Contrary to some reports of poor physical gold demand, the latest gold price falls seem to have yet again stimulated big demand on at least three continents. It may have already led to arresting the recent price falls but can it do even better for gold?
In the US very strong gold coin sales have been reported by the US Mint. In China the latest reported week of Shanghai Gold Exchange withdrawals were simply enormous for the time of year. India too is reported to be seeing strong demand at the lower prices. And in Australasia the Perth Mint has stated that it has been unable to keep up with demand. No doubt European demand for physical gold in coin and bar form will also be running very high, although we haven’t seen any official figures to confirm this yet. Perhaps the physical demand is at last leading to shortages of available gold and pushing prices higher again – or ...
by Michael Pento: For the past few weeks China has been balancing its desire to keep the equity market from a complete meltdown with courting the international investment community in hope of being a dominant player in the capital and currency markets.
IMF Warns China
But recently the International Monetary Fund (IMF) warned China about its concern over limiting investors' freedom to take equity out of financial markets. These concerns were raised when the IMF met with officials to discuss the chances of including the yuan in the fund's basket of currencies, also known as Special Drawing Rights (SDR).
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In 2014-15, India imported 915.54 tons of gold as against 661.71 tons in the previous financial year.
The importance of Hong Kong as a channel for Chinese gold imports continues to diminish with nearly half of Swiss June gold exports going direct to the mainland.
As we have noted here before, there has been an increasing trend for China to import gold directly via its mainland ports of entry rather than via Hong Kong, which makes Hong Kong to China gold export data less and less relevant. So headlines like the recent one from Bloomberg: China’s gold buying from HK drops to lowest in a year and the accompanying ‘analysis’, which puts it all down to lack of mainland China demand, have to be seen in context and as potentially misleading ...
Eric Sprott: “I don’t think there is any doubt about the world economy rolling over. China has been the major buyer of all products and they’re not holding it together here. They’ve experienced a market crash already, with these huge amounts of debts that the Chinese have taken. The Chinese have created more debt than anybody. Their debt outstanding has increased remarkably….
Rob Arnott: “Commodities have crashed. Emerging-market bonds have cratered. Emerging-market stocks have had a grinding 4 1/2-year bear market. TIPS are down. High-yield bonds are down. So pretty much everything outside of mainstream stocks is flat to down over the last 30 months.
Mainstream Media Propaganda Ramps Up As The World Begins To Unravel
So when the talking heads on TV are talking about ‘New high, new high, new high. Isn’t this wonderful?,’ what they are talking about is the one and only market that is going up, which is mainstream stocks. ...
With the price of gold and silver tumbling recently, today legendary Pierre Lassonde told King World News that a spectacular turn in the gold is coming and China and India will be the key. Lassonde is arguably the greatest company builder in the history of the mining sector. He is past president of Newmont Mining, former chairman of the World Gold Council and current chairman of Franco Nevada.
Lassonde is one of the wealthiest, most respected individuals in the gold world, and as always King World News would like to thank him for sharing his wisdom with our global readers during this critical period in these markets.
Pierre Lassonde: “We are in the dog days of summer, but I believe prices are more likely to be higher in September than what we are seeing today. However, if the U.S. dollar is going to stay on a tear, it will be very difficult for the gold market to work its way higher….
Retail demand in China is now jumping as it is in India, but it has still to reflect in London’s demand. The price rise in London was mainly due to a weaker dollar. But in both India and China premiums are rising with sales doubling in Hong Kong. Retail demand in these countries needs to feed through to Shanghai before we see this demand damage the ‘bear raid’.
One cannot know if the bears will continue their raids or how much gold they have to orchestrate their raids. The triggering of ‘stop loss’ protections has happened but ...
The Shanghai Gold Exchange is the only major official physical gold trading market in the world. All trades on the exchange are settled with the exchange of ownership on physical gold bullion. Paper future contracts do not trade on the SGE. In contrast, trading occurs on the LBMA and Comex in paper gold. The Comex is de facto a 99.999% paper gold exchange for which the percentage metal backing the paper traded is minuscule. The LBMA has been rapidly “catching up” to the Comex in this regard, although on a percentage basis the LBMA experiences a higher amount physical gold exchanged than the Comex.
