India, Indonesia, China And Wider Asia Buy Physical Gold And Silver On Dip As Stagflation Threatens

Tyler Durden's picture

From GoldCore

India, Indonesia, China and Wider Asia Buy Physical Gold and Silver on Dip as Stagflation Threatens

Gold and silver have extended their recovery and may be headed for the fourth day of gains due to the continuing European sovereign debt crisis, Chinese inflation (+5.3%) and the real risk that rising oil and commodity prices are leading to an inflation spiral internationally and stagflation.


Cross Currency Rates

German inflation data this morning was worse than expected jumping to 2.7% from 2.3% due to surging energy costs and despite recent strength in the euro. This has led to the euro falling against all currencies and especially against gold.

In the U.S., gasoline prices are continuing to rise with U.S. petrol prices looking set to hit $4.00 a gallon. The man in the street is feeling inflation in his pocket contrary to reassurances by Ben Bernanke and the Federal Reserve.

Generic Gasoline Future – 5 Year (Weekly)

The precious metals are likely to be supported later today when US trade deficit data is expected to be poor with still high oil prices leading to a very large expected deficit of $47.7 billion. This should see the dollar come under pressure and support gold.

The Bank of England inflation report today is expected to point to higher inflation but still no interest rate rise due to declining economic growth.

UK CPI EU Harmonized YoY – 1989 to Today

Stagflation or low economic growth, high unemployment and rising inflation is a clear and present danger to the UK, EU and U.S. economies and other economies internationally.

This is especially the case in the UK where house prices have begun to fall again and may be set for sharp falls. Internationally, we are seeing significant debt deflation where the value of goods and assets bought with debt are falling (cars, property etc) while the value of finite, essential goods such as food and energy are rising.

Safe haven and inflation hedging diversification into gold is likely to continue as inflation is deepening and there is a distinct whiff of stagflation in the air.

Ultra loose monetary policies and leaving interest rates close to zero percent will lead to further inflation and currency debasement. In order to curb stagflation there will need to be a return to monetary and fiscal discipline and positive real interest rates as was done by Paul Volker in the 1970’s.

It is too early to tell whether the recent sell off is over and a further correction is possible however global macroeconomic conditions suggest that gold and silver bull markets are very much intact.

This is especially the case due to continuing Asian demand with gold again being bought on all dips in China, India and the rest of Asia.

Bloomberg reports that Indian demand remains robust according to UBS sales figures. Reuters report that the selloff in gold and silver has seen physical buying of both gold and silver in Asia where dealers report that there was physical buying below $1,500/oz from India, Indonesia and China.

A Hong Kong dealer said that there was “not much scrap selling, as people are still bullish on gold" (see news).

NEWS

(Bloomberg) -- UBS Gold Sales to India in 2011 Are 10% Higher Than Year Earlier

UBS AG’s gold sales to India so far this year are more than 10 percent higher than in the same period last year, the bank said today in an e-mailed report.

(Bloomberg) -- AngloGold Chief Says Gold Could Break Through $1,600 in 6 Months

Gold could break through $1,600 an ounce in the next six months, Mark Cutifani, chief executive officer of AngloGold Ashanti Ltd., the world’s third-largest producer of the metal, said.

“We think the fundamentals are even more robust than last quarter,” he told reporters on a conference call today.

(Bloomberg) -- Silver Still Heading for $50, Bartels Says: Technical Analysis

Silver, which plunged 27 percent last week, still is poised to climb to the “very important” price of $50 an ounce by the end of the year, according to technical analysis by Bank of America Merrill Lynch.

“You’re still in an uptrend, despite the sharp sell-off” as shown by an intermediate-term trend from the lows on Aug. 24 and Jan. 28, Mary Ann Bartels, the head of U.S. technical and market analysis at Merrill in New York, said yesterday in a telephone interview. “The uptrend was not broken.”

Last week, silver futures plunged the most since at least 1983 after the Comex exchange in New York boosted margin cost by 84 percent. The price rebounded 9.1 percent in the past two days. On April 25, the metal reached $49.845, the highest since the Hunt Brothers tried to corner the market in 1980. In that year, the commodity climbed to a record $50.35.

Futures will face so-called resistance around $45 before topping $50, a “very important number” that “called the end of the bull market in commodities, with the Hunt Brothers getting squeezed out of silver” in 1980, Bartels said.

