Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1225.40 up $7.00 (comex closing time)
Silver $17.45 up 24 cents (comex closing time)
In the access market 5:15 pm
Gold $1221.60
Silver: $17.50
Gold/Silver trading: see kitco charts on the right side of the commentary
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 4 notice serviced for 400 oz. Silver comex filed with 31 notices for 155,000 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 rose by 5464 contracts as Wednesday’s silver price was up by 70 cents. The total silver OI continues to remain extremely high with today’s reading at 180,383 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 31 notices served upon for 155,000 oz.
In gold, the total comex gold OI rests tonight at 417,716 for a gain of 12,104 contracts as gold was up by $25.80 yesterday. We had 4 notices served upon for 400 oz.
Today, we had another huge withdrawal in gold Inventory to the tune of 4.41 tonnes, at the GLD. It rests tonight at 723.91 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. On Tuesday Koos Jansen informed me that last week 38 tonnes of gold was demanded by the Chinese .
In silver, / another huge 1.912 million oz of silver withdrawn from silver inventory at the SLV / and thus the inventory tonight remains at 320.750 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver rise appreciably by 5464 contracts as silver was up in price yesterday by 21 cents. The OI for gold rose by 12,104 contracts up to 417,716 contracts as the price of gold was up by $25.80 yesterday. GLD had a huge change (withdrawal) of 4.41 tonnes and another withdrawal of 1.912 million oz of silver from the SLV.
(report Harvey)
2,Today we had 2 major commentaries on Greece today:
zero hedge
3. Bill Holter further provides commentary on Ted Butler’s theory that JPMorgan has accumulated 350 million oz of silver.
(Bill Holter)
4. Bundesbank head, Jens Weidmann blasts Draghi for providing ELA to Greece and for purchasing bonds on the open market totally in contravention of their charter.
zero hedge
5. Greek government for the last 4 months has stopped paying suppliers
Ekatherimini
6. Kansas City Southern railway gives a disastrous outlook for the USA economy
zero hedge)
7. Consumer comfort index falls badly again.
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 12,104 contracts from 405,612 up to 417,716, as gold was up by $25.80 yesterday (at the comex close). We are in our next non active delivery month of May and here the OI fell by 3 contracts falling to 145. We had 1 notice filed upon yesterday. Thus we lost 2 gold contracts or 200 oz will not stand for delivery in May. The next big active delivery contract month is June and here the OI fell by 2,535 contracts down to 195,953. 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 99,603. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was unbelievable at 283,777 contracts as the bankers continued to use non backed paper against all of that demand. Today we had 4 notices filed for 400 oz.
And now for the wild silver comex results. Silver OI rose by 5,464 contracts from 174,919 up to 180,383 as the price of silver was up in price by 70 cents, with respect to yesterday’s trading. The bankers also used a humongous amount of non backed paper to quell the huge demand for silver. We are into the active delivery month of May where the OI fell by 34 contracts down to 375. We had 5 contracts filed upon with respect yesterday’s trading. So we lost 29 contracts or an additional 145,000 oz will not stand for delivery in this May delivery month. The estimated volume today was fair at 32,154 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 83,061 contracts which is unbelievable in volume. We had 31 notices filed for 155,000 oz today.
