Gold and Silver Imports Surge 500% in India
India's gold and silver imports surged 500% from April to May, reaching $8.96 billion according to Mineweb. May's numbers were up 222% compared to 2010.
According to Sudhir Chakraborty, an analyst at Standard Chartered bank, yearly imports of gold and silver in India average around $22 billion. Nearly $9 billion in a single month is unprecedented.
Soaring inflation, which official numbers recently pegged at 8.65%, is pushing demand for precious metals to all-time highs.
Indian consumers have a long tradition of using gold -- in the form of jewelry, coins, and bars -- to preserve family wealth.
More from Mineweb:
"Rapid inflation is eroding the earnings of the common man. One has to understand how the import of gold has reached $9 billion for a month, while the yearly average is around $22 billion," said Sudhir Chakraborty, bullion analyst at Standard Chartered bank.
Analysts maintained that India's central bank, the Reserve Bank of India's decision to grant licenses to seven more banks to import bullion has helped push up demand.
Karur Vysya Bank, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, Punjab and Sind Bank, South Indian Bank, State Bank of Mysore and State Bank of Travancore were added to the list. As of the start of 2011, some 30 banks in India have been granted permission to import gold and silver. Jewellers are getting easy supplies which is also helping push up demand.
China Buys 47% of the World's Gold
China is panicking.
Rampant inflation is driving Chinese consumers to buy gold on a massive scale...
In fact China is already set to buy almost half of all the gold that'll be mined this year.
You read that right: The Chinese may buy nearly 50% of total world gold production in 2011.
This incredible demand will no doubt put significant strain on global supplies.
Today I want to talk about how this soaring demand may be the catalyst that pushes gold prices over the $1,500 level in as little as a few weeks.
Over 1.3 billion inflation-nervous Chinese eye gold
In January 2010, China recorded an inflation rate of 1.5%. But just 12 months later, the rate of Chinese inflation has climbed to 4.9%.
Rising inflation has sent food and property prices in China skyrocketing.
The price of food in China, for instance, has increased 10.3% on an annual basis; grain saw an increase of 15.1% and fruit is up 34.8% since January of last year:
China's rising inflation stems from the $585 billion economic stimulus package its leaders pushed through in the depths of the financial crisis two years ago.
In dollar terms, China's stimulus was much smaller than the $800 billion package the U.S. created. But it was much larger as a percentage of the nation's GDP...
And now, all of that money sloshing around the Chinese economy has driven inflation rates to nearly 5%.
The Chinese government has already made some big moves to keep domestic inflation from spiraling out of control:
- raising interest rates multiple times;
- toughening price-fixing rules;
- tightening lending requirements and raising the minimum down payment people need to buy a home.
So far, none of these measures have managed to curb inflation. Fears of uncontrollable inflation — even hyperinflation — are quickly circulating throughout the Chinese economy.
This has prompted a rapidly growing number of China’s 1.3 billion citizens to start devouring gold as wealth protection.
Panic in the East
According to the gold-specializing Swiss Bank UBS, Chinese gold demand exceeded 7.05 million ounces in the first two months of 2011 alone.
This incredible demand is equal to roughly 47% of all the gold produced during the same two months!
The Chinese are buying nearly half of all the gold that is being produced worldwide.
Extrapolated over the full year, Chinese consumers could be in line to buy over 42.3 million ounces of gold just this year.
Let me put that into perspective for you. That's more gold than is being officially stored as reserves by China's Central Bank...
The Financial Times recently quoted a senior executive at the Industrial and Commercial Bank of China ICBC, who spoke of the “voracious” appetite for gold in China...
China's largest bank by market capitalization started a physically-backed gold savings accounts in December with the World Gold Council. Account openings have already surpassed 1 million, with more than 12 tonnes of gold already stored on behalf of investors.
Zhou Ming, deputy head of ICBC's precious metals department, said the nation's largest bank sold nearly 250,000 ounces of physical gold in January — the equivalent of 50% of all the bullion ICBC sold last year.
China Produced $35 Billion in Gold in 2010 According to China's Ministry of Industry and Information Technology, gross output from domestic production increased 67% to 230 billion yuan ($35 billion) in 2010. Of this, China's gold industry realized 5 billion yuan ($3.8 billion) in profit — 78% more than in the previous year. China's gold mines produced 9.9 million ounces of gold in 2010 — an increase of 7% over 2009. Meanwhile, total domestic gold output grew 9% to 12.0 million ounces. |
Zhou also said there was heavy demand for silver, with ICBC selling about 13 tonnes of physical silver in January alone, compared with 33 tonnes in the whole of 2010.
The demand for gold in China is exploding before our eyes. It seems that demand by individuals is reaching almost frightening levels.
And none of this includes what the country's Central Bank may be squirreling away...
We know that China has been buying on gold price dips. Various officials have confirmed this in the past, although we have no idea of the volumes involved.
The People’s Bank of China is almost certainly continuing to diversify their massive $3 trillion currency reserve into gold and precious metals in order to protect themselves from their large exposure to the weakening U.S. dollar.
We also know that China has been accumulating gold surreptitiously through buying up domestic production.
This suggests that increasing gold production was part of a long-term strategic plan to become a global leader in gold investments among governments.
The World Gold Council even reported:
Some market participants believe that China may also be continuing to buy local mine production, which it has done regularly in the past. There is certainly no shortage of experts, both domestic and from overseas, advising China to do so.
