UN report calls for a ban on mercury trade and its use in gold mining

• Small-scale gold mining is the major driver of global mercury demand, with South America accounting for 39% of this demand, according to a United Nations report on the highly toxic metal.
• Hair samples taken from indigenous communities in the Amazonian regions of Bolivia and Brazil showed mercury levels higher than the safe limits set by the World Health Organization.
• In Brazil in particular, mercury use has increased with a boom in illegal mining, which has been largely ignored – and in some cases even encouraged – by the government of President Jair Bolsonaro.

Artisanal gold mining is driving global demand for mercury, with 2,058 metric tons of the toxic metal contaminating water, land and air every year, according to a recent report. Mercury, Small Time Gold Mining and Human Rights,

The report, presented to the UN Human Rights Council on 20 September by Marcos Orellana, the UN Special Rapporteur on toxic substances and human rights, calls for an end to the mining, export and trade of mercury, as well as a ban on the use of mercury has gone. In small scale gold mining.

“An estimated 10 million to 15 million people were directly engaged in small-scale gold mining in 2017, including an estimated 1 million child laborers and 4.5 million women,” the report said. “It generates up to 20% of the global gold supply annually, equivalent to approximately 500 tonnes, with a market value of approximately $29 billion.”

Orellana, who teaches international environmental law at George Washington University in the US, found that demand for mercury used in small-scale gold mining stems from three major regions: South America (39%), East and Southeast Asia (37%). %), and sub-Saharan Africa (21%).

Most small-scale gold mining in South America is concentrated in the Amazon. In Brazil, it has gone “massive”. According to MapBiomas, a research collective that tracks land use changes through satellite imagery, small-scale gold mining overtook large-scale industrial mining in 2018, covering 107,800 hectares (266,000 acres) in 2020. 94% of it is in the Amazon.

The Intergovernmental Forum on Mining, Minerals, Metallurgy and Sustainable Development (IGF) estimates that there are over 450,000 artisanal miners, or garimpeiros, in Brazil. More than 20,000 work illegally inside the Yanomami indigenous territory alone.

Small-scale gold mining not only destroys vast areas of forests, but also leaves crater-like wastelands of the Moon. The most devastating aspect to both miners and people around the world is the use of mercury to extract gold from the ore.

Also known as quicksilver, mercury is liquid at room temperature. When heated, it evaporates into the atmosphere or flows into rivers, lakes and oceans, contaminating fish and thus entering the food chain.

Large illegal gold mining operations on the Uraricoeira River in the protected Yanomami indigenous territory in the north of Brazil, where small-scale gold mining has gone “large-scale”. Photo courtesy of Bruno Kelly / Amazonia Real.

Minamata disaster

In the 1950s, mercury caused one of the most infamous industrial disasters of the 20th century in the Japanese city of Minamata. Chisso Corporation, a petrochemical company, had been dumping waste containing methylmercury into the local creek for several years. This form of mercury bound to bacteria made its way up the food chain, and eventually caused widespread death, birth defects and neurological problems among local populations.

The response to the disaster gave rise to the Minamata Convention on Mercury (MCM) in 2013, which aims to protect human life and the environment from mercury pollution. Ratified by 128 countries, including Brazil, in August 2018, the treaty regulates the production, import and export of mercury as well as mercury-containing products.

“It’s time to turn off the mercury tap,” said Lee Bell, mercury policy advisor at the International Pollutants Elimination Network (IPEN), in a press release following the publication of Orellana’s report. IPEN is a global network of over 500 nongovernmental organizations dedicated to eliminating toxins and pollutants from the environment. It served as a major source of information for Orellana’s report linking mercury, small-scale gold mining and human rights.

“There is no valid reason to mine mercury and sell it on the global market,” Bell said. “We know that almost all of it is being directed to small-scale gold mining and deposited directly into the environment, contaminating waterways, fisheries and poisoning communities. Small-scale gold mining We must stop the international mercury trade immediately to end human rights abuses.

Experts say that while the MCM has been largely lauded as a step in the right direction, the convention has several flaws. Some countries requested exemptions on the use of mercury in products such as batteries, lamps, cosmetics, thermometers, and dental fillings that use mercury amalgam.

Contamination in bolivia

While the European Union and the US have banned mercury exports, many other countries continue to profit from the trade. Bolivia is the leading importer of mercury in South America.

According to the Bolivian Center for Documentation and Information (CEDIB), up to 200 metric tons were imported into Bolivia in recent years. Most of it is used in small-scale gold mining, not only in Bolivia, but also in neighboring countries.

“With the high price of gold and the availability of new technology, small-scale gold mining is getting out of control,” said Carmen Capriles, an NGO that aims to raise awareness about climate change and environmental degradation. Yes, told. Mongabe by phone from La Paz. “More and more gold is won, and it is the indigenous people who bear the consequences. I am afraid that this will be the worst situation not of this generation but of the times to come.

From 2019 to 2021, Reaccion Climaticos contributed to the study “Gender, Chemicals and Waste,” which includes a chapter on mercury use by artisanal gold miners working in Bolivia’s Beni River.

Capriles and his team took 65 hair samples from indigenous women in the Ayo Quibo and Portchuelo communities, and found mercury levels ranging from 3 to 32 parts per million (ppm). The maximum safe level set by the World Health Organization is 1 ppm, while the recommended level is a maximum of 0.58 ppm.

“Contaminated mothers will pass mercury through the placenta to their unborn babies,” Capriles said. “There is a serious risk that future babies will be born with neurological problems or birth defects.”

Gold miners operating balsa (dredges) on the Madeira River in the region of Rosarinho in the Brazilian state of Amazonas. Photo courtesy of Alberto Cesar / Amazonia Real.

