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Gold Bar Premiums At 17-Year High In Hong Kong
Submitted by GoldCorp.
Gold Bar Premiums at 17-Year High in Hong Kong – Safe Haven Bid on Inflation and Egypt Concerns
The geopolitical ramifications of the revolution in Egypt and the likelihood that it will spread throughout the Middle East, North Africa and possibly further afield is leading to volatility in markets. Equity indices in the Middle East and Far East were mostly down (except for China) overnight. European bourses were under pressure this morning but have recovered somewhat.
Gold and silver are marginally lower after their strong showing Friday which resulted in silver closing the week 1.7% higher and gold being tentatively lower (-0.14%). Remarks by a People’s Bank of China advisor that the Chinese should diversify into gold and silver are very important (see below).
(Click to enlarge) Gold in USD and CFTC Gold Open Interest - 2 Years (Daily)
NYMEX crude is up some 0.4% to just over $90.00 (see long term chart below) and Brent crude remains close to $100 a barrel this morning. Oil’s nearly 5% surge on Friday to end the week higher was ominous and the possibility of unrest spreading to other oil rich dictatorships such as Saudi Arabia is making investors nervous. The Middle East and North Africa produce more than a third of the world's oil and OPEC has warned of a possible oil “shortage”.
Oil in USD – 5 Years (Daily)
Any speculative froth seen when gold recently rose above $1,400/oz has been removed from the gold market as can be seen in the gold futures open interest numbers. Open interest has fallen by more than a third since early September. Those short the market have once again managed to flush out the weak paper longs who have been shaken out of positions.
Open interest levels are now well below those seen after the last period of correction and consolidation in the first quarter of 2010 (see first chart above) and we may now have seen capitulation.
Short positions remain high and concentrated with a few market players, especially JP Morgan, and they are vulnerable to a short squeeze, should prices begin to move up again. This seems likely given the tight physical demand situation in the market internationally.
Further evidence of this was seen in the fact that premiums for gold bars in Hong Kong are at their highest levels in 17 years (since 1994) as Chinese, Indian and wider Asian buying continues. Deepening inflation has led to strong demand and the geopolitical instability in Egypt and the possibility that it could spread throughout the Middle East and North Africa will lead to safe haven buying.
China Should Buy More Gold, Silver for Reserves – Chinese Central Bank Advisor
People's Bank of China adviser Xia Bin told the Economic Information Daily today that China should steadily increase its holdings of gold, silver and other precious metals. In an interview with the paper Xia said that “holdings of gold and silver can help establish the yuan as an international currency by increasing China's "final payment capacity." He advised buying precious metals on the dips and while gold and silver are marginally lower today, the remarks are another long term positive for the gold market.
Only last month, Xia made similar comments saying that the People’s Bank of China should diversify their massive $2.7 trillion foreign exchange reserves away from US dollars and increase their gold reserves as a long term strategy in order to help internationalise the yuan. The Chinese wish to make the yuan an accepted international reserve currency and establish it as a currency that will be used for payment and settlement in international trade.
China’s gold holdings, at 1,054 tonnes, remain miniscule compared to the over 8,000 tonnes held by the US Federal Reserve (gold only accounts for 1.6 percent of China’s massive currency reserves). With the supply and demand equation already tight due to international investment demand and central banks having become net buyers rather than net sellers, even a small amount of diversification out of their US dollar holdings and into gold should lead to much higher gold prices.
The reference to silver was important as it marks the first time in modern times that a central bank advisor or official has spoken about diversifying currency reserves into silver. It shows how the Chinese view silver as money rather than as simply a commodity to be consumed. Indeed, the Chinese like most of the world, used silver as currency for most of their history.
The comments may signal the start of a growing shift from seeing silver purely as an industrial commodity to seeing silver more like gold – as both an industrial commodity but more importantly as a store of value and as money. As Milton Friedman pointed out, the major monetary metal throughout history was silver, rather than gold.
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That's usually because in all cases including metals those who follow the trend recklessly stake their livilihood 100% on the accuracy of their late to the party gamble. For people like us it's simply an emotionless trade. That's why we are usually right and they fry.
Speaking of getting paid, guess where the word SALARY comes from? People used to accept salt as payment in Roman times
Because it held tangible value. It ain't just there to make your MacDonalds fries taste better. Rice was also used in Asia. Is there a point?
Here comes the squeeze !!!!!!!!!
In all commodities !!!!!!!
everyone saw this comming !?
Good luck kiddiez the Shizzie is starting to hit the fan !
Ivory Coast just defaulted on EU bonds !
Gold is (less) money.
Like I told you zombies when it hit the ridiculous $1400 price- it is going to $1000.
