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  • U.S. Investors Show New Interest In Gold And Silver [View article]
    Of course, the manipulation on the Comex managed to move the price lower in 2013. The idea was that buyers would get scared and stop buying. That worked on Western investors and they unloaded 900 tons of gold in ETF's. It worked in reverse on buyers in China, Turkey and others where the demand went and still is through the roof. To understand what happened to gold, lets look at some elements of supply.
    In 2013 the UK exported ~ 1500 tons of gold (and produced 0), the US exported ~ 750 tons of gold and produced a bit over 200 tons. BIS (Bank for International Settlement) also sold some of its gold. These three entities together supplied the market with a total of ~ 2400 tons of gold. This is equal to all the gold mined in the world outside China. Nobody knows what China mines but they claim more than 400 tons.
    The latest demand numbers have gone up again. Buying is the name of the game in China, India, Russia, Turkey. Thailand, the Middle East and more. The 2400 tons that the US, UK and BIS supplied last year wouldn't be enough to keep the price low in 2014. These three entities would need more than 2500 tons (maybe more than 3000 tons) of gold coming from somewhere to suppress the price around current levels.
    Of the 2400 tons supplied last year, 900 tons were ETF's, 200 tons (maybe a bit more) was gold mined in the US and the rest 1300 could only have come from the vaults of central banks (the FED, BOE and BIS). These central banks are selling their reserves to keep the price low and distract people from their irresponsible money printing policies. Since the UK and the US also consumed gold last year, the 1300 tons that I estimate to have been sold by Central Banks is actually a low estimate. 1500 tons and higher is more likely.
    I doubt that they can repeat the same with the rest of the holders of GLD in 2014 ... there must be some strong hands there but maybe they get some gold out of GLD. Still, the FED, BOE and BIS would need to sell more than 2000 tons of their reserves to keep the price down (maybe as much as 3000 tons). I don't know if they are prepared to do that but my guess is that the BOE blinks first and gets out of that rigged game because they risk the status of London as a world financial center if it gets out that they play such dirty games.
    With all that gold getting exported by the US and UK, you would think that finding gold is easy. So, why did Germany got only 35 tons of the reserves that they asked to be returned to them and will they get any more?
    The real problem that the FED has in gold is that the Chinese import in excess of 2000 tons and keep all the gold mined in China. That leaves 400 tons for the rest of the world and India itself consumes more than 1000. Where is the gold going to come from? My estimate is that the fair price of gold ~ 2500 or higher. This is half of current levels. Gold is very volatile due to constant interventions in the market ... these interventions happens several times per day every day. People with long term view are likely to be well reward for holding some gold. Do your homework and decide but stay away from ETF's (who knows what they have) and especially stay away from the Comex futures - this is a totally rigged game. Focus on physical metal.
    My estimate is that this year the demand will be much higher due to attractive prices and also India is coming back to the market - they are finding ways to import gold through various channels and their is a lot of pent up demand there. Think about the Prohibition, more alcohol was consumed during that time than before. The same is happening with the consumption of gold in India.
    Jan 19, 2014. 12:38 PM | 18 Likes Like |Link to Comment
  • Sterling Is No Safe Haven [View article]
    The title of the article makes sense but the case for the negative view on the £ is a bit timid. The reality is that the actual situation with the pound is much worse. The growth that is much talked about in the press is almost nothing. Remember that growth = Nominal Growth - Inflation. Inflation is the UK is much higher than reported and any reasonable inflation number would make the ''growth'' negative.
    The budget deficit in the UK will be ~ 7 to 8% this year and the current account deficit is also huge. The new boss at the BOE is just looking for any possible reason to start printing money again - more QE is sure to come.
    The conclusion is that the pound is indeed not a safe haven and is actually a disaster waiting to happen. The pound is likely to get into some sort of very high inflation situation and/or currency crisis, most likely both.
    Aug 24, 2013. 11:49 AM | Likes Like |Link to Comment
  • Will The Fed Spike The Gold And Silver Rally? [View article]
    Which is why the government is soon going to come up with something claiming that Bitcoin is mostly used by criminals and drug dealers and they will try to shut it down. They don't like competition to their money printing schemes.
