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Detroit halts $39.7 million in debt payments

June 17, 2013 -- Detroit is halting its payments on $2 billion of unsecured debts, offering city assets for sale, and telling citizens they need rely on public health-care, Bloomberg reported.

Last week, Detroit’s emergency manager, Kevyn Orr issued a 128-page restructuring plan for the beleaguered city. The plan was presented to creditors and was part of a $1.25 billion plan to bolster safety in the city and remove blight. Orr stated that plan is set to span 10 years and its goal is to give the currently insolvent city a viable future.

 “We have to strike a balance between the legacy obligations to our creditors and our employees and retirees and the duty as a city to 700,000 residents for lights, police, fire, emergency management, cleaning the streets,” Orr told reporters following the meeting.

Having missed $39.7 million in debt payments last week, Detroit became the largest city in the U.S. to default since Cleveland did so in 1978. Bloomberg reported that unsecured creditors may receive less than 10 cents on the dollar under the deal Orr proposed to the more than 100 creditors and union officials who attended his Wednesday meeting.

Other adjustments include the potential sale or lease of the city’s parking operations, while shuttering the city departments that manage and operate Detroit’s nine garages, two parking lots, and 3,404 metered street parking spaces. The city also intends to lease the 982-acre Belle Isle Municipal Park to the state of Michigan, saving itself $6 million a year.

Active and retired workers would see their pensions reduced under the plan, and the city wants to replace its retiree health-care plan with one relying on federal insurance exchanges under Obama’s patient Protection and Affordable Care Act or Medicare with city supplements, according to the report.

“After the meeting, Standard & Poor’s lowered the rating on the city’s general-obligation debt to CC from CCC- minus with a negative outlook. That’s 10 steps below investment grade,”wrote Bloomberg’s Brian Chappatta, Chris Christoff and Mark Niquette.

“We’re starting our first step,” Orr said. “This isn’t meant to be hostile or it’s not meant to be combative. This is meant to be an acknowledgment and a recognition of the realities that we can no longer deal with.”

Click here to read the entire story at Bloomberg.

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Unexpected report showing May inflation prompts gold to tick up at the close of the week

June 15, 2013 -- Gold ticked up on Friday after a report revealed inflation rose unexpectedly in May, reported TheStreet.

“The Bureau of Labor Statistics reported Friday that producer price index headline inflation for May rose 0.5 percent month-over-month, which was higher than the 0.1 percent rise economists polled by Thomson Reuters had expected,” wrote TheStreet’s Joe Deaux. “The report attributed the rise to higher food and energy prices. Gold prices popped off the flatline shortly after the report printed.”

The price of gold began to tick higher on the COMEX late on Thursday afternoon, following a report from the Wall Street Journal that the Federal Reserve is not expecting to raise short-term interest rates. In his article on TheStreet, Deaux suggests that behavior was evidence that traders had made bets that the Fed wouldn’t be curbing its Quantitative Easing stimulus program. The program is notorious for boosting inflation concerns since it was introduced during the 2008 global financial crisis.

Other factors pushed gold down slightly, until the release of the inflation data on Friday.

“Investors often view gold as a hedge against inflation,” wrote Deaux.

"Obviously the Fed's the biggest game in the news right now," said Frank Trotter, president of EverBank Direct. "I think certainty is the game we aren't seeing at all here in the middle of the year."

“The consumer price index will report inflation for consumers on Tuesday as Fed bankers convene for its latest policy-making meeting,” wrote Deaux. “Fed Chairman Ben Bernanke and many other central bankers have shown little concern for higher inflation, but a tick up in CPI coupled with Friday's rise in PPI could offer some pause.”

But investors and traders are expected to focus on the Fed’s policy statement, economic projections, and other statements when it holds its press conference on Wednesday.

EverBank's Trotter said gold prices have found a range to trade in ahead of the Fed meeting, and said he expects the yellow metal to trade near its current price until the central bank acts or a global event occurs.

Click here to read the full story on TheStreet.

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United States to shut down flow of gold to Iran from Turkey and UAE

May 20, 2013 -- The US has taken further steps to squelch the movement of gold to Iran, further undermining the Islamic Republic’s plummeting currency, reported Fox News. The article stated that such a move is “more likely to hurt ordinary citizens than the rogue regime's leadership.”

