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Chinese central bank gold buying – On a need to know basis

3 days ago

By Ronan Manly at
After announcing monthly gold purchases for ten straight months between December 2018 and September 2019, the Chinese central bank, the People’s Bank of China (PBoC), has now paused buying for its strategic gold reserves.
At least that’s according to October figures from the State Administration of Foreign Exchange (SAFE), China’s currency management agent, which each month announces the value of China’s foreign exchange and gold holdings for the previous month-end.
Given the pause or halt last month in China’s gold accumulation, the strategic gold reserves of the People’s Republic of China (PRC) now remain unchanged at 1948 tonnes for October. But for ten months

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The Power of Gold in Times of Crisis

9 days ago

By Ronan Manly (original posted at
While physical gold is a well-known safe haven asset which investors flock to in times of market turbulence as a way of protecting their wealth, gold is also the ultimate asset to own and possess in times of crisis and emergency. These crisis situations can range from episodes in which fiat currencies collapse, to times in which gold buys safe passage across international borders, and even to periods in which only gold can bail out and rescue an entire nation. Sometimes gold even ensures self-survival and can literally be the difference between life and death.
History is replete with examples of gold being the ultimate asset in times of crisis and desperation, where time

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Does anyone use the IMF’s SDR? – JP Koning – BullionStar

October 6, 2019

Last week I poked some fun at the International Monetary Fund’s special drawing rights. I claimed that no on uses them. I wouldn’t be the first to make this accusation. The International Monetary Fund (IMF) itself once described the role that special drawing rights (SDRs) play as “insignificant”.

No one uses the IMF’s SDR as a unit-of-account.
One exception. If you lose your life at sea, the ship owner’s liability is limited to 3.02 million SDRs. So says International Maritime Organization:
— John Paul Koning (@jp_koning) September 25, 2019

In response, people tweeted out some interesting uses of SDRs that I wasn’t previously aware of. In this post I’ll do a run-down of the surprising places that SDRs make an appearance.
Let’s start from

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LBMA Removes JP Morgan’s Michael Nowak from the LBMA Board – Ronan Manly

September 20, 2019

Just when you think it couldn’t get any more embarrassing for JP Morgan’s precious metals business and its embattled head, Michael Nowak, today it just did, as the powerful London Bullion Market Association (LBMA) moved to oust Nowak, who has become too toxic, from the LBMA’s board of directors.
According to the Financial Times, 20 September 2019:
“The London Bullion Market Association has removed Michael Nowak, JPMorgan’s head of precious metals trading, from its board after he was indicted by the US Department of Justice for a “massive, multiyear scheme” to manipulate the precious metals markets. 
“In light of the ongoing investigation by the Department of Justice, the LBMA, under the terms of its Articles of Association, has removed Mr Nowak from its board,” the LBMA said.
The DoJ

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LBMA Board Member & JP Morgan Managing Director Charged with Rigging Precious Metals

September 17, 2019

Michael Nowak, JP Morgan Chase managing director and Board member of the London Bullion Market Association (LBMA) has just been charged by the US Department of Justice (DoJ) with manipulating the prices of precious metals-futures contracts over an 8 year period.
Nowak sits on the LBMA Board along with LBMA chairman Paul Fisher, LBMA CEO Ruth Crowell, and LBMA General Counsel Sakhila Mirza.
How does “widespread spoofing, market manipulation and fraud”, that the DoJ alleges was undertakne by Nowak, sit with the LBMA’s claim that the LBMA Global Precious Metals Code “promotes a fair effective and transparent market” for its members, including JP Morgan, “to uphold high standards of business conduct”? Continue reading…
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September 8, 2019

According to the hyperbitcoinization hypothesis, the world will be overcome by bitcoin. How has the hypothesis fared so far?
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Chinese gold imports – Better data, lower inflows, unanswered questions

