Asia’s Return to the Golden Era

The fact that the Asian economies are rising much more rapidly when compared to that of the western economies is something that should not be taken lightly or regarded as a phase that will pass.

Countries such as China, India, Indonesia, Singapore and Japan  are seemingly bound together on a tangent that are slowly making them economic powerhouses and coupled with the fact that China has been actively recruiting smaller economies from Asia such as Malaysia, Singapore, The Philippines and other rising South East Asian economic stars such as Indonesia, Korea and Japan to join forces with them towards creating a ‘contained economy’ has been effectively moving them towards secure financial states through accumulated reserves from foreign trade and placing them in a strategic position to buy precious metals (especially gold) for investment purposes.

Most of the Asian population consist of serious savers who live within their means and most of these governments do not intend to change that trend which is evident in their ignorance of signals emanating from western governments and financial institutions to boost the consumer spending levels of these Asian countries who are closer to real economies that are stable in comparison to their Western counterparts.

Another factor that cannot be ignored is the association between these governments and the Russians lead by the popular Vladimir Putin who is an economic realist that follow the traditional economic regime of ‘the more their populations saves, the more money their banks are filled with to support infrastructure that subsequently attract Foreign Direct Investments creating an influx of foreign currencies that flow and into these robust economies allowing them to buy more gold and other precious metals to ensure that their currencies are supported.

The governments of Asia are encouraging saving based on the positivity that lies behind saving in the form of precious metals that is being coordinated by the Shanghai Cooperation Organization which is related to Russian financial institutions that are helping these Asian countries to regain and secure Asian assets that were actually theirs to begin with a few hundred years ago through the purchase of precious metals from the west. The total purchase of physical gold from Asia when prices are attractive is massive with India, China and Russia paving the way getting the other Asian countries such as Malaysia, Singapore, Indonesia and Taiwan following close behind.

These countries have balanced trade deficits and their exports are almost at balance with national debts being stabilized with each passing year. As the EU heads towards a total breakup and Trump leaves the US financial system in disarray, confidence in trading with the EU and the US has diminished and due to the potential these fast growing economies are showing, investors prefer to put their money where the economic fire will burn longer and brighter.

These events are evident and based on the amount of cash for gold bullion being spent, essentially returning foreign cash to the host country in exchange for their gold bullion, a growing trend with the majority of available gold flowing out of the US and the EU; it won’t be long before the US and EU have nothing substantial to back their currencies with as gold is the only real money that will retain the power to buy in the final chapter of the money story.

India Could Eliminate Restrictions on Gold Imports

A top-level officer in India is suggesting that gold imports should be restriction-free. This pitch was made by Nirmala Sitharaman, Commerce and Industry minister in the Asian country.

Right now, India is the second largest gold consumer in the world by a lot, only surpassed by China. While this country is one of the biggest in demographic terms, the massive gold demand can be considered as a clear result of the long-lasting traditions and religious culture.

The proposal was made last year, based on a more subtle import duty cut. But now the minister is insisting on a wider permission for those looking to legally import gold in the country. She said to the press that the actual restrictions aren’t only stimulating smuggling but also damaging the jewellery sector.

Helping the Productive Engine

Minister Sitharaman have an evident sentiment towards the jewellers, being a big part of the Indian economy. “Outbound shipments of gems and jewellery, which account for about 13% of the country’s total exports, in October rose by 22% to $ 4.38 billion,” says an article published by Hindustan Times, covering the minister’s efforts.

It is logical to think that easing the restrictions on gold import would boost jewelry exports, helping big time the domestic economy. From that point of view, the minister’s proposal should become a top priority for the actual economic agenda.

Back in 2013, the government did exactly the opposite: the import duty was increased by 10 per cent in order to discourage imports and contain the account deficit, boosting at the same time smuggling activities to feed the demand generated by the jewellery sector.

There is a clear disagreement inside the government. In the original article we can read that “She further said the ministry last year had recommended import-duty cut on gold, but “given the situation then, I think nothing moved in our favour””.

