gold backed savings and super accs in china!

Hey IDC Holders

Again, as economists, we need to keep an eye on the big picture!

While we wait for the Trading Halt to be lifted after this CR, we are starting to see a significant shift in the global monetary system with China announcing Gold Backed Savings Accounts. Gold backed savings accounts are expected to spread globally over time. The Chinese are also starting to put away Superannuation savings, but in Gold Bullion!

The US Federal Reserve is expected to announce QEIII either this month or next month and the ECB's stimulus measures in the next 24-48 hours, we should remember all the wealth in the emerging markets China and India and their soon to be significant positive impact on the gold price.

The Industrial and Commerce Bank of China has only recently activated gold backed bank accounts, this is a structural shift in terms of cash held in banks worldwide and how it is protected in terms of value. We can expect to see more banks worldwide back their own cash at bank with gold bullion.

We can expect to see a significant lift in the gold price from its current level in the coming weeks and months.

What Mr Promnitz's team is finding at Mt Kare is a potential Porgera twin massive gold and silver deposit, if we see our large institutional investors dip into their pockets again for more IDC shares, you can understand why! :)

Cheers Nectar

Gold Buyers Eye Draghi And Bernanke, But Forget China And India's Voracious Appetite


Retail demand for gold is huge, while half of all the gold ever mined is in the form of jewelry - Image credit: AFP/Getty Images via @daylife

Gold has regained its luster as of last week, when ECB chief Mario Draghi told markets “believe me,” anything will be done to the save the euro.  Bullishness has been fed by the believe that Draghi has put himself in a position where he must deliver bold monetary action, which comes coupled with a Federal Reserve meeting where Bernanke & Co. must face a slowing U.S. economy.

The yellow metal rallied more than 2% last week, breaking the $1,620 an ounce mark last Friday.  Bullion was stable amid thin markets and modest profit taking, according to VTB Capital; on Tuesday, gold was down slightly, having shed 0.4% to $1,617.20 an ounce by the closing bell.


Draghi Readies ECB Firepower: Central Bank May Buy Spanish, Italian Bonds
Agustino Fontevecc

Spain Will Lose Market Access In 3 To 5 Weeks Unless Policymakers Act
Agustino Fontevecchia
Forbes Staff
Gold has traded sideways this year, explained the World Gold Council’s head of investment research, Juan Carlos Artigas, but fundamentals point to a better story.  Artigas told Forbes that global central banks, which have recently become net buyers of the yellow metal after many years supplying the market, are on track to buy at least as much as they purchased last year, when they acquired more than 450 tons of gold.

While “physical players [have been] absent due to elevated prices and a demand lull in Asia,” global central banks bought 80 tons of physical metal in the first quarter, and will probably continue buying through the year.  Speculative buyers have been more cautious, Artigas explained, as they have been playing gold in tandem with the U.S. dollar, which in turn has strengthened as a consequence of a weakening global economy and jitters in Europe.

That could change this week if markets get what they want.  The violent resurgence of the European sovereign debt crisis, with Spanish bond yields stabilizing at one point well above 7%, has put the onus on the ECB, and thus on Mario Draghi.  Economists at Nomura and Barclays suggest the ECB will engage in a multi-pronged approach that could include sovereign bond purchases by the EFSF and the ESM on primary markets, coupled with the resumption of the SMP secondary market purchases.  The goal of this policy would be to push down Spanish and Italian borrowing costs.

In the U.S., an FOMC meeting will conclude on Wednesday and recent Fed chatter suggests Bernanke is seriously mulling another round of monetary stimulus.  The big question here is timing, when will QE3 come?  Dennis Gartman, of the eponymous newsletter, suggests the Fed may be on hold until after the presidential elections in order to remain apolitical.  Others, like Fed-watcher Jon Hilsenrath of the Wall Street Journal, suggest the FOMC could be closer to action and will unleash further stimulus either on Wednesday or in the following meeting, scheduled for September 12 and 13.

Artigas, who wouldn’t comment on the possibility of QE3, did add that gold market fundamentals point toward strength going forward.   While acknowledging China and India’s economic slowdown, he highlighted that China, the world’s largest producer and second largest consumer of the yellow metal, will still grow above 7% this year.

“There are roughly 171,000 tons of gold on the world’s surface,” Artigas explained, “worth roughly $9 trillion.”  The researcher noted that half of that was in jewelry form, about 18% in the hands of central banks, and about 19% was held by private investors.  Artigas explained that while the U.S. is a big market, it is relatively unimportant in a global market where gold has practically become a currency.


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In China, for example, the largest commercial bank in the world (the Industrial and Commercial Bank of China) has launched gold backed savings accounts, Artigas explained.  In a few years, there are already more than 2 million Chinese allocating a certain percentage of their salaries to these gold savings accounts, which work in similar fashion to a 401(k) plan in the U.S.

Artigas also spoke of India’s voracious demand for physical gold.  “Private individuals hold about 18,000 tons of gold in India,” he said.  The World Gold Council has been working with the “post program” in which post offices, which have become a key center for administrative life across all of India, sell certified bars and coins.  In a country where investment in gold is both a cultural and religious matter, buying from a guaranteed source is something buyers will pay a premium for.
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The major gold-backed exchange traded fund, GLD, has also seen an explosion of interest since coming to market in the mid-2000s.  While the price of gold, and the GLD ETF, have surged over the last couple of years, investors have been more skeptical of major gold miners like Barrick Gold, Newmont Mines, and Kinross Gold, though.

Regardless, after a relatively flat 2012, gold could be about to resume its decade-long bull run.  While markets tend to take a short-term view, and prices will react to Draghi and Bernanke over the coming days, the longer-term story does appear solid, at least in the eyes of the World Gold Council.