chinese gold rush2013 has been a torrid year for gold and it is down 26%. Given the still strong fundamentals, we are confident that in a few years, 2013 will be seen as a mere blip in the context of a long term, secular bull market which will likely see gold prices have a parabolic peak between 2016 and 2020.
ETP liquidations have been one of the primary reasons for gold’s weakness in 2013.  However, the supply demand data clearly shows that ETP liquidations are being matched by robust global demand, especially in China. Even if ETP holdings dropped by another 300 plus tonnes in 2014, average Chinese imports through Hong Kong alone are running at well over 100 tonnes per month.
Outflows of gold from ETFs amounted to 24.3 million ounces, nearly 700 metric tonnes, in 2013 from their peak at the end of 2012. Much of this gold was taken out of ETF holdings in London and shipped to refineries in Switzerland, where it was melted down and made into kilogramme bars, then sent to Hong Kong and ultimately to China.
Imports from Hong Kong to China totaled 26.6 million ounces or 754 metric tonnes through September alone. It is unknown where the gold would come from to replenish these ETF holdings were there a sudden surge in demand in the West in the event of a new sovereign debt crisis or a Lehman Brothers style contagion event.

 

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From Goldcore:

Today’s AM fix was USD 1,229.50, EUR 892.62 and GBP 754.57 per ounce.
Friday’s AM fix was USD 1,222.75, EUR 891.22 and GBP 750.89 per ounce.

Gold rose $11.10 or 0.91% Friday, closing at $1,237.60/oz. Silver climbed $0.18 or 0.92% closing at $19.70/oz. Platinum fell $1.05, or 0.1%, to $1,357.70/oz and palladium fell $0.72 or 0.1%, to $714/oz. Gold and silver were both up for the week at 0.72% and 1.13%.

All eyes are on the FOMC this week and speculation is high that the Federal Reserve may taper. Fed policymakers gather for the last time in 2013 for a two day policy meeting that concludes this Wednesday.

The dreaded ‘taper’ is becoming a bit of a caper as the death of QE is greatly exaggerated. While a taper is indeed possible, any reduction in bond buying is likely to be small and of the order of less than $15 billion. This means that the Fed is likely to keep its bond buying program at close to $70 billion per month which is still very high and unprecedented for any industrial nation in modern history.

This still high level of debt monetisation, in conjunction with continuing zero percent interest rate policies is bullish for gold.


Gold in U.S. Dollars, 10 Day – (Bloomberg)

Gold was higher last week which was positive from a technical perspective but as of late morning trading in London, there has been, as of yet, little follow through.

The dollar looks overvalued, considering the overly indebted U.S. consumer and government, and is likely to come under pressure again in 2014 which will support gold and could lead to a resumption of gold’s bull market.

2013 has been a torrid year for gold and it is down 26%. Given the still strong fundamentals, we are confident that in a few years, 2013 will be seen as a mere blip in the context of a long term, secular bull market which will likely see gold prices have a parabolic peak between 2016 and 2020.

ETP liquidations have been one of the primary reasons for gold’s weakness in 2013. ETP holdings may continue to fall as more speculative investors reduce allocations to gold and some ETP buyers sold in order to move to the safety of allocated gold.

However, the supply demand data clearly shows that ETP liquidations are being matched by robust global demand, especially in China. Even if ETP holdings dropped by another 300 plus tonnes in 2014, average Chinese imports through Hong Kong alone are running at well over 100 tonnes per month.

Outflows of gold from ETFs amounted to 24.3 million ounces, nearly 700 metric tonnes, in 2013 from their peak at the end of 2012. Much of this gold was taken out of ETF holdings in London and shipped to refineries in Switzerland, where it was melted down and made into kilogramme bars, then sent to Hong Kong and ultimately to China.

Imports from Hong Kong to China totaled 26.6 million ounces or 754 metric tonnes through September alone. It is unknown where the gold would come from to replenish these ETF holdings were there a sudden surge in demand in the West in the event of a new sovereign debt crisis or a Lehman Brothers style contagion event.


Global Asset Performance Since ZIRP Began 5 Years Ago

Despite the 26% fall in 2013, gold is 44% higher in the last five years and has protected those who have bought it as a long term hedge and financial insurance against macroeconomic, systemic and monetary risks.

There is much negative noise and sentiment towards gold due to the recent price falls. The smart money ignores this noise and continues to focus on the long term. We are confident that gold will again perform well in the coming five years and protect investors from the considerable risks lurking out there today.

It is worth noting that gold fell 25.2% in 1975 (from $187.50/oz to $140.25/oz) and many experts pronounced the death of the gold bull market. Experts such as economist Milton Friedman warned that gold prices could fall further.


Gold in U.S. Dollars in 1975 – (Bloomberg)

Gold subsequently rose 6 times in the next 4 years – from January 1976 to January 1980 -  proving many extremely wrong.

A historical perspective is valuable today and history does not always repeat but often rhymes.

The death of the gold bull market is greatly exaggerated.

 

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  1. It appears that Western Central Banks are prepared to sell physical gold into the market to the point of exhaustion.  On the surface it makes no sense unless the plan is to hold the system together until a certain date and then it’s anyone’s best guess what their play is.  I find it interesting that the former U.S. Mint Director has been trotted out “vouching” for the gold in Fort Knox. 
     

