One of the main causes many gold analysts assume Chinese gold demand (and withdrawals from the vaults of the Shanghai Gold Exchange) is inflated is because of Chinese Commodity Financing Deals (CCFD).
However, this analysis is incorrect:
On November 30, the good people of Switzerland will finally get an opportunity to make their voices heard. The Swiss Gold Initiative can be roughly stated in three parts:
- The halting of all Swiss gold sales
- The repatriation of all Swiss gold that is held in foreign vaults
- Resume backing the Swiss Franc with gold, at a minimum level of 20%
I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true. Your gold is gone.
All of it. Leased and sold away by your central bankers and politicians.
Regarding Goldman Sachs’ hypothecation of Ecuador’s 13 tonnes of gold: Ecuador has 26 tonnes in total.
You don’t manipulate the market with 26 tonnes. China withdraws over 30 tonnes per week from the Shanghai Gold Exchange. Then there’s India. Then there’s Russia. Then there’s Viet Nam (Viet Nam is the 5th largest gold importer in the world – that’s a fact). Then there’s all the other gold-buying countries. At least 50 tonnes of gold gets bought every week. This is gold that has to be delivered.
Coincidentally, or not coincidentally, Russia bought 25.5 tonnes in April.
My bet is that Goldman may have needed that gold from Ecuador to deliver to Russia.
Negative GOFO is now the norm, not the exception. In fact, since the price bottom at $1180 on June 28th of last year, there have been 229 market days. Of those days, GOFO has been negative for 133 of them or 58% of the time! GOFO has been in positive territory just 42% of the time or 96 days. For the previous 24.5 years, GOFO had only been negative for just 7 days.
Now, after the massive and counter-intuitive price slam, it’s negative nearly 60% of the time?!?
The “new normal” of negative GOFO is, in fact, symptomatic of extreme physical tightness and empty vaults in London. Knowing this and the clear correlation of GOFO with price (that we will demonstrate below), you should adjust your trading strategies accordingly. For those of us who are stacking only, persistently negative GOFO is just another clue that the end of the fractional reserve bullion banking system is near. Whether or not that “end” comes in 2014 or 2015 matters little. It is coming.
First the Bundesbank, now the Austrians?
The National Bank of Austria is demanding a full audit of Austria’s 150 tonnes of gold reserves on deposit in London at the Bank of England- 80% of the nations total gold reserves, after succumbing to pressure from the Austrian public.
In a public statement, Ewald Nowotny, Governor of the National Bank of Austria stated: “I acknowledge the request. Any grocery store is obliged to do inventory once a year. It is the only way of getting rid of these unreasonable allegations”.
- Massive US gold exports: NY Fed stealing sovereign nations gold- Harvey states ALL CUSTODIAL GOLD AT NY FED has now been shipped to China!
- GOFO Negative & silver backwardation with huge physical premiums in Shanghai- shortage looms
- Death-blow to the dollar– Russia/China $400 B Gas deal a decade in the making is official
- Eric Dubin explains how after years of rumors, COMEX default could come this summer!
- Eric makes the case for a 50% upside move in silver coming in 6 months, while Harvey states that the cartel is nearly down to their last ounce of gold, & AN OVERNIGHT REVALUATION OF GOLD TO $4,000 WITH NO-BID SELLERS IS COMING IN 2014- PERHAPS AS EARLY AS JUNE!!
“The fun starts when the run on COMEX begins- $1.4 quadrillion in derivatives will burst in 2014 in a full-blown implosion! -H.O.
The SD Metals & Markets With The Doc, Eric Dubin, & Guest Host Harvey Organ is below:
Tuesday, a whopping 4,307 contracts hit the Comex instantaneously at 8:20 a.m.
To put that size in context, at 8:00 a.m. (EST) the CME was showing a total of 45,000 contracts had traded from 6 p.m. the previous the evening until 8:00 a.m. Tuesday morning. That’s an average of 54 contracts per minute over the 14 hour period. All of a sudden someone decides they need to sell 4,307 contracts all at once?
The “art of selling” a big position when you need to sell involves hiding the size of the position from the market and feeding your position into the market over time as the liquidity lets you do it without giving away what you are trying to do.
