World Gold Council

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Editor’s Note: The tragic events in Paris, terrorism and war throughout the world, show geopolitical risk remains high.  These risks will likely impact economies and financial markets and will see continuing safe haven demand for gold. “The future is uncertain and gold is the most effective insurance against that.”

'Gold' Spikes Off 2015 Lows As Gold Coin Sales Surge To Highest Since Financial Crisis

With the 'paper' price of gold are a somewhat unprecedented barrage of selling currently (down 9 of the last 11 days) to 4-month lows, one could be forgiven for thinking that demand for the precious metal is dropping. However, as almost every nation in the world (ex US) is devaluing their currency, The World Gold Council reports that physical gold demand has risen dramatically with US gold Eagle coin sales at the highest levels since the financial crisis.

The Real Reason Belgium Sold 1,098 Tonnes Of Gold

As part of a global investigation into how much physical gold central banks have stored at what location and how much is leased out, we submitted the local equivalent of a Freedom Of Information Act (FOIA) request at the central bank of Belgium (NBB) to obtain information about the amount of Belgian official gold reserves, the exact location of all gold bars, the type of gold accounts NBB holds at the Bank Of England (BOE) and how much is leased out and to whom. The outcome of this research was not what we had expected...

Summarizing The "Black Monday" Carnage So Far

We warned on Friday, after last week's China rout, that the market is getting ahead of itself with its expectation of a RRR-cut by China as large as 100 bps. "The risk is that there isn't one." We were spot on, because not only was there no RRR cut, but Chinese stocks plunged, with the composite tumbling as much a 9% at one point, the most since 1996 when it dropped 9.4% in a single session. The session, as profile overnight was brutal, with about 2000 stocks trading by the -10% limit down, and other markets not doing any better: CSI 300 -8.8%, ChiNext -8.1%, Shenzhen Composite -7.7%. This was the biggest Chinese rout since 2007.

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Clearly, Russia puts great strategic importance on its gold reserves. Both President Putin and Prime Minister Medvedev have been photographed on  numerous occasions holding gold bars and coins as a display of economic stability and strength. Since early 2007 Russia has sold gold only twice, in 2012, in small amounts.

Gold And The Silver Stand-Off: Is The Selling Of Paper Gold And Silver Finally Ending?

In a January 2013 report “Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCs”, the Reserve Bank of India estimated that the ratio of paper gold trading to physical gold trading is 92:1. That is a lot of unbacked paper gold instruments. This has almost entirely separated the “gold price”, such as it is (the clearing price for vast volumes of paper gold “representations” with a fractional backing) from the fundamental supply and demand dynamics for actual physical gold bullion.

As Mr L. famously quipped. "Ever get the feeling you’ve been cheated?"

In India, Gold Is Not Only Money But Now Pays Interest

Despite Bernanke's previous protestations that "gold is not money... it is tradition," in an effort to mobilise 20,000 tonnes of unproductive gold owned by Indian households into cash, Reuters reports that - after unveiling the gold monetisation scheme on Feb 28th, India's FinMin Arun Jaitley released bank guidelines overnight on interest rates, reserve and liquidity ratios. The scheme "allows gold to become a dynamic, fungible asset in the hands of gold savers," offering incentives (interest payable in gold) to convince households, who sometimes have little faith in financial institutions, to break the tradition and hand over gold passed down the generations.

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With each passing year the currency fell in value to ever more absurd depths until by November 1923 an ounce of gold - which had cost 170 Marks only five years previously - was trading at 87,000,000,000,000 Marks per ounce. Silver saw similar price gains (see chart) - or rather to put it more accurately silver too remained a store of value and maintained purchasing power as the currency collapsed.

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While sentiment towards gold in the West is abysmal - even as gold languishes at record lows when adjusted for inflation - Asian demand remains insatiable. It would be wise for investors to inform themselves as to why this should be so. Demand for gold in Asia is often written off by Westerners as an irrational impulse of uneducated Asian peasant farmers and workers. 

Gold Jumps After India Reveals Import Surge

Gold prices jumped overnight on initial rumors and again in the last hour as Indian officials note that March Gold imports surged to 125 tons (more than double last March's 60 tons). As Reuters reports, Gold imports in the fiscal year 2014/15 ended March 31 jumped to 900 tonnes, up 36% from a year ago. Surging imports are helped by a falling price since the beginning of the year combined with the relaxation of government (capital control) import restrictions, and despite further efforts by the government to "monetize gold."