PRECIOUS METALS HEADLINES

JUL 5 India's June Gold Imports Fall 68% as High Prices Reduce Demand (Bloomberg)
Excerpt: -- Gold imports by India, the world's biggest buyer of bullion, slumped 68 percent from a year earlier in June as high prices eroded demand from jewelers and investors. Purchases declined to 24 metric tons from 74 tons, according to provisional data compiled by the Bombay Bullion Association Ltd., which represents 230 trading companies. ``We can expect some revival in demand if we have a good monsoon,'' Suresh Hundia, president of the association, said in a phone interview today in Mumbai. ``The festive season is also about to begin, so we are hopeful.'' A normal monsoon may lift farm production, which accounts for a fifth of the economy, and increase the disposable income in the hands of the farmers to purchase more jewelry during the festive season that begins next month.

JUL 3 Fed's Bullard says bank's credibility on line (Reuters)
Excerpt: he Federal Reserve's use of core inflation measures is harming its credibility, the new president of the St. Louis Fed wrote in an editorial released on Thursday. James Bullard, who took over from William Poole in April, said focusing on inflation indices that exclude food and energy work well when those prices are rising at rates similar to those of other prices, "but that is not what is happening today. "It is hurting Fed credibility to say that we are trying to keep inflation low and stable, but at the same time we are not counting some of the prices that are going up at the most rapid pace," Bullard wrote in the bank's magazine, "The Regional Economist."

JUL 1 ECB unveils new gold sales totalling 30 tonnes (AFP)
Excerpt: The European Central Bank said Tuesday that it had recently sold 30 tonnes of gold, on top of 42 tonnes sold in late 2007 under a central bank agreement...The ECB, which announced in early December that it had just sold 42 tonnes of gold, said Tuesday that it was not its intention "to sell more gold in the current year of the agreement," which begins and ends in late September.

JUN 29 Fed's flinch galvanizes gold (Marketwatch)
Excerpt: Comex August gold closed Friday at $931.30. Australia's The Privateer, adhering to a refreshing national tradition of blunt expression, wrote: "In what is an all but unprecedented event, gold has soared almost $50 straight up in the immediate aftermath of an FOMC meeting at which the Fed did what (almost) everybody expected them to do -- precisely nothing.

JUN 26 The Shrinking Influence of the US Federal Reserve (Der Spiegel)
Excerpt: Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) is to be carried out in the United States. It is nothing less than an X-ray of the entire US financial system. As part of the assessment, the Fed, the Securities and Exchange Commission (SEC), the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests -- worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar.

JUN 23 Australia gold output falls 7 pct over past 12 mos (Reuters)
Excerpt: Gold production in Australia, the world's third-largest miner, has fallen 7 percent over the past year, a deeper than expected decline, but should still rebound 10 percent in the year ahead, a government forecaster said on Monday. Gold production is estimated at 231 tonnes, or about 7.6 million troy ounces, in the financial year ending June 30, down from a previous forecast of 243 tonnes due to the closure of old mines and below par output at some newer lodes across the outback, the Australian Bureau of Agricultural and Economic Resources (ABARE) said in its June quarter bulletin. Output in the 2006/07 year came to 249 tonnes, equivalent to around one-tenth of the world's production. Output for next year was also revised down to 256 tonnes compared with a previous forecast for 268 tonnes, although the growth rate remains at over 9 percent, according to ABARE.

JUN 19 RBS Issues Global Stock And Credit Crash Alert (London Telegraph)
Excerpt: The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. "A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist. A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

JUN 16 The Fed's Rates Dilemma (Washington Post)
Excerpt: Speculation that the Federal Reserve is about to begin inflation-fighting interest rate increases appears to be dead wrong. Fed Chairman Ben S. Bernanke is worried more about runaway oil prices contracting the global economy than inflating it through a wage-cost spiral. According to sources close to him, America's leading central banker has no plans for a raise. That conflicts with the recent announcement that the European Central Bank would raise interest rates to combat what it considers to be a tide of inflation presaged by rising food and oil prices. Because the Europeans themselves are divided about what to do, the promised rate hike next month is described as modest -- no more than a quarter of a percentage point.

