- foorex2day

Central Bank gold reserves transparency

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">For a physical asset held on behalf of a country's citizens primarily for use in extremis, central bank reporting on gold holdings is woeful. It is impossible for a country's citizens to determine if their central bank is appropriately managing their (as in citizen's) gold such that it can perform its "last resort" function, if necessary, without knowing:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">a) the amount of physical gold held under its control and ownership versus how much has been leased (physically, not book)</div><div style="text-align: justify;">b) the amount of physical gold held domestically versus offshore</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I would argue that gold has a higher standard of disclosure compared to a central bank's fiat activities because if lost, say by the bankruptcy of a lease counterparty, physical gold cannot be printed out of thin air.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Now you may argue that I am being unrealistic, pointing to GATA's freedom of information lawsuit against the US Federal Reserve, or the IMF's 1999 weakening of central bank gold reporting requirements, as examples of central bank opacity. I agree that it is a difficult ask, but in both these cases either the detail sought, or the reporting frequency, opens up lines of arguments that can be used to muddy the waters and give plausible grounds for refusal.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I would argue that one does not deal with bureaucrats as one would in a commercial negotiation, where you go in with your highest (or lowest, if buying) offer, as that just opens up many points for refusal. It is better to go in with your strongest argued case, which will often not be exactly what you want, because it give much less wriggle room, and thus the best chance of success. Secondly, bureaucrats can have an arse covering herd mentality, so appeals to precedent are always useful as no bureaucrat wants to strike out on their own lest they get it wrong.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Given the above, I would propose that the best way to approach central bank gold reporting is to simply argue that central banks follow the accounting standards, that normal commercial organisations do to, when producing their annual reports.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Simple and reasonable. It is also difficult to argue against as central banks, via their oversight and regulation of the financial system, impose those accounting standards on others. It is also hard to argue against it on the basis that it would be market sensitive, as it is only being disclosed once a year and many months after the balance date of the annual report. As a result, one could interpret a refusal to do so as hypocrisy and an indication of something to hide.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">You may wonder if this will achieve anything with respect to physical versus leased gold. By way of example, I offer the Reserve Bank of Australia (RBA), which also provides you with a precedent. The RBA has, at least since 1998, been reporting physical gold, gold leases, the duration and risk profile of those leases, and average lease rates, all to accord with Australian Accounting Standards.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">For example, an analysis of the RBA annual reports allows us to produce the chart below, which shows how much of Australia's meagre 80 tonnes was held as physical and how much was leased out for which terms.</div><br /><div class="separator" style="clear: both; text-align: center;"><span style="margin-left: 1em; margin-right: 1em;"><img border="0" height="261" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR2qdA0qXejsjzs04lfcAT6GistOnKuMgwmZ0JJRQKDCAI8hePYPAxC27-JpFNwFFsG90Tpm_OR3JPihf6r7O8prcxYiYJp9Izf8N83xLV6fKb3iganxfjiDs_Gk1YlIcOYXLGbHLVLFWu/s1600/rbaterm.png" width="400" /></span></div><br /><div style="text-align: justify;">It is clear that the RBA started winding back its leasing after 2004, due I would argue, to the fact that lease rates by that stage had moved below 1% (and subsequently continued to fall), providing a poor risk/return tradeoff. We can also produce a breakdown of the credit rating of who the gold was leased to.</div><br /><div class="separator" style="clear: both; text-align: center;"><span style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_pBzoGA2QlW8_iC4m-LrlQ-7jyG9YYRbN71wKfKixmbyWMwZiL7M-8jA-HkRutqF5kZG6nByLeFweCe8pcrrkvpPGMtoetQjEGPFQIcf463W70-ZB3KpeWaLOsFaWG9j8qGI3Lv8istV_/s400/rbarisk.png" /></span></div><br /><div style="text-align: justify;">So we can tell from the above that the RBA is now only leasing 1 tonne of gold for a duration of between 3-12 months to an AAA rated counterparty. Such information, if provided by all central banks, would provide their citizens with the ability to assess how prudently their gold was being managed. It would also provide valuable information to the gold market in general.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So if it is good enough for the Reserve Bank of Australia to report this level of detail with respect of its gold reserves, I think it is fair to say it should be good enough for other central banks.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Technical Note: In point a) I referred to "leased (physically, not book)". The reason is that there is a difference, in terms of whether gold is at risk of counterparty failure, whether a lease involved actual physical shipment to the borrower, or whether it was just leased by way of a book entry with the physical gold remaining in the possession of the central bank.</div><div style="text-align: justify;"></div><div style="text-align: justify;">Thus when looking at gold reserves in terms of its last resort use, if gold is leased by book entry then it is arguable that there is no risk as, in case of a war for example, a central bank can just extinguish the paper claim by the counterparty and retain the gold.</div><div style="text-align: justify;"></div><div style="text-align: justify;">The extent to which central banks have lent gold physically or only via book entry to bullion banks and the different implications of those two methods for the stability of the fractional reserve bullion banking system and its run-proofness is another topic altogether, and one I can cover in another post if anyone is interested (stupid question, of course you do).</div></div>

