Koos Jansen’s Exhaustive Summary of the Chinese Gold Market

China goldOn April 4, 2014 Alasdair Macleod published an extensive analysis on the Chinese gold market.  I felt obligated to respond to it by sharing my point of view and explain where I disagree with his analysis.  I think his estimates are largely overstated because he double counts certain demand categories.  Macleod states Chinese gold demand in 2013 was 4843 metric tonnes, according to me it was 2197 metric tonnes (my estimate excludes some hidden demand and PBOC purchases on which I have no hard numbers). Setting out our differences was incidentally a good occasion for me to write another in-depth analysis on the Chinese gold market.
I highly respect Macleod, who was probably working in finance when I was in diapers, and I’m very grateful he has been using my findings about SGE withdrawals and the structure of the Chinese gold market. I see very little commentators stepping into this realm, though it’s truly the most important economic event happening in our time.
Having said that, I present my analysis: [Read more...]

SGE Withdrawals Hit 585 MT YTD, Up 23% YOY!

saudi goldSGE withdrawals have been in a down trend for five weeks. In these weeks withdrawals have been lower than the year to date weekly average. This is not surprisingly after an unprecedented start in 2014.  During four of the first seven weeks of this year SGE withdrawals, which equal Chinese demand, transcended global mining production.
SGE withdrawals are still 23 % up compared to the same period last year. [Read more...]

Alasdair Macleod’s Renewed Estimates of Chinese Gold Demand

Bundesbank goldI have been revisiting estimates of the quantities of gold being absorbed by China, and yet again I have had to revise them upwards. Analysis of the detail discovered in historic information in the context of China’s gold strategy has allowed me for the first time to make reasonable estimates of vaulted gold, comprised of gold accounts at commercial banks, mine output and scrap. There is also compelling evidence mine output and scrap are being accumulated by the government in its own vaults, and not being delivered to satisfy public demand.
The impact of these revelations on estimates of total identified demand and the drain on bullion stocks from outside China is likely to be dramatic, but confirms what some of us have suspected but been unable to prove.
[Read more...]

Koos Jansen On Why China is the Gold Manipulation Culprit!

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Caption Contest 1Asian gold demand expert Koos Jansen joins the show this week to discuss why:

  • In the End, Everyone Will Rush to Gold!
  • Gold Will Rise to At Least $1600 in 2014 on Chinese demand
  • Gold to replace US dollar as global reserve currency
  • Cartel smashes metals on FOMC taper, but gold completes “Golden Cross” Friday
  • Koos makes the case why he believes that China Is The Real Gold Manipulation Culprit, while Eric argues that the evidence points to the US gov’t 

The SD Weekly Metals & Markets with guest host Koos Jansen is below: [Read more...]

The Run On U.S. Gold Continues…

U.S. Gold Imports vs ExportsSo where is China getting all of its gold?  One of the large sources turns out to be the United States.  The U.S. experienced another record year of net gold exports in 2013.  Not only were gold exports at record levels, imports into the U.S. fell nearly half compared to 2010.

If we look at the chart below, U.S. gold exports in 2010 were 383 metric tons (mt), however by 2013, they increased 81% to 692 mt.  In addition, U.S. gold imports fell 48% from 604 mt in 2010 to 313 mt in 2013. [Read more...]

Former Treasury Official: One Day the Chinese Will Buy 100 Tons of Gold, & We Won’t Be Able to Make Delivery

EmptyVaultFormer Assistant Treasury Secretary Dr. Paul Craig Roberts thinks the Neoconservatives in the U.S. government want war in Ukraine.  Dr. Roberts says, They definitely want war, of course. They’ve wanted it ever since Reagan was President.  The Neocons were always saying we have to attack the Soviet Union, and Reagan said we are not going to win anything, we are going to end it.   The Neocons got to where they really disliked Reagan because he wouldn’t take advantage of Soviet weakness to attack them.  So, they are war minded.  They produce documents that say nuclear war is winnable.  So, they are basically crazy people; and, yet, they have determined the course of foreign policy since the Clinton Administration.  Under George Bush, they controlled the show; and today, under Obama, the Neoconservatives control it.
On gold, Dr. Roberts says, “To protect the dollar from Quantitative Easing (QE), the Fed is selling naked shorts in the gold market to keep the gold price from rising so rapidly that it exposes the worthlessness of the dollar. . . . The physical stock of gold in the West to meet delivery demand is diminishing rapidly.  So, one day the Chinese will buy 100 tons of gold, and we won’t be able to make delivery.  That would crash the system.  It would just pop.  So, there are things that could crash it suddenly.  Regardless . . . the economy is going to gradually sink because there are no jobs, or no good jobs. . . So, there is not a recovery.  The U.S. is a busted state.  It’s completely busted.”   [Read more...]

Chinese Physical Gold Demand YTD 369 tons, Up 51 % Y/Y!

Caption Contest 1The Shanghai Gold Exchange (SGE) is back on schedule publishing their trade reports on that cover the previous trading week. Last Friday’s report covered the trading week February 17 – 21. For me the most important numbers is always the amount of physical gold withdrawn from the vaults as this equals Chinese wholesale demandWithdrawals in week 8 (February 17 – 21) accounted for 49 tonnes, year to date there have already been 369 tonnes withdrawn from the vaults. If we divide the later by the number of days of the corresponding period (52) we come up with an average demand of 7.09 tonnes per day – this includes weekends and the one week holiday at Lunar year when the SGE was closed.
One would think that in coming months the price of gold and Chinese demand will get in conflict; the situation simply can’t go on like this forever. [Read more...]

