Gold Demand Extraordinary In Vietnam – Paying $217 Premium Over Spot

Today’s AM fix was USD 1,386.00, EUR 1,038.59 and GBP 881.79 per ounce.
Friday’s AM fix was USD 1,379.75, EUR 1,035.54 and GBP 882.76 per ounce.

Gold climbed to $1391.50/oz on Friday, its first close above $1390/oz in four weeks and silver climbed 1.2 percent to $22.07 an ounce.

Gold is marginally lower today in most currencies after last week’s small gain which was positive from a technical perspective.

Geopolitical tensions in the Middle East looks set to again brandish gold‘s safe-haven appeal and will support prices. Gold is higher in yen today as the yen has fallen against all currencies.

Demand in India and across much of Asia has fallen from the record levels seen in April but remains robust nevertheless which will support prices. Extraordinary demand from India and China has received all the attention in recent weeks while equally extraordinary demand in other Asian countries, such as Vietnam, has been completely ignored.

The Vietnamese Central Bank sold another 25,700 taels (37.5 grams, 1.2 troy ounces) at a gold bar auction on Friday in order to try and satiate the massive public demand for gold in Vietnam.

The Central Bank hopes that the sale of gold into the market will reduce the very high premiums paid by gold buyers in Vietnam, the largest buyer of gold in Southeast Asia after Thailand and one of the largest physical buyers of gold per capita in the world.

Vietnamese people hold gold as a store of wealth for protection against war, inflation and currency depreciation. In recent months, the bursting of bubbles in the stock market (see chart) and property market and the continuing devaluation of the dong has led to record demand in Vietnam and a surging premium over the spot price of gold.

Today, the premium was close to 5.5 million dong which is the equivalent of a very high premium of $217 per ounce over spot.

The premium reached an all-time high of more than $210 per ounce or 6 million dong in April, when gold prices were hammered by what appeared to be manipulative selling on the COMEX futures market.

The Vietnamese Central Bank has held sales since the end of March to help banks return deposits by June 30. So far 709,800 taels, or about 27 tons, have been sold in 28 auctions through June 7, according to the bank.

It is hoped that the gap between domestic and global prices for immediate delivery will probably drop to 4 million dong a tael ($158 an ounce) by the end of July, according to Nguyen Thanh Truc, vice chairman of the Vietnam Gold Traders Association.

Vietnam’s central bank has, like the Reserve Bank of India, tightened rules on gold trading. These include making itself the sole importer. This is an attempt to limit gold demand, the impact of gold prices on the exchange rate and in a misguided attempt to prevent a further devaluation of the dong.

As part of the drive, banks must return all gold deposits to investors by June 30, while the State Bank of Vietnam is selling gold to lenders and trading companies to boost domestic supplies.

Vietnam consumed 77 metric tons of gold last year. This compares favourably with massive gold buyers in India and China – 864.2 tons in India, 776.1 tons in China, where the populations are over 1 billion. Vietnam has a population of just 87 million and thus is one of the highest buyers of physical gold per capita in the world.

Purchases of physical gold between 2011-2012 accounted for over 3% of GDP.

Interestingly, property prices are often quoted in taels of gold rather than the local currency due to the Vietnamese experience of monetary inflation and currency debasement.

“The stricter regulatory measures implemented by the State Bank of Vietnam and the fear of a steep decline in gold’s price may affect gold demand temporarily,” Albert Cheng, Far East managing director at the council, said in an e-mail.

“In the long run, for the majority of Vietnamese, particularly those who have lived through the war years and the ensuing economic regression, gold is still considered as the favorite tool for saving and investment.”

Source: http://www.zerohedge.com/contributed/2013-06-17/gold-demand-extraordinary-vietnam-%E2%80%93-paying-217-premium-over-spot

Gold Premium Surges In China – Wise ‘Aunties’ And Wealthy Buying

Today’s AM fix was USD 1,405.25, EUR 1,074.68 and GBP 918.64 per ounce.

Yesterday’s AM fix was USD 1,396.75, EUR 1,072.61 and GBP 915.00per ounce.

Gold climbed $27.10 or 1.96% yesterday to $1,412.00/oz and silver also gained 2.57%.

#000000; font-family: Arial, Helvetica, sans-serif; font-size: medium; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px;”>

Gold inched down today after yesterday’s 2% gain. Gold was higher in Australian dollars after the Aussie dollar fell on concerns about the Australian economy.

Monday’s economic data showed U.S. manufacturing activity had slowed to the lowest level in almost 4 years. The still fragile nature of the U.S. economy will support gold.

Poor economic data is confusing the bulls who continue to under estimate risk. The monthly nonfarm payrolls figures out on Friday will give further guidance regarding whether the U.S. is tipping into recession.

Deutsche Bank has recommended buying gold in Japanese yen and Australian dollars.

The bank cites the significant increase in Japan’s balance sheet as likely to cause the yen to weaken further and says the Australian dollar is overvalued.

While gold in yen is down just 3.6% in 2013, in the last 12 months the yen has fallen by 10.1% against gold showing gold’s importance as a hedge against currency devaluations.

As long as the world’s economy remains in tatters then safe havens will be few and far between.

While gold’s safe haven credentials have taken a bit of a battering of late, they will again prove themselves over the long term.

The banking crisis in Cyprus has shown that even bank deposits are not safe and globally there are plans for so called ‘bail ins’ or deposit confiscation for banks that become insolvent.

