Silver and Gold Demand is rising to very significant levels. Gold ETP holdings climbed this week to a record for 11th straight session to 2,621.7 metric tons. As a small example, US Mint statistics for Nov show Gold sales have more than tripled from the same time last year. Silver sales are up 120% so far. Global Gold Demand in 2013 should be led by further strength in Chinese demand and a recovery in India, helping Gold continue its bull run into its 13th year, the industry-backed World Gold Council said on Friday. Chinese Gold Demand is likely to grow around 10 percent in 2013 from about 800 tonnes this year, as the world’s second-largest economy is expected to pick up pace, Marcus Grubb, World Gold Council managing director, said in an interview. “There’s evidence already that the Chinese economy is bottoming out, and beginning to recover again,” Grubb said. “We have strength into Q1 next year on Chinese New Year. I think you’ll see China perform strongly in 2013 as the economy recovers.” Central banks continued to diversify their reserves into gold and official sector demand is expected to reach 450-500 tonnes this year, compared with 456 tonnes last year, which was the highest since 1964, he added. Robust demand in the official sector is expected to continue into 2013, he added. Grubb also said the Bull Run on the Gold Market is expected to continue for a 13th straight year in 2013, without giving any price forecasts. Gold has been up around 10% so far this year at about $1,730 an ounce.
Indian households have piled up as much as 20,000 tonnes of Gold, worth $1.16 trillion, a historic high. World Gold Council’s latest estimate of India’s household Gold Reserves is 11% higher than 18,000 tonnes it had been pegged at earlier. Coupled with 557.7 tonnes of India’s central bank’s holdings, Gold stocks would represent more than 75% of its GDP. Marcus Grubb did not give a projection for Indian Gold Demand growth, though said demand should rebound after falling about 20-25% in 2012 to 750-800 tonnes. “And the reason is I think the effect on India you had this year is unlikely to be repeated next year,” he said, referring to a nearly 30% fall in Indian demand in the first half of this year, hurt by a slowing economy and record-high Gold Prices in local currency terms. He also cited other drivers for his projections for higher demand in 2013, including robust Western Gold Investment demand due to lingering global financial problems and purchases by central banks. Global Gold Demand is likely to fall by around 5 to 7% in 2012 to around 4,100 tonnes, he added. The world’s total consumer Gold Demand in the first three quarters of the year fell 7% from a year earlier to 3,185.5 tonnes. India’s Gold Demand during the period dropped 22% to 612 tonnes, the WGC said earlier this month. “India could probably come in around 750 to 800 tonnes for (2012), down from 1,000 last year,” he said, adding that Chinese Gold Demand in 2012 is expected to reach around 800 tonnes, up from roughly 778 tonnes a year ago. “It’s going to be very close as to which market is the biggest in the world,” he said. Grubb said Gold Demand in India and China in the fourth quarter looked to be strong. “Looking at data we have on Gold Imports into India and also premiums in Mumbai, demand’s been very strong so far in Q4 in India, I think actually stronger than in China,” he said, adding that Gold purchases before the Lunar New Year will help boost China’s Gold Demand in the fourth quarter.
The Shanghai Gold Exchange said it will begin a trial run of OTC Gold Trading on the China Foreign Exchange Trading System on December 3rd, allowing Interbank trading in large volumes. Though 3 months behind schedule, China would finally launch Interbank trading with Gold contracts on Monday that will help more market forces to influence the countries Commodity Exchange. The move will enable traders to swap Gold Bullion in larger amounts and heighten the appeal of the metal as an alternative investment class. Shanghai Gold Exchange said trades will be cleared and delivered under the auspices of the China Foreign Exchange Trading System, a subsidiary of China’s central bank. Marking a further opening in China’s Gold Market, the new trading system is of particular benefit for mainland institutions that trade Gold Bullion in large volumes. The move is also part of the broader financial reforms that Beijing has launched in recent weeks, loosening some of the restrictions on securities investment and allowing banks to price loans at cheaper rates than in the past, that seek to grant market forces a bigger role in both the economy and the capital market.
