October taper from the Fed likely off table as shutdown, debt-ceiling fight roil markets
Gold can now boast its best quarterly performance in a year, having gained abut 7.7% since July after April's major correction, which included the biggest two-day drop in 30 years. However, the metal is facing stiff resistance at the $1,350 level even as the U.S. government faces a shutdown as Congress feuds over funding Obamacare.
"Gold is disappointing traders who have expected a big rally on dollar weakness and the fear of an imminent shutdown,"said Kevin Kerr at Kerr Trading International. But "gold remains very volatile and could suddenly spike should the shutdown take place."
Gold dipped slightly Monday, falling under $1,330 after an earlier run above $1,340, but don't think stocks have been immune from the federal turmoil either. The Dow Jones Industrial Average dropped 128.57 points to 15,129.67; theS&P 500 index lost 10.20 points to 1,681.55; and the Nasdaq declined 10.12 points to 3,771.48.
The overall uncertainty over the U.S. budget and the debt ceiling, which Treasury chief Jack Lew says the government will hit Oct. 17, has many investors bullish on gold. "Hedge funds' combined holdings in gold futures rose the most this month as continued U.S. monetary stimulus spurred investors to sell short contracts and sent prices toward the first quarterly advance in a year," Bloomberg reported.
"The net-long position in bullion jumped 12% to 78,654 futures and options in the week ended Sept. 24, the most since Aug. 27, U.S. Commodity Futures Trading Commission data show. Long wagers gained 1.8% and short bets fell 17%, the biggest drop in four weeks. Combined net-long holdings across 18 U.S.-traded commodities climbed 1.7%, the first gain in September," the news agency reported.
Seventeen traders and analysts surveyed by Bloomberg expect prices to rise this week, with seven bearish and three neutral. That's the second consecutive bullish weekly survey, the first back-to-back positive outlook since July.
One strong bet arising from the congressional feud is that the Federal Reserve is unlikely to taper its stimulus program until December at the earliest. "The Fed has made it clear that the economy is weak, and the stimulus spigot will be open full-bore," said John Stephenson of First Asset Investment Management. "That means they're continuing to inject more into the money supply, and that is a bullish argument for gold."
The Fed meets next on Oct. 29-30. "It seems to us that the central bank will likely stand pat again, perhaps not wanting to take two completely different directional views on rate policy in the span of just 30 days," INTL FCStone analystEdward Meir said in a note.
Even Fed cheerleader Business Insider concurs: "After the Fed declined to reduce the pace of its bond purchases at its September meeting, a bunch of folks predicted we'd see'Octaper,' meaning the tapering of purchases would come in October. That now seems incredibly unlikely. Between the likely government shutdown and the debt ceiling fight, it's virtually impossible to imagine the Fed adding to the chaos by taking a tightening stance."
A shutdown won't halt essential services, but those services don't include the economists at the Commerce and Labordepartments who calculate many of the reports by which the Fed makes its monetary policy decisions. Business Insider quoted a note from Societe Generale: "A government shutdown could interrupt the flow of economic data. At such a critical time, when the Fed has made clear that any decision on tapering will be data dependent, that means no data, no decision."
Although an eventual tapering decision can hurt gold, it's probably not coming until December at the earliest, and probably not until 2014, if at all.
More information can be found online at http://www.goldbullionadvisors.com
Minneapolis branch head goes even further, vows "doing whatever it takes"
Gold surged about 1% early Friday, topping $1,345, as investors weighed fresh remarks from Federal Reserveofficials suggesting that bullion-friendly stimulus will keep rolling on for a while. The looming threat of a government shutdown also served as a supportive backdrop and sent all three major stock indexes into the red.
"People are concerned about the political situation in the U.S. and the prospect of another fiscal cliff," said Simon Weeks atScotiaMocatta. "That's driving [gold] at the moment."
"Support is obviously coming from the U.S., where lawmakers are once again playing Russian roulette with the budget and debt limit," agreed Ole Hansen of Saxo Bank.
Recovery facing "massive headwinds"
After a speech in Oslo, Charles Evans, president of theChicago Federal Reserve Bank, said there is "a decent chance" the Fed would have enough confidence in a strong economy to begin to pull back, or taper, bond buys at one of two remaining meetings this year: in late October or December. "But it also could be at the January meeting," he said -- in one of the first suggestions from a senior Fed official that a taper could be delayed into 2014.