May initial standings
May 14.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
4 contracts (400 oz)
No of oz to be served (notices)
141 contracts(14,100) oz
Total monthly oz gold served (contracts) so far this month
7 contracts(700 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 0 customer withdrawal
total customer withdrawal: nil oz
We had 0 customer deposits:
total customer deposit: nil 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 4 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 (7) x 100 oz or 700 oz , to which we add the difference between the open interest for the front month of May (141) and the number of notices served upon today (4) 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 (7) x 100 oz or ounces + {OI for the front month (141) – the number of notices served upon today (4) x 100 oz which equals 14,800 oz standing so far in this month of May. (.46 tonnes of gold)
we lost 2 gold contracts or an additional 200 ounces will not stand 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 14 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
107,072.170 oz (Brinks, Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
nil
No of oz served (contracts)
31 contracts (155,000 oz)
No of oz to be served (notices)
344 contracts (1,720,000 oz)
Total monthly oz silver served (contracts)
2532 contracts (12,660,000 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
2,998,496.1 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 1 customer withdrawals:
i) Out of Scotia: 107,072.170
total withdrawals; 107,072.170 oz
we had 2 adjustments
i) Out of CNT: 14,404.300 oz was adjusted out of the customer and this landed into the dealer account of CNT
ii) Out of Delaware: 10,416.400 oz was adjusted out of the customer and this landed into the dealer account of Delaware
Total dealer inventory: 60.142 million oz
Total of all silver inventory (dealer and customer) 177.578 million oz
The total number of notices filed today is represented by 31 contracts for 155,000 oz. To calculate the number of silver ounces that will stand for delivery in May, we take the total number of notices filed for the month so far at (2532) x 5,000 oz = 12,660,000 oz to which we add the difference between the open interest for the front month of April (375) and the number of notices served upon today (31) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the May contract month:
2532 (notices served so far) + { OI for front month of April (375) -number of notices served upon today (31} x 5000 oz = 14,380,000 oz of silver standing for the May contract month.
we lost 29 contracts or an additional 145,000 oz will not 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 14./ a huge withdrawal of 4.41 tonnes of gold/Inventory rests at 723.91 tonnes
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 14 GLD : 723.91 tonnes.
end
And now for silver (SLV)
May 14/ a huge withdrawal of 1.912 million oz from the SLV/Inventory at 320.75 million oz.
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 14/2015 no changes at the SLV / inventory rests at 320.75 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 8.1% percent to NAV in usa funds and Negative 8.1% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.6%
Percentage of fund in silver:38.1%
cash .3%
( May 14/2015)
2. Sprott silver fund (PSLV): Premium to NAV falls to-0.76%!!!!! NAV (May 14/2015)
3. Sprott gold fund (PHYS): premium to NAV rises to -.23% to NAV(May 14/2015
Note: Sprott silver trust back into negative territory at -0.76%.
Sprott physical gold trust is back into negative territory at -.23%
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)
Global Debt Now $200 Trillion!
By Mark O’ByrneMay 14, 20150 Comments
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– McKinsey Institute says global debt is $199 trillion and unsustainable
– Total global debt is $27,204 for every person living today
– All major economies have “higher levels of borrowing relative to GDP” than in 2007
– 3 risk areas – rising Chinese debt, government and household debt
– Debt report ignores U.S. unfunded liabilities of over $100 trillion
– Major cause of risky, unprecedented debt levels – QE and ultra loose monetary policies not acknowledged
– Risk of new global financial crisis – wealth taxes, currency wars and devaluations and bail-ins
Global debt is now in the region of $200 trillion. The McKinsey Global Institute recently published a report highlighting the bloated, unsustainable levels of debt that have been accumulated globally and the huge risks when interest rates begin to rise again.
McKinsey concluded that total global debt was $199 trillion and the little covered report was released in February – 3 months ago – meaning that the figure is likely over $200 trillion. With a global population of 7.3 billion this works out out at over $27,200 of debt for every man, woman and child alive in the world today.
Almost 29% of that debt – $57 trillion – has been accumulated in the relative short period since the financial crisis erupted in 2007 – just 8 years.
This has increased the total debt-to-GDP ratio by 17% and “poses new risks to financial stability and may undermine global economic growth.”
The report, entitled “Debt and (not much) deleveraging”, analyses the debt situation in 47 different countries – 22 of which have advanced economies and 25 with developing economies.
Of the 22 advanced economies every one was found to have higher debt-to-GDP ratios today than they did in 2007. For many, the ratio had grown by more than 50%.