For a physical asset held on behalf of a country's citizens primarily for use in extremis, central bank reporting on gold holdings is wo...

Watching the China 2710 tonne reserves meme creation

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">It was quite interesting watching a meme happen in real time when the gold blogosphere turn this Bloomberg story, which just said (my emphasis) <i>"China <b>may</b> have vaulted ahead of Italy and France last year to become the third-largest holder of gold, according to a <b>Bloomberg Industries report</b>"</i> into a fact. The chain seems to have been:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Bloomberg article picked up by Jeffrey Nichols (China’s Central Bank Buys Gold on the Sly) which was picked up by Shanghai Daily (China Expected To Announce It Has More Than Doubled Its Gold Reserves) picked up by Zero Hedge and then morphed into a fact by Shanghai Metals Market which was picked up by Max Keiser with this title China Expands Gold Reserves, Surges Past Italy & France in Ranking giving it a much wider distribution and validation.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I got hold of the actual Bloomberg Industries report on which all this was based, which was put out by Kenneth Hoffman. He is the money quote from the report:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><i>A deeper look into China's gold holdings shows its reserves may be more than 2 1/2 times higher than thought. Its last reported holdings in April 2009 were 1,054 metric tons. After adjusting for net imports from Hong Kong and domestic output, the figure is closer to 5,086 metric tons. When taking away gold uses for jewelry, industrial and other categories and adding implied bar demand to central bank holdings, the figure is likely closer to 2,710 mt.</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The funny thing for me is that Kenneth's 2710 tonne calculated figure on which all this hoopla was focused, is, in my opinion, flawed. What he has done is just looked at HK imports and China mine production (not factoring in any non reported imports) and only taking away jewellery, industry and other usage. What is left is, as he correctly says, is "implied bar demand". The flaw is he adds all of this to China's reserves. This assumes that no private investors get any gold bars at all. The fact is that some of the implied bar demand went into private hands and if you consider that, then his 2710 tonne figure would be lower.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Next week I will have a post out on what I think China's government controlled holdings of gold are, and how much is held privately within China. I'll work on seeing if I can get a Chinese website to misinterpret my article into a fact to help it go viral.</div></div>

It was quite interesting watching a meme happen in real time when the gold blogosphere turn this Bloomberg story, which just said (my emphas...