Mercury in indigenous Brazilians

Full scale studies of mercury use and contamination have not been done in Brazil. Sporadic surveys, however, point to an increasingly alarming situation, especially since President Jair Bolsonaro’s administration has taken a hands-off approach to small-scale gold mining.

In 2019, the Institute for Indigenous Research and Training (Iepe) participated in a survey in the state of Amapa, taking fish samples from different locations in the Amazonian state. It found mercury in all 428 samples, with 28.7% of them at more than 1 ppm.

In 2021, Ipe took 34 hair samples from women in the municipality of Vila Nova in Amapa, and found that 68% had mercury levels higher than the WHO’s safe limit.

“We have just completed a study of fish markets in 18 cities in the Amazon,” Ipe’s media coordinator Desio Yokota told Mongabay in a video interview. “We are still analyzing the data, but our preliminary results confirm a trend towards higher levels of mercury in fish.”

In 2020, the Osvaldo Cruz Foundation (FioCruz), a federal research institute for biological sciences, partnered with WWF Brasil to test samples from indigenous Munduruku communities in the Amazonian state of Para. They found that 60% of the participants had mercury levels above the WHO limit. All 88 fish samples taken as part of that study were also contaminated with mercury.

According to the Orellana report, a similar study among the indigenous Yanomami of Roraima state, who have been deeply affected by small-scale gold mining in their region, was blocked by FANAI, Brazil’s indigenous affairs agency. Under Bolsonaro, the agency has adopted a number of measures considered against the interests of the country’s indigenous peoples.

Bolsonaro also issued a presidential mandate just months after taking office in April 2019, in which he abolished the National Chemical Safety Commission (CONASQ), among hundreds of other multi-stakeholder councils. Created in 2000, CONASQ was tasked with improving the management of chemical substances in the country, including implementing the Minamata Convention. It included 22 representatives from the public, private and non-governmental sectors.

Experts say that the legitimate use of mercury for dental applications is often used to distribute mercury for artificial gold mining. In February 2018, the federal environmental protection agency IBAMA seized 430 kg (950 lb) of mercury at Quimidrol, a chemical company in the southern state of Santa Catarina. According to IBAMA, Quimidrol was Brazil’s largest importer of mercury, having sold 6.8 metric tons of the chemical over the past three years. Officially, mercury was labeled for dental use. But IBAMA found that Quimidroit had used a shell company in the Amazonian state of Mato Grosso to distribute the metal to gold miners in the region. The address used by the shell company turned out to be the address of a grocery store.

Iepe and Fiocruz contributed information to Orellana’s report, with Fiocruz also producing a set of recommendations to address rising rates of mercury contamination. These include routine testing of hair samples from at-risk communities, mandatory notification of chronic contamination, establishing a protocol for primary care and a risk management plan for affected communities, and adequate monitoring of mercury contamination in fish.

A grain of gold after it has been processed with the help of mercury. Photo courtesy of Cesar Araujo/Amazonia Real.

A ‘national challenge’

On 10 October, the Brazilian Society of Sciences (ABC) presented the article “Contaminated by mercury: why do we need an action plan?” Report published. The report states that while Brazil’s constitution bans mining on indigenous lands, there has been a “systematic invasion of garimpeiros” in recent years “without the state fulfilling its role to uphold the constitution”.

The report states that this has resulted in the death of indigenous people and environmental destruction, as well as widespread contamination of ecosystems with mercury.

It also calls for an updated mercury inventory, noting that the last one was done in 2016, before the Bolsonaro presidency, and was published in 2019. The amount of mercury emissions in that inventory was estimated to range from 69 to 913 metric tons.

A preliminary study presented at the CONASQ working group on mercury in 2018 estimated that small-scale gold mining in Brazil used up to 221 metric tons of mercury.

With small-scale gold mining exploding under Bolsonaro, mercury emissions are likely to be much higher today.

The ABC calls mercury contamination a “national challenge” calling for mobilization at all government levels, the private sector, and social and research organizations to implement some of the recommendations listed in its report.

They include resuming Brazil’s active participation in the Minamata Convention, updating the mercury emissions inventory, replacing products and processes that rely on mercury with alternatives, and last but not least, “on all illegal mining.” promotion of “banning”.

By Harold Vazquez

Source: BizCrastNet

FOMC rollover speculation boosts gold

Summary:  Gold trades higher supported by a change in sentiment across bonds and the dollar on speculation that we may approach peak hawkishness from the US Federal Reserve. The idea being supported by the FOMC’s potential willingness to offer time to assess the economic impact of the rapid pace of rate hikes and quantitative tightening already seen. After once again being rejected at the key $1615 support area, gold as a minimum needs to break above $1735 before an end to the month-long downtrend can be called

Gold trades higher supported by a recent change in sentiment across bonds and the dollar on speculation that we may approach peak hawkishness from the US Federal Reserve. The latest recovery that followed another failed attempt to break below key support at $1615, now a double bottom, started on Friday when the now famous “Fed whisperer” Nick Timiraos of the Wall Street Journal penned an article suggesting that the Fed is preparing to downshift in pace of rate hikes by early next year. The idea being the FOMC’s willingness to offer time to assess the economic impact of the rapid pace of rate hikes and quantitative tightening already seen.

The latest boost to gold came in response to a fresh slump in US bond yields and the dollar after economic data on Tuesday showed US home prices tumbling the most since 2009 while US consumer confidence was down by more than expected. Responding to these numbers the euro has returned to parity after breaking a trendline that was rejected several times since being established in February. In addition bond yields have softened across the curve, resulting in the 2-10 year spread still trading inverted at around 40 basis points, thereby signalling an elevated, but still unlikely risk of a recession in the US next year. 

At Saxo, we maintainour bullish outlook for gold and in our latest update we wrote about how the eventual recovery would need drivers to align, with the first trigger being peak hawkishness from the FOMC sending yields and the dollar lower. Being cautious we doubt that this is it, but there is clearly a growing belief the FOMC may pause soon to assess the economic impact of the current rate hike cycle which is currently pricing in a peak Fed funds rate just below 5% from the current 3.25%. In addition we maintain the view that long term inflation will end up somewhere in the 4 to 5% area, well above the current market expectations for a sub 3% rate. If proven correct, it would trigger a major adjustment in breakeven and inflation swap prices, developments that may support gold through lower real yields. 

Speculators and investors, however, are likely to remain mostly side-lined until we get a clearer view on the thinking within the Federal Reserve, hence the importance of next week's FOMC meeting. According to the weekly Commitment of Traders reports, speculators in the futures market have been whipped around for the past few weeks, thereby reducing the willingness to aggressively enter the market until a clearer picture appears. The same goes for investors in bullion-backed ETFs who have been net sellers on an almost continued basis since June. Overall total holdings have slumped to 2968 tons to a 30-month low, down 11% from the April peak. 

fter once again being rejected at the key $1615 support area, gold as a minimum needs to break above $1735, thereby reversing a succession of lower highs, before an end to the month-long downtrend can be called. The path to that level, however, remains littered with several smaller resistance levels, especially $1687 and $1700. For now and until such time momentum can be reestablished, watch the dollar, yields and geopolitical developments for directional inspiration.

By Ole Hansen

Source: Saxo

Billionaire investor John Paulson warns US house prices could tumble - and touts gold as an inflation hedge

• 
  John Paulson said house prices could drop, but a decline wouldn't spark another financial crisis.
• Paulson, who shorted the mid-2000s housing bubble, said there's much less risk in the system today.
• The investor criticized some of his fellow short sellers, and touted gold as an inflation hedge.

John Paulson, who called the implosion of the mid-2000s housing bubble, warned US home prices could slump again, but ruled out the decline sparking another financial crisis.

"We're not at risk of a collapse today in the financial system like we were before," he told Bloomberg in a recent interview. "Housing may be a little frothy. So housing prices may come down or they may plateau, but not to the extent it happened."

The billionaire investor and Paulson & Co founder explained that about 15 years ago, the mortgage market and banking system were much less solid than today.

At the time, many Americans could buy homes without undergoing credit checks or making down payments, and often had mediocre credit and lots of personal debt, Paulson said.

Moreover, banks were highly leveraged with capital ratios of about 3%, compared with between 9% and 12% today, he noted. Plus, they were exposed to big risks not disclosed on their balance sheet.

"You don't have the degree of poor credit quality in mortgages that you did at the time," he said. "The banks were very speculative about what they were investing in. They had a lot of risky subprime, high yield, levered loans."

The S&P/Case Shiller index of national home prices has surged by over 40% since the start of 2020, while long-term mortgage rates recently climbed past 6% for the first time since 2008. In other words, US homes have grown more expensive and financing a home purchase has become costlier, creating an affordability problem that could result in a market downturn.

Paulson also took aim at some of his fellow short sellers during the interview. He called them out for hyping up stocks to unwitting retail investors in order to drive up their prices, then stopping the promotion so that the stocks plummeted in value and the sellers' short positions paid off.

The investor pointed to cryptocurrencies, which he dismissed as a worthless bubble last year, as an example of short selling being risky because it has unlimited downside. Investors scoffed when bitcoin hit $20,000 and bet against it, he said, only to watch it more than triple in price to over $60,000 in November.

Paulson predicted last year that stubborn inflation would lead to higher interest rates, spurring investors to ditch cash and bonds for gold. He noted to Bloomberg that the yellow metal has served as a haven asset this year, given its smaller decline relative to stocks and bonds.

Moreover, he suggested gold could jump in value if the Federal Reserve's campaign of interest-rate hikes fails to crush inflation. He argued that investors would lose faith in the central bank and their long-term inflation expectations would rise, boosting demand for the metal as a hedge.

Paulson, who converted his hedge fund into a family office in 2020, shorted about $25 billion of securities during the mid-2000s housing bubble, and scored a $15 billion windfall for his clients. His wager was chronicled in a book titled "The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History."

By Theron Mohamed

Source: Insider

Gold Below $1,750 as Fed Signals No Pause in Inflation-Busting Rate Hikes

Gold bulls hoping to creep closer to $1,800 an ounce found themselves more than $50 below that target at Friday’s close, after the head of the Federal Reserve signaled no immediate pause in the central bank’s inflation-busting rate hikes.

“Gold is vulnerable here as the Treasury yields could gain further momentum next week if the labor market remains healthy,” said Ed Moya, analyst at online trading platform OANDA. “The risks of one last major move lower remains for gold.”

The yield on the benchmark 10-Year Treasury note edged towards Wednesday’s two-month high after Fed Chair Jerome Powell said the central bank will keep at “forceful” rate hikes until its fight against inflation is done.

The benchmark gold futures contract on New York’s Comex, December, settled at $1,762.90 per ounce, down $21.60, or 1.2%. For the week, December gold fell 0.7%.

The spot price of bullion, more closely followed than futures by some traders, was at $1,737.65 by 15:45 ET (19:45 GMT), down $21.11, or 1.2%. For the week, spot gold was down 0.6%.

“If spot gold’s low of 1735 fails to hold, the next support will be $1,727 and $1,710,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com. “Much will depend on how the market digests the after-effects of Powell’s speech from next week.”

Powell said policy-makers at the Fed’s Federal Open Market Committee had an “overarching focus” to bring inflation back down to the central bank’s annual 2% goal. 

The Fed has carried out four rate hikes since March, bringing key lending rates from nearly zero two years ago to as high as 2.5% by July.

“We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep at it until we are confident the job is done,” Powell said in a speech broadcast live from Jackson Hole, Wyoming, where the central bank was holding its annual symposium on the economy. 

The speech was one of Powell’s strongest ever, reflecting the onerous burden of the Fed under his watch in curbing inflation retreating ever so slowly from four-decade highs.

Powell’s comments also came after data on Friday showed a U.S. inflation indicator closely followed by the Fed growing at 6.3% in the year to July from a previous 6.8% year-on-year in June.

The so-called Personal Consumption Expenditure Index, or PCE Index, fell by 0.1% for July from 1% in June, the Commerce Department data showed. 

Until Friday’s publication of the PCE Index, a broader gauge of inflation called the Consumer Price Index, or CPI, remained at more than four times the Fed’s annual target of 2%. The CPI grew by 8.5% during the year to July. Prior to that, it expanded at its fastest pace in four decades, growing 9.1% during the year to June.

Gold remains a hedge against inflation for some of the most serious investors, although it hasn’t been able to live up to that billing since hitting record highs above $2,100 in August 2020.

By Barani Krishnan

Source: Investing

Charting the Gold-to-Silver Ratio Over 200 Years

 Charting 200 Years of the Gold-to-Silver Ratio

Gold and silver have been precious and monetary metals for millennia, with the gold-to-silver ratio having been measured since the days of Ancient Rome.

Historically, the ratio between gold and silver played an important role in ensuring coins had their appropriate value, and it remains an important technical metric for metals investors today.

This graphic charts 200 years of the gold-to-silver ratio, plotting the pivotal historical events that have shaped its peaks and valleys.

What is the Gold-to-Silver Ratio?

The gold-to-silver ratio represents the amount of silver ounces equivalent to a single ounce of gold, enabling us to see if one of the two precious metals is particularly under or overvalued.

Currently, the ratio sits at about 80 ounces of silver equivalent to one ounce of gold. This is after the ratio spiked to new highs of 123.3 during the COVID-19 pandemic.

While gold is primarily viewed as an inflation and recession hedge, silver is also an industrial metal and asset. The ratio between the two can reveal whether industrial metals demand is on the rise or if an economic slowdown or recession may be looming.

The History of the Gold-to-Silver Ratio

Long before the gold-to-silver ratio was allowed to float freely, the ratio between these two metals was fixed by empires and governments to control the value of their currency and coinage.

The earliest recorded instance of the gold-to-silver ratio dates back to 3200 BCE, when Menes, the first king of Ancient Egypt set a ratio of 2.5:1. Since then, the ratio has only seen gold’s value rise as empires and governments became more familiar with the scarcity and difficulty of production for the two metals.

Gold and Silver’s Ancient Beginnings

Ancient Rome was one of the earliest ancient civilizations to set a gold-to-silver ratio, starting as low as 8:1 in 210 BCE. Over the decades, varying gold and silver inflows from Rome’s conquests caused the ratio to fluctuate between 8-12 ounces of silver for every ounce of gold.

By 46 BCE, Julius Caesar had established a standard gold-to-silver ratio of 11.5:1, shortly before it was bumped to 11.75:1 under emperor Augustus.

As centuries progressed, ratios around the world fluctuated between 6-12 ounces of silver for every ounce of gold, with many Middle Eastern and Asian empires and nations often valuing silver more highly than Western counterparts, thus having a lower ratio.

The Rise of the Fixed Ratio

By the 18th century, the gold-to-silver ratio was being redefined by the U.S. government’s Coinage Act of 1792 which set the ratio at 15:1. This act was the basis for U.S. coinage, defining coins’ values by their metallic compositions and weights.

Around the same time period, France had enacted a ratio of 15.5:1, however, neither of these fixed ratios lasted long. The growth of the industrial revolution and the volatility of two world wars resulted in massive fluctuations in currencies, gold, and silver. By the 20th century, the ratio had already reached highs of around 40:1, with the start of World War II further pushing the ratio to a high of nearly 100:1.

Recently in 2020, the ratio set new highs of more than 123:1, as pandemic fears saw investors pile into gold as a safe-haven asset. While the gold-to-silver ratio has since fallen to roughly 80:1, runaway inflation and a potential recession has put gold in the spotlight again, likely bringing further volatility to this historic ratio.

By Omri Wallach

Source: VC ELEMENTS

Gold Price Forecast: XAUUSD pressured below the 200-DMA, on upbeat sentiment, ahead of Powell

• The yellow metal is near the day’s lows and aiming lower, extending Monday’s losses.
• Risk-on mood, spurred by China’s news, decreased appetite for safe-haven assets.
• US consumer confidence fell the most since February 2021.
• Gold Price Forecast (XAUUSD): To remain downward pressured below the 200-DMA

Gold spot (XAUUSD) prolonged its losses for the second straight day, struggling to stay above the $1820 mark amidst a positive market mood that witnessed a jump in riskier assets, weighing on safe-haven assets, particularly in the precious metal segment. At the time of writing, XAUUSD is trading at $1820.72, recording minimal losses of 0.10%.

XAUUSD’s Tuesday’s price action illustrates that the yellow metal entered a consolidation phase before resuming Monday’s downtrend, seesawing around its low at $1820.61. Nevertheless, it should be noted that XAUUSD will face solid support around the June 24 low at $1816.64.

Sentiment and a strong US dollar weighed on the gold price

Global equities rallied on positive news from China. Beijing cut the Covid-19 quarantine for travelers, which was greatly cheered by investors, shifting from the negative sentiment of Monday’s Wall Street session. In the meantime, US consumer confidence fell in June to its lowest level in 12 months, as inflation dampened US citizens’ economic conditions.

Elsewhere, Fed speakers will continue to cross newswires. On Tuesday, the NY Fed President John Williams said that officials would discuss whether to hike 50 or 75 bps the Federal funds rate in the next month. Williams added that policymakers would be data-dependent and that he does not foresee a recession in his baseline, though he acknowledged the US economy might slow down.

The US Dollar Index, a gauge of the buck’s value against six currencies, underpinned by the rise in the US 10-year yield up by four bps at 3.234%, advances firmly above the 104.000 thresholds, at around 104.560, gaining 0.62%.

Also, the US 10-year TIPS (Treasury Inflation-Protected Securities), a proxy for Real yields,  climbs six basis points, up to 0.707%, a headwind for gold prices.

In the meantime, outflows from gold ETFs could add some pressure on gold. Commerzbank analysts wrote, “holdings in the gold ETFs tracked by Bloomberg were reduced by 6 tons yesterday. The momentum of outflows has picked up pace again of late.”

Meanwhile, the Richmond Fed Manufacturing Index added to the ongoing Fed regional indices displaying negative readings and could be a prelude to July’s ISM Manufacturing PMI.

The US economic docket will feature later the San Francisco’s Fed Mary Daly, and by Wednesday, Cleveland’s Fed President Loretta Mester and Fed Chair Jerome Powell will cross wires.

Gold Price Forecast (XAUUSD): Technical outlook

XAUUSD is still downward biased, consolidating in the $1820-50 range. However, a daily close below $1820 would open the door for further losses. Besides, the daily moving averages (DMAs) above the spot price and the RSI at bearish territory bolstered the seller’s hopes for lower prices.

Therefore, the XAUUSD’s first support would be June 16 low at 1814.68. Break below will expose the June 14 low at $1804.95, followed by $1800.

By Christian Borjon Valencia

Source: Fxstreet

Central Banks Buying Gold Could Be Catalyst for $3,000 Gold Price

Why Central Banks Might Send Gold Prices Soaring

If you’re trying to figure out where gold prices are headed next, you can’t ignore central banks. They could be one of the biggest catalysts to take gold prices to $3,000 per ounce much sooner than expected.

Central banks have been buying gold for years, and it doesn’t look like they’ll stop anytime soon. Here’s the kicker: it’s not the major central banks that have been buying the yellow precious metal lately; it’s the smaller ones. The major central banks already own a lot of gold.

Central banks don’t make an announcement before buying gold for their reserves. They buy it first and announce it later.

Central banks’ actions have been speaking louder than words, saying they want more gold. They’ve been net buyers of the yellow metal since 2010. In the first quarter of 2022, they bought gold again, 84 tonnes of it. That’s a slightly lower amount than during the same period a year ago, but they remain buyers.

Egypt’s central bank purchased 44 tonnes of gold in the first quarter 0f 2022, taking its gold reserves to 125 tonnes. Turkey bought 37 tonnes of the yellow metal, so now that country’s reserves stand at more than 430 tonnes.

Over the past few quarters, India’s central bank has also been an active gold buyer. India added six tonnes of gold to its reserves in the first quarter of 2022, so its gold reserves now amount to 760 tonnes. Ecuador bought three tonnes of gold bullion from small, local gold producers in the first quarter.

The Bank of Ghana announced a gold purchase program in June 2021, with a goal of increasing its gold reserves from nine to 17 tonnes by 2026. Ghana’s central bank said it had purchased 600 kilograms of gold under that program.

Moreover, the central bank of Russia announced that it will resume its gold-buying program. In the past few years, Russia’s central bank has been one of the most resilient central banks in terms of purchasing gold. It bought gold no matter the price. The Russian central bank currently holds about 2,300 tonnes of gold.

Gold Price Outlook: If You Own It, Solid Rewards Might Be Ahead

Dear reader, what central banks are doing these days when it comes to purchasing gold is grossly underreported in the mainstream media. It doesn’t get reported much because the gold market is considered boring, not like hot technology stocks or cryptocurrencies.

Central banks need gold as the world becomes more polarized and currencies get questioned. The yellow precious metal has a history of preserving wealth in times of currency devaluation and crisis. Central banks know this well. They hold a lot of currency in their reserves and will need a lot of gold to hedge against volatility. This will help gold prices get to $3,000 per ounce.

Given what central banks did in the first quarter of 2022, my stance on gold is as bullish as ever. Over the past few months, gold prices have held at the level between $1,800 and $1,900. There could be a solid base building, and I wouldn’t be surprised if, in a few years, we look back at these prices and say, “Wow, gold was cheap.”

By Moe Zulfiqar, B.Comm.

Source: Lombardi

Gold Demand Trends Q1 2022

Q1 gold demand was 34% above Q1 2021, driven by strong ETF inflows

In a quarter that saw the US dollar gold price rise by 8%, gold demand (excluding OTC) increased 34% y-o-y to 1,234t – the highest since Q4 2018 and 19% above the five-year average of 1,039t. 

The Ukraine invasion and surging inflation were key factors driving both the gold price and demand. 

Gold ETFs had their strongest quarterly inflows since Q3 2020, fuelled by safe-haven demand. Holdings jumped by 269t, more than reversing the 174t annual net outflow from 2021. 

Bar and coin investment was 282t in Q1, 20% lower than the very strong Q1’21 but 11% above its five-year quarterly average. Renewed lockdowns in China and historically high local prices in Turkey were key contributors to the y-o-y decline. 

Jewellery consumption lost momentum in Q1: demand was down 7% y-o-y at 474t. The drop was largely due to softer demand in China and India.

Central banks added 84t to global official gold reserves during the first quarter. Net buying more than doubled from the previous quarter but fell 29% short of Q1'21.

The technology sector had a steady start to the year: demand of 82t was the highest for a first quarter since 2018, driven by a modest uptick in gold used in electronics.

Q1 gold demand increased y-o-y as strong ETF flows offset weaker jewellery and retail investment.

Highlights

The LBMA Gold Price PM gained 8% in Q1, its best quarterly performance since Q2 2020. The average quarterly price of US$1,877.2/oz was around 5% higher than in the first quarter of last year.

Gold mine production was 3% higher y-o-y at 856t. China resumed near-full production following safety-related closures, while higher grade ores were mined at various existing sites. 

The supply of recycled gold jumped to 310t (+15% y-o-y). This was the strongest first quarter for gold recycling activity for six years.

After a strong start to Q1 in China, demand came to a virtual halt in March. Tough new lockdowns imposed to contain a resurgence of COVID-19 had a marked impact on demand for jewellery, bars and coins.

By Goldhub

Source: Gold-org

LBMA and WGC launch Gold Bar Integrity Programme

London Bullion Market Association (LBMA) and the World Gold Council (WGC) are collaborating to develop and implement an international system of gold bar integrity, chain of custody and provenance. Over time, this will help consumers, investors, and market participants to trust that their gold is genuine and has been responsibly and sustainably sourced.

To deliver this industry-wide and ground-breaking development for the market, LBMA and WGC have brought together representatives from the global gold supply chain to launch a pilot phase of the project.

This initial phase will see two distributed ledger companies (aXedras and Peer Ledger) demonstrate how their technology can best deliver a global ecosystem that will create an immutable record of a gold bar’s place of origin and chain of custody. This blockchain-backed ledger will register and track bars, capturing the provenance and full transaction history.

Over time, the plan is to encourage all major participants in the gold industry to adopt this technology, and add to the global ecosystem, so that all gold bars are registered and tracked across the entire supply journey from mine to vault, and ultimately to end consumers such as jewellery manufacturers. This will effectively digitise the global supply chain of gold bars.

The Gold Bar Integrity Programme supports greater industry alignment to ensure the future growth of the international gold market.

Ruth Crowell, Chief Executive Officer, LBMA commented:

“The international trade in wholesale, physical gold depends on confidence. The initiative announced today underlines the confidence that all participants in the market can have in the integrity and accountability of the gold they trade, and the gold they buy. This is a major advance in furthering transparency for the common good of the gold industry.”

David Tait, Chief Executive Officer, World Gold Council commented:

“This transformative project is the first step towards a more aligned gold industry, where we work together to ensure a more accessible and transparent market. Consumers and investors want to know their gold has been responsibly and sustainably produced and tracing the origin of gold bars will help enforce the highest standards across the entire supply chain. At the World Gold Council we are committed to addressing barriers to investment such as trust and provenance as this is key to unlocking increased demand for gold.”

Jin Chang, Managing Director and Global Head of Metals, CME Group commented:

“We welcome the introduction of the Gold Bar Integrity Programme, which will help further strengthen the integrity of the physical gold industry, as well as its investment and trading communities. We are committed to helping our clients navigate the evolution towards a more sustainable future, and these initiatives help provide more clarity to the industry and our clients around how their sustainability goals are being met.”

By LBMA

Source: LBMA

Ukraine, Russia, gold and geopolitics

As the world’s attention has shifted to the crisis in Ukraine, we have received a lot of queries from investors about the effects of the recent events on gold’s performance in the short, medium and long term.

Taking a step back, we believe that geopolitical events in isolation are neither the only nor the main reason why investors should own gold. Gold’s role as a strategic asset is linked to its broad contribution to returns, diversification, liquidity and positive portfolio impact.

However, events like these represent a clear example of why gold is such an effective and well-established hedge against expected and unexpected market risks.

As Russian troops entered Ukraine on Thursday morning GMT, the gold price surged to an intra-day high of US$1,974/oz.1 And while it has given up most of Thursday’s gains as global equities rebounded, gold is still more than 5% higher month-to-date.2

Historical analysis suggests that gold has reacted positively to tail events linked to geopolitics and, despite price volatility, tended to keep those gains in the months following the initial event. In addition, gold trades in a deep and highly liquid market, with collective volumes surpassing US$120bn a day on average and tight bid-ask spreads. All these, combined with the fact that bullion carries no credit risk, makes gold a sought-after safe haven asset.

Gold also significantly outperformed against the US dollar as well as US, European, and UK sovereign bonds over the past week. And gold’s tested performance role as a high-quality, liquid store of wealth stands in stark contrast to assets such as bitcoin, which performed in line with equities during the recent crisis – both as equities plummeted as well as when they rebounded towards the end of the day and in early morning trading on Friday, February 25th.

Looking forward, we believe that gold may experience price volatility in either direction due to potential tactical positioning but investment demand is likely to be supported longer term by high inflation, geopolitics and overall market pullbacks, especially since – as we discussed in our Gold Outlook 2022 – many of the simmering tensions that took the back seat during the COVID pandemic are starting to resurface.

By Juan Carlos Artigas

Source: Goldhub

Gold Demand Trends Full Year 2021

Strong Q4 lifts full year demand 10%

Annual demand recovered across virtually all sectors – the notable exception being ETFs, which saw net annual outflows

Full year 2021 gold demand (excluding OTC) increased to 4,021t, propelled by Q4 demand which jumped almost 50% to a 10-quarter high.1 Demand recouped much of the COVID-related losses sustained during 2020. Demand for gold in the consumer-driven jewellery and technology sectors recovered throughout the year in line with economic growth and sentiment, while central bank buying also far outpaced that of 2020. Investment demand was mixed in an environment of opposing forces: high inflation competed with rising yields for investors’ attention.  

Jewellery fabrication staged a strong recovery in 2021. It grew 67% to 2,221t to meet the strong rebound in jewellery consumer demand,  which increased 52% in 2021 to 2,124t, matching the 2019 total. This was in good part linked to Q4 demand, which – at 713t – saw the strongest quarterly jewellery consumption  since Q2 2013.  

Global holdings of gold ETFs fell by 173t in 2021 in sharp contrast to 2020’s record 874t increase. Q4 outflows of just 18t were a fraction of the much larger outflows seen in Q4 2020. 

Bar and coin investment maintained its momentum, jumping 31% to an eight-year high of 1,180t. Q4 2021 demand of 318t, meanwhile, was the highest for a fourth quarter since 2016.

Central banks accumulated 463t of gold in 2021, 82% higher than the 2020 total and lifting global reserves to a near 30-year high. The pace of buying slowed in the second half, with a 22% y-o-y decline in Q4.

Gold used in technology grew 9% in 2021, to reach a three-year high of 330t. Y-o-y growth slowed in the most recent quarter (to 2%), highlighting the rapid recovery seen in the sector in Q4 2020.

Highlights

The US dollar gold price declined by around 4% during 2021.2  Nevertheless, the average price for the year of US$1,799/oz was around 2% higher than 2020, as the price was relatively steady, holding within a broad range for much of the year.

Total gold supply eased marginally in 2021: down 1% at 4,666t, its lowest level since 2017. Mine production recovered 2% over the year but this growth was counteracted by a sharp 11% drop in recycling.

Jewellery growth was almost universal. Gains were fuelled primarily by the two global heavyweights – India and China – but decent recovery was also seen across all other regions. 

Inflation-driven retail investment reached record levels in some Western markets. Bar and coin demand exceeded previous annual levels in both the US and Germany as investors focused on rising inflationary pressures and low/negative real rates.

By Metals Focus, World Gold Council  

Source: GoldOrg

LBMA Precious Metals Market Volumes: Turnover Figures for November 2021

 Welcome to our monthly analysis of LBMA trading volumes for the major precious metals. 

As usual, there are some interesting patterns to explore. 

There were some similarities in November trends to those of October, in that spot volumes increased for palladium but declined for gold, silver and platinum, while LoanLeaseDeposit volumes increased again for gold, silver and platinum, but declined for palladium. In the other areas, options volumes declined with the exception of gold, as was the case in swaps and forwards.

Gold volumes overall were unremarkable, as indeed was the price trajectory over the month. 

Silver spot volumes were very variable, as they were in platinum, while although there were some very quiet days in palladium, equally there were days when volumes spiked; we look more closely at all of this below.

The usual patterns of high volumes preceding changes in direction, or price corrections, were present in gold platinum and palladium but less evident in the silver market.

GOLD

It was another month of Fed-watching – and with good reason, as tapering was confirmed, and Jay Powell turned more hawkish after his renomination. After spending much of October working gradually higher in the wake of September’s falls, gold spent the last few days of the month and the first few days of November in a correction towards $1,760. One of the highest spot volume days was the 3rd, as it traded downwards in a $30 range in response to the Fed’s statement that it would indeed start implementing the tapering program in December, at a rate of $15Bn per month ($10Bn in Treasuries, $5Bn in mortgage-backed securities). This was a typical knee-jerk reaction, given that the tapering program had been well-flagged in advance, and the high spot volumes were accordingly not matched in the derivatives. Spot volumes averaged 17.2M ounces.

With weak-handed holders shaken out of the market, prices reversed and traded up to the month’s high of $1,877 on the 16th, running out of steam as strong US retail sales further raised expectations of tapering and rate hikes. (Commitment of Traders figures for COMEX also show substantial fresh longs and some short covering on the Exchange over that period). On the way up, the market enjoyed another heavy day on the 10th, trading a $44-range in an “up-day” on the release of the biggest surge in U.S. CPI since November 1990, coming in at 6.2%, with core inflation at 4.6%. On this occasion, the swaps/forwards and LoanLeaseDeposit volumes were high, as the price approached $1,880, five-month highs, suggesting that there was some price-locking activity and forward hedging underway.

By this stage, the spot price was over-extended on a number of technical indicators, and momentum started to fade, only to pick up again strongly with the record spot volume for the month coming on Nov. 22, the day that Jay Powell jolted the markets with his new more hawkish tone and allowing that inflationary forces might not be so transitory after all. Gold didn’t drop by as much as some other asset classes (notably silver, see below) and spent the rest of the month consolidating in price between $1,780 and $1,820. What was interesting, though, was that on the day following Mr. Powell’s stance adjustment, volumes surged in all the derivatives, again suggesting a rush to lock in high prices for fear of a change of trend – but also option activity may have reflected the desire to start taking action before interest rates start to rise -even though that would be several months ahead. The picture was similar towards the end of the month as gold started to slide below $1,800, prompting further hedging activity.

SILVER

While silver spot volumes were down 26% in October and against the nine-month average, they were down a further 25% in November against the ten-month average. This is largely because, with gold watching the Fed like a hawk but only trading in narrow ranges, silver’s notoriously fickle nature meant that some would-be market participants were sitting firmly on their hands. Generally, silver did trade in line with gold, but the range for the month, at 10.2% ($23.0-$25.4), was only 1.5 times that of gold (6.7%), compared with the more normal ratio of at least 2:1. Swaps/forwards were down 19%, and options fell 16% as the markets deliberated what the next trend would be, but LoanLeaseDeposit activity was up 24%, suggesting hedging activity, most likely from the base metal miners.  

There was a further external factor that has seen market elements hold off, the cost of freight. With freight rates from China to the West Coast, for example, rising by a factor of ten over the first ten months of the year and freighter space virtually impossible to come by, some silver has been flown between the point of sale and point of delivery, and this is expensive. It is likely that, where possible, buyers are holding off where they can. With the continuing expansion of the solar sector, in particular, this may not be for much longer.

There were three days of very strong business in the spot market, without which average volumes would, at 150M ounces, have been 29% below the ten-month average. 