    Aug 23, 2013. 07:24 PM | 1 Like Like |Link to Comment
  • World Gold Council's Grubb: Speculative Shorts Caused Gold Plunge [View article]
    Well, short it. Be a man and don't just talk but put your money where your mouth is.
    Aug 23, 2013. 07:22 PM | Likes Like |Link to Comment
  • A $1,500 Gold Breakout Is Coming - Here's Why [View article]
    Also the UK exported 800 tons of gold in H1. The US is also a bit exporter and exports much more than is mined in the US, while the UK doesn't mine any gold. This gold has now gone to Asia, never to come back. I actually think that Chinese demand is much higher than 1000 tons. ETF's can't repeat the same selling as before - they are just too small and some people will keep their positions. No more than another 100 to 150 tons to liquidated there till end of the year, if any, while buying is accelerating.
    Aug 23, 2013. 08:04 AM | 2 Likes Like |Link to Comment
  • Physical Demand For Gold Will Fuel A Spectacular Bull Move [View article]
    This is huge. It is 10 times increase YOY. Also, in only 6 months the UK has exported 10% of all gold stored in the UK. Keep in mind that this is not owned by the UK. UK owns very little gold. At this rate in 5 years there will be 0 gold in the UK and UK is the biggest gold trading centre ... the kind of things the BOE has to do to suppress gold prices.
    Aug 22, 2013. 07:17 AM | 1 Like Like |Link to Comment
  • Not All Gold Demand Is Equal: WGC Report Shows Serious Upcoming Supply Crunch [View article]
    The one thing to understand is that ETF's are actually very small on a relative basis. The total amount of gold liquidated from ETF's in the last year or so is ~670 tons or so. In the strongest month this year China and India alone bought ~ 300 tons in one month alone. These are the official numbers. Keep in mind that smuggling in India is big and also China buys more gold that just the gold from HK but that doesn't get reported anywhere. The big boys are China and India ... ETF's are small when you compare to that.
    Aug 22, 2013. 07:14 AM | 2 Likes Like |Link to Comment
  • Physical Demand For Gold Will Fuel A Spectacular Bull Move [View article]
    It is amazing how the gold mining world has changed. The biggest miner and producer in the world is now the UK. 800 tons of gold mined and sold in just 6 months! Given that in all of 2012 the world mined ~ 2800 tons, this is impressive. All that gold comes from the mines inside the vaults of the BOE and various bullion bank. At this rate of ''evaporation'' the gold vaults at the BOE are going to be empty soon. The US is also a big exporter of gold - much more than the US produces.
    Aug 21, 2013. 05:58 PM | 2 Likes Like |Link to Comment
  • Will The Fed Spike The Gold And Silver Rally? [View article]
    The FED is in a tough spot and there are no good choices. This is why B.B.B.B.B. (Big Bad Beard Ben Bernanke) is leaving. When the proverbial SHTF happens, he would much rather have somebody else take the blame.
    Aug 21, 2013. 03:08 PM | Likes Like |Link to Comment
  • Not All Gold Demand Is Equal: WGC Report Shows Serious Upcoming Supply Crunch [View article]
    On the supply side, the country that has become the largest gold producer and exporter now is actually the UK. In H1 of 2013 the UK exported ~800 tons of gold (roughly 1/3 of all the gold mined in the world in one year and this is only in 6 months). Keep in mind that the UK mines 0 ounces of gold. All this gold is most likely ''mined'' at the Bank of England vaults and some ETF vaults I think. Supposedly it gets exported to Switzerland mostly where it gets refined from 400 ounces bars to 1 kg bars and then shipped to Asia to never be seen again. This tells you why prices have come down. I understand that US gold exports are also huge.
    Another thing to keep in mind is that the Chinese are buying mines. Even thought prices are much lower, Chinese companies have invested a much larger $ amount (compared to 2012) to buy foreign mines. What happens once China buys a mine is that they never sell an ounce and just ship the entire production to China. This is effectively gold taken out of the market.