Iran is been the target of U.S.-led sanctions targeting the banking system and oil exports.

As of July 1, the US will crack down on all transfers of gold to Iran, whether they are being made to Iranian citizens or the government itself. The move is primarily intended to address the flow of gold from bankers in Turkey and in the United Arab Emirates, who have shipped large amounts of gold to Iran’s capital of Tehran. It is believed that they are attempting to prop up the Iranian currency, the rial.

"We have been very clear with the governments of Turkey and the UAE and elsewhere, as well as the private sector that is involved in the gold trade, that as of July 1 all must stop, not just the trade to the government," said Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen in a statement to the Senate Foreign Affairs Committee last week.

As of press time, no companies in Turkey or the UAE have been penalized by the Obama administration for trading with Iran in gold.

This past February, Iran’s central bank stated that it possesses 907 tons of gold in reserves. Meanwhile, the rial has lost two-thirds of its value against the US dollar since 2011.

"There's a tremendous demand for gold among private Iranian citizens, which in some respects is an indication of the success of our sanctions," said Cohen. "They are dumping their rials to buy gold as a way to try to preserve their wealth. That is, I think, an indication that they recognize that the value of their currency is declining."

Click here to read the entire article on Fox News.

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Stays at luxury Dubai hotel now include gold-plated iPad

May 20, 2013 -- Upon check-in to the Burj Al Arab in Dubai, a hotel that awarded itself a seven-star rating and calls itself the most luxurious hotel in the world, guests now receive a new amenity – a gold-plated iPad, reported The Telegraph, a British newspaper based in London.

With the name and slogan of the hotel engraved on their gold cases, the 24-karat tablets are valued at $10,000 and boast a concierge app for the Burj Al Arab. 

In a statement, the hotel said the gold iPad was introduced as a way of differentiating itself from its competitors. The statement referred to the gold-cased iPad as “the ultimate in luxury accessories.”

The limited edition iPad was designed by Gold & Co., a London-based design firm that specializes in creating gold-plated electronics and luxury items.

“We manufacture the finest gold-plated products for discriminating customers. Each limited-edition item is individually numbered to ensure exclusivity,” reads a statement on the Gold & Co. website. “Our assortment includes the most highly rated, in-demand electronic devices on the market today, including the iPad 3, iPhone 4S, Apple MacBook Pro, Apple iMac, Blackberry 9900 and Porsche Design P9981.” 

The hotel is known for making elaborate displays. The fourth tallest hotel in the world, the hotel is know for is curved, sail-inspired shape and the rooftop helicopter pad that juts out into open air.

Guests of the Burj Al Arab are obligated to return the precious metal-laden iPad when they check out.

Click here to see the whole article and to view more photos of the Burj Al Arab’s gold-plated iPad.

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Apparent gold heist results in disappearance of $625,000 in gold from Miami airport

May 17, 2013 – Gold shipment valued at $625,000 disappeared from an American Airlines flight after arriving in Miami. Authorities suspect it was a heist, reported Fox News.

Landing atMiami International Airport, the flight originated from Guayaquil, Ecuador, and the gold was stored aboard the flight in a box loaded into the plane’s cargo hold, according to the police report filed.

Crew members unloaded the plane’s cargo, but after being places on to a motorized luggage cart, the gold-laden box disappeared.

It wasn’t clear who owned the gold, or what its final destination may have been. American Airlines declined to comment on the incident and told Reuters that the case was being investigated by the FBI.

"The FBI is aware of the situation," FBI spokesman Michael Leverock told Reuters in an email when questioned about the missing gold.

Gold produced in South America is often transported through Miami and exported to other countries, primarily Switzerland, to be refined. Miami has become a major trans-shipment point for large quantities of unwrought gold and gold bullion.

As gold’s price has risen in recent years, trans-shipment of the precious metal through Miami has increases sharply. This has made gold Miami’s top import. It was valued at almost $8 billion in 2012. Most of it came from Mexico and Colombia, and almost all was in transit to Switzerland, according to World City, a Miami-based publication that tracks trade data.

South Africa imported a mysterious $1.1 billion in gold from the US in March

May 15 -- Since September 2012, South Africa has twice imported massive shipments of unwrought gold – an odd occurrence given that gold and other metals mined in the country is a primary export, reported Quartz.