The story behind JPM's 10 tonne gold withdrawals

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">What is JPM up to? A detailed look at the movements in an out of their eligible stock indicates they, or a client, is stockpiling/parking kilobars in a Comex warehouse for later withdrawal, possibly to do with Chinese new year.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Back in October, TF Metals Report noticed some "round number" Comex movements in multiple of exactly one tonne. At the time I noted that 3 kilo bars are acceptable for delivery against a Comex contract and speculated that:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><i>"if we see 99.5 bars going into COMEX then it may be an indicator that Asian demand has eased. Maybe JPM had commitments with refiners to buy their output for a period of time, and if Asian demand had eased then they may have just asked their refineries to make 99.5 (for all we know maybe those deliveries were 99.99 kilo bars) and they are just parking them in their COMEX warehouse, waiting for Asian demand to return ... if there are movements of round ounce tonne lots, indicative of kilo bars, out of the warehouses then it may be an advance bullish signal of Asian demand returning."</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Given these two large recent withdrawals, I decided to have a look at all tonne type movements in and out of JPMs eligible stock over the past two years. The first list shows the recent movements, which started in October with eight receipts totalling 20 tonnes. Coincidence that exactly 20 tonnes is then withdrawn a few days before Chinese new year on the 31st? I don't think so.</div><br />18 Oct 13 Received 6 tonnes <br />21 Oct 13 Received 3 tonnes <br />23 Oct 13 Received 1 tonne <br />11 Dec 13 Received 2 tonnes <br />12 Dec 13 Received 2 tonnes <br />13 Dec 13 Received 2 tonnes <br />16 Dec 13 Received 2 tonnes <br />17 Dec 13 Received 2 tonnes<br />24 Jan 14 Withdrawn 10 tonnes<br />28 Jan 14 Withdrawn 10 tonnes<br /><br /><div style="text-align: justify;">The other explanation to my initial one is that JPM contracted to sell 20 tonnes to an Asian client way back in October, hedged that on Comex and then accumulated kilobars over the next 4 months from refineries. That is, the 20 tonnes that was being accumulated was already spoken for. Either way, the two 10 tonnes withdrawals do not look like they were unplanned or unexpected by JPM.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This isn't the first time JPM has done this. Consider this sequence of movements towards the end of 2012 - accumulating 18 tonnes, then 17 tonnes withdrawn:</div><br />27 Aug 12 Received 6 tonnes<br />19 Sep 12 Received 6 tonnes<br />09 Oct 12 Received 6 tonnes<br />13 Dec 12 Withdrawn 10 tonnes<br />18 Dec 12 Withdrawn 2 tonnes<br />26 Feb 13 Withdrawn 5 tonnes<br /><br /><div style="text-align: justify;">Chinese new year in 2013 was 10 February, so the pattern is not as strong as 2013, but I would note that the 12 tonnes accumulated in September and October exactly equal the 12 tonnes taken out in December.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Here are some other tonne lot movements back to the beginning of 2012, which is as far back as I went in this quick analysis and that don't seem to be related, just for completeness.</div><br />06 Feb 12 Withdrawn 5 tonnes<br />09 Apr 12 Withdrawn 5 tonnes<br />12 Apr 12 Withdrawn 5 tonnes<br />20 Apr 12 Withdrawn 3 tonnes<br />29 Jun 12 Received 1 tonnes<br />02 Jul 12 Received 2 tonnes<br />07 Aug 12 Received 5 tonnes<br /><br /><div style="text-align: justify;">It is clear from the above that tonne lot movements in Comex warehouses are certainly not unique - a quarter of all JPM eligible movements are in tonne lots over the past couple of years. Seems they use Comex for holding kilobar inventory on a semi-regular basis.</div></div>

What is JPM up to? A detailed look at the movements in an out of their eligible stock indicates they, or a client, is stockpiling/parking ki...

