Deutsche Bank: ‘Low Probability’ European Officials Would Use Gold For Debt Crisis Kitco News - Market Nuggets

Market Nuggets: Deutsche Bank: ‘Low Probability’ European Officials Would Use Gold For Debt Crisis

21 October 2011, 10:45 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -Deutsche Bank doubts European officials will use gold holdings for programs to deal with the continent’s sovereign-debt crisis. “In the past, gold has been a useful asset for European governments as they attempted to reduce budget deficits and outstanding debt levels in the run-up to EMU entry, which was assisted by profit transfers from central banks to national governments when gold was valued at market prices rather than book value,” the bank says. “However, we attach a low probability of European officials using gold reserves in the context of the euro crisis. Gold holdings are still in the possession of national governments but are ring-fenced from the authorities by the eurosystem. Moreover, in terms of valuation, euro-area gold holdings represent little more than 6% of public debt outstanding.”

By Allen Sykora of Kitco News; asykora@kitco.com

Deutsche Bank: Gold May Trade Sideways Next Two Months

21 October 2011, 11:03 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -Deutsche bank says gold may trade sideways for a while, as was the case with silver when it corrected last spring. Gold corrected sharply lower in September. “We expected the events in the gold market might replicate what occurred in the silver market earlier in 2011,” the bank says. “Indeed when silver prices corrected by 30% in the second quarter of this year, prices then traded broadly sideways for two months. We expect a similar fate threatens the near-term outlook for gold.” For the rest of this year and next, Deutsche Bank has not revised its gold forecasts listed in a weekly commodities report. It looks for $1,750 an ounce in the current quarter. For the four quarters of 2012, it looks for $1,750, $1,850, $2,000 and $2,000, with a full-year 2012 forecast of $1,900.

By Allen Sykora of Kitco News; asykora@kitco.com

Kitco News - Market Nuggets

Uranium explorer Hathor`s White Knight is Rio Tinto - URANIUM | Mineweb

Uranium explorer Hathor's White Knight is Rio Tinto

Mining giant Rio Tinto has made a C$578 million bid for Hathor Exploration, targeting primarily the latter's Roughrider uranium find. The friendly bid has been approved by the latter's Board and recommended to Hathor shareholders.

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See the whole story here:

Mineweb.com - The world's premier mining and mining investment website Uranium explorer Hathor`s White Knight is Rio Tinto - URANIUM | Mineweb

The MasterMetals Blog

Commodity trade suffers as French curb credit - FT.com

Commodity trade suffers as French curb credit

FT.com

By Javier Blas in London

Getty

Trade finance is a huge business, with lending hitting $114bn in the first nine months, down 6 per cent year-on-year, according to Dealogic.

The European banking crisis is spilling over into commodities trading with French banks, the main financiers of trading houses, reining in their lending.

BNP Paribas and a handful of other European banks, including Société Générale and Crédit Agricole, provide most of the credit lines that underpin the business of the publicity shy Swiss-based traders that dominate commodities markets.

BNP’s Geneva branch alone accounts for up to a quarter of the sector’s credit, according to industry estimates. The bank said commodity trade finance activities “will be part” of its “global deleveraging effort”, but it “had no intention to exit the business”.

Industry executives and bankers said the top traders, including Glencore, Vitol and Cargill, were unlikely to be affected by the credit crunch but small and medium-sized trading houses were already suffering.

Harris Antoniou, head of energy, commodities and transportation at ABN Amro in Amsterdam, said: “There is nervousness in the market. Mid-sized companies in particular feel there may be a need to diversify their funding sources.”

The drive by French banks to reduce the size of their balance sheets is exacerbating the adverse impact on commodities trade finance of the new Basel III capital rules. The new regulation, which phases in over the next seven years, makes the issuance of letters of credit far more onerous than in the past. While banks needed to hold capital equal to just 20 per cent of the value of letters of credit under the old Basel II rules, the new agreement raises the bar to 100 per cent, greatly increasing the cost of lending.

Read the whole story here:

Commodity trade suffers as French curb credit - FT.com