24 April 2014 - India, China, and Gold Preparing for Gold's Comeback

Posted: 25 Apr 2014 02:54 AM PDT

From:http://www.wealthdaily.com/articles/india-china-and-gold/5134

By Joseph Cafariello

Wednesday, April 23rd, 2014

Gold seems to have been stuck in a fairly narrow trading range for almost a year now, bouncing between $1,200 at the lower end and $1,400 at the upper end. Technicals were pointing to a possible breakout through the upper band of resistance last month. But something got in the way… Indian policies and politics.India gold jewelry wedding

It seems India's government has dealt two rather daunting blows to jewellery purchases which have reduced imports of gold and other precious metals into its country, contributing to India's fall from top gold consumer to the number two spot behind China.

Just what has the Indian government been doing to cause gold sales and imports to plunge? Might we expect the gold price to rebound when these policies end?

India's First Blow to Gold – The 80/20 Rule

The Indian government's first measure affecting the gold price was the 80/20 plan introduced in August of 2013, which was intentionally directed at reducing precious metals imports. Why deprive its citizens of something which has become one of the most recognizable "elements" of Indian culture? It was all due to something that happened halfway around the world in America a few months prior.

When the U.S. Federal Reserve announced in May of 2013 that it would begin reducing its monthly bond purchases later in the year, U.S. bonds started falling and yields started rising, sucking capital from all around the world in search of higher returns in the American bond market. The flight of capital from emerging economies caused their currencies to plummet, including the Indian rupee which fell more than 21% in the four months from the beginning of May to the beginning of September.

This massive exodus of investment capital out of emerging markets opened up gaping holes in their governments' current account balances, leaving them short of investment income which they were counting on to finance their debt and economic expansion programs. Take money out of a country on such a large scale as that and its economy runs the risk of shutting down. Governments were understandably desperate to stop the flight of money out of their economies.

India, for one, started plugging up as many money leaks as it could find, gold imports being one of the largest. As the world's top importer of gold at the time, India's gold intake was averaging some 900 tons per year from 2010-13. Averaging $40 billion worth of gold imports annually, more than the entire holding of the largest gold trust fund in the world - the SPDR Gold ETF (NYSE: GLD) - was now entering India each year. Unfortunately for India's current account, that meant $40 billion was heading out, money which the government could not afford to let go.

Hence the government's raising of the gold import tax from 4% to 10% in order to curb gold demand, and the implementation of the 80/20 rule – which requires 20% of all gold imports to be processed into jewellery and exported back out of the country, with only 80% remaining in India for domestic consumption. The profit generated by exporting higher priced finished gold jewellery would contribute to the nation's production and help close the current account gap by at least $10 to $15 billion a year.

Unfortunately for the gold price, the 80/20 rule and the higher duty rate reduced India's appetite for gold by some 37%, with monthly gold imports falling from an average of 80 tons a month to 50, dropping India into second place behind the new top gold importer, China.

India's Second Blow to Gold – The Cash Limit Rule

The Indian government then followed its right jab with a quick left hook that has knocked gold imports down even more.

In an effort to ensure the country's national elections (which run from April 7th to May 12th) proceed without corruption, the government has decreed a restriction on the amount of cash Indians can carry on their person at any one time. Anyone with more than 50,000 rupees in their possession must provide personal identification, as well as documentation proving the source and intended purpose of those funds, while jewellers must provide documentation for amounts surpassing 200,000 rupees.

"The (Income Tax) department is very strict on the movement of cash and has opened a 24-7 call centre to receive complaints on violations," informs Kumar Jain, vice-president with Mumbai Jewellers Association. "People are scared to carry cash or gold."

"Seizures of legal gold are happening everywhere," adds Bachhraj Bamalwa, director of All India Gems and Jewellery Trade Federation. "Government officials are harassing jewellers with legal gold in the name of elections."

The purpose of the restrictions is to prevent bribery for votes which has plagued Indian elections in the past, where perpetrators were caught with suitcases packed with cash and jewellery concealed in car trunks, ambulances, even hearses.

