‘Gold Wars’ – Swiss Gold Shenanigans As Russia Stockpiles Gold For War

‘Gold Wars’ – Swiss Gold Shenanigans As Russia Stockpiles Gold For War

Today’s AM fix was USD 1,154.00, EUR 926.31 and GBP 736.20 per ounce.
Yesterday’s AM fix was USD 1,161.00, EUR 930.81 and GBP 736.26 per ounce.

Gold climbed $1.70 or 0.15% to $1,161.80/oz yesterday. Silver fell $0.06 or 0.38% to $15.61/oz.

Gold
for immediate delivery lost 0.8% to $1,153.50/oz in late morning trade
in London. It reached $1,132.16 last Friday, November 7, the lowest
since April 2010.

Gold, for the moment, is taking its signal and
remaining weak due to the resurgent dollar and buoyant and bubbling
stock markets (see chart below).

S&P 500 – 20 Years (Thomson Reuters)

There
are lots of important economic data points in the coming week including
US October industrial output, US PPI & CPI, Germany ZEW and China
HSBC Flash November Mfg PMI.

Negative numbers, particularly weak
industrial output and higher than expected inflation would likely see
gold supported and could even see a safe haven bid and short covering
rally.

More dovish than expected FOMC Minutes could also support
gold. Hawkish minutes could lead to further weakness and gold testing
the next level of support at $1,100/oz.

Gold in U.S. Dollars – 10 Years (Thomson Reuters)

Gold
remains very vulnerable and further declines to $1,000/oz are quite
possible. Though the momentum of the selling seems to have abated
somewhat, momentum is a powerful thing and the short term trend remains
down.

Three important factors which should support gold above
$1,100/oz are Chinese demand, central bank demand including from Russia
and of course the Swiss Gold Referendum.

Chinese SGE Gold withdrawals for the week were at 54.19 tonnes suggesting Chinese gold demand is more robust than thought.

Chinese SGE Weekly Gold Withdrawals at 54.19 tonnes

Questions are being asked about whether Chinese demand has actually fallen as the WGC suggest.

They
appear to be only viewing Chinese demand through the rather narrow
prism of Hong Kong exports to China. However, today China is importing
huge volumes of gold bullion from all over the world and therefore
deliveries on the Shanghai Gold Exchange are a much better benchmark of
real Chinese demand.

Silver in U.S. Dollars – 10 Years (Thomson Reuters)Russia,
according to the latest data from The World Gold Council (WGC) has
continued to buy significant amounts of gold. Dwarfing the rest of the
world’s buying in Q3, Russia added a large 55 tonnes to its reserves.

The Telegraph
reports that Putin is taking advantage of lower gold prices to pack the
vaults of Russia’s central bank with bullion as it prepares for the
possibility of a long, drawn-out economic war with the West.

Russia bought more gold in Q3 then all other countries combined…

It
is not just Russia buying gold. So too are ex Soviet States which are
aligned with Russia. Meanwhile, the People’s Bank of China quietly
continues to stealth diversify its reserves into gold.

The Swiss
gold referendum is in just 16 days and volatility is likely to pick up
ahead of the big vote. A ‘no’ vote is still more likely than a ‘yes’
vote but the results will likely be very close.

There is much
dissatisfaction with politicians amongst voters in the western world.
Indeed, there is a distrust of banks and bankers. The Swiss people are
stubbornly independent and quite contrarian by nature. Also there is the
important fact that there is a another vote on the same day about
immigration in Switzerland and this is likely to bring out more
conservative voters who may vote for the Swiss Gold Initiative.

All in all it promises to very interesting and very close and should result in volatility in the gold market.

Should
there be a sense that the yes side may win then we would expect gold to
recover from its recent bout weakness and test $1,200/oz again.

We remain bearish in the short term but very bullish for 2015 and in the coming years.

Read Essential Guide to Gold Storage in Switzerland

www.GoldCore.com