Surging Demand for Silver

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Good evening, I'm Saijal Patel from CNBC and you're watching "Asia Market Daily".

It's been a record month for sales of the bullion 2010 silver eagle coin — as more investors turn to silver as a cheaper alternative to gold and to limit their exposure to the dollar and other currencies.

CNBC's Sharon Epperson reports on the other commodity trade.

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At Plaza Collectibles in Manhattan, business has never been better as demand for silver in surging.

(SOT) Lee Rosenbloom, Global Research Head of Global Commodity Research, BofA Merrill Lynch

"We've seen a tremendous demand, both in new and older silver coins, this is probably the in the last 25 years the strongest demand we've seen."

While gold coins trade based on a spot price that is over $1,300 an ounce, silver coins are based on futures prices that are under $30 an ounce — making them a more affordable alternative.

(SOT) Francisco Blanch, Principal, Plaza Collectibles

"$20, $30, $40 these are relatively cheap gifts and ways for people to accumulate wealth, store wealth, and I think that's part of what's driving this silver price."

The U.S. Mint says strong interest in the cheaper precious metal has driven silver coin sales up sharply this year, rising more than 22% from the same period last year.

Here in the futures markets silver prices are up 60 percent so far this year, on this investment demand as well as industrial demand, which has risen 18% from this time a year ago.

(SOT) Scott Travers, Author of 'The Coin Collectors Survival Manuel'

"It's probably a better opportunity now than we've ever seen historically for collectors of silver coins."

But for retail investors who aren't as interested in holding the actual silver metal, exchange traded funds may be a better alternative.

(SOT) Philip Klapwijk, Executive Chairman, GFMS

"You're going to be paying double digit percentage spreads over silver coins which is for some buyers at least a major disincentive."

Which is why many investors have flocked to funds. Holdings in the largest silver exchange traded fund are near a record high. Sharon Epperson, CNBC, New York.

Source : Saijal Patel from CNBC

Metal market Gold near 2-week high

Standard & Poor's threatened to cut the credit ratings of Portugal, citing uncertainties stemming from the risk of the country having to seek international financial aid - just
after Ireland secured an 85 billion euros bailout package from the European Union. 
Spot gold added $3.26 to $1,388.20 an ounce by 0301 GMT after rising as high as $1,389.75 on Tuesday - its strongest since Nov. 12. Bullion was still below a lifetime high around $1,424 struck in early November. 

BNP Paribas hiked its 2011 gold price forecast by 20 percent, saying a number of factors -uncertainty on the role of the dollar within the international monetary system, concerns on the stability of peripheral euro zone countries and growing inflationary pressures in Asia - supported an upward trend.  
"Consequently, we have raised our 2011 gold price forecast to $1,500 an ounce from $1,245 an ounce previously. If we see the gold rally extending in 2012, it will however take place at a more moderate pace. We expect gold to average around 1,600 an ounce in 2012," BNP Paribas said in a report. 
Gold priced in euro rallied to a record at 1,070.11 euros an ounce. U.S. gold February futures
rose $3.2 to $1,389.3 an ounce.  

Spot gold is expected  to extend its gain to $1,403 per ounce, as per its wave  pattern and a Fibonacci projection analysis, according to Wang Tao, a Reuters market analyst for commodities  and energy technicals 
The euro fell to around $1.2969 , lows not seen since mid-September, clearing the way for a test of Fibonacci support at $1.2794, a level representing the 61.8 percent retracement of the June to November rally.    

There are growing worries that other debt-ridden euro zone countries such as Portugal and Spain will also need aid. The Portuguese prime minister said the country was not facing any
pressure to ask for a bailout and did not need any such help. "We've seen buying on dips on the physical side but towards year-end, I guess people will also book profits. I think people are still watching the developments in Europe and also Korea," said a dealer in Hong Kong. 

"Is Europe going to print more money to rescue the economy? Is China going to increase the interest rates? Let's see how it's going to impact the market," he added.  
Some dealers said there was a bit of safe-haven buying related to the conflict in the Korean peninsula, while others believed investors paid more attention to the debt crisis in Europe and worries about interest rate hike in China.  

HSBC's China Purchasing Managers' Index rose in November to an eight-month high, powered by domestic demand, while the prices manufacturers charge their customers climbed at the
fastest pace on record. 
It was the strongest reading since March, despite anxiety in financial markets over measures by the People's Bank of China to tighten monetary policy.