Evans continued to stress the Fed's data-dependent, wait-and-see strategy. The bank's Sept, 18 decision not to taper "was very much in keeping with our overall intention in the program that it's open-ended, that we would be conditioning on the data, and a little more data to assess the sustainability of output growth I think is very helpful," he said. "We need to see further developments of the positive variety for the economy to have that added confidence. It wouldn't surprise me if we go a little bit longer" with QE because of "massive headwinds" hindering the recovery.
Fed will do "whatever it takes"
Evans' comments followed an ultra-dovish speech by Minneapolis Fed head Narayana Kocherlakota on Thursday:
"Doing whatever it takes in the next few years will mean something different. It will mean that the [Fed's Federal Open Market Committee, or FOMC] is willing to continue to use the unconventional monetary policy tools that it has employed in the past few years. Indeed, it will mean that the FOMC is willing to use any of its congressionally authorized tools to achieve the goal of higher employment, no matter how unconventional those tools might be.
"Moreover, doing whatever it takes will mean keeping a historically unusual amount of monetary stimulus in place -- and possibly providing more stimulus -- even as: Interest rates remain near historic lows. Economic growth rises above historical averages. Per capita employment begins to rise appreciably. Asset prices rise to unusually high levels, leading to concerns about 'bubbles.' The medium-term inflation outlook rises temporarily above 2 percent. It may not be easy to stick to this path. But I anticipate that the benefits of doing so, in terms of employment gains, will be significant."
"I do not think the Fed will taper this year"
Digesting public statements such as these, professional investors and analysts are increasingly confident in voicing predictions that the Fed won't taper this year. Bond guruJeffrey Gundlach of DoubleLine Funds said Thursday that he doesn't expect the Fed to begin tapering its bond purchases until a new chair is in place next year, likely current Vice Chairwoman Janet Yellen.
Grant's Interest Rate Observer founder and gold bull Jim Grant concurred: "No, I do not think the Fed will taper this year."
India's gold-buying momentum rising
Meanwhile, India is just getting back into the gold groove. Its main festival season starts soon after Oct. 4, then peaks withDiwali, which is on Nov. 3 this year.
"India's gold imports are expected to pick up in October after a three-month slump as festival-season sales kick in, and because of a government push to clear shipments that were stuck because of confusion over new import rules," reportedThe Wall Street Journal. "Volumes have already started rising with government officials clearing this week imports which were stuck since August."
Imports are likely to average 75-80 tons a month during October-December, said Harmesh Arora of the Bombay Bullion Association. "You will find the momentum picking up once the inauspicious period ends on Oct. 4," he said.
BofAML cuts 2014 target but remains long-term bull
JPMorgan recently issued a bullish forecast for gold, but not all big firms are on the same page. Bank of America Merrill Lynch cut its 2014 forecast by 17.2% to $1,294 an ounce. Of course, it's prediction is based on the Fed tapering its stimulus program -- which is very much up in the air, given the comments above from Evans.
"Gold prices have stabilized, and they could remain supported as the U.S. reaches the debt ceiling. However, we believe the focus of investors remains firmly on a gradual normalization of U.S. monetary policy. Hence, our base case anticipates sustained headwinds to gold prices," wrote BofA analysts.
"Pronounced" jewelry demand to emerge
Despite the forecast reductions, though, the BofA commodities analysts (led by metals strategist Michael Widmer) say they "remain longer-term bulls" on gold. By 2016 they expect the bull market to make a comeback, largely on rising incomes in emerging markets like China:
"Looking further out, we see further potential upside to gold prices. Our models show, for instance, that the importance of investors as marginal buyers could subside gradually. ... This trend is heavily influenced by rising affluence in emerging markets, which should result in more spending on luxury goods like jewelry.
"In fact, we estimate that jewelry demand may become so pronounced by 2016 that prices could trade above $1,500/oz even if investors were net sellers. Looking at sensitivities from a different angle, we estimate investors would need to buy merely 600t of gold to sustain prices at $2,000/oz by 2016, compared to non-commercial purchases of 1,798t in 2012."
"We could see gold at $2,500"
Gijsbert Groenewegen of Silver Arrow Capital Management remains ultra-bullish in the near term: "Like the Chinese, the Indians are buying more and more gold ... as a hedge against inflation and the weak economy. Comexinventories are being depleted. Central banks want their gold repatriated (Germany, Poland, Finland)."
Further declines in gold and silver "will offer the investment of a lifetime because I don't exclude that we could see gold at $2,500 and silver at $100 next year," Groenewegen said. "Most investment options are looking to be exhausted. We are entering the phase of preserving capital."
