Goldhub blog: Posts from September 2019
Twenty Years of the Central Bank Gold Agreement comes to an end today.
(short thread) https://t.co/qmscGo1wSa
- The domestic gold price was 10.3% higher in August compared to July, outpacing the LBMA gold price which rose by 7%
- Indian gold imports reached just 28.2t in August 2019 – 70% lower than the same month last year and lowest level since January 2018
- With elevated domestic gold prices and a higher custom duty, the discount in the local gold market widened out as far as US$55/oz in August
- Monsoon rainfall is 5% above Long Period Average (LPA) with Kharif sowing just 0.2% lower than last year; normal monsoon and healthy sowing bodes well for rural gold demand in Q4 2019.
I was in Shenzhen earlier this month attending various events held by major jewellers and industry bodies such as the Shenzhen Gold and Jewellery Association.
Attracting around 2,300 Chinese jewellers, the Shenzhen International Jewellery Fair 2019 is China’s leading jewellery conference and exhibition, showcasing cutting-edge innovations and exciting developments in China’s jewellery market.
Gold rallied on Friday following the LBMA fix which left the fix price flat on the week and XAU higher (XAU +2%, LBMA -0.1%) as yields fell following the Fed rate cut which left the market thinking the ‘organic growth’ Powell discussed could represent future QE.
- In August, Shanghai Gold Benchmark (PM) rose 11% to 355 yuan/gram and the local gold premium peaked at a six-year high.
- While Au(T+D)’s trading volume in August surged to a new all-time high, gold withdrawals from the Shanghai Gold Exchange (SGE) declined again last month.
- Gold imports dropped to 44t in July, the lowest since 2017.
- The People’s Bank of China (PBoC) added another 6t to its gold reserves in August.
On 17 September, independent asset management firm First Eagle outlined the benefits that it believes gold and gold mining stocks can bring to an investment portfolio. Today, First Eagle discusses gold’s role in detail and assesses the current drivers for performance.
In our recently published report Gold: the most effective commodity investment, we looked at how gold is under-represented in the commodity indices investors often use to gain exposure. This can have unintended consequences on portfolio performance, especially when other commodities – such as oil – can have significantly different characteristics than gold.
While the gold market is a complex place, full of interesting dynamics and uses, nothing quite gets people's attention like the gold price.
Today, we released a report on gold and commodities, covering key themes including:
- Why gold is not a typical commodity
- Why gold is under-represented in commodity indices (ranging from 3% to 12%) despite its clear differentiating benefits
- Why gold is the most effective commodity investment
When Dr Duvvuri Subbarao was Governor of the Reserve Bank of India, the country’s gold reserves increased by more than 50%. Now a Distinguished Visiting Fellow at the NUS Business School in Singapore, Dr Subbarao explains why he believes gold has such a significant role to play among central banks, particularly those from emerging markets.