Because of the way in which the SGE functions, gold withdrawn from the SGE measures the true demand for gold in China in a given time period. All gold – except for the gold purchased by the Peoples Bank of China – purchased by any form of end user must pass through the SGE by law. It is for this reason that “withdrawals” represent the most accurate measurement of demand for gold in China – except the Central Bank’s demand. ...
This is really fascinating. At some point gold's price will rise in the light of this demand. At least I think so. Sometimes it seems like we have been transported to Bizarro World where left is right and right is down and good is evil.
Richard Russell: "The Fed continues to deny inflation. Yet their denials are now almost a joke, with nearly every conceivable item in daily use rising in price. Furthermore, with the minimum wage rising across the nation, inflation is now starting to accelerate.
Industrials are again above the critical 18,000 level, with the Nasdaq above 5,000 again and flirting with a record high. Are the averages forecasting an economic boom ahead? The Transports continue to deny the good times. The lowly Transports are telling us that something is very wrong. The action of one average alone (Industrials) cannot forecast things to come. The Transports continue to negate the Industrials' forecasts of good times ahead. ...
Today I’m writing about the GDP — the gross domestic product, the gauge by which Washington measures all the business done in this country. I know that if I told you straightaway that I was going to write about the GDP, you would have immediately turned the page — but now that I have hooked you into thinking this column is going to be fun, I got you, at least this far.
But wait, there’s more. In fact, the GDP can be awfully amusing — in its own way. For example, did you know that virtually all economists and members of the media are still eating crow — the feathers and all — because they believed statistics put out by the Commerce Department since the Great Recession were reliable and truthful.
Those numbers were neither. And late last week, Commerce lowered its GDP figures for the last six years while also producing more statistics for recent quarters that will someday need to be corrected. ...
Click through for the full post. He is one of the few in the established media who tells it like it is when it comes to gov numbers.
Manhattan, 2040: Alice wants to open an antiques store. Chelsea seems like a good location. She has to find 150 square meters to move the items that she has collected over the years, and to go on a tour of flea markets in Eastern Europe, her area of expertise. She needs to finance the imports. The problem? She doesn’t have enough money to get started.
She goes into her interface in the Federal Reserve and chooses the “print money for personal and economic growth” option. She answers a series of questions that appear on the screen, defining her business sector, presenting projected costs, and building a draft business plan.
From here, the central bank will make calculations based on all of her personal and financial details (she owns a small apartment and is financially stable). Statistical analyses of her financial history show that she is reliable and careful. Data on the risks tied to Alice’s business idea will be integrated with data on the needs of the economy and its potential areas of growth, along with other information the bank has.
Click through for the rest of the post. It's a very interesting read.
A 'Puke' Of Epic Proportions And Why This Will End In Collapse
Bill Fleckenstein: “If you look at the action in the precious metals, the miners and commodities, you could make a pretty good argument that this has been a ‘puke’ of epic proportions — the sorts of things that happen at the ends of bear markets. It’s a pretty interesting moment for the precious metals markets. The number of anti-gold news stories and the end zone dancing by the bears has gotten extreme.
And I think the stock market rally is on borrowed time. I’m not a big believer in the bull case for the dollar either. So I think the next 2 – 6 months are going to be very interesting. I just don’t see any way possible that this period can end without a collapse because I don’t think the liquidity is there to accommodate very many sellers. ...
Richard Russell: "As subscribers know, I am rooting for the US to come out of this complex situation alive and better than ever. The Greek catastrophe is giving way to the Chinese tragedy. The Chinese stock market is falling apart. The question now is whether China’s bear market will envelope the world.
As I write an hour before the close, the US market continues to hold up. The Industrials are 600 points above the critical 17,000 level and the Transports are almost 300 points above the 8,000 level. The Nasdaq is holding above 5,000. Gold is down 1.7 to 1095.2 and silver is up 2 cents to 14.63. ...
