Indian Central Bank Gold Imports

India has been importing a record amount of gold over the last year but the indian central bank is losing it battle against inflation, spurring investors to sell government bonds.

Gold shipments into India (Which is the 3rd largest economy in Asain) have risen to 800 m3 tons from 557 tons in 2009 and breaking through the previous limit high of 769 m3 tons in 2007, according to Rajef Patel, CEP for India and the Middle East at the World Gold Council. Forecast for this year are looking to push in excess of 800 m3 tons once again,, this will take INdia into the position of one of the worlds largest net buyers of gold, fight with China to hold that position.

Gold Price Analysis

The next couple of days should be very telling on which way GOLD is going.

Intermediate trend broke down and GOLD is trying to find support at the 50 day moving average.

Volume:   The down days are getting much more volume then the advancing days which is a sign there is more selling pressure then buying pressure.

MACD:  The momentum has been decreasing from mid October and currently we are crossing to the downside which can be interpreted as a sell signal.

Ultimate Oscillator: There has been a slight bearish divergence between the highs which further supports a top.

Conclusion: Watch the supports and see if they break down.  Some technical are pointing for prices to go lower so be cautious putting in long positions and be ready to take some money off the table if you are already long.

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What is Gold?

Gold is a chemical element with the symbol Au (from Latin: aurum "gold", originally "shining dawn") and an atomic number of 79. It has been a highly sought-after precious metal for coinage, jewelry, and other arts since the beginning of recorded history. The native metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Less commonly, it occurs in minerals as gold compounds, usually with tellurium. Gold metal is dense, soft, shiny and the most malleable and ductile pure metal known. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Gold is one of the coinage metals and has served as a symbol of wealth and a store of value throughout history. Gold standards have provided a basis for monetary policies. It also has been linked to a variety of symbolisms and ideologies.

A total of 165,000 tonnes of gold have been mined in human history, as of 2009. This is roughly equivalent to 5.3 billion troy ounces or, in terms of volume, about 8,500 m³, or a cube 20.4 m on a side. The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.

Although primarily used as a store of value, gold has many modern industrial uses including dentistry and electronics. Gold has traditionally found use because of its good resistance to oxidative corrosion and excellent quality as a conductor of electricity.

Chemically, gold is a transition metal. Compared with other metals, pure gold is chemically least reactive, resisting individual acids but being attacked by the acid mixture aqua regia, so named because it desolves gold. Gold also dissolves in alkaline solutions of cyanide, which have been used in mining. Gold dissolves in mercury, forming amalgam alloys. Gold is insoluble in nitric acid, which dissolves silver and base metals, a property that has long been used to confirm the presence of gold in items, and this is the origin of the colloquial term "acid test", referring to a gold standard test for genuine value.

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Original Article

Teasco Now In Gold

Tesco, the large supermarket chain has now introduced the Tesco Gold Exchange, which is a cash-for-gold service, much the same as we see in Tesco's throughout Asia. In a nut shell it allows consumers swap their unwanted gold for cash . Tesco are offering £7.81 p/gram  of common 9ct gold. The exchange value it claims is more than some of the competing retailers in the market, reports say.
Cash-for-gold is fast catching up as a service offered by retailers to attract consumers, with consumers ready to exchange unused gold lured by the high gold prices - in November’10 it touched a record high of $1,424 per ounce and is still at $1,407.96.
Tesco’s cash-for-gold is accessible on its website and 15 of its 2,482 stores, as it is implementing this service on a trial basis to make the ‘process transparent and easy to understand for customers’, reports suggest.


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Gold - more than a twinkle in the eye

(SINGAPORE) Analysts believe that gold will shine even brighter this year, as the flight to safe-haven assets continues amid the weakening US dollar and euro, as well as rising demand in markets such as China, will keep gold in the limelight.

On the last day of trade for 2010, gold spot prices closed at US$1,412.63 an ounce, marking a 28 per cent surge this year - the 10th straight annual gain and the third consecutive year to see a double-digit rise. Gold has averaged US$1,227 per ounce in the last year, hitting a record US$1,426.45 on Dec 7.

It marked a spectacular end to a decade that began with trepidation, as industry players had feared a third straight decade of a bear market.

Analysts whom BT spoke to expect gold to reach new highs this year - with an average price of at least US$1,400 an ounce. Some have even touted prices hitting an average US$1,500.

This can happen, given that factors that lifted gold prices in 2010 are likely to linger, with increased demand for safe-haven assets and worries over the stalled US economy as key reasons, said analysts.