The metal may rise to $80 in three to five years, she said. In February, Bartels correctly predicted the silver rally in March and April.

Yesterday, silver futures for July delivery rose $1.37, or 3.7 percent, to $38.486 on the Comex. The price jumped 5.2 percent on May 9.

In technical analysis, investors study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

(Bloomberg) -- China’s April Gold Output Jumps 27% to 61.1 Tons, Bureau Says

Gold output in China gained 27 percent in April from a year ago to 61.1 metric tons, according to data released today by the statistics bureau. Silver output increased 2 percent to 930.6 tons, it said.

(Bloomberg) -- China April Base Metals, Precious Metals Production (Table)

The following table lists China’s production of copper, other non-ferrous metals, and precious metals in April, as well as from January to April this year.

The figures are provided by the China Federation of Logistics and Purchasing, which releases monthly data on behalf of the National Bureau of Statistics. Figures are in metric tons. Percentage changes are from the year-earlier period.
*T
===========================================================
                 April    YoY %     Jan.-Apr.      YoY %
===========================================================
Copper         454,000     19.2     1,727,000       15.8
Aluminum     1,459,000      7.4     5,514,000        2.7
Lead           398,000     31.8     1,513,000       33.0
Zinc           435,000      2.8     1,705,000        9.2
Tin             14,152      5.2        50,519       13.1
Nickel          20,673     42.0        75,185       30.0
Alumina      2,987,000     18.3    11,195,000       12.4

PRODUCTS
Copper         915,000      3.5     3,126,000       13.6
Aluminum     2,431,000     38.4     8,152,000       36.9

PRECIOUS **
Gold            61.08     26.5        199.80        4.5
Silver         930.64      2.0      3,629.75       15.4
===========================================================

(Bloomberg) -- Deutsche Bank Sees Gold Reaching $2,000 as Soros Pares Bets (3)

Gold, which reached a record on May 2, may surge a further 30 percent by January as investors seek to protect themselves from “economic uncertainty,” according to Deutsche Bank AG.

“I’m bullish on gold despite its current levels,” Hal Lehr, Deutsche Bank’s managing director for cross-commodity trading, said in an interview in Buenos Aires. “It could reach $2,000 an ounce in the next eight months.”

Investors including George Soros and John Paulson invested in gold as the metal surged over the past year amid a sovereign debt crisis in Europe, economic turmoil in the U.S. and civil unrest in the Middle East. This month‘s record $1,577.57 an ounce was a sixfold gain since the precious metal’s low in August 1999.

Gold fell 1.6 percent on May 4 after the Wall Street Journal reported that Soros Fund Management LLC sold precious- metal assets. Soros’ fund held shares in the SPDR Gold Trust, the biggest exchange-traded product backed by gold, and the iShares Gold Trust at the end of 2010, U.S. Securities and Exchange Commission filings show.

Gold rose for a third day in New York today as concern about Europe’s debt woes spurred demand for precious metals as a protection of wealth. Standard & Poor’s yesterday downgraded Greece’s credit rating for the fourth time since April 2010.

Gold for June delivery rose $13.10, or 0.9 percent, to $1,516.3 an ounce at 11:05 a.m. on the Comex in New York.

Inflation Hedge

Bullion rose for six consecutive weeks through April 29 as the metal is seen as a hedge against inflation around the globe.
Central banks in China, India and the European Union, among others, have increased interest rates in recent weeks as policymakers seek to control consumer prices with tighter monetary policy.

The U.S. Federal Reserve has kept the benchmark rate between zero percent and 0.25 percent since December 2008 and pledged to purchase $600 billion in Treasuries through June to stimulate the economy. Standard & Poor’s earlier last month revised its debt outlook for the U.S. to negative from stable.

The U.S. Treasury Department projects the government could reach its debt ceiling limit of $14.3 trillion as soon as mid-May and run out of options for avoiding default by early July.

Lehr’s so-called cross-commodity team was created by Deutsche last year to handle large investments in commodities without distorting prices with sudden inflows of cash, he said. The team focuses on investment opportunities in a portfolio of commodities, as opposed to looking at individual commodities.

