…undermine US political and economic dominance? UBS reported on very strong buying out of Switzerland:… … “Gold opened weakly in Comex trading on Wednesday, under pressure from the strong dollar and this led Comex traders to try gold from the short side early on before some weighty Swiss buying, probably speculative in nature, wrong-sided the market and gold never looked back after that.”

Gold imports into Turkey for July were reported by The Istanbul Gold Exchange. It was a record month for gold imports with 34.625 tonnes imported. The Istanbul Gold Exchange started recording data eleven years ago and this figure has never been surpassed. It was a significant 50.3% higher than June and 1.8% above the level of July last year, the previous record. So far this year imports are 21.2% above last year's imports which were themselves a record.

The Istanbul Gold Exchange is where many buyers in the Middle East acquire bullion. Geopolitical uncertainty, terrorism, the threat of a war with Iran and the 'war on terror' are undoubtedly underpinning strong demand from the region. Also record oil prices are filling the coffers of oil producing countries in the region and some of these petrodollars are being recycled into gold.

Commonwealth Bank of Australia commented on this in a report which was quoted in Reuters and can be found in our Opinions of the Week section:

“Strength in both China’s economy and currency and heightened investor interest should support Asian gold demand over the next year. And with rivers of energy dollars flowing into the Middle East, demand there shouldn’t be too shabby either,”

NM Rothschild & Sons (Australia) Ltd said that China's currency revaluation is expected to boost domestic demand for gold and help provide a base for gold prices.

“Without a doubt, revaluation is going to underpin metal prices, particularly gold, by making them more affordable from a Chinese standpoint,” said Darren Heathcote, head of trading at N M Rothschild & Sons (Australia) Ltd.

Interestingly Rothchild's noted that India imports some 700 tonnes of gold per annum while China imported only 230 tonnes last year which was up 13% on the previous year.

“I could see demand (growth) rising toward 20% this year from about 13% last year and it's only a matter of years before we see (China) up there with India in terms of overall quantity,” Heathcote said.

HSBC had some excellent research on seasonality in gold prices and how August and particularly September have historically seen the best performance of gold:

“July historically has been a poor month for gold. Over the last fifteen years the average monthly price movement during July has been a decline of USD1.56/oz, while over the last five years July has seen an average fall of USD5.93/oz.

Indeed, over the more recent period, July has been the worst month of the year for gold.

Since 1990, gold has risen in July only five times, and fallen in eleven, while since 2000 gold has risen only once (2003 when gold rallied USD4.40/oz) and fallen five times.

The good news though is that August, and particularly September have historically been good months for gold. True, since 1990 gold has been little changed on average through August, and has risen eight times and fallen seven, although the performance since 2000 has been more impressive. Gold has risen in four of the last five Augusts and has fallen only once, averaging a rise of USD11.18/oz. September has been a more reliable month, with gold price rises averaging USD9.06/oz since 1990 and USD8.21/oz since 2000. Over the last fifteen years gold prices have rallied through September twelve times, over the last five years gold has increased four times. (a USD3/oz fall in 2000 the exception).”

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