All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Gold Ignores Indian Tax Hike, Rises “Because of China” as Stocks & Commodities Jump

The WHOLESALE MARKET gold price reached new 5-week highs as Asian trade ended and London opened on Tuesday, while global stock markets and commodity prices also rose after stronger-than-expected growth data from China.

The world’s second-largest economy, China reported annual growth of 8.9% for the end of 2011 – the weakest level since mid-2009 but stronger than analysts forecast and almost 5 times the pace of US growth at last count.

The Shanghai Composite stock index jumped 4.2%. Copper led base metal prices by rising 2.6%.

Silver bullion re-touched last week’s 2-month high above $30.50 per ounce, despite news of a sharp hike in Indian import duty which also affects gold.

The gold price peaked on Tuesday mornng at $1667 per ounce, more than 9.4% above the 5-month low touched in late December.

US crude oil contracts jumped back to $100 per barrel after Saudi oil minister Ali al-Naimi said the Opec-cartel member is now targeting that level – “a new line in the sand” substantially above the previous “fair price” of $75 according to Standard Bank today.

“Gold price action is becoming increasingly indifferent to physical trade and far more susceptible to broader market headwinds,” says a note from Japanese conglomerate Mitsui’s London team today.

“Everything is rising because of China,” says one commodities analyst in Frankfurt to Bloomberg. “It’s general market sentiment.”

“Simply put,” reckons China economist Ting Lu at Bank of America/Merrill Lynch in Hong Kong, “Beijing will continue its policy easing which was started in mid-October, though we should not expect a big-bang stimulus.”

Beijing cut the required reserve ratio which banks must keep back from lending for the first time in three years last November, easing it back half-a-percentage point from a record 21.5%.

Analysts now expect a further two percentage-point cut in 2012, reports Reuters, “with many banking on one in the run-up to next week’s Lunar New Year holiday.”

“In terms of calendar year 2011, [gold demand from] India was ahead,” says Philip Newman, research director at Thomson Reuters GFMS, presenting the consultancy’s latest global data in London today but it does seem as though China, in terms of our data for the first half [of 2012], may just tip it.”

GFMS now forecasts a gold price peak of $2000 per ounce, sometime in 2012.

China’s domestic gold mining output – the world’s No.1, and currently subject to an export ban – rose sharply in December to end 2011 some 19% higher than 2010 at 731 tonnes, according to the National Bureau of Statistics today.

Across in India – the world’s hungriest gold consumer – the government today raised import duties on silver to 6% by value, and raised the duty on gold from 300 Rupees per 10 grams to a value tax of 2%.

That doubles the effective tax rate on gold, first deregulated as India moved away from a command economy in the early 1990s.

The gold price on the Multi Commodity Exchange (MCX) today rose almost 1% to INR27,760 per 10 grams, while shares in leading jewelry chains shed some 3%.

Over the last 12 months, the plunge in the Indian Rupee’s forex value has made the gold price rise over 10% higher than it otherwise would. Annual imports to India – which has no domestic gold mining output – declined by 9% from 2010′s record level, according to the Bombay Bullion Association.

Meantime in Europe on Tuesday, several governments including Greece and also the cross-border Stability Fund – downgraded from its “triple-A” credit rating on Monday by Standard & Poor’s – raised almost €11 billion in short-term bills, and at lower interest rates than last time of asking.

The Euro rallied 1.5¢ from last week’s 17-month low near $1.26.

The gold price rose faster, however, nudging cost of gold to Eurozone buyers above €1300 for only the second time since 8th December.

“Spot gold in Euros is about to touch the November peak at €1316.48 [per ounce],” reckons Axel Rudolph, technical analyst at Commerzbank.

“Should this level be surpassed a swift acceleration higher towards last year’s all-time high at €1359 should be seen.”

New data released Tuesday showed the pace of consumer-price inflation slowing last month across the European Union – the largest single export market for China.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Markets “Comfortable Again with Gold”, Euro Falls After “Soft” Italian Debt Auction

SPOT MARKET Dollar gold prices dipped to $1637 an ounce Friday morning London time – a 1.4% fall from Thursday’s high – as the Euro fell against the Dollar following a successful-yet-disappointing Italian bond auction.

In contrast to Dollar gold prices, the gold price in Euros gained throughout Friday morning, hitting €41,326 per kilo (€1285 per ounce) around lunchtime.

