Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1218.40 up $25.80 (comex closing time)
Silver $17.21 up 70 cents (comex closing time)
In the access market 5:15 pm
Gold $1214.85
Silver: $17.12
Gold/Silver trading: see kitco charts on the right side of the commentary
The bankers rarely allow gold to rise after a big day. So expect the crooks to contain gold and silver tomorrow.
Following is a brief outline on gold and silver comex figures for today:
At the gold comex today, we had a poor delivery day, registering 1 notice serviced for 100 oz. Silver comex filed with 5 notices for 25,000 oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 242.14 tonnes for a loss of 61 tonnes over that period. Looks to me like the comex is bleeding profusely!!
In silver, the open interest fell by 2171 contracts despite the fact that Tuesday’s silver price was up by 21 cents The total silver OI continues to remain extremely high with today’s reading at 174,919 contracts maintaining itself near multi-year highs despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.
In silver we had 5 notices served upon for 25,000 oz.
In gold, the total comex gold OI rests tonight at 405,612 for a gain of 4,132 contracts as gold was up by $9.40 yesterday. We had 1 notice served upon for 100 oz.
Today, we had no changes in gold Inventory, at the GLD. It rests tonight at 728.32 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Yesterday Koos Jansen informed me that last week 38 tonnes of gold was demanded by Chinese citizenry (equals withdrawals from SGE). This demand is for one week.
In silver, / no changes with respect to silver inventory at the SLV/ and thus the inventory tonight remains at 322.662 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver fall by 2177 contracts as silver was up in price yesterday by 21 cents. The OI for gold rose by 4132 contracts up to 405,612 contracts as the price of gold was up by $9.40 yesterday. GLD had no change and SLV, no changes with respect to the inventory levels.
(report Harvey)
2,Today we had 3 major commentaries on Greece today:
(zero hedge/ Raul Meijer)
3. Bill Holter further provides commentary on the huge rise in yields from sovereign bonds and how this is blowing up our major underwriting banks who engaged in these massive derivatives.
(Bill Holter)
4. Spain’s economic recovery is just not there. They learned from the USA as all of their gains in employment has come from part timers
(zero hedge)
5. Goldcore discusses the huge Ted Butler paper released yesterday
/(Goldcore)
6. Yesterday we reported that USA may use military in its confrontation with China in the South China sea. Today China responded in very unfriendly terms.
(zero hedge)
7. The city of Chicago has reduced to junk status by the rating agencies as soon as they lost a supreme court decision that they could not change pension benefits already promised. They will no doubt head towards bankruptcy like Detroit but it will be worse.
(zero hedge)
8. The big story of the day which propelled gold/silver northbound: retail sales were totally flat, ie. no gain even though they expected a .2% rise. The consumer is 70% of GDP and that was enough to send our precious metals up.
9. The Atlanta Fed reported that they now expect second quarter GDP to rise only to .7% instead of .8%. As soon as June rolls around, this will probably fall into the negative category just like Q1 GDP
(Atlanta Fed, zero hedge)
we have these and other stories for you tonight
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest rose by 4132 contracts from 401,480 up to 405,612, as gold was up by $9.40 yesterday (at the comex close). We are in our next non active delivery month of May and here the OI fell by 1 contract falling to 148. We had 1 notice filed upon yesterday. Thus we neither lost nor gained any gold contract standing for gold in May. The next big active delivery contract month is June and here the OI fell by 9,544 contracts down to 198,488. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 118,543. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was fair at 171,513 contracts. Today we had 1 notice filed for 100 oz.
And now for the wild silver comex results. Silver OI fell by 2,177 contracts from 177,096 down to 174,919 despite the fact that the price of silver was up in price by 21 cents, with respect to yesterday’s trading. We must have had considerable short covering yesterday. We are into the active delivery month of May where the OI fell by 165 contracts down to 409. We had 166 contracts filed upon with respect yesterday’s trading. So we gained 1 contract or an additional 5,000 oz will stand for delivery in this May delivery month. The estimated volume today was extremely good at 41,032 contracts (just comex sales during regular business hours. The confirmed volume on yesterday (regular plus access market) came in at 44,129 contracts which is also good in volume. We had 5 notices filed for 25,000 oz today.