The three major areas for concern according to the report are rising government debt, rising household debt and rising total debt in China – which has increased a staggering four-fold since 2007.
The McKinsey report states bluntly that “government debt is unsustainably high in some countries.”
Government debt has expanded by 25% since the crisis began and much of it stems directly from the crisis.
The report states that for the six of the most highly indebted nations deleveraging has become impossible – at least without “implausibly large increases in real-GDP growth or extremely deep fiscal adjustments.”
With regard to household debt the report states that household debt-to-income ratios in some countries exceed those of the crisis countries in the run-up to 2008.
In those crisis countries – the report cites the U.S., the U.K., Ireland and Spain – households have managed to pay down some debt. According to the report, in advanced countries – like Australia, Canada, Denmark, Sweden and the Netherlands – but also in Malaysia, South Korea, and Thailand household debt relative to income has exploded.
China’s debt has quadrupled since 2007 to $28 trillion. This represents 282% of GDP. The McKinsey Institute expresses concern about China’s financial system thus:
“half of all loans are linked, directly or indirectly, to China’s overheated real-estate market; unregulated shadow banking accounts for nearly half of new lending; and the debt of many local governments is probably unsustainable.”
They believe the Chinese government could bail-out the financial system if necessary but suggest that debt be reined in.
The report offers its solutions to these three growing crises but fails to acknowledge the root cause of the problem – the policy response of governments and central banks in recent years and the debt based monetary system.
Not acknowledged in the report is the fact that governments and central banks opted to bail out banks, at the expense of taxpayers and engaged in quantitative easing which again aided banks and their balance sheets but further indebted taxpayers and sovereign nations.
In a world where currency comes into existence as a debt and the interest on that debt cannot be paid until new currency is created in the form of new debt, governments are left with a choice between continuous debt expansion and borrowing or deflation and possible depression and economic collapse.
Unless and until the debt based system is replaced there can only ever be an increasing debt load and an urgency for economic growth with the consequent degradation of our environment and a debt enslaved humanity.
The solutions offered by the McKinsey report, particularly with regard to dealing with government debt, instead focus on ever more government and corporate power and financial repression.
For example, in dealing with government debt the report suggests “more extensive asset sales, one-time taxes on wealth, and more efficient debt-restructuring programs.”
The summary of the report makes this conclusion:
“Debt undoubtedly remains an essential tool for financing economic growth. But how it is created, used, monitored, and (when necessary) discharged still needs improvement.”
It is not clear what “one-time tax on wealth” McKinsey have in mind and whether debt restructuring will involve “bail-ins.”
Another glaring omission in the McKinsey report is the dire fiscal position of the U.S. who now have a National Debt or Federal Debt of $18,44 trillion and a real national debt and “unfunded liabilities” alone of over $100 trillion.
The attempt to solve what was essentially a global debt crisis with mountains of more debt means we will have another global financial crisis – the question is when rather than if.
This will have an impact on our economic recovery and on asset prices and hence the importance of diversification – both in terms of asset diversification but also in terms of geography and where and how your assets are owned.
Must read guide to Bail-ins here: Protecting your Savings In The Coming Bail-In Era
MARKET UPDATE
Today’s AM LBMA Gold Price was USD $1,214.75, EUR $1,063.59 and GBP $768.91 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,193.00, EUR 1,062.43 and GBP 761.55 per ounce.
Gold climbed $21.60 or 1.81 percent yesterday to $1,214.80 an ounce, and silver outperformed and surged $0.57 or 3.45 percent to $17.11 an ounce.
Gold traded sideways in Asia overnight and gold in Singaporewas firm at $1,214.10 an ounce near the end of day trading. Gold and silver appeared to consolidate in early trading in London on the sharp gains seen after the poor U.S. retail sales number yesterday.
Gold and silver are both near a five week high after climbing on the weak U.S. retail sales data that heightened concerns that the Fed would not raise interest rates soon – something we have said would likely happen. The U.S. dollar fell in value against other currencies on the news and is weak again today – particularly against silver and the Swiss franc.