Silver prices dipped to $29.69 – 3.3% below yesterday’s peak – while stocks and commodities were mostly flat and government bond prices gained.

“We feel the market is once again comfortable with gold,” says Scotia Mocatta’s latest technical analysis report, “but will liquidate on a break of $1605.”

Heading into the weekend, gold prices are up 1.5% in Dollar terms, while on a fortnightly basis gold is looking at a gain of 4.7%. Based on PM London Fix prices, this would be gold’s biggest two-week gain since the fortnight ended 4 November.

Italy successfully auctioned €4.75 billion of 3-Year government bonds this morning, paying an average yield of 4.83% – down from 5.62% paid at a similar auction two weeks ago.

“On the whole [however] the auction results are mixed to soft,” cautions Rabobank strategist Richard McGuire, adding they were “certainly far from the humdinger we saw in Spain yesterday.”

“It doesn’t defeat the notion that the [European Central Bank] extraordinary liquidity provisioning will support peripheral debt but it perhaps tempers expectations as to what degree these operations will support.”

ECB president Mario Draghi argued yesterday that last month’s 3-Year longer term refinancing operation – at which European banks borrowed close to €500 billion – had averted a potentially disastrous funding crisis.

“The ECB can be rightly justified in saying that the Armageddon we were facing toward the end of last year does seem to have been addressed,” reckons James Nixon, chief European economist at Societe Generale.

Speaking at a press conference following the announcement that the ECB would leave interest rates on hold, Draghi said that “the [ECB's] monetary stance is and will remain accommodative”.

“Further rate cuts,” says SocGen’s Nixon, “will only be forthcoming if, for example, we see signs of an outright credit crunch.”

The decline in the Euro in the second half of last appears to have boosted the Eurozone’s trade balance.

The 17-nation Eurozone saw its external trade surplus grow strongly in November – rising to €6.9 billion from €1.0 billion a month earlier – data published Friday by Eurostat show. However, the full 27-member European Union still ran an external trade deficit of €7.2 billion, though this was less than half that run in October.

The Euro ended December around 12% below its 2011 peak against the Dollar, and currently trades around $1.28.

“With a rate of $1.29 or $1.30 … [the Euro] is still too high,” said French president Nicolas Sarkozy back in January 2011.

Hungary – whose government debt is now rated as junk by all three major ratings agencies – must show “strong commitment” to economic reform before the International Monetary Fund will consider opening negotiations on a bailout, IMF managing director Christine Lagarde said Thursday, following a meeting with Hungarian officials.

“We fully understand and agree with the experts from the IMF,” said Tamas Fellegi, the Hungarian minister appointed to negotiate with the IMF.

Hungary’s prime minister Viktor Orban said this morning however that “there are areas where views differ significantly” between his government and the IMF.

China meantime saw its foreign exchange reserves fall to $3.18 trillion in the fourth quarter of last year, a period that included the first consecutive monthly fall (in December) since early 2009.

“The decline in foreign exchange reserves in Q4 is consistent with the sharp reversal in capital flows out of emerging markets in general and the region in particular,” reckons Andy Ji, economist at Commonwealth Bank of Australia.

The news “might also be contributing to gold’s downward movement,” reckons Standard Bank commodity strategist Marc Ground.

“This can be explained in terms of the negative effect that a slowing down in Chinese foreign-exchange reserve accumulation would have on global liquidity and the ability of governments, especially those of developed nations, to borrow.”

Copper and gold provide “the best value opportunities” for investment this year, according to a report published by Goldman Sachs on Friday.

The Goldman report also argues that there was a “wedge” between gold prices and real interest rates towards the end of last year. Short-term gold lease rates – the difference between the return on lending cash and the return on lending gold – were negative for much of 2011, falling towards the end of the year.

“Demand for US Dollars drove the gold lease rates to unprecedented negative levels as US Dollars became increasingly more valuable than gold,” the report says.

“This new demand for Dollars was mostly from European banks using the gold market to source US Dollar liquidity when their funding from the US money markets dried up, which created a significant amount of gold selling.”

