Huge U.S. gold position liquidated by fund-WSJ

Jan 28 (Reuters) - Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market, the Wall Street Journal reported on Friday.

As a result of the move, which was made on Monday, the number of gold contracts on CME Group Inc.'s Comex division plunged by more than 81,000, to about 500,000, in their biggest single fall ever, the WSJ reported. It said an average daily move is about 3,000 to 5,000 contracts.
Daniel Shak, who runs the $10 million fund, told the newspaper that the trade had been profitable for him for years, but it stopped working and the exchange kept raising his margin requirements, forcing him to put up more money.
Shak said that when the exchange raised it by 25 percent on Monday, he decided to cut his losses and end the trade, the newspaper said.

http://www.reuters.com/article/2011/01/28/precious-fund-idUSLDE70R0TH20110128

ECB Says Estonia’s Central Bank Joins Gold Agreement

Estonia signed an agreement that limits how much gold European central banks can sell until 2014, according to the European Central Bank.
The five-year agreement announced August 2009 that was signed by the ECB and 18 other countries will remain unchanged over the period of the agreement, the ECB said in a statement on its website today. That agreement started Sept. 27, 2009 and limited gold sales to 400 tons a year for five years.
Estonia owned 0.2 metric ton of gold as of last month, according to the World Gold Council. As of Nov. 30, the gold sales under the agreement for 2010-11 total 0.9 ton by an unidentified country in the eurozone, according to the World Gold Council.

http://www.bloomberg.com/news/2011-01-17/ecb-says-estonia-s-central-bank-joins-2009-gold-agreement.html

Tunisian former president's wife 'fled country with £38 million in gold'

Tunisian protesters were goaded to new pinnacles of indignation on Monday as it emerged that the former president's wife, Leila Trabelsi, spirited 1.5 tonnes of the central bank's gold onto the aircraft that flew her and her family to Dubai. 

Intelligence officials in Paris told Le Monde, the French newspaper, that Mrs Trabelsi visited the bank last month, when protests were gathering momentum, and instructed the governor to hand over gold ingots worth £38 million.

Although he initially refused to comply, the personal intervention of the former president ensured that the gold was handed over.

The disclosure of Mrs Trabelsi's final act of avarice has enraged Tunisians, but not surprised them. The first lady's love of showy opulence and reputation for grasping corruption made her and her equally unpopular nephews the country's principle hate figures.

Three days after they ousted their president, Tunisian protesters returned to the battle-scarred streets of Tunis yesterday to demand the complete purge of former regime loyalists from government positions.

Demonstrators massed in the capital city's Independence Square, defying emergency laws forbidding public gatherings in an effort to complete the job begun last Friday when they forced Zine al-Abidine Ben Ali, their president for 23 years, to flee the country.

 http://www.telegraph.co.uk/news/worldnews/africaandindianocean/tunisia/8265025/Tunisian-former-presidents-wife-fled-country-with-38-million-in-gold.html

You're insane if you don't own gold, investors told

 

By Richard Evans 5:46PM GMT 11 Jan 2011

Not owning gold during the current financial turmoil is "a form of insanity", according to an investment analyst at a leading City firm. 

Robin Griffiths, a technical strategist at Cazenove Capital, told CNBC: "I think not owning gold is a form of insanity. It may even show unhealthy masochistic tendencies, which might need medical attention."

He added that the dollar was heading for "oblivion".

Mr Griffiths predicted that gold's 10-year bull run would continue and even intensify. "Although it's been a top performer for each of the last 10 years, it's still in a linear trend," he said. "Eventually it will go exponential and make more in the last little bit than the whole of the 10-year trend."

He said investors should regard any short-term falls in the gold price as a buying opportunity, adding that gold was still not an "over-owned trade".

His comments come against the background of the US Federal Reserve's huge monetary stimulus from quantitative easing, which many believe will result in inflation and a fall in the value of the dollar.

"The downward trend in the dollar is awesomely powerful," Mr Griffiths said. "It's vital to get yourself out of the dollar long-term on any significant rally. Continuing to own a currency that is going to be printed virtually into oblivion – that's the official policy – is crazy."
He added: "Real assets hedge paper money being printed into oblivion, so you've got to own gold and you've got to own other commodity-related investments still."
Gold hit an all-time high of $1,432 last month and is currently trading around $1,375.
Meanwhile, the gold price would have to exceed $2,000 for the metal to be considered in a bubble, according to an analyst at Deutsche Bank. "We believe gold will continue to compete aggressively for investment capital," said Michael Lewis in a report.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8253166/Youre-insane-if-you-dont-own-gold-investors-told.html

India, Iran mull over gold-for-oil for now

NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions.

