Daily Market Update

Russia, Turkey, Ukraine Buy Gold But Bullion Tiny Part Of Global FX Reserves

Today’s AM fix was USD 1,663.50, EUR 1,325.18 and GBP 1,053.52 per ounce.
Yesterday the London Bullion Market was closed for a national holiday.
Friday’s AM fix was USD 1,666.50, EUR 1,329.16 and GBP 1,051.88 per ounce.

Silver is trading at $30.88/oz, €24.70/oz and £19.63/oz. Platinum is trading at $1,531.50/oz, palladium at $641.50/oz and rhodium at $1,025/oz.

Gold fell $5.90 or 0.35% in New York on Friday and closed at $1,663.90. Silver climbed to $31.241 then retreated but finished with a gain of 0.03%.

Cross Currency Table – (Bloomberg)

Gold edged off of its 4 month high as some participants may have decided to take profits ahead of the Jackson Hole Symposium on August 31st and September 1st.  Market participants expect speeches by Bernanke to offer clues with regard to further QE or what it will in time be known as – counterfeiting.

Russia, Turkey, Ukraine and the Kyrgyz Republic have again expanded their gold reserves.

July saw Russia’s biggest increase since since October and Kazakhstan increased their bullion reserves for a 12th consecutive month.

Russia’s assets rose about 18.6 metric tons to 936.6 tons last month and Kazakhstan’s climbed 1.4 tons to 103 tons, data on the International Monetary Fund’s website showed according to Bloomberg. 

Both countries’ holdings are at the highest level since at least 1993, the data show. 

Turkey, Ukraine and the Kyrgyz Republic expanded bullion reserves in July, while Guatemala and Mexico reduced them marginally, according to the IMF data.

IMF World Gold Reserves in Millions Fine Troy Ounces 

Ukraine bought 0.2 ton in July, the Kyrgyz Republic added 0.1 ton and Turkey’s bullion reserves jumped 44.7 tons to 288.9 tons, the data showed. The country’s holdings have increased due to it accepting gold in its reserve requirements from commercial banks. Guatemala cut gold holdings by 0.2 ton and Mexico reduced them by 0.1 ton, the data showed.

Gold now accounts for about 9.2% of Russia’s total reserves and 16% of Kazakhstan’s, according to the World Gold Council. 

IMF World Total Reserves Minus Gold in Millions of SDRs 

That compares with more than 70% for the U.S. and Germany, the biggest bullion holders and less than 2% for China.

Central banks have been expanding reserves due to the highest level of monetary and systemic risk in living memory. Many central banks are concerned about the outlook for the dollar, the euro and indeed the pound.

Nations bought 254.2 tons in the first half of 2012 and are likely to add close to 500 tons for the year as a whole, the London-based World Gold Council said earlier this month.

Central banks were net sellers for the best part of 50 years despite the massive increase in the global money supply and indeed of international foreign exchange reserves in that period and especially in recent years (see important charts above).

Therefore, there is a real possibility that the recent shift to becoming net buyers may be a game changer as central banks are now likely to be net buyers for a long number of years to come.

This will provide a fundamental pillar of support under the market.

Their buying is due to significant systemic and monetary risk and the need to prudently diversify their foreign exchange reserves. These risks will not abate for at least a few years.

China is continuing to quietly accumulate their reserves and diversify out of their massive $3.24 trillion of foreign exchange reserves. 

China’s gold reserves remain miniscule as a percent of their overall foreign exchange reserves – less than 2%.  In marked contrast to the US, Germany and even France and Italy when gold’s share of national forex reserves is over 70%.

China’s undeclared official gold reserve purchases remains an elephant in the room in the gold market with very little coverage of or analysis of the People’s Bank of China’s quiet and untransparent accumulation of gold. 

In the coming months, one can expect that China will announce that they have doubled their gold reserves to over 2,000 tonnes. This announcement may again shock the market and drive prices higher as did their announcement in April 2009 which surprised those less informed about the gold market.

The People’s Bank of China will not telegraph its intentions or purchases to the market as doing so would lead to a surging gold price and to a further devaluation of its foreign exchange reserves.

China is trying to position the yuan or renminbi as an alternative global reserve currency and large gold reserves are essential if this is to be achieved.

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(Bloomberg) — ETF Securities Platinum Products Had Highest Inflows in 2.5 Yrs
ETF Securities Ltd. said its platinum exchange-traded products had their highest inflows in 2 1/2 years last week, totaling $85 million, as labour disruptions hit mines in South Africa.

Tin products received $17 million of inflows, the highest on record, the company said in an e-mailed report.

(Bloomberg) –Commodities Inflow Of $750 Million In Week
Commodity index swaps signaled a net inflow of about $750 million in the week ended Aug. 21, the first net inflow in seven weeks, Citi Research said in an e- mailed report to clients. Since the end of June, commodities have had a net outflow of $8.5 billion.

(Bloomberg) — Gold ETP Holdings Rise to Record for Fifth Straight Session
Gold holdings in exchange-traded products backed by the metal rose to a record for the fifth straight session.

The amount increased 3 metric tons, or 0.1 percent, to 2,451.63 tons, data tracked by Bloomberg showed.

Gold inches down as investors await central banks meeting – Reuters

Gold Drops on Speculation Bernanke Will Refrain From Stimulus
– Business Week

Gold, silver retreat in electronic trading
– Market Watch

Gold forecast to hit $1,800 an ounce
– San Francisco Chronicle


Flashing Warning On The "Unintended Consequences" Of Ultra Easy Monetary Policy From… The Fed?! – Zero Hedge

Santelli Channels Max Keiser: On Liquidity And More Central Bank ‘Counterfeiting’ – Max Keiser

Bullishness rising faster than gold – Market Watch

Gold, Jim Grant, Bernanke, Draghi & A Collapse In Confidence – King World News

Brain-dead politics assures chaos till 2016 – Market Watch

The Gold Standard and the Myth of Price Stability – CNBC


Stephen Flood
Chief Executive Officer

I am the CEO of GoldCore. We help investors buy and store gold and silver easily and cost effectively. We work with clients of every variety from wealth family offices to everyday people. We provide the very best market data and client service and we care deeply for our clients interests.


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