GOLD PRICES failed to hold an early 1.7% spike against the Euro in London trade Monday, after the Greek referendum surprised pundits and politicians with a resounding "No" to the austerity and repayment demands of Athens' international and Eurozone creditors.
Priced in Dollars, gold moved in a $10 range around $1170 per ounce.
Euro gold prices spiked to €1066 as the 19-nation currency sank at the start of Asian trade following Sunday's Greek referendum, but then slipped back to last week's level of €1050 before edging 0.5% higher.
European stock markets meantime lost 1.5%, but US shares slipped only 0.5% at Monday's open as major-economy government bond prices jumped.
US crude oil contracts sank almost 5% per barrel to trade below $55 for the first time in 3 months.
"[Sunday's] unexpectedly resolute 'No' vote has increased the chances of Greece leaving the Eurozone," says today's commodities note from German investment and commercial bank Commerzbank.
"Yet there has been virtually no reaction from the gold price."
However the politics now unfolds, reckons US brokerage INTL FCStone in a note, "We think that the short-term uncertainty generated by the Greek vote will likely benefit gold and suspect that we could see more appreciation over the next few days."
But "Gold's 'safe haven' appeal is clearly out the window," counters China-owned bullion and investment bank ICBC Standard Bank, "as any logical reaction to [gold's overnight] rally continues to run into scale up selling.
"Selling interest brought prices right back to the €1050 anchor."
Looking at the political and puntits' reaction to the Greek referendum, "The resounding 'No' vote is incompatible with opinion poll findings that most Greeks want to stay in the Euro," reckons former UBS economist George Magnus.
Congratulations for the 61-to-39% victory for 'Oxi' today came from the left-wing leaders of Venezuela, Cuba and Bolivia, as well as from recent debt-defaulter Argentina.
Within Greece, claimed German MEP Manfred Weber, it was "worrying that it's mainly radical parties (far-left & far-right) that are celebrating [this] outcome."
"Democracy matters more than any currency arrangement," wrote Keynesian US professor Paul Krugman on his New York Times blog.
"We are in a difficult situation," said Martin Schulz, president of the European Parliament – and "chief bully boy" according to UK anti-Europe MEP Nigel Farage – because "eighteen other states of the Eurozone agreed about the proposals to which the Greek people said 'no'.
"Democratic governments and parliaments in other countries had another view, a different view."
Spain's economy minister Luis de Guindos said Athens had the right to ask for a 3rd bail-out from its Eurozone partners – a view stated in March – while fellow bailed-out Euro member Ireland had "always [felt] debt reprofiling would be part of [a Greek] agreement," said Dublin's minister for European Affairs Dara Murphy, contradicting what Irish taoiseach Enda Kenny said only a fortnight ago.
"Germany is the country that has never repaid its debts," says French economic historian Thomas Piketty, interviewed by Die Welt and pointing to Berlin's own debt forgiveness enjoyed after the first and second world wars.
"[Germany] has no standing to lecture other nations.”
Greek finance minister Yanis Varoufakis meantime surprised analysts early Monday by resigning his post, despite the referendum win for Syriza's view – a move apparently aimed at placating Athens' creditors so that prime minister Alexis Tsipras can begin renegotiations in Brussels on Tuesday.
"Amidst all this," notes Japanese conglomerate Mitsubishi's analyst Jonathan Butler, "gold has done very little [and] has performed disappointingly as the Euro clawed back its initial losses against the Dollar.
"[But] volatility in gold could increase from the currently rather subdued level as the crisis drags on."
Stock markets in China meantime soared 8% and then fell back to cloose only 2.5% higher on Monday after Beijing moved to stem the last month's near one-third collapse in equity prices by banning any sales below a certain points-level, forcing the creation of a $19 billion "stabilization fund" financed by 21 major brokerages, suspending all new share IPO flotations, and promising "liquidity support" to financial intermediaries.
On month-on-month basis, gold imports declined 18.1% in June. The country had imported 1.64 tons of gold in May this year.
BUY GOLD prices in London's wholesale market edged higher on Friday, as world stock markets fell again ahead of this weekend's Greek referendum, asking voters whether they accept the terms of a bail-out which Athens' creditors now say is off the table.
With the New York gold futures market closed for Independence Day, prices to buy gold with Dollars touched $1170 per ounce, regaining two-thirds of the week's earlier 1.5% drop.
