Chinese consumers led by their old ‘aunties’ have reportedly bought over 300 tonnes of gold worth more than $16 billion since the price crash last month. There have been queues at the nation’s many gold shops. Perhaps the Chinese aunties have heard the story about what happened to the Russian babushkas in the 90s.
Basically the babushkas are largely pensioners on fixed incomes and in the 1990s their income was devastated by a massive inflation that also destroyed the savings of the communist era. If only they had switched their money into gold then their savings would have been preserved. ...
The once-mighty United States is now the most indebted nation on Earth. In round numbers, here are just some of the vital statistics as the patient dies:
National debt: $17 trillion, or $50,000 per man, woman and child, or $150,000 per taxpayer. Annual federal deficit: $1 trillion. Medicare/Medicaid/Obama”care”: $1 trillion a year. Social Security: another $1 trillion a year. Defense: two-thirds of a trillion. Unemployment handouts: $2 billion per working day. Debt interest: $1 billion per working day. Federal pensions, ditto.
Now for the big numbers. Your government’s Social Security liability is as big as the national debt: $17 trillion. Its prescription drug liability is $22 trillion. Then there’s the Medicare liability of $86 trillion. Total unfunded liabilities of the U.S. government are $125 trillion.
Net assets for each U.S. citizen are $300,000. The net liability of the U.S. government, shared among its citizens, amounts to almost four times that: $1.1 million a head. And the government’s debt is growing at $1 million every 45 seconds. To cover its annual deficit, it is printing $1 trillion a year of currency that is not backed by any asset whatsoever. ...
“It never gets old”. After nicely digesting Wednesday’s big up move in gold during the Crimenex regular trading session yesterday, a so-called rumor article to hit saying QE is going to end led to a sell-off in gold in the usually thinly traded Access Market. Now, what should be viewed as “gold friendly”, the gigantic easing in Japan by its currency falling, is instead spun into a negative for gold. As I told Bill Murphy late yesterday, in this world there’s no such thing as gold friendly.
Eric King: “John, what are you hearing about the physical market for gold?”
Hathaway: “Well, it’s just gangbusters. You hear about shortages of coins. Sometimes that can be attributable to the mints not having enough equipment. Bars, the same thing. I read recently that more than half of the gold which has been ordered has been on a delayed delivery of some sort.
Everything I get confirms the activity is overwhelmingly on the buy side....
The emancipation of physical gold from paper gold is at hand.
What the gold Banks have done is so stupid that it might not be stupid. The hammer of the gold banks in showing us all that they are the boss they have executed themselves in the form of waking the sleeping elephant of physical gold demand by holding a special sale on the metal.
The School of Free Gold is on the doorstep of their long sought end game. Free gold has various applications of their thesis but if you do not let applications detract from the main thesis of the emancipation of physical gold from fraudulent paper gold, they are right. Actually more correct than any other approach. Even they do not see their predictions have come true today as what above ground gold not already hoarded is heading for hoarding.
Cyprus was the key that opened the door to the end.
Hold your gold. You are approaching an event that is going to blow you away. Gold is going way over the modest price of $3500 and paper gold will be emasculated in that it no longer will be a factor in price discovery.
The knuckle draggers at the COMEX who are the gold banks have more than shot themselves in the foot with their gold sale. They have taken a direct hit in the head.
The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin. And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate. So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold? When that moment arrives, it will represent the end of the paper gold scam. Many believe that the recenttakedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them. Instead of cooling off demand for precious metals, it has unleashed a massive "gold rush" all over the globe. Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can. This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on. The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets. ...
“The yuan is setting all-time highs. China is playing the game and they are dominating right now. Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.
The move in the yuan overnight was one of the most significant upticks I have seen. LIke I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that’s over 2,400 tons of gold per year on an annualized basis.
This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn’t just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese. ..."
Click through for the full interview. I've been saying it for years at this point, China is looking way down the road and making moves in the mining and gold building arena with a plan of making themselves big dog in the world.
The bulk of the imports by banks now is on a consignment basis that doesn't require them to fund the purchase, RBI said.
