Silver at Four-Year Low

Release Date: 
Friday, September 19, 2014

Gold and Silver Prices

Gold prices fell following the Federal Open Market Committee meeting earlier in the week, and silver prices fell to four-year lows on Friday. “Gold futures fell to an eight-month low as equities surged to a record, crimping demand for the precious metal as an alternative asset. Silver tumbled below $18 an ounce to the cheapest in four years. Gold dropped for the third straight week after the Federal Reserve raised its estimate for a key lending rate even as policy makers affirmed a pledge to keep borrowing costs close to zero percent for a considerable time.” (“Gold Falls on Equity Rally; Silver Drops to Four-Year Low,” Bloomberg, 9/18/14.)

Gold finished the week at $1,217.20, down $11.70. Silver prices closed the week down $0.74, finishing at $17.89.

China Adding to Gold Reserves

Although China does not disclose its holdings, many experts believe China’s central bank will increase its gold reserves.

“China may join other emerging countries in boosting gold reserves as the precious metal makes up a smaller share of its foreign-exchange holdings compared with developed economies, said a London-based researcher. ‘It is clear that western central banks over time will be reducing their reserves and China and other Asian countries will be increasing,’ David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in a Sept. 11 interview in Beijing. ‘Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.’”  (“China May Boost Gold Reserves Amid Imbalances in Holdings,” Bloomberg, 9/15/14.)

China Looks to Shift Control of Gold Market

In a move that many market watchers believe reflects China’s desire to shift dominance in the gold market from the West to the East, Shanghai has started an international bourse to trade gold.

“China will launch a gold exchange open to foreign players for the first time on Thursday, putting the world's top bullion buyer on track to win a race to set the benchmark price in Asia. The Shanghai Gold Exchange (SGE) will launch its international bourse with eleven yuan-denominated gold contracts, the first of a slew of bullion contracts expected in three other countries in the region before the end of the year. A successful take-up could see more gold priced and paid for in yuan rather than the U.S. dollar, challenging the traditional dominance of London and New York in trading.

“Asia, which accounts for about two thirds of global gold consumption, has long been clamouring to gain pricing power over bullion, although previous efforts have failed to win investor backing. China's efforts have the best chance of success, say market players, as it has a huge home market. With imports of over 1,000 tonnes of gold last year and local production of about 400 tonnes, China consumes over a third of global supply.” (“China set to win Asia gold pricing race with new exchange,” Reuters, 9/18/14.)

China Hacks Defense Contractors

Chinese hackers successfully accessed the databases of at least 20 defense contractors, placing highly sensitive information at risk.

“China committed about 20 cyberattacks across a year-long period on defense contractors working with the government agency responsible for the transportation of military forces and equipment…Fifty attempted intrusions were detected, 20 of which were deemed successful and sophisticated enough to pose an advanced threat. All of them were linked to Chinese authorities.”

“‘These peacetime intrusions into the networks of key defense contractors are more evidence of China's aggressive actions in cyberspace,’ said Sen. Carl Levin, the committee's Democratic chairman. ‘Our findings are a warning that we must do much more to protect strategically significant share information about intrusions when they do occur.’” (“Report: China Hacked Defense Contractors 20 Times in One Year,” MSN, 9/17/14.)

Global Cyber-Attacks Cause “Immeasurable” Damage

Reports of cyber-attacks continue to be heard from across the globe.

“Security researchers have uncovered a group of hackers that broke into 300 banks, corporations and governments for 12 years without being caught. The hacker collective from Germany exploited a loophole in the UK which enabled them to obtain security certificates to allow them to target organisations in Germany, Switzerland and Austria and access sensitive, confidential data. The damage suffered by their victims in terms of loss of data and compromised security has been described by researchers as ‘immeasurable’. The group[s] were able to access biowarfare plans, according to CyberTinel. ‘We're talking about things like studies on biological warfare and nuclear physics, infrastructure security plans, corporate financial documents,’ said Kobi Ben-Naim from CyberTinel, the security company that blocked the attack.” (“Hackers ‘Swooped’ On Biological Warfare Study,” Sky News, 9/17/14.)

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Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below:

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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