For one thing, the US and Europe are likely to continue their currency-weakening policies this year. Most recently, the US Federal Reserve embarked on another round of quantitative easing - a move that has, and will continue, to put pressure on the dollar.

European governments have also moved to tighten fiscal policy because of the sovereign debt crisis that is spreading across the region. This means that the European Central Bank will have to keep interest rates 'extremely low, in order to prevent the eurozone economy from contracting', said Citigroup global metals researcher David Thurtell.

The weakening US dollar and euro has also made gold a sought-after hedge against currency losses, said Mr Thurtell.

Citi has a short-term price target of US$1,450 an ounce for gold, and a 6-12-month target of US$1,550. It expects an average gold price of US$1,500 an ounce this year.

The need for a safe harbour from financial storms has sparked renewed interest among retail investors in gold, which lost favour following its crash in January 1980.

Gold hit a then-record of US$850 an ounce on Jan 21 - equal to an inflation adjusted price of more than US$2,200 today - before crashing the next day.

But these investors are back. Christian Nolting, Asia-Pacific & regional head of portfolio management at Deutsche Bank private wealth management, said: 'Retail investor demand for gold has been quite resilient this year, given the environment of heightened macroeconomic uncertainty, as investors bought gold to diversify their portfolios and hedge against inflation risks.'

Deutsche Bank private wealth management expects gold to reach US$1,400 an ounce within the first quarter this year, and US$1,420 over 12 months. It has an average gold price of US$1,400 an ounce for 2011.

Gold's resurging popularity among retail investors worldwide can also be seen in much simpler, everyday terms, as opposed to a portfolio investment.

An upscale shopping mall in Florida state in the US installed an ATM that dispenses 24-carat gold bars and coins. The 'Gold To Go' machines - the brainchild of German firm Ex Oriente Lux's chief executive, Thomas Geissler - has also been installed in Abu Dhabi's Emirates Palace hotel, as well as countries such as Germany, Spain and Italy.

Firms promising attractive returns on gold investments have sprouted in Singapore. Pawnshops in the country have also seen a new trend: clients redeeming their gold items, only to pawn them later at a higher value.

Central banks - both from developed and developing countries - have also showed more interest in gold given the uncertainty over the future of the international monetary system, with the World Gold Council (WGC) saying that central banks have raised their gold holdings in order to diversify their foreign exchange reserves.

Albert Cheng, managing director of the far east region at WGC, said: 'This is something that won't go away in 2011, especially because the emerging markets will likely continue to look for diversification.'

For example, a WGC report issued in November 2010 showed that the gold holding of Russia's central bank rose 7 per cent in the third quarter of last year.

It is likely that central banks became net buyers in 2010 for the first time in decades, something that is expected to continue.

China, in particular, has thrown its weight behind gold. In 2010, the Chinese central bank moved to liberalise its local gold market and open its doors to local individual investors. This allowed Chinese banks to trade gold bullion on the global market and advertise gold-related investment products for locals.

Citi's Mr Thurtell said: 'China demand appears to have risen more than five-fold in 2010 from 2009, and is set to make further strong gains over 2011.'

WGC's Mr Cheng also believes that China's measures to curb price increases in its property market would make gold a more attractive option to investors.

The WGC thinks that China's investment-driven consumption of gold could have nearly doubled to 150 tonnes last year from 80.5 tonnes in 2009. Mr Cheng added that China's gold consumption is likely to be double in 10 years or earlier.

The jump in Chinese demand could even see China replace India as the world's largest gold consumer. In 2008, India's total gold consumption was 700 tonnes.

Dominic Schnider, head of commodities research at UBS wealth management, told BT: 'Chinese demand might be similar to India, which, by providing a type of base demand on top of financial demand from the developed world, can drive prices.'

UBS has a 12-month price target of US$1,650 an ounce for gold, with the year's average at US$1,500 an ounce.

Investors, however, should not be blinded by all that glitters. Peter O'Malley, HSBC head of resources and energy group, said: 'We suspect that given gold's significant run-up this past year or so, it will be difficult to maintain such momentum. Increasingly, many analysts on the Street see the beginnings of a turnaround in the US economy.'

This, he said, will push investors to look to US equities and the US dollar, thereby paring their gold exposure. HSBC's forecast price for gold in 2011 stands at US$1,425 an ounce.