South Korea plans more military drills after U.S. warships leave on Wednesday, Yonhap news agency said, a move likely to add to tension on the divided peninsula after last week's attack by the North. 
In equities, Japan's Nikkei share average was flat on Wednesday, after falling nearly 2 percent the previous day when China stocks tumbled on a liquidity squeeze. U.S. fell in a choppy session on Tuesday on Portugal fears. 

Source : neftegaz.ru

China approves gold fund of funds

HONG KONG (MarketWatch) — China’s securities regulators have given the go ahead for a mutual fund to invest in foreign exchange-traded gold funds, potentially tapping interest among mainland China investors who face negative real interest rates on their bank deposits and want to hedge against inflation.

Lion Fund Management Co. said they received approval from the China Securities Regulatory Commission on Monday to proceed with the fund, the first of its kind for mainland China, according to a statement posted on the Beijing-based fund provider’s website.

The fund has been granted permission to invest outside of China under the Qualified Domestic Institutional Investor (QDII), the fund managers said in the statement.

The fund will invest in gold-backed exchange-traded funds operated outside of China, though the fund provider’s statement didn’t specify which ETFs, or which markets, it was considering.

Hong Kong launched its own gold-ETF earlier this month, back by bullion held at a government-run depository at the city’s international airport. See report on Hong Kong’s first locally backed gold ETF.

The QDII scheme enables financial institutions to invest in overseas markets and is widely seen as a vehicle to allow capital outflows from China at a time when the currency is not freely traded, prohibiting China’s vast pool of savers from investing abroad.

One-year yuan deposits at the Bank of China Ltd., for example, fetch 2.5%, with the People’s Bank of China having last hiked its policy rate by a quarter-point in October.

However, cash kept in these savings accounts are actually losing purchasing power at a dramatic rate, as with consumer prices in October 4.4% higher than they were a year earlier, and with the inflation rate expected to hit 5% in December, according to estimates by Bank of America- Merrill Lynch.

The state-run China Daily said Tuesday that the new gold fund was the first of it its kind to be available to mainland investors.

More funds could be on the way soon, as several other fund providers have pending applications for similar products, seeking to tap rising interest among mainland Chinese investors for precious metals, the report said.

By Chris Oliver, MarketWatch

Gold bounces from lows

Investors also closely watched an escalating tension in the Korean peninsula, although dealers said there were no signs of buying related to the crisis sparked by North Korea's artillery attack on a South Korean island.

Spot gold added 73 cents to $1,362.46 an ounce by 0628 GMT, having hit an intraday low at around $1,353 - not far from a low around $1,350 seen last week. Bullion was below a lifetime high around $1,424 struck in early November. 

According to a Reuters market analyst, Wang Tao, spot gold may extend its fall towards $1,329.45 per ounce as a big downward wave "C" is progressing. 

"For today, I would look at support for gold at about $1,350. However, I think if we see a breach of this level, then we could see gold retreating further," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. 

"For the week ahead, I will also expect gold prices to pare some of its gains that was accumulated earlier last week. Currently the gold and the dollar is having a pretty strong
inverse relationship."  

U.S. gold futures hardly moved at $1,362.1 an ounce. 

The euro slipped to its lowest in two months against the dollar as the market looked past a rescue package for Ireland to other euro zone economies and a euro zone crisis resolution
mechanism. 

EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package to help Dublin cover bad bank debts and bridge a huge budget deficit, and approved outlines of a permanent crisis-resolution system which could make private bond holders share the burden of restructuring sovereign debt bought after 2013.  

"The dollar is so strong, but we see buying on the physical side when trading started in Asia. That helps the market a bit. Some Chinese guys may be buying a bit," a dealer in Hong Kong said.  

"I would think $1,350 is a good support for gold, but I don't think we will go down too much even if we break that level." 

Silver also bounced on firmer gold while platinum palladium barely moved. 

The world's largest silver-backed exchange-traded fund, iShares Silver Trust , said its holdings slipped to 10,711.23 tonnes by Nov. 26 from an all-time high of 10,893.68
tonnes by Nov 23.  

In other markets, the Nikkei hit a five-month closing high as the yen softened against the dollar, while oil rose past $84 after the Irish deal.

Source : http://neftegaz.ru

Gold production in Australia rises 22% in third quarter

Australian gold production rose 22 percent to 67 tonnes in the third quarter of 2010 as miners cashed in on strong bullion prices, research released on Sunday shows.

Surbiton Associates, based in Melbourne, which keeps a tally of Australian gold output said "we are now seeing the effects of re-evaluation of known deposits and the bringing of old mines back into production, as well as some new finds, so output is increasing."

Showing the previous quarter was no flash in the pan, quarterly production of 67 tonnes was down only one third of a tonne on the June quarter, when gold production rose to its highest level in six-and-a-half years.