May initial standings
May 13.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
16,170.34 oz Scotia
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
2,101.45 oz (Scotia, HSBC)
No of oz served (contracts) today
1 contracts (100 oz)
No of oz to be served (notices)
147 contracts(14,700) oz
Total monthly oz gold served (contracts) so far this month
3 contracts(300 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
164,151.8 oz
Total accumulative withdrawal of gold from the Customer inventory this month
52,539.9 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil oz
we had 1 customer withdrawal
i) Out of Scotia; 16,170.34 oz
total customer withdrawal: 16,170.34 oz
We had 2 customer deposits:
i) Into HSBC: 2,000.000 oz ?????
ii) Into Scotia: 101.45 oz
total customer deposit: 2101.45 oz
We had 0 adjustments:
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (3) x 100 oz or 100 oz , to which we add the difference between the open interest for the front month of May (148) and the number of notices served upon today (1) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the May contract month:
No of notices served so far (3) x 100 oz or ounces + {OI for the front month (148) – the number of notices served upon today (1) x 100 oz which equals 15,000 oz standing so far in this month of May. (.466 tonnes of gold)
we neither lost nor gained any gold ounces standing for delivery.
Total dealer inventory: 372,738.572 or 11.59 tonnes
Total gold inventory (dealer and customer) = 7,784,927.15. (242.14) tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 242.14 tonnes for a loss of 61 tonnes over that period. Lately the removals have been rising!
end
And now for silver
May silver initial standings
May 13 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
38,356.306 oz (Brinks, Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
nil
No of oz served (contracts)
5 contracts (25,000 oz)
No of oz to be served (notices)
404 contracts (2,020,000 oz)
Total monthly oz silver served (contracts)
2501 contracts (12,505,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
126,359.680 oz
Total accumulative withdrawal of silver from the Customer inventory this month
2,891,423.9 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 0 customer deposits:
total customer deposits; nil oz
We had 2 customer withdrawals:
i) Out of Scotia: 30,015.56 oz
ii) Out of CNT: 8,340.74 oz
total withdrawals; 38,356.306 oz
we had 0 adjustment
Total dealer inventory: 60.117 million oz
Total of all silver inventory (dealer and customer) 177.685 million oz
The total number of notices filed today is represented by 5 contracts for 25,000 oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (2501) x 5,000 oz = 12,505,000 oz to which we add the difference between the open interest for the front month of April (409) and the number of notices served upon today (5) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the May contract month:
2501 (notices served so far) + { OI for front month of April (409) -number of notices served upon today (5} x 5000 oz = 14,525,000 oz of silver standing for the May contract month.
we gained 1 contract or an additional 5,000 oz will stand for delivery.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.com orhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
May 13.2015: no change in inventory at the GLD/Inventory rests at 728.32 tonnes
May 12/no change in inventory at the GLD/inventory rests at 728.32 tonnes
May 11/ no changes at the GLD/Inventory rests at 728.32 tonnes
May 8/ they should call in the Serious Fraud squad as the owners of the GLD just saw 13.43 tonnes of gold leave its vaults heading for China:
Inventory tonight: 728.32 tonnes
May 7. no change in gold inventory at the GLD/741.75 tonnes
May 6/no change in gold inventory at the GLD/741.75 tonnes
may 5/no change in gold inventory at the GLD/741.75 tonnes
may 4/no change in gold inventory at the GLD./741.75 tonnes
May 1/ we had a huge addition of 2.69 tonnes of gold into the GLD/Inventory rests tonight at 741.75 tonnes
April 30/ no change in gold inventory/739.06 tonnes of gold at the GLD
April 29/no change in gold inventory/739.06 tonnes of gold at the GLD
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
May 13 GLD : 728.32 tonnes.
