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Silver Demand Surges In India While Gold Premiums at $35/oz In China

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Today’s AM fix was USD 1,232.00, EUR 945.51 and GBP 806.07 per ounce. 
Yesterday’s AM fix was USD 1,229.00, EUR 942.85 and GBP 799.97 per ounce.

Gold fell $53.20 or 4.17% yesterday and closed at $1,224.10/oz. Silver slid to a low of $18.421 and finished down 5.46%.

Must Attend Webinar: "Has Gold's Bubble Burst Or Is This Another Buying opportunity?"


Cross Currency Table – (Bloomberg)

Gold inched upward today after investors and speculators viewed the recent price falls as excessive and some began to dip their toes back into the market.

Gold tumbled to its lowest level in nearly three years yesterday after concentrated selling in electronic trading on the COMEX, less liquid Asian trading Tuesday night that led to stop loss orders being triggered and further price falls.

Bullion dealers, mints and refineries have seen a small increase in clients liquidating physical bullion in June but nothing that would justify the scale of price weakness seen. There has been a small bit of panic selling which suggests capitulation and the market may be close to exhausting itself to the downside. 

There are also many retail and wealthy buyers looking to accumulate at these lower prices – both in western markets and in Asia.

Physical demand remains robust internationally especially in China and India where premiums are moving higher again.  In China, physical demand remains robust and premiums remain at elevated levels near $35/oz. In India, premiums charged shot to $20 an ounce overnight from $8-$10 on Tuesday.

Demand in both countries and in Asia in general is set to continue due to real and valid concerns about currency devaluations.

Despite futures prices falling in India to their lowest in more than a month, gold premiums doubled as dealers struggled to meet surging demand after a ban on bullion consignment imports.

India, the world's biggest buyer of gold, now requires importers to pay upfront for inventory, making it difficult for smaller jewellers with lower working capital to source supplies. The government also raised the import duty to 8% in May. India has ruled out a blanket ban on gold imports or any increase in customs duty from the current 8%.

Attempts to prevent Indians from buying gold are contributing to them buying poor man’s gold, or silver. There has been a massive increase in silver demand in India in recent months and the government's meddling and controls in the gold market will likely led to even more demand for silver.

While India imported 1,900 tonnes of silver in 2012, in the first five months of 2013 alone, imports have touched 2,400 tonnes.


Silver in USD, 5 Year – (GoldCore)

According to industry estimates, silver imports during the January-March quarter stood at 760 tonnes. Imports shot up 720 tonnes in April alone, and in May, they further swelled by 920 tonnes.

Gold Coin and Bar Sale Controls Create Deep Concern In India 
Gold buyers in India are concerned after the India Gems & Jewellery Trade Federation asked its 42,000 member companies to stop selling gold coins and bars from July 1. The Indian government is believed to have put pressure on the powerful trade group in order to curtail India’s massive demand for gold.


Gold in Indian Rupees (2008 to 2013)

Indians are seeking ways to circumvent any prohibition and acquire gold which is the most popular form of saving in India. Many are concerned about the status of gold savings schemes that they had invested in to accumulate gold coins for future use.

The All India Gems and Jewellery Trade Federation, which represents 90% of jewellers, had come out with an open call on Monday to its members to stop selling gold bars and coins. 

This has triggered a lot of concerns among consumers who have put their money in a few gold savings schemes – some of which were launched during the recent crash of the gold price in April.

Assuaging fears, president of the Madras Jewellers and Diamond Merchants’ Association Jayantilal Challani said, “Though we have asked our members to stop sales of coins by July 1, all the schemes will continue and consumers will get the promised quantity of gold, but may be in the form of jewellery of their choice.”

However, this has caused a lot of concern among the public as they stand to lose out due to the very high premiums on jewellery versus those on coins and bars. There are concerns that gold dealers will use this as an opportunity to sell much more expensive jewellery.

Another unintended consequence of the Indian government’s extremely anti gold policies will be the growth of smuggling and a black market in gold. 

Ironically, it may also lead to Indian people, particularly the wealthier middle classes and high net worth Indians to store their bullion in safe jurisdictions which treat gold favourably such as Hong Kong, Singapore and Zurich. In a worst case scenario, it could lead to capital flight.

NEWS
Gold Rebounds With Silver From Lowest Levels Since August 2010 - Bloomberg

Gold inches up on weak U.S. GDP, sits near 3-year low - Reuters

Plunge at the Start of Trading in Asia Triggered Automatic Sell Orders, Creating a 'Domino Effect' – Wall Street Journal

New EU rules will force 'wealthy' savers to share the costs of future bank failures - BBC

COMMENTARY
Video: Bull Case For Gold Has Not Changed: Jim Rickards – Yahoo Finance

Gold Drops Below Its Average Cash Cost – Zero Hedge

Gold Could Fall To $1,000 If It Breaks Through Key Resistance - Forbes

Video: Gold market rigging 'wouldn't surprise me a bit' - CNBC

Venezuela on the Brink of Hyperinflation – Ed Dolan’s Econ Blog

Gold Correction In 1975/76 vs 2012/13 – The Short Side of Long

For breaking news and commentary on financial markets and gold, follow us onTwitter.