NEW DELHI(BullionStreet): Conflicting reports about India's gold import projection created confusion among traders and jewelers in the world's largest consumer country.
Some reports said India’s gold imports are likely to fall below 900 tons this year due to Reserve Bank of India's (RBI) decision to curb gold bullion imports by banks.
The RBI will issue guidelines by the end of this month to restrict banks from importing gold on a consignment basis as it seeks to reduce domestic demand and curb a record current-account deficit, the central bank said on 3 May. ...
So, what do you call it when a government attempts to reduce demand for a product? I call it manipulation.
Things are upside down in the gold market. Valuations are irrationally low, while global consumerism fuels demand and supply comes up short.
"There will be a lot of short-term volatility. But people's desire to own gold on the physical level is not going away, whether people are buying gold jewelry in China or India or Europe or buying bars and coins—gold will act as a safe haven, as a currency hedge."
Who is winning the "currency wars"? Our take on the greenback, yen, sterling, euro and gold ...
Gold. Is the ultimate currency the ultimate winner in Currency Wars? So as to ensure that no good deed goes unpunished, gold had a rather volatile ride of late. And not surprisingly: as the price of gold moved up 12 years in a row, speculators decided that a good thing is even better when leverage is employed. And, as such, good things come to a screeching halt when margin calls force selling. We now have many investors sitting on paper losses. Some that bought gold because of a meltdown in the Eurozone are selling their positions. On the other hand, not everyone buying gold because of future inflation is on board. Our reason to buy gold has always been motivated by what we believe is too much debt in the developed world. While Eurozone members are trying to address their debt loads through austerity - with rather mixed results - we believe the U.S., U.K. and Japan are more likely to resort to their respective printing presses. In that environment, we believe gold should perform rather well over the coming years.
So why not hold only gold? Any investment depends on...
Submitted by Michael Snyder of The Economic Collapse blog,
The legal claims on physical gold far exceed the amount of physical gold that the banks actually have by a very, very wide margin. And right now the bankers are scared out of their wits because their warehouses are being drained of physical gold at a frightening rate. So what happens when their physical gold is gone but they still have lots and lots of people with legal claims to gold? When that moment arrives, it will represent the end of the paper gold scam.
Many believe that the recent takedown of the price of paper gold was a desperate attempt by the bankers to put off that day of reckoning, but it appears to have greatly backfired on them. Instead of cooling off demand for precious metals, it has unleashed a massive "gold rush" all over the globe. Meanwhile, word has been spreading among wealthy families in both North America and Europe that they had better grab their physical gold out of the banks while they still can.
This is creating havoc in the financial community, and at least one major international bank has already declared that it will only be settling those accounts in cash from now on. The paper gold scam is starting to unravel, and by the time this is all over it is going to be a complete and total nightmare for global financial markets.
For years it has been widely known that the promises that banks have made regarding their gold far exceed their actual ability to deliver, but we have never reached a moment of such crisis before. ...
"Inflation is a state of affairs in which there is too much money," Jim Grant notes in this Bloomberg TV interview, however, "It's not too much money chasing too few goods," he corrects the misnomer, "the thing this money chases is variable." Whether it is Iowa farmland, housing, stocks, or bonds, central banks are stuffing us with it. Yes, equities are high, but Grant explains, "beneath the surface of things or not so far beneath the surface of things," it is not at all good, adding that, "Central bank 'original sin'," is akin to Revolutionary France, and he shows no concerns over Gold's recent dip, noting "a general fatigue animus towards gold," that seems predicated on more confidence in central bankers; to Grant, "that confidence is utterly misplaced!" ...
Since the beginning of the year and through last night, there has been 300 tonnes of gold removed from GLD and 90 tonnes of gold from the Comex removed. In the 12 years that I've been doing the precious metals sector, there has never been such an extraordinary, visible movement and disappearance of gold like this. Hugo Chavez, on his death bed, repatriated 200 tonnes of gold back to Venezuela from Europe in about four months, but we know where it went. It didn't disappear. The German Bundesbank requested the repatriation of some part of the German gold held by the NY Fed in NY and, after several days of negotiations, Bernanke agreed to send 300 of the 1800 tonnes back - over the next 7 years.
