Friday, January 30, 2015
"Gold is set for another bearish year," Howie Lee, an analyst at Phillip Futures, said in a note Thursday before the metal's decline in U.S. trading hours. He cited a "strong signal" of interest rate hikes ahead based on changes in the U.S. Federal Open Market Committee statement Wednesday.
"A hawkish U.S. Federal Reserve adds negative pressure on gold, as higher interest rates and a stronger dollar dims the appeal of gold as an alternative asset," Lee said. India overtook China as the world's biggest gold consumer in 2014 as global physical demand fell, an industry report showed on Thursday, forecasting that prices that have declined for the last two years would bottom out this year.
Gold shipments to China from Hong Kong fell 32 percent in 2014 from a record a year earlier as lower prices failed to boost demand.
Demand for luxury goods including bullion has been hurt by an anti-graft drive in China, while a rally in stock markets damped interest in the metal as an investment. Purchases of the precious metal that pushed China above India as the world’s biggest consumer after it dropped into a bear market in 2013 haven’t been sustained, leading banks including Goldman Sachs Group Inc. to predict further price declines A larger global currency shift is underway.
The absolutely stunning decision by the Swiss National Bank to decouple from the euro has triggered billions of dollars worth of losses all over the globe. China has been quietly stockpiling gold for years now. In fact, it is stockpiling so much gold that many have speculated that it may be building a gold-backed yuan currency that would make the Dollar pale in comparison on the global market.
Lots of other countries are rapidly buying up gold, too, including – Serbia, Greece, Ecuador, Mexico, Kazakhstan, Kyrgyzstan, and Tajikistan. But reportedly no one is buying gold at a faster pace than Russia. More than that, Putin has been positioning his motherland to team up with China to solidify the emerging BRICS system which aims to thwart decades of Anglo financial dominance with a un-dollar currency system that will also include a development bank.
With the gold price continuing to outperform stocks and cyclical commodities in 2010, debate has intensified over how much upside is left in gold’s bull market. One of the most successful investors of this generation, hedge fund magnate who rose to fame for shorting securities tied to the housing market prior to the financial crisis of 2008, recently expressed his bullish outlook for the gold price As for the gold price, very bullish on the yellow metal, noting that the price of gold has been highly correlated to the monetary base for as long as his firm, Paulson & Co., has tracked the data. Given his expectation for further money printing by the Fed – and that in 1980 the gold price rose by 100% more than the correlation implied – assets are denominated in gold – a strong indication of his disdain for fiat currencies. ukraine gold gone
First, China buys physical gold in world markets, fabricates it where necessary into “good delivery” bars – in Switzerland or the Middle East – then ships the bullion, transparently through Hong Kong or Shanghai (or quietly through Beijing and other ports of entry). Second, it keeps virtually all domestically mined gold “in house.” The world was slow to wake up to the new reality in which China is now the de facto IMF sovereign backstop, as Zero Hedge described two weeks ago in “China Prepares To Bailout Russia” when we noted that a PBOC swap-line was meant to reduce the role of the US dollar if China and Russia need to help each other overcome a liquidity squeeze, something we first noted over two months ago in “China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin.”