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http://news.asiaone.com/News/The%2BBusiness%2BTimes/Story/A1Story20110103-256187.html

Gold Price Information - India

Mumbai, Jan 2


In 2010, all precious metals performed exceptionally well in terms of price appreciation, and with the exception of platinum, all others have actually surpassed the 2008 peak. Undoubtedly, silver and palladium have been outstanding performers with the former hitting 30-year highs.
A remarkable feature of 2010 was that ETF holdings of precious metals rose significantly. Gold ETF holdings were up about 300 tonnes which is well short of the 617 tonnes of ETF buying in 2009. Silver inflows were heavy too, especially in the second half. Platinum and palladium inflows and holding also expanded.


Base metals ended the year strongly. Over the week, lead and zinc showed the largest gains of 6 per cent and 7 per cent respectively. LME copper stocks ended the year at 377,550 tonnes, a fourth below end-2009 levels.


Gold: Interestingly, gold has continued to perform incredibly well reaching newer all-time highs during the year in terms of a number of currencies including the Euro, British pound, the Indian rupee and of course the USD. In London on Friday, the last day of 2010, gold PM Fix was at $1,410.25 an ounce, up 0.3 per cent from previous day's $1,405.50/oz. However, silver edged lower by 0.2 per cent to AM Fix of $30.63/oz on Friday, from the previous day's $30.70/oz.
Platinum had a PM Fix of $1,731/oz and palladium $791/oz, both declining from the previous day.
Gold's Fix above the psychological level of $1,400/oz is seen a positive sign for the New Year. For 2011, gold continues to remain a safe bet. All background conditions are gold positive - lingering growth concern, unresolved European sovereign debt crisis, easy money policy and inflation fears. Central bank purchases and popularity of physically backed ETFs (Exchange Traded Funds) have helped propel the market higher.


Investment demand continues to be strong and the metal's safe haven status is unchallenged. Most experts remain positive on the yellow metal in the near-term. For instance, Barclays Capital has forecast an annual average spot price of $1,445/oz for 2011. From the current level of close to $1,400/oz, prices are expected venture further into unchartered territory quarter after quarter, peaking at a quarterly average all-time high in Q3 at $1,490/oz, it is forecast. At that point in time, it is speculated that the market will start to price in prospects of a potential interest rate increase.
What are the risks to gold prices? Because the metal is overwhelmingly driven by investment demand, a mass exodus of investors will exert tremendous price pressure downward. The second risk is jewellery demand destruction because of exorbitant prices, especially in price-conscious markets such as India.


However, there is reason to believe, given the supportive background, investment demand will continue to remain robust. Potential loss of physical demand may be neutralised by rising incomes and higher purchasing power. Consumers may realign their price expectations as is borne out by India's gold jewellery demand in the first three quarters of 2010 which exceeded demand for the whole of 2009.


“Given that gold jewellery is also bought as a store of value, higher prices also act as a purchase incentive”, Barclays commented.


Despite weak fundamentals, silver outperformed gold in 2010 and reached highs not seen since 1980. Silver is riding on the positive sentiment towards gold. If investor appetite were to decline for any reason, silver will be the first precious metal to head southward and suffer a sharp correction.
For 2011, the annual average spot price forecast made by Barclays Capital is $28.1/oz, with price peaking at the quarterly average of $30.9 in Q3.


In India, currently, gold is traded at around Rs 20,600 for 10 grams and silver at about Rs 46,000 a kg. Domestic market prices closely track global price trends. Given the positive outlook for bullion in 2011, investment even at current levels would bring good returns.


As a note of caution it must be mentioned that the market will continue to remain volatile and there will be price fluctuations. It is absolutely important that investors have a clear exit strategy. It is also highly likely that import tariffs on gold and silver will be raised in the New Year so that the exchequer garners additional revenue.


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Gold Price


Information Source www.thehindubusinessline.comhttp://www.thehindubusinessline.com/2011/01/03/stories/2011010350731200.htm

Gold - U.S Dollar 50/50 Investment Strategy

I was talking to a friend of mine yesterday and he is working on the strategy of having a 50/50 Gold to U.S dollar portfolio, interesting I thought.

His basic idea on the way he is investing is at present gold and the U.S dollar have an inverse relationship, i.e as one rises the other will drop in price. My point to him was simply that you are in a no loose technical position, you can neither loose or gain in this situation and personally I think its a little crazy!

Well we all have our different trading systems and ideas but I am still a gold bull and will be for some time yet, roll on the gold price for 2011 I say.

I hope that everyone is over the worst of their hangovers from the NYE parties and in the coming days we will see the markets start up strong and find direction for 2011.

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