Available Gold Supply Disappearing As Gold Price Plunges
27 June, 2013
With gold breaking the $1,200 level, today a legend in the business warned King World News that continued manipulation by Western governments in the gold market is now destroying future gold supply. Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also warned KWN that available physical supplies of gold are disappearing as the plunge in the gold price intensifies to the downside.
Barron: “ETFs continue to be stripped of gold and the bullion banks continue selling the gold overseas when they can arbitrage the price. So investors just need to sit tight and ride this out because available physical supplies of gold are dwindling rapidly.
We are at or very near the bottom because gold has now tumbled below the cash cost of production for the mining industry. So almost nobody is making money mining gold at these prices. As gold falls below the average “cash cost” it begins to get very dire and we start to see mines close.
I have just seen two operations close without any notice in the last couple of days. Certainly the world is not out of the woods yet, and another crisis is just around the corner. A major crisis will emerge in Europe or the United States that will move the price of gold significantly to the upside.
In the meantime, if the bullion banks do not turn the price of gold higher we are going to see gold production plummet. I’m not sure that’s what Western governments want to see at this point. They (Western central banks) are already supplying gold, along with the ETFs being drained, in order to meet the massive global demand for gold. The last thing they need is to see a supply crunch.
If that’s the case, the gold simply won’t be there anymore and Western vaults will be drained at an ever greater pace. There have already been a lot of projects which have been canceled or deferred and this will definitely impact supply already in years to come.
It takes a long time to commission a mining project, and when they cancel it or defer it they stop work and it takes a long time to get going again on these projects. So supply will already be constrained in the marketplace going forward, now it’s just a question of what degree supply will be constrained.”
Eric King: “That collapse in production you are talking about, Keith, will it be fairly dramatic?”
Barron: “It’s already happening, but it’s only to get more and more severe if the gold price continues to weaken or does not rally significantly from current levels. We have already seen major shakeups inside the mining industry and many CEOs have been fired and replaced. So everyone is aware of costs.
The reality is that all of that fat is being trimmed away. A classic example of this was the Barrick announcement to let go of a large number of key personnel. We can expect to see more of this as additional projects get mothballed going forward. A lot of major companies have also halted exploration or cut their budgets for exploration way back. So they will not be finding new deposits in the short-term. The last thing that actually goes is production and that is what we are seeing right now.
This is what Western central planners and governments don’t consider when they are manipulating the price of gold. Right now they are destroying their source of supply to keep the manipulation going. The bottom line is Western governments simply will simply not be able to continue the manipulation of gold as the supply of gold collapses.”
Barron also added: “The world is in an extremely precarious position and I am shocked by the amount of complacency out there. This is what is really frightening. We are seeing a bond bubble which has just now begun to burst, and even though global stock markets have been strong for many years, it has not filtered down to their economies.
In the United States for example, there are still large numbers of people unemployed and totally dependent on the government for their survival. This is the sort of thing which is very, very troubling. None of the problems in Europe have been fixed, they have simply been papered over.
So the financial world is headed for disaster and yet complacency reigns. The reality is that those who move to protect themselves while prices for gold are cheap will be greatly rewarded as the financial world lurches into the next crisis.”
Gold Premiums Double in India as Demand Outstrips Supply
26 June, 2013
WAR IS PEACE.
FREEDOM IS SLAVERY.
IGNORANCE IS STRENGTH.
MUMBAI (Reuters) – Gold premiums doubled in India on Wednesday as suppliers struggled to meet surging demand after a ban on consignment imports, but futures prices fell to their lowest in more than a month as international gold prices fell due to a strong dollar.
India, the world’s biggest buyer of gold, now requires importers to pay upfront for inventory, making it difficult for smaller jewelers with lower working capital to source supplies. The government also raised the import duty to 8 percent in May to keep a lid on the surging current account deficit.
“There may be some demand from jewelers for raw material,” said Bachhraj Bamalwa, former chairman of All India Gems and Jewellery Trade Federation, adding that premiums charged on London prices shot to $20 an ounce on Wednesday from $8-$10 on Tuesday.
“We are unable to supply, though there is demand … we give deliveries after 2-3 days,” said Harshad Ajmera, proprietor of wholesaler JJ Gold House in Kolkata.
Enjoy the gold crash comrades.
Full article here.
Luster Gone: Gold Posts Worst Quarter on Record
28 June, 2013
Gold surged more than 2 percent on Friday on end-of-quarter short-covering, but bullion still posted its largest quarterly loss in at least 45 years due to selling amid fears the U.S. Federal Reserve may wind down its stimulus program.
Bullion's 2.3 percent rally was particularly impressive on a day that had little macroeconomic news and no dramatic movements in other commodities and financial markets. Silver jumped 6 percent for its biggest one-day jump since January 2012.
After Friday's rally, gold is still 23 percent lower for the second quarter, its biggest decline since at least 1968, Reuters data shows.
Some investors aggressively bought back their bearish bets on fears gold could rebound, while others squared their books on the last trading day of a dismal second quarter after Thursday's 2 percent drop as funds polished portfolios through the practice of window-dressing.
"You've seen an over-run on the downside here. I am not positive that this is the low but we are very close to it," said John Hummel, AIS Group's chief investment officer, who manages $400 million in assets including a managed futures fund.
Spot gold recently was up 2.2 percent at $1,226.46 an ounce, rebounding sharply from a low of 1,180.71 an ounce, which marked the cheapest price since August 2010.
Friday's rise was the metal's biggest one-day gain since May 20.
Gold's relative strength index climbed to 28 on Friday but still below 30 in an area technical analysts regarded as oversold.
Mark Arbeter, chief technical strategist at S&P Capital IQ, said: "It will take months for gold to trace out a potential bullish reversal formation because of the severe technical damage."
Thursday's slide to below $1,200 an ounce for the first time in three years has prompted nervous investors to buy put options to hedge against further losses.
U.S. gold futures for August settled up $12.10 at $1,223.70 an ounce, with trading volume at around 310,000 lots, nearly 50 percent its 30-day average, preliminary Reuters data showed.
Open interest of Comex gold rose 1 percent to around 400,000 lots, suggesting more participants added bearish positions, traders said.
Physical Demand Lags
Bullion has taken a beating — losing as much as 15 percent or about $200 an ounce — since the beginning of last week when Federal Reserve Chairman Ben Bernanke laid out a strategy to roll back the bank's $85 billion monthly bond purchases in a recovering economy.
After a spectacular surge in physical demand after a $200 two-day dive in April, dealers and jewelers said consumers across the world are reluctant to buy even after the latest price decline.
With one day left in the month, sales of the U.S. Mint's American Eagle gold coins in June stand at only 47,000 ounces, a fifth of what was sold in all April, when sales hit a 3-1/2 year high. Silver Eagles sales are down 20 percent.
Investors, not individuals, are likely to hold the key for prices in the second half. The world's eight largest gold ETFs lost 530 tonnes of gold in the first half of 2013, equivalent to about 10 percent of annual gold production.
Among other precious metals, silver rose 5.9 percent to $19.53, rebounding sharply from a near three-year low at $18.19 an ounce. Platinum rose 1.7 percent to $1,335.49, while palladium also gained 1.7 percent to $655.85