The chronological events of 2013 set the background for gold in 2014. It was a momentous year which should ensure a rise in the gold price in 2014.
Before 2013 demand for physical ETFs was high. At the same time Asian demand, from China, India, Turkey and elsewhere, was accelerating leaving Western bullion markets increasingly short of physical liquidity. Hong Kong and China between them in 2012 had absorbed on official figures 1,458 tonnes, and India a further 988 tonnes, ensuring 2013 kicked off with more global demand than available supply from mines and scrap.
The following is a list of subsequent important developments in 2013.
1. Germany’s Bundesbank announced in January that it would recall 300 tonnes of its gold stored at the New York Fed by 2020. The Bundesbank was criticised for this decision, since gold held in New York amounted to 1,536 tonnes, so why take seven years to repatriate less than 20% of it? In the event by the year-end only five tonnes had been repatriated, fuelling rumours that it didn’t actually exist other than as a book entry.
2. The Cyprus bail-in debacle in February alerted everyone to the new bail-in procedures being adopted by all G20 member states. Wealthy depositors in the Eurozone suddenly realised their deposits were at risk of confiscation. Governments were no longer going to bail out large euro depositors, let alone those with bullion accounts.
3. The new bail-in regime was followed by ABN-AMRO and Rabobank’s refusal to deliver physical gold to their account-holders, offering currency settlement instead. Many interpreted this as evidence of long-term holders attempting to withdraw physical bullion.
4. By end-March it was becoming clear that growing demand for physical bullion was a potential systemic problem. This was followed in April by a co-ordinated attack on the gold price to persuade the investing public that gold was in a bear market.
Source Gold Eagle