More information can be found online at http://www.goldbullionadvisors.com
"Gold prices fell about a week before the Dec. 16, 1995, shutdown began but had jumped above $400 by end of January 1996," Saefong noted. "And the gains continued, with prices trading near $415 by Feb. 2."
"There was a flight to safety. Gold prices rallied almost 4% as stocks sank almost the same amount," said Richard Gotterer, managing director and senior financial advisor atWescott Financial Advisory Group, adding that those percentage moves were "pretty significant" at that time.
"My expectations are for a contentious government over the next few weeks. This is going to make for interesting headlines," he said. "Gold should have strong support in that type of environment."
Shutdown would slam U.S. GDP
"A shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say, as government workers from park rangers to telephone receptionists are furloughed," Bloomberg reported.
Mark Zandi of Moody's Analytics Inc. estimates a three- to-four week shutdown would cut growth by 1.4 points. Zandi projects a 2.5% annualized pace of fourth-quarter growth without a shutdown.
On the lower end of projections is an 0.3-percentage-point blow to fourth-quarter GDP, lowering it to a 2.3% rate,according to St. Louis-based Macroeconomic Advisers.
"A shutdown wouldn't be unprecedented," Bloomberg noted. "Seventeen funding gaps happened between 1977 and 1996, based on a Congressional Research Service analysis. In 1995 and 1996, interruptions lasted from Nov. 14 to Nov. 19 and from Dec. 16 to Jan. 6, as Republicans led by then-House speaker Newt Gingrich clashed with President Bill Clinton's administration."
Default puts U.S. back "in uncharted territory"
However, with a debt-ceiling crisis poised to follow so closely to the shutdown, the damage could be worse. "The combined prospect of a budget standoff between the White House andCongress and haggling over the debt ceiling could have a bigger impact on the economy as businesses hold off on investment and households delay spending," Bloomberg said.
Indeed, Macroeconomic Advisers is much more concerned about the debt ceiling. "We believe that because many Republicans fear the potential political fallout, any shutdown will be relatively brief," the firm wrote. "We see the possibility of hitting the debt ceiling later this fall as a far larger threat to the economic outlook, and frankly are incredulous that some Republicans seem more concerned about a shutdown than a sovereign debt crisis."
"A shutdown of nonessential services is inconvenient for a while. If we hit the debt ceiling, we're in uncharted territory,"said Joel Prakken, a senior managing director at the firm. "If you miss an interest payment on the national debt, that's a sovereign default of sorts, and I think it would shake the foundations of the global financial system."
"Last time we had this (debt-ceiling) scenario, gold had a good move on the upside and there is no reason to suspect it may not do the same, should the two houses and the president attempt once again to play a game of brinkmanship," speculated David Govett at Marex Spectron.
Stocks plummeted in 2011 as gold soared
The danger is all this, particularly for the stock market, is complacency. Investors should remember that stocks plunged during the 2011 debt-ceiling standoff, with the Dow losing 2,000 points and the S&P 500 shedding 17%. Gold, of course, shot up to successive highs during the crisis, before peaking at its all-time nominal record price above $1,920 in September 2011.
"Every day we move closer to a government shutdown or debt default, with far knottier politics than we had during the debt-ceiling fiasco of summer 2011, after which the U.S. lost its AAA rating from Standard & Poor's," warned Howard Gold at MarketWatch.
"The complacency on this issue is alarming," Chris Kruegerof Guggenheim Partners told Gold. "Clearly with Washington policy, everybody's been focusing on the Fed and the taper," he said, and are only now looking at the prospects of shutdown or default -- and aren't worrying too much about it.
Crisis "could jar the entire global financial system"
"Our growing concern is that everyone is far too complacent that just because there has been a deal in all the prior fiscal cliff fights that there has to be a deal in this debt ceiling fight," he wrote in a note to clients. "There is no evidence to suggest that the debt ceiling will be raised in time. ...
"It's something that could jar the entire global financial system, [which] is based on the premise that Treasurys are a riskless asset and you're calling that into question."
More information can be found online at http://www.goldbullionadvisors.com
Central bank buys bullion for 11th straight month, along with Turkey and Kazakhstan
Once again Vladimir Putin's Russia has added to its goldreserves, buying 12.7 metric tons in August to increase its total official holdings to 1,015.5 tons, according to theInternational Monetary Fund, confirming central-bank buying as an ongoing key support for prices over the long term.