Turkey’s energy minister said on Thursday that he sees no conflict between Ankara and Washington over U.S.plans to widen trade sanctions against Iran, including Turkish-Iranian “Gold for Gas” trade. U.S.senators and aides told Reuters this week that new sanctions aimed at reducing global trade with Iran in the energy, shipping and metals sectors may soon be considered by the U.S. Senate as part of an annual defense policy bill. One senior aide said the move would end “Turkey’s game of Gold for Natural Gas”, referring to Iran’s conversion of Turkish payments for gas into gold because of the sanctions. Iran sells oil and gas to Turkey, with payments made to Iranian state institutions. U.S.and European banking sanctions ban payments in U.S. dollars or Euros, so Iran is paid in Turkish lira – of limited value for buying goods on international markets, but ideal for buying gold in Turkey. Asked about the planned new sanctions, Turkey’s Energy Minister Taner Yildiz said: “I’m not of the view that there will be any negative situation, a clash with the USA, regarding natural gas, oil and mining. We are talking with the USA.” Couriers carrying millions of dollars worth of Gold bullion in their luggage have been flying from Istanbul to Dubai, where the Gold is shipped to Iran, industry sources with knowledge of the business told Reuters last month.Turkey’s Deputy Prime Minister Ali Babacan said last week that the lira Iran received from Turkey for its Gas was being converted into Gold because sanctions meant that it could not transfer the cash into Iran.
Official Turkish trade data suggests that nearly $2 billion in Gold was sent to Dubai on behalf of Iranian buyers in August. The shipments help Tehran to manage its finances in the face of Western financial sanctions. The sanctions, imposed over Iran’s disputed nuclear program, have largely frozen it out of the global banking system, making it hard to conduct international money transfers. By using physical gold, Iran can continue to move its wealth across borders. As the banking sanctions began to bite in March,Tehran sharply increased its purchases of Gold Bullion from Turkey, according to the Turkish government’s trade data.Turkey’s Gold Exports as a whole jumped more than fourfold to $11.2 billion in the first eight months of 2012. More than 90% of Iran’s Gas exports go to Turkey under a 25-year supply deal. Turkey imports about 10 billion cubic meters of gas a year from Iran, making it the country’s second-largest supplier behind Russia.
There is no way to avoid an Inflation Spike based on what’s done & what’s coming out of the Federal Reserve at the upcoming policy meeting. Gold Demand will also spike accordingly. Goldman Sachs expects the Fed’s policy meeting outcome to be an announcement of QE4. It is expected be a purchase of $45 billion each month in Treasuries. This number will be in addition to the already existing QE3, which is $40 billion per month in mortgage-backed security debt. QE4 is going to be a replacement for Operation Twist. Operation Twist was designed to push down the long end of the curve in order to keep interest rates artificially low. At $85 billion each month all the way through 2013 would make it over $1 trillion worth of QE for 2013. This would be in addition to the $2.5 trillion of QE1 and QE2. Goldman also predicts there will be no change in the Fed’s interest rate policy until 2016. So we are talking three full years, 2013, 2014, and 2015 where we will have these near zero interest policies from the Fed. The more money that the Central Banks print, whether it’s outright monetary transactions or quantitative easing, they are debasing their currencies. All this is eventually going to lead to not only high Inflation, but Hyper Inflation. Gold and Silver would be the natural safe Haven Hedge against this kind of price Inflation’s.
With Gold Demand consistently rising & Gold Prices thereby getting out of the reach of the common man – the largest number by population, Silver provides the next best option. Silver has historically also been called the poor man’s Gold. I expect Silver to out perform Gold or for that matter any other investment option available in 2013.
Overall, the price action that we are looking at in Silver is very constructive. When silver eventually achieves a break through the $37.50 barrier, it will indicate a break out and will start an up-move that is going to take it sharply up to retest the all-time highs set in 1980 and in April of 2011 – and beyond…
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