The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
For Russia, sanctions have created significant problems for its gold mining industry — the largest in the world after China — in selling overseas. It produces roughly 300 tonnes each year but has a domestic market for only 50 tonnes, according to MKS PAMP.
At the same time, western governments have frozen $300bn of Russia’s foreign currency reserves through sanctions, which Shiels says has prompted nations outside the west to ask: “Should we have exposure to so many dollars when the US and western governments can confiscate that at any time?”
Russia’s gold-buying repeats South Africa’s playbook during Apartheid-era sanctions of supporting domestic mining by buying the yellow metal using local currency, says Ash.
“With limitations on the export side, it would make sense it’s the Russian central bank,” said Giovanni Staunovo, commodity analyst at UBS.
The Central Bank of Russia stopped reporting monthly numbers on its reserves soon after the war began. CBR officials have rejected the suggestion it is buying gold.
Our gold and foreign exchange reserves are sufficient. We don’t have a specific task of accumulating gold and foreign exchange reserves,” said CBR governor Elvira Nabiullina in mid-December.
Yet CBR officials have long placed strategic value on boosting gold reserves; in 2006 it said it would be desirable for gold to make up 20-25 per cent of its holdings — in February 2022, the last time CBR published its statistical data, gold accounted for 20.9 per cent. It has reduced its holdings of US Treasuries to only $2bn from more than $150bn in 2012, while increasing gold reserves by more than 1,350 tonnes worth almost $80bn at current prices, according to Julius Baer, a Swiss private bank.
Carsten Menke, head of next generation research at Julius Baer, reckons the purchases from Russia and China indicate a growing reluctance for countries to rely on the greenback.
“The message these central banks are sending by putting a larger share of their reserves in gold is that they don’t want to be reliant on the US dollar as their main reserve asset,” Menke said.
Some in the industry speculate Middle Eastern governments are using fossil fuel export revenues to buy gold, most likely through sovereign wealth funds
The coming months will test whether record central bank buying was an opportunistic spurt as gold prices fell, or a more structural shift.
Even with prices having since recovered to about $1,800 per troy ounce, few are willing to bet the trend towards diversification of central bank reserves will change course any time soon.
Bernard Dahdah, senior commodities analyst at Natixis, the French investment bank, said deglobalisation and geopolitical tensions meant the drive by central banks outside of the west to diversify away from the US dollar was “a trend that won’t change for a decade at least”.
Worth a read
Central banks are scooping up gold at the fastest pace since 1967, with analysts pinning China and Russia as big buyers in an indication that some nations are keen to diversify their reserves away from the dollar.
Data compiled the World Gold Council, an industry-funded group, has shown demand for the precious metal has outstripped any annual amount in the past 55 years. Last month’s estimates are also far larger than central banks’ official reported figures, sparking speculation in the industry over the identity of the buyers and their motivations.
The flight of central banks to gold “would suggest the geopolitical backdrop is one of mistrust, doubt and uncertainty” after the US and its allies froze Russia’s dollar reserves, said Adrian Ash, head of research at BullionVault, a gold marketplace.
The last time this level of buying was seen marked a historical turning point for the global monetary system. In 1967, European central banks bought massive volumes of gold from the US, leading to a run on the price and the collapse of the London Gold Pool of reserves. That hastened the eventual demise of the Bretton Woods System that tied the value of the US dollar to the precious metal.
Last month the WCG estimated the world’s official financial institutions have bought 673 tonnes. And in the third quarter alone central banks bought almost 400 tonnes of gold, the largest three-month binge since quarterly records began in 2000.
The conservative estimates from the WGC outstrips the reported purchases to the IMF and by individual central banks, which stands at 333 tonnes in the nine months to September.
Officially, the buying in the third quarter was led by Turkey at 31 tonnes, taking gold to about 29 per cent of its total reserves. Uzbekistan followed with 26 tonnes, while in July Qatar made its largest monthly acquisition on record since 1967.
The discrepancy between the WGC’s estimates and officially reported figures tracked by the IMF can be partly explained by government agencies besides the central banks in Russia, China and others that can buy and hold gold without reporting them as reserves.
Acknowledging its intake — but also possibly trying to signal its limited role — the People’s Bank of China (PBoC) reported earlier this month that in November it made its first increase in gold holdings since 2019, with a 32-tonne bump worth about $1.8bn. Yet the gold industry says Chinese buying is almost certainly higher.
Mark Bristow, chief executive of Barrick Gold, the world’s second-largest gold miner, said China had bought tonnes of gold around the high 200s mark, based on his discussions with numerous sources.
Nicky Shiels, metals strategist at MKS PAMP, a precious metals trading company, added gold prices would have peaked around $75 lower in November if the PBoC had only purchased 32 tonnes. Gold prices traded as high as $1,787 a troy ounce in November and have since advanced above $1,800.
I would argue that the best co**** of action is to remain low key with no headline grabbing announcements such as resumption of dividend payments, we really do not want any unnecessary attention at this time. Let's keep going as we are, selling off our inventories and reducing our debts. When this is over, and it will be, we'll all be handsomely rewarded for our perseverance.