end
And now for silver (SLV)
May 13.2015: no changes at the SLV/Inventory rests at 322.662 million oz
May 12/no changes at the SLV/Inventory rests at 322.662 million oz
May 11/no changes at the SLV/Inventory rest at 322.662 million oz
May 8/ today we lost a huge 2.87 million oz of silver from the SLV/Inventory 322.662
May 7/no change in silver inventory/325.53 million oz
May 6/we had a huge withdrawal of 2.143 million oz of silver from the SLV/325.53 million oz
May 5/no change in silver inventory at the SLV/327.673 million oz
May 4/ no change in silver inventory at the SLV/327.673 million oz
May 1/no change in silver inventory at the SLV/327.673 million oz
April 30/no change in silver inventory at the SLV/327.673 million oz
April 29/ we lost 2.963 million oz of silver inventory from the SLV/inventory tonight 327.673 million oz
May 13/2015 no changes at the SLV / inventory rests at 322.662 million oz
end
And now for our premiums to NAV for the funds I follow:
Central fund of Canada data not available today/
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 6.6% percent to NAV in usa funds and Negative 6.6% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.3%
Percentage of fund in silver:38.3%
cash .4%
( May 13/2015)
2. Sprott silver fund (PSLV): Premium to NAV falls to-0.63%!!!!! NAV (May 13/2015)
3. Sprott gold fund (PHYS): premium to NAV rises to -.28% to NAV(May 12/2015
Note: Sprott silver trust back into negative territory at -0.63%.
Sprott physical gold trust is back into negative territory at -.28%
Central fund of Canada’s is still in jail.
end
Early morning trading from Asia and Europe last night:
Gold and silver trading from Europe overnight/and important physical
stories
(courtesy Mark O’Byrne/Goldcore)
This was brought to your attention yesterday. Goldcore’s Mark O’Byrne also thought it worthy:
Ted Butler: The Biggest Silver Haul In History
By Mark O’ByrneMay 13, 20150 Comments
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As I’ve mention previously JPMorgan is still stopping (taking) silver deliveries in its own house account. In the May COMEX futures contract, they’ve taken over three million ounces so far. It still looks like JPM will take another million ounces or so before the delivery period is over. This is in addition to the 7.5 million ounces the bank took in the March delivery period.
Another standout development in recent weeks has been the withdrawal of 5 million ounces from the big silver ETF, SLV. This large withdrawal would appear to be a big buyer converting shares into metal for the purpose of acquiring physical silver and avoiding the 5% ownership reporting requirement. I believe this is the work of JPMorgan and represents the mechanism by which the bank has amassed the bulk of the 350 million ounces I claim it has acquired over the past four years.
The U.S. Mint sold 783,500 Silver Eagles in just two days after going 4 or 5 days with no sales. Then the Mint reported a scant 50,000 additional coins sold over the next two days. This is precisely the erratic level of sales that indicates the presence of a big buyer. I can’t certify that the big buyer is JPMorgan, but everything I look at points to them.
The Canadian Royal Mint reported sales last week its 2014 sales of Silver Maple Leafs and the same pattern that has characterized the U.S. Mint was clearly revealed. Sales of silver coins hit a new record, with more than 29 million Silver Maple Leafs sold. The big buyer of Silver Eagles has also been accumulating Silver Maple Leafs. Over the past four years the big buyer has bought, at least 30 million ounces of Canadian Maple Leafs and 75 million U.S. Silver Eagles totaling more than 100 million ounces of silver in bullion coin sales alone. I’m convinced JPMorgan is the big buyer.
How in the world can JPMorgan eventually sell hundreds of millions of ounces of silver without flooding the market and causing prices to crash? This is what JPMorgan does as a regular part of their business – accumulate and then liquidate massive market positions before most people get out of bed every morning. It is second nature to them. In my opinion, this silver will be sold before most people realize they bought it in the first place. Buying 350 million ounces of silver was the hard part, selling it will be a snap.
The big buyer is exploiting a loophole in the law that requires the Mint to produce to whatever the demand might be. So JPMorgan artificially depresses prices via short sales on the COMEX and then requests that the US Mint sell it all the Silver Eagles it can produce. It doesn’t care if it is paying $2 over the spot price, JPM wants all the silver it can get its hands on. But what about selling the coins I claim JPMorgan has acquired? The coins will not be sold as coins, but melted into 1,000 ounces bars. In fact, some of the 100 million+ ounces of coins may have already been melted and cast into good delivery bars. Considering that the coins are the same purity as 1,000 ounces bars, melting is a simple and a low cost process.
At the end of 2007, when the price of silver was less than $15, but close to the highest price it had been in 25 years Bear Stearns, assumed the role of the biggest silver and gold short when these positions were transferred from AIG. From the end of 2007 to March 2008, the price of silver rose to $21 and gold rose from $800 to $1,000. Based upon the size of the short positions that Bear Stearns held the investment bank had to come up with more than $2 billion in margin money. Bear was unable to do so and the U.S. Government arranged for JPMorgan to take over Bear Stearns and its massive COMEX short positions in silver and gold.
