Wednesday, February 24, 2010

Global gold buyers vs. global gold sellers

I thought that I would publish this list, put together by my friend and colleague, Andy H., in order to put the global demand for gold in perspective.   Please keep in mind that many of the sovereign buyers were, at various times in the last 15 years, sellers of gold.  Also keep in mind that, on average over the last 15 years, the global demand for gold has been exceeding the globaly supply by roughly 1000 tons per year.  This deficit historically has been filled by Central Bank selling.  In addition to most Central Banks now acting as buyers, the global mining output has been in steady decline over the past few years, even with China displacing South Aftrica as the largest gold producer.

As you can see, there are only two known "official" sellers/lessors of gold.  With regard to the recent IMF 212 ton transaction, it is questionable as to whether or not this was an outright sale and transfer of physical gold OR an accounting transfer, in which India, Sri Lanka and Mauritius simply withdrew their gold "deposit" as part of their IMF membership terms.  All three countries have IMF gold depositories and the "sale" would have required nothing more than an accounting transfer.  I have yet to see the IMF or any other official source dispute this.  Here is the list:


1. Chinese government
2. Chinese population
3. Indian government
4. Indian population
5. Viet Nam
6. Russia
7. Middle East (Turkey, etc.)
8. Cambodia
9. European population (record demand)
10. American population (record demand)
11. Basically ALL populations (record demand)
12. CBGA signatories (at least no longer selling)
13. Gold companies, particularly Barrick
14. ETFs, such as GLD (record holdings, new funds being created every month)
15. Major hedge fund managers, such as Paulson, Soros, and Tudor Jones


1. U.S. government, via acknowledged swaps
2. U.S. government, via derivatives/paper gold futures contracts via bullion banks
3. U.S. government, via Federal Reserve, via Warsh et al admissions
4. U.S. government, via IMF, likely via U.S. government-owned or leased gold
5. Bank of England via sales or leasing
6. Bank of Canada (hat tip to Mike - see his comment posted in the comments section)

I think we can all come to the same conclusion about what happens when you have a commodity that has a large structural deficit between demand and supply...


  1. Dave, I think you forgot to put gold miners on the list of sellers. I know the amount of gold they put on the market is not enough to satisfy demand, but it's still important. Remember, not all miners are holding back what they mine. Most companies need to keep the cash flowing and they can't afford to amass gold like Cameco is amassing uranium, or like Barrick is amassing gold (which was a surprise for me, thanks for bringing it out). The supply from miners is important enough to make it to the sellers list IMO.

  2. Thanks for the idea, but I think gold miners are implied. This more about showing central bank buyers and sellers.

    Most people do not know most CB's have gone from being gold dishorders to big buyers. Also, most people are not aware that Viet Nam and Cambodia are among the largest gold buyers in the world.

    In fact, I personally know of a Cambodian living here who has specifically mentioned that it is well known throughout Asia that the London physical market is semi-fraudulent becuase of leasing and paper games and that China is in the process of making Hong Kong the dominant global physicl market for gold.

  3. Dave,

    While there is record demand, how do you think the PMs will fare if price deflation (via job loss and monetary constriction of the middle class) becomes a major factor? It appears that price inflation has mainly occurred in food, energy, etc. Barring a flight to safety, how would PMs, as commodities perform?


  4. That's a GREAT question. To be honest, the only areas where I see price declines, or deflation, are in housing and computers/electronics.

    Here's the problem: people confuse price movement with inflation/deflation, when it's really about money debasement. The value of the dollar has declined about 96% since the Fed was founded in 1913 and over 80% since Nixon closed the gold window. The charts I have that show that cite the Federal Reserve as the source for the data.

    Here's some great examples of price inflation people don't consider because the media and Govt and Fed and Wall Street emphasize "core" CPI readings, which exclude food and energy:

    college, cars, healthcare, insurance, housing up until the past couple years, child daycare, I can go on and on. People don't recognize these because the costs occur over a long period of time and result from the extreme dollar debasement/money supply expansion that has occurred over the past 39 years (gold window closing)

    Food prices are starting to climb now, as is energy.

