Month: September 2014

Singapore and Hong Kong Race For Gold Benchmark – Use Brinks and Via Mat For Storage 

Singapore and Hong Kong appear to be competing for the a new global gold price benchmark. Further details emerged at the weekend about the planned launch by Singapore of a new 1kg physically deliverable gold contract for the Asian wholesale gold market. Last week, CME announced a new 1 kilogramme gold contract in Hong Kong.

The new Singapore gold contract differs from others in that as well as acting as a price discovery benchmark for 1kg gold bars in the Asian region, it has been specifically designed to actually deliver gold to wholesalers, because settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar is 32.15 troy ounces.

In June the Singapore Exchange (SGX) indicated that their 1kg gold contract would probably be launched by September, but the launch date has now been pushed back to either October or November. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider.

The Singapore contract will be in lots of 25 kgs, denominated in US dollars,  and it will trade for three hours in the Singapore morning time. Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5 hours ahead of the Indian market, but is in the same time zone as both Hong Kong and Shanghai.

Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added.

Physical settlement is two days after trade date and consists of  99.99 purity 1kg gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list . This means that wholesalers will be able to gauge demand and supply of 1kg bars over the following week.

At a gold conference in Pune, India this weekend, the SGX clarified the new launch date and pointed out how the new 1kg contract could benefit the physical Indian gold market.

At the conference, Derek Neo of the SGX said that the 1kg gold contract will “benefit Indian traders as they will be able to see the price trend of gold kilobar when the Singapore market for gold closes at 11.30 a.m” (9am Indian time), and that since India is one of the world’s largest importers of gold, “the contract is going to provide another avenue to source quality gold”.

The SGX is exclusively using the vaults of Brinks Singapore as the official vault for the contract’s 1kg gold bars. In Singapore, Brinks have a vaulting facility in the free port of Singapore.

Four international banks that are members of the SBMA will act as market makers for the new gold contract and these banks need to guarantee availability of 1 kg gold bars in order to provide the liquidity to allow the new contract to work as designed. These banks are JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.

Since the SGX 1kg gold contract is traded on the Exchange and is regulated, it will be interesting to see the published trading statistics from the Exchange once the gold contract product is up and running and the volume of 1kg bars that these four bullion banks are providing to the Brinks vault in Singapore.

New Hong Kong Gold Contract

The US based CME Group who run the Comex gold futures exchange in New York and also host the new LBMA Silver Price auction in London have also announced plans for a new 1kg gold product in Hong Kong.

The CME’s new Hong Kong 1kg product is a US dollar denominated gold futures contract. It will trade on the Comex in New York and not in Hong Kong, but it will be settled and deliverable in Hong Kong at exchange-approved vaults. This is significantly different to the SGX physically
deliverable 1kg gold contract in Singapore.

There are still not many details released about the CME’s Hong Kong gold futures contract, but it will primarily be a cash settled contract for 99.99% fine 1kg gold bars, and is designed for global market participants who want to arbitrage and hedge risk between the New York or London gold prices and the Hong Kong regional price.

Last Thursday, the CME announced that three vault providers have applied to be approved vaults for the gold kilo contract. These are Via Mat Management AG, Brinks Global Services USA, and HKIA Precious Metals Depository Ltd.

Via Mat, Brinks and HKIA all have vaulting facilities in Hong Kong.

The contract specifications, such as contract size and trading hours have not yet been released but it’s thought that the CME’s Hong Kong contract will be structured similarly to the CME’s existing 100-ounce COMEX gold futures contract that trades in New York.

MARKET UPDATE

Today’s AM fix was USD 1,234.75, EUR 955.62 and GBP 759.43 per ounce.

Friday’s AM fix was USD 1,237.25, EUR 957.11 and GBP 760.87 per ounce.

Gold in USD – 5 Years (Thomson Reuters)

Gold fell $11.40 or 0.92% to $1,230.70 per ounce and silver slid $0.06 or 0.32% to $18.65 per ounce on Friday. Last week, gold and silver were both down 3% and 2.86%.

Gold recovered from Friday’s low in Asian trading this morning, ending in Singapore near $1233, before continuing the recovery in London trading. Silver is trading in London at $18.58, essentially unchanged from Friday’s New York close.

Precious metal trading will this week be predominantly affected by the upcoming US Fed FOMC meeting scheduled for tomorrow and Wednesday.

The Platinum price has recovered slightly today, rising 0.51% to $1371. Palladium is also stronger, up 1.93% at $845.