Diversified Precious Metals Portfolio

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">A recent note by David Jollie of Mitsui Global Precious Metals on platinum and South African strikes (cliff notes: "any further gains to be small in scale" ie, buy rumour, sell fact) got me thinking about platinum as part of a precious metals portfolio.<br /><br />I was asked about platinum on Friday in a Reuters Global Markets Forum live chat interview, and declined to give a view, saying that the Perth Mint doesn't follow platinum, as it is a small market, less liquid, and more risky and thus not something you therefore want to push on our generally conservative clients.<br /><br />However, in 1994 the Perth Mint did recommend some platinum in a portfolio, producing the "Aussie Diversified Precious Metals Portfolio" which was a boxed set of<br /><ul><li>two 1 kilogram Kookaburra silver bullion coins</li><li>a 2oz Kangaroo gold bullion coin</li><li>a 1oz Koala platinum bullion coin</li></ul>It never took off and the sets were eventually scrapped (I salvaged a plastic box, sans the coins) primarily because we charged a premium for the set (ie box) when investors could just buy the coins individually for lower cost. Anyway, the question is: how did that ratio of gold:silver:platinum perform?<br /><br />Before I get to that, I would just note that our Depository clients are split into three groups. The first are those who only buy gold, the second those who only buy silver, and the third who buy both. What is interesting is almost all of those buying both gold and silver do so on a 50:50 basis by dollar value, say $10,000 worth of gold and $10,000 worth of silver. I'm not sure there is anything scientific about that allocation and probably just comes down to hedging one's bets.<br /><br />So lets compare the performance of those three groups against the Aussie portfolio, using 30 Dec 1994 London Fix prices to 31 Dec 2013 (throwing in platinum for comparison):<br /><br /><table border="1"><tbody><tr> <td width="70%">Strategy</td> <td width="30%">Return</td></tr><tr> <td>Gold Only</td> <td>214%</td></tr><tr> <td>Silver Only</td> <td>302%</td></tr><tr> <td>Platinum Only</td> <td>226%</td></tr><tr> <td>50% Gold, 50% Silver</td> <td>258%</td></tr><tr> <td>The Aussie</td> <td>236%</td></tr></tbody></table><br />I'd say if you're not too sure about whether gold or silver will be the better performer, the un-"modern portfolio theory" 50:50 strategy seems to have worked out. Of course, the above figures themselves are high unscientific with no real basis for the starting date beyond that was when the Aussie was launched, but hey, what do you want from a free blog? As always, do your own due diligence.</div></div>

A recent note by David Jollie of Mitsui Global Precious Metals on platinum and South African strikes (cliff notes: "any further gains t...