Can you feel the panic in the air? CNN Money’s Fear & Greed Index measures the amount of fear in the financial world on a scale from 0 to 100. The closer it is to zero, the higher the level of fear. Last Monday, the index was sitting at a reading of 36. As I write this article, it has fallen to 7. The financial turmoil which began last week is threatening to turn into an avalanche. On Sunday night, we witnessed the second largest one day stock market collapse in China ever, and this pushed stocks all over the planet into the red. Meanwhile, the twin blades of an emerging market currency crisis and a commodity price crash are chewing up economies that are dependent on the export of natural resources all over the globe. For a long time, I have been warning about what would happen in the second half of 2015, and now it is here. The following is a summary of the financial carnage that we have seen over the past 24 hours…
-On Sunday night, the Shanghai Composite Index plunged 8.5 percent.
Was the 2007 to 2008 financial crisis the equivalent of a foreshock — an earthquake that, at the time, seemed like the Big One until, that is, the real and substantially larger earthquake brings massively more destruction days or weeks later?
Based on what has transpired in recent years, it would certainly seem that the Global Financial Crisis was just a taste of what’s to come.
The world is more deeply indebted today than it was back then. Too-big-to-fail banks are even bigger today. And central bankers for the world’s key countries have little firepower left to confront a new financial crisis.
We are now officially on our own. Buy gold!
Click through for the full post and chart showing countries and their Debt-to-GDP.
One of the big questions which the gold sector may be asking is what is the low gold price doing to Chinese demand. Have the Chinese become disillusioned with gold given they piled in so strongly in 2013 when Shanghai Gold Exchange withdrawals for the year hit a massive record 2,181 tonnes, but the gold price has largely been on a downwards path ever since.
We had already seen the beginnings of a pick up in Chinese demand, as expressed by SGE withdrawals, when they hit well over 60 tonnes for the week ended July 10th (see Huge latest week SGE gold withdrawal figure – 62 tonnes) all at a time when seasonality suggests Chinese demand should actually be at its lowest. ...
The Central Planners who thought that buying shares to prop up the stock bubble was an excellent fix are about to find out the true meaning of toil and trouble. The actual line from Shakespeare's Macbeth is double, double, toil and trouble, fire burn, and cauldron bubble but for the purposes of analyzing what happens when authorities prop up market bubbles by directly buying assets, bubble, bubble, toil and trouble is also appropriate. China's authorities seem to have chanted Shakespeare's magical incantation nonstop this year, as the Shenzhen and other Chinese stock market indices have more than doubled. This chart illustrates what the Chinese authorities were aiming for: a bubble that just keeps expanding and never pops:
Click through for the rest of the article and charts.
Echo bubbles aren't followed by a third bubble. Speculative bubbles that burst are often followed by an echo bubble, as many participants continue to believe that the crash was only a temporary setback. The U.S. housing market is experiencing a classic echo bubble. Exhibit A is the Case-Shiller Housing Index for the San Francisco region, which has surged back to levels reached at the top of the first bubble:
Click through for the full charts and rest of the post. It's a must read.
President Obama this week nominated Kathryn Dominguez for a seat on the Federal Reserve Board. She’s a professor of public policy at the University of Michigan’s Gerald Ford School of Public Policy. If the Senate approves her, it would add another academic to the Fed’s policy- making arm, which — as you might have noticed — hasn’t been very effective in recent years in either predicting what the economy is going to do or fixing the economy after it behaves in an unpredictable manner. Like all professors, Dominguez has lots of books, charts and theories, I’m sure. All of those are great when standing in front of students. The trouble is, the Fed’s actions aren’t purely academic.
Click over for the full article.
I clipped the above from another section of the Crudele's article where he talks about "The hidden truth behind quarterly earnings reports."
China is engineering yet another mini-boom. Credit is picking up again. The Communist Party has helpfully outlawed falling equity prices. Economic growth will almost certainly accelerate over the next few months, giving global commodity markets a brief reprieve. Yet the underlying picture in China is going from bad to worse. Robin Brooks at Goldman Sachs estimates that capital outflows topped $224bn in the second quarter, a level "beyond anything seen historically". The Chinese central bank (PBOC) is being forced to run down the country's foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June. ...
Gerald Celente: “Because the markets are rigged. That’s not a conspiracy theory; that’s a fact. We already know that LIBOR and forex are both rigged and we also know there have been investigations about the rigging of the gold market. And it’s not in the best interest of central banks, who are printing trillions of dollars of fiat money in order to prop up global equity markets, to see their currencies devalued….
Click through for the rest of the post on King World News.
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