With the cooperation from the federal government, JPMorgan was able to turn silver (and gold) prices sharply lower into year end 2008 and made well over one billion dollars as a result of falling metals prices. Thus, they were able to greatly reduce the short positions inherited from Bear Stearns. JPMorgan then repeated the process of selling short great additional quantities of COMEX short contracts on metals price rallies buying back those short positions when prices fell. JPMorgan’s profits from the short side of COMEX silver and gold, amounted to hundreds of millions and even billions.
This process was repeated by JPMorgan in COMEX silver until the fall of 2010, when silver began to rise in earnest due to a developing physical shortage that drove prices to nearly $50 by the end of April 2011. On the run up, it must have become clear to JPMorgan that a physical silver shortage was developing and for the bank to try to fight it with additional paper short sales would be futile. Therefore, two decisions were made; one, it would be necessary to create such a large break in silver prices so as to crush the momentum of the price rise and two, the developing physical shortage proved that silver was destined to blow sky high in time and JPMorgan should position itself accordingly. The big break in prices started on May 1, 2011 and broke the back of the silver price. Less visible is the evidence that JPMorgan began to acquire the biggest physical silver stockpile in history.
In little more than a month, as a result of the big break in silver prices staring on May 1, 2011, some 60 million ounces were liquidated from the big silver ETF, SLV, as a result of plain vanilla selling by investors who sold their shares in reaction to plunging prices. When net selling occurs in SLV, metal is automatically redeemed from the trust on a mechanical basis. The shares were sold and the metal was withdrawn from the trust as prescribed by the prospectus. That doesn’t mean the metal was dumped on the streets of London or ceased to exist. The metal fell into the ownership of someone and the most likely candidate was the entity that arranged for the selloff in the first place. The entity which stood to gain the most by the selloff was JPMorgan. They picked up their first 50-60 million ounces as a result of the May 2011 silver smack down.
Pressed for space to store the silver it planned to acquire, JPM opened its own COMEX warehouse in April 2011 and from zero ounces in 2011, that warehouse has turned into the biggest COMEX silver warehouse of all with nearly 55 million ounces on deposit. The start date proves intent by JPMorgan to acquire silver.
In 2012, JPMorgan physically transferred 100 million ounces of silver from its own custodial warehouse for SLV to the Brinks warehouse in London, leaving ample space in the former SLV warehouse to store 100 to 200 million ounces of silver that would come to be owned by JPMorgan and that would never require public disclosure. This is the most plausible explanation for why JPMorgan would move the silver to the Brinks warehouse. All the movements of metal out of SLV over the years, reeks of JPMorgan converting SLV shares to metal to be stored in its own warehouse in London on an undisclosed basis. An easy 200 million ounces can be accounted for in this manner.
The unusual and unprecedented turnover of physical silver in the COMEX-approved silver warehouses that began in April 2011 suggests to me that JPMorgan has been causing the movement in its quest to acquire physical silver. An easy 100 million ounces acquired by JPMorgan can be deduced from the more than 750 million ounces turned over in the COMEX warehouses over the past four years. How hard would it be for JPMorgan to “skim” 100 million ounces off a turnover of 750 million ounces?
The recent acceptance of more than 10 million ounces on COMEX futures deliveries and the physical movement of most of that metal into the JPM COMEX warehouse is a mere fraction of the total amount of silver JPMorgan has acquired over the past four years, but it is clearly the most transparent and may point to JPMorgan reaching the maximum amount of physical silver it intends to acquire, indicating we may be close to when the bank decides to let silver prices rise.
I’m using the number of 350 million ounces as what JPMorgan has acquired, but the real amount may be in excess of 500 million ounces. I’m being somewhat conservative in saying 350 million ounces because I’m worried that those who deny that JPM has acquired any physical silver heads might explode if the number is closer to half a billion ounces. I’m not looking for anyone to lose their minds, but to understand what these facts mean.
Ted Butler
end
Gold is a market ‘like all others’? What nonsense!
