Thursday, November 17, 2011


Barring a last minute miracle we will be closing below all the major exponential moving averages.  All that is left is the 50 day simple moving average down there at 1205.  Then we are back to a chasm, while we wait for the next, Steve Liesman, or Reuters rumor about 'rescue'.  p.s. whatever happened to that 1.4T ESFS that solved all the world's ills.  I guess that had a short half life.

Anyhow, back to other stories - CNNMoney reports that demand for gold continues to surge especially in... (wait for it) Europe*.And central bankers seem pretty antsy to acquire it as well.  Interestingly, gold has not been that great of a safe haven of late - but if when the "QE of all QE's comes from the ECB", I'd expect it to go on another run.

*excluding Gordon Brown who was happy to liquidate much of England's stash in the $300s.

  • Even near record high prices, gold hasn't lost its luster ... especially in Europe.  Investors in Europe purchased a record $6.2 billion in gold bars and coins in the third quarter, the World Gold Council reported Thursday.
  • While that's not a record in terms of weight, Europe's demand for about 118 metric tonnes nevertheless amounts to nearly a third of all the investment-grade gold demand worldwide in the quarter. It also marks a 135% surge in demand from Europe from the same quarter last year.
  • Worldwide, demand for gold bars and coins was up 29% compared to a year ago.
  • The increase in demand came even as gold became more expensive than ever. Gold prices surged 20% in July and August and briefly topped record highs above $1,900 an ounce in trading, before falling back since then.
  • "Fears generated by the deepening sovereign debt crisis in Europe were manifested in a strong desire to buy gold," the World Gold Council said.
  • Even foreign central banks stepped up their buying, purchasing 148.4 tonnes of gold in the quarter, up from 22.6 billion tonnes a year ago.
  • The U.S. dollar and the euro remain the top currencies on reserve at central banks, but "questions surrounding the creditworthiness of western governments' debt" has increased the appeal of gold as an alternative, the Council said.
  • Thailand, Russia and Bolivia were among the central banks that publicly disclosed gold purchases. Not all central banks report this information on a regular basis though.

More on the central bank buying here - apparently the amount disclosed 'stunned' traders.
  • Gold traders and analysts have been stunned by the final figure provided for the quarter. Most say it was around 100 tons above what they had originally tallied.
  • Bullion dealer GoldCore suggested a number of central banks may be quietly and gradually accumulating large quantities of bullion. “They are not declaring their purchases due to concerns that this may further devalue their currency reserves, which are mostly in U.S. dollars and also in euros, and would result in them having to pay higher gold prices for their new gold reserves,” it said.
Translation - the euro and dollar are both perceived junk but central banks who own them, don't want to say it publicly... at least until they are done buying more gold ;).
  • “While one can account for some of the purchases—from Thailand, Bolivia, Russia etcetera–there is an unaccounted amount out there. A clue probably lies in the fact that a lot of [recent] buying has been from central banks that have been in surplus, [in regions] like Asia and Latin America.”

There does appear to be some 'crowding out' however as prices skyrocket over the years...
  • But some analysts aren't quite as optimistic that gold can keep up its winning streak.  "You have a continuation of patterns that should worry the bulls," said Jon Nadler, a senior analyst with Kitco Metals in Montreal.
  • Global demand for gold jewelry, which has typically accounted for about two thirds of all gold demand, fell 10% year-over-year and is dragging near its lowest level in 25 years, Nadler said.

As for supply?
  • Meanwhile, the gold supply is increasing. Mine output increased 5% year-over-year in the third quarter, and the supply of recycled gold rose 13%.

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