China's gold output, consumption rise in 2023, gold ETFs add 9.53 tonnes in Q3

China’s gold production and consumption both increased over the first nine months of 2023, while the country’s gold ETFs also saw significant inflows in the third quarter, according to a report from Xinhua.

“China produced 271.248 tonnes of gold in the first nine months of 2023, up 1.261 tonnes or 0.47 percent compared with the same period last year,” the report said, citing data released by the China Gold Association (CGA). “In the January-September period, gold consumption in China totaled 835.07 tonnes, up 7.32 percent year on year.”

The CGA data also revealed a rise in the consumption of gold jewelry and gold bars and coins in the Chinese market. “Consumption of gold jewelry in the Chinese market rose 5.72 percent year on year to 552.04 tonnes, while that of gold bars and coins surged 15.98 percent from the same period in 2022 to 222.37 tonnes,” they said.

However, not all sectors saw an increase in gold consumption. “During the period, consumption of gold for industrial and other use fell 5.53 percent from a year earlier to 60.66 tonnes,” the report said.

The third quarter also witnessed significant inflows to the holdings of Chinese gold-backed exchange-traded funds. “In the third quarter alone, holdings of gold-backed exchange-traded funds (ETFs) in China added 9.53 tonnes,” the CGA said.

This addition brought the total holdings of gold ETFs in the Chinese market to about 59.69 tonnes by the end of September.

According to a recent report from Vladimir Zernov, Market Analyst at FX Empire, China is selling off massive quantities of its U.S. assets, and has little choice but to reallocate the funds to gold.

Zernov said he believes gold is one of the few viable alternatives to U.S. Treasuries. “In this scenario, China could increase its gold purchases in the upcoming months,” he wrote.

According to recent data from the U.S. Treasury, Chinese investors sold $21.2 billion worth of U.S. assets in the month of August. “While Fed policy outlook was the biggest driver behind the sell-off in Treasuries, it looks that China’s activity contributed to the move that pushed the yield of 30-year Treasuries towards 5.00%,” he wrote.

Zernov said he believes that, contrary to the prevailing market view, high Treasury yields may actually serve as an additional bullish catalyst for gold. “Traders are searching for safe-haven assets due to geopolitical tensions,” he wrote. “Treasuries are considered to be among the safest assets in the world, but their price is falling for months, and some investors may choose to buy gold.”

Chinese investors may be among the first ones to redeploy their funds to gold markets, he said.

Recent gold purchase data supports the theory that China is moving heavily into gold as they move to liquidate U.S. debt, with the People’s Bank of China (PBoC) buying gold at a torrid pace.

According to updated foreign reserve data, China’s central bank bought 29 tonnes of gold in August, lifting year-to-date purchases to 155 tonnes. It was also the central bank's biggest purchase since December.

And it’s not just the Chinese state that’s shown a voracious appetite for the yellow metal. Recent months have seen China’s domestic gold prices spike well above international spot prices as the country’s wealthy and middle class have clamored to secure the value of their own savings.

The population’s desire for gold was so great that the PBoC intervened in the market by banning banks from importing gold, which pushed the spread between the spot price of gold in Shanghai and in London to a record $121 per ounce in mid-September.

By

Ernest Hoffman

For Kitco News

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This is why the fiat system 'ruins everything' and 'must be destroyed' – Jimmy Song

The fiat system is responsible for not only bad financial practices and mountains of debt but also distorted incentives on personal and professional levels, according to Jimmy Song, Bitcoin Developer, Author, Educator and Entrepreneur.

In his new book, 'Fiat Ruins Everything: How Our Financial System Is Rigged and How Bitcoin Fixes It,' Song dives into the fiat system and its pitfalls.

Song makes the case that the debasement of our money is the root of many of our problems and that the system of central banking has, in a way, “enslaved” us.

Song writes, “Like a zombie master, central banks have turned every organization into its slave, and much of civilization now lives a zombie-like existence. This is the debasement you’ve been feeling your whole life, the reason why everything seems to be slowly deteriorating.”

Song maintains that fiat has ruined everything from the economy to policies to relationships to family to art.

"Fiat money and the system of central banking is allowed to put new money into existence," Song told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, on the sidelines of the Pacific Bitcoin Festival. "And the existence of somebody that can do that changes the incentives all over the place. In our personal lives, we don't have savings vehicles anymore, so that changes our behavior."

Song broke down his argument, starting with governments being in charge of printing money to prolong their stay in power.

"Governments can print money to buy votes to essentially prolong their power. That leads to a lot of distorted incentives. And at the global level, the U.S. has the ability to print the world's reserve currency. And that means it is dominant in foreign affairs," he said.

Song makes a compelling argument on how the fiat system impacts and distorts our daily lives. Watch the video above for details.