(Reuters) - Gold edges up, silver rises; China data seen to support

Gold firmed a touch and silver rose more than 2 percent on Wednesday, as concerns about China's high inflation and waning economic growth are seen buoying interest in precious metals.

China's inflation in April was stronger than expected, at 5.3 percent on the year, while industrial output was considerably weaker than forecast.

High inflation and lower economic growth in China, the world's second-largest economy, are likely to dampen risk appetite and support interest in gold, though reaction to the data was muted.

Spot gold rose by half a percent to $1,522.96 an ounce by 0615 GMT, building on gains in the past three sessions.
U.S. gold edged up 0.4 percent to $1,523.10.

"Gold is generally benefiting from the return of confidence from investors," said Darren Heathcote, head of trading at Investec Australia. "They are very happy buying on the dip, as we see the same old problems hanging around."

Growing concern over Greece's fiscal status, dollar weakness and high oil prices continue to fuel nervousness in the financial markets, driving investors to seek safe haven in bullion.

Brent crude was steady near $118 after a jump in China's implied oil demand to the third-highest level on record showed that Beijing's efforts to cool the economy of the second-largest oil consumer are doing little to dent use.

Holdings in the SPDR Gold Trust remained unchanged at a one-year low, but those in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, extended a rise of 3 percent in the previous session and edged up 0.2 percent to a one-week high of 10,585.99 tonnes by May 10.

Spot silver rose as much as 2.3 percent to $39.34, before easing to $39.19, on course for a fourth straight session of gains. COMEX silver gained nearly 2 percent to $39.22.

Silver prices plunged more than 25 percent last week and gold nearly 5 percent, prompting buying in the physical market in Asia, dealers said.

"We saw buying when gold dipped below $1,500 from China, India and Indonesia, but not much scrap selling, as people are still bullish on gold," said a Hong Kong-based dealer.

Technical analysis echoed bullish sentiment in the physical market, as it indicated that gold could rise to $1,531 in the next 24 hours, said Wang Tao, a Reuters market analyst.

"It's not beyond reason for gold to reach another record high, but the sell-off last week made some investors more cautious," said Heathcote of Investec Australia.

"They are not fully committed as yet and are more willing to take profit after decent gains. So it may take a while to see a new record."
Platinum group metals rose in tandem with gold and silver. Spot platinum edged up 0.3 percent to $1,798.99 an ounce in its fourth day of rise, and spot palladium rose by 0.7 percent to $730.22.

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Waterman Jim's picture

ok i guess i have to do it...

 

Silver bitchez!

 

 

Ahmeexnal's picture

CME/COMEX/JPig et al have got to be retard!

By bringing silver price down, they are actually PAYING people for buying PHYSICAL if you take into account the alternative (keeping your fiat in near-zero interest banking or,  realistically, negative interest when you weigh in inflation)!!

Troll Magnet's picture

i have 5 bucks to spare.  can someone go dig up an ounce of silver for me?  hell, i'm willing to pay $6!  $7?  anyone?

tmosley's picture

Sadly, when they say $5, them mean 5 silver dollars.  About $150 in fiat.

lol

trav7777's picture

yeah, that makes sense, cliff, they're using the equivalent of 5 ozs to get one ounce.  Moron.

Bob's short call at 39 and change was right...as usual, you again were wrong and have fallen flat on your face again.

tmosley's picture

Go fuck yourself, loser.  For ever $2000 I have lost for people who follow my calls, I have made them $5 million.

You have no perspective, because you have abandoned all sense of perspective and logic, and joined the ranks of the trolls.

Edit: and yeah, that probably is the real cost, as not one single silver mine on earth would be profitable without producing other metal by-products.  And hardly any silver is produced in silver mines.  And, of course, the $5 figure is only MARGINAL cost, and doesn't take into account the huge capital investment required.

You SHOULD know this, having spent so much of your loser life justifying higher oil prices.  But again, you have devolved into a loser troll, so literally nothing can be expected of you.  You will lie and tell half truths to pursue your agenda.

trav7777's picture

those people who bought your call of 60 next week are sitting on 30% loss in their life savings, just like you are.

outamyeffinway's picture

Bob also called a top at $32. Moron.

I could do that daily as well until I hit my mark.

Bob also, at a silver summit in 2008 said, "Mark my words, the dollar will be worth zero by the end of the year!"