The effect is that "Indian demand for gold is lower, as it is difficult for consumers to carry cash given election-related curbs," Bamalwa explains. "They are resisting unnecessary buying at the moment," which is hurting jewellery sales. As a result, India's monthly gold imports have fallen yet again from 50 tons in March to an expected 20 tons for both April and May combined.

This has contributed to gold's price drop as of late. But for how long will the plunge continue? Fret not, gold bugs.

The world's new top importer of gold – China – is coming to the rescue.

China Picks Up India's Slack

While the Indian government's efforts to suppress gold imports succeeded in shrinking India's 2013 gold intake to some 975 tons, slightly below 2010 and 2011 imports, China's approval of multiple gold trading products, gold bank accounts, and increased gold coin minting resulted in its gold imports climbing to a record 1,066 tons in 2013.

As the price of gold kept falling throughout 2013, Chinese investors just kept right on buying, with coin and jewellery sales rising by 32% to record levels. "When prices drop," noted Jiang Shu, senior gold analyst at Industrial Bank in Shanghai, "there'll always be buyers."

The Industrial & Commercial Bank of China - China's largest bank by assets – stated that trading volume in its precious-metals business in the first three quarters of 2013 increased 22% year over year to $176.6 billion, with sales of gold bars at their highest level in four years.

And China still has a long way to go to catch up to India's level of household gold inventories. "China is 10 years behind India in terms of deregulation and growth of demand," Marcus Grubb, managing director of investment strategy at the World Gold Council, estimates. "Given last year was such a strong year, it will be hard to equal that again in 2014. But the stock of gold in China is less than half of that in India, so we think there's plenty more room to grow."

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The Buying Frenzy Will Be Restored

According to the World Gold Council's recent report, last year's global gold supply fell 2% as lower prices attracted investors. All throughout 2013, while the west was selling paper gold investments in ETFs and stock, releasing some 800 tons of gold back into the marketplace, China's and India's gold imports combined for a total of 2,041 tons of purchases.

With Indian national elections due to close in early May, restrictions on the carrying of cash and gold will be lifted.

This should not only restore normal jewellery buying activity in India, but should also produce a sudden spurt of sales that have been postponed.

Then there is the upcoming holy day of Akshaya Tritiya, which falls on May 2nd this year – "considered auspicious for starting new ventures", which jewellers have easily turned into a gold buying bonanza. The next wedding season beginning in September will again renew Indian interest in gold.

Yet given the past several months of below average gold imports, supplies may be constrained. "There will be wedding season and Akshaya Tritiya demand in May, but supplies won't suffice," noted a senior official with a private bank, raising the expectation of upward price pressure.

Finally, there are the possible easing of the 80/20 rule which should reduce the amount of gold exported out of India, and the proposed lowering of the gold duty tax from 10% to 8% which should increase imports all the more.

Given all the headwinds gold has been facing – reduced U.S. Fed stimulus, the absence of meaningful inflation, shrinking Indian imports over the past 8 months and recent restrictions on rupee handling – gold's price has held up remarkably well, keeping a solid $100 above its recent double-bottom low of $1,180.

Add some rather favorable conditions quietly lingering about – such as the recent trepidation over an imminent correction in equities, geopolitical tensions in Ukraine, the likelihood of new rounds of stimulus in Europe and Japan, and continued gold buying in China and India – the gold price could very well mount a retest of its $1,400 resistance, which if breeched would leave a clear path to the next major resistance levels of $1,500 to $1,600 by year's end.

Joseph Cafariello

Source:http://www.wealthdaily.com/articles/india-china-and-gold/5134

24 April 2014 - 谢国忠：对股市多头说再见黄金是安全资产

Posted: 25 Apr 2014 02:47 AM PDT

From:http://gold.hexun.com/2014-04-24/164214766.html

2014年04月24日07:50 来源：FX168

谢国忠本周撰文表示，股市已见顶，将慢慢破裂，但这可能产生一个新的泡沫。黄金是当前环境下的安全资产。随着纸币失去信用，黄金的需求将激增。

玫瑰石顾问公司董事,前摩根士丹利的董事总经理及亚太区经济首席分析师谢国忠本周撰文表示，股市已见顶，将慢慢破裂，但这可能产生一个新的泡沫。

他表示，最近网络股和生物科技股暴跌，这可能意味着股票投机已经见顶。但与2000年不同，股市泡沫破裂可能缓慢发生。金融市场结构过去15年内发生了剧烈变化。太多的基金经理单边做多这些股票。