Keep living in dream land, the only reality and truth is reflected in the share price.
Every spike in the share price has only been temporary and a selling opportunity, and this time is no different. This company has promised so much over the years and delivered nothing, all to the detriment of the shareholders.
If it's product actually had any medical use it would have been fully exploited by now. The market is wise to this fact and so are the market makers who just love creating false spikes just to suck in more punters.
Pursuing countless opportunities is no recipe for success, quite the opposite it proves they are desperate. One by one all will end with the usual statement at how surprised and disappointed they are with the results.
Funny how all these mediocre pharma companies with no real underlying product seem to gravitate towards each other only to stumble at the first trial results. The miracle cure for all ailments with just one constant, failure. All the while the bods reap their extortionate salaries and worthless free options.
What ever happened to Money Munch.
Again, this is holding up remarkably well considering all this talk of sanctions and the war continuing indefinitely.
Chart points
200-Day Moving Average 219.69;
50-Day Moving Average 227.34;
20-Day Moving Average 241.97;
10-Day Moving Average 242.99;
Upper Bollinger Bands 250.01
Lower Bollinger Band 233.93
Putin cancels annual press conference as unease grows over Ukraine war.
Something is stirring.
This time next year you'll be thinking why wasn't I a little braver, I could have made a fortune.
Apologies if I've missed any recent communication on this but precisely when will this bear any fruit. They stated 2 years in the original news release in September 2020.
Juvenescence will deploy the Sulforadex® stabilisation technology to manufacture and market a nutritional health product containing a defined and stable dose of sulforaphane, derived from natural sources. This contrasts with the synthetic sulforaphane which is used in SFX-01, the Company's lead therapeutic product. It is envisaged that product launch by Juvenescence will occur within the next two years
With all the talk of further sanctions and large shareholders dumping positions, it seems to be holding up remarkably well. Fingers crossed going forward.
Agreed, current price action does not correspond to any dumping. Why dump now after all this time.
Could drift down to around £2.15p - £2.17p support line before the next leg up. It was never going to be an easy ride.
Ft article
"The measure, if backed unanimously by the 27 EU states"
Unlikely to be unanimously backed so nothing will happen. Also, it's starting to be clear that Ukraine are the ones holding back on peace talks, adding more sanctions on Russia isn't going to change that, in fact, the opposite as it will encourage them to holdout as much as possible which the Europeans do not want.
Rumours were recently circulating that NatWest were considering a potential buyout. Ruth Markland purchased shares on 24/11/22, she wouldn't have been allowed if there was any bid in the offing.
Russian President Vladimir Putin remains open to negotiations but the fighting will go on, his administration said.
While military operations continue, Putin “was and remains open for contacts for negotiations,” Kremlin spokesman Dmitry Peskov said on a conference call on Friday.
Article in the ft
Gold demand firmer in Q3
Healthy Q3, driven by stronger consumer and central bank buying, helped year-to-date demand recover to pre-COVID norms.
Gold demand (excluding OTC) in Q3 was 28% higher y-o-y at 1,181t. Year-to-date (y-t-d) demand increased 18% vs the same period in 2021, returning to pre-pandemic levels.
Jewellery consumption reached a robust 523t, increasing 10% y-o-y despite the deteriorating global economic backdrop. Y-t-d demand is slightly firmer (+2%) at 1,454t.
If you have the stomach for it watch Einsatzgruppen - The nazi death squads on Netflix.
What the Ukrainians did to their Jewish and Romany neighbours is truly shocking.
Seemed to be a lot made of the EU confiscating Russians assets to rebuild Ukrainians infrastructure.
According to the ft article this morning
"The underlying assets would be returned to Russia if a peace agreement were signed".
Apologies if this has already been mentioned, so much noise on this site I'd end up pulling the little hair I have left out if I read every post.
Very well put Kuurj, pretty much summed it up.
Ukraine war latest: Stop fighting or face destruction, Belarus warns Ukraine Sky headline.
Seems to me that the Russians are now bombing them to force them to the negotiating table.
It's going to end, just depends on how much of their infrastructure they want to remain in place before they start taking.
The West will not intervene and don't expect massive handouts to rebuild the country, our tax bill is high enough already.
Going by the last company communication they've done a great job in finding new markets to sell to which will go someway in reducing the inventory overhang and help reduce the 2.8bn debt and increase profitability. They seem keen to get the divided payment going again but want all shareholders to have the option of receiving this. Again, looking at a work around to make this a viable option, hopefully by March next year.
Lots of posts on here in reference to crypto currencies, I understand the principles behind it but the arguments to justify the price just doesn't comprehend which is why I haven't touched them.
What does make sense to me is the following. They are on track to meet our full-year guidance of 1.7m ounces. Simple calculation 1.7m X $1751 ,= $ 2,976,700,000 obviously less cost but doesn't include the other commodities they sell. Company value approximately $1,345,000,000.
No brainer in my eyes.