Money debasement

Inflation and currency debasement create a population that is focused on consumerism versus sound money spending, Song pointed out.

"The debasement of money causes you to want to spend it rather than save it because saving it is a lot of work. In order to keep the value that you have, you have to put a lot of time and energy into investments, savings vehicles, and maintaining those investments," he explained. "That's a lot of time, effort, and energy taken away from pursuing something more fruitful, like providing value to other people through the market process of providing goods and services."

This is how society ends up preferring short-term consumption versus long-term goals. The consequences of this could be dire, especially when it comes to civilizational progress. Watch the video above to get the full take.

Prior to the modern-day fiat currency, there was a gold standard, which served people better. However, one of its downfalls was centralization, Song added. For more details on what worked and what didn't under the gold standard, watch the video above.

Song argues for the sound money standard, noting that if Bitcoin is adopted on a large scale, it could fix the global issues the fiat system created.

"What fiat money lets you do is suspend reality. You can certainly see that with some of the zombie companies that exist today. The more money you inject, the longer they can live, even though they really should be dead," Song said. "Fiat must be destroyed to preserve civilization."

Coverage of the Pacific Bitcoin Festival is brought to you by Swan Bitcoin – Swan.com

  When the Fed starts c

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Gold continues to shine as rising debt could cause bond yields to become unanchored – Sprott's McIntyre

There is no question that geopolitical uncertainty caused by chaos in the Middle East was the spark that ignited safe-have demand for gold and drove prices up from their seven-month lows; however, there is another factor at play in the marketplace that is helping to support prices at $2,000 an ounce, according to one portfolio manager.

In an interview with Kitco News, Ryan McIntyre, managing partner at Sprott Inc., said that the potential for a credit risk event is also providing solid safe-haven demand for gold and could help propel prices well above $2,000 an ounce.

McIntyre's bullish outlook on gold comes as the precious metal has held its ground, holding initial support this week above $1,950 an ounce even as bond yields remain in striking distance to 5%, their highest level in 16 years.

McIntyre said that one of the reasons why gold's negative correlation to bond yields is breaking down is because more and more investors are becoming worried about the U.S. government's fiscal outlook and the growing debt, which has surpassed $33 trillion.

However, McIntyre added that this is more than just the size of U.S. government debt.

"The most frightening thing for me is the deficit. I am more focused on the trajectory of where things are going," he said. "The rising deficit means the U.S. is not getting its finances in check."

McIntyre also noted that elevated gold prices reflect the growing risk that the U.S. economy faces a potential debt spiral as higher interest rates reflect higher borrowing costs, which precipitates the need for more capital.

He said that he thinks the U.S. is experiencing a slower version of what happened last October when the U.K. bond market was roiled after then-Prime Minster Elizabeth Truss proposed substantial tax cuts to be paid for with higher deficits. The turmoil in British financial markets cost Trust her job as Prime Minister.

One reason why markets are now focusing on the U.S.' growing debt is because of the sharp rise in interest rates. With the Fed Funds rates between 5.25% and 5.50%, the U.S. government is now spending more money servicing its $33 trillion debt than it spends on national defense.

At the same time, McIntyre also noted that along with the Fed's aggressive rate hikes, it has reduced its balance sheet, significantly reducing M2 money supply, the amount of money held by the public.

  Traders wait to see if gold can break $2,000 after the Fed holds rates steady

"Because the supply of money is decreasing, asset values are inherently decreasing. You now need more assets to support your credit requirements at higher levels. This is the last thing you absolutely want because it can quickly spiral out of control," he said. "I think this is why investors are turning to gold because they see a stable asset. There is only one safe-haven asset out there if you don't just want U.S. government bonds: that is gold."

While the Federal Reserve remains primarily focused on inflation, McIntyre said they need to be aware of the potential risk that bond yields could become unanchored to monetary policy.

While it may be a little early, the scenario that McIntyre is looking for is where the Federal Reserve maintains its hawkish stance but starts buying bonds, to keep yields in line. He added that the same time, increasing M2 money supply would also help ease market tensions.

However, McIntyre added that the Fed is in a difficult position. Because of rising deficits, the Fed can be seen increasing its balance sheet too much.

"Maybe in the short term, it will have the desired effect. But I think it will make people more nervous. And that's the problem when you lose control," he said. "With all this uncertainty, I think gold will continue to do well and remain in an uptrend until the government can get its spending under control, which isn't likely to happen anytime soon."

By

Neils Christensen

For Kitco News

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Gold bulls on parade, S&P setup for a black Monday?

Monday, I wrote that my base case for the S&P is that prices are headed to the 200-week average. The breach of the trendline is turning out to be significant; we can’t tell the future, but we can let the trendline be a guide.

