Friday, March 21, 2014

Gold news - March 21 , 2014 - One manipulation ( Federal Open Market Meeting Week smash ) leads into the next set of manipulations ( setting up for the April Gold Contract - expiration date March 26 , 2014 ) ...... cyber hack of Koos Jansen blog , Goldman bad talking gold ( probably buying like bandits ) , JP Morgan setting up for April with a large eligible gold increase at Comex. , meanwhile China remains front and center ( yuan weakness causing all types of derivative troubles ) , but the chinese still buying gold in size ! ! .......Note South Korea looking to get into the physical gold game !

Gold news of note..... GATA


CHINA....


China gold researcher Koos Jansen's Internet site under attack

 Section: 
10:50a HKT Friday, March 21, 2014
Dear Friend of GATA and Gold:
Congratulations to China gold researcher and GATA consultant Koos Jansen, who reports that his Internet site, In Gold We Trust, has come under constant "distributed denial of service" attacks originating from the United States and China, attacks that increasingly befall Internet sites that get a little too close to the real issues of the gold "market." Jansen says he is taking security precautions in the hope of improving public access. In the meantime maybe he can find some consolation in knowing that certain people may not enjoy his work. Jansen's commentary is headlined "In Gold We Trust" under attack and it's posted at that Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.





Official gold market to open in South Korea

 Section: 
By Cho Ki-won
The Hankyoreh, Seoul
Friday, March 21, 2014
On Mar. 19, two gold bars were brought to Ilsan in Gyeonggi Province and deposited in the safe of the Korea Securities Depository, an organization that stores gold for the gold market. For the gold market to open, there needs to be actual gold to be bought and sold, and this was the first gold bullion to arrive at the safe.
The gold bars, which have a purity of 99.99%, weighed 1 kilogram each, and a security label was attached to the bottom bearing the mark of the Korean Mint. The bars had been produced by a Korean metal refinery.
"One importer has asked us to store 15 gold bars. Once they are certified by the Mint, those bars will be placed here as well," said Seong Bo-kyung, head of the gold storage payment team for the depository.
The depository announced that, once the gold commodities market takes off, it is expecting to handle an average of 4-7 tons, or 4,000-7,000 gold bars, each day.
The public is now able to trade in gold on the market, just as they can with stocks. This is made possible by the KRX gold market, which will open on Mar. 24. The market enables ordinary investors to buy and sell gold through accounts with securities companies or futures trading companies.
The idea behind setting up a gold market is to make sales of the precious metal more transparent by having them take place at an official exchange. In the past, transactions in gold took place off the exchange and were not recorded, making them a popular method of tax evasion. The opening of the gold exchange is connected with the current administration’s policy of bringing the underground economy into the light.
"With rings and other kinds of jewelry, we are trying to create added value in terms of product competitiveness, and for trading in gold as an investment, we want transactions to be made transparently on the exchange," said Gong Do-hyun, head of the gold market team at the Korea Exchange.
The method of trading in gold was designed to be similar to the stock market. Trades can be made between 10 a.m. and 3 p.m., starting one hour after the stock market opens. "We decided to start trading an hour after the stock market to match the working hours of people in the jewelry industry," Gong explained.
The method chosen for making contracts is single-price sales, taking place between 9 a.m. (when bidding begins) and 10 a.m. and from 2:30 p.m. to 3 p.m. This kind of trading means that transactions are not made each time an order comes in but rather that orders are pooled for a set amount of time and then sales are made at a certain time for a single price.
Outside of these times, deals can also be made through the continuous trading method, which involves individual competition and multiple prices.
Just as with the stock market, information about the prices and volume on the gold commodity market will be made available in real time, while fluctuations in prices will be limited to a 10 percent change from the previous day.
For one year investors will not be charged any fees to use the exchange.
"Once the gold market gets going, we expect that the practice of dodging the value-added tax through illicit sales will disappear, which will lead to around 300 billion won in tax revenue," the depository said. "The market will also guarantee a swift and reliable supply of gold as a raw material, contributing to the development of the South Korean jewelry market."
Some concerned analysts point out that, even after the establishment of the gold market, there is no telling whether individuals and jewelers who have been relying on paperless transactions in gold and not paying taxes will enter the market, as this would mean exposing their transactions to the government. The Korea Exchange believes that about a year will be required for the gold commodity market to become fully active.


