Summary
- The World Gold Council has reported significant undisclosed gold buying in London's OTC markets, which is helping drive spot prices to new record highs.
- Investment demand for gold in Q3 2024 has more than doubled compared to Q3 2023, with 'unreported demand' consuming about one-third of new global gold mining output.
- India has recently repatriated 102 metric tonnes of gold bullion reserves from London back to its borders, demonstrating a growing trend of nations securing their gold reserves domestically.
- India currently maintains 324 metric tonnes of reserves split between London and BIS locations, though this represents just under 10% of their sovereign wealth compared to Western powers' claimed 70% allocation.
- The spot gold price reached another record nominal high before pulling back to close just under $2,750 per ounce, while silver tested down to around $32.50 per ounce.
- The gold-silver ratio expanded to 84 by week's end, reflecting gold's relative strength over silver in recent trading.
- CME Group's recent increases in Comex gold and silver margin requirements remain well below historical highs of 8% for gold and 15% for silver.
- Indian silver investment demand in 2024 is matching U.S. levels, with notably strong holding patterns and minimal selling back into the market.
- Vedanta's Anil Agarwal highlighted silver's growing importance, noting prices exceeding Rs 1 lakh per kg in India and doubled demand year-over-year.
- India's Hindustan Zinc is expanding silver production with a 100% solar-powered refinery, aiming to become the world's largest producer while focusing on domestic sales.
Lots of interesting gold related reports mainly focused on London this week.
The first of which being that the World Gold Council estimated that undisclosed gold buying in OTC markets in London is both heavy and helping to drive spot prices to further nominal record high numbers.
Who are all these undisclosed gold bullion buyers you might wonder. A likely combination of central banks who don't want that information yet disclosed and high net worth investors who are getting in on the FOMO gold trade.
Estimates for Q3 2024 gold demand show gigantic increases in investment demand from the prior Q3 of last year 2023, more than doubling being recently reported.
This catch-all opaque gold demand bucket called 'unreported demand' is consistently eating up about 1/3rd of new line global gold mining output. And odds much of this is central banks in the emerging market world that are the major undisclosed buyers along with HNW investors finally getting in on the gold trade given rampant western record gold price media headlines this year.
Another major story about gold, London, and India this week.
The nation of India just disclosed another 102 metric tonne re-shoring of her official gold bullion reserves out of London and back to within India's borders.
Let me show what that looks like in real gold bullion bars. That is akin to calling up the BoE and saying, yea mate we're going to need to take back that entire row of our bullion by air cargo. Cheers.
So now India has 324 metric tonnes of reserves split between London and wherever the BIS also has it hidden.
One of the stories top comments with the highest like to not like ratio was the following comment by a likely Indian citizen who read the news. He stated, "move all the gold back to India ASAP, it is never safe to keep any gold in another country. Bring all the gold back to India before the end of the year. England is never a safe place for India's assets."
Palki Sharma of Firstpost does an excellent job explaining the historical background of this latest 102 ton Indian gold London withdrawal story.
So further to her point about India still only having just under 10% of her sovereign wealth and savings allocated to gold bullion. Whereas often unaudited western financial powers claim holding up to around 70% of their savings in physical gold bullion reserves.
China and Russia also have more catching up to do while they have basically coordinated the timing and sizes of their tandem official gold bullion reserve declarations thus far in the 21st Century. China still only has about 5% of her sovereign savings in gold bullion allocation, Russia just under a prudent 30% physical gold allocation at the moment.
Worldwide the average gold bullion allocation is still a pathetic 12% but as you can see it is growing with the nominal spot price of gold climbing. The world's central banks on net still hold way too many IOU bonds and foreign fiat currency issuances compared to their official gold bullion reserves.
Obviously the global bullion over bonds trade is only still now, in its early innings. Both disclosed and undisclosed Central Banks and HNW investors are increasingly moving in the correct direction. Only in the latter innings will retail normie investor hoards figure this out at much higher relative bullion valuations.
After this short break, we're going to dig into silver news this week and see further how Indians are also flexing their muscles in that increasingly cutting edge industrial and precious store of value trade as well.
The silver and gold spot price markets in fiat US dollar terms were a mixed bag this week.
The spot silver price closed with weakness retesting down to around $32.50 oz mark to finish the week.
The spot gold price pulled back today after hitting another record nominal price high yesterday, to close just under $2,750 oz.
The spot gold silver ratio popped on gold's relative strength over silver to end the week, ballooning back up to 84.
I have seen a lot of silver and gold market onlookers on twitter freaking out about the CME Group's recent raising of Comex gold and silver margin requirements of late.
On a historic 21st century timeline, nominal margin requirements would basically have to double in both COMEX gold and silver futures at the moment in order for their margins as a percentage of position to get back towards historically high levels of near 8% in gold and 15% in silver.
We are nowhere near such percentage levels at the moment.
Take a gander especially at the bottom section of this CME Gold & Silver Margin data from near the present day and back in time over the last nearly 20 years.
At the same time that Undisclosed gold demand is gobbling about 1/3rd of new line global gold mining, silver's industrial demand remains outstripping-ly strong. Supply deficits will likely continue so long as we don't slip into a deflationary depression.
Silver's solar demand has been probably the largest contributor to ongoing supply deficits and there is still no sign of that slowing anytime soon.
The Silver Institute dropped a new silver bull video this week, highlighting how important silver is to our collective futures. Have a look.
And while US silver bullion investment demand has been notably weakened with rising spot prices this year. The same is not true on the Indian side of the silver investment demand equation.
Indians are buying silver as an investment in decent size estimated to be about the same as US silver investment demand for the year 2024.
And apparently Indians at the moment have strong silver stacking hands, with little to trivial amounts being sold back into the Indian market. Rather, further positive price expectations abound there.
And their spot gold and silver price charts reflect the simple fact that in bullion bull markets, gold leads, eventually silver follows.
On the Indian silver demand side of the ongoing story, 2024 may come up short of 2022's record volume demand, we will have to wait and see yet.
But one of the heads from the largest producers of silver in India, amongst other metals and key energies like oil and gas, was out pounding the table this week on the silver bull case.
Anil Agarwal of Vedanta tweeted the following Indian silver pump.
He wrote.
"Can silver become more precious than gold?
Silver is shining.
In India, prices have crossed Rs 1 lakh per kg! Demand has doubled from last year.
Silver's demand is being driven not just by its traditional uses but by massive industrial demand.
It is now being used extensively in solar panels for renewable energy, in EVs, in advanced healthcare, electronics and many other technologies.
This combination of being precious and functional is rare and the demand supply gap is increasing.
It is the new critical mineral of the future.
Our Hindustan Zinc, we are producing silver sustainably with a 100% solar-powered refinery. At first, it was difficult to make silver but because of our brilliant engineers and technologists today we are one of the largest producers of silver in the world -- our aim is to be number 1 -- and sell our entire production in India.
Our not-for-profit industrial park for zinc and silver in Rajasthan will welcome thousands of downstream industries which can add value addition to silver and create lakhs of jobs."
For rural India to rise and develop from humility into an emerging global power, it is going to take massive amounts of industrial silver inputs into its growing infrastructure and renewable energy fleets to come.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