Amid the backdrop of Syrian tensions, it's no surprise that Russia is buying gold, given that the yellow metal is an alternative currency to the dollar. The real mystery remains over how much gold has been amassed by China, with which Russia has forged yuan-ruble convertibility pacts in recent years.
"Earthquake" gold announcement expected from China
"The People's Bank of China last revealed its total gold holdings in April 2009 -- 1,054 tonnes -- and they could use it as a weapon in the currency wars," Addison Wiggin wrote.
"If you're China, the last thing you want to do is be transparent about your gold purchases, because it will drive the price up," said gold expert Jim Rickards of Tangent Capital in an interview earlier this year. "You want a big pile of chips. The U.S. has a big pile of chips, Europe has a big pile of chips. The U.S. has 8,000 tonnes of gold, 17 members of the euro system have 10,000 tonnes. China at 1,000 tonnes is not a player, but at 5,000 tonnes, they are a player. ...
"I have spoken to a number of sources in Asia," he said. "I've spoken to a number of people who are very close to the physical market, I've done my own investigations. Every time I have an estimate and try to verify it, what I get back is that I'm wrong on the low side."
Rickards expects China to announce in 2014 that it has accumulated 5,000 tonnes of gold. "That should be an earthquake because even the gold deniers, the gold doubters, are going to have to sit up and take notice. Either the Chinese are dopes, which they're not, or people will start to get gold, which I think they will."
Syria's neighbor Turkey piles into gold
But back to the IMF data. Perhaps it's not surprising that Turkey bought the most gold in August, given that it neighbors Syria and therefore could use a crisis currency if it's drawn into a regional Middle Eastern war. It added 23.4 tons to its 487.4 tons, the data showed.
Kazakhstan's reserves rose 2.5 tons to 134.5 tons. In all, eight central banks increased reserves in August, down from 15 in July, while five cut their holdings.
Central banks are "long-term holders of gold, with a long-term view and prices at the moment are pretty attractive for a long-term buyer," said Victor Thianpiriya of the Australia & New Zealand Banking Group in Singapore. "The fact that they're doing it in smaller volumes is consistent with the fact that sentiment towards gold is getting a bit more negative. ...
"This is consistent with our view that central banks continue to view gold as good value on a long-term basis," he said. Central bank buying "should continue to be a supporting factor going forward."
Thailand's biggest gold retailer doubling down
And while certainly not a central bank, Thailand's biggest domestic gold importer "expects to more than double purchases this year after the bear market in prices spurred a surge in demand for physical metal," Bloomberg reported.
YLG Bullion International Co. might may import as much as 200 metric tons in 2013, from 92 tons last year, CEO Pawan Nawawattanasub said.
"Cheaper prices are attracting customers to buy bullion bars as they see it as money better spent than on something like aHermes bag," said Pawan. "Demand in Thailand can continue to grow, partly because collecting gold is in our culture. ... There has been a complete change of customer profile. Huge volumes from retail investors are helping to offset a retreat from big investors."
Singapore makes play for Thai business
Thailand is Asia's biggest gold consumer after India and China, and it is Southeast Asia's second-biggest economy. Therefore, in its bid to become the top gold-trading hub in Asia, Singapore is wooing Thailand's top five gold traders to establish footholds in the city-state before the ASEAN Economic Community (AEC) takes shape in 2015.
Nuttapong Hirunyasiri, managing director of MTS Gold Futures, said the Singaporean government had dispatched a team to Thailand to offer relaxed regulations and tax incentives to traders who open offices in that country.
"Thailand's gold market has become bigger and better known in the past few years. It's ranked third in Asia. [Thai] gold traders also want to upgrade themselves to international standards," Nuttapong said.
More information can be found online at http://www.goldbullionadvisors.com
Barclays, JPMorgan, and UBS all see upside, at least for the near term
Several big investment banks have upgraded their outlooks on gold after the Federal Reserve last week made its shocking announcement that it wasn't ready to taper its $85 billion monthly bond-buying stimulus program.
Conversely, some other firms say the economy is improving and therefore tapering is inevitable, so gold is headed down.
JPMorgan goes long
JPMorgan surprised markets in its own right by issuing a buy call on gold:
"This week's surprise by the Fed in not tapering their asset purchases led to a 5% rally in precious metals. In our view, the main driver of gold's performance over the past five years has been QE. Following the 2008 crisis, the unprecedented expansion of central bank balance sheets led to fears of inflation further down the road and resulted in very strong demand for gold, a large amount of which came via ETFs.
