Gold Nears $1,900 - Venezuela Formally Requests Gold Holdings Held By BOE Ship By Sea By Tyler Durden |
08/22/2011 07:55 - 0400
Gold Nears $1,900 - Venezuela Formally Requests
Gold Holdings Held by BOE Ship By Sea
All major currencies have fallen against
gold and silver again today with gold reaching new record
nominal highs in most fiat currencies including U.S. dollars.
Gold reached a new record of $1,894.80/oz - just shy of
$1,900.
Cross Currency Table
Gold is trading at 1,870.10 USD , 1,296.40
EUR , 1,132.40 GBP, 1,470.90 CHF and 143,670 JPY per ounce
and has risen some 1% in all currencies. Gold is particularly
strong against the yen and Swiss franc which have fallen
in international markets on concerns of debasement.
The London AM fix was a fourth consecutive
record nominal high in US dollars. Gold’s London AM
fix this morning was USD 1,877.75, EUR 1303.17, GBP 1139.55
per ounce (from Friday’s USD 1,862, EUR 1299.28, GBP
1126.91 per ounce).
Silver is in all major currencies and has
risen another 1.4% in dollars after last week’s 8%
gain.
Gold’s 6.2% rise last week and silver’s
8.2% rise was barely reported in the press and media in
Europe over the weekend – with all the focus continuing
to be on equities and to a lesser extent bonds. The usual
suspects in stockbrokerages and banks warned about gold
being a bubble again.
Silver was not reported at all and remains
almost completely taboo in the non specialist financial
press. Besides the very occasional article warning that
it is a bubble.
According to Bloomberg, the central bank
of Venezuela has sent a statement by e-mail requesting its
99 tons of gold holdings from the Bank of England, citing
the institution’s president Nelson Merentes.
“We’ve contacted the Bank of
England and the corresponding protocols have been initiated
to complete this operation as soon as possible,” Merentes
said, according to the statement. “Once that’s
done, the shipments will begin by sea.”
Chavez ordered the central bank Aug. 17
to repatriate $11 billion of gold reserves held in developed
nations’ institutions. Chavez fears 'hostile countries'
may seize the national patrimony.
Venezuela holds 211 tons of its 365 tons
of gold reserves in U.S., European, Canadian and Swiss Banks.
40 shipments will be needed to carry the
17,000 400oz bars by sea. Piracy must be a real concern
given the value of the bullion and Venezuala should ensure
that the shipment is well protected.
While physical demand remains robust, sentiment
in the trading pits remains muted. An indication that speculative
sentiment remains lukewarm was seen in the U.S. Commodity
Futures Trading Commission data released Friday evening.
Hedge-fund managers and other large speculators
decreased their net-long position in New York gold futures
in the week ended Aug. 16, according to the CFTC data.
Speculative long positions, or bets prices
will rise, outnumbered short positions by 200,086 contracts
on the Comex division of the New York Mercantile Exchange,
the Washington-based commission said in its Commitments
of Traders report. Net-long positions fell by 3,487 contracts,
or 2 percent, from a week
The opposite was the case in the silver
market where sentiment appears to be heating up somewhat
with the risk of another short squeeze developing.
Hedge-fund managers and other large speculators
increased their net-long position in New York silver futures
in the week ended Aug. 16, according to U.S. Commodity Futures
Trading Commission data.
Speculative long positions, or bets prices
will rise, outnumbered short positions by 21,928 contracts
on the Comex division of the New York Mercantile Exchange,
the Washington-based commission said in its Commitments
of Traders report. Net-long positions rose by 3,540 contracts,
or 19 percent, from a week earlier.
The dumb money continues to warn that gold
and silver are bubbles.
Their simplistic bubble thesis is based
almost exclusively on the nominal US dollar price and recent
price movements and on the assumption that (to paraphrase)
‘gold has gone up in price a lot - therefore it is
a bubble’.
There is a continuing failure to look at
the important supply and demand fundamentals of the gold
and silver markets which leads to unsound reasoning and
irrational conclusions. There is also a failure to adjust
for inflation.