The Daily Nugget: Gold Climbs Slightly, Bitcoin To Be Regulated?

Yesterday gold climbed slightly as demand from China was strong and some safe-haven gold buying was seen on the back of the Middle East troubles. Demand is slowing in China however, as volumes on the Shanghai Exchange sank to levels not seen since April 12th.

Outflows from ETFs remain – 17 metric tons this month alone, yet demand for coins remains strong. US Mint gold coin sales are 512,000 ounces in the year-to-date, sales were 753 for 2012.

US CFTC data shows hedge funds are feeling bullish on gold as they raised their net-long position by 19 per cent to 54,762 futures and positions (as of April 30). These actions show a split in consensus as Warren Buffet continues to remain bearish on gold stating that he wouldn’t even buy it if it went to $800. On May 2nd he said ‘It just sits there and you hope somebody pays more for it.’ Actually we don’t hope someone pays more for it, we hope

As gold remains 13% down since the beginning of the year, yet more banks are predicting a bad 2013 for gold. Coutts is the latest to scale back their gold holdings citing the likelihood of a new peak as being low, ‘unless there is a crisis in the Middle East, a weaker dollar or a jump in inflation.’ Seems like they might be changing their minds fairly soon then.

HSBC believe the gold price will average $1,542 this year, supported by both India and China’s strong gold demand. Chinese households are reported to have bought over 300 tonnes since the gold price drop last month.

Here in the UK we will be looking to the outcome of Thursday’s MPC meeting. Given the improvement in the UK’s PMI data it is likely that the MPC will allow the Funding for Lending scheme more time, before agreeing to any further stimulus.

Gold traders are likely to be looking to China’s latest data releases, namely trade, money supply and inflation numbers. March’s data disappointing and April’s isn’t expected to be much better.

The virtual currency network has been awash with the news that the CFTC is considering regulating Bitcoin. Bart Chilton has said that “It’s not monopoly money we’re talking about here – real people can have real risk in these instruments, and we need to ensure that we protect markets and consumers, even in what at first blush appear to be ‘out there’ transactions.”

Earlier this year we wrote about the Trial of the Pyx, a full judicial trial, that has taken place every year in order to check the integrity of new coins produced by the Royal Mint. Should the integrity of the coins come into question then it is the Master of the Mint who is to blame. Our Master of the Mint is George Osborne, Chancellor of the Exchequer. Unfortunately, but not unsurprisingly, he passed the Trial. Shame.

Not all central banks are a lost cause however; Vietnam’s central bank has imported gold in order to make up for the gold sold at auction to local commercial banks since March this year.

Eurozone fears are heightened once again as business activity shrank across the single-currency union, even in Germany. It now looks as though the Eurozone is likely to fall deeper into recession in this quarter. German Finance Minister Oskar Lafontaine, who helped to create the euro, has called for its break-up.

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