Gold is being supported by jittery bond markets, rising bond yields and dollar weakness this week.
Recent economic data, including the retail sales number yesterday, has been more negative than positive. This is contributing to volatility in bond markets and some selling pressure in equity markets. There are increasing concerns about the economic outlook globally.
The U.S. dollar has come under further pressure and remained at three month lows today after the poor retail data proved a huge disappointment to those expecting a strong economic rebound from a weak first quarter – blamed on the weather.
German and U.S. bond yields surged to their highest in over five months as a vicious selloff extended to its tenth session. The startling rise in yields has made equities look more expensive in comparison to government debt and kept stock markets subdued.
Gold prices may benefit if there is a supply disruption from South Africa due to South Africa’s Association of Mineworkers and Construction Union (AMCU) pay rise dispute. The AMCU are seeking basic pay for entry-level workers in the gold mining industry to be more than doubled, which means difficult negotiations and perhaps a strike which we saw in the platinum sector last year that lasted five months.
In late morning European trading gold is up 0.32 percent at $1,220.54 an ounce. Silver is up another 1.2 percent at $17.40 an ounce. Palladium and platinum are up 0.15 and 0.26 percent at $790 and $1,150.00 an ounce respectively.
end
Mike Kosares: What might be behind today’s price jump
Submitted by cpowell on Wed, 2015-05-13 17:32. Section: Daily Dispatches
1:30p ET Wednesday, May 13, 2015
Dear Friend of GATA and Gold:
Today’s jump in gold prices might have been prompted by sharply falling appetites among foreign central banks and ordinary investors for U.S. government debt, USAGold’s Mike Kosares writes today. If so, he adds, look for a resumption of “quantitative easing” — that is, still more debt monetization and money printing. Kosares’ commentary is headlined “What Might Be Behind Today’s Price Jump” and it’s posted at USAGold here:
http://www.usagold.com/cpmforum/2015/05/13/what-might-be-behind-todays-p…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy Ronan Manly/GATA)
Ronan Manly: Much of Venezuela’s gold was leased in London before repatriation
Submitted by cpowell on Wed, 2015-05-13 23:50. Section: Daily Dispatches
7:49p ET Wednesday, May 13, 2015
Dear Friend of GATA and Gold:
In the first of a two-part series, gold researcher and GATA consultant Ronan Manly today discloses that much of Venezuela’s gold reserves was leased or otherwise put in play in the gold market in London in the decade before President Hugo Chavez ordered it repatriated. Manly’s analysis is headlined “Venezuela’s Gold Reserves — Part 1. …” and it’s posted at Bullion Star here:
https://www.bullionstar.com/blogs/ronan-manly/venezuelas-gold-reserves-p…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy GATA)
Make cash illegal to end boom and bust — and liberty
Submitted by cpowell on Thu, 2015-05-14 01:16. Section: Daily Dispatches
9:32p ET Wednesday, May 13, 2015
Dear Friend of GATA and Gold:
If commentary published tonight in the London Telegraph is any indication, gold bugs may not be quite as paranoid as their stereotype.
The commentary, written by Jim Leaviss of M&G Investments in London, argues that governments could stop the boom and bust of the business cycle if only cash was eliminated and replaced by electronic money. Leaviss says a step toward such a change is already under consideration in Denmark.
Leaviss writes: “Once all money exists only in bank accounts — monitored or even directly controlled by the government — the authorities will be able to encourage us to spend more when the economy slows or spend less when it is overheating. … In this futuristic world, all payments are made by contactless card, mobile phone apps, or other electronic means, while notes and coins are abolished. Your current account will no longer be held with a bank, but with the government or the central bank. …”
When government wanted people to save, Leaviss writes, it could impose a tax on bank account transactions, and when government wanted people to spend, it could impose negative interest rates, as some governments already have done.