The premium gold buyers in China are willing to pay to take immediate delivery of gold, as bullion jumped four-fold in April after prices fell sharply.

Store of wealth buyers thronged jewellery stores and bullion brokers in China in order to buy gold jewellery, coins and bars.

Photos of Chinese “aunties,” a term of respect for older women, clearing shelves in goldsmith shops made headlines in government media such as the People’s Daily and millions of Weibo microblog accounts after the 14% plunge in prices in the two days through April 15.

The biggest such drop since 1983 was seen as an unprecedented opportunity by some, which prompted fabricators to replenish inventory by taking delivery on the Shanghai bourse.

The Bloomberg CHART OF THE DAY (above) shows that in the 12 months through April 12, before the rout, gold for immediate delivery in China traded at an average premium of $7.22 an ounce to the prevailing London counterpart, according to Shanghai Gold Exchange data.

The premium has averaged $32 an ounce since mid-April, as physical demand surged, and was at $17.15 at 2:17 p.m. in Shanghai.

“Premium is a function of demand and supply, and right now you could interpret the high premium in Shanghai as a sweetener to entice the overseas gold supply to flow into China,” Qu Mingyu, a trader at Bank of China Ltd. in Shanghai said on May 24.

Even before the mid-April price drop, China’s gold imports jumped to a record in the first quarter, according to official data, and probably rose further through May, Qu said.

China’s output of 403 metric tons in 2012 made it the world’s largest producer for a sixth straight year, according to the China Gold Association. Domestic demand was 776 tons last year, which outpaced supply and spurred imports, according to the World Gold Council.

The store of wealth demand is not just from Chinese ‘aunties.’ There remains an under estimation of the demand coming from wealthy Chinese and high net worth and ultra high net worth individuals (HNWs and UHNWs).

This has not been commented upon or analysed but we have direct experience of wealthy Chinese people looking to store gold in Hong Kong and Switzerland, as have other storage providers.

Given the significant cultural affinity for gold in China, there is likely to be sizeable demand from wealthy Chinese people looking to diversify and protect their new found wealth.

To characterise Chinese demand for physical gold as solely from “aunties” is to simplify Chinese demand. Indeed, besides Chinese people buying gold, Chinese companies and of course the official sector and the People’s Bank of China are also likely accumulating gold.

The significant broad based demand for gold in Asia, and particularly from India and China, continues to be ignored and under estimated by gold bears such as Nouriel Roubini.

Source: http://www.zerohedge.com/contributed/2013-06-04/gold-premium-surges-china-wise-%E2%80%98aunties%E2%80%99-and-wealthy-buying

All Time Record Gold Transactions Reported By LBMA

Today’s AM fix was USD 1,410.25, EUR 1,085.98 and GBP 926.94 per ounce.
Yesterday’s AM fix was USD 1,406.25, EUR 1,083.90 and GBP 926.75 per ounce.

Gold climbed $19.00 or 1.36% yesterday to $1,413.80/oz and silver also gained 1.25%.

Gold is marginally lower today in dollars but higher in other currencies but remains near a two-week high and is heading for the best week in a month in all currencies, with a gain of 2% in dollar terms.

The South African rand has collapsed 7.7% against gold this week again showing gold’s hedging properties.


The precious metals have been weak again in May with gold falling 4.4% despite this weeks’ recovery. Silver is down 7% and platinum by 2.6%. Palladium has recovered from recent weakness and those who accumulated on weakness are set for the best month since November after it surged 6.6% in May.

Weakness in gold and silver is leading to robust demand internationally as store of value buyers accumulate gold and silver on this dip. This is particularly the case in Asia where premiums remain robust and supply demand imbalances remain.

The persistent strong demand of this week began on the price falls in April. This demand is clearly seen in the London gold and silver trading data released by the London Bullion Market Association (LBMA) yesterday.

London gold trading jumped to a 20 month high in April and silver volumes surged 25% after the price falls led to an increase in physical buying, the LBMA said in a report.

Trading in gold averaged 24.1 million ounces a day in the London market, the most for any month since gold reached record nominal highs in August 2011, the LBMA said in a statement yesterday as reported by Bloomberg.

The 24.1 million ounces was a 10% increase on March when 21.8 million ounces a day were traded.

Silver volume surged nearly 25% to 165.2 million ounces a day, up from 132.5 million ounces in March.

There were 5,395 gold transactions on average per day, the highest on record, while silver transfers at 1,007 a day were the second-highest ever, according to the report.


Gold fell 14% in London in the two trading sessions ended April 15, the biggest drop in more than 30 years, on ‘speculation’ that Cyprus or other European countries would sell holdings in the precious metal, the LBMA said.

The price has rebounded as much as 13% through early May as demand increased for gold coins and jewelry.


“April was characterized by continued offloading of both metals by ETF funds,” the LBMA said. “But this was more than offset by strong physical demand, particularly from India,” the world’s biggest consumer.

The value of gold transferred in April increased about 3% from the previous month to a daily average of $35.8 billion, the LBMA said. Silver values climbed about 9% to $4.17 billion a day.

The South African rand collapsed 7.7% against gold this week. In the same way that Japanese people preserved their wealth through gold ownership this week and in recent months (stock falls and currency devaluation), gold has protected South African people from currency devaluation in recent years and again this week. More importantly, it will do so in the coming years.

Source: http://www.goldcore.com/goldcore_blog/all-time-record-gold-transactions-reported-lbma