Friday, March 26, 2010

The Asians/Indians Are Aggressively Buying Gold While America Sells on the Cheap

Make no mistake about it, China/India/Viet Nam/Thailand and others in the eastern hemisphere are buying this correction in the gold market with both hands. I don't know that the west has much physical gold to dump on the market - and clearly the ECB system has been a net buyer over the past 2 months - but the east is hungrily and greedily scooping up whatever is out there.

As you'll see from the market color and articles below, the supply of "big boy" gold is dwindling rapidly (I'm not talking about coin dealers with 1 oz. bullion coins and crappy private-minted junk being offered at big premiums to spot. I'm talking about 400 oz. bona fide AND deliverable-on-demand LBMA bars).

"JB" is an articulate, witty and perspicacious metals market professional who shares news and insight on the eastern hemisphere physical gold/silver markets with subscribers to  Below I've pasted his commentary on the eastern markets - he gets his information directly from traders and news reports:

Here's Thursday's commentary based on the overnight markets in the east:

Intriguingly, so also may be China [buying aggressively]. Mitsui-HK today explicitly says: "While euro tried to pull the yellow metal lower, Chinese buying wanted to push it higher”...More concretely, the Shanghai market closed at a $6.08 premium to world gold of $1,091.98, the second day of unusually high premiums.  Indian ex-duty premiums: AM $8.18, PM $7.85, with world gold at $1094.91 and $1098.04. Lavish for legal imports.

[please note, the presence of premiums this high in China and India is consistent with the fact that buyers in those countries are scrambling to buy as much gold as they can.  While premiums are required for importation, premiums this high are not common.  Same with Viet Nam]

Here's the overnight action reported this morning:

Early on Friday morning local Vietnam gold stood at a $29.10 premium to world gold of $1,091.80 (Thursday $27.89/$1,087.20).  Private communications today suggest that Chinese gold imports have indeed grown appreciably lately. Also since last Friday Istanbul gold premiums (which are awkward to measure) have been clearly supportive of Turkish gold imports: the kilo bar premium today was an import-friendly $9.42..

Jewellers across Asia chased gold bars after bullion prices dropped more than $10 this week, while main consumer India was stocking up as the wedding season begins again in April, dealers said on Friday…"We are actually running out of stocks. There's not enough time to replenish gold bars. Thailand is the hottest buyer. Their demand is really good because they are quite price-sensitive," a physical dealer in Singapore said…Premiums were steady at 80 cents to $1 an ounce to the spot London prices in Singapore, their highest since early February, but they could rise next week because of the strong demand and tight supplies.”

The quote underlined above comes from this reuters report:  Asia chasing gold while it's under $1100

All of the above market color is backed up by this report out of Mumbai, which was posted at two days ago:  
Gold refineries are facing a strange problem in India now. There is no yellow metal for them to process now. When the gold boom was at its peak in 2008 and 2009, the quantity of scrap gold used to come to the market was very high and many refiners had increased the capacity to process the scrap gold.  But, time has changed and the scrap gold flow to these refineries has halted.  (Here's the link:  LINK)
The moral of this is that just because the U.S.-centric media, financial advisors, brokers and politicians believe that gold is a useless, barbaric relic not worthy of investment, the rest of world is accumulating as much as they can before the REAL fireworks begin in the price.  Don't forget, gold has appreciated, in the face of extreme Fed/BOE/ECB intervention, every year for NINE YEARS against ALL fiat currencies - and an average of about 16%/yr. at that. 

How did your financial advisor/broker, who treats you to beautiful rounds of golf and lavish meals do vs. that?  While the hoi polloi of America watch reality t.v. and dump their scrap gold into cash-for-gold scammers, the rest of the world is sucking up all the gold they can.  Keep selling America.  It's consistent with the politicians and big bankers, who have been selling this country short for years....

(source:  Vronsky, et al)


  1. The more I think on it, the more I am certain that the key lies in auditing the Fed, and subjecting it and the Treasury to scrupulous investigation.

    I am reminded of this quote by Jackson on the central bank of his day, The Second Bank of the United States:

    "Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the Bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst yourselves, and when you lost, you charged it to the Bank... Beyond question this great and powerful institution has been actively engaged in attempting to influence the elections of the public officers by means of its money...

    You tell me that if I take the deposits from the Bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin. Should I let you go on, you will ruin fifty thousand families, and that would be my sin. You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, I will rout you out."

    Andrew Jackson on The Second Bank of the United States

  2. Agree Jesse. Did you read that latest biography on Andrew Jackson. My father read and I've receive pretty much a full recap. It's startling the degree to which AJ saved this country back then from what has happened since 1913.

    The problem is that your "key" will NEVER happen until it's too late...

    By the way, I have the video report that I'm tryhing to figure out how to "rip." It's a flash-player video at Kitco with no embed code with it.