“At the moment it’s easy for individuals to avoid seeing their money eroded this way,” Leaviss notes. “They can simply hold banknotes, stored either in a safe or under the proverbial mattress.” (He could have added gold.) “But if notes and coins were abolished and the only way to hold money was through a government-controlled bank, there would be no escape.”
Yes, no escape at all. Everyone’s financial transactions would be recorded and monitored, everyone’s finances would be vulnerable to government cutoff at any time, and liberty and privacy would be abolished.
That government must never have such power has been the principle underlying the political development of the English-speaking peoples for hundreds of years, from Runnymede by the Thames to Independence Hall in Philadelphia. Yet now nostalgia for the Soviet Politburo and the Nazi Gestapo is being celebrated in what is supposedly the United Kingdom’s leading Conservative newspaper. God save the queen — and the rest of us too.
Leaviss’ commentary is headlined “How to End Boom and Bust: Make Cash Illegal” and it’s posted at the Telegraph’s Internet site here:
http://www.telegraph.co.uk/finance/personalfinance/comment/11602399/Ban-…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
Avery Goodman/Chris Powell/GATA)
Avery Goodman: The real reason China is buying up the world’s gold
Submitted by cpowell on Thu, 2015-05-14 03:26. Section: Daily Dispatches
11:29p ET Wednesday, May 13, 2015
Dear Friend of GATA and Gold:
Colorado securities lawyer Avery B. Goodman writes tonight that China’s vast acquisition of gold is meant to create a mechanism for controlling the currency markets and devaluing the yuan against the U.S. dollar as convenient while escaping charges of currency market manipulation.
Drawing on a crucial U.S. State Department document unearthed by GATA —
http://www.gata.org/node/13310
— Goodman writes: “Whoever controls the price of gold against their own currency controls the price of gold against any other currency that gold is denominated in. When China increases the number of yuan it takes to purchase an ounce of gold, the dollar will respond by rising in value, even though China will not be pegging its yuan directly against the dollar.” Chinese goods thereby will become cheaper against U.S.-made goods, preserving China’s advantages in world trade.
Goodman continues: “Control over the worldwide currency markets is why China wants to control the gold market. It is already taking affirmative steps to establish that control, and that is what is behind the announcement that the Shanghai Gold Exchange will establish a yuan-based gold fix before the end of 2015.”
Goodman’s analysis is headlined “The Real Reason China Is Buying Up the World’s Gold” and it’s posted at Seeking Alpha here:
http://seekingalpha.com/article/3178896-the-real-reason-china-is-buying-…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
What took these guys (WGC) so long to recognize China as the world’s number one consumer of gold;
(courtesy Lawrence Williams/Mineweb)
WGC resurrects China as world No. 1 gold consumer
The latest Gold Demand Trends analysis from the WGC sees a stable supply/demand picture.
Lawrence Williams | 14 May 2015 14:40
Forgive us for coming back to a subject we have covered before, but we have previously commented on our disbelief that India regained top spot as the world’s No. 1 gold consumer in 2014. This belief, which is since being perpetuated by the mainstream global media, was based on the World Gold Council (WGC)’s Gold Demand Trends report of February this year, which had India just pipping China into the No.1 spot on preliminary data. We disagreed with this assessment at the time and have pointed to other statistical analyses of the global gold market since which would also reverse this position and we are now pleased to note that the latest WGC Gold Demand Trends report has China firmly back in the No. 1 spot for 2014 with its latest consumption figure for that year put at 973.6 tonnes as against India’s 811 tonnes. China’s figure would be even higher at 1,015 tonnes if we include Hong Kong consumption which perhaps one should given that Hong Kong is a part of China even if its statistics tend to be recorded separately.