Even now, prior to prices getting to the 200-week moving average (if they even do), I am anticipating the flip to the long side. My feeling is that time will coincide with despondent sentiment. But I don’t think we are there yet, and the last few days of panic can be brutal (as gold bugs may know).

Beyond the bullish stance I have maintained on stacking gold, on Tuesday, I suggested a trade to short Bitcoin and long gold, citing the XAU/BTC ratio as a basis; that trade is playing out. As I write, gold is hitting the 2k spot, up $35+ from Tuesday morning. Below is a 2-hour chart; regular readers should be more than familiar with triangles breaking to the upside…

Bitcoin trades around $33,500 right now, down from $35,000 Tuesday morning. Still, as I also wrote Tuesday, I remain bullish on Bitcoin in the longer term and would be looking to close the short and add to a stack at around 31800, still as the base case.

By

Jonathan Da Silva

Contributing to kitco.com

Time to Buy Gold and Silver

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Another one bites the dust: gold price hits a record high against Aussi dollar

The gold market continues to attract attention as prices push back to $2,000 an ounce, with many analysts now saying that the precious metal could be on its way to all-time highs.

However, as a global monetary metal, gold has already hit all-time highs in some currencies this year, with the latest being the Australian dollar, rallying briefly to A$3,159. Reflecting the broader market, gold has been pushing higher against the Aussie dollar as Israel’s war with Hamas continues to create significant chaos in the Middle East.

“The conflict between Israel and Palestine over the Gaza Strip is still deteriorating, prompting the flight to gold,” said Dr. Sandra Close, a director for Melbourne-based gold consultants Surbiton Associates. “Time and again, gold has proved to be an important safe haven during times of international conflict and uncertainty.”

Analysts note that gold’s all-time high will provide solid support for Australia’s gold mining sector. The country is the world’s third top gold producer.

In a report published last month, Surbiton said that Australian miners produced 80 tonnes of gold in the third quarter, an increase of eight tonnes, or 11%, from the second quarter.

“The gold output for the 2022/2023 financial year totaled around 306 tonnes, some 10 tonnes, or nine percent, lower than in the previous financial year,” Surbiton said in the report.

Close noted that better weather through Australia’s winter months allowed gold producers to process higher-grade ore. She added that at current prices, the sector is worth around $30 billion.

The Australian dollar is just the latest currency to lose value against gold.

The precious metal continues to hit fresh new highs against the Japanese yen on a daily basis. One ounce of gold is now worth ¥296,735.90.

Gold is also trading at record highs against the Chinese yuan at CNY14,488.70 an ounce.

Gold has seen significant Asian demand in recent weeks. Analysts note that Japanese investors want to protect their purchasing power as the yen has seen substantial weakness in global currency markets.

At the same time, Chinese investors are turning to the yellow metal to protect themselves from a slowing economy.

In a recent interview with Kitco News, market strategists at the World Gold Council said that global investors should monitor these growing trends in these two Asian Markets.

  Gold prices ending the week around $2,000 as geopolitical uncertainty overshadows rising bond yields

“I think what is driving gold demand in Asia is global geopolitical risks and capital flight being triggered by the prospect of a weak Chinese economy,“ said John Reade, chief market strategist at the WGC.

“Many Chinese investors have built massive real estate positions in their portfolios and now they are looking to diversify and gold is the next logical asset to own,“ added Joseph Cavatoni, North American market strategist.

The two analysts also said that Japan could be a major source of physical demand in the new year.

“This could become a significant trend for the global market as Japanese consumers have a lot of cash savings, which makes sense when you have decades of deflation,“ said Reade.

Although the global gold market is priced in U.S. dollars, both Read and Cavatoni noted the fact that the yellow metal has hit record highs in multiple currencies this past year is a strong signal that global demand remains healthy.

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David

Gold price to see wild $100+ daily gains, Bitcoin rally to follow, if Middle East tensions escalate and spillover into 'unmitigated disaster' – Larry Lepard

Turmoil in the Middle East is keeping investors on edge, and gold is one of the first assets to react — rising above the critical psychological level of $2,000 an ounce and trading near 2.5-month highs on Friday.

It won’t be surprising to see gold witness daily gains of $100+ as the Israel-Hamas war escalates, Larry Lepard, Managing Partner and Founder of Equity Management Associates, told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.

"Gold has gone up a lot in a very short period of time," Lepard said Thursday. "And that’s a combination of the war and also sniffing out the underlying problem in the bond market. When geopolitical trouble arises, gold tends to smell it first."

Gold has gained over $160 since the terrorist group Hamas attacked Israel on October 7, killing more than 1,400 people, mostly civilians. Since then, the conflict has been escalating, with gold crossing the $2,000 an ounce level Friday and December Comex gold futures last trading at $2,005.90, up 1.28% on the day.