As a snap opinion poll showed Greek voters split almost 50-50 over Sunday's ballot, prices to buy gold with Euros rose back to last Friday's closing level at €1054 per ounce.
"Bookmakers odds might be a better guide to political outcomes than opinion polls," writes investment bank ICBC Standard Bank's FX strategist Steven Barrow, citing last year's Scottish independence referendum and UK elections this May.
"Scouring some of the leading bookmakers," "it looks like the probability of a ‘yes’ outcome is put in the 60% region while the chances of a ‘no’ vote are put at around 40%.
Greece's banks and financial markets remained closed Friday amid capital controls restricting depositors to €60 withdrawals per day from ATMs, with reports spreading that cashpoints are already empty.
"Referendums are in fashion these days," says one London bullion market-making bank's note, pointing to the Scottish as well as Swiss gold referendum of late 2014.
"Unlike those, no one in the investment world really has much time (or willingness) to position ahead of [Sunday's Greek] result, especially in a week shortened by the US Independence Day."
Shanghai's stock market meantime sank by more than 5% yet again on Friday, extending the last 3 weeks' slump to 30% and prompting the China Securities Regulatory Commission to say it's investigating short sellers and market manipulation, "based on reports of unusual movements" in stock and derivatives prices.
"Whether there is a ‘Yes’ or a ‘No, an agreement is in the offing," said Athens' finance minister Yaris Varoufakis to Irish broadcaster RTE today, repeating a claim he made to the BBC and also Bloomberg on Thursday that "a deal is more or less done."
On the contrary, said European Commission president Jean-Claude Juncker – who said last week he felt "betrayed" by Athens' negotiators – because "If the Greeks vote 'no', the Greek position is dramatically weakened."
Seasonally weak demand to buy gold in major consumer nation India, meantime, has driven local prices as far as $15 per ounce below London benchmarks, Reuters reports.
Typically quoted at a premium to London, retail prices to buy gold in India already slipped $1 below in June, but the last two weeks' price drop "failed to lure customers," the news-wire quotes Bachhraj Bamalwa, director at the All India Gems & Jewellery Trade Federation.
Latest Swiss gold export data, says consultancy Metals Focus in a new report, "ties in well with feedback from our field trips, that gold demand in India [has] eased."
Might your gold become useless to you in a Greek-style crisis...?
ANCIENT ATHENS hoarded its silver and gold bullion coins upstairs above the Parthenon, according to one Canadian archaeologist, writes Adrian Ash at BullionVault.
Where are Greece's poor citizens holding their gold and silver today?
Certainly not in Zurich, Singapore or anywhere else via BullionVault. We saw internet traffic from Greece rise 50% during the first half of this year from the Jan-June period of 2014. But new accounts? Zero growth...with just a handful of customers again.
No, the preferred choice for Greeks buying gold has remained bullion coin. Specifically gold Sovereigns, bought from the UK's Royal Mint in Wales...and distributed through the central bank in Athens, the Bank of Greece. At least, that's what Greek law demands.
Incredibly, a rule stated on the central bank's website here has made it the ONLY legal route for gold bullion sales and purchases in Greece since at least 1999, with commercial banks invited to apply for approval if they wished. Word is, small private-sector dealers have long ignored that rule (Google.gr suggests likewise). After all, it flew in the face of the European Union's general directive on free trade in legal goods, even if it fits with the classic Euro-fudge known as the principle of subsidiarity, which says national governments can arrange things domestically pretty much as they like, provided they don't block cross-border trade and capital flows. Y'know, in the way that, say, today's capital controls do.
Prior to this banking shutdown, therefore, residents of Greece could also buy gold coins or small bars from dealers abroad, and get them posted across the border. Because inside the EU's common market, a citizen anywhere can buy legal goods such as gold bullion from any other member state.
That's what the European Union is supposed to be about, at root. The Bank of Greece's stated monopoly on gold bullion inside the Hellenic Republic didn't contradict that core EU aim. But with Greece now stuck in a week-long banking shutdown thanks to the debt crisis, the Bank of Greece has shut its gold operations. Or so Bloomberg reported Monday.
This news didn't feature in last Sunday's capital controls notice (they're always imposed on a Sunday). Nor does it appear on the central bank's gold pages online. True or not however, the broader chaos in Greece already raises the issue of what freedoms a precious metals owner might expect, both legally and in practice, during the kind of crisis you might be buying to guard against today.