See the Essential Guide To Storing Gold In Singapore (Click link)

 

via Zero Hedge http://ift.tt/1y6DYz7 GoldCore

via Zero Hedge http://ift.tt/1qWAicL williambanzai7

But but but… the survey all said record highs… Yet another piece of hard data hits the tape and disappoints. While Fed surveys point to an exuberant economy, Industrial Production fell 0.1% in August (missing +0.28% expectations) for its worst print since January’s “weather”-related plunge. This comes on the heels of Chinese Industrial Production at its worst in 6 years… perhaps explaining why global GDP expectations continue to test cycle lows. US Capacity Utilization also dropped to 78.8% (lowest since Feb) and the weakness was all Manufacturing driven as production slumped 0.4% MoM – its worst since Jan. So who you gonna believe? Soft surveys? or Hard data?

 

NOT the exuberant economy stocks are crowing about…

 

Perhaps most worryingly – where have we seen such a divergence in Industrial Production before between China and US?

Charts: Bloomberg and Goldman

via Zero Hedge http://ift.tt/1y6DUPM Tyler Durden

With the S&P 500 hitting fresh record highs day after day (apart from last week), everything must be great, right? Wrong! As we have noted previously, the leadership in this market is becoming more and more narrowly focused as stunningly 47% of Nasdaq Composite stocks are down at least 20% from their highs with the average stock in the index in a bear market (down 24%). The same is true for the Russell 2000, with over 40% of stocks in bear market and an average drop from recent highs of 22%. By contrast only 31 names in the S&P 500 have seen drops of 20% or more this year. It appears, just as there has been an up-in-quality rotation in credit markets, so stock investors appear to have rotated into momentum winners, chasing returns in an ever-more narrow group of extreme beta stocks.

 

 

Source: Bloomberg

via Zero Hedge http://ift.tt/1tWb2Hh Tyler Durden

US Industrial Production and the NY Fed Empire State Manufacturing survey are the two main releases for the US. In Europe, the euro area trade balance will be the notable print. Beyond today, US PPI, German ZEW and UK CPI are the main economic reports tomorrow. Wednesday will see the release of BOE’s meeting minutes, the US CPI, and the Euro area inflation report. On Thursday, President Obama will host Poroshenko and on the data front we have Philly Fed, initial claims, and building permits to watch out for, but the biggest market moving event will surely be the Scottish independence referendum. German PPI will be the key release on what will otherwise be a relatively quiet Friday.

And a detailed breakdown from Goldman:

In DMs, highlights of next week include US FOMC, Philly Fed, CPI and IP; MP Decisions in Norway and Switzerland; Australia, Sweden, and UK Minutes.

• [Monday] US IP (expect 0.10%, below consensus).
• [Tuesday] UK CPI, Australia Minutes.
• [Wednesday] US FOMC (expect no change in forward guidance, retain language on “considerable time”, mildly hawkish shift in SEP) and CPI (expect flat), Euro area CPI (final in line with flash at 0.3%), Sweden and UK Minutes.
• [Thursday] US Philly Fed (expect 24.0 vs. consensus 23.4), MP Decisions in Norway and Switzerland (expect no change from either).
• [Friday] Results from Scottish referendum for independence.

In EMs, highlights of next week include MP Decisions in Thailand, Malaysia, South Africa, and Nigeria; Mexico and Poland Minutes.

• [Monday] CPI in Israel and Poland.
• [Tuesday] Israel GDP, Poland CPI.
• [Wednesday] Thailand MP Decision (expect rates on hold), CPI in Malaysia and South Africa.
• [Thursday] MP Decision in Malaysia (expect rates on hold) and South Africa (expect rates on hold), Poland Minutes, Ukraine IP.
• [Friday] Mexico Minutes; Nigeria MP Decision.

Monday, September 15

Events: Speech by Germany’s Finance Minister Schaeuble.