Strength in Australia's currency was taking some of the shine off rising world bullion prices for the nation's miners as they dig deeper for more nuggets, Sandra Close of Surbiton said.

The current Australian dollar-denominated gold price of A$1,409 per ounce is about A$150 an ounce below the all-time high of A$1,547 ounce reached in February 2009.

The result was in line with the year's upward trend in gold production, as established producers increased output, newly commissioned mines were ramped up and new or `recycled' operations came on stream

AngloGold Ashanti Ltd. this month approved development of the A$600 million ($583 million) Tropicana gold project in Western Australia.

December gold futures on the Comex division of the New York Mercantile Exchange rose $10.30, or 0.7%, to $1,362.60 per ounce. This occurred even though the dollar on Friday climbed to its strongest level against the euro in two months. Gold was even higher until Friday, when gains in the greenback exerted some pressure on commodities collectively.

Renewed hostilities on the Korean Peninsula and the ongoing European sovereign-debt saga are likely to remain in the forefront next week, and if so, could be supportive for gold.

Monday, November 29, 2010 by Proactive Investors

Gold, base metals may rise on growing demand

G Chandrashekhar

Mumbai, Nov 28

Re-emergence of sovereign debt concerns in southern Europe, strengthening dollar, quantitative easing II, continued easy money policy in the US and tightening monetary policy in major emerging markets, China's fight to contain commodity inflation – the list of factors that affect commodity markets seems rather long.

For commodity producers, QE II has provided such a tonic boost that the recent negative developments such as sovereign debt issue have failed to dampen the sentiment. Investor interest remains largely intact. Globally, in the commodity market, assets under management have reached a record $340 billion.

The emerging markets, largely represented by Asia covering China and India, are currently driving global commodity demand. In particular, industrial metals and in energy products coal are set to enjoy rising demand.

In many cases, despite road bumps, fundamentals are seen improving. Crude and copper provide a promising picture. However, if the southern European sovereign debt crisis takes turn for the worse, all bets will be off. Gold will continue to be the safe-haven metal.

The dollar appears strong relative to the euro not because of the former's fundamental merit, but simply because the latter is under strain. How the euro/dollar relationship pans put over the coming months needs to be watched closely.

Gold: The metal continues to enjoy strong investor interest despite a firming dollar. In addition to liberal US monetary policy, return of sovereign debt uncertainty in Europe has helped the precious metal stay at elevated levels, although from time to corrections are seen. Week-on-week, the metal was up 0.9 per cent last week.

In London on Friday, the PM Fix for gold was at $1,355 an ounce, down 1.3 per cent from the previous days. Silver moved down sharply losing 3 percent from the previous day to Friday AM Fix at $26.62/oz. The precious metal is likely to trade range-bound in the coming days as it looks for direction from currency markets and geopolitical developments.

Experts are near-unanimous that gold should continue to rise in 2011. However, whether it would outperform other commodities will depend on currency factor as there are competing concerns on the dollar and Euro on the risks of investing in gold. At least in the short-run, the dollar is likely to retain the bulk of its recent strength although it can weaken against the euro from time to time. Long-term investor interest remains stable.

Base metals: The complex continues to be impacted by macroeconomic data, growth concerns and monetary policy in major economies. Average prices of most base metals are likely to be higher in the first quarter of 2011, with copper in particular showing robust upside potential.

Crude: Despite considerably constructive fundamentals, the market is still concerned about revival of European sovereign debt concerns. Flow of positive macro-data will boost prices. Clearly, crude is expected to stay above $80 a barrel unless the global growth or debt concerns take a turn for the worse. Major emerging markets are seen driving growth in consumption. Crude is likely to trade in $80-90 a barrel range for some time.

Source : http://www.thehindubusinessline.com

Gold's value as a currency reserve

Gold is still considered an important reserve asset by most central banks, even though it is no longer the center of the international financial system. The most important reason is that gold is the only reserve asset that is no one's liability. This means that, unlike a currency, the value of gold cannot be affected by the economic policies of the issuing country or undermined by inflation in that country.


Gold has a track record of holding its real value over the centuries. Since gold is no-one's liability, it can not be repudiated and holding it is a safeguard against potential unforeseen crises. Gold also brings much needed diversity to a central bank portfolio due to its low correlation with key currencies and its strong inverse correlation with the US dollar. The central bank of Argentina, for example, when diversifying a portion of its reserves away from 100% reliance on the US dollar in 2004, included gold in its purchases.


Gold accounts for 9% of reserves held by central banks (valued at market prices).

Source : Responsible Gold