     

    • The problem with GLD is it’s set up to be robbed   If you have enough shares, GLD has to cough up gold with a share redemption.  That affects the price of gold, dumping more tons into the gold pipeline. 
      GLD is down nearly 50%.  Until GLD is completely exhausted, gold prices will be pushed downward through stock redemptions that force GLD to sell gold into a  weak market price that is made even weaker by GLD dumping.  SLV is another thing entire;y and filled with fraud.   

    • AGXIIK
       
      And you just know … all the ‘experts’ at the bucket-shop brokerages are burning up the phones telling their sucker-clients to either dump those GLD shares or add sell-stops for ‘protection’ … which, of course, the bullion bank algos trigger and stop into their own accounts to vacuum out the vaults.The ETFers were ‘useful idiots’ all along.

    • @hayduke
      Great Eye! 
      When he said “It’s audited every year” 
      He looked up and to the RIGHT. Now, normally that means someone is telling the TRUTH, “looking” 
      into their memory (if it is a complicated or long statement) But MOY IS A LEFTY!!! He uses his left hand 
      for gesturing lots more than his right, so his brain is flopped. He looks UP and RIGHT to access his 
      “Creative” zone of his brain WHEN HE LIES!
      This is a time tested theory by profilers and investigators. 
       
      GOOD CATCH!
       

  2. Where’s the gold going to come from? Ahhh, let me see….show me a country that has some gold stashed away and I will show you a country that needs the black ops subterfuge of financial war, or outright military war waged against it, if they don’t get the point…..yep, ask libya what happened to all their gold. From what I understand most of Canada’s gold has been vaporized by the Au monsters also….

    • If a World bank whistleblower tell us there is a humongous shitload of gold in Hawaii vaults, we may roll our eyes. But who to believe more, a whistleblower (usually not full of S) or a banker?
      A central banker that has unreasonable amounts of stolen gold in their vaults will like to understate the holdings. 8,000mt sound slike a lot, no-one declared to have as much. But who knows, many may have more. And the biggest may well have had most to hide.
      I stack silver because gold gets more plentiful every day. And may well be less rare than it’s cracked up to be.

  3. Pat Fields  That make sense  and SLV has to be another target  It’s handled by JPM
    On another note, if there are tens of thousands of tons of gold in Hawaii, it would stand to reason that China’s blue water navy, pretty formidable and nuclear-equipped, could take the gold by force of arms.  It would be pretty bold; that action, or simply a force majuere expropriation for our crappy UST debt held by China.  A bit of both could happen. 
    Like Jack Benny, when asked by the armed robber saying “It’s your money or your life”, replied  “I’m thinking,  I’m thinking!”
    what is the brink index of the Chinese navy when they arrive off Pearl Harbor and ask that question.  Hmmmmm

    • AGXIIK …”SLV has to be another target”
       
      Right on schedule, Harvey Organ reported on Friday, that 1.4 million ounces were removed from SLV. The usual modus as carried out with GLD, as far as I can gather. ‘Algo’ the index down to the share sell stops and buy them (for a song and dance) into the bullion bankers’ house accounts. As soon as they pull in the required number … clean out the SLV bullion vault (next door).

      Also, I give absolutely no credence to that Hudes woman, touting the Hawaiian gold fable. It’s nonsensical to suffer the trouble of robbing countries throughout the Middle and Near East for their relative pittances if there actually were so much ‘grease’ to ‘quiet screeching wheels’. The story’s too obviously BS in light of the maneuvers taken over these past three decades.

      Lastly. China’s Navy is no more ‘offensive’ than our own, simply because of its size and modernity. China is too obviously a target for Congress to ‘bump off’ at the behest of the bankers and monopoly industrialists, so I conclude their military expansion is still defensive in essence.

  4. Pat  I just pinged Harvey’s page this PM   6.7 tons of gold went bye bye from GLD today.  Between friday and today 69 tons of SLV went adios.  
    Sprotts  PSLV went NAV
    SGE passed over 20 tons through its portals to China.
    24 tons of GLD gold fled since December 2  

    If Sprott and SLV are disgorging hundreds of tons of silver to India and China, I wonder what will happen with the FOMC or if this makes a whit’s bit of diff.
    But maybe an increase in gold price. Euro central banks have to be selling gold. Their financial situations are pretty bad but they haven’t gone broke. If China takes in 2,000 tons, or more, Europe is the likely source of gold to the east. GLD is part of it.
    FOMC keeping rates low means gold might respond favorably.

    • “FOMC keeping rates low means gold might respond favorably.”
      So, AGGie, my old friend, you seem to me to be saying that prior moves (like keeping rates LOW)  is now past the
      Point of Diminishing Returns and may revert to normal and help PM Prices??? Inquiring Minds want to know! 
      @AGXIIK 
      Here’s your new golfing partner Bub!

  5. RGR  I am going to relyon humna nature to sniff out the time to buy gold.  Watching the Pincess Bride, a movie full of great lines. I am going  to go to the reasoning of the Sicilian. 
    “Never get involved in a land war in Asia.
    Never to against a Sicilian Bankerster when FIAT is on the line.”
       Wesley AKA Dread Pirate Charlie,  built up an  immunity to FIAT, bought gold and survived the game of wits.
    I’ll say gold will go up. 
    It will go up for reasons that will surprise us. 
    When it goes up, that will also surprise us.
    How far it goes up with shock us.
    I predict at least 25 gold talkers will claim that their prediction was the right one.
    For all the wrong reasons and thus look like fools.
    Charlie will be the one proven right, tight and outa sight. 
    Keep stackin’

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