JUN 11 Gold Falls Most in Two Months as Dollar Jumps; Silver Declines (Bloomberg)
Excerpt: Gold tumbled the most in two months as the dollar had the biggest gain since December, reducing the appeal of the precious metal as an alternative investment. Silver also dropped. The dollar index, a weighted measure against the euro, yen, pound and three other major currencies, jumped 1.1 percent. Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise. Before today, gold climbed 38 percent in the past year as the dollar fell 15 percent against the euro.

JUN 10 President Bush betrays fears over economy with strong dollar call (Times of London)
Excerpt: President Bush issued a call for a rise in the value of the US dollar on currency markets yesterday in a signal of mounting official alarm in Washington about the effect of the slumping greenback on the world’s largest economy. In an exclusive interview with The Times on the eve of the United States-European Union summit in Slovenia, Mr Bush expressed concern about the dollar’s continuing weakness and said that he favoured an appreciation in the US exchange rate. “We want the dollar to strengthen,” he said on Air Force One as it crossed the Atlantic bound for the summit. The President did not suggest that the United States was preparing to back its rhetoric on the dollar with any formal intervention in the exchange markets. He said that the “relative evaluations of economies will lead to that dollar strengthening”.

JUN 9 China asks US to help stabilise dollar (AFP)
Excerpt: The Chinese ambassador to the World Trade Organization on Monday asked the US to take action to stabilise the dollar, which has fallen sharply in the past year. ADVERTISEMENT During the biennial trade policy review of the world's largest economy by the World Trade Organisation, China also raised its concerns over "rising sentiment of protectionism" in the United States, saying that it could threaten global trade. "As a major currency for international reserve, the dramatic depreciation of the dollar has lead to shrinking national reserve of many countries and reduced social welfare," China's ambassador to the WTO, Sun Zhenyu, said.

JUN 4 Dollar Crisis Looms as China Ponders Reforms, Mundell Says (Reuters via GATA)
Excerpt: A major dollar crisis could come within five years and China is discussing reforms to the global monetary system to protect its $1.6 trillion reserves pile, says Nobel Prize-winning economist Robert Mundell. Mundell, who has regular contacts with Beijing officials, said they are considering proposing ways to to fix major currencies, including the dollar and the euro, in a system similar to the one that operated under the Bretton Woods agreement from the end of World War II until the 1970s. "Inside the Chinese government there's a lot of discussion going on. I'm not sure how they're doing it but I know they're going to get an input from me," Mundell told Reuters in an interview. Without reform, the global monetary system is headed for a dollar crisis within years, Mundell believes. However, he thinks the United States will avoid a technical recession during the current downturn and that the weak dollar will help it to make a recovery around autumn of this year.

JUN 1 Gold Derivatives: Moving Up Again (Golden Sextant)
Excerpt: On May 22, 2008, the Bank for International Settlements released its regular semi-annual report on the over-the-counter derivatives of major banks and dealers in the G-10 countries and Switzerland for the six months ending December 31, 2007. The total notional value of all gold derivatives climbed from $426 billion at mid-year to $595 billion at year-end. Gross market values increased from $47 to $70 billion over the same period, while gold prices rose from $651 to $837 (London PM). As detailed in table 22A, forwards and swaps increased from $141 to $200 billion, and options from $285 to $395 billion. Converted to metric tonnes at period-end gold prices, total gold derivatives climbed by more than 1750 tonnes during the last half of 2007, with forwards and swaps rising almost 700 tonnes and options over 1050 tonnes.

MAY 28 CGA announces major gold findings in China (Commodity Online)
Excerpt: China Gold Association on Wednesday said it has discovered five major bullion deposits in northwestern China. According to CGA , the Yangshan deposit in Gansu province have resources of 308 metric tons, the largest in the country.