"As QE continued and inflation expectations remained subdued, this demand for an inflation hedge subsided, ETF positions were unwound and gold prices fell. Along with precious metals rallying, inflation breakevens widened following the Fed announcement, another indication that uncertainty around future inflation may pick up as a result of the Fed's volte-face on tapering.
"Additionally, positions are much cleaner now, following the unwinding of ETF positions, and physical demand from retail buyers in Asia has been very strong.
"We open a long position in gold."
Barclays raises its forecast
Another bull, Barclays Research, said gold could rise to $1,482 as soon as October under a delayed tapering scenario, averaging $1,463 in the fourth quarter:
"Our rates strategists have revised their forecast for 10y USTreasury yields lower to 2.85% in Q4 13 (from 3.1% previously), due to the dovish signals from the Fed about the pace of policy normalisation. Also, they do not think the rates markets will question the path as laid out by the Fed, at least in the near."
"According to our economists, a recent set of solid macro data, combined with a dovish Fed, will likely continue to support risk assets in the near term. This coming week will include data releases such as consumer confidence, durable goods orders, new home sales, and the second release of Q2 GDP, from which we can gauge the aforementioned continued support of risk assets, especially equities, which in turn could provide an external market effect on gold."
"The elephant in the room is the U.S. debt ceiling"
UBS also raised its one-month target, to $1,405 from $1,250, and its three-month target to $1,375, from $1,350. "The latest euphoria in gold could continue in the coming days as speculative investors liquidate their short positions in futures and options further," said analysts Dominic Schnider andGiovanni Staunovo. "A test of the upper bound of our three-month trading range of $1,425 cannot be ruled out, especially with the Chinese market returning this Monday from a long weekend and the U.S. debt-ceiling debate coming into focus."
A couple of other analysts outlined the case for higher gold in a CNBC report. Compass Global Markets CEO Andrew Suhas an end-month target of $1,450 for gold and an end-year target of $1,580. "The elephant in the room is the U.S. debt ceiling," Su said. "The fact the Fed has delayed the tapering of stimulus is a double-edged sword. It is in effect recognition by the FOMC that all is not well with the U.S. economy."
Ultimate Wealth Report's Moneynews editor, Sean Hyman, agreed: "We'll have the debt-ceiling issues coming to a head again soon and so it's probably safer for the Fed to keep things as they are now between now and the December meeting. I expect gold to hit $1,500-$1,570 in the coming months."
Gold bears see improving economy
On the bearish side are Citigroup Inc. and Morgan Stanley, which said the Fed news will give gold only a short-term bounce.
The price could fall below $1,250 before year's end as economic data strengthens and investors expect the Fed to start reducing its asset purchases, Citigroup analysts Ed Morse and Heath Jansen said. Morgan Stanley expects gold to average $1,200 to $1,350 in the coming year before trending lower, it said.
It's important to note that this pessimistic gold forecast from Citigroup is not shared by everyone in the conglomerate. Strategist Tom Fitzpatrick is a vocal gold bull. He recently told King World News:
"Within the gold dynamic, we believe this recent correction was very similar to what the gold market witnessed from 1974 to 1976 -- as the equity markets recovered from the bear market bottom in 1974. In this instance, very recently gold went 14% below the 55-month moving average, exactly as it did back in 1976.
"After the low in gold in 1976, the equity market peaked four weeks later. So far, following the $1,181 low in gold, the peak in the equity markets has been five weeks thereafter. And as we started that historic upward movement in gold, beginning in 1976, this was also when the equity market peaked and went into a corrective phase, and that is when gold really came into its own.
"So we believe we are back into that track where gold is the hard currency of choice, and we expect for this trend to accelerate going forward. We still believe that in the next couple of years we will be looking at a gold price of around $3,500."
"This looks like to me like 2007 all over again"
The above bearish forecasts are based on optimism about the economy, and indeed, if you are optimistic about stocks, then you might well be pessimistic on gold. But a former chief economist for the "bank of central banks" -- the Bank for International Settlements -- recently told London'sTelegraph newspaper that the current global economy remains as vulnerable as ever.
"This looks like to me like 2007 all over again, but even worse," said William White, now chairman of the OECD'sEconomic Development and Review Committee. "All the previous imbalances are still there. Total public and private debt levels are 30% higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle."