• United States | [MAP 2] Industrial Production MoM (Aug): GS 0.10%, consensus 0.30%, previous 0.40%
• United States | [MAP 2] Empire Manufacturing (Sep): Consensus 16, previous 14.69
• United States | Capacity Utilization (Aug): GS 79.20%, consensus 79.30%, previous 79.20%
• Israel | CPI YoY (Aug): GS 0.40%, consensus 0.20% (0.10% MoM), previous 0.30% (0.10% MoM)
• Poland | CPI YoY (Aug): GS -0.30%, consensus -0.30% (-0.40% MoM), previous -0.20% (-0.20% MoM)
• Colombia | [MAP 4] Industrial Production YoY (Jul): GS 0.00%, consensus 2.20%, previous -0.60%
• Peru | [MAP 5] Economic Activity YoY (Jul): GS 2.50%, previous 0.30%
• Also interesting: [DM] US Empire Manufacturing; Canada Existing Homes Sales; Euro area Trade Balance; Norway Trade Balance; United Kingdom Rightmove House Prices Singapore Unemployment and Retail Sales [EM] India Trade Balance and Wholesale Prices; Philippines Overseas Remittances; CA in Czech Republic and Poland; Unemployment in Turkey and Peru; Colombia Retail Sales.

Tuesday, September 16

[Number of MAP releases = 0; Average MAP relevance = 0.0]

• Events: Speeches by BOJ’s Kuroda, ECB’s Liikanen, Bank of Canada’s Poloz, RBA’s Kent and Australia’s Treasurer Hockey, UN General Assembly.
• United Kingdom | CPI Core YoY (Aug): Previous 1.8%
• Australia | Minutes from MP Decision: We expect the minutes to continue to signal that the RBA remains firmly on the sidelines, balancing the significant degree of spare capacity in the labour force against the longer run risks to financial stability from rising house prices.
• Israel | GDP Annualized (2Q P): Previous 1.70%
• Nigeria | CPI YoY (Aug): GS 8.40%, consensus 8.50%, previous 8.30%
• Poland | CPI Core YoY (Aug): GS 0.50%, consensus 0.40% (-0.10% MoM), previous 0.40% (0.00% MoM)
• Also interesting: [DM] US PPI and Total Net TIC Flows; Euro area ZEW Survey Expectations; Spain Labour Costs; United Kingdom ONS House Price; Australia Roy Morgan Consumer Sentiment [EM] Poland Employment and Wages.

Wednesday, September 17

Events: Speeches by Fed’s Yellen and ECB’s Mersch.

• United States | MP Decision: We expect no change in the forward guidance, and we expect the Fed to retain language pertaining to the “considerable time” and “significant underutilization” of labor market resources. We expect the content of the Summary of Economic Projections (SEP) to show a mildly hawkish shift. As noted in the US weekly (link), we expect the “considerable time” forward guidance to stay in the September statement. Removing the language at this time would be a substantial hawkish surprise, in our view. “Significant underutilization” of labor market resources will also likely remain in the statement, despite some discomfort with this phrase apparent in the July minutes. The pace of asset purchases will be tapered by a further $10bn per month to $15bn. We expect the content of the Summary of Economic Projections (SEP)—released coincident with the FOMC statement—to show a mildly hawkish shift. Core inflation projections for 2014 may move up slightly, while unemployment projections move down. The median 2015 “dot” may shift up a hair to 1.25%. We expect the 2017 fed funds rate median—which will be released for the first time in the September SEP—to stand at 3.5%, still slightly below participants’ longer-run consensus of 3.75%. The SEP may include a clarification regarding how the dots should be interpreted in light of the Committee’s desire to maintain a target range for the fed funds rate in the future.
• United States | CPI MoM (Aug): GS 0.00%, consensus 0.00% (1.90% YoY), previous 0.10% (2.00% YoY)
• United States | Current Account Balance (2Q): Consensus -$114.0B, previous -$111.2B
• Euro area | CPI Core YoY (Aug F): GS 0.30%, consensus 0.90% (0.10% MoM), previous 0.90% (-0.70% MoM)
• Sweden | Minutes from MP Decision
• United Kingdom | Minutes from MP Decision
• Malaysia | CPI YoY (Aug): Consensus 3.2%, previous 3.2%
• Thailand | MP Decision: We expect rates on hold (Benchmark Interest Rate at 2.00%, in line with consensus) as the incremental information available on economic activity since the last meeting has been positive. At the last BOT meeting on the sixth of August the monetary policy committee voted unanimously to keep rates on hold, and we expect this to remain the case for the rest of the year.
• Poland | [MAP 3] Sold Industrial Output YoY (Aug): Consensus 0.30% (-5.80% MoM), previous 2.30% (2.00% MoM)
• South Africa | CPI YoY (Aug): GS 6.40%, consensus 6.20% (0.30% MoM), previous 6.30% (0.80% MoM)
• Also interesting: [DM] US MBA Mortgage Applications and NAHB Housing Market Index; Euro area Construction Output; Trade Balance in Italy and Spain; United Kingdom Unemployment; Australia Westpac Leading Index; New Zealand Balance of Payments; Singapore Exports [EM] Russia Unemployment; Retail Sales in Russia and South Africa.