The latest WGC statistics – now provided by the Metals Focus consultancy rather than by GFMS which has provided them in the past – also suggests that Chinese consumption (excluding Hong Kong) fell by 7% in Q1 this year to 272.9 tonnes compared with Q1 2014, while India’s grew by 15% to 191.7 tonnes – which still leaves China as comfortably the No.1 global consumer. The report also points out that the two countries between them account for 54% of total global gold consumer demand. In terms of percentage of new mined supply – put at 729 tonnes for Q1 2015 – the two countries accounted for 64%. But we also believe that, in the case of China, these figures still substantially underestimate gold flows into the country, which is in part due to a rigid calculation as to what actually is defined as ‘consumer demand’. This does not appear to include demand absorbed directly by the Chinese banking system. To back up our view withdrawals from the Shanghai Gold Exchange (SGE) in Q1 this year reached around 623 tonnes – 10.5% higher than in Q1 2014 – See: SGE Q1 gold withdrawals at new record – ca. 623 tonnes. Whether one takes SGE withdrawal figures as an accurate representation of actual Chinese demand (there are arguments over this) it is certainly an accurate indicator of the levels of Chinese gold flows.
Now whether the world’s mainstream media will now recognise the latest WGC figures as being the correct ones, or continue to claim India is the world’s No. 1 gold consumer based on the earlier WGC data, is a moot point – we suspect not. But anyway which is actually the larger gold consumer at any point in time is perhaps an irrelevance in terms of overall global gold supply/demand fundamentals.
So, if we look deeper into the WGC’s latest Gold Demand Trends report, it would appear that global gold demand slipped marginally by about 1% in Q1 this year compared with a year ago with lower jewellery demand mostly countered by a rise in investment demand.
Central banks too continued to absorb gold with purchases of 119 tonnes – the same level as a year earlier, being the 17th successive quarter in which they have been net purchasers as they have continued to look for diversification away from US dollar denominated assets.
Global supply was also much the same as a year earlier, with a continuing rise in new mined production (compared with Q1 2014, but actually down on Q2,3 and 4 figures for last year) balanced by a continuing fall in supply from scrap, which has been limited by lower gold prices. On new mined supply, the report suggests that the analysts expect this to plateau this year before starting to retreat until, and unless, there is a substantial gold price pick up.
On mine production the WGC notes that, “A further increase is likely next quarter as the tail end of growth comes through from a number of projects. However, this should fade away as the year progresses; we will likely see negative comparisons in the second half of the year.
Alastair Hewitt, the WGC’s head of market intelligence, in commenting on the report, noted that what has turned out to be a fairly stable supply/demand balance hides some substantial regional and sectoral differences – for example Chinese jewellery demand is seen as falling back by around 10%, but this being perhaps more than balanced by a 22% rise in Indian jewellery demand. Gold ETFs also saw a small inflow during the quarter (26 tonnes) being the first quarterly inflow since 2012. Consumers in Eastern nations continued to dominate demand, but this has been the case for some time now with gold flows continuing to move at a high rate from West to East.
Thus overall the latest WGC report sees little change in supply and demand fundamentals, while the gold price has actually remained fairly stable during Q1 trading within a fairly tight range throughout the quarter. This morning the price has been sitting close to the $1,220 level which is towards the higher end of its recent range, but it tends to fluctuate quite sharply on US data announcements depending on whether these are seen as bringing the US Fed timetable for possibly raising interest rates forward or moving it ever further back. In our view this should in reality be something of an irrelevance for the gold price anyway as any likely level of interest rate increases would still leave them in effective negative territory.