The World Gold Council estimates China’s gold demand could double in 10 years as more investors embrace precious metals.
But even in the short term, the expected demand for gold in China over the coming month will be enough to put significant strain on global supplies.
I expect this heavy demand to help push precious metal prices to record highs in 2011.
Prices of $1,500 an ounce for gold and $40 an ounce for silver remain viable short-term targets.
Any price dip should be seen as a buying opportunity.
Greg McCoach is an analyst at Wealth Daily
5 Safest Places to Invest After the Downgrade
Posted by Brittany Stepniak - Monday, August 1st, 2011
It's hard to see anything positive when the U.S. government is about to experience a historically unprecendented credit rating downgrade. But there's always a bright side in the dark face of disaster -- you just have to know where to look for it. And gold isn't a bad start, certainly bright enough to guide investors through almost any financial meltdown.
While businesses, individuals, and consumers alike will undoubtedly face a great deal of hardship in the coming times, there is hope. Continue reading to learn more about the five benefeciaries. And, don't be alarmed, it's no surprise that not all of them are nestled here at home in the United States.
Learn them, read about them, know them. It could determine if you succeed or fail in protecting your wealth during these tumultuous times.
-Gold, Gold, Gold, Gold! (We really can't push this one enough)
-Guernsey (and other triple-A sovereigns)
-Corporate Bonds
-Swiss Franc
-Treasuries
Gold
Learn them, read about them, know them. It could determine if you succeed or fail in protecting your wealth during these tumultuous times.
-Gold, Gold, Gold, Gold! (We really can't push this one enough)
-Guernsey (and other triple-A sovereigns)
-Corporate Bonds
-Swiss Franc
-Treasuries
Gold
This one is a no-brainer. When politicians announced that the vote on the Republican plan was to be postponed, gold immediately escalated to a record-high price of $1,634. What does this tell us? When all other currencies are losing, gold is gaining. Time and time again this holds true.
Over the course of this past year, gold has surged by 33 percent compared to the U.S. paper-dollar. Final verdict? Gold is the #1 hedge against inflation. Case closed.
Guernsey
As one of 19 sovereigns rated triple-A by Standard & Poor's, this tiny affluent Channel Island off the Coast of Normandy could soon be considered a safer place for investors to park their assets than the U.S.
S&P and Moody's Investor Services have placed the U.S. government under watch for a possible downgrade of its triple-A Treasury bonds. With the nation possibly losing its risk-free status, investors have been eyeing other sovereigns with stellar ratings as alternatives. Among them: Australia, Canada, Germany and the Netherlands.
But the pool of investable AAA-rated assets around the world is nowhere near as deep as that of the U.S. The nation offers the widest and most liquid range of such assets with more than $11 trillion outstanding, compared with roughly $7 trillion of all other outstanding triple-A rated government paper.
S&P and Moody's Investor Services have placed the U.S. government under watch for a possible downgrade of its triple-A Treasury bonds. With the nation possibly losing its risk-free status, investors have been eyeing other sovereigns with stellar ratings as alternatives. Among them: Australia, Canada, Germany and the Netherlands.
But the pool of investable AAA-rated assets around the world is nowhere near as deep as that of the U.S. The nation offers the widest and most liquid range of such assets with more than $11 trillion outstanding, compared with roughly $7 trillion of all other outstanding triple-A rated government paper.
Corporate Bonds
Investment rules that apply to some asset managers require them to hold only triple-A rated debt. If rating agencies downgrade the U.S., this will trigger a sell-off in Treasuries, leading investors to triple-A corporate bonds, such as those from Microsoft, Johnson & Johnson and Exxon Mobil.
To be sure, some experts wonder if a downgrade to the U.S. government would lead to downgrades of American companies. But so far, it appears that stellar corporate earnings (excluding financial corporations) have made the corporate bond market an attractive place for some portfolio managers.
To be sure, some experts wonder if a downgrade to the U.S. government would lead to downgrades of American companies. But so far, it appears that stellar corporate earnings (excluding financial corporations) have made the corporate bond market an attractive place for some portfolio managers.
The Swiss Franc
The Swiss franc extended its longest monthly rally in 17 years after it became apparent on Thursday that there would be no U.S. House of Representatives vote over a deal following several hours of close-door meetings.
The franc touched 79.99 centimes per dollar, after reaching an all-time high the previous day. For the past year the lure of the franc has pushed up its value by 24% against the euro and 12% against the U.S. dollar.
Treasuries
U.S. Treasuries are at the heart of the tumultuous debate over raising the debt ceiling. Nonetheless, U.S. debt is still among the world's safest investments. Judging by yields thus far, it appears Treasury bonds could continue being attractive to investors even if rating agencies downgrade the U.S.
Some have been expecting investors to sell Treasuries out of fear that the nation would default or get hit with a ratings downgrade even if the debt ceiling is raised. However, yields on 10-year bonds are still below 3%, as investors' appetite for Treasuries hasn't faded very much.
Some have been expecting investors to sell Treasuries out of fear that the nation would default or get hit with a ratings downgrade even if the debt ceiling is raised. However, yields on 10-year bonds are still below 3%, as investors' appetite for Treasuries hasn't faded very much.
*Indented excepts from CNNMoney.
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