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Wednesday 11 January 2012, 08:40 EST

“Bullish Macro Factors” to Drive Gold in 2012 Rather than Dollar, “Ringleader of Intolerance” Germany sees Negative Growth in Q4

SPOT MARKET gold prices rose to a one-month high of just under 1647 per ounce Wednesday morning – a 5.1% gain for January – before easing back as the Dollar rallied on the currency markets.

The gold price in Euros meantime touched levels not seen since December 8, hitting €41,502 per kilogram (€1290 per ounce), while the Euro currency fell to 15-month lows against the Dollar following disappointing German growth data.

The previous day saw spot market Dollar gold prices break through their 200 day moving average, which yesterday sat at $1626.86 per ounce by PM London Fix prices.

“The move higher today was not expected as it was against a bearish picture,” writes Russell Browne, technical analyst at bullion bank Scotia Mocatta, adding that “it will take a number of days of closes above the 200 day moving average to give the bulls confidence to re-enter the market.”

“While the Dollar may not see a significant correction soon,” says a note from Societe Generale, “and is likely to continue to gain against the Euro as the Eurozone crisis persists, the negative effects of a stronger Dollar on gold are likely to be largely diminished in 2012, allowing the bullish macro drivers to dictate price action once again.”

Silver prices meantime rose to $30.31 per ounce – level with the week’s high and 8.6% up for the month so far – before they too eased back, while stocks and commodities ticked lower and major government bond prices gained.

Germany’s economy shrank by 0.25% in the fourth quarter of 2010, newswire Reuters reports, citing an official from the Federal Statistics Office. For 2011 as a whole, gross domestic product grew at 3.0%, down from 3.7% a year earlier, official data show.

Growth in the Eurozone meantime was half that initially reported in Q3, European Union statistics agency Eurostat now says, after revising Q3 2011 growth from 0.2% to 0.1%.

“Germany cannot isolate itself so easily from tensions within the Eurozone,” says Joerg Zeuner, chief economist at VP Bank in Liechtenstein.

“In addition the export sector is facing a difficult period given the fall in global demand.”
“The best resolution [to the Eurozone crisis]…is that Germany take steps to reverse its trade surplus,” argues Beijing-based economist Michael Pettis.

“[However,] countries that run large and persistent trade surpluses never seem to understand that their surpluses are mainly the consequences of domestic policies that generate additional domestic growth by absorbing foreign demand.”

Italian prime minister Mario Monti has called for more support from the European Union ahead of a meeting in Berlin today with German chancellor Angela Merkel.

“I am demanding heavy sacrifices from Italians,” he tells German newspaper Die Welt.

“[Unless] concrete advantages become visible…a protest against Europe will develop in Italy, including against Germany, which is seen as the ringleader of EU intolerance, and against the European Central Bank.”

Almost the entire €489 billion the ECB lent to Eurozone banks at last month’s 3-Year longer term refinancing operation has been redeposited with the central bank reports news agency Bloomberg, citing estimates from Barclays Capital made using ECB data.

“It’s illusory to think that the [3-Year LTRO] will translate into credit generation,” says Philippe Waechter, chief economist at Natixis Asset Management in Paris.

“It will assuage some of the anxiety banks have regarding their liquidity needs. But they’ve engaged into a massive overhaul of their strategy and shrinkage of their balance sheets, which is, coupled with the deteriorating economy, not compatible with increasing credit.”

Authorities in Iran meantime have blamed Israel for a car bomb that killed a nuclear scientist in Tehran.

Also in Iran, local press reported yesterday that officials had denied rumors that the authorities were blocking any text messages that contained phrases such as ‘Dollar’ or ‘foreign currency’. The imposition of US sanctions has reportedly led to increased interest in holding gold and Dollars as a hedge against Rial depreciation.

Gold bullion dealers reported strong demand from India on Wednesday, Reuters reports, as the Rupee rallied 1.5% against the Dollar to hit a one month high. The weak Rupee saw record domestic gold prices in India last year, weighing on demand during what is traditionally a strong season for buying gold.

China meantime imported a record volume of gold from Hong Kong in November, according to official data. The Hong Kong government’s Census and Statistics department reports that just under 102.8 tonnes of gold were imported by China, equivalent to 18% of China’s total private sector gold consumption in 2010 by World Gold Council figures. Imports from Hong Kong are generally regarded as a proxy for overall imports.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Tues 10 Jan., 08:35 EST

Euro-Gold Makes “Impulsive Move Higher”, Silver Breaks $30/Oz, as “Growth Replaces Inflation” as #1 China Worry

THE WHOLESALE LONDON spot gold price touched a 3-week high against the US Dollar in London on Tuesday morning, trading just shy of $1640 an ounce as world stock markets and industrial commodities also rose.