Submitted by cpowell on Wed, 2015-05-13 02:34. Section: Daily Dispatches
10:49p ET Tuesday, May 12, 2015
Dear Friend of GATA and Gold:
More sneers seem to come toward GATA tonight from Bob Moriarty over at 321Gold. His new commentary —
http://www.321gold.com/editorials/moriarty/moriarty051215.html
— begins this way:
“The gold ‘permabulls’ have cost their followers a lot of money over the past 15 years. We all know who they are. Gold is supposed to go up every single day or it’s ‘proof’ of a conspiracy of the evil bullion banks that manipulate gold at every turn. … Gold, silver, and resource stocks are markets like all others.”
— “We all know who they are”? Really? Then why not identify them so they may know that they have been accused and have a fair chance at rebuttal? Why, if not cowardice, hide behind insinuation?
— “Gold is supposed to go up every single day or it’s ‘proof’ of a conspiracy of the evil bullion banks that manipulate gold at every turn” is not GATA’s position.
Instead, GATA’s position is that central banks are in the gold market surreptitiously every day, often acting through intermediaries like bullion banks, for the traditional purposes of central bank policy — to control and defeat a dangerously competitive currency that, if ever traded freely, would make deadly trouble for government currencies, government bonds, and interest rates generally — and that this intervention distorts and ultimately defeats all markets and even democracy itself. Yes, if central banks were not constantly intervening against gold, the monetary metal’s price would be a lot higher. But no one contends that in a free market gold would “go up every single day.”
— “Gold, silver, and resource stocks,” Moriarty writes. “are markets like all others.” What nonsense! While there are indications that central banks are trading most commodities — futures exchange operator CME Group actually offers discounts to central banks for their secret trading of all CME Group commodity and financial futures contracts — there is no proof that central banks are intervening in, say, soybeans and pork bellies. But documentation of the longstanding and surreptitious intervention by central banks in the gold market abounds, from the records of the Bank for International Settlements, the Bank of England, the Federal Reserve, and the International Monetary Fund to the recent and historical comments and memoirs of central bankers themselves. No, gold is a market powerfully unlike all others. Indeed, gold is unique for the threat it poses to an essentially totalitarian system that seeks to control the valuation of all capital, labor, goods, and services in the world.
All this is summarized with links to the major documents and admissions here:
http://www.gata.org/node/14839
Of course GATA aspires to defeat this system; doing so would change the world, liberate it. Enough publicity just might accomplish this. But far from being a “permabull” for gold, GATA tells investors in the monetary metals what they’re up against: an ever-intensifying phenomenon that even some central bankers call “financial repression.” Thus GATA is very bad for the business of mere stock touting — which may explain Moriarty’s sneering misrepresentation.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
A new operation where things are paid for by using gold:
(courtesy Koven/Toronto National Post/GATA)
BitGold begins trading on TSXV as gold transaction platform builds momentum
Submitted by cpowell on Wed, 2015-05-13 00:58. Section: Daily Dispatches
By Peter Koven
National Post, Toronto
Tuesday, May 12, 2015
http://business.financialpost.com/investing/bitgold-begins-trading-on-ts…
Roy Sebag and Josh Crumb started their business with one simple guiding principle.
“We wanted to be able to go into Tim Horton’s and buy a coffee with gold, with our credit card or debit card,” Sebag said in an interview. “It went from being a hobby of how to do that to this whole company.”
Investors will start to get a better look at their vision on Wednesday, as shares of BitGold Inc. begin trading on the TSX Venture Exchange. It is the culmination of several years of hard work by the founders, and is being backed by George Soros, Sprott Inc., and other big-name financiers. The company has a valuation of more than $30 million.
BitGold is the first serious financial services platform ever built around gold. The online service allows users to buy gold, store gold, and pay for goods and services around the world using gold as the currency. The service has been active for less than a week but has already signed up thousands of users.
As its name implies, BitGold takes inspiration from Bitcoin. But there are a lot of questions about the intrinsic value of bitcoins. While gold has plenty of non-believers, the metal has been a medium of exchange for thousands of years.
Sebag and Crumb, who are 29 and 35 respectively, got the idea for BitGold shortly after the financial crisis in 2008. Sebag was a hedge fund manager at that time, and the collapse of Lehman Brothers made him alarmed about counterparty risk. He talked to some mentors about his concerns and they piqued his interest in gold, which has no counterparty risk.
He never embraced the end-of-the-world ideology so beloved by gold bugs. But he saw the value of using gold as a currency, and he was surprised there was no bank fully backed by gold. He teamed up with Crumb (who has a mining background) around this time, and they got to work creating a financial platform that would make gold more accessible and an easy medium for transactions.