Gaming the London Fix ... Seat Price

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">While goldbugs are focused on whether the London Fix is gamed, the industry is watching an equally interesting and delicate game around Deutsche Bank's London Fix Seat.<br /><br />If you thought that the gold market was opaque, well a seat on the London Fix would have to be a totally dark market. This creates a problem for both buyer and seller as:<br /><ol><li>there are no public prices for a seat</li><li>neither seller or buyer want to be seen as too desperate by approaching the other party directly</li><li>the buyer doesn't know how profitable a seat could be, as Fix volumes are not published</li></ol>Given the above, it is not unreasonable to expect the seller and potential buyers to play some of their signalling/negotiating game via the media. However, to be fair the "sources" mentioned in various media reports could also be legitimate bystanders just speculating, we just don't know. Either way, no need for that to spoil the fun of looking at the various comments made in the media (here and here and here) over the past few days to see how the London Fix Seat price game is playing out.<br /><br /><strong>In favour of the seller</strong><br /><ul><li>the last time a seat was sold in 2004, it cost around 1 million pounds ($1.6 million) [anchoring high]</li><li>Gold traders say the benchmark still has value, helping them to hedge risk [you make money being a fix member]</li><li>a seat at the table is prestigious; to say that they're a fixing member carries a certain kudos [the seat carries a premium above the profit made as a market maker]</li><li>there could be quite a few contenders; Deutsche said it had already begun talks with other banks to sell its role [lots of buyers]</li><li>a logical possibility would be for another of the London Bullion Market Association's market-making members ... not currently involved in fixing - Credit Suisse, Goldman Sachs, JPMorgan, Merrill Lynch, Mitsui Precious Metals and UBS [lots of serious buyers]</li><li>a candidate is more likely to emerge among the Asian banks ... as these look to raise their profile in the London market ... Bank of China and Industrial and Commercial Bank of China (ICBC) are already members of the LBMA. ICBC is also about to complete the acquisition of the London commodity arm of Standard Bank [even more buyers]</li><li>bidders ... may also include other parties with an interest in the gold market such as refiners [a lot more buyers than you think, better rush]</li><li>The bank said it would ... resign its seat if it fails to do so [but if I can't find a buyer I'll walk away, I'm not desperate]</li></ul><strong>In favour of the buyer</strong><br /><ul><li>Market participants said the role as a rate setter would be worth around £200,000 and had more value as a mark of status [anchoring low]</li><li>it's a tough sale at the moment, there's nothing really in it for the banks [there's not that much money in market making]</li><li>who, after the Libor scandal, will want it; increased scrutiny, with regulators pushing for new rules on commodity benchmarks after the Libor scandal, threatens to outweigh that benefit; if regulators are going to say 'well the fix doesn't work as it is, and we have to find another way of doing it', nobody is going to want to buy that seat [lots of regulatory risk]</li><li>it is a very old-style, archaic system and it is amazing that such a way of doing business has survived the modern day and age [Fix is old school and will probably fade away so not worth that much in the future]</li><li>any interested party ... would have to weigh the price carefully against shareholder value [I'm not desperate, won't overpay]</li></ul>So we have a £200,000 to £1,000,000 price range with good points made on both sides. I think there is a good chance a Chinese bank will buy a seat for the prestige as it gives them the ability to differentiate themselves from their domestic competitors - Deutsche can be expect to work the status benefits point hard to new players in the bullion market or those looking to step up.<br /><br />On the negative side, Deutsche Bank's biggest problem is the risk that regulators turn the fix from, as Paul Tustain says, a place where <em>"financial trading principals [win] what traders call 'order-flow' from customers, principals (who sell gold to you)"</em> where you can make money working your book, into a place where the holder of a Fix Seat is just an <em>"agents (who buy gold for you)"</em> and who can only earn the $0.20 per ounce Fix fee spread.</div></div>

While goldbugs are focused on whether the London Fix is gamed, the industry is watching an equally interesting and delicate game around Deut...

Wealthy Chinese short sellers a source of future demand?

