Gold recovers

Gold Retraces Half Of Record Plunge

Zero Hedge,

24 April, 2013

With its biggest 8-day rally in 20 months, Gold having jumped another 1% this evening has just breached $1445 and retraced half of the record plunge from April 12th. It would appear that the record physical demand that we are seeing in every corner of the globe is indeed leaking back into the actual price of gold.

Spot Gold has retraced half of its record plunge losses...

with the best 8-day performance since early September 2011...

Just What Is Going On With The Gold In JPMorgan's Vault?

Zero Hedge,

14 April, 2013

We know that back in early October 2010, when gold closed at a then record high of $1,320, JPM decided to reopen its previously mothballed precious metal vault due to soaring demand for metal vaulting, thus becoming only the fifth official Comex private gold depository in New York in addition to HSBC, Bank of Nova Scotia, Brinks and MTB (and of course the New York Fed).

We also know, courtesy of a Zero Hedge exclusive, that the JPM vault - the largest private gold vault in the world - is located at 1 Chase Manhattan Plaza, and is literally adjacent to the vault of the New York Fed 80 feet, and 5 sublevels, below street level.

We know that for a long time the vault held around 2.5 million ounces of eligible (commercial) gold, a number which declined only gradually until very recently.

We know that the total amount of registered (investment) gold has been steady for the past 4 years(after peaking in early 2006).

Finally, everyone knows that in the past month gold has experienced a very severe move lower which is still largely unexplained.

What many may not know, is that while registered Comex gold has been flat, the amount of eligible gold in Comex warehouses (the distinction between eligible and registered gold can be found here) in the past several weeks has plunged from nearly 9 million ounces, to just 6.1 million ounces as of today- the lowest since mid-2009.

What nobody knows, is why virtually the entire move in warehoused eligible gold is driven exclusively by one firm: JPMorgan, whose eligible gold has collapse from just under 2 million ounces as of the end of 2012 to a nearly record low 402,374 ounces as of today, a drop of 20% in one day, though slightly higher compared to the recent record low hit on April 5 when JPM warehoused commercial gold touched a post-vault reopening low of just over 4 tons, or 142,700 ounces.

This happened just days ahead of the biggest ever one-day gold slam down in history.

Some questions we would like answers to:

1. What happened to the commercial gold vaulted with JPM, and what was the reason for the historic drawdown?
2. Gold, unlike fiat, is not created out of thin air, nor can it be shred or deleted. Where did the gold leaving the JPM warehouse end up (especially since registered JPM and total Comex gold has been relatively flat over the same period)?
3. Did any of this gold make its way across the street, and end up at the vault of the building located at 33 Liberty street?
4. What happens if and/or when the JPM vault is empty of commercial gold, and JPM receives a delivery notice?

Inquiring minds want to know...

Ron Paul Blames Obama Administration, Goldman for Gold Decline

CNBC,

23 April, 2013

The recent 13 percent two-day plunge in gold led investors to look for reasons. People have blamed the talk of Cyprus selling their gold, gold's general underperformance this year, or a larger move away from risk-off assets.

But Ron Paul points his finger at two potential culprits: The Obama administration, and Goldman Sachs.

In a wide-ranging interview on CNBC.com's "Futures Now," the former U.S. representative from Texas noted that 53,000 gold contracts had been sold amid gold's decline, potentially moving the market. And Paul implied that someone in President Obama's administration could be behind it.

"When that 53,000 contracts sold in one sale, who did that? Was that the President's Working Group on Financial Markets, or somebody else?" Paul said.

Paul seemed to be referring to a comment that BullionVault Vice President of Business Development Miguel Perez-Santalla made to USA Today (USA Today: "Gold Badly Tarnished"), in which he told that paper that "one big seller at the Comex opening" sold 53,000 contracts, triggering the sell-off.

The President's Working Group on Financial Markets is actually a little-understood group that President Reagan created by executive order in March of 1988 as a response to 1987's "Black Monday" crash. Working under the Treasury Department, they periodically recommend reforms of the financial markets.

So did this secretive group, working under a government directive, purposely crash the market by engineering the sale of 53,000 gold contracts as former Representative Paul seems to suggests?

Highly unlikely, say some traders.

"It would be news to me, and a lot of people, if the government's hitting the open market like that," said Jeff Kilburg of KKM Financial. "It's a head-scratcher."

RBC Precious Metals Strategist George Gero said that "there was more to it" than any single sale.

"Since September, we lost open interest in gold steadily," as money "went to better-performing assets," Gero explained. "Gold has been a very poor performer all year, as big triple-digit stock up moves were a headwind."

Dennis Gartman, the editor and publisher of the the Gartman Letter, was similarly skeptical. "The gold market is filled with all sorts of conspiratorialist thinking," Gartman wrote to CNBC.com. "Do I think that the government trades futures in gold? Probably they do when panic hits, but I have my doubts that they want to be the creators of panic."