As many of you know, my theory has been over the years that there has been a silver loan from the official sector of China to the USA. That loan occurred in 2003 right after the USA announced that they were out of silver from the days of the Manhattan project. Today Bill offers another explanation tying in Ted Butlers take on how JPMorgan acquired 350 million oz of silver
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Dave Kranzler and Chris Powell
(courtesy Dave Kranzler/IRD/Chris Powell/GATA)
SoT Ep 26 – Chris Powell: “Gold Is The Deadly Threat To All Governments”
May 14, 2015Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. EconomyBIS, Chris Powell, GATA, Shanghai Gold Exchange
We open this podcast with Charlie Chaplin’s speech from “The Dictator.“ It is one of the most powerful speeches ever given. It ranks with the likes of Dr. King’s “I have a Dream” and a handful of other truly great speeches that were designed to uplift the spirit, free the mind and announce to the world we are all sovereign human beings created to do great things with our lives.
For over 15 years, Chris Powell – the co-founder of GATA – has been in the trenches exposing the corruption deeply embedded in our financial and political system. Chris has been a staunch promoter of free markets and reduced Government power. The cornerstone of democracy and true freedom begins with honest money. Gold stands alone a honest because it does not rely and counterparty risk and it can not be printed and devalued.
Because of this inherent nature in the use of gold as currency, gold stands as threat to a Government’s ability to dictate.
Gold is the deadly threat to all governments, including the Chinese government. Gold is a free market independent currency and puts all government currency at risk. Is China really working in the gold market for free markets and democracy and individual liberty around the world? No, I don’t think so. China, I think, is mainly working to hedge it’s stupid U.S. dollar exposure. – Chris Powell, Shadow of Truth
The gold community, in general, is very excited about the prospects of China and the new gold fix that will be launched sometime in 2015. Most of the speculation is around the September timeframe, but most assuredly before years end. After speaking with Chris about China and this seemingly important change in the global pricing mechanism, our optimism is waning. Let’s just say there has been a dose of reality served up.
I don’t kid myself that China is working for the benefit of us goldbugs here in the West. I think China is working for power for the Chinese government. Now, does the Chinese government want a higher gold price or a lower gold price or does the Chinese government just want to control the gold price as much as Western governments want to control it for different reasons? In 1974 Kissinger and his Deputy Secretary Thomas Enders discussed how the United States must persuade the European countries to keep moving gold out of the world financial system because whoever has the most gold controls it’s valuation and whoever controls golds valuation controls the valuation of government currencies. – Chris Powell, Shadow of Truth
This is an incredible interview with Chris Powell. Dare we say that he was “on fire.”
I’d say almost all the major ones (mainstream media) in the United States and Europe. Every major financial news organization in the West has all this documentation (regarding gold market manipulation) It just can not be acknowledged as an issue. Any journalist that picked up the gold price suppression issue would be fired.
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I don’t think the power of Central Banks to create infinite money is their greatest advantage right now. I think their greatest advantage right now is either their control of the mainstream financial news media or the timidity of the mainstream financial news media. This story is just the Emperors New Clothes.
There is very likely an arrangement, an understanding, among the world’s major Central Banks that is redistributing the worlds gold, right now, the debtor nations to the creditor nations to allow the creditor nations to hedge themselves against an evadible devaluation of the dollar.
He (Jim Rickards) has said, over the last year, a number of times. That from his meetings with government officials, Central Bank officials, elected officials, officials of the International Monetary Fund that there is, some, more or less formal arrangement, understanding between the United States and China. Whereby, China agrees not to dump it’s Treasuries while the United States agrees facilitate the flow of gold into China at a discounted price.
Rickards has been on record, on several occasions, stating that gold would be revalued to approximately $9,000 per ounce. According to Millars report, there is already in place, a plan to revalue gold by 7 to 10 times. Gold is currently, approximately, $1,200 per ounce, multiply that by 7 and you get $8,400 per ounce. A multiple of 10 and you have $12,000 per ounce.
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As many of you know, my theory is that the sovereign Chinese has loaned the USA 300-600 million oz of silver in the year 2003, the year they ran out of above ground silver courtesy of the Manhattan project.