Tumbling Chinese yuan sets off 'carry trade' rout, triggers derivatives contracts

 Section: 
By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, March 20, 2014
China's yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts.
The jitters come amid reports of fire sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20 percent for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570 million of debts, the biggest property failure so far.
The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3 percent since January, a clear break with China's longstanding policy of slow appreciation.
Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level, where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5 billion. ...
... For the full story:



Zero Hedge: How gold performs during FOMC weeks

 Section: 
4:07a HKT Friday, March 21, 2014
Dear Friend of GATA and Gold:
Zero Hedge notes the peculiar inverse correlation between the gold price and the last seven weeks during which the Federal Open Market Committee has met. Of course GATA has noted many similar inverse correlations over the years and they can be only mere coincidences or signs of central bank intervention in the currency markets.
As Zero Hedge says, "Welcome to the centrally planned world where the announcement of ongoing trillions in fiat dilution constantly crushes the price of undilutable money" -- except, of course, gold can be diluted in several ways, from paper gold to high-frequency trading in gold futures and other derivatives undertaken or underwritten by central banks in secret.
Zero Hedge's commentary is headlined "How Gold Performs During FOMC Weeks" and it's posted here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.












Koos Jansen......



Chinese Gold Demand 488 MT YTD, Up 29 %

Although  last week only 34 metric tonnes of gold were withdrawn from the vaults of the Shanghai Gold Exchange (SGE), down 6.52 % from the prior week, year to date there has been a staggering 488 metric tonnes withdrawn, up 29 % to compared to last year. Year to date demand will probably come on par with last year when we enter april, as withdrawals exploded in April 2013. What will happen after April is hard to say, this year’s average daily withdrawals stand at 6.7 metric tonnes, last years daily average was 6 metric tonnes (2197 mt / 365). It will all depend on how much floating supply there is left…

At the current pace, 6.7 metric tonnes a day, China will be roughly importing 1700 metric tonnes this year to meet SGE demand. My research has exposed that SGE withdrawals equal Chinese wholesale demand. Not often, but sometimes we can read other analysts or media share the same findings. From the Chinese media (dated January 10, 2014):

China’s explosion in demand for physical gold in 2013 left a deep impression on international investors. The Shanghai Gold Exchange withdrawals for the year up till 27 December 2013 exceeded 2180 tons. Considering the exchange’s position as a hub for domestic gold circulation, in conjunction with a system that forbids withdrawn gold from re-entering inventory, to a large extent the withdrawals number can be treated as the best benchmark for physical gold demand in the Chinese market. Not to mention that the entire 2013 global mined gold production does not exceed 2700 tons. China’s massive demand has to a large extent remade the world’s gold circulation system. Newly mined and stocked gold is moving through trade links in London – Switzerland – Hong Kong – into China in a large scale orientation towards the East. The impact of China’s demand on international gold price will inevitably increase.

Another quite interesting headline in China today:

RMB Internationalization Requires To increase Gold Reserves

A very  important condition for the internationalization of the renminbi is to increase Chinese gold reserves, because it increases the world’s confidence in the renminbi and expands it’s flow capacity.

It still beats me why not many other analysts, journalist and blogs have gotten involved in researching the Shanghai Gold Exchange an the Chinese gold market in general, as this unprecedented exodus of physical gold from West to East is talking place right in front of our eyes month after month.

Kindly note, if someone could prove me wrong on my analysis about Chinese gold demand I would be happy the hear it. Comment below or sent me an email at info@ingoldwetrust.ch.


The Real Asset Co. Buy Gold Online


Meanwhile In The West


Business Insider reports:

In a new note, Goldman Sachs argues that the rise in the price of gold [year to date] has been driven by three unsustainable factors: Weather-induced economic slowdown in the US, a spike in Chinese demand due to credit concerns, and increased geopolitical tension.