Other people have tried to do something like this in the past, but they were never able to overcome the legal and technical impediments. Sebag and Crumb worked with lawyers and politicians to offer this service under Canadian bailment law. They got the world’s largest bullion banks to connect to their platform, and got Brink’s Co., a leading storage and security company, to serve as clearing house for trades. Through Brink’s, BitGold can track whenever gold owned by its customers moves in and out of vaults.
“It is a complicated (structure). But for the user — and this is the main thing — it’s just Paypal with gold. It’s a nice, clean interface,” Crumb said.
After users go through an extensive sign-up process at bitgold.com, they are able to deposit funds and obtain gold stored in vaults in six different cities around the world. After that they can pay for goods using that gold or redeem physical gold in 10-gram cubes (worth about US$400). Brink’s handles the transfer of the gold between the two parties. In the next month or two BitGold plans to launch a debit card that can be used at any ATM or retail location. That will allow users to buy that Tim Horton’s coffee with gold, just as its founders dreamed.
BitGold has a 1 percent fee to buy gold and a 1 percent fee to redeem it. Storage is free. The founders argued this is a far more attractive fee structure than the popular gold exchange-traded funds, which have annual fees.
Sebag, the chief executive, has been telling the Street that he has a target of 50,000 customers for BitGold. But his hopes are an order of magnitude higher than that. Based on the rapid take-up of the platform in the first few days, he said, it appears to be far more than a niche product for a small group of users. He noted that hardcore gold bugs make up less than 10 percent of the user base so far.
“I’m seeing friends who signed up sending payments to each other,” Sebag said. “I know they bet on football, and now they’re paying each other.”
end
Why China is taking full control over the physical gold market and pricing:
(courtesy Epoch Times / Schmid and special thanks to Robert H for sending this to us)
China, Business, China Business & Economy, Economies, HK Business
Why China Is Taking Control of Physical Gold Pricing
By Valentin Schmid, Epoch Times | May 12, 2015
The Chinese have always been in love with gold. And this year especially China is taking several steps to rattle gold markets.
The country is currently lobbying to be included in the International Monetary Fund’s reserve currency and gold has a lot to do with that process. Estimates say China has amassed thousands of tons of gold reserves that could rival the United States in the future.
“It is the Chinese view that all great currencies have gained prominence in some measure because of the hard asset reserves the government standing behind the currency holds. Gold reserves both from the government and reserves held by the population are a key factor for economic security for them,” says Simon Mikhailovich, managing director at Tocqueville Bullion Reserve
In its quest to increase both private and public holdings, the country has overtaken South Africa as the world’s largest gold producer, and by 2013 has become the world’s biggest private market for gold, according to the World Gold Council.
Investors and consumers bought 259 tonnes of gold in 2013 as mines produced 430 tonnes. But that is not enough: According to chairman of the Shanghai Gold Exchange (SGE) Xu Luode, China also imported 1,540 tonnes through Hong Kong.
The paper market doesn’t count here. It knocks the market down.
— Victor Sperandeo, EAM Partners
It is the very same Shanghai Gold Exchange which is now taking another step toward controlling the gold market. According to Reuters, China plans to establish a new standard gold price for physical metal, a so called “fixing” for the 1 kilogram bars (32.15 troy ounces) it trades on its futures exchange.
New Market
Both Chinese and Western banks have been involved in the fixing, which has not yet been publicized. However, it is a logical step in China’s quest to gain more influence.
Dissatisfied with the current gold price fixing conducted by member banks of the London Bullion Market Association (LBMA), China can achieve several goals by starting its own mechanism.
“I think the Chinese have a problem. The LBMA auction price is achieved by a group of banks. Price for physical gold is determined in markets where you don’t have to have physical gold to affect the price. You don’t even have to want it, you can just do it through financial operations,” says Mikhailovich. Setting prices this way lacks transparency and leads to distortions in the market.
The Chinese gold market. (World Gold Council)
He refers to the fact that “paper” derivative contracts far exceed the amount of physical gold available for trading. According to a report by the Reserve Bank of India, paper claims on physical gold were 92:1 in 2010.
