“So
many paper promises to deliver, so little real assets (physical
gold)”.
Are
We On The Verge Of
Witnessing The Death Of The
Paper Gold Scam?
8
May, 2013
.
The
legal claims on physical gold far exceed the amount of physical gold
that the banks actually have by a very, very wide margin. And
right now the bankers are scared out of their wits because their
warehouses are being drained of physical gold at a frightening rate.
So what happens when their physical gold is gone but they still have
lots and lots of people with legal claims to gold? When that
moment arrives, it will represent the end of the paper gold scam.
Many believe that the recent takedown
of the price of paper gold
was a desperate attempt by the bankers to put off that day of
reckoning, but it appears to have greatly backfired on them.
Instead of cooling off demand for precious metals, it has unleashed a
massive "gold
rush"
all over the globe. Meanwhile, word has been spreading among
wealthy families in both North America and Europe that they had
better grab their physical gold out of the banks while they still
can. This is creating havoc in the financial community, and at
least one major international bank has already declared that it will
only be settling those accounts in cash from now on. The paper
gold scam is starting to unravel, and by the time this is all over it
is going to be a complete and total nightmare for global financial
markets.
For
years it has been widely known that the promises that banks have made
regarding their gold far exceed their actual ability to deliver, but
we have never reached a moment of such crisis before.
Posted
below are quotes from people that know precious metals far better
than I do. What these experts are saying is more than a little
bit disturbing...
-CME
President Terry Duffy:
What’s interesting about gold, when we had that big break two weeks
ago we saw all the gold stocks trade down significantly, we saw all
the gold products trade down significantly, but one thing that did
not trade down, was gold coins, tangible real gold. That’s going to
show you, people don’t want certificates, they don’t want
anything else. They want the real product.
-Billionaire
Eric Sprott:
So we see all of these paper (trading) volumes going through that
bear absolutely no relationship to what’s going on in the physical
markets. As you know I have always been a proponent of the fact that
supply in the gold market was way less than demand, and by a very
large factor. I think demand exceeds supply by at least 60%. The
central banks are surreptitiously supplying that gold, and ultimately
they will be running on fumes.
When
we hear about the LBMA not willing to deliver gold, and JP Morgan’s
inventories at the COMEX have gone from 2.4 million (ounces) down to
160,000 ounces, it just makes you realize that all of this paper
trading means nothing. It’s the real physical market that you have
to rely on.
-JS
Kim:
FACT #1: COMEX gold vaults were recently drained of 2 million ounces
of physical gold in one quarter, the largest withdrawal of physical
gold bullion from COMEX vaults in one quarter during this entire
12-year gold and silver bull. There has been speculation about the
reasons that spurred these massive withdrawals of gold from COMEX
vaults, but the most reasonable speculation is that no one trusts the
bankers to hold on to their physical gold anymore, especially in
light of Fact #2. Note below, that both registered AND eligible
stocks of gold had heavily declined in recent months. Such an event
signals a general distrust of the banking system from everyone
holding gold in registered COMEX vaults.
FACT
#2: One of the largest European banks, ABN Amro, defaulted on their
gold contracts and informed their clients that they would only settle
their gold bullion contracts in cash and not in physical. So much for
the supposed legality of financial contracts as a "binding"
contract. So whether Fact #1 caused Fact #2 or vice versa is
irrelevant. What IS apparent is that the level of trust in bankers to
safekeep physical gold and physical silver is disappearing, as it
should be, and as it should have already been for years now. But
truth always takes some time to catch up to banker spread lies and
that is what is happening now. I have been warning people never to
trust bankers in deals involving gold and silver for years now, as in
this article I wrote nearly four years ago informing the public that
the SLV and GLD are likely a banker invented scam as well.
FACT
#3: Silver fraud whistleblower and London trader Andrew Maguire
stated that the LBMA was having trouble settling gold contracts in
bullion as well and stated that institutions that asked for physical
settlement “were told they would be cash settled instead by a
bullion bank.” In plain English, this is a default. So Andrew
Maguire reported that the LBMA had already gone into default. In
light of Fact #1 and Fact #2, the dominoes were starting to tumble
and the house of cards that the bankers had built in gold and silver
paper derivatives to deceive and hide the true fundamentals of the
physical gold and physical markets from the entire world was rapidly
starting to crumble. A financial earthquake of magnitude 2.5 was
quickly threatening to evolve into one of the biggest financial
earthquakes of all time in which the world’s confidence in all
global fiat currencies would effectively have a well-deserved
funeral.