"White said the five years since Lehman have largely been wasted, leaving a global system that is even more unbalanced, and may be running out of lifelines," the Telegraph report said. "'The ultimate driver for the whole world is the U.S. interest rate, and as this goes up there will be fall-out for everybody. The trigger could be Fed tapering but there are a lot of things that can go wrong. I very am worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks,'" White said.
"The world has become addicted to easy money, with rates falling ever lower with each cycle and each crisis. There is little ammunition left if the system buckles again. 'I don't know what they will do: Abenomics for the world I suppose, but this is the last refuge of the scoundrel,' he said."
To taper or not to taper: Fed is caught in a trap
Indeed, the Fed is in a "double-bind," wrote "Of Two Minds"economic blogger Charles Hugh Smith:
"The Federal Reserve is in a classic double-bind: as its policies to boost growth bear fruit, interest rates rise, threatening the very recovery the Fed has lavished trillions of dollars of quantitative easing (QE) to generate. Higher growth naturally leads to higher interest rates, which then choke off growth.
"If the Fed cuts back its money-pumping and asset purchases, interest rates will rise, as interest rates will seek a market level that isn't pushed to near-zero by the Fed's financial repression.
"Higher rates will choke off tepid Fed-induced growth. We already see home refinancing rates plummeting to 2009 recessionary levels.
"So the Fed risks blowing asset bubbles that will devastate the economy if it continues the QE pumping, but it risks killing the tepid recovery if it cuts back its pumping. Darned if you do, darned if you don't.
"Put another way: if growth is needed to boost corporate sales and profits, but growth leads to higher interest rates and reduced central-bank support of markets, this is a double-bind with no exit."
More information can be found online at http://www.goldbullionadvisors.com
Yuan takes another step toward currency convertibility as Shanghai free-trade zone opens
Three gold-bullish, dollar-bearish stories on China are in the news:
1) Robin Bromby of The Australian newspaper disputesGoldman Sachs' call last week that gold possibly could fall to $1,000. Not with China waiting in the wings, he argues:
"They'll be clinking champagne glasses at the People's Bank of China after reading Goldman Sachs' latest gold forecast. The Chinese central bank will be looking forward eagerly to filling more of its vaults with the metal at bargain basement prices. …
"Chinese gold-buying in the three months to June 30 was up 148% year-on-year (and there were steep rises in Thai and Indonesian buying, too).
"'Astounding' was the word GFMS used in relation to the Chinese purchases. Worrying, is the word we would use: Western investors will probably rue their selling decisions. …
"There is enough demand to ensure gold will not reach $1,000. Too many mines would go out of business."
2) Meanwhile, "This Is Beijing," a Web site authorized by theInternational Communication Office of the CPC Central Committee and operated by the China Internet Information Center, reports that gold vending machines have been unveiled at bank branches in Beijing:
"The machines, which enable the public to purchase and take immediate delivery of small gold bars and other precious metal products at the push of a button, were launched by Hua Xia Bank.
"Like cash ATMs, the machines are equipped with a touch screen and card slot. What makes them different is a 'delivery slot' on the lower right, from which consumers can receive the products.
"Transaction on the machines is quite users-friendly. After deciding which products to buy, consumers only need to scan an ID card and pay with a debit card or deposit card, according to an official at Hua Xia Bank. The whole transaction process takes six to seven minutes, the official added.
"'A total of 24 precious metal products are now available in the machines. Product prices are set according to market prices. No procedure fee is charged,' said a staffer from the machines' manufacturer.
3) And on a macro level, Gordon T. Chang reports in Forbesthat the stature of China's currency is growing -- quickly -- on the world stage:
"The Shanghai free-trade zone, China's first, will officially open for business on Sept. 29. Just about every China economy maven has been following the months-long saga regarding the establishment of the zone because in Shanghai the central government will punch a gaping hole in the country's currency wall. ...
"The betting is that the premier will announce some form of full convertibility for transactions in the zone. Hong Kong'sSouth China Morning Post reports an 'internal government document' states that 'on the condition risks can be controlled' firms in the zone will be permitted to 'undertake convertibility of the yuan on the capital account on a first-to-do and first-to-try basis within the zone.'
"The authorities apparently hope the zone will operate, in the words of Reuters, "as a fully liberalized trading hub for the Chinese currency." If Premier Li's rules allow companies across China to access the zone's financial institutions, he will have effectively made the renminbi fully and freely convertible. ...
"Now, provincial officials want their own free-trade zones. ... The result of rampant zone creation will be, as a practical matter, capital account convertibility for the entire nation. It's coming soon."
More information can be found online at http://www.goldbullionadvisors.com