Silver bullion prices jumped above $30 per ounce, rising more than 4.5% from last week’s close, as German government Bunds eased back but other Eurozone bond prices ticked higher, edging interest rates lower.

Ahead of Thursday’s meeting of the European Central Bank – widely expected to cut interest rates across the 330 million-citizen currency zone below 1.00% – the Euro currency edged up to its highest level since Friday lunchtime at $1.28, some 1¢ above Sunday night’s 16-month low vs. the Dollar.

“Precious metals are benefiting from a broad-based buying across asset classes,” says Marc Ground at Standard Bank.

“The 2008-11 uptrend line at $1532.62 underpins the spot gold weekly chart,” says Axel Rudolph, technical analyst at Commerzbank.

Looking at spot gold in Euros, an “Impulsive move higher is being witnessed,” Rudolph adds, saying that for Eurozone investors “it will take an unexpected reversal…for the current bullish momentum to be thwarted.”

The gold price in Euros today touched a 1-month high above €41,000 per kilo.

Latest data from the International Monetary Market on Friday put the size of speculative bets that the Euro will weaken further “at an all time high” according to HSBC’s Global Markets team today.

“We have seen good physical demand emerge below $1610 for two days in a row,” said a Hong Kong gold bullion dealer in a note on Tuesday.

“There is some buying, but we haven’t seen a substantial pickup in physical demand before the Lunar New Year,” says Dick Poon, manager of refinery group Heraeus’ Hong Kong operations, quoted by Reuters.

The Chinese New Year will fall on January 23rd, marking a week of national holidays now associated with heavy household demand for physical gold coins, jewelry and other products.

“People are worried about the Eurozone, and concerned if China can maintain its growth,” says Poon.

German chancellor Angela Merkel will tonight follow Monday’s meeting with French president Sarkozy by meeting Christine Lagarde, head of the International Monetary Fund, to push ahead with the 50% writedown on Greek government debt agreed at a summit last October.

Italian bond prices rose Tuesday morning, trimming interest rates on Rome’s 10-year debt to 7.14%. That’s still more than five percentage points higher than Berlin pays, however.

New data from China meantime showed the pace of import growth falling sharply from 22.1% year-on-year in November to 11.8% last month – a two-year low.

“Domestic demand is slowing down very quickly,” says Zhang Zhiwei of Nomura in Hong Kong. “The first quarter is going to be very tough.”

November saw China cut its banking reserve requirement – the amount of savers’ deposits which must be kept back, rather than lent out – for the first time in three years.

“Growth has [now] replaced inflation as Beijing’s top policy concern,” says Qu Hongbin, co-head of Asian economics research at HSBC, forecasting 3 cuts to China’s banking reserve requirements by July.

“Gold shipments certainly haven’t gone from nought to sixty like they did last year,” said a senior logistics executive by telephone to BullionVault this morning.

“But there’s still a tremendous amount of material going there,” he went on, adding that Chinese gold imports leapt in September, and have remained at strong levels since.

“The worry is India. November’s flow was dead, the worst since 2008.”

The Reserve Bank of India today granted approval to four more banks for the import of gold bullion and other precious metals. That takes the total number of banks licensed to import gold and silver to India – the world’s heaviest consumer market – up to 35.

“It’s not because they foresee huge demand coming up,” Reuters quotes a bullion dealer, noting that 2011 gold imports to India – which has no domestic mine supply – are estimated to have fallen by 9% from 2010′s all-time record high.

“They are just trying to open up for more competition in the market and customers will have more choices.”

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

All essays, research and information found above represent analyses and opinions of Mr. Radomski and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mr. Radomski and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above belong to Mr. Radomski or respective associates and are neither an offer nor a recommendation to purchase or sell securities. Mr. Radomski is not a Registered Securities Advisor. Mr. Radomski does not recommend services, products, business or investment in any company mentioned in any of his essays or reports. Materials published above have been prepared for your private use and their sole purpose is to educate readers about various investments.