Stimulating the Gold Market

Taking down the massive restrictions on gold in India could help the market. Prices would go up when the Indian jewellers get a broader access to raw material. Smuggling activities would be discouraged at the same time, helping the proper gathering of data related to trade and commerce.

Even with the actual import duties, gold demand keeps increasing in India, demonstrating that the country’s hunger to buy gold bullion and jewellery is far from being satisfied. “Arresting the eight-month fall, gold imports more than doubled to $3.5 billion in October. The imports had stood at $1.67 billion in October last year,” says the article, giving a clear proof of this increase happening.

Gold investors should pay more attention to what minister Sitharaman accomplishes in this matter. Reducing restrictions on these imports would be a decisive thing for gold, increasing the nationwide demand and boosting jewellery exports as well. The raw material can easily get more expensive, benefiting to those betting on this market.

While Indian authorities are working hard against gold smugglers, the truth is that these illegal activities aren’t going to end while the import duty remains so high.

China Demands on Gold and Other Metals Will Change Dynamically

After a tough year for the Chinese economy, politicians seems to have a clearer panorama for upcoming seasons. While this country remains as the biggest gold buyers in the world, indicators could be changing due to the influence of local industries.

A recent announcement from the Chinese Ministry of Industry and Information Technology said that gold demand growth is expected to decrease to an annual average of 4 percent regarding the four upcoming years.

This still means that China will consume more gold than never before, only with a slowdown in growth. The same announcement shared with the media some estimates regarding consumed tons.

The Ministry expects to consume 1,200 tons in 2020, representing an increase in comparison with 2015, when 986 tons were consumed. The domestic output is also expected to increase, with an estimated included. In 2020, 520 tons are expected to be produced, in comparison with 450 tons during 2015.

Relevant Economy Changes

The same announcement from the Chinese government exhibit estimates not only for gold consumption but for others metals as well. The data includes copper, aluminum, lead, and zinc.

These changes come from a plan for non-ferrous metals’ needs, applying more control on what the country truly demands. This plan is a response to the wild backlashes suffered by the Chinese economy in previous years, linked to poor control on the productive mechanisms and slowing exportations.

Copper annual growth for the 2011-2015 period was at 8.9 percent. The new estimate for the upcoming five-year period is around 3.3 percent. For aluminum, annual growth will go down from 14.4 to 5.2 percent.

For lead, annual growth will go down from 0.8 percent to 0.6 when comparing 2011-2015 period with the upcoming 2016-2020 one. Zinc demand growth will cut down in half, going from 3.5 percent to 1.7.

What Does This Mean for the Markets?

Pessimist investors will see a tragedy here but there is nothing massive happening, actually. Demand is not decreasing, only its growth rate. China will require massive amounts of minerals, more than the country is requiring right now.

In fewer words, the Chinese industry will still have a growing demand in the upcoming five years, only slower in comparison with the actual one.

Gold and other metals prices will have the window same to keep raising if the investors have enough interest. The markets could receive this news as a bad one but notice that the domestic output will go down as well, making China buy more than before.

Numbers aren’t lying. The panorama remains very positive. With a decreasing production output and a still-growing demand, the country is headed to demand more metals during the five upcoming years.

The data at the beginning of this article is a valid proof. Domestic industry will have to demand more gold in comparison with previous years, where production was higher. This will directly influence commodities and mining stocks.

Investors also have to remember that China is suffering mineral shortages, partially caused by several mines’ closure. This is an important factor that will gain relevance in the upcoming years when the demand increases.

Why has Gold Fallen from Grace?

Anyone who has been in touch with the investment market is in one way or another aware that the prices of precious metals is below expectations and off lately it dipped below the 1,200 USD mark after a good 6 % jump early on in the year leaving speculators bewildered on which way to go. If we look at 2015, gold lost by about 12 % and half way through 2016 gold still does not seem to want to recover and the pessimism surrounding the shiny yellow metal is only making things worse.