Writers at Quartz noticed the anomaly while reviewing US trade data, noticing that in January 2013 South Africa’s $402 million trade surplus with the U.S. flipped and became a $689 million deficit by March. It pinpointed that the $1.1 billion differential could be entirely attributable to large shipments of gold from the U.S. to South Africa in February and March.

The article stated that 20,013 kilograms of unwrought gold, worth $982 million at the time was transported to South Africa from New York’s John F. Kennedy International Airport (JFK). This data was discovered in information released by the U.S. Census Trade Division.

The term “unwrought gold” refers to gold that has not been formed into bullion, jewelry, powder, or currency. Both cast bars and bars created from gold scrap count as unwrought gold.

The shipments from JFK were the only unwrought gold to leave the US for South Africa in 2013; another large shipment occurred in September 2012.

South Africa’s mining industry is massive, although output has been declining for decades, and it is primarily and exporter. Most South Africans are legally forbidden from importing or owning unwrought gold. Refiners, dealers and jewelers are issued permits.

Gold output fell sharply last year, at the time of another large gold shipment from New York in September 2012.

The article on Quartz suggested that perhaps it was the South African Mint that imported the gold from the U.S. It produces legal Krugerands, which are refined by the Rand refinery.

The shipments to South Africa amount to 16% of all unwrought gold exported through JFK in the first three months of 2013. The gold was not necessarily shipped at the same time, but it could have been. It would have taken up about the same amount of space on a plane as a washing machine.

Click here to visit Quartz and read more about this mystery, and view charts showing South Africa’s spikes of gold important. 

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Gold growth based on demand for physical gold as hedge fund speculators move on

May 13, 2013 – Gold dropped dramatically in mid-April, but many buyers remain bullish on the precious metal.

“When the price of gold plunged $200 last month, many people thought they caught the sound of a bubble popping,” wrote Matthew Craft for the Associated Press.

In his article, he pointed to the thousands of people still buying up physical gold bullion and certified gold coins in the U.S. and abroad.

“None of the reasons they give for buying gold have changed: Gold remains a refuge from disaster, they say, arguing that a steep drop in the dollar and a spike in the price of consumer goods are a threat,” wrote Craft.

In the article, Craft outlines the rise of the precious metal from the days of the housing market starting to crack and the stock market sinking in 2007 through last month’s drop below $1,361 and recent unsteady climb back up above $1,440. After talking to various gold experts, he finds people projecting gold to move up, down, and sideways in the coming months and year.

The article points to 2009, when hedge funds and big investors began to join the gold rally.

“Instead of buying gold bricks and stashing them in their basement, many hedge funds and big investors turned to buying gold exchange-traded funds, which trade on markets like stocks,” wrote Craft. “The most popular offering, the SPDR Gold Trust, attracted big investors like John Paulsen, who made billions betting on the mortgage meltdown, and George Soros.”

Paulsen and Soros have since slashed their stakes in the SPDR Gold Trust by the end of 2012. Many hedge funds and big investor speculators followed suit.

Investors in SPDR never take possession the physical gold because they do not own it outright. Instead those investors own equity in the trust, which is the owner of the gold. They hold an ownership stock in the gold-owning trust. Such stock also known as “paper gold.”

Craft cites sources projecting the precious yellow metal will still rise to $2,000 as a result of the Fed’s rampant spending, while others believe the commercial value of gold is closer to $800.

Click here to view Craft’s entire article at the Associated Press. 

India retailers expect to sell record levels of physical gold on Monday’s national holiday

May 12, 2013 – Jewelers and physical gold sellers in India are anticipating record sales on Monday, the Hindu holiday Akshay Tritiy, reported India’s Daily News & Analysis.

The Akshay Tritiy holiday is believed to be an auspicious day, and Hindi believe that new endeavors begun on this day are to blessed. In recent years jewelers have successfully introduced a tradition of gold buying. With the recent drop in the price of gold in mid-April, experts expect demand to reach new highs.

“The market has been stable for almost a month now. We hope sales to be more than what it was last year on Akshay Tritiya, by at least 30%,” said Dinesh Jain, the owner of five jewelry stores and the former director of an Indian trade association. 

