Saudi Arabia buys $3.5bn of gold in two weeks
Posted on 13 November 2008 with no comments from readers
There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.
Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.
He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.
Gold is currently trading at prices similar to a year ago, and 30 per cent off its March peak. Saudi investors clearly think this is the right time to buy and are piling into gold.
News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.
Market analysts such as the legendary gold bug Jim Sinclair have pointed out that if less than two thousand millionaires insisted on delivery of physical gold at the end of their futures contracts, as is their legal right, then the spot gold market would jump to new highs.
Saudi Arabian investors have spotted a bargain, and it may be a much better one than they think.
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no Comments posted by readers:
A very clear signal by private investors in support of a clear-cut currency de-pegging for all gulf countries.
I would be delighted to have an entry on your blog on that subject, de-pegging and Gulf states monetary policies.
Why would a de-peg be beneficial?
The first thing that comes to mind is a floating or Central Bank-controlled currency that will just wilt under whatever financial and economic pressures are out there.
Also, if crude oil is headed south towards $35, don’t you think the local currency will take a hit?
If anything, the Central Bank did the correct thing by not de-pegging the Dirham. At least inflation gets reigned in somewhat and travelling to Europe and Asia becomes less of a financial burden.
I’m npot sure I believe this. The reports from all over the globe are that there is very little bullion available anywhere. Just where did they find 3.5 billion worth?
In that connection, what do you think of the today’s article linked below….?
http://www.moneyandmarkets.com/the-g-20s-secret-debt-solution-27996
Really enjoy your blog
4. Very interesting, but I am not an expert in these matters, and 3. presumably somebody sold it to them for more than the spot price.
Peter,
Regarding your book, you think there’s still money to be made in Dubai esp. with the US heading into depression..! Everything is linked these days..Dubai is fabulous though..
Thx
I would suggest they got it for spot or maybe less. Anything to keep them out of the comex and cal enough to continue holding dollars.
And I doubt they actually took physical possession of it. Still sitting in the vault of the NY Federal Reserve, just moved from one account to another on their computer.
Its a strange and desperate world out there at the central bank level.
Would it be possible for you to source the entire story you are quoting from.
I am absolutely delighted to see the House of Saud exercising its independence, whatever they choose to do with it. The sun rises in the east, and the people will bask in its warmth. I have no doubt of that.
The people in the east, and perhaps the west, may see a 21st century end to a 20th century financial crisis if the black gold of oil joins with yellow gold. We may yet live to see sound money, handled by wise people. We’ll see. Time tells all. I’m delighted that Saudi Arabia chooses oil and gold over mere, tawdry paper promises made by the west.
P.S. And the Middle East retains its land, and people. The riches of the earth are these: land, gold, silver, and in the 20th century: oil, and the talents of people. Just my opinion. It’s wonderful to see it come to pass in my lifetime. All the paper promises were a mirage. Twas ever thus.
I tend to think the Arabs purchase of the gold in part created the shortage. The press is reporting past tense events.
Did the Saudi’s sell US dollars for gold bullion?
The Middle Eastern contries are moving to a ” common market”, they have said, ” eventually, oil will not be priced ONLY in dollars,it will include local currency, the dollar and perhaps, GOLD.
That is some intriguing news. Thanks, Peter.
Here is the full story from Gulf News. The newspaper completely missed the significance of the story and buried it on an inside page – also if you are unfamiliar with the UAE currency you would not know this was $3.5bn. The fact that this great news story was completely bungled suggests it is genuine and not some kind of attempt to hike gold prices. Anybody could have done a much better job…see:
http://archive.gulfnews.com/articles/08/11/13/10259112.html
If the Saudi’s did indeed buy all that gold, why hasn’t the price been driven up? Platinum went up more!
Wow, that sure is a LOT of gold. Must be nice having that kid of money laying around!
jess
http://www.internet-anonymity.net.tc
On 16. The spot price is controlled by the futures market – physical gold can be traded without the volume appearing on any market measure. However, over time this just has to have a impact on the price, which clearly should be much higher than it is, and it will be once the selling by hedge funds in the futures market stops.
[...] Saudis buying gold – are you? [...]
Well, for the sensationalists this is an oportunity to refresh the Amerco-hystery , according to which we’re only 4 months away from the us economy to collapse ….hahaha, buy gold quick!