    In fact, I would argue that the price of gold has not yet come close to "catching" up with this monetary debasement. If you use the 1980 high and compound it forward by JUST the 3% Govt CPI, gold would be at $2100. If you use John Williams' alternative CPI calculation, gold would be something like $6500 (you can google these numbers and find them).

    What I believe is likely to happen, and many others also view this, is that every country is now engaged in active currency devaluation, money supply inflation, and that this will lead at some point to hyperinflation of prices.

    Gold/silver is the ONLY way to protect yourself from this and 5000 years of historical experience backs this view.

  5. Dave the only way I see them allowing gold to do its thing is when the whole usd ponzi system is about to come crashing down... in such a scenario the price of gold or silver will be the last thing on our minds.

  6. Thanks Dave for answer my question.

    I found these two gems, while a little off topic, they add to the big picture:

    Video about the "Bubble" in Bonds:

    Very interesting article Treasury Auctions. This was a great article because it explained how they work to an average person like myself.


  7. anliu, 3 years ago I would have agreed 100% with you on that. what "they" can't control is the fact that most global Central Banks are now scrambling to accumulate gold, big hedge funds are now involved, and China is ultimately going to use gold as an economic nuclear weapon.

    It is out of "their" control - for the most part - now.

  8. Remember what Volcker said, the mistake of the 70s was allowing gold to go bonkers... so now, everytime gold looks like it might make a momentum move higher the boys come and beat it down with more paper.

    Dave, I doubt China will use gold as the nuclear option, atleast for now. In the recent article some blah of China said they didn't want to buy the IMF gold was because it might set off a speculation frenzy. Remember they want to accumulate gold at as low a price as possible. And if I remember correctly they want 6000 tons of it! So by talking up the usd and not being an overly active player in the gold market, benefits China's long term objective.

    I always felt the PTB would eventually want a war with China and Russia on one side and America and Europe on the other. And by crashing the usd and wiping out China's saving would achieve that. But seems like other forces are at play now.

  9. i think Canada should be part of the seller list. Since 1980, Canada has sold 99.5% of it gold which was 653 tonnes to 3.4 tonnes today. They have been contiously selling during this bull market over the last 10 years. I think they are working with the BOE and FED in the gold swaps and gold suppression.

    On paper they only have 0.2% of their reserves in Gold which is way below the 10.2% average of all the CB's and 39.81% average of all the G7 nations.....on paper. The EU is currently at 57%.

    Canada has essentially gone unnoticed i think in this scheme and should be looked at now. I think they are in grave danger when the tide turns.

    anyone care to comment?

  10. Prechter is a good con-man. Full of generalities and "perfect" patterns set up that he of course fully expected. Does he include Treasuries as part of his ultimate bubble? If so, how does he find that dollar positive? Didn't we learn that big banks will be saved at all costs, even if it is the destruction of the currency?

  11. Well, well, well.

  12. Edwardo - thanks for the link. I may do a quickie post later tonight or tomorrow based on that.

  13. @Anonymous - I wish I had saved the link, but someone posted an article on the internet showing the ROR of Prechter's calls vs. that of the Wilshire and the SPX over something like 20 years. It was dismal for Prechter.

  14. @Mike - hey thanks for the enlightenment. I did not realize that about the BOC. I added BOC to the Sellers list with a hat tip to you.

  15. @anliu: conceptually w/regard to the PTB I don't disagree, however I've always felt for several reasons that the Bilderberg/one world one govt movement would fail. I do think something like "1984" is possible, with 3 or 4 large geographic/semi-cultural factions that form.

    I think the global race to devalue currencies will drive a wedge between a lot of countries, as well as the U.S. imperialistic perpetual war against a perpetual boogieman.

    I'm not saying China will exercise the nuclear gold option anytime soon, but after they accumulate a very large amount of gold they will do some kind of huge reval of gold and rollout a gold-backed currency.

  16. @dave, no need for credit but thanks anyways. i dont have any evidence to prove it but damm those numbers are ugly for Canada. wish more attention would be made, i am sure gata could probably uncover some stuff. afterall Canada is pretty much british and will do anything for the US behind the curtain, so it would make sense to play their games. and now the our main guy at BOC is ex goldman sachs how nice.

    So why would a great nation with supposedly the best banking system, no housing bubble or fed/provincial/municipal or personal debt issues need gold for?
    After all 41% of their reserves are in US securities, can't get any better then that.