Markets are digesting the latest developments ahead of another uncertain weekend, including the Pentagon stating that the U.S. Navy warship intercepted three cruise missiles and several drones launched by the Iran-aligned Houthi movement from Yemen. Also, Iran called for an embargo against Israel, including an oil embargo on the country. Iran has also warned that if Israel proceeds with a ground operation into Gaza to retaliate against Hamas and rescue the hostages, it will activate its terrorist proxy groups on multiple fronts.

There is a 20% chance that this conflict will escalate into an "unmitigated disaster," said Lepard, with economic consequences that would "probably be bigger than 2008, and it's probably bigger than in 2020. What could happen that would be bigger than those two things? It'd be a really major war. It doesn't strike me as impossible," he pointed out.

The United States has been living in a false narrative that everything is well. But the regional banks still have $600 billion of commercial real estate losses, according to Lepard.

"You know something is going to break, and then it's going to cascade very similar to the way it did in 2008," Lepard described. "It would be an unmitigated disaster. And I don't think there's any way the Federal Reserve wouldn't be called upon to quote-unquote do the patriotic thing and print the money necessary to keep the system going, inflation be damned."

This could mean a major stock market selloff between 30% and 50%. For gold, this would translate into $100+ daily price moves, with Bitcoin likely following at some point.

Lepard envisions similar-sized price moves as in March 2020 after the Federal Reserve stepped in to support the U.S. economy, and gold surged, hitting record highs. "Gold went up a hundred dollars a day, two days back to back. You never see that. And that's what would happen again this time. So I think everybody has to be prepared for that," Lepard noted.

  The monetary system today: 'Council of elders deciding the price of money' – Lyn Alden

Best-case and worst-case scenarios

Even in the best-case scenario, in which the Israel-Hamas war does not escalate into a major regional conflict or a WWIII-type situation, gold is looking to hit $2,500 an ounce after it goes through $2,100, Lepard told Kitco News.

"Gold will get through $2,100, which is a very important level. And when it goes through that, people will chase a new all-time high. We'll be at $2,500, maybe even $3,000," he said. "Assuming an absolute best case in the war, we're still screwed monetarily and economically."

Bitcoin will also likely catch the safe-haven bid and follow gold’s rally. "My target for mid to the tail-end of next year is $2,500 to $3,000 gold and $50k-$100k Bitcoin," he added. "That’s assuming a best case scenario in the war — that things calm down and nothing gets worse."

To learn when Bitcoin is likely to start rallying, watch the video above.

At the same time, the worst-case scenario, in which the Israel-Hamas conflict turns into a major war, is not all that implausible either, according to Lepard.

The Fed’s easing cycle is near, what it means for markets

There's a high probability that the Fed is done hiking because the bond market is signaling that something is close to breaking, Lepard said.

The yield on the benchmark 10-year Treasury, which moves inversely to prices, is trading above 4.9% — a level last seen in 2007.

"The Fed knows that if they continue to raise rates, they're going to break the bond market. They may have already broken it, but they're going to break it to the point that it's irreparable. So I think what we're moving towards is monetary easing," Lepard said. "And that's what gold smells. Gold also smells war, and gold always goes up when there's instability."

Watch the video above to get Lepard’s take on the Fed’s next step and what the central bank’s Chair Jerome Powell is afraid of going into the year-end.

Lepard also explores the idea of sound money and which safe haven assets are the best to hold during heightened geopolitical uncertainty and makes the case for Bitcoin as well as gold. Watch the video above for details.

By

Anna Golubova

For Kitco New

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David

Gold Price News: Gold Leaps Ahead on Heightened Risk Aversion

← Back to Gold News

Gold continues to rally strongly, with recent gains taking the price to a three-month high of $1,979 per ounce. For now, the appetite for safe-haven assets is trumping stiff rate headwinds.

Market drivers for gold remain under significant tension. US economic data is still largely beating expectations, helping to sustain inflation and higher interest rates to combat it. US rates continue to climb with 10-year US Treasury yields now testing 5% – a level not seen since mid-2007. This is clearly a challenge for non-yielding assets, such as gold.

gold kau price on kinesis exchange

However, the risk environment also remains elevated. Geopolitical risk has risen in the Middle East. However, the muted rise in crude oil prices thus far suggests that the market is still pricing in a low probability of Iran being drawn directly into the regional conflict. As such, the risks here still arguably lie to the upside. Equity markets are also uneasy, with the VIX (‘Fear’) Index of implied S&P 500 volatility at the highest levels since the US banking scare in March.

In the meantime, the much-awaited speech by Fed Chairman Powell has done little to move the dial. While the probability of a rate pause until the end of 2023 seems to have improved, the chances of one last rate hike in Q1 2024 have hardly moved. Until greater clarity, bonds will be handicapped in their ability to attract safe-haven flows from gold.

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