Gold was lower in most currencies except the euro this morning
as euro weakness has kept gold close to record nominal highs in
euros. Gold is 2.7%, 3.3% and 4% higher in dollars, pounds and
euros for the week and looks set to close higher and near nominal
highs in all currencies.
XAU-USD Exchange Rate
Futures markets are expected to see thin trade this morning
ahead of the key U.S. employment report. It is expected to show
improvement in the labor market but if the number disappoints
gold should receive a safe haven bid. A good number could see
gold ease in the short term but the long term fundamentals remain
sound due to robust global and particularly Asian demand.
Cross Currency Rates
While all the focus will be on the US jobs market today, the
more important long term factor of robust global and massive
Asian demand should continue to support gold around the $1,500/oz
level and silver around the $36/oz level.
Bloomberg reports this morning that gold and silver imports
into India, the world's largest importers of bullion, rose 200%
to $17.7 billion in the 2nd Quarter of 2011 (April-June).
XAU-EUR Exchange Rate
Commodity Online reports that India's state-owned trading
company-Minerals and Metals Trading Corporation (
)-said on Thursday that it would import 350 tons of gold and
1,200 tons of silver in 2011-12 as demand for the precious metals
is rising fast. The company almost doubled its import of gold at
45 tonnes during the April-June quarter this year compared to the
same period last year.
Silver prices have remained robust in India thanks to strong
demand and short supply in the global market. The demand for
silver is rising as buyers expect better returns and it is much
cheaper than gold which has become harder for lower income
Indians to buy.
China's $70 Billion Fund Managers Protecting Wealth
China's increasingly important asset managers, who have been
approved to raise $70 billion for allocation overseas, are
seeking additional funds to invest in gold and precious metals as
soaring inflation spurs interest in alternative assets as a way
to protect wealth, according to Bloomberg.
Five companies have been approved this year to raise cash for
investment in precious metals products overseas via the qualified
domestic institutional investors programme. Twenty more
applications for resources and commodity investment are
Gold demand in China is expected to continue rising as economic
growth boosts wealth and inflation rising at the fastest pace in
almost three years drives demand for a safe
Investment demand more than doubled in the first quarter to
90.9 metric tons as the nation overtook India to become the
largest market for coins and bars, the World Gold Council said in
Exchange traded funds, which trade like shares, enable
investors to buy precious metal derivatives without taking
physical delivery. China does not have gold ETFs yet and
investors and savers usually choose to buy physical gold coins
Chinese speculators, a fast growing and increasingly voracious
class, buy and sell contracts traded on the Shanghai Gold
Exchange and the Shanghai Futures Exchange.
Consumer prices in China advanced 5.5 percent in May, the most
since July 2008 and exceeding the government's target of 4
percent every month this year. The People's Bank of China
yesterday said it would raise interest rates for the third time
this year to curb inflation.
XAU-British Pound Exchange Rate
Massive and Continuing Demand in China & India Not
Covered by Media
One Gold ATM in London Is
One of the most important continuing factors in the gold and
silver markets in recent months has been the massive increase in
demand seen in both India and China.
The most expensive five words in the investment lexicon are
"this time it is different". However, the huge and increasing
demand from India and particularly China is a genuine "game
Chinese people could not own gold until 2003 when Chairman
Mao's gold ownership ban ended with the liberalization of the
Chinese gold market.
This huge and still growing demand has been reported in the
specialist financial press. But it has not been covered in the
non specialist financial media and the majority of investors in
the world are completely unaware of it.
As are ill informed 'analysts' who either are not aware of the
facts and figures or choose to completely ignore them.
In recent weeks there has been a very significant increase in
demand for gold and silver bullion from the more than 2 billion
people In India and China. This has not been reported and covered
in most of the western media.
Indeed it is curious that the opening of a gold vending
machine in London is deemed to be far more newsworthy than the
cultural affinity and increasing demand for gold by people
ravaged by inflation in India, China and the rest of Asia - the
mass of humanity.
Global Supply and Peak Gold
Meanwhile, growing global demand is being confronted with anemic
supply and the real possibility of peak gold.
Kingsgate Consolidated MD Gavin Thomas, an experienced miner,
believes that the peak of gold mining has been reached. He
told Bloomberg that gold production had not increased in spite of
the price of gold nearly tripling over the 10 years to 2011.
Demand was increasing, but the grade of gold mined and the number
of large discoveries was falling.
Simplistic and superficial analysis of the gold market
continues despite the availability of much excellent research
clearly showing why gold and silver are safe haven assets and
very important diversifications in these uncertain times.