-Jim
Sinclair:
I think the reality is the supply situation is extremely volatile at
this point, and even discussing it is like rubbing a raw nerve to the
people who are in charge. The amount of discussion on the subject of
warehouse supply, supply that is represented by the gold leases,
indicated to the central planners that the demand for physical was
going to continue to effect the exchanges.
Although
they did not expect any grandstand delivery, the mere continued
draining of physical inventories was threatening the very functioning
of the paper exchange. That threatening of the paper exchange and its
ability to continue functioning is really taking off the blinders and
revealing the truth behind the critical question, ‘Where is the
gold?’
The
question now is, ‘Where has the gold gone?’ Who has all of this
gold? Because of the nature of gold leasing, all of this gold has
been purchased and it has gone somewhere. The reality of the empty
vaults reveal that the gold has gone missing.
-Ronald
Stoeferle:
We’re seeing this rush to physical gold not only in the retail
market, but also for the institutional players...[it's] just
overwhelming…I [estimate] a 130-to-1 [ratio of paper to physical
gold]…and I think in the last week we were really close to
[triggering] a default of the paper market.
-Gerhard
Schubert, head of Precious Metals at Emirates NBD:
I have not seen in my 35 years in precious metals such a determined
and strong global physical demand for gold. The UAE physical markets
have been cleared out by buyers from all walks of life. The premiums,
which have been asked for and which have been paid have been the
cornerstone of the gold price recovery. It is very rare that physical
markets can have a serious impact on market prices, which are
normally driven solely by derivatives and futures contracts…
I
did speak during the week with several refineries in the world, of
course including the UAE refineries, and the waiting period for 995
kilo bars is easily 2-3 weeks and goes into June in some cases. A
large portion of the 995 kilo bars in the UAE goes normally into the
Indian market, but a lot of the available 995 kilo bars are destined
for Turkey, at this time. We heard that premiums paid in Turkey have
reached anything between US $ 20 and US $ 35 per ounce.
-James
Turk:
Another indication of the demand for large bars is the huge drawdown
in the gold stock in COMEX warehouses. It is noteworthy that COMEX
reports show the drawdown is largely the result of dealers removing
their inventory, their working stock. When that happens, you know the
availability of supply is constrained.
What
all of this means, Eric, is one thing. If the central planners want
to keep the precious metals at these low prices, to meet the demand
for physical metal they will need to empty more metal from central
bank vaults, or borrow metal from the ETFs as some have suggested is
happening. Otherwise, the central planners will have to step back and
stop their intervention, thereby letting the price of gold and silver
rise so that demand tapers off, bringing demand and supply of
physical metal back toward some kind of balance.
We've
seen this same situation several times over the last twelve years. It
is what I have been calling a “managed retreat.” Despite the
current weakness, I firmly believe we have again entered a critical
period where the central planners will need to retreat once again in
order to let the gold and silver prices climb higher.
-The
Golden Truth:
And then I get a call from a close friend in NYC last Friday.
His career has been in private wealth management in the private bank
department of the Too Big To Fail banks. He's been looking for
work and chats with old colleagues all the time. He called my
Friday and told me he just got off the phone with a very high level
private banker from a big Euro-based TBTF bullion bank, but who was
at JP Morgan until about six months ago.
This
guy told my friend that there is a scramble by many very wealthy
European families/entities to get their 400 oz bars out of the big
bank vaults. He knows this personally, for a fact. He said the
private banker community is small over there and the big wealthy
families all talk to each other and act on the same
rumors/sentiment. The Bundesbank/Fed and the ABN/Amro
situations triggered this move. He knows for a fact JPM tried
to calm fears about 3 months ago by sending a letter to it's very
wealthy clients assuring them their bars were safe, in allocated
accounts. He said right now those same families are walking
into the big banks like JPM and demanding delivery of their bars or
threatening to take their $100's of millions in investment portfolios
to competitors. His wording was "these people are putting
a gun to the heads of private banks and demanding their gold."
