December 2014 Review

Save our Swiss gold’ is rejected, Russia and China continue to add to their gold reserves and Christmas sees demand rise for physical gold. Here’s our roundup of December’s bullion news headlines for gold and silver bullion.

Bullion news – The Swiss reject returning to the gold standard

Switzerland voted overwhelmingly not to return to the gold standard. The referendum was primarily focused on the levels of Switzerland’s gold reserves, but was seen as a step in the direction of returning to the standard.

However the Swiss electorate rejected the measure. The “Save our Swiss gold” proposal required the Swiss National Bank to hold at least 20% of its $538 billion balance in gold, but was rejected by 77% to 23%.

Elsewhere around the world

Central banks in Russia and China continue to add to their gold reserves, and countries such as the Netherlands and Germany are beginning to repatriate their existing gold reserves. It’s also been rumoured that Russia and the former Soviet states are planning to introduce a gold-backed currency to compete directly against the US dollar. Plus, with continued demand for from retail buyers from countries such as India, gold is by no means a forgotten commodity.

India repeals its 80:20 rule

Speaking of India: the end of November saw the Indian government ease its import restrictions on gold. It’s repealed the 80:20 rule that made it mandatory for 20% of all imported gold to be exported before the country accepts more gold shipments. Because of this the beginning of December saw shares in many of India’s jewellery companies rise by as much as 20% as gold sales in the country pick up speed.

Physical demand for gold is up

After a brief crash both silver and gold rebounded. In fact, December saw the demand for buying gold rise after a 4-year low. This climb shows a revived trend for buying the precious metal as a store of value.

The festive season has helped support sales of gold and silver with consumer demand back up and running. Manufacturers are also starting to stock up on the precious metal ahead of autumn festivals in India and the Chinese New Year in February. Imports for the jewellery markets in India and China mean that demand is still strong in these regions.

Gold price remained stable

The middle of December saw the gold price stay relatively steady, despite uncertainty in the market. A note from the Deutsche Bank commented: “The gold price has been remarkably stationary, even versus the Euro.

“Market protagonists appear unwilling to use gold as a hedge against an ECB asset-purchase program, a sovereign default or a Eurozone break-up, at least not if this involves holding a long position over the year-end”.

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