Posts Tagged ‘Dubai’
Speculator Gold Gross Shorts At All Time Highs

Premia for gold bars (physical over paper) rallied to their highest since late-2008 according to SocGen, even as ‘professional’ investors look to position the exact other way. The combined short positions of futures and options speculators in COMEX gold is now at a record high for the third week (having surged from 4.3 million ounces in late September to a a stunning 13.9 million ounces short now. At the same time, Gold ETFs have only seen one in-flow day in the last 34 days. (Read more…) It seems investors are well-and-truly on one side of this boat – even as price continues to buck the supposed structural weakness.

COMEX Gross Short positions…

 

ETF Holdings…

 

but price is now ignoring the flows (despite the protestations of some in the media)…

 

 

Via SocGen:

Shortage of metal drives premium higher as customers told to wait for delivery

 

While many professional investors looked to exit the market, the opposite response in the physical market to this recent price fall has also been dramatic. The price drop ignited a buying frenzy in Asia and other parts of the world, leading to a shortage of gold bars and coins in Hong Kong, Singapore and Tokyo, and helped the metal stage a rebound. The sudden demand surge caught many traders off guard and sent premia for the yellow metal soaring.

 

The US Mint had to suspend sales of certain coins as buying ramped up. The Mint sold an estimated 210,000 ounces of American Eagle gold coins in April; almost three and a half times more than the 62,000 ounces it sold in March. Similarly, the Perth Mint in Australia went into overdrive, working around the clock to keep up with an intensity of orders not seen since the 2008 global financial crisis.

 

Premia for gold bars rallied to their highest since late-2008 in Singapore and touched an 18-month peak in Hong Kong after a spate of physical buying led to supply constraints. Premia in Hong Kong touched $4/oz while in the Middle East there have been reports that both Istanbul and Dubai ran short of investment bars, with wholesalers paying a premium of $6-$9/oz for kilobars.

 

Retail gold sales tripled across China on April 15-16 after the rout, according to the China Gold Association. On the Shanghai Gold Exchange (SGE), daily physical volumes averaged 12.9 tonnes from the start of 2013 through to the close of business on 10th April. During this time the average premium on the SGE over loco London metal was just over $13/oz, itself a substantial increase from the 2012 average premium of less than $7/oz. While in contrast, during the price drop between 11th and 26th April, physical volume on the SGE averaged 32.6 tonnes daily, with an average premium of $20.4 over the London fix.

 

Turning to India, investment demand (albeit boosted by the imminence of the Akshaya Tritiya festival) has been significant with premia surging to a peak of $30/oz briefly before settling back to $8/oz in recent days. Imports exceeded 100 tonnes in April and looks set to repeat the performance this month ahead of restrictions proposed by Reserve Bank of India that will likely ban or at least restrict bullion imports on a consignment basis.

 

While investment bar and coin premia has eased from the frantic highs, they remain at elevated levels in several markets, with robust demand surging at every retracement in price. Mints and refineries continue to struggle to deliver supply chain orders with up to a one-month wait for delivery. For now though, there appears to be a growing disconnect between paper and real gold.

Charts: Bloomberg

    



 
China’s Consumption of Gold and Acquisition of Gold Mines Continues

 

Today’s AM fix was USD 1,429.75, EUR 1,102.52 and GBP 931. (Read more…)19 per ounce.  
Friday’s AM fix was USD 1,449.25, EUR 1,114.12 and GBP 941.62 per ounce. 


Cross Currency Table – (Bloomberg)

Gold fell $12.90 or -0.89% on Friday to $1,443.30/oz and silver finished with a gain of 0.42%. Gold and silver both traded down for the week at -1.76% and -1.25%.

The downward pressure on the gold price emanated from Comex where gold futures were off 1.9%. 

Driving the sentiment was the report that U.S. jobless benefits decreased to their lowest rate since 2007. Philadelphia Fed President Charles Plosser forecasted that day unemployment will drop to 7% by December 2013 and he favours reducing the Fed’s $85 billion monthly bond purchases next month. Plosser however has no vote on Fed policy this year.

While hedge funds are seeing outflows of $20.8 billion from gold funds this year, BlackRock Inc. the world’ biggest money manager is still bullish, reported Bloomberg.


Gold in Dollars, 1 Year – (Bloomberg)

Asian countries are seeing unprecedented demand for the yellow metal after the dip in prices in April.

India imported $7.5 billion of gold bullion in the last month up from $3.1 billion a year earlier. The country’s trade deficit widened 70% with the increase in gold and silver imports.


Gold in Euros, 1 Year – (Bloomberg)

Analysts at Sprott Group highlight that China is using its gold import data to elevate import statistics even though the precious metal should not be classified with imports since they are not used for “goods and services” but rather primarily as investments.

The golden boost to the imports data has led some analysts to conclude that the Chinese manufacturing sector is strong. According to the Bejing Daily Newspaper, Chinese housewives or “aunties” have purchased 300 tons of the yellow metal in the past three weeks amounting in nearly $16 billion.  The impact of the run on physical gold in China may have a significant effect on import statistics.

Recently, China National Gold, a state-owned miner, was in talks to purchase Barrick Gold’s 74% stake in African Barrick, a major gold producer in Tanzania.

Although the deal has been shelved it shows China’s desire to acquire more mines. The Chinese purchased Norton Gold Fields in Australia last year for $240 million and in mid April bid for Kalgoorlie Mining Co.  Even with the price drop the Chinese saw the price for Barrick as too steep.  

China is the world’s largest producer of gold.