<div dir="rtl" style="text-align: right;" trbidi="on"><div style="text-align: justify;">Koos Jansen latest piece on gold leasing and short selling within China is a must read. There seems to be two basic "gold trades" used by wealthy Chinese:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>Finance business by Lease and Hedge</b></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">1. Lease gold from bank</div><div style="text-align: justify;">2. Sell gold on SGE</div><div style="text-align: justify;">3. Post 15% of cash from #2 as margin against long gold futures</div><div style="text-align: justify;">4. Use remaining cash from #2 to fund your business</div><div style="text-align: justify;">5. At end of lease, take delivery of futures and use physical to repay lease</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The article says that the effective interest rate on the amount of cash left over from #4 works out at 6.7% compared to around 9% for a conventional loan. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b>Finance business by Lease and Short Sell</b></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">1. Lease gold from bank</div><div style="text-align: justify;">2. Sell gold on SGE</div><div style="text-align: justify;">3. Use cash to fund your business or other investment</div><div style="text-align: justify;">4. At end of lease, buy back gold (which has hopefully fallen) and repay lease</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Needless to say, the second method is highly risky and is more a combination of financing your business plus a speculative bet on gold prices. Here are some interesting quotes that give a different insight into the thinking of some wealthy Chinese that is at odds with the common view (narrative) about how Chinese view gold (which is that they are buy and hold investors):</div><ul><li><div style="text-align: justify;"><i>"these business owners, in the background of gold’s 28% pullback in 2013, remain bearish on gold ... hope to buy back the same amount of gold to repay and get the spread when gold falls further to their targets in 2014"</i></div></li><li><div style="text-align: justify;"><i>"A business owner signed a 3-month gold lease agreement at the end of last year and sold the gold at $1300/oz. He said he would buy back and return the gold when gold fell to $1150/oz in Q1 2014 and pocket the $150/oz difference."</i></div></li><li><div style="text-align: justify;"><i>"some rich people even use the funds through gold lease to invest in high yield real estate trust products to achieve “getting something from nothing”. The spread between the yield on trust products and gold lease rate is risk free in their eyes."</i></div></li></ul><div style="text-align: justify;">While banks limit gold leasing to those legitimately involved in the gold business who need to finance their physical inventory, it appears that some gold merchants have excess physical stocks. They are therefore willing to lend this out to private investors (who put up cash margin and real estate as collateral). Alternatively, it seems people can create fake gold business to access this market.</div><br /><div style="text-align: justify;">Koos' article is similar to a trade identified by FT Alphaville in August, where <i>"Chinese firms have been able to benefit from cheaper US interest rates by using various commodities with high value-to-density ratios, such as gold, copper, nickel and “high-tech” goods, as collateral. The deals were motivated by the fact that borrowing US dollars in this collateralised fashion was cheaper than borrowing in the domestic Chinese market."</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">See also this GFMS note <i>"our information collection from various trade sources indicated that these Hong Kong export numbers have been highly inflated by growing round tripping between mainland China and Hong Kong whereby local companies used gold to engage in currency and interest rate arbitrage transactions"</i> This would make sense in light of Koos' research that says that the same bar cannot be traded back on to the SGE - maybe a way around this is to export gold out of China and reimport as "new" gold (I have been able to confirm that bars are being exported out of China as part of this trade).</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">There are a number of implications from this story:</div><ol><li><div style="text-align: justify;">How much of the gold that we have seen being imported into China is just tied up in these trades?</div></li><li><div style="text-align: justify;">Has this Chinese short selling impacted negatively on the gold price?</div></li><li><div style="text-align: justify;">When will the unwinding of these short selling deals happen?</div></li><li><div style="text-align: justify;">What will be the impact on the gold price when these short selling deals are unwound?</div></li></ol><div style="text-align: justify;">The FT Alphaville article noted that the copper collateral scheme may have raised between $35-40 billion. Gold is a lot more value dense than copper, so realistic to think that the gold collateral trade is of the same or greater size?</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I would also note that exports <b>from</b> China to Hong Kong (the round tripping trade) really began to pick up in March 2012, when it was clear that the gold price had peaked. The quotes above indicate that some wealthy Chinese took a bearish view on gold and maybe March was when this short selling trade started to pick up. It is also interesting that this chart of Koos shows big differences developing between SGE withdrawals and all known supply in April 2013, on the price smash. Did the price smash encourage more bearish bets, which would have resulted in gold within China held by industry users being released and sold on the SGE? Maybe Koos can run this chart back a few years so we can see if this gap only developed once gold peaked.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Koos article closes with the observation that <i>"many real estate investment products are facing default risks and on the other, gold lease arbitrage is facing the volatility of gold price. If these 2 risks occur at the same time, this seemingly risk-free arbitrage could be in fact “picking pennies in front of a bulldozer.”"</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I am sure that is the majority view of Chinese and this short selling is limited to a few, but China is a big market and this trade could still be significant in terms of the global gold trade. Maybe we have just found another source of potential future demand should these Chinese short sellers come to the view that gold has bottomed.</div></div>

Koos Jansen latest piece on gold leasing and short selling within China is a must read. There seems to be two basic "gold trades" ...

How accurate are the LBMA gold & silver forecasts

I've got a post up on the corporate blog on the LBMA 2014 forecasts, which are predicting a pretty flat year. I was a bit underwhelmed b...