By reading Mr. Radomski’s essays or reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these essays or reports. Investing, trading and speculation in any financial markets may involve high risk of loss. We strongly advise that you consult a certified investment advisor and we encourage you to do your own research before making any investment decision. Mr. Radomski, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Gold Up 5% on Week in Euros as “Recession Data” Hit Europe, US “Can’t Decouple” from Eurozone Crisis Despite Positive Jobs News

THE DOLLAR cost of buying gold hovered around $1620 an ounce Friday morning London time – becoming a bit more volatile following the release of US employment data but failing to establish a definite direction – while stocks and commodities edged higher.

Silver prices meantime eased around lunchtime, hitting $29.15 per ounce.

On currency markets the Dollar rallied – pushing the Euro down further – after the nonfarm payrolls release showed the US economy added 200,000 private sector non-agricultural jobs in December.

The US unemployment rate fell from 8.7% in November (revised up today from 8.6%) to 8.5%.

From its high above $1.30 on Tuesday, the Euro meantime has since fallen 2.5% against the Dollar.

By Friday lunchtime the price of buying gold in Euros – which touched a 4-week high of €40994 per kilo (€1275 per ounce) looked set for a weekly gain of over 5%.

The Dollar cost of buying gold meantime was headed for a weekly gain of around 3.6%.

“A close above the 200 day moving average at $1632 is needed to shift the market [for buying gold] to Neutral from Bearish,” reckons Russell Browne, technical analyst at bullion bank Scotia Mocatta.

“While gold is pushing towards its 200 day moving average at $1633, we are not convinced that it can sustain a break above this level yet,” adds Standard Bank commodities strategist Walter de Wet.

“Liquidity remains locked up as the European interbank market continues to malfunction…in the physical market, we continue to see steady buying of gold. But this demand is more likely to provide support for gold on dips below $1600 rather than push it substantially higher.”

Friday’s Asian trade saw demand for buying gold in physical form, according to one Shanghai trader.

“Liquidity is back in the market,” said the trader.

“With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as gold.”

In the US, however, the volume of gold to held to back shares in the world’s largest gold ETF, the SPDR Gold Trust (GLD), has not changed since before Christmas.

This contrasts with the world’s biggest silver ETF, the iShares Silver Trust (SLV), where steady outflows since the middle of last month has seen the volume of silver bullion held fall to its lowest level since September 2010.

“We expect silver demand to slow during [2012],” says the latest precious metals note from French bank Natixis, citing “reduced investment demand alongside the current weakness in global industrial demand.”

“There have been good data out of the US,” said Jeremy Friesen, Hon Kong-based commodity strategist at Societe Generale, speaking ahead of today’s nonfarm payrolls release.

“But ultimately the US can’t decouple from the European crisis…there are going to be enough reasons to be worried about global growth and the financial system in the next quarter or two, and gold should benefit from that.”

German factory orders fell 4.8% between October and November last year, Bundesbank figures published this morning show.

Retail sales for the 17-nation Eurozone as a whole meantime fell 2.5% in the year to November – compared to a 0.7% y-o-y drop to October – according to official European Union data, while the European Commission’s economic confidence indicator hit its lowest level in over two years last month.

“This data has recession written all over it,” says Martin van Vliet, Eurozone economist at Dutch bank ING.

A report in French newspaper Les Echos suggests the governments of France, Belgium and Luxembourg are considering fully nationalizing Dexia. The three governments pledged last October to guarantee for a decade €90 billion of the bank’s loans, nationalizing its Belgian division.

In Switzerland meantime Phillip Hildebrand, head of the Swiss National Bank – which last year pegged the Swiss Franc to the Euro – has refused to resign after it emerged that his wife bought US Dollars three weeks before the peg was announced.

Here in the UK – where the Pound this morning hit a 15-month high against the Euro – oil company Shell has announced it will close its final salary pension scheme, the last FTSE 100-listed company to do so.

The Sterling price of buying gold hit £1052 per ounce Friday lunchtime in London – 4.6% up on the start of the week.

Hungary’s leader Viktor Orban has expressed support for central bank governor Andras Simor as the government prepares to renew negotiations with the International Monetary Fund and the European Union over a possible bailout. The IMF and EU last month walked away from negotiations after Orban’s government refused to repeal new legislation seen as threatening the central bank’s independence.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011