因主要央行保持货币宽松，全球金融系统经历了一个又一个泡沫。长期宽松的货币政策使得金融体系相对于实体经济显得非常地大。这种变化迫使中央银行对泡沫破裂这样的负面冲击作出反应。这样的反应使得金融系统更加庞大。这种恶性循环可以解释投机者何以形成如此强大的势力。

泡沫不可能永远膨胀，即使是在宽松货币政策环境下。恐惧和贪婪间的平衡可能提示当前的资产价格太高了，比如网络股当前的情况。

在持续宽松的货币环境下，股市泡沫会向其他资产转移。

中国或美国收缩货币政策的讨论不至于引起强有力的政策。在下一次危机前（如高通胀和政治危机），实际利率将保持负值。

黄金是当前环境下的安全资产。随着纸币失去信用，黄金的需求将激增。电子货币是傻瓜的爱好，骗子恰恰利用了人们对纸币潜在崩塌风险的恐惧。

股市泡沫再次触顶

谢国忠称，网络股在低迷的经济环境下飞上了天。市场宣称这类公司在低迷的经济环境下快速增长，但任何增长都被经济体的大小限制。

网络商务往往从现存的商业活动中重新分配收入。广告支撑着大多数网络公司。一个经济体中广告的价值总量是稳定的。即使互联网公司得到了所有的广告馅饼，他们的收入也不会超过固有的限度。在初期，他们取得50.0%或者100.0%的增速，但若干年后，他们的价值量变得很大，最终受到了限制。

泡沫不可能永远膨胀，即使是在宽松货币政策环境下。恐惧和贪婪间的平衡可能提示当前的资产价格太高了。

股市泡沫破裂的新特征

谢国忠指出，现在网络股已达顶峰。如今，泡沫的破裂有两点不同。

首先，泡沫慢慢破裂。铁矿石2012年从高峰腰斩，2013年反弹了50.0%，今年下跌了三分之一。货币，债券和新兴市场地产看起来也要追随铁矿石模式。流动资产通缩多年的情况在历史上并不常见。泡沫一般慢慢增长，然后破裂。比如，香港地产市场在1998年破裂，IT股票泡沫在2000年破裂，美国房市2008年破裂，等等。

其次，当一个泡沫破裂后，一般会产生一个新的泡沫。2008年，地产信贷破裂后，股市，特别是网络股大幅上涨。再后来，纽约和伦敦的房价飙升。如此看来，一个泡沫消失后，另外一个泡沫会升起。

网络股可能遵循类似的模式。一些股票一下跌了20.0%，但还存在泡沫。当然，网络股会反弹一些，然后迎来新一轮下跌，可能在下半年，然后再度反弹。金融环境变化了，他们这轮会慢慢下跌。

Richard Russell：股市处于险境，买入黄金

道氏理论大师罗素(Richard Russell)最近表示，"我的建议没有改变，大量持有实物黄金和白银。不管在什么市场，金银代表永恒的财富。持有金银让我安然入睡，为钱而失去内心的平静是不值得的。拥有黄金的方法很简单：卖出联邦储备券(美元)，买入黄金。"

罗素称，"上周，我把没有受到支撑的垃圾货币联邦储备券换为永久货币金银。我认为，金银被操控，价值被低估。"

罗素认为，股市当前处于危险之中，而金银安全。他认为，金银是永恒的财富。而纸币，如美元，欧元和日元的购买力将下降。个人在银行的存款(银行的无担保债务)可能不会被及时，全额支付。

S&P500指数处于历史高位(如下图所示)，你能从中找到指数进一步上涨的信心吗？还是从中看到了修正和股市崩溃？

Source:http://gold.hexun.com/2014-04-24/164214766.html

24 April 2014 - India, China, and Gold Preparing for Gold's Comeback

24 April 2014 - India, China, and Gold Preparing for Gold's Comeback

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