"We have written a letter to NIOC ( National Iranian Oil Company )) asking it to suggest a bank where US sanctions are not applicable," a government official involved in the matter said requesting anonymity.

Another official said India could settle crude oil import transaction using gold in the short term, while efforts to resolve the deadlock continue. An Indian delegation, including officials from ministries of external affairs, finance and petroleum, will visit Tehran next week to thrash out the payment issue, officials said.

India's crude oil imports from Iran faced an impasse after the Reserve Bank of India declared that a regional clearinghouse that involved the Iranian central bank could no longer be used to settle oil and gas transactions between the two countries.

Oil industry officials are keenly awaiting a solution as India imports 80% of the 184 million tonne of crude oil it refines every year, and Iran accounts for 16% of these purchases, making it the second-biggest supplier, after Saudi Arabia.

The uncertainty encouraged Mangalore Refinery and Petrochemicals to issue spot tenders to import crude oil to make sure its operations were not hindered if the bilateral issue is not quickly resolved.

Officials said India regards Iran as an important trade partner and there is no question of any change in the long-term supply contracts.

Earlier, oil minister Murli Deora told ET that the payment issue was only a temporary problem, and crude oil supplies did not attract international sanctions. Last August, minister of petroleum & natural gas Jitin Prasada had told the Parliament that there was no adverse impact of economic sanctions on the supply of crude oil from Iran to India.

But several analysts believe India had acted under the pressure of the United States, which has lauded the RBI's action. Last year, India had protested Iran's remarks on Kashmir, and earlier, India had voted against the country's nuclear programme in a resolution of the International Atomic Energy Agency .

Some oil industry officials are puzzled by the turn of events particularly the reported reluctance of an Indian bank to facilitate trade using the Indian currency.

"It is a mystery. India bought crude oil from Russia using the rupee-rouble trade. Why can't something similar be done when Iran is ready to settle trade in rupees?" asked an executive in a private refiner.

Oil industry officials are optimistic that a solution would eventually be found. Indian Oil Corp (IOC), country's largest refiner which controls over 50% of the domestic fuel retail business by volume, does not expect any glitch. "We do not anticipate any supply disruption ... the government will find a solution soon," IOC director-finance SV Narasimhan said.

Domestic oil companies faced the crisis after the Reserve Bank of India (RBI) discontinued a settlement through the Asian Clearing Union (ACU) for crude oil payments to Iran. ACU, an initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), was established in 1974 at Tehran for promoting regional co-operation. It facilitates payments among member countries for eligible transactions on a multilateral basis. The model helps in economising the use of foreign exchange reserves and transfer costs. 

 

http://economictimes.indiatimes.com/news/news-by-industry/energy/oil--gas/india-iran-mull-over-gold-for-oil-for-now/articleshow/7238760.cms

India gold buying resurfaces as prices steady near 2-wk low

(Reuters) - India gold buying resurfaced on Wednesday afternoon as prices steadied near their lowest level in two weeks offsetting a weaker rupee even as the wedding season drew to a close in the world's largest consumer of the yellow metal, dealers said.
"There is renewed enthusiasm in market after markets crashed by $40 yesterday, I booked deals for 200 kgs from yesterday evening from $1,417 and below," said a dealer with a state-run bank in Mumbai.
The most-active gold for February delivery on the Multi Commodity Exchange was trading 0.15 percent higher at 20,480 rupees per 10 grams at 1:27 p.m., drawing away from a two-week low of 20,423 rupees struck in the previous session, a level last seen on Dec. 23.
International spot gold steadied from a more than two percent fall in the previous session, as bargain hunting on the physical market lent support and helped offset a stronger dollar.
India's gold buying is expected to restart in mid-January, when harvest festivals are slated.
Traders were undeterred by a weaker rupee, which made the dollar-quoted yellow metal expensive.
The Indian rupee dropped to its lowest level in more than a week as the dollar climbed broadly against major currencies and Asian peers, while a shaky shares added to the downbeat mood.
India's central bank has allowed 7 more banks to import gold and silver, bankers and trade officials said on Monday, a move that will smoothen supply in the world's largest consumer of the metals.

http://in.reuters.com/article/idINIndia-53936420110105

Gold hits another record high level of 45,800 per tola

KARACHI: Gold lovers have once again been burdened with a steep rise in the yellow metal rates as it hit another record-high level of Rs 45,800 per tola in the local bullion market following the trend in the international market in which it touched the highest-ever level of $1,420 an ounce, analysts said on Monday.