MORE:
Why China’s Bid to Join the Elite of Global Finance Will Almost Certainly Be Successful This Year
China QE Could Be About More Than Economics
At this moment, there are two fixings for the price of physical gold, at 10:30 a.m. and 3 p.m. GMT in London. The member banks set a price, which settles delivery contracts among themselves through a secret conference call.
This price then acts as a signal for pretty much all gold derivative contracts such as futures and options throughout the world. The current participants of the fixing are Barclays, HSBC, Scotia-Mocatta, and Societe Generale.
In addition, there is evidence this “paper” gold price has been manipulated downward. “There is no transparency and there has been evidence of tactical manipulation. Who says there is not strategic manipulation?” asks Mikhailovich.
This was beneficial for China for some time, as it enabled it to accumulate gold at discounted prices. But not anymore.
As part of its bid to gain more influence at the International Monetary Fund, China will likely come out with an updated number of its gold reserves, which stood at a paltry 1054 tonnes as of 2009.
“I am convinced they will announce the new number in the summer, prior to the decision of the IMF regarding the SDR. We have always seen that gold is a very important factor when it comes to trust in a currency. I think a gold backing of the yuan would substantially increase the international acceptance,” says Ronald Ströfele, managing director at European asset manager Incrementum.
Higher Price
What is even better than just showing a higher number of tonnes in reserve, is also showing a higher price.
“I think what the Chinese are trying to do is creating a real market that reflects supply and demand for physical gold,” says Mikhailovich. Because of the skewed relationship between paper and physical, this will very likely also lead to higher prices for physical, bypassing the futures trading on the New York Futures Exchange Comex and the obscure price setting mechanism at the LBMA.
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“Both gold and silver are very actively traded in the derivatives market. Every other asset that doesn’t have a derivative, has gone up in price,” he says and makes reference to collectibles, such as paintings and antiques.
Indeed, after the gold price topped out at the end of 2011, an index of global art compiled by artprice.com has risen 9 percent until August of 2014.
Having a vibrant physical market would also help from a technical perspective as the exchange would hold the physical inventory while it goes up in price, rather than paper gold, according to Victor Sperandeo of EAM Partners LLC.
“The paper market doesn’t count here. It knocks the market down. If China wants to participate in the physical market, it helps their portfolio and they will be long inventory all the time.”
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The following is extremely important. We now have had 2 huge runnups in rate rises on sovereign bunds (bonds) and both times, central bank interventions brought them down. Bill Holter wrote the following piece last night and yet today, again yields rose again as the German 10 year bund finished at a yield of .72%. Derivatives held by our major underwriting banks (Deutsche Bank, JPMorgan, Bank of America, Citibank, Morgan Stanley, Goldman Sachs) will have considerable losses
(courtesy Bill Holter/JSMineset)
A foundation of BAD credit is no foundation at all!
That didn’t take long did it? I of course am speaking of the second overnight and global meltdown of the credit markets …in the last four business days! Before getting into this topic which I believe will soon be seen in retrospect and by historians far into the future as “THE” trigger event. The second piece I sent out yesterday “I bet you didn’t even notice it” was written over the weekend, I planned to send it out forTuesday’s reading. After sending it to Jim Sinclair to see what he thought, he strongly urged me to get that piece out for Monday. Had I not followed his advice, yesterday’s piece would have been a day late, and old news by the time it went public. So, I am eating a bit of humble pie here, the first fruit has already fallen from the seed of our partnership!
Just as we saw last Wed. night/Thurs. wee hours, credit markets again melted down overnight. The following charts clearly illustrate this.
Bonds…
Charts: Bloomberg
…But wait, just as last Thursday, credit again reversed so, …no harm no foul?
It is so important you understand “what” is happening and have an idea of “why”. Let me tackle the what part first, We are witnessing sovereign bonds and their yields move in wider standard deviations than most commodities ever do. When you hear the word “commodity” you should think “risky risky” because they have wild moves limit up and limit down, it’s the way the game is played and should be expected.
Sovereign notes and bonds are (were) the opposite. They are THE bedrock of the entire financial system. They are “supposed to be safe”. They are supposed to be for widows and orphans. Sovereign credits are THE core to nearly all retirement funds on the planet. If everything else fails, it is this sector, government bonds, which should stand tall and stave off the failure of retirement plans. The action over the last week is anything but bedrock or “stable”, in fact, it is volatility in the bond markets that are endangering everything financial, suffice it to say “a foundation of BAD credit is not foundation at all”!
