(Kitco News) – The U.K.’s Royal Mint and exchange operator CME Group are collaborating to create a blockchain-based digitized gold-trading platform meant to cut the cost of trading the precious metal, the two entities announced Tuesday.
Under the new platform, scheduled to begin sometime in 2017, the Royal Mint will issue “Royal Mint Gold,” with a digital record of ownership for metal stored at its on-site bullion vault storage facility. CME Group will develop, implement and operate the product’s trading platform. This will allow market participants to trade RMGs between themselves, with some news organizations characterizing this as over-the-counter trading.
One RMG will represent one gram of gold.
A news release from the organizations says the new service will provide an “easier, cost-effective and cryptographically secure alternative to buying, holding and trading spot gold.”
A number of news organizations are describing the blockchain technology as transparent and tamper-proof, at least so far. This was the technology used to build bitcoin, some reported.
The Royal Mint is a 1,000-year-old institution owned by HM Treasury and permitted to produce British coins. CME group is a U.S.-based derivatives exchange.
“The Royal Mint has a unique history and a trusted reputation earned over many centuries trading in gold but until now, there hasn’t been a way to digitally trade physical gold,” said Vin Wijeratne, chief financial officer of the Royal Mint. “Developing a trading platform with CME Group will satisfy customer demands for faster, cost effective and secure ways to buy, hold and sell gold and complement our existing products.”
David Janczewski, director of new business at the Royal Mint, said that “distributed ledger technology is a game changer and supplying gold on a blockchain has been on our minds for some time.”
CME Group will launch a digital-trading platform that will operate 24 hours a day, 365 days a year. Unlike the traditional physical spot cost model for investing in gold that levies for management fees and ongoing storage charges, RMGs will offer ownership of the underlying gold with the option for conversion to physical gold by the Royal Mint with no storage cost.
The initial amount of RMG at launch could be up to $1 billion worth of gold, reported the Royal Mint and CME group. It will be offered through investment providers. Further RMG will then be issued based on market demand.
“Developing a digital gold trading platform will help ensure that CME Group’s current product offerings meet the evolving needs of the global marketplace,” said Julie Winkler, senior managing director, research, product development and index services at CME Group.
“As we continue to expand our global footprint and develop new products, this platform will help set standards for digital assets in financial markets.”
(Kitco News) – Speculation that President-elect Donald Trump can boost the U.S. economy with a massive fiscal plan has helped push U.S. bond yields to their highest level in more than a year, the U.S. dollar to a 13-year high and gold reserve in exchange-traded funds to their lowest level five months.
More than $2 billion in Gold has flowed out of the world’s bigest physical gold ETF in NovemberReserve data compiled by SPRD Gold Shares (NYSEARCA: GLD) shows that gold holdings in the world’s largest ETF totaled 885.04 tonnes as of Monday, the lowest level since June. November has been one of the worst months in terms of outflows in the last three years as GLD gold reserves have dropped by 57.55 tones, with the heaviest selling occurring after Trump’s Nov. 8 election win.
Taking the average gold price from the London Bullion Market PM Gold Price, the outflows seen in GLD total more than $2.3 billion in the past month.
However, despite the heavy selling since early November, gold reserves are still up for the year by 242.67 tonnes, given the unprecedented demand seen in the first half of the year.
Analysts at Commerzbank said in a report Tuesday that heaving ETF redemptions in the last 12 consecutive sessions has been the biggest drag on prices. Currently, gold prices are trading near their lowest levels since February and are down more than 6% since the start of the month. February Comex gold futures settled Tuesday at $1,190.80 an ounce, down 0.24% on the day.
Mike Dragosits, senior commodity strategist at TD Securities, said in a telephone interview with Kitco News that although prices have been dragged lower as investors focus on Trump’s economic policies and expected Federal Reserve interest rate hike on Dec 14, he thinks that a bottom could be in place, at least in the near-term.
“Even though we have broken below the key support level at $1,200 an ounce, we haven’t seen a lot of follow through on the downside,” he said. “I think at these levels, the bearish sentiment is overdone. I think a lot of the big selling has stopped and we could see prices stabilize.”
Dragosits added that his firm is expecting to see a bounce in gold, as it expects the Fed to be less aggressive than economists and markets are expecting.
“I think a 25-basis-point hike is already baked in but I don’t think the Fed is going to signal a very aggressive stance for 2017,” he said. “If the Fed is too hawkish in their expectations for 2017, they could risk hurting U.S. economic growth.”
Copper and zinc prices closed up over 1% yesterday November, 24 with three-month copper prices closing at $5,893 per tonne, while aluminium and nickel prices closed down by an average of 0.8% and lead and tin were little changed. Platinum prices fell 1.5%, spot gold prices were down 0.3% at $1,185.90 per oz, while palladium and silver prices were little changed.
This morning the base metals are consolidating, three-month lead prices are up 0.8%, zinc prices are up 0.6% and copper prices are up 0.3% at $5,882 per tonne, aluminium and nickel prices are little changed, while tin prices are down 0.9% at $21,100 per tonne. Volume as of 06:44 GMT has been 10,059 lots.
Precious metals are weaker across the board with spot prices down an average of 0.5%. Spot gold prices have been as low at $1,171.33 per oz, but were recently quoted at $1,180.10 per oz.