It can actually be said that for the first time gold has suffered just as much as other commodities instead of it being regarded as a safe haven as it usually is. Instead, that position has been taken over by the attraction of the capital markets which governments are making attractive to stimulate their respective economies. Added with the fact that the Asian Gold exchange has come at an unlikely time, due to which indexes are not reflecting what they are supposed to reflect, the lack of trust by some quarters and the exodus of gold into the Asian market has obscured the performance of the shinny yellow metal. The price projections for gold does not look good indeed with Citi Corp estimating the price would fall to below $1,000 with the only positive projection stemming from HSBC at $ 1,205, the rest including ABN Amro, Agricole, Deutsche Bank, Societe Generale and BMO are all not expecting gold to pass $ 1,050.

Although this may sound like bad news to most gold buyers have been waiting to unload, the truth is that it is actually god news and it’s time to buy the precious metal again because it allows those in possession of physical bullion to lower the average cost of each ounce that they are holding on to. If investors are able to bring the average cost per ounce of their holdings to below or close to $1,100, unloading at $ 1,200 would not be difficult as it will be able to provide a minimum return of 8 % which those who have holdings valued at $ 1,200 per ounce would have to wait until prices are at $1,300 to earn the same returns.

Thus, for those who acquired their bullion for anything above $ 1,200, falling gold prices could be seen as good news as they would be able to reduce their costs significantly and would not have to wait till the prices of gold to soar to make a tidy profit. Whatever it is, a gold bull run is on the horizon and it is not a question of if any more as it is a question of when.

The Feds would not be able to continue the current rate hikes as it would have negative effects on the long run and China’s slow growth is seemingly coming to an end as the Chinese government attempts to prop itself up to stand in for the USD and by the looks of it, they might just manage to do it with all the support it is getting from regional counterparts.

Valuable Metals Mining – Sluicing for gold

Sluicing for gold is a medium scaled strategy for mining valuable metals that are saved at the slants of slopes or good country with free rubble. This mining operation is typically incited not long after the searching for gold (placer stores) has been depleted downstream. As the miners who prospect placer stores at the streambeds work their way up to the source or birthplace of the stream at the slope or mountain slants which are generally the wellspring of the gold placer stores up and down the waterway or stream bed.

This mining “operation” of sluicing (which is characterized as ‘washing or cleaning’ in the oxford lexicon) includes a container (a floodgate box) that is apportioned and riffled. The riffles arrive to trap the heavier components that don’t stream out of the allotments as the current is backed off by these parcels. The floodgate box is generally set or assembled inside of the restrictions the stream (for the most part in the centre) as the specialists load material scooped from the waterway overnight boarding-house earth around the conduit box and drop it into the ‘heap compartment’.

The streaming water flow then helps the slime through the floodgate box, as the allotment moderates the ebb and flow the heavier “more” denser material sink down and is caught by the riffles and the lighter particles float away. The caught materials in the riffles are then assessed for mineral or other alluvial components that are then isolated by the suitable classifications.

The isolated material is then sent for purifying or extraction to gold refiners or by and large purchasers who purchase the conduit gold as per substance of the metals at a discount of twenty to thirty percent of the spot gold cost at the given time. A large portion of these people who purchase gold from the mineworkers then offer gold to gem specialists who then make gold gems after the gold ‘is extricated’ from the crude express that they found in.

The administration specialists who purchase these gold mineral likewise send it to the refiners just that the gold they purchase are rather executed to the gold stores in the wake of being changed over into gold bars, gold bullion or gold coins.

The sluicing for gold strategy has however been in decay in the course of the last half century as a large portion of the areas this mining technique was connected to are presently ‘gold free’. More propelled procedures have been supplanting this old mining strategy that soon will be never polished and be esteemed as a ‘chronicled technique’ that will never change.

The Bullion Secret

Although there are banks that are honest about their gold bullion reserves, there are some who are not only secretive about their bullion reserves, but misreport it. It is a common fact that most central banks keep the actual amount of gold reserves a secret, some are even believed to not have any and the US Fed is one of them, and the incident with Germany wanting their gold bullion bank and the US central bank being unable to deliver (citing transportation as the problem – while they sent people to the moon without much problems) – the issue only got bigger.