The reasons for the increase in the gold rates in the international market are - euro dipped against the dollar and surge in inflation in the developing countries, they added. Around Rs 155 per tola increase was recorded in the local bullion market while in dollar terms, the increase was $15 per ounce, gold traders said.

Gold prices in the international market gained 18 percent in 2010, supported by investors and hedgers. Gold has always been a top priority for investors on back of better returns on securities besides hedging, Pakistan Gems and Jewellery Development Company (PJGDC) Director Shafi Choksi said. He said, “This is the serial increase as international investors are relying on gold buying due to its continuous increasing price,” he added. China and India also have sped up their buying and made difference in the market, besides new entrants in the gold market have also pushed its price at an all-time high level, Choksi said. He said gold would likely touch $1,460 to $1,480 on higher demand by leading gold consuming countries like India and China by the mid 2011.

He said, “Hedging in yellow metal will remain a basic feature this year as the prices of gold in Pakistan are still lower than in Dubai and this discourages the import on the domestic front, but still investors in the international and domestic markets seek an alternative to volatile currencies, equities and some sovereign bonds as economic data has cast doubt on the global growth outlook.” The increase in hedging is attributed to the fluctuating share markets and concerns over the increasing inflationary conditions in the country, he maintained.

He said gold’s attraction as an alternative investment had helped boost its price by over 25 percent in 2010 while it gained around 23 percent in 2009.

He said the domestic sale of gold registered a decline by around 78 percent in 2010, though the demand was still there on wedding season, but the customers curtailed volume of buying. Physical demand for gold picked up in India despite the fact that high prices discouraged consumers throughout the year.

The international investors including investors in Pakistan put money into gold on poor returns on investments and international economic recession.

The fundamentals are driving the price and those fundamentals remain fear-driven besides macro uncertainty, concerns over currency stability, medium-term inflation fears as the US Federal Reserve implements Quantitative Easing II, geopolitical tensions and low interest rates, international analysts opined. A weaker euro and consequently stronger dollar pressurises gold prices, but concerns over sovereign debt are set to support demand for the metal.

The strong inverse relationship between gold and the dollar weakened to such an extent last year that gold prices managed to rise nearly 30 percent at the same time that the dollar rose more than 6.5 percent against the euro.

http://www.dailytimes.com.pk/default.asp?page=2011\01\04\story_4-1-2011_pg5_2

Buy some milk... and flog the family jewellery: Tesco enters gold exchange business by offering cash for gold

 

 

3rd January 2011

Buy some milk... and flog the  family jewellery: Tesco enters gold exchange business by offering cash for gold

It is seen as the preserve of backstreet pawn shops and daytime TV adverts, but now selling your gold could become as commonplace as your weekly grocery shop.
Tesco has added to its ever-increasing range of services by launching its own Gold Exchange and is seeking to take customers' unwanted trinkets off their hands.
The nation's biggest retailer is seeking to put a golden sheen on a market that has been the subject of investigations by the Office of Fair Trading.

Consumer advice groups have claimed that the biggest names in the gold-buying business are guilty of offering unfair prices for jewellery, with a Which? report alleging the CashMyGold company paid just £38.57 for an item worth over £700.
However, Tesco is vowing to raise standards in the industry with a competitive pricing scheme and a pledge to help customers turn their unused jewellery into 'something more worthwhile'.
'Customers have been poorly served in this area, so we're pleased that we can trial a trustworthy service that is transparent and offers market-leading value,' said a spokesman.
'Plenty of people have old jewellery in the back of a drawer that is never worn and is of no great sentimental value but can be surprisingly valuable; particularly at a time when the price of gold is so strong'.'
Gold prices have skyrocketed in recent years, rising to more than $1,400 (£900) an ounce in 2010, compared with the 2007 price of $600.

http://www.dailymail.co.uk/news/article-1343598/Tesco-enters-pawn-business-paying-customers-unwanted-jewellery.html