BAR & COIN INVESTMENT: The Big Squeeze on Global Gold Production

Global Gold Production vs Bar & Coin Investment.png2As the Fed and Central Banks play around with silly words like “Taper”, the global financial system continues to disintegrate and is in much worse shape today than it was in 2008.  Somehow, the monetary authorities have deluded the public into believing that they are in control of the situation and things are going to be just fine.
Unfortunately, the system is rotting from the very banking core and without the continued propping up of assets the whole system would collapse.  We must remember, the leverage in these banks including all the garbage from the shadow banking system is so high, that a small 1-2% loss of assets would wipe them out clean to the bone.
The Fed & Central Banks Games will continue for a while.  However, fundamentals are beginning to get the upper hand…. and this has the monetary authorities quite concerned.

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From the SRSRocco Report:

Before the collapse of the housing and financial markets in 2007-2008, the world was asleep as they continued to suffer from monetary gold amnesia.  Global gold and bar investment was running at a lethargic 350-400 metric tonnes from 2001-2006.  But all of a sudden, in 2008 demand for gold bar & coin investment doubled.

If we look at the chart below, we can see how the world reacted to the housing and banking crisis:

Global Gold Production vs Bar & Coin Investment.png2

As the chart shows, from 2001 to 2006, global gold bar & coin investment was virtually flat.  Then in 2008, total bar & coin investment increased to 875 mt (metric tons) from 438 mt in 2007.  Furthermore, demand increased to 1,218 mt in 2010 and peaked in 2011 at 1,519 mt.

After a brief decline in 2010 and 2012…. 2013 has been gangbusters.  In the next chart, world demand for gold bar & coins hit a record of 914 mt for the first half of the year:

Global Gold Bar & Coin Investment Semi Annually 2

Of course, part of the increased demand was due to the much lower gold prices courtesy of the Fed & Central Bank policy.   You will notice the 1H 2013 gold bar & coin demand was higher than the total annual demand from 2001 to 2009.

Moreover, the BIG SQUEEZE continues as world bar and coin investment demand eats up more and more of total global gold production.  In 2001, bar & coin demand was only 14% of total gold production, however by 2013 this will reach an estimated 1,600-1,700 mt or 58-62% of gold production.

This huge increase in physical bar and coin demand is a BLACK-EYE for the Fed and Central Bank policy.  The Fed doesn’t really care how many POOR SLOBS invest their hard-earned money in the GLD ETF, but purchasing physical bullion… is another matter entirely.

There have been rumors that the EAST is buying gold hand over fist and the only way to satisfy this demand is to steal physical bullion from the very same POOR SLOBS who invested in paper gold, such as the GLD — including the unlucky individuals who think they have allocated gold stored at one of these fine establishments.

Junk Sale 2According to the World Gold Council, 685 metric tons were hoodwinked from Gold ETFs such as the GLD in the first half of 2013.  So, as bullion banks put out their “SELL” recommendation, they covered their massive short positions and took delivery of the ETF Gold to meet the demand from the EAST.  Perks of being apart of the fiat monetary regime.

Surprisingly, some precious metal analysts were writing articles stating, “Gold being drained from the Comex and ETF’s is just part of a normal business practice of physical bullion movement as the prices rise and fall.”  Either these analysts are being overly naive, ignorant or even worse… paid to provide disinformation.

The only thing backing up the current Fiat Monetary System is FAITH.  Anytime there is a competing currency that starts to steal the show (such as gold & silver), then the MONETARY CLOWNS come out and do their silly act to keep the public from leaving the CIRCUS TENT called fiat currency.

The situation does not bode well for the Fed and Central banks as physical gold demand continues to increase putting the BIG SQUEEZE on total gold production.  It’s only a matter of time before the whole world wakes up from the fiat monetary nightmare to realize that acquiring any amount of physical gold will become… quite impossible.