The Fed’s “art of war” on gold involves dumping large quantities of gold contracts, often at times when it wants to make a statement.
The real question is, why has the Fed all of a sudden become very blatant about its intent to wage a war on gold?
Good evening and welcome to the business magazine Makro. For many people, the purchase of gold represents a safe reserve for bad times. No wonder that, at the height of the financial crisis savers were queuing up at gold dealers. Throughout history, gold has served as a promise of reliability and stability.
But today there are considerable doubts as to whether that promise remains valid, because an examination of gold prices reveals machinations fit for a financial thriller.
Gold is the opponent of debt based moneys, i.e. currencies, and in particular the US Dollar. Therefore, the US Federal Reserve has an interest in a weak gold price, and the US government protects the manipulation of the gold price by the private banks.
For years, the US Federal Reserve has served as the lender of last resort. Gold must be weak if a loss of confidence in the US Dollar is to be averted. It has been difficult to prove that this is a rigged game with a stacked deck, but if the gold market manipulations are indeed encouraged in addition to being condoned, that would explain why oversight bodies have thus far turned a blind eye to it, despite years of massive conspicuous activities in the futures markets, as with the gold fixing in London.
I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true.
Your gold is gone. All of it.
Leased and sold away by your central bankers and politicians.
Italy’s central bank, the Banca d’Italia, has recently published an important document detailing the storage locations and composition of the country’s gold reserves. The document confirms that Italy’s gold is held across four vault locations, three of which are outside Italy.
This is a significant announcement given that the Banca d’Italia is the world’s third largest official holder of gold after the U.S. and Germany. Italy officially holds 2,451.8 tonnes of gold, worth more than €72 billion (US$ 100 billion) at current market prices .
In the detailed three page report focusing exclusively on its gold reserves (and only published in Italian), the Banca d’Italia reveals that 1,199.4 tonnes, or nearly half the total, is held in the Bank’s own vaults under its Palazzo Koch headquarters on Via Nazionale in Rome, while most of the other half is stored in the Federal Reserve Bank gold vault in New York.
All bars brought into the vault for deposit are carefully weighed, and the refiner and fineness (purity) markings on the bars are inspected to ensure they agree with the depositor instructions and recorded in the New York Fed’s records. This step is vital because the New York Fed returns the exact bars deposited by the account holder upon withdrawal—gold deposits are not considered fungible. –NY Fed website
Recall, after a couple of weeks of negotiations in the proverbial smoke-filled room, it was agreed that the U.S. would return 300 tonnes of Germany’s 1500 tonnes being kept in NY Fed vaults over seven years. This equates to a pro rata 43 tonnes per year (approx).
First year scorecard: the U.S. shipped back 5 tonnes and they were in the form of bars that had to melted and re-cast. If you re-read that passage above, it should leave you scratching your head.
Thanks to a tip from an SD reader, we have discovered the US’ official bar list of “Deep Storage Gold” held at Fort Knox, Denver, and West Point, buried in a PDF file on the House Financial Services website.
Updated on Sept 30th, 2010, the document provides a full bar inventory including total bars, weights, and fineness of the US Deep Storage Gold reserves.
For all those inquiring minds wondering how much if any of the US’ gold reserve remains, the official US Deep Storage Gold bar list is below:
Writer and researcher Koos Jansen from In Gold We Trust joins the SGTReport to talk about the shocking developments at the Shanghai Gold Exchange – and the German gold issues, including the statements from Elke Koenig, the president of Germany’s top financial regulator, Bafin who candidly stated last week that “manipulation of precious metals is worse than the Libor-rigging scandal.”
Businesses in China are using gold leasing from banks to solve their short-term funding problems in the hope of buying back the gold at lower levels to repay the lease. However they can be short-squeezed when gold moves higher.
Many Chinese real estate investment products are facing default risks, and gold lease arbitrage also faces the volatility of gold price.
If these 2 risks occur at the same time, this seemingly risk-free arbitrage could be in fact “picking pennies in front of a bulldozer.”