“Gold prices are lower than what it was two months back — almost 500 rupees less. People will surely rush to buy gold. Each year on Akshay Tritiya, we sell about 450 kilograms of gold. This year it will easily be a ton or even more.”

Buying gold is believed to bring good fortune.

In the month since April 15 when the price of gold dropped dramatically, demand for physical gold has shot up in India, China, Japan and the U.S. Gold jewelry and gold coins have both been popular options, and some retailers found themselves without inventory as demand for gold outstripped the supply from their pipeline. 

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Notorious scientist intended to extract gold from seawater to pay Germany’s war debt

May 10, 2013 -- German scientist and 1918 Nobel Prize winner Fritz Haber once sought to help his country pay its World War I reparations with a scheme that would extract trace amounts of gold from the ocean. Haber also created many of Germany’s chemical weapons used in the second decade of the 20th Century.

In a history story published on io9.com, writer Keith Veronese detailed Haber’s wartime inventions, which included the weaponization of chlorine gas and the creation of several other weapons of mass destruction. Haber was an expert on electrochemistry and gaseous chemical interactions.

In 1919, at the conclusion of World War I, the Treaty of Versailles dictated that Germany must pay between 50 and 132 billionGerman gold marks to France, Britain, and Russia.

“This was a huge blow to a war-torn economy — the upper end of that figure comes close to half a trillion dollars, when adjusted for inflation,” wrote Veronese.

Once again aspiring to assist his homeland, Haber deduced a plan to extract that gold from the sea and help Germany pay its obligations. Seawater contains a vast array of elements in microscopic amounts. He believed that the gold within the oceans could be extracted and compiled, opening up a new source of revenue for his country.

“To extract gold, Haber planned to separate the acquired seawater using massive centrifuges and his expertise in electrochemistry. Concentrating the gold would consume a phenomenal amount of energy, but at the estimated acquisition rate, an energy cost that would leave Germany with a large profit margin,” wrote Veronese.

Haber’s initial estimates concluded that a metric ton of seawater would yield 65 milligrams of gold bullion. However, in a two-year trial launched by the German government, Haber discovered an error in his calculations, and realized that his estimates of the yield were a thousand times larger than the actual gold content of the sea.

In his plan, the gold collected would not have covered the cost of extracting it from the sea. So the plan was shelved.

Read the full story at io9.com for more on Haber and his wartime and peacetime innovation.

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Chinese demand for physical gold hits all-time high

May 8, 2013 -- China’s physical gold imports more than doubled to an all-time high this spring as Chinese consumers and investors locked up more gold, Bloomberg reported on Tuesday. China is second only to India in consumer gold purchases and is the world’s second-largest economy.

Buyers on the Chinese mainland bought 223,519 kilograms, including scrap, from Hong Kong in March. This is a dramatic increase over the 97,106 kilograms purchased in February. The Hong Kong government released this data on Monday.

Bloombergcalculated net imports by China’s mainland ere 130,038 kilograms in March, compared with 60,947 kilograms the prior month. To fully measure mainland China’s appetite for precious gold bullion, Bloomberg deducted the flow of physical gold from the mainland into Hong Kong to arrive at its adjusted estimate.

This demand reflects the period before the price of gold dramatically fell into a near market in April 15, the worst drop in three decades. The sharply decreased priced led to surging demoing for physical gold in the form of coins, bullion bars, and jewelry from buyers in China, India, Japan and the U.S.

“This is quite out of expectation as all these imports were done before the market slump in April,” Qu Mingyu, a trader at Bank of China told Bloomberg. “Judging from the explosive growth of trading volume on the Shanghai Gold Exchange in the second half of April, and anecdotes that many jewelry shops are sold out throughout the country, imports might be even more substantial in April.”

The Bank of China one of the three largest bullion banks in China.

After the dramatic price of gold bullion on in mid-April, retail gold sales tripled across China, according to the China Gold Association. On May 2, the deputy head of the association said that China is experiencing a shortage of gold jewelry inventory after consumers bought up the raw materials. Manufacturers are themselves increasing raw material purchases in order to ramp up production.

Separate data yesterday showed China’s gold usage rose 26 percent in the first quarter as prices fell.

China and India account for more than half of global demand.

Click here to read the full article from Bloomberg. 

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  • Updated: 06/18/2013 5:30:43 pm