    I think Canada has done a great job playing the socialist and the nice guys to the world since 1980 and behind the scene's joining the rigging of the gold market and probably creating the soon to be biggest collapse in their small history.

    I wish we could uncover more information on they're most likely rigging but it will be very difficult. But no one in Canada cares about Gold as much as foreigner's think, all we care about is paper gold, gold stocks not actual gold and ya of course our mining sector is big and we have some big reservers by funds (CEF, sprott etc..), and some big investors here care(sprott, embry etc..) but not the average j6p, afterall we learn from our government that we dont need gold so we prefer more debt just like them.

    I know we probably have the commodities to bail us out in a way and i guess we should be fine because of it, but we have the same exact issues that the states has and the rest of the world is tearing up other countires for and yet the market doesn't give 2 shits. Canada is not the flavour of the month right now but one day it will be.

    the housing bubble is going out of control. the home price to income varies from 5 to 9.3 which is much higher then the states was and most of the world. our debt to gdp is getting worse now 70%+ and our deficit last year sky rocketted negative 59billion for the first time in years. but good times keep on rolling thats why we dont need gold.
    i see BC as the next California easily, they have debt like Canada has never seen before.
    750k avg home and they make 70k for household income. Add the olympics debt now and they are toast.

    one day when things start going the other way around and they are already, then they will question the gold. i hope the fed has some secret's on canada helping them rig the market also in a small way i am sure if they ever get audited.

  17. I agree dave, no way no how can the PTB implement a one world dictatorship when they can't even manage europe. A "1984" scenario would be possible if world population is kept at around a billion, ala the Georgia gild stones.

    Also regarding QE 2.0 that everyone is waiting for, Banana Ben said he would not go beyond March of this year and I believe his word. But we all know the fed has somehow been surreptitiously monetizing way more than the public is being led to believe. So I feel publicly he will shy away from further qe to back up his rhetoric of a strong dollar. But we all know whats going on behind the scenes.

    What we need is for a large enough country to start accepting gold as payment. Say Iran making the announcement that they are accepting physical gold for payment for their oil. Like it or not gold is still perceived as a commodity and not a currency. Once nations start accepting gold as payment then its a whole new ball game. This is what Jim Rickards alluded to, once gold is viewed as currency then the sky is the limit. I'm actually very surprised Iran hasn't made that move already. IF they did, then you can bet a pretty ounce that a bombing campaign by the central bankers isnt too far away!!! ;)

  18. damn Mike had no idea the fiscal situation in Canada was that grim. I thought things were in better shape because of the natural resource heavy aspect of your economy. and don't forget the missing gold scandal from the Mint. i guess at the end of the day, Canada is just as controlled by billionaire PTB as the U.S.

    Hey, at least it looks like there will be a U.S./Canada hockey rematch at the Olympics!

  19. anliu: the Fed may stop buying mortgages but it looks like FNM/FRE will replace the Fed and even ramp up the pace. Bernanke said it looks like FNM/FRE may be turned into public utilities. I was praying he dropped from a heart attack at that moment. And the money will still have to be printed for the GSE's to buy mortgages like that.

    The only reason I don't believe Bernanke what he says the Fed won't go beyond March is that his ex-Goldman handler, NY Fed Chair Dudley, has publicly stated that the extension of the mortgage program is an option.

  20. @dave from denver
    i noticed this post was put on

    wondering if you can ask them if they have any dirt on Canada? or at least i think it should be mentioned.


  21. Mike Contact Rob Kirby of

    here's his email:

    I bet he can fill you in on anything you want to know. I know LeMet/Midas in the past has been very critical of Canada, especially when the Royal Mint gold scandal was happening.

    The guy running the BOC is an ex-Goldman guy, and the BOC is seen down here as a lapdop of the U.S. Fed.

  22. ya i remember them killing the RCM before but dont ever remember anything about the BOC.

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  39. It seems like the US and England own all the gold in the world. Most mines in South Africa are owned by the US, i.e Anglo American, Xtrata, Anglo Platinum, etc. Countries in Africa have to start nationalizing their mines, especially South Africa. Great post. Thanks for sharing.

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