My prediction: That gold will never see inside of a ship hull.
Something ugly is going on and, at least for me, it explains why the western bullion banks are making a concerted and aggressive effort to hold down the price of gold using printed paper Comex futures contracts. (about 80% of all downward price movement in gold/silver since Jan 1 has occurred during Comex floor trading hours). ...
An "unsubstantiated" rumor spread through the markets around noon Denver time today that the Wall Street Journal's mindless mouthpiece for the Fed, Jon Hilsenrath, was going to print an article reporting that the Fed was considering tapering down QE soon. For those of you who don't know, the Fed was using Hilsrenrath - at least for awhile - to telegraph impending policy decisions.
When this rumor hit, the dollar jumped a lot higher and every other market tanked hard. Let's think about the implications of the Fed slowing down its purchases of $85 billion in Treasuries and housing mortgages each month. First, the housing market would absolutely collapse. That there is a real housing bounce is an absolute joke. That the Fed has engineered a speculative frenzy in certain markets by injecting $40 billion per month into the housing market is true. But what if the Fed were to stop that? Think it about it everyone. I have a neighbor who has decided to buy and flip a house. I would love the opportunity to see what happens if the Fed pulls QE before this guy can get the house renovated and back on the market. Please Ben, make my day.
How about if the Fed stopped buying $45 billion per month in Treasuries? Anyone care to think about what that would do to the Government's cost of funding all of its welfare programs and imperialistic military activities? $45 billion per month means that the Fed is buying more than 50% of all of the new Government debt that is being issued every month. If the Fed takes that bid away, the cost required to induce outside buyers to replace the Fed would drive interest rates up significantly. It would likely throw our system into a depression. If that weren't the case, the Fed wouldn't need to buy Treasuries at all.
Go ahead Ben, stop all QE. Let's see what happens. You have been making the claim that ...
"You will recall a couple of weeks ago in one of the KWN interviews I pointed out that when people ask me when gold is going to move I say, ‘June or July of 2000. Gold has moved from $252 to just shy of $1,500 an ounce. A five-fold move.’
A five-fold move in 12 or 13 years and we’re supposed to be apologizing for that. If you had the ability to predict a five-fold move in the next 12 years, how would that make you feel? It would make me feel pretty good. The point of gold is to preserve one’s purchasing power...."
"On May 7-8, 2013, Istanbul (Turkey) will host the Global Finance in Transition conference. The event is organized by the Central Bank of the Republic of Turkey jointly with the Reinventing Bretton Woods Committee and the Russian Ministry of Finance.
Representatives of G20 finance ministries and central banks, international organizations, research institutions and businesses will take part in the conference. Head of Turkey's Central Bank Erdem Basci, Deputy Minister of Finance of Russia Sergey Storchak and Executive Director for the Reinventing Bretton Woods Committee Marc Uzan will give the opening remarks at the conference.
Five panel discussions are planned as part of the event. They will cover the international financial architecture, in particular, changes in the flow of global investments, local bond markets and growth in emerging economies, incentives and determinants of investment and other issues. In addition it is expected that new instruments and incentives for making the global financial system safer will be suggested during the forum."
Did you know there was such a thing as the "Reinventing Bretton Woods Committee"? Wouldn't you like to know how the ...
Click over for the rest of the post and all the charts on silver and gold.
I overheard a conversation in the gym last night wherein the comment was made, “The Dow is up from a low of 6500 because of administration policies.” The comment was made in reference to the Dow breaking 15,000, in the context of a recovering economy and in support of the administration. I refrained from making any comment of my own and to instead vent here where readers have the same right to discard my opinion and stop reading just as I stopped listening.
I think a quick look at the real facts are in order. Prior to the debt crisis, the Dow reached a high of 14,164.53 on October 11, 2007. As we came to learn, that was an artificial high achieved through the spending of money that never existed. Money that was created out of thin air.