September 2, 2019

By Ronan Manly at
While gold imports into China fell noticeably between May and July 2019, the reasons for the lower gold inflows may be more complex than the official line.
In mid-August Reuters published a story titled “China curbs gold imports as trade war heats up” claiming that the Chinese authorities had been ”severely restricting gold imports since May” by reducing the monthly gold import quotas that are handed out to a group of Chinese and foreign banks by China’s central bank, the People’s bank of China (PBoC). The background to gold import quotas can be read here in BullionStar’s article “Chinese Cross-Border Trade Rules of Gold“.
Speaking on condition of anonymity

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More on the puzzle of negative interest rates – copy

August 26, 2019

Interest rates on many bonds have plunged into negative territory. But why on earth would anyone be willing to save $1000 only to get $999 in the future? Saving up for a rainy day has always gone hand in hand with a positive interest rate, not a negative one.
In my last post I showed how negative real return on saving could emerge. I invoked a certain type of a economy – a dystopic island where castaways like Robinson Crusoe live. The island’s few meagre opportunities to invest have dried up. Technological advancement has halted. To prepare for his retirement Robinson Crusoe stores coconuts, but the constant assault from rodents and insects meant that he’d end up with less resources than he started with.
Crusoe and other castaways his age can also prepare for old age by lending resources

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The not-so-crazy world of negative interest rates – JP Koning

August 6, 2019

A few years ago when I was working at a bank, I asked the bond trader who worked next to me what he thought about the newish phenomenon of negative interest rates. “Rate are only negative cause they’re messing around in our markets!” he whispered indignantly. By “they” he meant central bankers.
Was the bond trader right? Are negative interest rates an artificial phenomenon that central bank technocrats have foisted on the world? Or can interest rates naturally turn negative, of their own accord? (In this post I’ll be referring to real interest rates here, not nominal rates. If you have a bond that yields 0.5% per year, but inflation is 1%, then the real, or inflation-adjusted rate, is -0.5%).
This is an increasingly relevant question. As Deutsche Bank’s Torsten Slok recently illustrated,

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The History of the World is a History of Gold – BullionStar

August 1, 2019

The history of gold is nearly as long as the history of human civilisation. Gold has been inextricably linked to human civilisations since at least 6000 BC. There is absolutely no way of looking at the history of the world without encountering the history of gold.
Most importantly, gold has been used as money in countless civilisations for thousands of years, facilitating trade and economic growth and acting as a store of value for accumulated wealth. Indeed, gold has been the ultimate form of money for thousands of years precisely because it is a trusted form of money which retains its purchasing power over time.
Because it can be found in its naturally occurring state, gold was one of the first metals known to man, and early civilizations prized gold for its unique and precious

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Gold the Ultimate Asset as Fed Joins Race to the Bottom in Global Rates

July 31, 2019

The US Federal Reserve’s Federal Open Market Committee (FOMC) today announced a 0.25% cut in the influential US federal funds rate from a target range of 2.25% – 2.50% to a target range of  2.00% – 2.25%, a move which was closely watched and widely signaled, but which was the first such fed funds rate cut in over 10 years.
As an official interest rate which affects all other US interest rates including bank-to-bank overnight loans, the US Federal Reserve uses changes in its fed funds rate to manipulate US economic growth, but its impact is even more far-reaching, influencing as it does the relative strength of the US dollar versus other currencies, and the interest rate decisions of the world’s other major central banks.
Confirmation of the cut – officially called a policy action – came at

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Gold Smuggling to India & Japan is a Symptom of Governments’ War against Gold

July 10, 2019

By Torgny Persson the founder and CEO of BullionStar.
Smuggle gold to India and Japan has become a lucrative business for many dealers and middlemen across Asia. It is widely known that demand for physical gold by Asian populations is insatiable. From the estimated held by India’s population to the more than 25,000 tonnes of gold calculated to be held by China’s population, these two countries alone hold nearly one quarter of the world’s known above ground gold stocks.
However, beyond China and India, gold is central to almost all Asian societies and cultures. While sometimes forgotten, Japan became one of the world’s largest gold market in the 1970s and 1980s when it imported thousands of tonnes of gold to satisfy its investment boom in gold. Hong Kong’s gold market, one of Asia’s oldest,

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