Some banks are more tactical about the amount of gold bullion reserves that they have and they usually cite that it is against bank policy to divulge such information, while other banks beat around the bush with some just ignoring the question entirely. So, the question that needs to be asked here is – WHY? Why are these central banks so secretive about how much gold they have? The answer is actually very basic, if a central bank does not have sufficient gold reserve, what is their money backed up with? Thus, if a central bank declares that it has very little gold, the value of that banks domestic currency falters as in, people lose confidence in it despite the fact that the gold standard has long been abolished.

The fact that these central banks are expecting the gold standard to return in the near future is almost undeniable. The fact that most countries are printing money with anything to back up their currencies is the core of the problem. If we were to take a gram of gold for every 100 units of paper money for any given nation, the stark truth is that these countries would have dispose of more than half of their printed money or reduce its value according to how much gold they have. This was the primary reason that the US was the first country to divorce the gold standard, it was simple because they did not have enough gold reserves to back their currency up based on the pegged value at that time.

Gold bullion is fundamental to currency systems or the world’s financial system risks collapsing under its own weight. The current situation attests to that fact as we may observe the volatile conditions of the current financial systems. This situation cannot go on as money has become meaningless and a false economic environment has enveloped the world, an environment that advocates a financial system that is practically meaningless. The prices of gold that are based on the dollar is currently at what most people are ‘believing’ to be the ‘real value of gold’ when in actual fact, gold is gravely undervalued, if we were to take the amount of currency that is in circulation. So for those of you who would like to secure your future, your best bet is to buy physical gold or silver bullion and keep them safe until the time comes.

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Vaulted Bullion

To invest in bullion for those who are not too familiar with the gold bullion investment industry, the best approach towards it is by first looking at the amount of money you have decided to invest on gold bullion. If you have saved up a significant amount of money and decide to buy gold bullion with all of it, it is not advisable. The best is to diversify your savings by perhaps allocating 30 % of your saving towards gold bullion in the form of gold bars, P.A.M.P gold or even gold coins. The best however would be gold bars weighing a gram or so. On the other hand if you do not have savings, you may opt to establish a relationship with a gold bullion trader who is reputable and buy gold on instalments if it is possible, otherwise its best to save up enough to buy the smallest gold bullion denomination usually P.A.M.P or gold coins from prestigious mints such as the Perth Mint or the Royal Canadian Mint.

The reason behind why it is always good to buy gold in smaller denominations is that it’s simply easier to sell in comparison to larger bars as people may not have the sufficient funds to buy the bigger and heavier bars at fair value. However, the only or the biggest problem that people have about keeping physical gold bullion is storage, if one was to keep it in a storage facility that provides security and insurance the cost could be high enough to an extent that it may offset whatever profit that could be made from the gold bullion in the future. The best option is to insure the bullion on the premise where you could buy a good heavy safe that is reliable enough for insurers to insure your safe – this off course is when the amount of gold that you have reaches a significant amount. If at all the total gold you have is below 100 grams, then the best place to store it would be in the closet where it is well hidden.

Buying gold is the best way to prepare for economic downtrends which according to many economists is just around the bend. The current political situation around the world and the building tensions between nations might just fracture and cause all hell to break loose. If at all that was to happen the safest money at that point of time would be none other than gold and silver as paper money would become almost valueless. The fact that oil prices have dropped dramatically coupled with China’s slowing economy that is dragging all trading partners along with it plus the economic sanction on Russia and the turmoil in Syria have all come to an incredible stress point that is difficult to predict.

Thus, if you are thinking about investing in something that could help you ride out the storm, it would be gold bullion. The more gold you possess in small denomination during times like these, the better off you would be.

Gold Industry Is Getting Stronger Despite Low Prices

With a bearish gold market, investors are losing their nerves. Many already bet against the precious metal. But, some can see further than the negative (are pretty naive) forecasts that are pretty common on the internet. The low prices are just an effect of the investors taking odd decisions.

Surely you already hear or read that “gold is the preferred safe-haven during financial crises”. Well, there are several crises going on worldwide but, this time investors choose the growing United Stated Dollar. The usual behavior wasn’t followed. So, prices are dropping.

Despite all the drama produced by the falling gold prices, great things are occurring in the precious metal’s industry. Two countries are the main characters of the good news: Australia and India.

