Gold & Precious Metals

The market capitalization of gold-backed crypto tokens increased by 60% in 2022 to surpass $1 billion for the first time in history, according to Arcane Research in its latest weekly report.

Gold shines, Bitcoin disappoints

In 2022, investors have been rushing to the perceived safety of gold-backed crypto assets, whose value is pegged to the price of gold.

Namely, PAX Gold (PAXG), Tether Gold (XAUT) and similar precious metal-backed digital assets have been climbing in value as investors “diversify inflation bets” within the crypto sector, explains Arcane Research. PAXG is also outperforming Bitcoin (BTC) this year, as shown in the chart below.

Gold, itself, rose by almost 14% YTD to nearly $2,050 an ounce, its highest level since August 2020. Arcane noted:

“The rallying gold price seems to have attracted more crypto investors to the gold-backed tokens […] since they allow crypto investors to diversify inflation bets through familiar crypto market infrastructure.”…read more.

Gold price blasts to 15-month peak as war returns to Europe

Gold blasted to its highest since 2020 after Russian forces attacked targets across Ukraine, triggering the worst security crisis in Europe since World War II and further crushing risk sentiment across the global markets.

The move sparked a flight to haven assets, with spot gold trading 0.8% higher to $1,925.07 an ounce by 11:10 a.m. ET, near a 15-month high. US gold futures on the Comex also gained 1.0% at $1,930.30 an ounce.

On Wednesday evening, Russia President Vladimir Putin vowed to “demilitarize” Ukraine and replace its leaders, while the West threatened additional sanctions in response. In response, US President Joe Biden announced he would impose “further consequences” on Russia after what he called an “unprovoked and unjustified attack.”

“The Russian invasion of Ukraine puts the markets in panic mode,” Alexander Zumpfe, senior trader at refiner Heraeus Metals Germany GmbH & Co., told Bloomberg. “Investors are throwing shares out of their portfolios and fleeing to safe havens.”

Evidently, US futures and European stocks both tumbled, while Treasuries rallied. Gold jumped the most in almost two years, even as the dollar strengthened. Bullion priced in euros even hit an all-time high…read more.

Irish Central Bank Raises Gold Reserves By 33%, Worried About Inflation

Recently the Central Bank of Ireland joined the ranks of sovereign gold buyers, adding 2 tonnes of gold to its monetary gold reserves in 2 months, consisting of a tonne of gold bought in each of September and October 2021.

While in relative terms, the actual quantity of gold added by the Irish central bank was quite small, in percentage terms it was very substantial, since in August Ireland only held 6 tonnes of gold (supposedly held at the Bank of England), and as of the end of October Ireland now holds 8 tonnes of gold, i.e. a 33% increase (and a significant number for those in the know).

For example, during October 2021, while three of the four largest sovereign buyers of gold in the world were the notable gold aficionados namely Kazakhstan (6 tonnes), India (3.8 tonnes), and Russia (3 tonnes), the fourth, was Ireland (1 tonne), not what you would expect…read more.

 

China Creates New State-Owned Mining Giant To Tighten Control Of Rare Earth Supplies

Now that aggressive foreign policy toward China has attracted bipartisan consensus, evidenced by the fact that President Biden has opted to keep certain tariffs imposed by the Trump Administration in place, Beijing is looking for new ways to squeeze Washington. For years now, we have been warning about the risk of China cutting off supplies of 17 rare earth metals critical for the production of tech gadgets.

Earlier this year, we reported that Beijing was keeping a rare-earth export ban in its “back pocket”. Now, it appears the CCP is moving to tighten state control over rare earth production so that they might more easily control who gets the metals.

Whereas rare earth metals were previously mined by six major Chinese firms, the CCP is merging assets from several state-owned firms to create China Rare Earth Group. The new mining giant will be based in resource-rich Jiangxi Province; it’s expected to allow Beijing more leverage over the supply, and by extension, the price, of these incredibly valuable commodities that are essential for the production of chips and other components used in high-tech products from computers to weapons systems.

China is believed to control up to 90% of global supplies of rare earth metals. Only a small number of rare earth mining operations exist outside China. As for where the rest are mined, the chart below offers some insight…read more.

Singapore piles into gold for the first since 2000

The central bank of Singapore increased its gold reserves by 20% this year, buying gold for the first time in two decades.

The gold purchase was made between May and June, totaling 26.35 metric tons, according to the data from the Monetary Authority of Singapore’s (MAS) International Reserves and Foreign Currency Liquidity report.

This boosted Singapore’s total gold reserves to a reported 153.76 tons.

The gold acquisition was only noticed when the data was included in the International Monetary Fund’s (IMF) monthly update. According to the IMF numbers, this was the first increase in Singapore’s gold reserves since 2000.

It is unclear how much MAS, Singapore’s central bank, paid for the gold bullion. But according to Monday’s gold price, the acquisition would be worth around $1.5 billion.

The purchase was also highlighted by the World Gold Council’s senior analyst Krishan Gopaul, who tweeted last week: “Here’s something interesting in the latest IMF stats: The Monetary Authority of Singapore added 26t of #gold to its reserves over May and June 2021. This is its first gold purchase since at least 2000, and another instance of a developed market CB buying (along with Ireland).”

Singapore’s central bank chose not to advertise the significant increase in its gold holdings. And many analysts are trying to figure out why such a large acquisition went under the radar…read more.