So they forecast that future weather conditions in the US will improve their economy and credit concerns and geopolitical tension will soon be dampened?

Goldman also released a report titled: The End Of Chinese Financial Commodity Deals. In which they explain a process called round trippin; circular gold trade between Hong and the mainland to strike an arbitrage profit.


Round Trippin
Slide Goldman Sachs



Goldman declines to mention this process of gold export to mainland Custom Specially Supervised Areas and back to Hong Kong are also done from another incentive than for arbitraging. Hong Kong has a booming jewelry industry, in the dense streets of The Special Administrative Region you can find  a jewelry store (mostly Chow Thai Fook) on every street corner. It’s estimated that half of all jewelry in Hong Kong is sold to mainland tourist, that can import as much as they like into the mainland. Mainland tourist prefer to buy jewelry in Hong Kong where there’s zero tax on jewelry, whereas in the mainland there’s a 22 % tax on jewelry.

Plausible scenario: a Hong Kong jeweler imports bullion and exports it to the CSS area Shenzhen just across the border, that has a huge jewelry fabrication industry (cheap fabrication). In Shenzhen the jewelry is fabricated and exported back to Hong Kong to be sold in the shops. Note, for trading gold from Hong Kong in and out of a CSS area there is no PBOC permit required. To export gold out of a CSS area into the mainland a PBOC permit is required. I’ve been told this policy is airtight.

Additionally, the inflating of import and export numbers from Hong Kong to the mainland does not influence net export to the mainland. Nor does it influence total mainland net import that supplies the SGE.


Hong Kong - China gold trade 2009 - 2013


Just some thoughts..



Overview Shanghai Gold Exchange data 2014 week 11



- 34 metric tonnes withdrawn in week 9  (10-03-2014/14-03-2014)
- w/w – 6.5 %
- 488 metric tonnes withdrawn year to date

My research indicates that SGE withdrawals equals Chinese wholesale gold demand. For more information read thisthisthis and this.


SGE withdrawals 2014 week 11


This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.


SGE withdrawals week 11 2014


This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).


SGE premiums


Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.


SGE premiums week 10, 11 2014


A source in the mainland explained me negative premiums at the moment like this:

the SGE is a very illiquid market if you look at the daily volumes. Several slightly larger orders can push the market prices up or down and often traders have to wait tens of minutes to get their orders fulfilled. The price doesn’t track the London spot well. Sometimes the London spot has moved several dollars but the prices on the SGE didn’t budge at all…

The low liquidity on the SGE is mainly because of the much higher commission compared to the SHFE and a much poorer information system. Without the PBoC protection, the SGE should have closed down years ago!

In my humble opinion, the weekly withdrawals and the daily deferred payment direction are more important than the premiums.




Goldman Doubles Down Its Hate On The Best Performing Asset Of 2014: Gold

Tyler Durden's picture





 
As gold completes its golden cross today and remains by far the best-performing asset of 2014, we thought it intriguing that Goldman Sachs' commodity group would issue a strong "sell your gold" recommendation... of course, when Goldman's clients are selling, who is buying? As a reminder, the last time the bank was extremely bearish on gold(about a year ago)our skepticism at the time was well warranted as Goldman was in fact the largest buyer of gold in the following quarter.
Via Goldman Sachs' Damien Courvalin,
Cold, Crimea & China: Transient supports to gold prices
The 2014 gold rally brought prices to their highest level since September before a more hawkish-than-expected March FOMC pushed prices sharply lower. Three distinct and in our view transient catalysts have driven this rally: (1) a sharp slowdown in US economic activity which we believe was weather driven, (2) high Chinese credit concerns, although ultimately bearish for gold demand through lower financing deals if realized, and (3) escalating tensions over Ukraine. While further escalation in tensions could support gold prices, we expect a sequential acceleration in both US and Chinese activity, and hence for gold prices to decline, although it may take several weeks to lift uncertainty around this acceleration. Importantly, it would require a significant sustained slowdown in US growth for us to revisit our expectation for lower US gold prices over the next two years.
Re-acceleration in US activity will push gold prices lower
While we see clear catalysts for the recent rally in gold prices, this move has been large relative to US real rates which are a key input into our forecasts and benchmarking of gold prices. As a result, we see potential for a meaningful decline in gold prices towards the level implied by 10-year TIPS yields, which our rates strategists expect to rise further this year, and reiterate our year-end $1,050/toz gold price forecast. More broadly, we believe that with tapering of the Fed’s QE, US economic releases are back the decline in gold prices will likely be data dependent, in contrast to our 2013 bearish gold view which was driven by the disconnect between stretched long gold speculative positioning and stabilizing US growth.
Indian and Chinese gold demand unlikely to surprise to the upside
Weak Indian gold imports and surging Chinese imports were the most important shifts in EM gold demand last year, although these trade statistics likely overestimated shifts in local gold demand given reported gold smuggling into India and the use of gold in Chinese financing deals. While we see potential for these shifts to reverse in 2014, we estimate the net impact will not be meaningful to our gold outlook as: (1) India’s potential easing of gold import tariffs will likely remain modest given how much lower gold imports have contributed to its improved trade balance, (2) we expect a gradual unwind of gold backed financing deals.