“Throughout these years no more than half of the gold has been invested. Gold has been invested in for example deposits similar to money market deposits and gold interest rate swap agreements. Gold investment activities are common for central banks. Risks related to gold investments are controlled with limits, de-centralising investments and limits regarding run times.” –Bank of Finland
The Cyprus/ Eurozone crisis has just intensified, as Dutch Bank ABN Amro has sent a letter to clients this weekend informing them that they will halt extradition and physical delivery of their clients’ gold holdings effective April 1st!
No worries however, Amro ensures its clients that there is no need to panic or do anything rash (such as remove your phyzz prior to April 1st:
We ensure that we have your investments in precious metals now the new way to handle and administer
Forget traditional imminent deposit bank runs in Cyprus, has a physical gold bank run begun?
By Bill Holter:
There is a bill proposed to the Texas legislature that would allow various state pension plans to invest directly in PHYSICAL Gold.
The proposed bill would create the ability for the state to actually build its own depository where “state sovereign” Gold would be stored. Can you imagine the response out of Washington if a bunch of redneck, backwoods Texans demanded their Gold be delivered? Would Texas receive the same “7 year” waiting period response that Germany received when they requested their bullion be repatriated? The bill would also allow for individuals to eventually store personal Gold in this depository.
If this bill passes, you can pretty much bet that “them’s fighin’ words” will be what we hear out of Washington. I can already see the dust storm coming. Were the federal government to spazz out and declare a confiscation and Texas was sitting on a “hoard” of Gold, this dust storm would be a bunch of military tanks rolling along on their way to make a “withdrawal” from the depository. Say what you will but if you really think about it, other sovereign countries have been invaded and their Gold plundered many times for less. What do you think happened to Saddam & Qaddafi’s gold?
Ahead of today’s FOMC statement (and in light of Eric Sprott’s 2nd installment of Do Western Central Bankers Have Any Gold Left?), we thought it a good time to recall a conversation between Alan Greenspan and others made at a December 1992 FOMC meeting in which key secrets were revealed regarding manipulation of the gold market by Western Central bankers.
As The Doc discussed with Eric Sprott in our recent interview, the US exported $4 billion in gold in December. Eric pointed out that $4 billion is 2.5 million ounces of gold exported in a single month, when the US produces 8.8 million ounces annually. Eric asked rhetorically where 2.5 million ounces of gold were coming from.
Courtesy Former Chairman Alan Greenspan and the minutes from a Dec 1992 FOMC meeting, we just may have the answer for Mr. Sprott…
The Treasury Department has released the results of a gold audit on the Treasury’s gold holdings stored at the NY Fed which began in 2010. Not surprisingly, the Treasury report claims that the audit found no issues with the quality of the gold held at the NY Fed, or in any policies or procedures by the NY Fed.
The audit reportedly claims that in 3 of 367 tests of the gold’s purity, the gold was more pure than Treasury records had previously indicated, and as a result has increased the book value of the US’ gold holdings by 27 ounces.
The most newsworthy revelation in the report however was that the US (which is supposed to hold the vast majority of its gold reserves at the NY Fed) holds a total of 32,021 good delivery bars on deposit at the NY Fed:
As part of the audit, the Treasury tested a sample of the government’s 34,021 gold bars in the New York Fed’s vault five stories below Manhattan’s financial district.
Why is this so significant? As anyone with a simple calculator can discover, the Treasury department has just inadvertently admitted that rather than the official 8,133.5 tons the Treasury reports as the US’ official gold reserves, the Treasury’s actual physical gold stores at the NY Fed are a measly 466.57 tons! While the Treasury does reportedly also hold gold at Fort Knox, several reports have claimed that up to half of the US Gold is held at the NY Fed!
No wonder it will take the Bundesbank 7 years to repatriate 300 tons!
Calls for Germany to repatriate its 1,536 tons of gold reserves held at the NY Fed are intensifying as Der Spiegel reports the Federal Reserve has refused to allow German inspectors to even view the country’s massive gold reserves “in the interest of security and of the control process“.
We have stated repeatedly that with repatriation and/or audit requests completed or in progress by Venezuela, Germany, Switzerland, and the Netherlands, The BOE and the Fed suddenly find themselves in a heap of trouble as the situation (and confidence that the Central banks actually still hold the
tungsten gold reserves on deposit) is rapidly deteriorating.
More on the Fed’s non-compliance with German requests to view/inspect their own gold below.