Metals Market Report Archive
Metals Market Report 11-08-2017

The Mike Fuljenz Metals Market Report

November, 2017 - Week 1 Edition

Some Surprising “Reversals” in Gold Demand Overseas

Sometimes, gold demand statistics are hard to verify. People buy or sell gold on the underground market or are reticent to reveal their purchases.  Last week we learned about several reversals in gold demand:

Germany has “quietly become the world’s biggest gold consumer, stealthily climbing past China and India,” says Forbes Magazine (October 11, 2017).  The World Gold Council reports that Germany took over as #1 gold consumer spot in 2016, after German investors spent $8 billion on gold coins, bars and exchange-traded funds.  This revival in German demand is rooted in fears that won’t quickly subside, says the World Gold Council, “fear of a Eurozone meltdown and the collapse of trusted banking institutions.”

China’s demand is likely rising 15% rather than declining 15%, as media reports proclaimed.  That’s because the normal way of reporting Chinese demand comes from the volume of gold imports through Hong Kong, but that is the older, less popular way of measuring gold demand.  By contrast, the China Gold Association say demand for physical gold in the country has actually increased 15% for the first nine months of the year – even though Hong Kong imports have declined 15%. Most of China’s retail gold demand comes via the Shanghai Gold Exchange, not Hong Kong. Gold also enters China in Beijing, unreported. On top of that, China is the largest gold producer in the world, and that gold stays home.

Turkey is stepping up its gold buying by about 245%.  Through the first three quarters of 2017, Turkey bought $13.8 billion of gold vs. $4 billion for the same period last year.  Although total central bank gold buying is down this year from last year, Russia, China and Kazakhstan regularly buy central bank gold, and now Turkey’s central bank boosted its gold holdings to a three-year high, adding $7.5 billion since last December. (Turkey’s central bank is now the world’s 13th largest gold holder). This dramatic gold rush resulted from a speech by President Recep Tayyip Erdogan last November, asking Turks to use gold instead of dollars to stanch the eroding value of the Turkish lira, which is down 7% to the dollar this year.

Gold Reacted to the Nomination of the New Federal Reserve Chairman

Gold reacted to the nomination of Jerome Powell as the new Federal Reserve Chairman by yawning (no change) at first, then by dropping $10, since he is viewed to be “Yellen 2.0,” more of the same, but gold then rose $12 Monday morning on a slightly weaker dollar and overseas developments. Over the weekend there was a shake-up in the Saudi Arabian kingdom after several Saudi princes and their business cohorts were arrested on corruption charges.  Also, President Trump is in Asia and has promised to step up the level of confrontation with North Korea – a development which usually sends gold prices up in reaction.

Trump’s Possible Release of Kennedy Assassination Files Sparks Demand for Silver Kennedy Half Dollars

This year is the centennial of the birth of President John F. Kennedy in 1917.  There was a surge in demand for 1964 Silver Kennedy Half Dollars around the date of his birth (last May 29), and there will likely be another surge in demand when the last remaining Kennedy assassination files are released, perhaps this week.  President Trump recently promised to expedite the release. “Subject to the receipt of further information, I will be allowing, as President, the long blocked and classified JFK FILES to be opened.”

A White House official told reporters last Saturday: “The President believes that these documents should be made available in the interest of full transparency unless agencies provide a compelling and clear national security or law enforcement justification otherwise.” The White House also said that they were working “to ensure that the maximum amount of data can be released to the public” by the October 26 deadline.  As soon as they are released, we will cover any breaking news and perhaps tie it into a Kennedy coin article as the date of the tragic assassination (November 22) approaches.

London Bullion Market Association Predicts $21.60 Silver by October 2018!

Gold is up over 11% this year, with silver gaining 6%, vs. declines in most other commodities. The annual meeting of the London Bullion Market Association last week predicted that gold will be at $1,367 a year from now, for a gain of 6.7%, but they predicted a much larger surge in the price of silver. In their meeting held in Barcelona, the LBMA predicted that silver would soar 21% to $21.60 by October 2018.

 

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