    Sprott bid the IMF for its remaining 190 tonnes of gold and the IMF turned them down:

    It's the 2nd frame down with the gold bar in the screen.

  3. The IMF Gold is only for sale to the right entity that will give their paper game more leverage.

    Joe M.

  4. several of us believe that it's already been allocated to one/a couple of Central Banks to plug holes from leasing.

    Take a look at that Kitco video I linked in my comment above. It's the video with the gold bar in the screen. Eric Sprott bid the IMF on the 190 tonnes and they turned him down. I'm sure he bid right around spot.

  5. Nothing really new here for those who follow the gold market closely:

  6. Agree except that now Murphy has those emails and Maguire as a smoking gun. I had actually copied and pdf'd the whole thing and was going to do a post on it, but it seems like other than our world, no one gives a rat's ass if JPM illegally profits from manipulating silver. LOL.

    Be interesting to see if Murphy does something in the legal realm to further this. I know there were taped phone conversations between Maguire and the CFTC that GATA has filed an FOIA request to get ahold of.

  7. On the other hand, the fact that the IMF turned down Eric Sprott's bid to buy that 190 tonnes is HUGE news and I think it's partly why gold rallied hard into the close of the NYSE.

    spot gold/silver went into small backwardation between spot and June/May gold/silver. THAT is interesting.

  8. Stupid question alert.....
    I did not know the IMF could sell gold to private entities. I figured they could only sell to member states, that is wrong? If so then their refusal of Sprotts offer is a big deal. Maybe not a big Fu#cking deal like say health care, but a big deal.

  9. Anyone can sell gold to anyone. Recall, the IMF came out about a month ago and said they were going to sell the gold over time, on the open market. Notwitstanding that the IMF technically does not really have the gold physically to sell like that - or to Sprott - since IMF gold is gold that is "pledged" by memeber countries, many of us believe the IMF has already "disposed" of the gold by letting member countries who's central banks have leased out a lot gold "withdraw" their pledge in exchange for putting up cash for SDR's. Something like that.

    If that sounds too conspiratorial, I would urge you to reread the emails that Bill Murphy dropped on the CFTC yesterday detailing JPM's manipulation of the silver market. The games that go on behind the scenes with central banks, countries and banks are much more profoundly fucked up than any of us can ever know.

  10. dave,
    please, no need to disclaim conspiracy. Facts like JPM's silver deal are not conspiracy!

  11. That was awesome how Bill dropped that bomb in the CFTC meeting. All the CFTC need do is check their own phone records.

    Now, here's what I want to know and it would be very revealing. Did that low level minion at the CFTC forward that information to Bart Chilton before the manipulation took place?

    This would tell us if BC is for real or just another DC con man. It will also tell us the CFTC/SEC as part of the PPT will never, ever do anything that goes against the power elites.

    Joe M.

  12. Joe, Bart Chilton was cc'd, as was Gensler, on every email after the first one. Chilton knew ahead of time. If watch that section of the video again, you'll see that Chilton, after Murphy was done reading, looked in complete horror and he kind stammered out "that was a little more detail than I was expecting." I don't think Chilton knew GATA had the emails.
    Chilton is fraud.

    check this out:

    Le Metropole Members,

    On March 25th at the CFTC Public Hearing on Precious
    Metals GATA made a dramatic revelation of a whistleblower source, Andrew Maguire, who has first hand evidence of
    gold and silver market manipulation by JPMorganChase and
    who has even tipped off the CFTC in advance of manipulative attacks on gold and silver. Just as in the Madoff case the regulator has done nothing to stop such manipulation.

    On March 26th while out shopping with his wife, Mr.
    Maguire's car was hit by a car careening out of a side
    road. The driver of the vehicle then tried to escape.
    When a pedestrian eye-witness attempted to block the
    driver's escape he accelerated at him and would have hit
    him had the pedestrian not jumped out of the way. The
    car then hit two other cars in escaping. The driver was apprehended by the police after police helicopters were
    called in and following a high speed chase.

    Andrew and his wife were hospitalized with minor injuries.
    They were discharged from hospital today and should make
    a full recovery.

  13. OMG! That is unreal! This is staring to get a bit scary. I use statistics at work all the time for data analysis and the odds that Maguire would be hit by a crazy driver right after his information was put out there is almost impossibly high for a random event. Amazing.

  14. Hey gyc. There's been several "coincidental" deaths globally to bankers and traders blowing the penalty whistle.

    In fact, Jesse and I nearly simultaneously, and only half-facetiously, emailed each other Thursday evening that we thought Maguire might turn up floating face-down in a swimming pool (that actually has happened a couple times to whistle-blowers over the years).

    As you point out statistically, it is very highly unlikely that it was a random event.

