A recent Chairman of that private corporation in control of the finances – perhaps even, the destiny – of the USA for the past 100 years, famously referred to the yellow metal as “a barbarous relic”.
Although this Ph’d prophet of policy-managed markets has hardly been a fount of wisdom in the course of his career… in this case he stumbled upon a truth.
Yes. Bernanke got it right!
Gold has all the attributes of a primitive thing – and as such belongs in essence to a different cycle in humankind’s journey.
In fact, it’s the very primitive nature of gold [& silver] which renders it a potentially deadly kryptonite to the modern financialized world.
On April 1, 2013 ABN AMRO sent a letter to its gold account clients that stated ABN AMRO would no longer offer physical delivery of precious metals.
After the letter was published the entire gold space exploded and the default of ABN AMRO on its gold obligations was taken for granted by many.
In recent months I stumbled on some sources saying that was not exactly what happened.
Why not? I asked myself, it said so in the letter. No physical delivery is no physical delivery.
Just be sure I decided to give ABN AMRO’s press division a call yesterday for more information.
This is the official story:
Once you can understand the mindset from which the average Wall Streeter is coming from, it can give you an incredible trading advantage that’s almost the equivalent of spotting your opponent’s “tell” at the poker table.
Once I started talking about gold or silver to anyone who would listen back in 2009, it was as if somewhere inside you could tell that they realized that it was all coming to an end, but that they just preferred to not ask any questions and hope it would go on long enough for them to be ok.
In China, abandoned malls and ghost cities are not taken as ominous signs of financial uncertainty and impending economic doom, but they are seen as bounties of potential and opportunity.
Likewise, the Chinese don’t try to hide their massive, under-populated, and lifeless developments.
No, they flaunt them. Nobody here in China is admitting defeat, they are just getting started.
While the mainstream would have you believe otherwise, Chinese (wholesale) gold demand is still trending upward.
The SGE chairman, Xu Luode, confirmed this last week at the LBMA forum in Singapore.
The official Chinese gold demand figure for 2013 according to the World Gold Council was 1189 tons.
At an LBMA forum in Singapore this week however, Xu Luode, the Chairman of the Shanghai Gold Exchange informed the audience that “The Chinese consumption demand of gold hit 2000 tons in 2013“.
So much for the Western financial media’s denial of epic Chinese demand for gold.
The official confirmation of massive Chinese gold demand wasn’t the only take-away from the forum however, as Luode announced China’s goal of instituting a Chinese daily ‘fix’ for gold similar to the London fix.
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.
Chinese gold demand has reached an astounding 883 metric tons year to date, after another 33 tons were added over the past week.
Meanwhile Russia added 9.3 tonnes to their official reserves in May.
At this moment there are 12 banks that can import gold into China.
These banks have a PBOC license to import gold, though for every shipment they need a new approval.
Before approval the gold is “parked out of China…and only transferred and shipped into China when needed”, – which should be interpreted as only shipped into China when PBOC approval is granted.
In the past years most gold that entered China mainland came in through Hong Kong. Why? Because Hong Kong was the parking spot for gold outside of China before it was allowed to be imported.
This will soon change as the Shanghai FTZ will take over this role.
According to the official 2014 report, the BoE had 755 tonnes less gold in their vaults in February 2014 relative to February 2013.
However, when we look at UK’s net gold trade over this period (March 2013 – February 2014), we can see 1593 tonnes were exported.
GLD’s stock lost 451 tonnes over this period.
This leaves a gap of 392 tonnes (1593 minus 1201), which had to be supplied by additional LBMA or private vaults in London.
Chinese gold demand in the past few weeks is not as strong as in the beginning of 2014 or as in 2013 after the price of gold crashed in April, though the levels are slightly higher as they were throughout 2011 and 2012.
On the Shanghai Futures Exchange (SHFE) all silver futures contracts came out of backwardation this past week (week 24), and on June 13, most Shanghai silver premiums over international price closed under 6 %.
The prior week they all closed above 6 %.
The scarcity of silver in Shanghai appears to be easing.
India saw a remarkable increase in official gold imports in March, according to numbers published by India’s customs department DGCIS this week.
The jump in official gross imports is significant because the Indian government tries to hold down gold imports since it sky rocketed in April and May 2013, after the price of gold had crashed. The import duty on the yellow metal was raised from 6 % to 8 % in June 2013 and to 10 % August.
In March official gross gold imports accounted for 60 metric tonnes, up 88 % from 32 tonnes in February.
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.