But the decline in gold has more than one culprit, according to Ron Paul, and he pointed his finger at venerable investment bank Goldman Sachs. The firm made a widely followed and wildly prescient call on April 10th to short gold. In retrospect, the call was itself pure gold, and came just as the shiny metal was about to embark on its worst two-day crash since 1980. After the gold short turned out to be very lucrative very quickly, Goldman reversed course on Tuesday, and instructed clients to cover their bearish bullion bets.

When it comes to Goldman and their calls, "I think they obviously look at the market, and they have ulterior motives, and they make a lot of comments and I have no idea what their purpose is," Paul said. "We have no idea about whether that's accidental, or what."

Goldman Sachs, for their part, told CNBC.com earlier in April that their research "is independent from other activities of Goldman Sachs."

So perhaps the government and Goldman Sachs led to gold's drop, in Paul's view. But he still says that in the long-term, "if you print money, the price of gold in terms of dollars will go up."

Still, the near-term outlook for gold remains hazy, in the opinion of this former congressman.

"This year isn't even over yet, so who knows what's going to happen," Paul said. After all, "Goldman Sachs might affect the market again some day."

Keiser Report: Psyops & Debt Diets

In this episode of the Keiser Report, Max Keiser and Stacy Herbert follow the ounces not the prices in the precious metals market and discuss the psyops of the gold war where sales of 1100 tons (45% of annual new supply) is sold into the market at once in order to alter behavior. They observe crowds stampeding in the East for more physical gold while in the West, people are put on a restricted debt diet controlled by their governments based on needs not wants. Finally, they discuss the conflicts of interest at the heart of CISPA and Max starts his own hashtag - #AmericaFatigue.

In the second half of the show, they talk to Wolf Richter of Testosteronepit.com about gold smashes, wealth grabs and government and Wall Street corruption.

"Panic" For Physical Gold Spreads To UK Where Royal Mint Sales Of Gold Coins Triple

Zero Hedge,

24 April, 2013

Following the entire "developing" world (where faith in paper money "backed" by $1 quadrillion in derivatives is at times questioned, and instead the people, for some inexplicable reason, fall back to hard currency equivalents) scrambling out to their local precious metal dealers to find "out of gold" signs virtually everywhere, yesterday it was the US Mint's turn to announce it had halted shipments of the popular one-tenth ounce gold American Eagle coin as it had run out, following a surge in demand (we expect this shortage will soon spread widely to traditional one-ounce denominations shortly).

Things in the US have gotten so bad, not only are most online dealers backlogged weeks and months in advance for most PMs (as the CEO of Texas Precious Metals explained in detail), but respected bullion vaults are also now on the verge of running out of inventory. As Reuters described, "Michael Kramer, president of Manfra, Tordella & Brookes (MTB), a major U.S. coin dealer in New York, has been inundated by orders from existing and new wholesale and retail customers. "It's panic. This is one of the busiest times in quite a while. People think gold's at the lows and they want to take advantage."

It was only a matter of time before the last bastion of paper money, London, also succumbed to the soaring demand for physical, and sure enough moments ago Bloomberg reported that the "Britain’s Royal Mint, established in the 13th century, sold more than three times more gold coins this month than a year earlier as prices declined."

Sales are more than 150 percent higher than last month, according to Shane Bissett, director of bullion and commemorative coin at the Royal Mint.

“Since the dip in the price of gold we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating,” Bissett said by e-mail in response to questions from Bloomberg. “The Royal Mint continues to supply to its customers and is increasing production to accommodate the higher demand.”

Its not only the UK Mint, but a pervasive global "panic" to get as much gold as possible while prices are as low as they are, courtesy of the recent takedown in spot.

Standard Chartered Plc said yesterday its gold shipments to India last week exceeded the previous record by 20 percent and were double the total of the week before.

 

“The concern is really how long it can last,” said Dan Smith, an analyst at Standard Chartered Plc. “A lot of people surge in on the low prices and then they are likely to back away a bit as prices rally and they’ve restocked.”

Don't worry, Dan: for now the surge is going on, and on, and on, and so on. We will be sure to inform you, however, when physical demand is finally satisfied. Until then, we have several months of backlogged demand to catch up on, and possibly the default of one or two depositories in the meantime.

Finally, for all those confused by the non-linear relationship between paper gold (selling via ETFs and other), and physical gold (buying via retail and corporate channels), here is Bank of America with a quick and dirty summary of how to think about the relationship:

With prices now below $1,500/oz, we expect a pick-up in jewellery demand in the medium term and see considerable pain for miners should prices dip below $1,200/oz. As such, we believe the downside to gold prices may be limited to an additional $150/oz. In fact, we estimate that jewellery demand may become so pronounced by 2016 that prices could trade above $1,500/oz even if investors remain net sellers. Looking at sensitivities from a different angle, investors would need to buy merely 600t of gold to sustain prices at $2,000/oz by 2016, compared to non-commercial purchases of 1,798t in 2012.

So yes - physical demand can and will offset even virtually unlimited paper selling, assuming of course demand for physical persists at the recent pace.