NEWS
Gold down 1 pct to near 2-week low on dollar - Reuters 

Gold Drops for Third Day as Dollar’s Strength Curbs ETP Holdings - Bloomberg

Gold Bears Pull $20.8 Billion as BlackRock Says Buy: Commodities - Bloomberg

Amplats scales back South African job cuts to 6,000 – The Telegraph

India trade deficit jumps over 70% on gold imports – Market Watch

 

COMMENTARY
Precious Metals Lose Luster for Investors – Dubai Chronicle

THE BIG FALLACY: Silver Trading More Like A Base Metal - SilverSeek.com 

Eric Sprott: The Golden Answer To Chinese Import Data – Zero Hedge

African Barrick Gold’s China talks end – The Financial Times

A Top Contender at the Fed Faces Test Over Easy Money – Wall Street Journal

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


 

    



 
Two People Dead From SARS-Like Virus In Saudi Arabia, Two More Infected In France

While the H7N9 birdflu epidemic is still raging in China, with 4 news deaths bringing the total confirmed death toll to 31 (and who knows how many unconfirmed) on 129 infections leading to a mortality rate that is simply staggering, even if the mordibity rate is largely a function of Chinese data censorship, Europe and the middle east may be set for a viral breakout of their own.

First is the case of Saudi Arabia, where two more people have died from novel coronavirus, a new strain of the virus similar to the one that caused SARS, in an outbreak in al-Ahsa region of Saudi Arabia, the deputy health minister for public health said on Sunday. Ziad Memish said that in the latest cluster of infections, 15 cases had been confirmed, and nine of those patients had died. (Read more…)

As a reminder, the slow burning threat of a viral epidemic in Saudi Arabia is not new. It was back in September that the WSJ wrote about a “Mysterious Virus” that had emerged in the Middle East.

“Global health authorities are hunting for cases of a mysterious viral respiratory illness that killed at least one person in Saudi Arabia and left another who traveled there in intensive care in a U.K. hospital. Health officials said the source of the virus infecting both is unknown, though they have identified it as a coronavirus, part of a large family of viruses that in most cases cause common colds, but also have caused SARS. With no indication yet whether the new virus is like SARS, which spread from person to person, officials are tracking this new virus closely.”

Some eight months later it seems the neither the epidemic, nor the source, or host, have been identified. As to what the real state of affairs in the Kingdom is, like in China, one must rely on the local media for truthful reporting – something which as Fukushima taught everyone, can be a bitter pill to swallow for some, or most, governments.

What is more troubling is that with the lack of accurate newsflow out of Saudi Arabia, come unforeseen consequences, such as the eventual spread of the virus from its localized region to a new area, such as Europe or in this case France, to start.

Reuters report that a “second diagnosis of the new SARS-like coronavirus has been confirmed in France, the Health Ministry said on Sunday, in what appeared to be a case of human-to-human transmission. The new infection was found in a 50-year-old man who had shared a hospital room with France’s only other known sufferer, the ministry said in a statement.”

More from Reuters:

Health experts are concerned about clusters of the new coronavirus strain, nCoV, which was first spotted in the Gulf and has spread to France, Britain and Germany.

 

There has so far been little evidence of direct and sustained human-to-human transmission of nCoV – in contrast to the pattern seen in the related Severe Acute Respiratory Syndrome (SARS) virus, which killed 775 people in 2003.

 

The first nCoV case in France, confirmed on May 8, is a 65-year-old man who fell ill after returning from Dubai late last month.

 

Both French patients are in hospital in the northern city of Lille, where the younger man was transferred to intensive care on Sunday as his breathing deteriorated.

 

His case suggests that airborne transmission of the virus is possible, though still unusual, said Professor Benoit Guery, head of the Lille hospital’s infectious diseases unit.

Not unexpectedly, the government’s first response is the usual one: don’t panic.

“Fortunately, this remains a virus that is not easily transmitted,” Guery told the BFMTV channel. “I don’t think the public should be concerned – it has been out there for a year and we have 34 cases globally.”

 

He said the second French case had occurred because the first patient presented “quite atypical” symptoms and had not been isolated immediately.

If this sounds suspiciously familiar to what the Chinese authorities said in 2003 when placating the population before the first SARS breakout became a pandemic infecting over 8000 and killing nearly 800, it’s because it is.

As for the current nCoV or whatever it ends up being branded, breakout, the actual R0 and epidemic details are largely irrelevant, especially in the beginning: all that needs to happen is for several reported cases to be announced in France, and elsewhere in Europe, for the fear of the worst case scenario to bring society to a halt, if a temporary one.

Because if anyone the European authorities have shown beyond a reasonable doubt, and in fact have said so on paper, is that when it becomes serious, you have to lie.

Logically, the question on everyone’s mind now will be how soon until it becomes serious?

* * *

And sure enough, moments ago the World Health Organization chimed in, confirming it was on the edge of becoming quite serious. From the WHO twitter account:

  • Novel coronavirus is a new infection and there are also many gaps in our knowledge that will inevitably take time to fill in. #nCoV
  • Novel coronavirus is caused by a virus from coronaviruses group. Another from the group is SARS, however #nCoV is NOT SARS
  • Novel coronavirus: We don’t know where this virus lives. We don’t know how often people might develop mild disease. We aren’t sure why #nCoV
  • Things we also don’t understand re: novel coronavirus: How are people getting infected? From animals? Contaminated surfaces? People? #nCoV
  • Novel coronavirus clusters seen in countries increasingly support the hypothesis that the virus can transmit H2H with close contacts #nCoV
  • Novel coronavirus person-to-person transmission has remained limited to some small clusters so far #nCoV
  • Novel coronavirus: Countries need to increase surveillance, as well as awareness among all people, particularly health care workers #nCoV
  • Novel coronavirus: Critical for countries to report cases, related info urgently to WHO as required by the Intl Health Regulations #nCoV

Lots of unknowns. Here is what is known: