The Daily Nugget – Banxico, CFTC and transparency

The gold price looks like it may finish the week on a second weekly gain. Silver, platinum and palladium are headed for weekly losses, although small.

Gold’s stability, despite US dollar strength and positive economic data, has held up very well. Many who are investing and buying gold believe the bottom is near

For those worried about gold-backed exchange traded products, you’ll be pleased to hear the holdings rose for the first time in five weeks. March has been even better for silver ETPS, which rose to a record earlier this month.

In the early hours of this morning, Haruhiko Kuroda was confirmed as Bank of Japan governor. He is expected to push for yet more stimulus in the coming weeks.

Speaking of central bankers, the EU Summit will conclude today which has seen central banks and heads of government push for more growth and to help unemployment. More time is likely to be given to France, Portugal and Spain to reduce their budget deficits.

Yesterday Barclays lowered its 2013 price forecast to $1,646, citing ‘investor fatigue’. This is the thing about forecasts, you can’t possibly foresee all the elements which will affect a price. So Barclays latest prediction, is no more relevant than previous ones as there are still events and factors which we cannot possibly predict and expect.

Barclays believe the biggest factors to watch are the physical gold buying in China and investments in gold-backed funds.

It wasn’t just gold that Barclays were discussing yesterday, but also platinum. The bank believes the industrial precious metal will be in deficit by 251,000 ounces this year, as mine supplies fall to levels not seen since 2000. Whilst demand is expected to fall this year, on the back of reduced auto-industry expectations, however it is set to rise over the next five years by around 400,000 ounces.

Yesterday it was the 113th birthday of the Gold Standard Act. Signed on the 14th March 1900 by President William McKinley, the Act ended bimetallism set the price of gold at $20.67 an ounce and valued the dollar at 25.8 grains of gold.

Last week I wrote an article on Banxico’s gold buying activities. Further to last week’s news, journalist Guillermo Barba now reports that the Bank has in fact been selling its physical gold held in Mexico and buying what is (presumably) paper gold in London. You can read his article here.

Yesterday, the big news amongst in the gold and silver markets was the announcement that the US CFTC are considering investigating whether the London Fix is open to manipulation. The investigation has not been formally opened but they are planning on considering whether or not the fix is transparent enough.

The mainstream media have picked up on the news and are now liking it to the LIBOR scandal, something which our own Non-Exec director Ned Naylor-Leyland mentioned many months ago.

We most enjoyed ZeroHedge’s response to the news:

“We are confident that this latest noble CFTC effort will be for naught. After all, wholesale market manipulation like that of LIBOR and the energy market is contained to those sectors. It is preposterous and inconceivable that bankers, anywhere and especially in London, would be tempted to intervene illegally and push gold prices lower. After all, it is not like a surge in gold and precious metal prices is indicative of a loss of faith in the status quo and fiat money, and thus an embedded status quo oligarchy would have any interest in keeping precious metal prices lower. Which is why we urge the CFTC to promptly forget this latest charade and to instead focus on much more productive things: like ignoring the creeping takeover by high-frequency trading of all commodity markets as well as complaining to Congress about its low, low budget.”

About the Author

Jan SkoylesJan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Jan first became interested in precious metals and sound money when she met Ned Naylor-Leyland whilst working alongside him in the summer of 2010. Jan then went on to write her undergraduate dissertation on the use of precious metals in the monetary system. After graduating from Aston University in 2011 Jan joined The Real Asset Co research desk. Her work and views are now featured on a range of media including BBC, Reuters, Wall Street Journal, Mail on Sunday, Forbes and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan's commentary by subscribing to our RSS feed Gold Investment News.View all posts by Jan Skoyles