Thursday, September 15, 2011

Return of the Meanies

The CME Final for Wednesday reports that on volume of 186,369 contracts, 18.56% above estimate, open interest fell 2,253 lots, 7.01 tonnes or 0.44%, to 509,815 lots. Gold of course was down 0.85% at the stock market close and traded across a 2% range. The open interest decline seems small if the picture was simply one of dominant long liquidation. JBGJ suspects significant fresh shorting also.

Indian ex-duty premiums: AM ($5.03) PM 50c, with world gold at $1,805.20 and $1,806.05. Well below, and below, legal import point. The rupee initially slid another 0.4% to another 2-year low and appeared headed for a 9th day of weakness, but then firmed to close slightly stronger at $1= 47.545 (R47.62). The stock market rose 1%.

Indian domestic gold prices were unusually diffuse today. It has to be conceded the world’s largest gold buyer seems not to be performing its usual stabilizing function very strongly. Perhaps today’s later world gold declines will repair this. A steadier rupee would also be very helpful.

As noted last night, local Vietnam gold this morning stood at a $44.13 premium to world gold of $1,812 (Wednesday $29.43/$1,839.45).

Shanghai gold closed at a premium of $11.11 to world gold of $1,811.35 on heavy volume equivalent to 17,571 NY lots (Wednesday $10.34/$1,827.50). The Yuan was allowed to rise to a 6.79% post $US "depegging" appreciation (6.72%). China appears to be the brightest spot in the gold world at present.

Senate majority leader Reid has spoken of bringing forward the Chinese currency bill – see

http://uk.reuters.com/article/2011/09/13/usa-china-
currency-idUKS1E78C1NG20110913

and although little noticed Republican contender Romney has made forcing the Chinese to revalue part of his economic program. JBGJ wonders if Beijing is starting one of its cosmetic appreciations of the Yuan. These seem to stimulate Shanghai gold premiums and activity.

http://www.gata.org/node/10434 . The thought is that a flow of mobilized CB gold is again hitting the market, for whatever reason. Under the current CB agreement, additional lending was permitted again.

This esoteric subject is difficult to evaluate, but just the thought could certainly damage sentiment.