Mid-Day Gold & Silver Market Report – 9/16/2014

Peter LaTona

9/16/2014 12:00:00 PM

CHINESE CENTRAL BANK MAY BE BUYING MORE GOLD

Many emerging countries have been buying Gold in order to increase the Gold allocation of their foreign reserve currency. China may soon follow. The Chinese have not reported their Gold holdings since 2009. At that time, the Chinese central bank was the sixth largest holder of Gold but at the same time Gold only represented 1.1 percent of their foreign reserve currency. China maintains the world’s largest foreign-exchange reserves. Emerging countries such as China, who wish to be recognized as developed countries, understand that developed countries generally keep 50 percent or more of their foreign reserves in Gold. The U.S. keeps 70 percent. David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said during a September 11 interview in Beijing, “Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.” China may be purchasing more Gold to close this imbalance. It is also worth noting that central banks have now been net purchasers of Gold for 14 straight quarters.

India and China together represent more than 50 percent of the world’s Gold demand. The article above indicates that China may be purchasing even more. At the same time, India’s Gold imports have rocketed 176 percent. However, India fell behind China has the leading purchaser of Gold in 2013. The decline in their consumption was related to a tenfold increase in Gold import duties. Other harsh tax and import rules further suppressed Gold buying.  Now, India has a new, more business friendly prime minister. India employs more than 3 million people in the Gold industry and there is great hope that Gold sales will resume at previous levels.   

At 1:00 p.m. (ET), the APMEX Precious Metals spot prices were:

• Gold, $1,238.80 Up $2.60
• Silver, $18.86 Up $0.18
• Platinum, $1,368.50 Up $4.00
• Palladium, $844.10 Up $7.20

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