Here comes the global run on gold…
Something BIG changed after the collapse of the U.S. Investment and Housing Markets as a huge crack in the Fiat Monetary System took place. After the world nearly disintegrated under the debt-based U.S Dollar system in 2008, some of the Central Banks of the world finally found MONETARY RELIGION.
At this time, and according to some of the more enlightened Central Banks, gold was no longer a worthless piece of metal whose sole purpose in government was to be pawned off to support a worthless paper monetary system.
In just a few years time, the huge flood of Central Bank gold into the market dried up and switched to become a large source of demand.
Going into the London close Wednesday, precious metals were raided.
But then, a funny thing happened…
The 6th month GOFO rate has entered backwardation.
The backwardation in gold is incompatible with the raid on gold . It does not make any economic sense.
Lets head immediately to see what the data has in store for us today:
The record high investment demand of silver and gold, coupled with monstrous central bank purchases, is putting the hurt on the “just in time” precious metal-delivery system the bullion banks have been operating for many years.
These banks are being caught in a pincer movement, which are once again threatening their hallowed, price-setting mechanisms.
There’s growing evidence that the system’s widening imbalance between supply and demand is again becoming critical. The amount of silver and gold that Western central and bullion banks are able to bring to the market is growing more and more inadequate.
As long as the cartel can make timely deliveries to all the parties who want to buy silver, then this silver price suppression scheme will continue. We will only see a freed silver price (as we nearly did in 2011) when they take silver’s contractual price (paper price) to levels which cannot be adequately delivered to both investors and industrial users alike.
With each and every Comex-Open, silver price-pummeling, that day grows ever closer.
Another 2 tonnes of gold was removed from the GLD trust yesterday. The last time the reported amount of gold in GLD was this low was November 18, 2008. The price of gold was $738.
Despite the fact that the price of gold is up about 2% YTD, 6% of GLD’s reported amount of gold has been removed by the bullion banks.
I predicted in 2009 in a report I wrote about GLD’s legal structure that GLD would eventually suffer the same fate as Enron. In fact, our entire is system is one giant Enron/Madoff Ponzi scheme.
To compound the removal of the “visible” physical stock of gold from our western system, nearly 10 tonnes of gold was removed from JP Morgan’s Comex gold vault:
As the increasingly volatile stock markets bounced back higher today, JP Morgan experienced one of the largest withdrawals of gold from its inventories this year. In just one day, a stunning 321,500 oz of gold (10 metric tons) were removed from JP Morgan’s Eligible inventories:
If you look at a four year chart of the continuous gold futures, it shows a definitive bottom a year ago in June. Since the beginning of this year, that up-trend has actually started to turn up a little bit, the slope of it has gotten a little bit sharper… From a technical stand point, I think gold’s in really good shape.
At some point I think you’re gonna see China and Russia sorta force the market higher in order to bring out more physical gold.
I think most of you remember the Dutch bank ABN AMRO. Last month they came out with an analysis titled: It’s Not All Gold That Glitters.
I present the translation below, from which you can read that ABN AMRO is trying to change thousands of years of history by saying gold’s safe haven status should be revised, all because the price of gold did not behave as they expected in recent years (oh, and perhaps the fact that ABN AMRO defaulted on their clients’ rehypothecated gold in 2013 might have had something to do with it) .
Thou doth protest too much methinks.
An interesting read from a paralel universe.
China National Gold Group Corporation or China Gold, China’s largest gold conglomerate with primary interests in mining and also refining, is on the hunt for global acquisitions and partnerships, the company’s president said yesterday.
Mr. Song said that his company is searching for opportunities in the gold and silver markets. “The growing strategy is very clear: We are going out looking at things globally,” he said through an interpreter. “We have a few opportunities, at different stages.”
For 53 years the Chinese people were banned from owning gold.
But that all changed in 2003, and now the enormous demand by 1.3 billion Chinese over the last ten years is causing an important paradigm shift, as gold and silver moves from the West to the East.
The ramifications of that paradigm shift have yet to be appreciated.
Jim Rickards, author of NY Times Bestseller The Death of Money, has just reported that the head of global commodities trading at LBMA bank is expecting an imminent gold “demand shock” as a result of the Chinese credit crisis.
Is the long anticipated demand side supply squeeze in physical gold finally here?
Silver remains scarce in Shanghai, premiums for spot silver this week have been above 6 percent over the international price and some contracts on the Shanghai Futures Exchange (SHFE) are still trading in backwardation.
On June 6, when the SHFE closed, the bid price for the first delivery month silver contract, which expires on June 16, was ¥ 4058 yuan. The ask price for the December contract was ¥ 4053 yuan.
This means that when you own physical silver, or can get your hands on any, you can sell it in June and at the same time buy it back in December for less money.
Silver delivered in June trades over a premium to silver delivered in December, which emphasizes spot demand.
Normally precious metals trade in contango; future prices being higher than spot.
In this EXCLUSIVE, MUST LISTEN interview with The Doc, Eric Sprott dissects the fundamentals in the gold and silver markets, coverage of manipulation finally reaching the mainstream, and reveals his updated outlook on gold & silver.
Eric discusses why the precious metals options markets always expire at MAX PAIN for the customers, and why he urges all PM investors to STAY OUT of the futures options markets, and simply accumulate physical metal.
Sprott explains how PM manipulation shifted from being conducted solely by the Central banks to the dealers active daily participation that we see now, and discusses how much he personally lost when a Barclays trader manipulated gold down into the London fix.
Regarding his price outlook for the metals, with silver trading under $20 and gold trading near $1250, is Eric still looking for new highs in 2014?
His answer might shock you.
The Doc’s full Exclusive interview with Eric Sprott of Sprott Asset Management is below:
- Willie dissects the Holy Grail Gazprom gas deal, which he states is an OPEN DOOR for the dumping of Treasury bonds in exchange for energy
- Russia Liquidating T-bonds through Euroclear in Belgium to acquire gold
- Big Surprise Coming for London Boys: Frankfurt to Become Financial Hub For All of Europe & Asia- Willie reveals insider details
- Large sovereigns (Russia, China, India, Saudi Arabia) now working together to source massive gold reserves for gold-backed USD replacement
- China & Russia Have Accumulated Over 40,000 Tons of Gold Reserves for USD Replacement!!
Jim Willie’s Full MUST LISTEN interview with The Doc is below:
In order to survive in a manipulated low-price environment, the gold producers resorted to “High-grading” some of their mines. By high-grading, the mining companies target higher ore grades in their operations to produce more metal while lowering costs.
Unfortunately, this short-term band-aid comes at a cost. When the mining companies choose to high-grade they are left with lower quality ore in the future that is more expensive to extract.
The top four gold miners overall production remained virtually flat while instituting their costly short-term solution of high-grading. In utilizing high-grading, problems will only get worse in the future for these top gold mining companies. Unless the price of gold rises considerably in the next few years, a lot of gold will remain in the ground… too expensive to extract.