From GoldCore

Gold Bar Demand in China Surged 51% to 213.9 Tons In 2011

Gold’s London AM fix this morning was USD 1,579.00, EUR 1,255.67, and GBP 1,006.63 per ounce. Friday's AM fix was USD 1,560.50, EUR 1,240.66, and GBP 996.04 per ounce.

Silver is trading at $28.65/oz, €22.86/oz and £18.33/oz. Platinum is trading at $1,442.50/oz, palladium at $592.60/oz and rhodium at $1,275/oz.

Gold rose $13.30 or 0.85% in New York on Friday and closed at $1,572.80/oz. The higher close Friday was not enough to prevent a lower week for gold which was down 1.2% for the week.

Asian trading started out flat and then gold climbed to about $1,583/oz and pulled back a bit and is now trading in Europe near $1,580/oz. US markets are closed for Memorial Day today which means that volumes may be low and illiquidity could result in sharp price movements.





Cross Currency Table – (Bloomberg)

Gold is higher in all currencies today as some buyers view the recent price falls as overdone and are buying the dip. There is some relief that Greek opinion polls showed pro bailout conservatives in the lead for elections. This has alleviated fears of a disastrous Greek exit from the euro, but uncertainty still remains and ‘Grexit’ remains likely.

The risk of contagion in the Eurozone appears to increase by the day as the news from Spain shows that it is following fast in the footsteps of Greece and this will support gold. Bank runs in Greece and the risk of bank runs in Spain and elsewhere are a scenario which could lead to contagion.

As long as the short term panacea of using quantitative easing, the modern euphemism for the creation of trillion of units of currency (dollars, euros, pounds etc) is embraced by global policy makers – gold’s bull market is assured.

The day or reckoning has been postponed for now but economic recovery is not coming and indeed there is now the real risk of a global recession and even a global Depression – especially if there are widespread global electronic bank runs.

While gold and silver fell marginally last week, the very large weekly returns in the gold mining sector may signal we are close to a bottom. The XAU and HUI gold mining indices rose 6.8% and 7.9% respectively. Strong gains in the XAU and HUI have often preceded market bottoms for gold and silver.

This week investors will look to China’s PMI and US non-farm payrolls to gauge the health of the world’s two largest economies.



XAU/USD Currency Chart – (Bloomberg)

A reminder of the sharp increase in demand for gold and silver, particularly store of wealth demand, in recent years was seen in the figures released by the China Nonferrous Metals Industry Association in Shanghai today.

China’s gold consumption rose 33% to 761 tons in 2011 and China’s silver consumption rose 6.8% to 6,088 tons last year.

China’s gold consumption rose 190 metric tons last year to 761 tons, Wang Shengbin, China Gold Association Vice Chairman, said in a speech in Shanghai as reported by Bloomberg.

China’s jewelry consumption jumped 28 % to 456.7 tons last year, gold bar consumption surged 51% to 213.9 tons and gold coin consumption gained 25% to 20.8 tons, Wang said

China’s silver consumption, including industrial use, jewelry and coins, rose 6.8% to 6,088 metric tons last year, the vice chairman said. The amount shows a surplus given China’s output of 12,348 tons last year, which gained 6.3%, Wang said.

OTHER NEWS

(Bloomberg) -- Gold Traders Increase Bets on Price Rise, CFTC Data Shows

Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended May 22, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 115,151 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 1,009 contracts, or 1 percent, from a week earlier.

Gold futures fell this week, dropping 1.4 percent to $1,571.20 a troy ounce at today's close.

Miners, producers, jewelers and other commercial users were net-short 135,598 contracts, down 3,319 contracts, or 2 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) -- Silver Traders Trim Bets on Price Rise, CFTC Data Shows

Hedge-fund managers and other large speculators decreased their net-long position in New York silver futures in the week ended May 22, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 10,797 contracts on the Comex division of the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 677 contracts, or 6 percent, from a week earlier.

Silver futures fell this week, dropping 1.1 percent to $28.39 a troy ounce at today's close.

Miners, producers, jewelers and other commercial users were net-short 15,222 contracts, down 686 contracts, or 4 percent, from the previous week.

Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors, as well as commercial companies that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.

(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,664 Metric Tons

Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,664.30 metric tons as of May 25, according to figures on the company’s website.

================================================================================

May 25 May 24 May 23 May 22 May 21 May 18

2012 2012 2012 2012 2012 2012

================================================================================

Million Ounces 310.714 310.714 310.229 310.229 310.229 310.229

Daily change 0 485,182 0 0 0 4,269,979

--------------------------------------------------------------------------------

Metric tons 9,664.30 9,664.30 9,649.21 9,649.21 9,649.21 9,649.21

Daily change 0.00 15.09 0.00 0.00 0.00 132.81

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NEWS

Gold Extends Advance As Wen Comment Boosts Stocks - Bloomberg

Gold firms on euro rebound; Europe worries linger - Reuters

Gold holds ground, underpinned by steady euro - Reuters

Gold edges up as Greek exit fears ease - MarketWatch



COMMENTARY

Will Gold Fall All the Way with the Euro? - GoldSeek

Complete European Calendar Of Events: May – July – Zero Hedge

Silver: Illegalities - Jesse's Café Américain

Are The Europeans About To Start The Second Half Of Our Great Depression? – Zero Hedge

Detroit Goes Dark: Half of Detroit's Street Lights May Go Out To Save Money; Left to Rats – Mish’s Global Economic Trend Analysis

Europe's Maquina Infernal has crippled Spain – The Telegraph