I believe that they asked for their silver back and it was denied. Sovereign China used the lower prices to stock up on gold. Bill Holter also is a strong believer of this theory. We now add in Ted Butler’s assertion as to what is going and we may have the perfect picture of what is happening behind the scenes;
(courtesy Bill Holter/Miles Franklin/JSMineset)
The Great Silver Debate
Over the last weeks, a great debate has erupted regarding silver. More to the point, Ted Butler claims JP Morgan has accumulated at least 350 million physical ounces. Some pooh pooh this and say it is not possible while others who may believe it are scared witless because they are afraid Morgan will dump the metal and destroy the silver price.
Taking first things first and then later expanding, I believe it is possible for Morgan to have accumulated this silver. If you look at the bleed from both COMEX and SLV inventories and add in the purported movements on the LBMA, I do believe it is possible that JPM has amassed a silver war chest. From a “dollar” standpoint, this is only about $5 billion which wouldn’t even need to come from their equity as they have a direct pipeline to the bowels of the Fed and Treasury for credit.
To answer the question of “fear” propounding this silver will be used to destroy the market, I would first remind you that “devious” and “stupid” are two separate descriptions. No matter what anyone believes, JP Morgan is not stupid, devious may be another matter altogether with each fine they have paid as proof. JP Morgan has had a huge short paper position in silver for many years dating back to at least 2007 when they inherited Bear Stearns positions. The position has been so large in fact, they could never possibly “push a button” to cover it because the metal simply never existed to cover it in a short period of time. Any attempt to cover would have created a panic of demand and a minimum price of $100 per ounce for starters!
This leads us to one of several theories and the most obvious, JP Morgan has been amassing physical silver and is now actually a hedge against their short position as opposed to the other way around. It makes zero sense to me that Morgan would dump a physical position because the accumulation was so difficult to acquire in the first place. As I said above, JP Morgan is not stupid and they understand the logic of where the macroeconomics are headed. They know the game is either inflate or die and can surely make the judgment as to whether or not they want to be net long, or short silver. And trust me, they also know the difference between paper contracted silver and the real thing in their vaults.
It also occurred to me, what if the short position is “used” to revalue the long position? We have seen so many times where naked contracts were “sold sloppy and sold BIG”, what if JPM decided to actually cover their short by buying “sloppy”? They effectively could use the short position as a springboard if you will? What would stop them from covering the short to become flat and just keep on buying sloppy in the futures pits and running every short on the planet? They must surely know the upside pressure is there not only technically but fundamentally because of the supply being knocked off stream by below production prices? This is an easy trade for them if truly have built a physical long, thus making their short to unwind the “sloppier the better”! This makes more sense to me than dumping the physical long which everyone is so afraid of.
Another theory is that JP Morgan has gotten very long physical silver at low prices by compressing said price in the futures markets. Some believe Morgan understands where the game is headed and also understands the “uses” for silver are expanding exponentially, and in particular the solar energy industry. This is possible in my opinion as I don’t believe there is any hoard of 350 million ounces or more anywhere else. Maybe they are looking to the future and want to sit on the real metal to supply into a future market at grossly higher prices with real demand unable to be satisfied.
There is one more theory, one that I cannot prove but makes a lot of sense. I believe the Chinese lent 300 million ounces of silver to the U.S. back in 2003 and this was a 10 year lease. I believe the lease ran out and was defaulted on in 2013, this would partially or mostly explain why silver was attacked in the paper markets so brutally. The “tree had to be shaken” in an effort to shake some real silver from holders hands. Also if you remember, it was around this time that Warren Buffett let loose of his 129 million ounce position he announced originally a few years earlier, the divestiture “coincidentally” coincided with the formation of the ETF, SLV… that was funded with a very similar number of ounces!
It is my belief that after the U.S. defaulted on its lease to China, China wanted some sort of assurance they would ultimately be paid. It was this broken transaction and the following agreement not to “let the price of silver (or gold) to get away” that has allowed China to amass huge sums of gold “in lieu of” silver. I believe this broken transaction is the reason suppression has been so blatant and violent since April