In Shanghai, January zinc prices are up 3.1%, followed by lead prices that are up 2.6% and copper prices are up 1.7% at Rmb 48,100 per tonnes, nickel is little changed, while tin prices are off 1.7% and aluminium prices are down 1.4%. Spot copper prices in Changjiang are down 0.7% at Rmb 47,920-48,120 per tonne, the spread between spot and the January date is all but flat, while the LME/Shanghai copper arbitrage window remains open with the ratio at 1:8.19.
In other metals in China, January iron ore prices are up 4.5% on the Dalian Commodity Exchange, on SHFE, steel rebar is up 6.1%, gold prices are down 1.5% and silver is off 0.1%. In international markets, spot Brent crude prices are down 0.8% at $48.47 per barrel.
Equities – the Euro Stoxx 50 and Dow both closed up 0.3 percent yesterday and this morning Asian equities are firmer with the Nikkei up 0.3, the Hang Seng is up 0.6%, the CSI 300 is up 0.9%, the ASX 200 is up 0.4% and the Kospi is up 0.2%.
In FX, the dollar index’s rally has halted up in high ground, with the index recently quoted at 101.46, having been as high as 102.05. Any correction in the dollar could lead to broad based consolidation as traders adjust to the roller-coaster moves that have been seen since the US election. The euro seems to be attempting to rebound, it was recently quoted at 1.0598, as are the yen at 113.02 and the aussie at 0.7460, while sterling is flat at 1.2465. Emerging market (EM) currencies, having been weak in recent weeks, are showing some signs of attempting to rebound, this ties in with early signs of consolidating in the dollar.
On the economic agenda, Japan’s CPI data showed falling prices, although the Bank of Japan’s reading of core CPI show prices rising 0.3% and the service PPI climbed 0.5% from a prior reading of 0.2%. Later there is UK data on GDP, business investment, index of services and CBI realised sales, Italian retail sales with US data including goods trade balance, wholesale inventories and flash services PMI – see table below for more details.
The rebounds in base metals prices after last week’s corrections have been impressive, but the higher prices do seem to have run into supply, at least for most of the metals, the exception is zinc that has set a fresh high this morning at $2,767 per tonne, basis three-months. Generally although we are bullish for most of the metals’ fundamentals it does seem as though the rallies over the past month have run prices ahead of the fundamentals, so we would not be surprised to see consolidation set in as the market absorbs scale up selling.
The strong dollar, prospects for US interest rate rises and brighter opportunities in other asset classes, have led to long liquidation in gold, silver and platinum. Palladium has bucked the trend, as it has followed equities more. Given there is still a lot of uncertainty out there in the political arena, we would have thought the pullback in gold prices would start to attract bargain hunting, especially if the rallies in other markets start to show signs of tiring.
– See more at: https://www.bulliondesk.com/gold-news/metals-morning-view-dip-gold-price-runs-into-buying-base-metals-prices-consolidate-124505/#sthash.b0VXD38S.dpuf
For many silver investors, the reason behind investing in the precious metal is simple: it’s an affordable precious metal alternative to gold. For this strategy to work, however, it’s necessary that the silver price closely track the price of gold. But is that what we’ve seen in the markets lately, or has silver developed a mind of its own?
With the price of gold showing signs of life again with an uncertain market headed into the U.S. presidential election, there may be no better time to evaluate the price of silver:
The Price Of Silver This Morning
Silver, like gold has enjoyed a generally positive year. Currently over $18 per troy ounce, silver has rebounded from its lows in late 2015 and enjoyed a medium resurgence. It’s still got a long way to go if it’s to match its all-time highs, which has silver investors optimistic for the future.
A look at the price of gold in recent years won’t show a direct 1:1 correlation between the metals, but the trends are clear: silver and gold are joined at the hip to the extent that they belong to the precious metal asset class. But does that correlation over the long-term trends translate to a short-term correlation between the two?
A Dip In Gold And Silver Prices Late This Week
Anyone paying close attention to both gold and silver prices will have noticed a dip recently. EconomicCalendar.com notes a plummet in silver prices at about 3.5% from where it was. Thus far this morning, gold is down about $7, or about half a percentage point.
As one might expect, the lower silver prices mean larger percentage swings over gold, but the correlation between the precious does seem to hold up over the past week. Both metals have shown a lot of optimism throughout the week, despite GDP numbers from last week that suggested the metals may be in for a bit of a dip on the news.
Silver’s Reaction To The Stock Market
Like gold, silver is often seen as a hedge against trouble in the stock market. Silver is essentially “Gold Jr.” for many who want to move their money out of equities and invest in something more tangible, while they worry about volatility or even negative interest rates in banks across the world.
With reaction in the stock market currently jumpy, it seems to suggest that both gold and silver may be in a holding pattern throughout the year. DailyFX has some of the short term predictions in both gold and silver prices. Needless to say 2016 has been a year of tremendous upheaval and instability across a range of measurements, not just in the economy. It stands to reason that both silver and gold can benefit from this uncertainty.
For long-term concerns, silver’s price remains a close tracker of gold, as both of the precious metals benefit from optimism in this asset class. Those who believe that silver has even more room for upward mobility may see the investment as even more ripe than that of gold.