I
know this information is good because I know my friend's background
and when he tells me his source is plugged in, the guy is plugged in.
Not only that, my friend's source said that there's no doubt that
someone like a John Paulson, not necessarily specifically him, but
entities like him or it may include him, have held a gun to GLD and
demanded delivery of physical in exchange for their shares.
Regarding
the Bundesbank/Fed situation, recall that the Bundesbank asked to
have some portion of its gold sitting - supposedly - in the NY Fed
vault in NYC sent back Germany. The total amount is 1800 tonnes.
After behind the scenes negotiations, the Fed agreed to ship 300
tonnes back over seven years. To this day, the time required
for that shipment has never been explained. Venezuela demanded
the return of its 200 tonnes held in London, NYC and Switzerland and
received it all within about four months.
And
regarding the ABN/Amro situation. ABN/Amro offered a gold
investment account product that offered physical delivery of the gold
in the investment account when the investor cashes out. About a
week before the gold price smash, ABN sent a letter to its clients
informing that the physical delivery of the bullion was no longer
available and that all accounts would be settled with cash at
redemption.
I
believe it was these two events that triggered the big scramble for
physical gold by wealthy families/entities who were suspicious of the
integrity of their bank vault custodial arrangement anyway.
*****
So
what does all of this mean?
It
means that we are entering a period when there will be unprecedented
volatility for precious metals. There will be tremendous ups
and downs as this crisis plays out and the bankers try to keep the
paper gold scam from completely unraveling.
Meanwhile,
nations such as China continue to stockpile gold as if the end of the
world was coming.
Quite the contrary: as export data released by theHong Kong Census and Statistics Departmentovernight showed, Chinese gold imports in March exploded to an all time record high of 223.5 tons.
And
the number for April is expected to be even higher.
We
are also seeing a rapid decoupling between spot prices and physical
prices. In fact, it is quickly getting to the point where the
spot price of gold and the spot price of silver are becoming
irrelevant.
For
example, demand for silver coins has become so intense that some
dealers are charging premiums of
up to 30 percent over
spot price for silver eagles.
That
would have been regarded as insane a few years ago, but people are
now willing to pay these kinds of premiums. People are
recognizing the importance of actually having physical gold and
silver in their possession and they are willing to pay a significant
premium in order to get it.
We
are moving into uncharted territory. The paper gold scam is
rapidly coming to an end. In the long-term, this will greatly
benefit those that are holding significant amounts of physical gold
and silver.
JPM Eligible Vault Gold Drops To Fresh Record
8
May, 2013
Two
weeks ago we
reported about
one of the biggest daily withdrawals of eligible gold from the JPM
gold vault, it not on an absolute basis, then certainly on a
relative, when in one day over 260k ounces of gold were withdrawn,
leaving a record low 141.6k ounces, or just over 4 tons of gold in
the vault. Subsequently, we tracked the daily additions and
withdrawals of gold from the vault to see if any other major
withdrawal request would come, instead discovering instance after
instance of JPM reclassifying Registered gold into Eligible, which is
how the vault saw its eligible inventory rish back to 195K ounces as
of yesterday, without any actual net additions or more importantly
withdrawals. It seems the pause of withdrawals has ended, and as
of yesterday, another delivery led to a withdrawal of 53,658 ounces,
or 28.5% of the total, leaving a fresh record low inventory of only
137,377 eligible ounces in the vault.
As
a result, total Eligible in the Comex system is now at a level of
6.13 million oz, or roughly the lowest since since 2009.
And
since much of the Eligible gold "additions" have come as a
result of the reclassification of Registered gold into Eligible, the
combined total of Eligible and Registered has also declined to levels
last seen in 2008, at just under 8 million total ounces.
But
here's the real punchline: if JPM had not been allowed to arbitrarily
convert registered gold into eligible in the past two weeks, the
firm's current inventory of eligible gold would be just 83,718 troy
oz, or a little over one and a half metric tons: an amount that is
laughable and is about 3% of the maximum eligible gold (2.8 million
oz) held at the JPM vault, shortly after its commercial reopening in
October 2010.
