gold goodies

From John Brimlow as reported in Le Met Cafe:


More gold goodies from John Brimelow … from late last night…

GJ: A European CB Buyer?

Tuesday, March 31, 2009

Indian ex-duty premiums: AM ($4.28) PM ($4.11) with world gold at $919 and $916.80. Below legal import point, but of course narrower than lately. The rupee was quite strong, closing at $1=R50.71 (Monday R51.79) and the stock market was up 1.47%.

This was the close of the Indian FY: the rupee fell 21% in FY ’08, which has been very detrimental to the Indian world gold bid. Following its habit, the Bombay Bullion Association has put out a story – widely picked up – to the effect that the country imported no gold in March. This will not be news to the readers of these notes. See

http://in.reuters.com/article/domesticNews/idINBOM45732920090331

Another source reports that the export of gold coin heard of last month has now ceased. The BBA, of course, prefers low gold prices and high throughput. No one should expect comment from them when India imports resume.

On a happier note for gold’s friends, Reuters reports that the astonishing Western appetite for bullion items is continuing:

"Russia's state-controlled Sberbank says it has never seen such strong demand for investment coins…"The demand for gold and silver has been unprecedented," said Carla Coolman, a spokeswoman at the United States Mint."

"Austria's Philharmonic, named after the Vienna Philharmonic Orchestra, was the world's best-selling gold coin in the last quarter and sales soared 544 percent in the first two months of 2009…the Royal Canadian Mint quadrupled capacity to produce bullion gold and silver Maple Leaf coins in late 2008, and the Austrian Mint is producing in one week what it usually churns out in four."

See

http://www.reuters.com/article/ousiv/idUSTRE52U06M20090331

Reuters also issued one of its occasional reports on the Asian physical market: discounts on kilo bars have narrowed to zero in Singapore and Hong Kong.

TOCOM on Tuesday was non-committal: aggregate volume was equivalent to 16,747 Comex lots, the active contract gained 35 yen and world gold opened and closed a couple of dollars above Monday’s NY floor close. Open interest rose 0.77 tonnes (248 Comex) but according to Mitsubishi the public shaved 0.5 tonnes (161 Comex) from their long. Absent a decisive move in world gold, TOCOM needs a pronounced weakening trend in the yen to spark interest.

The ECB’s weekly statement of condition indicates that "gold and gold receivables" fell E82 Mm last week: 4.15 tonnes at the present book value. This "reflected" the sale of gold by one "Eurosystem central bank… and the purchase of gold by another". This is the third time in four weeks that this form of language has been used. It is quite distinct from what is said when a coin program is under way: it looks very much as if a CB has broken ranks and is buying for FX reserve purposes. This could be an important precedent. (Last week two CBs were reported to have sold 0.65 tonnes in total.)

Monday’s energetic Comex gyration and down $7.60 close saw open interest rise 905 contracts (2.8 tonnes). Not much for all the commotion. It would appear some of the initial ferocious rise was short covering – which found a ready seller to permit not too damaging an exit.

Gold has a relatively peaceful NY day, closing up $7.30 on estimated volume of only 103, 001 and a switch effect of 3,136 lots. An effort to rally on the open was promptly blocked, but equally a morning Bear raid was reversed. ScotiaMocatta reports "dealer interest" in buying – possibly physical demand picking up. The Comex range was $13.30. For the quarter the active contract was up 4.6%.

Somewhat discouragingly, gold shares gave ground in the last hour (as did gold in the after market). The XAU closed up only 0.43% and the HUI up 1.55% - it peaked almost twice as high. MarketVane’s Bullish Consensus gained a point to 76%. The GLD ETF (which seems to be posting later in the evening) was unchanged for the third day running at 1227.44 tonnes. Mark Hulbert’s HGNSI was unchanged at 30.2%, having rather puzzlingly jumped up in two days from 3.5% on Thursday. Hulbert wrote about it this morning:

http://www.marketwatch.com/news/story/Gold-market-sentiment-takes-turn/story.aspx
?guid=%7B9083CBFB%2DF1DD%2D420D%2D9E5D%2D71C95784B516%7D

***

and then today…

Indian banks were closed today, as they do for the first day of the new FY. This meant that only the thin offshore FX markets were functioning. Using the closing rate of $1=R50.50 (Tuesday R50.71) it appears India was back above import point this afternoon. Jaipur for instance showed a $1.86 premium with world gold at $920.12; some other cities were higher. The stock market closed up 1.99%.

While it is premature to judge that India has returned to the buy side in world gold, such a development would be of the first importance – ironically just as India’s lack of imports in recent months is getting wide coverage.

Viet Nam’s physical market was at a $3.21 premium to world gold, the highest in many weeks. Shanghai’s active gold contract also closed at $2.37 premium, also the highest for a long time.

TOCOM made little contribution today. On volume equivalent to 13,464 Comex lots open interest slipped1.32 tonnes – 410 Comex. The active contract closed up 14 yen, but world gold went out $3.80 below the Comex floor close.

Turkey was reported by the Istanbul Gold Exchange to have imported 40kg (1,286 ozs) of gold in March, following two months of no imports (indeed, Turkey is reported to have been exporting). This very good news for gold’s friends, as there was some reason to fear the IGE had opted to repress monthly reports (as they did weekly ones some years ago). Silver imports were stated to be zero for the third month running.

Over the past six months, Turkey, which normally imports around 20 tonnes of gold a month, has imported a total of 1.27 tonnes. This morning The Gartman Letter expresses "fascination" with the performance of gold in the absence of Indian imports: with Turkey also included the situation is more remarkable still.

A curt announcement from the ECB today reports:

"On 31 March 2009, the European Central Bank (ECB) has completed gold sales amounting to 35.5 tonnes of gold."

Presumably the ECB is following its former habit of announcing its own sales (in tonnes, rather than in Euro book value) before running them through the weekly consolidated statement of condition. On past form, this sale will show up in a few weeks. As Andy Smith points out today, the lack of a definitive statement that this fills the selling objective for the year has to be read as meaning there is more to come.

Why the ECB undermines the veracity of its weekly statements in this way is a mystery. The sale, however makes even more interesting the apparent purchases of gold by one of the subordinate CBs noted yesterday.