The busiest day in spot, which was also the busiest in the swap/forward markets, coincided with the busiest day for gold and the derivatives, i.e., the day after Jay Powell’s pivot. Here, too, we can assume that this was hedging.

Perhaps of more significance, given that it wasn’t related to gold price action, was the heavy volumes that went through in swaps/forwards and options in the second week of November. This was as silver pushed from $24 briefly through $25, a psychologically important level and three-month highs. Then as prices held above $25 for a few days, the LoanLeaseDeposit volumes picked up, so all three patterns suggested industrial hedging. Finally, towards the end of the month, LoanLeaseDeposit picked up again as silver started to slither lower, suggesting some nervous selling and possibly technically driven shorts as sentiment deteriorated on the back of the announcement of the Omicron virus.

PLATINUM 

Hobbled to some degree by the persistent semiconductor chip supply dislocation, platinum ran out of steam in mid-November. To put this into a longer-term context, platinum had been in a relentless bear market from $1,340 in February down to $904 in late September and then sustained a 40% correction up to the mid-November peak of $1,105. By the end of the month, most of those gains had been given back after a fall that started in mid-month. The major one-day fall actually came a couple of days before the announcement of the Omicron variant. The trigger for the fall was likely to be a combination of flat vehicles sales as well as platinum being heavily overbought by this stage and profit-taking set in (here, too the CFTC figures show that trading in the exchanges saw heavy long liquidation and a big increase in shorts in the week from the 16th to 23rd, underlining the nervous sentiment in the market).

As far as specific highlights are concerned, the first heavy days of spot trading, in a month where the average was just 4% below that of the first ten months of the year, were on the 3rd and 4th, in which the $1,050 level was putting up stiff resistance and attempts to breakthrough were foiled. 

Apart from some heavy options trading at the start of the month, the derivatives volumes were not out of the ordinary, so this spot volume can most likely be attributed to speculative activity.  

The upward correction that ran through to the 16th was similarly relatively mundane in terms of spot volumes, although it is noteworthy that volumes were growing in the Swap/Forward, potentially suggesting some industrial interest, while options were mixed with some days of no activity at all. LoanLeaseDeposit was relatively active but in line with the January-October averages, so nothing especially out of the ordinary there.

The interesting action came as the price reversed course on the 16th, the same day in which gold topped out. This is partially attributable to the retail sales numbers, which, while strong at the headline level, were flat month-on-month and which reminded the market of the problems in the semiconductor sector. Jay Powell’s comments on 22nd exacerbated the price fall, and on the following day, volumes exploded across all four sectors as platinum dived through $1,000, prompting technical, psychological and hedging activity. 

The rest of the month was quieter apart from a final burst in spot trading on the final day of the month as the $950 level came under attack – and in early December, prices were consolidating in that region.

PALLADIUM

If platinum is somewhat hobbled by the parlous state of the semiconductor supply chain, then palladium has it a lot worse. Typically, the auto sector accounts for between 80 and 85% of global palladium industrial demand, and the cutbacks at auto producers are seriously undermining current offtake levels. In November, however, palladium marked time between $2,000 and $2,100 for the first ten days of the month before embarking on a sharp upward move that took it to $2,217 (intraday) in just six trading days, moving smartly into overbought territory; it then went sharply into reverse, plunging to $1,700 in the following seven days. Industrial demand was pretty quiet over the whole of the month, so it is arguable that [rice action was dominated by market-jobbing.

In the background, the activity on NYMEX in the first half of November suggests that there was some bargain hunting going on, along with short covering, which will have helped the upward momentum before the run towards $2,200 prompted profit-taking.

In the background, sentiment was helped mid-month by good headline factory order numbers, although the Federal Open Market Committee meeting noted that bottlenecks were due to last “well into next year” while nonfarm payroll numbers were much better than expected (and wage inflation, while 8.3% annualized were just 3.1% against September 2019). This may well have helped sentiment, and also there was a feel-good factor running through the markets as John Kerry and Chinese climate envoy Xie Zhenhua revealed, at COP26, an agreement to co-operate on addressing climate change. In the longer term, of course, this does not help palladium at all as Internal Combustion Engines are phased out (it is quite possible that by 2040, if plans go as scheduled, that, far from being 80% of the world’s global palladium demand, the auto sector will be a net supplier into the market).

In terms of trading activity, the average volume for the month was 563,800 ounces, but this was eclipsed on three trading days (and if these were taken out, then the average would have been 451,575 ounces). Regular readers of this column will not be surprised to know that these heavy trading days were reversal days, notably the 1.1M ounces when palladium slithered from $1,885 to $1,700 in a major clear-out on the 26th of the month; and then again with another downdraught on the final day, when it traded downwards in a range of $1,811 to $1,707. What is slightly different, however, is that the big trading volume day when the price turned up in mid-month was not the first day of the rally but the second. This suggests that the market was still unsure of itself – understandable given the fundamentals – and needed reassurance. That came in the form of the 10-day moving average crossing the 20-day to the upside and the spot price moving above both of these two plus the 50-day.

There was little fluctuation in the swap/forward sector until the dramatic one-day price moves at month-end, when volumes almost doubled, suggesting some forward over being taken into the price weakness. It is more likely to have been industrial buying interest rather than mine hedging, but we can’t rule out the latter entirely. Options activity was at its height on the 24th, a day of a narrow range, trading around the $1,900 level. LoanLeaseDeposit high-volume days (in excess of a million ounces against a monthly average of generally 0.84M) coincided with the key days already outlined here, as market participants may well have been hedging into strong price moves, especially when spot had cleared $2,100 and then again when the price was under heavy pressure.

The clear-out of weak-handed holders set the scene for an earl-December rally, but this too petered out.

By Rhona O’Connel  

Source: Nasdaq