Sprott’s Tekoa Da Silva joins The Doc & Eric Dubin on this week’s Metals & Markets from the Sprott Natural Resource Symposium in Vancouver discussing:
- PM futures roller coaster: metals smashed under $1300 and $21 ahead of options expiration, but close week with a strong Friday afternoon rally- is the take-down over?
- Tekoa discusses his journey from PM journalist and pod-caster to Investment Executive at Sprott Global- what he’s learned from the brilliant minds there including Sprott, Rick Rule, and John Embry, and how SD listeners can apply lessons he’s learned at Sprott to their investing
- With the BRICS announcing the $100 billion central banking alternative to the West, Tekoa discusses the death of the US & the dollar as occurring gradually so as not to alarm the boiling lobster: “At some point the lobster will pass away, and be eaten by outside groups!“
- Tekoa reveals how he was able to get the ECB’s Mario Draghi to admit central banks’ gold leasing has been unsuccessful
- From the stunning “Castle in the City” in Vancouver, Tekoa gives an inside update on the Sprott Natural Resource Symposium, and reveals how excited the Sprott team is about the next major bull upleg in the PM and natural resource sector.
The SD Weekly Metals & Markets With Tekoa Da Silva from the Sprott Natural Resource Symposium in Vancouver is below:
From the “Castle in the City” Fairmont Hotel Vancouver, site of the 2014 Sprott Natural Resource Symposium:
Source: The brilliant William Banzai 7
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Another week, another bear raid in precious metals. Surprised? This time, the mainstream media is harping on slowing Chinese gold demand as being the catalyst for last Thursday’s big price decline. Demand has moderated, but the establishment media isn’t painting a full context map. They’re over-estimating the decline.
June’s Hong Kong net gold imports totaled about 40 metric tons, versus 52.3 tons in May. The Financial Times of London ran a story with a “scary” headline sure to reinforce mainstream bearishness: China gold demand falls by a fifth, but output rises. But here’s the rub. More and more gold imports are now flowing directly into mainland China, bypassing Hong Kong. China doesn’t report on this flow. Months have passedsince this change went into effect and by now, we might even be talking about a tonnage shift away from that is greater than the reported net gold Hong Kong month-over-month import decline in June.
Mainstream financial media further substantiates the slowing demand thesis by citing lower Chinese retail gold jewelery demand. Ironically enough, there’s a discrepancy in this data that the mainstream has totally missed that dilutes the weakening demand thesis.
The Chow Tai Fook Jewellery Group Ltd. is the world’s largest publicly traded jeweler. Following Thursday’s attack on gold and silver, Bloomberg ran a story including the company’s report of a 24% decline in mainland Chinese sales for the three months ending June 30th. But the story failed to emphasize that’s a year-over-year comparison and other important points of context.
Fact is, a 24% decline in mainland Chinese retail gold demand over last year’s unprecedented demand following the April 2013 blatant neutron bombing of gold still represents near record demand. More importantly, that percentage decline is much lower than the year-over-year declines in Honk Kong net gold imports for the second quarter; particularly stark comparisons are seen with year-over-year data for May and June, where roughly a halving of net Hong Kong gold imports were reported compared to the same months in 2013. You’d think that Bloomberg reporters would recognize that the halving of Hong Kong net imports while jewelry demand (using Chow Tai Fook’s sales as a reasonable estimation of the entire sector) only falling by about a fourth would raise necessary analytical questions. For starters, this contrast provides further anecdotal evidence that a considerable amount of unreported gold is flowing into China that in the least, partially makes up for the decline in Hong Kong net imports.
To date, I’m the only precious metals analyst pointing the discrepancy between mainland jewelry demand trends versus Hong Kong net import data. Obviously, jewelry demand and raw gold demand in Hong Kong does not have a perfect correlation — but it’s darn high, and the magnitude of this discrepancy more than makes up for data opacity. It’s virtually impossible to draw any other conclusion than the fact that a huge amount of unreported gold is bypassing Hong Kong and landing directly on the mainland.
Bottom-line: we’re going to have to suffer through more months where establishment butt kissing media will continue to report on Hong Kong net gold imports without recognizing that it’s to be expected that part of any given month’s decline will be on account of direct Chinese mainland imports.
Tekoa Da Silva: A Rising Star
We’ve missed Tekoa’s active blogging and outstanding interviews. But clearly, Sprott was wise to hire Tekoa and I’m confident we’ll be hearing much more from him in the future.
It was a pleasure speaking with Tekoa. I think you’ll enjoy the back-story on his encounter with ECB big cheese Mario Draghi and his experiences working at Sprott Global.
We’ve endured another week of intense geopolitical turmoil, and there’s no sign tensions in the Middle East nor the Ukraine will lessen anytime soon. Perhaps sharing lighthearted material would be appropriate? Nah… If you missed it, do check out the series Dave Kranzler and John Titus have produced on the derivatives quagmire. The series is thought provoking. Click here to access part one and here for part two.
A hat tip to Jason Burack and the Wall Street For Main Street team is also due. They’re producing high quality interviews on a regular basis, including this week’s interview with Dave Kranzler. Check them out and consider bookmarking their website and/or subscribing to their YouTube channel. …and no, we’re not getting paid for the plug, but we will be syndicating Wall Street For Main Street on The News Doctors.