More Investments In The Search Of Effectiveness

With an everyday-stronger US Dollar and a dropping Australian currency, gold miners have found the perfect opportunity to boost their profits. By now, the taken decision was to make several investments. Investments seeking major efficiency and better opportunities. This money is now destined to expand their projects in a smart way, taking advantage of the actual low costs of exploration and technical studies.

Mr. Jake Klein, chairman of Evolution Mining, said to The Australian Financial Review that “in a strange way the tougher times get, the more opportunity presents itself.” Said that, many big miners are now buying promising projects with 150.000 – 250.000 ounces-per-year estimations.

If gold prices go up in the next months and the Australian Dollar remain low, domestic companies would get extremely high profits, allowing further purchases and technical improvements.

India’s Growing Importation

These days, India seems to be the gold’s savior. After China’s market collapse, Asian imports decreased in a relevant way but, the Hindu country still buy gold in big quantities and the demand keeps growing. In fact, it’s calculated that 400 metric tonnes were imported to the India since the start of the year. That represents an increase of 100 metric tonnes from the same period of time the past year.

What seems odd is that the demand keeps growing despite reports about massive inventories of the precious metal. Local experts declared to the international media that dealers and jewellers already have huge stockpiles of gold. Some think that is because the Hindu festival is coming and the merchants are preparing themselves to this season.

But dealers and jewellers have the minor representation on the demand scale. 60 per cent of the gold’s importations and consumption belongs to the farmers. Hindu farmers rarely have a comfortable access to the nation banking system. So, they use the precious metal to store their wealth in a way they see appropriate.

Back to the commerce topic, the Hindu festival season represents the most volatile period of gold consumption in India. Thanks to tradition and family rites, gold sales sky-rocket during this time of the year, which starts in September. That can be a good reason of why dealers and jewellers are demanding and hogging all the gold they can afford in times like these when gold consumption is low.

Metal’s Rising

As always, gold doesn’t remain low for many long. Yes, gold prices are falling. But, with severe financial problems in sight, investors will think again. By the other hand, the mining industry is getting more effective at the same time that cost is dropping. Australian miners can (and will) use that domestic surplus to take a step further is their business.

Aligned with miners’ desire, Hindu traditions take relevance again (according to local observers), which can make India the biggest gold importer in the world in a few years in the future. The financial world must remember: gold always survives.

Is Gold Against Western Central Banks?

There is still obstinacy against the concept of the gold as one of the safest investments. Many economists and politicians are loath to accept the gold as the right way to composite the nation reserves and backup the currency. They just consider it as a nice way of saving that can be used by investors. Why is that happening yet?

Central banks and institutions are constantly making a gain through the fiat currencies and their fragile structure and behavior. Fiat currency can suffer severe inflation or deflation situations, due to its non-existant intrinsic value. That happens really often, and during that process, many countries and organizations profit.

The whole image adopted by the gold through media manipulation has modified the mindset of many investors. The market put the precious metals in the commodities sector, making people forget its evident and strong relationship with monetary and currency affairs.

One of the main aspect that everyone has known and remember on the daily basis is that the gold can’t be devaluated by a Central Bank’s policies and decisions. In that way, savings and investments are independent of financial and political measures. So the assets remain safe against possible manipulations or misguided judgment by public officers.

Now China is about to suffer a Great Depression-like crisis due its recent stock market crash. Thanks to the important loss of relevance in the gold reserve subject, they Yuan will suffer and there is going to be a deflation process. The Chinese economic machine will take care of delivering deflation to other countries through the pressure applied to commodities.

The import of cheaper commodities into the United States from China will strengthen the Dollar even more, creating displeasure inside the Federal Reserve. There are several proposals from the FED to devaluate the currency to create stimulation in the domestic manufacturing sector and boost exports. With an even stronger Dollar, this intention is clearly frustrated.

Smart investors will look gold closer and stay away from unstable currencies. The China’s purpose were established the Yuan as an alternative and viable reserve currency for investors and countries, so this situation represents a mishap. By the other hand, there are some investors who are thinking about China and a possible selling of its gold holdings between the market collapse panic.