  15. I posted on this tonight. I think its time to load the boat re silver/gold. Too weird!

  16. I posted a comment on your Double Tin Foil Hat post.

  17. DnD, á la the dust up over Sprott and IMF gold , I came across the article by Ron Kirby on GoldSeek, 16 March 2010, "Smoke, Mirrors,SDRs and Gold: Why Central Banks Cannot Tell the Truth". I was wondering if you, Jesse or anyone else posting here had seen this and what, if any, the take on it is. It seems to me an important window into the workings of the Fed with the IMF as active partners in the use of Gold/SDRs in back door off book fund flows and IMF international liquidity pumping. Includes a most interesting snippet of dialog from 1992 FOMC meeting from Adrian Douglas.

    thanks, another dave in denver

  18. Rob Kirby does great work. He is outlining the problem with the physical gold accountability at the IMF and the accountability of the gold pledged to the IMF reserve fund by participating members.

    Not only did Sprott get turned down on its bid for the 190 tonnes of IMF gold supposedly for sale, but Ed Steer in his Saturday gold newsletter said that another, larger financial entity bid the IMF for the 190 tonnes and was turned down by the IMF and was pissed about it.

    That gold is just not there to be sold. In fact, many of us believe that the gold sold to India/Maritius/Sri Lanka was nothing more than an accounting transfer in which the gold pledged by those 3 three countries were "unpledged" in exchange for cash settlement, presumably in U.S. dollars.

    There is a huge conspiracy in the gold/silver market and the demeanor of all of the participants at the CFTC hearings who have something to cover up makes it even more apparent.

    I like your nickname, yardfarmer!

  19. another way to put it is: "LBMA trades over 100 times the amount of gold it actually has to back the trades." Or in plain English there is one ounce of gold to back onehunderd ounces of paper promises to deliver gold.

    ASK YOURSELF: do you really trust that these ETFs have the gold they claim and GLD's counterparties that store said gold are not leasing it out or creating/forming/leveraging some other paper gold on top of their paper gold. As an example, GLD can hold NOT GOOD bars for proper delivery to the market and they do not insure their gold holding. Add to that, there are many other serious situations one should consider before choosing GLD or other ETFs.

    Read GLD's 10-k filing at and pay special attention to pages 54 to 62.
    Bottom line, if you want to invest in gold i would do as GLD's largest shareholder did about a year ago.... they sold their GLD holdings and purchased physical metal and took delivery. In this day and age counterparty risk is to be avoided imho.

    The goldsmiths in Florence invented fractional reserve banking in the middle ages when they realized that most of the gold they stored for others could be leased (loaned) out because most deposits of gold just sat in the vaults. GLD and SLV are running the same game. Everything is just peachy as long as they never have to deliver all the gold and silver they've promised. Try CEF and SGOL. They take delivery of gold and silver in allocated accounts.

    Wouldn't ETFs have the opposite effect? Increasing or at least satisfying demand for gold and silver without having the actual gold and silver?
    Bingo. GLD and SLV if you think about it are the most brilliant inventions of the metals manipulators. If everybody who thought they'd bought gold or silver with those ETF's actually bought physical or allocated gold or silver where do you think the prices would be today?

    Great articles

    When the IMF sells gold, it simply amounts to making small accounting entries in the books of member states. Sprott, as far as I know, is not a member of the IMF. Arranging a physical delivery to Sprott would have been problematic for the IMF, to say the least.

    You are ASSUMING the IMF has ACTUAL physical gold bars for sale of the correct weights and purity. You see, the IMF appears to only want to keep the gold hidden via central bank sales. If someone independent wanted gold, no matter how deep their pockets, then this gold would be 'public' and open to being fully scrutinized via weight, measurement and for gold content.

    Am now 100% convinced the IMF HAS NO ACTUAL GOLD BARS, because central banks just use ledger notation and never get audited. The IMF relies on partners to hide the crime.

    You know why the IMF won't sell to Sprott?
    The IMF knows Sprott will demand delivery to a non-London location.

    I thought that the IMF didn't really have 'its own' gold, i.e. bars in vaults, but only committments from member central banks, i.e. accounting entries. When India 'bought' the 200 tonnes a few months back, did the Indian navy show up in London to take possession, or did they just change 'ownership' on paper (as long as the gold doesn't move. )
    Maybe the IMF would have sold to Sprott if he promised not to take delivery. Heck, then the gold wouldn't have to exist at all.

  20. Dave,

    I am interested to see if HSBC can deliver one millions ounces of Gold with one day notice. This goes against everything we have seen concerning prompt Gold delivery.

    Joe M.

  21. Great comment mabman. Read this GLD research piece I posted on here in December. I actually authored it in late Feb '09:

  22. Me too Joe. I'm sure Rob will share the results with GATA as soon as he hears.

  23. The goldsmiths of Florence invented fractional reserve banking in the Middle Ages, when they realized that most of the gold that is stored for others it could be rented (provided) as most of the gold deposits sitting in the vaults .