Earlier
today, when reporting about
the insatiable demand for physical out of China, following the report
that "The
jump in Chinese physical demand also prompted some banks to ship in
more supplies from London and Swiss vaults, traders said."
we asked "What about New York vaults? And specifically the
biggest gold vault in the world, located 90 feet below 1 Chase
Manhattan Plaza?" It appears the Chinese may have gotten just a
little more gold out of New York today after all.
Finally
with gold at record low levels, pay attention to how much more
registered gold is converted into eligible in the coming days.
Because if one day the registered gold holders realize the "run
on the vault" that is going on, and they too ask to have their
gold moved elsewhere, then things will really get entertaining.
Source: COMEX
Chinese Gold Imports Soar
To Monthly Record On
Insatiable Demand
8
May, 2013
In
what must be an inexplicable move to momentum-chasers everywhere, as
gold continued to decline in price in March, and long before its
targeted smash in April, China was not backing off its gold purchases
of the yellow product. Quite the contrary: as export data released by
the Hong
Kong Census and Statistics Department overnight
showed, Chinese
gold imports in March exploded to an all time record high of 223.5
tons. This
follows 97.1 tons in February, and brings the total imports for the
first quarter of 2013, or 372 tons, on par with what China imported
in the entire first half. It also means that since January 2012,
China has imported an absolutely stunning 1,206 tons of gold. Putting
this number in context, this is 20% more than the
entire reporter official
gold holdings of 1054 tons, and represents roughly half of the total
2500 tons of gold mined every year (a number which is set to decline
as gold miners find current prices unsustainable and are forced to
shut down production).
Comparison
of Chinese gold imports: 2012 vs 2013:
And
sequential change in Chinese gold imports since January 2012 or when
the gold fever in China was truly unleashed:
The
latest official Chinese holdings:
And
if March was a record month for China, we can't wait for April when
prices plunged and whenphysical buyers,
who unlike paper momentum chasers buy more then lower the price falls
will see the recent take down as a buying opportunity (if they can
find physical of course). From Reuters:
Chinese gold imports are likely to swell further after more than doubling to an all time high in March as retail consumers pounced when prices plunged to a two-year low last month.
"Physical demand picked up significantly over the last couple of weeks. Consumers and industrial users tend to see price drops as buying opportunities," Zhang Bingnan, secretary-general of the China Gold Association, told Reuters.
"Investment demand should continue to stay strong through the rest of the year because of limited investment alternatives," said Zhang, adding that gold sales and processing volumes both spiked in April.
"April imports will be stronger than March," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "The world was buying gold and China was no different at all."
And
therein lies the rub: because if China fails to mask the ongoing
soaring hot money inflows as reported earlier, and which amounted to
over $180 billion in q1 as
reported earlier,
just watch as Chinese demand for physical goes truly off the charts.
The
rest of the story is well known but here it is from Reuters:
In March, Shanghai gold futures fetched premiums of more than $30 to global prices, making it cheaper to buy the metal overseas.
April could see imports swell further after the drop in international prices spurred frenzied buying in Asia, leading to a shortage of gold bars and coins in Singapore as well as Hong Kong, which is China's main source for gold imports.
The drop in prices has prompted a gold rush in China, with Chinese shoppers flocking to retailers to buy jewellery and bars.
A spokesman for Hong Kong jewellery chain Chow Tai Fook, the world's largest jewellery retailer by market value, told Reuters that traffic at its China stores jumped by 50 percent during the May Day holidays.
The surge in Chinese travellers during the three-day May Day holiday also drove gold sales in Hong Kong to rise by an estimated 50 percent, with total gold sales from April 29-May 2 reaching some 40 tonnes, local media quoted Haywood Cheung, president of the Hong Kong Gold and Silver Exchange, as saying.
The jump in Chinese physical demand also prompted some banks to ship in more suppliesfrom London and Swiss vaults, traders said.
What
about New York vaults? And specifically the biggest gold vault in the
world, located 90 feet below 1 Chase Manhattan Plaza?
Or
is there maybe a correlation between the record drawdown in JPM's
commercial holdings and the record break out of Chinese gold fever?
We hope to find out soon.
As
for the increasingly irrelevant spot price of gold paper derivatives,
we can only hope "experts" like Paulson et
al can
continue their liquidation of gold ETF "holdings" for as
long as possible: after all one can buy far more gold more when the
price is lower, not higher.
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