The next question is “why”. For laughs I guess I should point out the explanation of a guest moron on CNBC. He claims that yields on European bonds are rising because their economy is turning up. He went on to actually say these spikes in yields (drop in prices) are actually a very good thing because they provide “proof” of future growth. Never mind all of this debt is held as collateral for everything else, lower bond prices are “good” when too much debt is the problem in the first place?
I would ask if he has even heard of a little country named Greece? Is it even possible that eurobonds are being sold because fear of a Greek default? Is the fear of a default cascade the reason bonds are being dumped in wholesale batches? I have heard the explanation that “net issuance” has again gone positive as the reason for these air pockets. Maybe this is true, I do not think so but if it is then there is a very real problem! If this is true, it means the market cannot absorb the issuance and yields are going higher not by design but because there are simply not enough buyers, an “uh oh moment” so to speak.
I have a little different theory which if not so now, or “yet”, it will be soon! I believe much of the bond market weakness is being caused (and saved) by OTC derivatives. I believe and have said multiple time before, “someone(s) out there is already dead”. I believe that “bankrupts” are strewn all over the place and have been hidden with overnight loans… but there is a new problem. The recent volatility has created more and more losers …which creates more and more FORCED SALES! (Please don’t scoff at this as there are a handful of “choice” firms who have not had a single day of trading losses in over four years, with a whole string of losers in their wake? )
You see, for all intents and purposes we have lived through a global bull market in bonds since 1982. This has culminated in negative interest rates and we ended up with everyone on the same side of the boat with no one left to “buy”. Of course you could ask the question “why would anyone buy?” with zero or even negative interest rates. Only a few of the “sane ones” out there have asked this question until now, it seems maybe a few of the insane may be regaining at least some sense of sanity!?
As I did yesterday, I will repeat “why” all of this is important. “Credit” is what our entire system is based upon. It has become the basis for all paper wealth and the lubricant for all real economic activity. Should credit collapse (it will), everything we have come to believe in (been fooled by) will change. Credit has come to be viewed as “wealth”, it is considered an “asset”… with just one problem, it is neither! Credit is only an asset and can be considered wealth as long as the borrower “can pay”. And herein lies the rub, Greece cannot pay which means the holders of Greek debt (along with issuers of CDS) cannot pay and so on. It is not just Greece of course, it is the entire Western world, it just happens that Greece is first because they lied the most with the help of Goldman Sachs and other “benefactors”. If counterparty risk did not matter, there would be no problem. The reality is this, the whole show from single dollar bills to trillions in derivatives will be engulfed in this “counterparty risk”!
Derivatives are a $1 quadrillion ticking time bomb, soaked in gasoline and sprinkled with gunpowder. The volatility we are now seeing are the matches! While we have had two “saves” where the central banks have stepped in and bought debt to steady the markets, the day will come when it does not work. This game has gone on for a very long time and resulted in a mania where most all of the players are “long”. The only potential new longs left are the central banks themselves who can only buy more debt with money created by debt. The day will come when the ability to “save” is overcome. Along with it will come the freedom of prices created by Mother Nature herself. Stocks, bonds, currencies, commodities and yes, even silver and gold will finally break the chains of “algo mania”.
Finally, this you must understand, “power” is currently debt. The control of debt is also the power of prices. Once debt breaks loose and trades out of the control of central banks, these central banks will also lose the control to price everything else. We have come very close twice in the last four trading days of the credit market control being broken. Will loss of control be on the next convulsion? Or the next? I nor anyone else knows this answer, I do know the greatest margin call in all of history will be issued … and it cannot be met! Regards, Bill Holter
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And now overnight trading in stocks and currency in Europe and Asia
1 Chinese yuan vs USA dollar/yuan strengthens to 6.2052/Shanghai bourse down and Hang Sang down
2 Nikkei closed up by 139.88 points or .71%
3. Europe stocks all up/USA dollar index down to 94.49/Euro rises to 1.1227/
3b Japan 10 year bond yield: rise to .47% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.77/Japan losing control over their bond market
3c Nikkei still just above 20,000
3d USA/Yen rate now just below the 120 barrier this morning
3e WTI 61.21 Brent 67.17
3f Gold up/Yen up
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2