The LBMA appears now to be in an intractable and rapidly degenerating position - with the vaulted gold available outside of the Bank of England and ETF holdings largely gone from London, how do you manage the appearances of a spot gold market with turnover of 200M oz per day and a massive open interest? While gold flow from the miners provides some liquidity and enables the LBMA paper gold market to provide some gold delivery and suppress gold prices, it is obvious that a massive gold event has occurred and that this paper market will not be the same given increased pressure for physical delivery. The London market cannot sustain any material gold withdrawal as occurred in 2013.
We now approach an event that may provide the catalyst for the inevitable repricing of gold and expiry of the LBMA paper/digital gold scheme. That event is the April 19, 2016 initiation of a daily spot domestic Gold Fix on the Shanghai Gold Exchange (SGE) that will be followed at a later date for the SGE international gold market. The SGE is very different from the LBMA unallocated paper gold market in that for a standard kilo gold contract to be issued, first a kilo of 99.99% pure gold delivered directly from an approved refinery must be deposited with the SGE.
Chinese gold miners are aggressively scouting for overseas acquisitions, encouraged by historically low gold prices that could help them scoop up assets cheaply.
Though gold prices have risen by more than 16% since hitting a six-year low in December, the metal has still been trading close to levels last seen in 2010, in a range of roughly $1,220 to $1,240 a troy ounce.
China is the world’s largest gold consumer and producer, but only a few Chinese companies, such as Zijin Mining Group Co., have ventured abroad to buy mines, unlike their counterparts in industrial metals.
If cash-rich Chinese gold miners embark on an asset-buying spree, China could reduce its dependency on other international producers for supplies and increase its heft in global gold markets.
A period of low gold prices also means Chinese companies may have more options to buy because several mining companies are facing credit crunches and have huge debts.
CAIRO (Reuters) - Egypt and Saudi Arabia signed an agreement late on Saturday to set up a 60 billion Saudi riyal investment fund among other investment agreements including an economic free-zone to develop Egypt's Sinai region, Egyptian state television reported.
The signing of the agreements took place in Egypt's Abdeen palace in the presence of Egypt's President Abdel Fattah al-Sisi and Saudi's King Salman, during a rare 4-day visit to Egypt.
Egypt has struggled to spur economic growth since the 2011 uprising ushered in political instability that scared off tourists and foreign investors, key sources of foreign currency.Egyptian state TV said the agreement was to establish "a Saudi-Egyptian investment fund with a capital of 60 billion riyals between the Saudi Public Investment Fund and the entities belonging to it and the Egyptian government and the entities that belong to it."
A memorandum of understanding was also signed between the Saudi Public Investment Fund and the Egyptian International Cooperation Ministry to set up an economic free-zone in Sinai. No other details were announced.
The two countries also signed agreements to develop a 2250 Megawatt electricity plant with a cost of $2.2 billion, set up agriculture complexes in Sinai and develop a canal to transfer water, a statement from the Presidency said.
Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.
Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as soon as next year, with the country currently planning to sell less than 5 percent.