Good call. Uh huh.

Sean7k's picture

Quick note: Blythe is putting gold and silver on sale again. 

Sudden Debt's picture

Silver dropped another dollar in 30 seconds.

I guess there will be another margin hike comming today or tomorrow.

 

 

tmosley's picture

Yup.  Best stay away from paper.  Only physical will survive all the "one-time" shit they are going to throw at the market.  Guaranteed.

Sudden Debt's picture

I can't wait untill they offer some at 20$ :)

No more buying untill than :)

 

 

tmosley's picture

That should take about 20 more margin hikes.  Might get there in a couple of weeks.

cowdiddly's picture

When the buyers have to pay cash but the sellers have an infinite supply of paper its tough. I can here the airplanes leaving for Asia and India now. These stupid idiots are going to wake up in a couple years time and find out the rest of the world bought all the Ag just like the rare earths. These people have 3 trillion cash to spend and seem to have gained an aversion to paper. Gee I wonder what I would buy with 3 trillion. Commodities NA, never. Bury head in sand.

Kopfjager's picture

Where can I find the current margin?  Trying to get an idea how close we are to 1 to 1, 1 to 2 etc.    

New_Meat's picture

can they drive it to 1.5:1?  just wonderin' ;-)

- Ned

Sudden Debt's picture

1.5$

 

= margin increase => 5%

Waterman Jim's picture

oops and dont forget Gold

 

 

 

 

Thomas's picture

Saw some British central banker on TV today spouting off about inflation rising to 5% in 2012 and then dropping back to 2% again by 2013. Translation: Inflation is rising but stop thinking about it because we don't need any of those pesky expectations rearing their ugly heads.

cossack55's picture

I guess 40% of your population dying of starvation reduces demand pull and hence reduces pressure on the currency. Good plan.

hamurobby's picture

But but then who will pay all that debt down?

magpie's picture

wow at the sidebar it says that with Scotland's independence the debt is going to be divided up.

and the Scots don't have a central bank, right ?

gordengeko's picture

"In technical analysis, investors study charts of trading patterns and prices to predict changes in a security, commodity, currency or index."

lol, that is some funny shit.  The only reason tech anal-sis seems like it works less than half of the time is because billion dollar hedge funds use it (without obviously hedging like last week) as a basis for their decision making causing them to buy or sell said commodity, security, currency or index.  When shit doesn't pan out, you can easily mock up a chart giving you 20/20 hindsight.  Which is why anyone with good marketing skills can sell a TA indicator book and make more money from that then actually using the damn thing!haha 

Re-Discovery's picture

+ $19.95 (price of the book)

UnRealized Reality's picture

I beg to differ. TA probably works better today then in the past. We all claim there is only robo trading in the market which can only be done with PhD's writing code based on TA. Plus these PhD's have NO trading experience at all, all they now are numbers and stats. They don't know how to BTFD or buy physical to fuck the banksters. They are machines and do not have emotions so you keep trading on emotions and news.

gordengeko's picture

Those codes you are talking about are also based off of information 99% of the investing community don't have access to unless you want to spend upwards of 25k(at least).  Not to mention I would wager to bet the majority of those codes are of the high-freq kind.  By the time the avg investor e-trade baby hits the buy/sell button on his ipad, some hedge fund(or more) is making money off of them...twice  This market is rigged to the core, it is a ponzi casino with a marketing fascade designed to keep the sheep in the dark.  This is why BOA, GS and JPM are damn near flawless in their trades.  We'll see what happens soon IF the bernanke clan loses control and the market turns.  See how many billion dollar funds go under this time.

UnRealized Reality's picture

WOW, you really beleive that many some bodies are sitting at a computer feeding all the news,all the Fed speak, all the ECB speak, everything in that computer system 24/7. And how much does that cost? I thought they were in the business of making money.  WOW, I feel for you.

gordengeko's picture

"I thought they were in the business of making money."

ANYHOW.

I was in the process of writing one of these codes based off of information the investing DOES NOT have access to or even know about when I discovered someone beat me to it.  I have since spoken with him several times and now use his data and yes it's ALL numbers and digits on a computer screen.  And yes MANY people with money use his data.  I don't give a shit whether you believe me or not.   