MAY 27 Investors bet Persian Gulf will loosen dollar pegs (Wall Street Journal via GATA)
Excerpt: Hedge funds and other investors made bundles of money in the 1990s betting currency pegs around the world would break. They are at it again, only this time they are gambling currencies will soar, not plummet. Among the prime targets are Persian Gulf nations that link their currencies to the U.S. dollar. An economic boom has touched off rampant inflation in these countries. That is putting pressure on policy makers to allow their currencies to strengthen, something they have said they have no plans to do. But some investors are so keen on these economies that they think the currencies have nowhere to go but up. Everest Capital Ltd., a $3 billion hedge fund based in Bermuda and specializing in emerging markets, wrote in a first-quarter note to investors that it was betting that Saudi Arabia, Qatar and the United Arab Emirates would loosen the hold on their currencies, allowing them to strengthen.

MAY 20 Gold ETF demand doubles in the first quarter (Marketwatch)
Excerpt: Demand for gold exchange-traded funds doubled from the first quarter of last year, but demand for the precious metal in terms of tonnage dropped 16% to its lowest quarterly figure in five years, the World Gold Council said Tuesday. "Continuing instability in the equities markets, ongoing fears over the dollar and rising inflation and increased understanding of gold's investment attributes helped spur demand" for ETFs, the Gold Demand Trends report, complied by precious-metals consultancy GFMS Ltd. for the WGC, showed. Gold ETF demand climbed to 73 metric tons for the first quarter of this year to represent $2.2 billion in dollar terms. But the "sharp rise and unusually high volatility in the gold price" was the primary cause of the drop in tonnage demand to 701 metric tons for the quarter.

MAY 19 London-Listed Silver ETF Unloading Holdings (Resource Investor)
Excerpt: So far this year, the silver price has advanced 15% following gains of about 15% in 2007. From January to March, however, prices had surged 40% to hit a 27-year high of $21.44 on March 17. The correction that ensued after the peak seems to have leveled at $17, but holdings in London’s silver exchange traded fund (ETF) are still falling. ETF Securities' ETFS Physical Silver ETF [LSE:PHAG] has lost about 85 tonnes since the start of the year, now with just about 285 tonnes in trust. Nicholas Brooks, Head of Research and Investment Strategy for ETF Securities, told RI that the fund has had about 3.5 million ounces (99 tonnes) worth of silver redemptions from February...On the other side of the pond, Barclays’s U.S.-listed iShares Silver Trust [AMEX:SLV] now holds about 5,928 tonnes of silver, a rise of more than 25% in volume since the end of last year. From February to May, when ETFS Physical Silver ETF lost 99 tonnes, iShares Silver Trust added 563 tonnes. Brooks said the main buyers of ETFs in Europe are institutional investors, whereas in the U.S. the retail market is a much larger player.

MAY 15 Venezuela stops open-pits and gold mines (Reuters)
Excerpt: Mineral-laden Venezuela on Thursday shut the door to new gold projects and threatened other mining and logging concessions in a step by leftist President Hugo Chavez to tighten control of natural resources. Environment Minister Yuviri Ortega said the South American country will not give permits for any open-pit mines and will not allow companies to look for gold in its vast Imataca Forest Reserve. "Venezuela will deny environmental permits for the open-pit mine exploitation," Ortega told Reuters in an interview.

MAY 14 New Study Finds Silver Futures Market is Functioning Properly (CFTC)
Excerpt: The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) today released a report that re-examines long-term and recent allegations of misconduct in the silver markets and finds that there is no evidence of manipulation in those markets for the trading period examined. For the report, DMO examined trading activity in the silver futures market covering the period 2005-2007. Among other things, DMO analyzed the recent price movements in the silver market in relation to price movements for other metals; the relationship between the price of New York Mercantile Exchange (NYMEX) silver futures and spot silver prices; and the relationship between the positions held by large short silver futures traders and silver futures prices.

MAY 12 The global slump of 2008-09 has begun as poison spreads (London Telegraph)
Excerpt: The avalanche of bankruptcies has begun. Six US companies of substance have defaulted on bonds over the past fortnight, against 17 for the whole of last year. As a "non-believer" in the instant rebound story, I am not easily shocked by gloomy reports. But the latest note by Standard & Poor's - The Bust After The Boom - gave me a fright...Diane Vazza, S&P's credit chief, says defaults are rising at almost twice the rate of past downturns. "Companies are heading into this recession with a much more toxic mix. Their margin for error is razor-thin," she said.
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