Gold & Silver extend their rallies amid escalating Chinese demand for gold

china goldThis past week has seen precious metals prices rise strongly, with the bears caught on the hop.
Chinese demand is still accelerating, which tells us physical gold is too cheap. It seems amazing that this demand goes unrecognised. However, even the yearbooks issued by the Shanghai Gold Exchange clearly state DELIVERY IS DEMAND.
Sorry about the capitals, but most analysts have missed the point, commonly stating that Chinese demand last year was only 1,100 tonnes, when SGE delivery alone was twice that. Furthermore, add in Hong Kong and we know from government statistics that total public demand in China, including 50 tonnes of coins, tops a massive 2,800 tonnes. 
Why Western analysts persist in beliefs that demand in China was less than half this is their affair. Presumably this is the information that the bears have not bothered to verify, but at least our readers are better informed.  [Read more...]

Alasdair Macleod Dissects China’s gold demand

Caption Contest 1There are very few figures coming out of China that you can rely upon, and this is particularly true of gold imports. Instead, you have to take what is available and apply a judicious mix of logic and deduction.
Mainland China does not publish imports and exports. The only figures for gold supplied to the Chinese public are of gold delivered through the Shanghai Gold Exchange and out of their registered vaults, which for 2013 totalled 2,197 tonnes. Most of this I have reason to believe is imported, only some of which is through Hong Kong. And to think that gold is only imported through Hong Kong is a major mistake. [Read more...]

Guest Post: Thoughts Behind PBOC Gold Purchase Policy

Gold liesAs few realize that gold is a strategic asset in national security, few must realize that the announcement of gold reserves of a major country is also an important strategic decision that will only come from the highest of ranks. The deep implications this has on prices, perceptions and what it may provoke from the other players makes this an important card that will only be used casually by incompetent fools.
2013 was in many ways a total bonanza, and one would be very naive to think that the PBOC would pass up on this golden window given their good understanding of the subject as seen in various speeches and writing within the nation!
In 2013 the stars lined up for the Chinese.
The bear market from 2011 has been almost a god send to the mandarins tasked with amassing the gold hoard.
[Read more...]

Chinese Gold Demand Sets All-Time Record in January at 247 Tons!

Caption Contest 1Withdrawals from the Shanghai Gold Exchange vaults in January 2014 accounted for 247 tons, which is an increase of 43 % compared to January 2013. It’s also greater than monthly global mining production and an all-time record!
Mainland China mines about 35 tons per month which is required to be sold first through the SGE. The other 212 tons (247 – 35) were supplied via import or recycled gold. Monthly scrap estimates are 25 tons, meaning Chinese gold imports in January were a staggering 187 tons!
China continues draining the vaults in the west BIG TIME!
[Read more...]

Chinese Gold Rush Is Heating Up!

china goldIn the trading week from January 20th-24th, 57 tons of physical gold were withdrawn from the SGE vaults!
This is the third week in a row SGE withdrawals have been more than weekly global mine production.
In the first 24 days of 2014 withdrawals from the SGE accounted for 216 tons. With one trading week left this month it’s very likely January 2014 will break the all time record of monthly withdrawals, surpassing the 236 tons from April 2013.
Are we witnessing the height of the Chinese gold rush? [Read more...]

Harvey Organ: 20 Tons of Gold “Kilo Bars” Withdrawn From JPM Vaults & Headed to Hong Kong!

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Gold VaultHarvey Organ joins the SD Weekly Metals & Markets Wrap this week to warn of a possible February COMEX Gold Default:

  • Continued decline in “registered” gold inventory at the COMEX- 2o tons of gold “kilo bars” withdrawn from JPM vaults headed to Hong Kong!
  • 2014 will mark the year where physical forces deep “managed retreat” in the least
  • Geopolitical and Global Macro review:  From MyRA & pension fund confiscation to Ukraine & Emerging Markets
  • Fed Taper Review- Eric believes the Fed will overshoot tapering to $50 billion/month, while Harvey believes Wednesday’s taper will be the last
  • Harvey discusses why February may very well see strains to the point of the long anticipated COMEX default in gold!

The SD Weekly Metals & Markets with Harvey Organ is below: [Read more...]

The Big Reset: Why China Bought JPMorgan’s Gold Vault- Part 2

We havewitnessed several indications pointing towards great stress in the physical gold market.
Just like the London Gold Pool failed in 1969, the current manipulation scheme of gold (and silver prices) cannot be maintained for much longer.
I would be very surprised if the current paper gold game can be continued for another two years. This system might even fall apart in 2014. A default in gold and/or silver futures on the COMEX is a real possibility.
It has happened before in other markets. In such a scenario futures contracts holders will be cash settled.
So I expect the Comex will have to move to cash settlement rather than gold delivery at a certain point in the not too distant future. After such an event the price of gold will be set in Asian markets, like the Shanghai Gold Exchange. I expect gold to jump $1000 in a short period of time and silver prices could easily double overnight.

[Read more...]

An Open Letter to Jeffrey Christian & The CPM Group on the SGE

jeffrey christianIt appears that our friend and Managing Director of the CPM Group Jeffrey Christian does not have a very good understanding of how the Shanghai Gold Exchange operates. [Read more...]