I’d be more concerned about the $700 billion we just handed over to the numb-nuts that got us into this mess in the first place…. To hell with the camel jockeys and their gold…
what if? What if the Saudis are thinking three steps ahead;
laying the groundwork now to be the global bank of tomorrow, backing the world’s currencies with the gold they possess?
Could be a replay of the Hunt brothers playing with the silver market in the 70’s.
Peter — Can you provide a link to a reliable source to corroborate your claims about the Saudi gold purchases?
good article. thanks
Here is the link to the source
http://archive.gulfnews.com/articles/08/11/13/10259112.html
$3.5B at $750/oz is 4.67M oz or 2.333 TONS of gold. I also ask WHERE this quantity would be available, given the apparent shortage of physical metal?
[...] “TEHRAN (Reuters) – Iran has converted financial reserves into gold to avoid future problems,” Saudi Arabia buys $3.5bn of gold in two weeks “There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 [...]
Response to comment 26 from Rick…try Fort Knox. US reserves are getting a tan in the gulf!!
could any body provide me a link to get accurate current price of gold in saudi arabia….thanks for your help buddy
Before doing conversions, be sure to know what system you are using. Precious metals are sold by the TROY ounce (metric) which is not the same as the pounds/ounces/tons most people are familiar with. 4,666,667 troy ounces is equal to about 160 tons, or 145.15 metric tons (tonnes). Refer to the following for proper conversions: http://www.metric-conversions.org/weight/troy-ounce-conversion.htm
Also, do not confuse the RETAIL gold market (coins and small bars) with the large 400 oz bars which are still in prevalent supply.
Now if they had used that money to purchase silver, this would have been a MUCH bigger story.
Everyone outside the US are stocking up on gold now, not just the retail bullion consumers. That should say something about US dollar investments. All those trillions of new dollars are going to hit the market at some point soon.
Mark
DGCmagazine
It just doesn’t make sense. How can you have those Arab nations buying 1B worth of gold while at the same time gold is still struggling below $750. Where do they buy those gold from? Directly from producers? From the futures market and then taking delivery? It can’t be from the futures market since gold is still struggling below $750. Directly from gold producers? How come we don’t see much higher gold revenue from gold companies then?
Also, why buy gold from producers if you can own those gold producers, which mostly have resources trading below $50.
Below $700 an ounce most gold producers are losing money, so buying their shares might be more risky than stocking up on gold if you are really conservative about retaining value. I think it is too conservative, and you might at least want to include some precious metal stocks. But then we do not know what other assets these guys hold – they might be the biggest gold stock owners in the world. As for where the gold came from, I have no idea but I am sure billions in gold is held outside the official system – it is that kind of asset. What about KingTut’s gold in the Cairo Museum?
There are Australian gold producers making >A$400 an ounce selling at spot gold in Aussie dollars at around A$1200 an ounce. Some of the leaner Australian listed gold producers are trading at around their market cap and represent great value. There has been a disconnect recently between the gold price and currencies.
How does buying physical gold (that probably doesn’t exist) increase the value of the same amount of gold in the same vault? Our Government, the Illuminati and Elitists seem to be running scams on the Arab world. Guess they have been the last to resist and now they believe the hype?
I think you would find that people paying $3.5 billion for gold will have carried out extensive due diligence and seen the stuff themselves – the idiots are the guys not buying!
Ok. So I heard about this deal through my ex because her uncle is apparently receiving a $100 million in commission from it (and he’s not the only one receiving a %). He has a criminal history and absolutely no education/training/certification when it comes to a $3.5 billion deal. How the hell is he benefiting when it is supposedly coming out of US Reserves? This is bullshit! Why would they give away the gold for paper money that will eventually become useless when the dollar fails? Additionally, the alleged company he works for is a new one. How is this possible? Does anyone know the name of this company?
Check this out that I found about this guy who pulled of a major gold deal for saudi.
http://www.goldpreciousmetals.com/Gold_article3.html
http://www.bi-me.com/main.php?id=19581&t=1&c=33&cg=4
http://www.allheadlinenews.com/articles/7010787989
The best news I have read in years.
This is the real gold dealer.
GOLD PRICE INCREASING DAY BY DAY.
CURRENT SITUATION OF THE MARKET NEEDED.
PLEASE NOTE THAT THIS INCREASE EFFECTION IN PRICES WHAT SITUATION SHOULD BE CREATED IN FUTURE.
Hi, i would like to beg gold market prices of uptodate per how much SR per 10 grams.