    On the demand side in India, there is talk that currency weakness will tame gold demand. I don't think so. The currency weakness has been combined with huge inflation. Food prices have gone up something like 40 to 50% on many essential products. What that means is that gold looks even cheaper to Indians. It also means that farmers will be cash rich due to higher prices and they are some of the biggest buyers of gold, gold that they don't mind buying in Dubai or from smugglers if needed. Given what is going on with the local currency, who can blame them.
    Aug 21, 2013. 09:09 AM | 4 Likes Like |Link to Comment
  • What Does It Really Cost To Mine Gold: The Barrick Gold Second Quarter Edition [View article]
    African Barrick (ABX owns most of it I think) just changed its CEO. I think that all miners are slowly moving from being volume driven to profit driven given the huge losses that have been taken. I expect that supply will come down, especially given the lack of investments in new projects/mines. Current prices of gold are very close to the all in costs per ounce of the big miners like ABX, GG, NEM and others and it just doesn't make any sense for them to invest in new risky projects, Keep in mind that the new projects are going to be more expensive due to lower average grades. Also, many mines are money losing at current prices, like most mines in South Africa.
    Aug 21, 2013. 08:51 AM | Likes Like |Link to Comment
  • Will The Fed Spike The Gold And Silver Rally? [View article]
    I agree that they don't want to taper but they are afraid that people may lose confidence in the currency. Any taper would be a propaganda decision and not financial. They are positioning themselves to be in a position where they can increase or decrease QE (mostly working on the increase part) by saying that QE is what FED funds used to be. So, to keep the game going for longer, they may tactically decrease QE first and then increase it later to give it more credibility - pure marketing ploy but it is possible.
    Aug 21, 2013. 06:31 AM | 1 Like Like |Link to Comment
  • World Gold Council's Grubb: Speculative Shorts Caused Gold Plunge [View article]
    Gold has also been exported from the US in large amounts, much larger than the amounts mined in the US. It does seem very likely that the Western Central Banks have been secretly selling gold to keep prices low. I believe that it was a well organized operation where the Central Banks and the BIS sold gold, while the bullion banks were told to sell futures on the Comex.
    This was combined with a lot of negative press about gold and pressure was put on fund managers to liquidate their GLD holdings with things like ''Why do you own this money losing asset when you can have equities''. I bet that some of the managers were just ordered to sell.
    The plan was to crush sentiment but the problem is that the Asians didn't fall for it and bought like crazy. If the FED attacks gold again on the Comex or even tries to keep prices at close to current levels for a while, they will have to ship even more gold to Asia as the appetite there is huge and well above actual supply. Supply is actually coming down with Q2 scrap gold down 20% YOY and this is a large portion of the supply.
    Aug 20, 2013. 07:41 AM | 1 Like Like |Link to Comment
  • The Bond Market's Fear Of Summers [View article]
    The bond market is not scared of Summers or Yellen as either of them is likely to be more dovish than Bernanke. The president wants a dovish FED and you can be sure that he is not going to put there anyone who is likely to oppose that. I don't know but I personally think that Obama is going to choose Yellen, just for the sake of continuity, but who knows what is going on behind the curtains ... there is a lot of Byzantine politics and special interests working on that. In any event this doesn't really matter as either of them will be just the same as the other - mega dovish and a money printer that will put Bernanke to shame.
    Aug 20, 2013. 06:47 AM | 3 Likes Like |Link to Comment
  • Will The Fed Spike The Gold And Silver Rally? [View article]
    The FED cannot do much in a way of tapering for these reasons:
    - Nobody can fund government deficits without the FED printing money. The FED is really scared that the bond markets can drop more.
    - Without the Fed, housing is going to do badly and this is the only part of the economy that is ok ... somewhat.
    - There is a lot of political pressure on the FED not to stop printing and they always listen to the politicians.
    These are the reasons why the FED doesn't want to taper but they also have other excuses: low inflation, emerging markets crisis, low CPI and that is what they will use as excuses.
    The conclusion is that the FED will either not taper at all or will only do a very small taper, to preserve confidence. They are likely to reverse even a small taper and will eventually increase QE to say 100 billion a month, most likely.
    Aug 20, 2013. 06:42 AM | 8 Likes Like |Link to Comment