UnRealized Reality's picture

To be fair I'll concede to your argument, except, all that DATA input is transform into patterns over and over again, hence trading patterns. So charts do work. I don't give a shit whether you believe me or not.  

gordengeko's picture

Ok ok we can have some agreeance.lol  Yes that's all the whole entire fiat/ponzi/casino/market is.  All digits, data, patterns, stats which are all on a computer screen thrown and interwoven in a 'Matrix".  Nothing is real.

 

Terminus C's picture

Nobody feeds the news... they headline scan the internet.  Everything is digital now and often comes out in digital format before it hits the tee vee.

It is you whom I feel for, your thinking is still in the 20th century.

cowdiddly's picture

Exactly my brutha. Technical analysis is a backwards looking metric in a forward looking market. Kinda like deer tracks, Does not tell yo where the deer are, only where they have been. When you go to the store and see bread is on sale for 69 cents, do you break out a ruler and start studing a chart and drawing lines? No, you buy the loaf because you know its on sale. Same with 39 dollar silver. Just by it, your eyes can see its 30% off. I no a lot of chart heads are going to love the above statements. They have been forcefed the bait with the media for 20 years and swallowed the hook like the sucker fish that they are. Chicken entrails mumbo jumbo sold to them by the very same banksters that are stealing their money.

Sean7k's picture

And the world screams,"save us from these fiat currencies and the debt they represent". Cue the forgotten Incredibles, gold and silver. They take care of evil old school. 

Silverhog's picture

I love those predictions "Silver may reach $80 in 3-5 years" Does anybody in their right mind think this Titanic debt ridden economy will make it to 3 years never mind 5. Who the hell can predict 2 months from now with any certainly. I guess when your getting paid to say this crap you have to show up for work.  

cossack55's picture

I rather like Mike Ruppert's take on collapse by August when the 2Q earnings show the truth.

Re-Discovery's picture

Truth?  I thought we depleted that commodity.

Sudden Debt's picture

I've heard that on mars, the soil contains traces of it.

But it's not going to be cheap to mine it because the soil also contains 99,9% HOPE. The most toxic commodity in the world... it makes you halucinate and spend money like there's no tomorrow. And they still don't have a cure for it....

 

 

Sudden Debt's picture

I predict the US will have a fool for a president in 2012. Also in 2016 and 2020 and 2024 and 2028 and 2032 and 2036....

 

Wanna a make a long therm bet for a trillion dollars? Or a cola? Whatever is worth most in 2036.

Sudden Debt's picture

INCREASE MARGINS SO THEY CAN BUY ALL THE REST OF THE WORLD RESERVES FOR PEANUTS!!!

 

Those people deserve it all. I still wonder why Bernakovitch doesn't just give it to them for free...

 

 

 

reload's picture

Bla bla...more `only temporary` inflation from the BOE. They already ran out of credibility. Bottom line is that PM`s and othe comods keep looking good while the CB`s keep the printers spooled up. Money in the bank or in bonds is just getting an inflation haircut anyway. And who wants to be in `the stockmarket`? not me, although I do enjoy Robo`s charts.

gall batter's picture

i have no debt but i know and care about so many people who do.  i've tried to convince them to get out of debt, stop using their cards, etc.  all to no avail.  i've quit talking about it.  feel like i spend most of my energy worrying.  am still thinking of the people of japan, however my son's college roommate is japanese and lives in tokyo.  my son emailed him to be sure he was okay.  japanese roomy was nonchalant.  more interested in corresponding about sports.  

Sudden Debt's picture

you should send his roommate some beans and tell him it are magic beans which will protect them against gamma radiation.

US => EXPORTS HOPE TO THE WORLD!!

 

I think Michael Jackson wrote a song about it....

 

gall batter's picture

just saw this about high levels of radiation outside the exclusion zones:

http://www.youtube.com/watch?v=Dxbm7iJTT8U

Sudden Debt's picture

Just imagine paper silver would crash to 1$ and some idiots would sell bullions for 2$ per ounce :)

I think I'd morgage my house with whatever loans the banks offer :)

 

PaperBear's picture

Will the last person to leave the fiat debt currency building please turn the lights off.

I have hung up a sign on the doors saying 'TOXIC FINANCIAL SITE - KEEP OUT' so as to ward off the unsuspecting.