Bloomberg headlined its story "Bank of Greece stops gold sales". But the central bank also sets itself out as the only legal BUYER of bullion in Greece, too. If the gold window is closed, that also means the Bank has stopped buying.
This is more important, because in a banking shutdown...after 5 years of economic collapse...people will be rushing to raise cash, not buy gold. Losing the key insitutional dealer only would only worsen liquidity, and prices, for would-be sellers. Amid the kind of confusion now hitting Greece, gold held in-country risks becoming useless to its owners.
Each household's shortage of Euros worsens every time they spend money. So who will buy gold from you for Euros? No doubt there's a thriving black market, however. Gold always finds a way, as India's attempts to block legal imports have proved time and again. Greece only made giving till receipts mandatory for all businesses in 2012. Foreign-issued credit cards are apparently helping some people get round Greece's new capital controls today. And in gold, acting legally under EU rules always made you a criminal anyway under the Bank of Greece's more controversial claim to a monopoly. The lines have long been blurred.
Now contrast that hassle, risk and lack of willing buyers with the safety, instant pricing and deep liquidity available to that handful of Greek citizens who bought and now hold bullion outside the country. BullionVault users owning gold in Switzerland or Singapore, for instance, can sit it out, and maintain some wealth away from Greece's collapse for when the crisis finally passes. Or they can sell a little...and receive funds back to their Greek bank...ready to spend from their allotted €60 per day ATM withdrawal (if they can find a machine with any cash). Because there are no blocks on receiving funds from abroad, of course.
If you're right to buy gold against a Greek-style crisis, in short, then you'd be right to own it in a safe, secure jurisdiction abroad. This is rule No.1 on the Gold Buyer's Checklist.
And if things get really bad? No amount of gold, or any other asset, can guarantee you escape any and all kinds of crisis. But owning physical bullion outside your own borders means you have a high-value asset...instantly priced, deeply liquid and sellable for local currency...ready and waiting should you and your family need to get out. And be able to.
Everyone hopes it won't come to that. Everyone always hopes that it won't.
GOLD PRICES fell to 15-week lows in London trade Thursday, briefly slipping near $1160 per ounce as world stock markets dropped, the Greek government was challenged over the validity of this coming weekend's 'austerity' referendum, and new data showed the US jobs market slowing in June.
Major government bond prices fell outside the US and UK, nudging 10-year German Bund yields up to 0.84% – a 7-month high when first reach in June.
Gold prices fell against the Dollar for the 8th session in nine, but recovered against the volatile Euro to remain "stuck to €1050 like a limpet" according to ICBC Standard Bank's trading desk in London.
"Physical buying [from Asian wholesalers] is around, but very light given summer holidays and Ramadan."
The US economy added only 223,000 jobs in June, the Labor Department said Thursday, missing analysts' consensus forecasts for the third time this year.
Greek finance minister Yanis Varoufakis meantime said he will quit the "radical left" Syriza government if Greek voters don't back his demands for foreign creditor nations to accept a debt restructuring in Sunday's referendum – itself called "unconstitutional" and "unclear" by the Athens Bar Association of lawyers today.
Varoufakis says Euro membership is not up for discussion, but "The question of the referendum is whether they want to be with the Euro," said European Central Bank member Josef Bonnici, head of Malta's central bank.
Blaming Syriza for the current crisis, Greece needs "comprehensive" debt relief from its Eurozone partners, fellow creditor the International Monetary Fund said today, calling for maturities to be doubled from 20 to 40 years with €60bn in new funds required over the next 3 years.
"[Syriza's prime minister] Tsipras has turned this country into North Korea," the Wall Street Journal quotes one 83-year-old lining up to try and withdraw cash from an ATM in Athens.
"I can't believe at this age I have to line up to get rationed."
"Despite the prevailing uncertainties on the future of Greece and its impact for the Eurozone," says Germany's Commerzbank in a note, "gold still continues its downward trend."
"Participants [are] keen to sell the relatively short-lived rallies," says Swiss refiner MKS's trading team.
"Interest rate expectations in the US will continue to weigh on the metals."
"We are on the cusp of a gold bull market," reckons a new note from Bank of America Merrill Lynch, forecasting a rise to $1300 per year in 2016.
"But there is no immediate trigger for prices to rise...Ongoing uncertainty emanating from Greece [means] rising risk aversion is bullish, [but] this may be offset by a stronger Dollar."
For last fortnight, the tariff value of gold was fixed at $385 per 10 grams and silver at $519 per kg.