Thursday, September 18

Events: Speeches by BOJ’s Kuroda, FDIC Chairman Gruenberg and Vice Chairman Hoenig, RBA Bulletin, ECB Announces TLTRO Allotment, Scotland Referendum on Independence (results announced Friday, September 19).

• United States | [MAP 4] Philadelphia Fed Business Outlook (Sep): GS 24.0, consensus 23.4, previous 28
• United States | Housing Starts MoM (Aug): GS -5.00%, consensus -4.90%, previous 15.70%
• Norwa
  y | MP Decision: We expect rates on hold (at 1.50%) and for the Norges Bank to revise up its policy rate path by 30-50bp.
• Sweden | GDP QoQ (2Q F): Previous 0.20% (1.90% YoY wda)
• Switzerland | MP Decision: We expect rates on hold (SNB 3-Month Libor Target Rate at 0.00%) and for the SNB to reconfirm its minimum exchange rate target against the Euro.
• Japan | Trade Balance (Aug): GS -¥1063.0B, consensus – ¥1027.5B, previous (r) -¥962.1B
• New Zealand | GDP SA QoQ (2Q): GS 0.6% (3.8% YoY), consensus 0.6% (3.8% YoY), previous 1.0% (3.8% YoY)
• Malaysia | MP Decision: We expect rates on hold (Overnight Policy Rate at 3.25%, in line with consensus), pausing before a further 25bp rate hike in November. Since the last meeting in July, inflation has continued to moderate, and at 3.2% YoY remains at the low end of BNM’s forecast range of 3%-4% for 2014.
• Poland | Minutes from MP Decision
• South Africa | MP Decision: We expect rates on hold (repo rate at 5.75%, in line with consensus). This is primarily based on our expectation for August inflation (on Wednesday, September 17) and the recent rates/FX market dynamics. This contrasts with our view of what would be required to address the current risk of stagflation. Hence, we expect the SARB to be more cautious but to continue to stress that it would not hesitate to hike if inflation or inflation expectations were threatened.
• Ukraine | Industrial Production MoM (Aug): Consensus (-18.00% YoY), previous -2.20% (-12.10% YoY)
• Colombia | [MAP 5] GDP YoY (2Q): GS 4.60%, consensus 4.70% (0.80% QoQ), previous 6.40% (2.30% QoQ)
• Also interesting: [DM] US Initial Jobless and Continuing Claims and Building Permits; Euro area Construction; Italy CA; Switzerland Trade Balance; United Kingdom Retail Sales and CBI Trends Total Orders; Japan Machine Tool Orders (Aug F); Australia New Zealand CA [EM] Hong Kong Unemployment and Composite Interest Rate.

Friday, September 19

Events: ECB Announces 3-Year LTRO Repayment.

• Nigeria | MP Decision
• Brazil | IBGE Inflation IPCA-15 MoM (Sep): GS 0.35% (6.58% YoY), previous 0.14% (6.49% YoY)
• Mexico | Aggregate Supply and Demand (2Q): Previous 2.40%
• Mexico | Minutes from MP Decision: We expect the minutes to preserve a neutral rate bias going forward but to contain slightly more hawkish language on the balance of risks for both domestic growth and short-term inflation.
• Also interesting: [DM] US Leading Index; Canada CPI; Euro area CA; Japan Leading Index, Coincident Index and Foreign Buying Stocks/Bonds; New Zealand ANZ Consumer Confidence and Job Advertisements [EM] Philippines CA; Colombia Trade Balance.

Source: Bank of America, Goldman Sachs

via Zero Hedge http://ift.tt/1m5Hogs Tyler Durden

Following last month’s biggest plunge in 2 years to 4-month lows, it is likely no surprise that the soft-survey-based Empire Fed index exploded to 27.5 (smashing 15.71 expectations) to its highest since October 2009. Of course – away from the headline exuberance, employment plunged to its lowest since 2013, the average workweek slipped, capex expectations plunged, and new orders barely rose (while Prices Received soared). Seems like seasonal adjustments played a strong hand in this exuberance… given hardly any sub indices jumped.

Headlines hits 5-year highs…

 

as employment pluinges to 2013 lows…

 

Chart: Bloomberg

via Zero Hedge http://ift.tt/1AQmcw1 Tyler Durden