At that time, money needed to fuel the stock market and the economy, was acquired through loose money policies – an artificial supply. Home prices were a prime example. Home values were greatly exaggerated, thus allowing people to borrow against equity that really did not exist. The markets and the economy became dependent on this money supply. So much so that when the supply was exhausted and the economy began to waiver, they had to concoct things like “No-Doc” Loans, “Stated-Income” Loans and “Cash-Out” Financing.
Cash-Out financing was one of my favorites. It allowed people to buy a house (or several) without a down payment and without any documentation of assets and without the need to verify any income. Ironically, the income was to be derived from the purchase of the home, which was based on overstated appraised values.
These windfall profits were then lured into the rising stock market, where stock investing was believed to be a no-brainer. It was magic. Everything was rising in value, fortunes in paper wealth were blossoming. Indeed it was magic and as we all know, magic is nothing more than an illusion with smoke and mirrors thrown in to further deceive. Nobody in their right mind, today, believes the credit crisis was not caused by artificial liquidity – the creation of money out of thin air. ...
... There's really no other possible source for that gold than from "official" sources, meaning the Fed and/or the Treasury. The only other explanation is that thousands and thousands of tonnes of gold somehow got into this country without being detected by US trade and customs officials, which implies that a rather large series of crimes had to be committed.
Because I almost completely discount the idea of illicit gold imports being of a material size, that just leaves us to try and figure out how much leasing the Fed and the Treasury have supported over the prior decades, as we will see below.
The facts are easy enough to grasp. The US has exported vastly more gold than it has imported, and that gold had to come from somewhere. It is very doubtful that accounting errors can explain away even 1% of this discrepancy.
This leaves gold-leasing from the Fed as the most likely source for all that gold, and it is such a large amount that I know of no possible source on the face of the planet where such an amount could be purchased. This is why Germany seeking to repatriate their gold is such a big deal. What if that gold has already been loaned out? ...
"And here's a refreshingly honest assessment of the situation from an Indian newspaper:
The jump in Chinese physical demand also prompted some banks to ship in more supplies from London and Swiss vaults, traders said LINK
If you read that entire article, you'll see that in 2012, India/China imported more than 1/3 of the global gold production and will likely account for close to 50% this year. This is the unintended consequences for the Central Banks who are spear-heading the manipulation of the price of gold for the purposes of defending the dollar and fiat currencies."
The company expects the price of platinum to rise 5.6 per cent this year to $1634 a troy ounce and then 12.5 per cent to $1838 in 2014 as the cost of producing platinum continues to climb higher.
SYDNEY(BullionStreet): Macquarie Research cut its 2013 gold price forecast by 4.3 per cent to $1467 a troy ounce and cut its 2014 gold price forecast by 3.1 per cent to $1385, noting that the changes were moderate because it was already bearish on gold.
It noted that "the short-term outlook for gold is unusually murky -- heavy disinvestment from ETF (exchange-traded funds) investors is being offset by strong physical demand in key markets such as India and China, but neither of these is likely to continue indefinitely, and which runs its course first could determine whether the price moves $100 an ounce higher or lower.
The bank said one of the few areas with potential was the platinum group of metals, even though it cut its price forecast for platinum and palladium in 2013 and 2014. ...
"So what he’s [Draghi] telegraphing to you is that the European Central Bank is going to pull out their guns as well, just like the QEs in the US and in Japan. My guess is when they do this, some of that liquidity is going to find its way into our market as well.
So you’ve got tremendous liquidity out there from three huge central banks, and the world is profoundly underinvested in US equities. So there is still room for the market to run to the upside here.”
Click over for the full interview. I'm not really that stunned by the idea though. The global economies have pretty much all given in and are on a path of money creation. Perhaps the surprise is that it's no longer news.
Grandich on gold: Gold – The next $50 move in gold could very well signal where the next $500 goes. A close above $1,500 and the gold “take-down” a few weeks ago blows up in the bears faces big-time. However, if we for some reason go back under $1,400, the bears could collapse the market. The good thing this time around my heart and brain both believe its to the upside. Remember, physical buyers around the world continue to say only one thing on any decline.
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