Full note below:



21 MARCH 2014

Gold Daily and Silver Weekly Charts - The Hunger Games


Last night Nick Laird showed me some excellent original data analysis from his site, Sharelynx.com, that demonstrates that a decline in the price of gold during an FOMC week is no sure thing, but more normally distributed. And we have to balance that against a different, and much less statistically robust graph, that was on ZH, and which I also presented here, that clearly showed declines in FOMC weeks, and no similar declines in off weeks, but for a much shorter period of time.

Nick looked at full weeks, and even much tighter spreads of days, but only looked at FOMC events, and a lot of them going back to 2006, and then even to 1994. I plan on looking at some of his data much more closely, but it does drive home the conclusion that simply betting blindly on around certain events does not work. If it was that easy, everyone would do it. Rather, there are other variables at play, of that I am certain. And I will take a much closer analytical look at all the data, and not just cycles and dates, when I have a greater opportunity.

Next week is an option expiration for the precious metals futures on the Comex. A large tranche of gold was deposited into the JPM warehouse. Perhaps these are preparations for the next active month for physical bullion which is April. Otherwise things were quiet.

Another thing of which I am reasonably confident is that there is a 'currency war' in progress, and some great changes in the composure and complexion of international finance and trade. This 'war,' more like a new kind of cold war than a military war, ebbs and flows, manifesting itself first in one way and then in another. And sometimes it pokes its head out of the financial pages and onto the headlines, as it has recently done in the Ukraine and Crimea.

As you might always expect in times of change and contention, truth is in short supply. And I think some long standing trends are coming to a head. And so we should expect the unexpected, and look for things to happen, particularly from the top down, that we had not seen coming.

I will never forget how, shortly after the tragic events of 911, and the expected response against the Taliban in Afghanistan, that the word was given out from the top down, 'attack Iraq.' And people looked at each other and said with their eyes, what? And the media machine was put into gear, and the march to Iraq was begun.

I mean that sort of unexpected thing, that does not seem to make sense if you have been following some logical sequence of things, but that the media picks up from the top and repeats without fairly batting a jaundiced eye.

If you want a vision of the future, I would not look for a 1984 type boot stomping endlessly on a human face. Rather, I think we will see the kind of bifurcated society of a few effete haves in a few cities, and the great number of have nots, as is depicted to some effect in The Hunger Games. President Snow reminds me of the consummately ruthless CEO, moreso than a dictator. The various District have been reduced to their basic economic elements, and the people of the Capitol are living large on their efforts.

Like most works of fiction it is an oversimplification. But it has a resonance with the kids, wildly popular in the teens and younger set. The young have a tendency to pick up on trends based on behaviours that are not carried overtly perhaps in the official news and the spoken words of adults. When the books became popular I read them, just to keep in touch with my own children and what was attracting those of them who were thinking. And now the movies are coming out. The books are better, but you may find the movies to be diverting.

So it looks like interesting times ahead. And may the odds be ever in your favour.

Have a pleasant weekend.