The People’s Bank of China (the Chinese Central Bank) has already taken many measures to counteract many of the recent crash’s effects. Experts stated that the applied policies were well oriented and are going to have relevant results anytime soon. Now a gold revaluation is mentioned widely. It can work to make stable the economy and help against the actual crisis.

But that kind of revaluation means a threat to the US monetary interests. The Yuan gold price can rise up in any moment as a viable measure to fight the damages inflicted by the stock market crash. Also can greatly help with the Chinese intention of strength the Yuan’s image in front of the US Dollar at the international currency markets. For the Chinese Government, sooner or later, the Yuan will become a reserve currency.

Thanks to that and the conversations between the PBOC and the International Monetary Fund (IMF), China release its first gold reserves number since 2009, showing to the world that they have 1658 tonnes. The forecasts were much more optimistic than that, but those numbers still represent a great improvement of almost 60% of the increase.

Neither China nor the US are going to have a serious discussion about the subject. Powerful Central Banks around the world will keep alive their fight against the gold and its relevance inside monetary affairs. But China needs a domestic change to ease the upcoming impacts.

Gold ‘in’ Locks

Gold has always been considered as a haven by investors who intend to diversify their investment portfolios; this assumption is true to a certain degree and totally inaccurate from a different perspective due to the fact that monetary authorities are able to confiscate gold held by private investors in private agencies via minor legislative amendments on top of the fact that they can ‘force’ owners to surrender gold kept on their own premise of face legal action. Thus, investors who are under the impression that their gold is safe and sound in their own vaults or the vaults of private holding agencies may have to reassess their contingencies about the safety of their investments in gold.

Lessons from History

Just before the advent of World War II the Gold Reserve Act of the United States (30th January 1934) was executed which resulted in the surrender of gold and gold certificates that were held by the Federal Reserve to be handed over to the United States Department of Treasury. The Gold Reserve Act simply made owning gold ILLEGAL, thus, those who owned gold privately were also forced to sell their gold to the treasury and this law remained in full effect until 1964 and it was not until 1975 when Americans were free to own and trade gold as the enactment also prohibited American citizens from trading gold in any part of the world until 1975 (Richardson et al., 2013) and (Baettig, 2013).

Modus Operandi : The Ploy

As it is currently, there is no requirement by law to report ownership of gold by individuals or organizations holding gold on behalf of investors, but this could change abruptly as it only takes a flick of a pen to re-enact the Gold Reserve Act, leaving the burden of declaring the amount of gold that you own on you and by failure to do so (declaring) you will be persecuted, this is only the beginning of a process that would continue as the government slowly shifts their focus from the individual to the organisations such as vault agencies and banks to supply information on their customers who owned how much gold ? Financial Institutions and vaulting companies will have no choice but to comply with the request of the governmental agencies or risk losing their businesses. If this does not yield the desired results they step up their confiscating activities by taking direct action. Bearing court orders, governmental agency personnel are able to them from your home and failure to comply would land the individual in court and if at all the gold that is held by investors resides within the sphere of a Gold Exchange Traded Fund the investor is omitted out of the equation and the gold is handed directly to the authorities by the bank or vaulting company without your consent. Investors will be informed after the gold is confiscated from the ETF which usually results in the closure or suspension of the gold market in regions within the government’s jurisdiction (Baettig, 2013).

Confiscate Proof Haven

Most investors are under the notion that places such as Canada and Dubai are safe places to keep their gold; again this is true only up to a certain degree as national interests such as security and bilateral trade relations would easily override your importance as an individual investor. Singapore is another place where investors turn to when they need to store their gold, again Singapore is a tiny island nation that relies on the goodwill of other nations and would easily give in to external pressures if it becomes necessary in view of their national interest.

If at all there was a place where investment gold would or could be safe, it would definitely be Switzerland, and the reason behind this fact is simple – Switzerland’s economy depends on their banking system and the country would lose their current vantage of being the safest place to store wealth if at all they were to place the interests of a foreign sovereign above the interests of their clients. Therefore, it is not only about how you store your gold, it is also about where you store your gold and Switzerland is without doubt the safest place to store assets such as gold.