China gold exchange restrictions will cut risk, not appetite

December 30, 2011 at 18:32


China's decision this week to channel all gold trading through Shanghai shouldn't dampen mainland investors' appetite for bullion, even as unauthorized trading platforms are forced to close, according to analysts. Tightened oversight of the gold market, including a ban on bullion trading apart from that directed through the official exchanges in Shanghai, comes after a year of volatile price moves for gold and silver. Unauthorized trading platforms have proliferated along with the boom in precious metals Analysts in Hong Kong said the move is likely an attempt to bolster investor safeguards rather than to discourage investment. Some investors had complained they'd b...

Gold Left Some Investors in the Dust

December 28, 2011 at 18:24


Gold has been among the best investments in 2011. Shares of gold miners? Among the worst. Gold is up 12% this year but shares of gold miners have fallen almost 16%. Smaller gold miners are down almost 40%, based on the returns of leading exchange-traded funds tracking those stocks. The surprising gulf has caused pain for some of the biggest names on Wall Street -- including John Paulson, George Soros, David Einhorn, Seth Klarman, and Thomas Kaplan -- many of whom piled into gold shares over the past year, sometimes by shifting away from gold itself. Bulls figured that gold miners had more upside than gold, partly because mining stocks outperformed during past ...

The Federal Reserve's Covert Bailout of Europe

December 28, 2011 at 15:40


America's central bank, the Federal Reserve, is engaged in a bailout of European banks. Surprisingly, its operation is largely unnoticed here. The Fed is using what is termed a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland, and Japan. Simply put, the Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then ...

China Clamps Down on Gold Trading Frenzy

December 27, 2011 at 17:30


Gold exchanges in China outside of two in Shanghai are to be banned, authorities said in a statement released today. Gold exchanges have mushroomed across China, from the northern port city of Tianjin to Guangxi bordering Vietnam, as spot prices in the precious metal have soared to record highs and speculation has boomed. "No local authority, institution, or individual is allowed to set up gold exchanges," said the notice dated December 20 and jointly issued by the People's Bank of China, the Ministry of Public Security, and other regulators. The notice -- published on the central bank website ( -- said the Shanghai Gold Exchange and the Shanghai F...

China, Japan to back direct trade of currencies, sidestepping dollar

December 26, 2011 at 22:48


Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for the exchange, to cut costs for companies, the Japanese government said. Japan will also apply to buy Chinese bonds next year, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. The deals between the world's second and third-largest economies come as the 2-year-old European debt crisis keeps global financial markets volatile. Japan will start to buy "a small amount" of China's bonds, a Japanese government official said on condition of ano...

Turkey Boosts Gold Reserves

December 23, 2011 at 16:28


Turkey lifted its gold reserves by a hefty 1.328 million troy ounces, or 30 percent, last month as central banks around the world maintained their positions as net buyers of the precious metal. According to data from the International Monetary Fund, the Turkish central bank increased its gold reserves to 5.758 million ounces in November, from 4.429 million ounces the month prior. This followed a rise of 697,000 ounces in October, the latest IMF figures show. While the Turkish central bank wasn't available for immediate comment Friday regarding its recent reserve increases, it announced in November that it had begun to accept gold in its reserve requirements from com...

Will the Europeans have to sell there gold?

December 20, 2011 at 16:39


If the Italians can't persuade the bond markets to keep them in business, they have another card up their sleeve. Few people realize it, but Italy holds the world's fourth biggest stockpile of gold, at 2,452 tonnes. That's even more than France, and more than twice as much as China. Only the United States, Germany, and the International Monetary Fund hold more. The question here is whether some of the troubled European countries -- such as Italy and France -- are going to have to start selling off the national gold pile to meet their bills. Some wonder if they already have. Italy's gold has a street value of about $123 billion -- easily enough to cover this...