Maybe. IF it does, book it for a short stay, 'cause other than food it'll be the hottest thing on the face of the planet.
Good luck.
Bet your whole life savings on that one, genius.
My lil tyler. Get the picture. China does not ever do what it says.
China is loading up on Euro bonds and that is the only underlying truth in the market. Ultimately in about 12 months time, china will fully graduate to euro reserves and manage its US exports (today 18% of China GDP). So the only game in town right now is euro and euro and euro. Euro will surge well beyond 1.6 this year and finally people will get that euro 1.18 was just a regular correction in its wide history of existence.
No point telling all this to a stupidly and insanely mad in love with Gold crowd. They are fooling the shit out of u guys....trust me they have an agenda that people might load upon gold as much as possible while they play the real game which is euro and diversyifying away from dollar.
and by the way they do read ur blogs. And they love it when they see how their comments are so brilliantly analysed and highlighted. Gold is only useful for relative 10% diversification but it will never give u 5x 6x RoC. Just think about it.
It would be extremely naive to believe the stated Chinese gold reserves. Just think about it. They've been mining gold for 1000s of years. They are a closed, xenophobic society. Marco Polo wrote that he saw vast displays of gold. Methinks that the Chinese may have many more tons, certainly more than the US? It amazes me that no one analyzes why the US hasn't had an gold audit since the 50's, even with many calls to do so; what are the banksters hiding?
Everything will hyper deflate (how many dow 0000 calls have we seen by gold bugs) but somehow gold will skyrocket when trillions of dollars disappear? No one will have to pay margins? Nothing? Ok let's say this does happen.
Does that mean nothing else goes up in price? like THINGS PEOPLE NEED TO SURVIVE. Sometime I wonder if gold bugs have found a way to eat their gold and silver and metal ! Let me know how that works, love to try it!
PM's are a universal currency. Money to be used a a medium of exchange for THINGS PEOPLE NEED TO SURVIVE, as you you say. It's not all that convenient to buy $500k of wheat or rice.
So, you would rather be a USD bug? Good luck with that.
Is this the best your Troll Help Line could come up with? Better call him back and ask him how QE Infinity will end in deflation.
Let me know what he says.
ZZzzzzz.
heh,
did he really use the "you can't eat it" line?
really? good lordy
lolwat? Not one goldbug ever said that. Deflationists are the ones who hate gold and love dollars. Just dollars, and nothing else.
You are a crazy person, and need to go back to troll school. I know that old Johnny Bravo, the janitor, likes to molest the students, but you'll just have to deal with that. Learn to like it.
At work so I have not been able to read every post so if it has been shared, sorry...
Gainesvillecoins.com has a note on thier homepage asking for patience for orders filled, email responses or phone call responses. Seems the orders are soaring... I know I am waiting for an order placed a week ago...
Sounds like a crowded trade to my fine ears. ;)
apparently, your the 25 week bastard†
Go invest in a real company and create some jobs, instead of hoarding a barbarous relic.
I can't eat dollars either. But when I save dollars or gold in a tin box in the back yard, it is only because circumstances indicate that is the safest course of action. I would much rather own shares in a company that is growing its earnings at 20% a year and pays a 5% dividend!
The main question to ask is what forces in the economy prevent very many companies from achieving this today, and the answer is: mainly government! Government distorts the time value of money and it is doing so by creating a tidal wave of new, air-backed, money. It has also told business owners and investors that should the succeed in making any money it will be taken from them to "spread around" to others because of "fairness". Further, should anyone grow his company larger than 50 employees, he surely will be hit with the ObamaCareTaxGrab (tm), that is unless he can purchase an indulgence in the form of an "exemption". I am told that almost 800 employers have gained such favors. I am also told that government plans to secure more complete compliance with the 40,000 + pages of tax code by hiring more auditors and requiring me to fill out a 1099 form for almost every vendor I deal with, including Motel 6 and McDonald's.
So, for me, something has to be an extraordinary value for me to take the risk of trading gold in the hand for stock in a company that could be put out of business by the next bureaucratic brain fart.
Money is nothing but the belief by a majority that it is just that... money.
I know for so many this is a tough concept to get but just look around you, what are the worlds currencies backed by? not gold! not silver! Not anything but belief
that is a rational statement.
and every 5-year-old in the world 'knows' that gold is better than silver or bronze.
anybody else need more than that mindset to rely on in a future of rough times?
i'm a little slow out here, but i'm ok with me little bits-o-gold.
Precisely the point. I don't get attached to shiny objects so I don't recklessly risk my 'entire life savings' on a trade. Obviously most of you idiots do exactly that. Have fun pumping gas in your 60s guys!