 


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Thu, 06/27/2013 - 15:15 | Link to Comment Colonel Jessup
Colonel Jessup's picture

This is what I find amazing - how quickly people lose sight of the fact that gold has been money for 6,000 years. And those that watched the CBC documentary "The Secret World of Gold" can learn what most stackers and ZHers know - gold is the only store of value recognized by governments worldwide. Do you think France & the UK took all those precautions to keep their physical away from the advancing Nazis for fun? Do you think they stashed their paper money in the same fashion? of course not.

J.P. Morgan spoke the truth in his congressional testimony when he stated "only gold is money, nothing else".

BTFD folks - and don't be the weak hands. The central banks globally are accumulating physical - don't fall for the slight of hand.

Thu, 06/27/2013 - 14:53 | Link to Comment bill1102inf
bill1102inf's picture

If you own phys at 1900/1800/1700/1600/1500 etc. you have nothing to worry about.  As long as you never actually need to use it to buy anything.

Thu, 06/27/2013 - 11:56 | Link to Comment MrBoompi
MrBoompi's picture

I'm sure when gold is at $250 and silver's at $5, we might see some demand again.  Supply?  Well, that's another issue entirely.

Fuck derivatives.

Thu, 06/27/2013 - 11:42 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 hey, go to india and sell that 1900 gold for 35 more than you can get here.

Thu, 06/27/2013 - 13:06 | Link to Comment Vooter
Vooter's picture

But why? Most smart people buy bullion so that they HAVE BULLION. Why would they then turn around and sell it on a price drop? If you bought a boat because you enjoy boating, and boat prices subsequently dropped, would you sell the boat? Why?

Thu, 06/27/2013 - 11:24 | Link to Comment Fred123
Fred123's picture

Meanwhile, the robust demand is still being met by enough supply. In the local gold shops demand is not as strong as it was a few weeks ago during the first sharp move down. I suspect more down to come.

Thu, 06/27/2013 - 15:33 | Link to Comment DosZap
DosZap's picture

Meanwhile, the robust demand is still being met by enough supply. In the local gold shops demand is not as strong as it was a few weeks ago during the first sharp move down. I suspect more down to come.

As WE all know there is ZERO reason for this to be happening,IF the mkt was data driven,I FEAR that Odumpster may drive it into the crapper, and issue a EO for turn in ON the cheap.

Thu, 06/27/2013 - 10:33 | Link to Comment Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

This confirmation bias is not making me feel any better about my gold n silver

Thu, 06/27/2013 - 11:20 | Link to Comment conork
conork's picture

The "premium" is higher because the dealers bought at a higher rate than the current spot, as they empty their invenory the price and spread will reduce

Thu, 06/27/2013 - 11:02 | Link to Comment Silveramada
Silveramada's picture

is 18 the support we were looking for? http://zysites.com/silververitas/

Thu, 06/27/2013 - 13:05 | Link to Comment DeadFred
DeadFred's picture

Gold is about 4% above the 68% retrace of its rise from 2008. I would be a bit surprised if it came this far down and doesn't touch such an obvious target. Silver tends to drop more so a 6% drop is about $17.50

Thu, 06/27/2013 - 10:40 | Link to Comment SWCroaker
SWCroaker's picture

I keep telling myself: "Rule your mind".  To be my own judge of value, and worth.   It's an evolutionary advantage humans can choose to employ, or not.   The external world is noisy, temporal, and screeches with distraction.  I am holding fast to what I know; there are enough others out there, figuratively lashed to their own masts, to take comfort in solidarity.

Thu, 06/27/2013 - 12:28 | Link to Comment GoinFawr
GoinFawr's picture

Every time just like the last
On her ship tied to the mast
To distant lands
Takes both my hands
Never a frown with golden brown

Thu, 06/27/2013 - 10:39 | Link to Comment Toolshed
Toolshed's picture

If it's paper gold and silver - sell that worthless garbage. If it's physical and in your possesion - you have nothing to worry about. Unless you consider physical gold and silver to be an investment - which is just silly. It is insurance.

Thu, 06/27/2013 - 11:01 | Link to Comment Deo vindice
Deo vindice's picture

I think a great number of bullion buyers bought so for an investment and view their holdings in that light. If so, of course there is concern on their part. What is needed is a change of attitude towards their holdings to see it as a preservative of wealth, not a creation of wealth.

Thu, 06/27/2013 - 15:00 | Link to Comment cornedmutton
cornedmutton's picture

+100,000

I just finished speaking with someone at the office this morning whom expressed a dis-interest in gold and/or silver in that, yes, you can buy today with the same amount of PM what you could have bought before (as you are largely insulated from the effects of monetary inflation); however, you couldn't buy MOAR!!!!

MOAAAAARRRR!!!!

Thu, 06/27/2013 - 14:19 | Link to Comment SAT 800
SAT 800's picture

At any such time; and in any such circumstance that Gold and Silver are needed to function as "insurance"; they will also function as creators of wealth. there is no scenario available for them to "insure against" that does not involve mass panic and extreme events in financial markets; including huge losses on the part of conventional investors. If you end up selling your Silver bullion for new world credits; you'll get a lot of them for it. Even if this is done on the grey market.

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