Saturday, August 17, 2013
Gold Gone? Germany baffled as Fed bars access to bullion
The world is losing trust in the dollar as a safe haven. A major blow came after Germany’s Bundesbank demanded the repatriation of a big chunk of its gold being held in the US. Because as RT’s Gayane Chichakyan reports, some are concerned the assets of foreign nations in the Federal Reserve are not secure or even there. The Germans were infuriated when the US Federal reserve didn’t even let them examine their own assets properly. Peter Boehringer, the founder and chairman of ‘German Precious Metal Association’, says that’s a bad sign.
Cisco CEO Reports Record Sales And “Lumpy” Demand, Just Like In November 2007, A Month Before Stocks Began To Crash
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
Cisco CEO John Chambers gushed with positive vibes during the earnings call on Wednesday: “unbelievably strong results,” is what he called the fourth quarter. He talked about record revenues. “We have strong momentum,” he said, “very solid execution,” that allowed the company to close “a very successful fiscal year.” But he lowered guidance, lamented the debacles in China and Japan, announced “workforce rebalancing” to axe 4,000 people, mostly middle managers – that’s 5% of the company’s global workforce – and estimated write offs of “up to $550 million.” Then he uttered the word “lumpy.”
He’d used that word before – to describe growth in the US during the earnings call on November 7, 2007, weeks after the S&P 500 and the DOW had set all-time highs, when the market was still jubilant and oblivious to the hissing from the housing bubble and the stench from the banks.
That November, too, Mr. Chambers brimmed with optimistic energy. It was a phenomenal quarter. Revenues jumped 17%. He talked about the factors that were “driving our current growth to these record levels,” and why they’d be able to maintain that growth. “Over the last 17 quarters, our growth in terms of orders at Cisco has averaged in the mid-teens,” he said. “This quarter continues that momentum. So, “with the appropriate caveats, our long-term guidance should be in the 12% to 17% range year over year.” Growth numbers from corporate nirvana. Then the appropriate caveats. “Probably as a surprise to no one,” he said, they were experiencing “some softness,” and growth in the US would be “very lumpy.” The Financial Crisis was next.
This time around, he was just as chipper. “Q4 was a record quarter on many fronts with record revenues of $12.4 billion and record non-GAAP operating income, record non-GAAP net income….” You get the idea. And then the first warning: “…despite the challenging macroeconomic backdrop.”
He is a unique gauge into the world economy: one, because of Cisco’s global reach, he can take the heartbeat of corporate and government demand around the world; and two, because he knows how to issue a warning.
As in November 2007, the warning was sandwiched between bouts of enthusiasm and talk of opportunity…. How Cisco was “leading many of the technology transitions” and tidbits like “revenue growth of over 30% in our wireless business.” He raved about the data-center cloud business whose revenue grew “over 40% year-over-year in the most recent quarter, and we’re not stopping” [not until Edward Snowden’s revelations appalled Cisco’s foreign customers; my take.... NSA Pricked The “Cloud” Bubble For US Tech Companies].
Product orders grew only 4% year over year. But in the US, there was “continued momentum,” with enterprise orders up 9%, commercial up 12%, and the public sector up 4%. Or at least a “solid minimum,” as he called it a little later. “This recovery is more mixed and inconsistent than the others I’ve seen,” he said.
Alas, in China and Japan, the second and third largest economies in the world, and in some of Cisco’s top emerging markets, including Brazil, the lumps appeared. In China, “we saw the same weakness many of our peers experienced,” he said, but the company was continuing “to work through the challenges,” and orders declined “only 6%.” And in Japan, where Abenomics has become the religion of salvation? “They’re down in the teens,” he said. Maybe down 15%?
The order debacle in China and Japan was woven around India, where orders jumped 19% – he wasn’t “doing back flips on any of the major countries” in Asia “other than India,” he explained. Mexico was up in the “double digits” and Europe 6%. But Brazil and Russia were “approximately flat.” So, on a macro basis, it would be a “mixed environment.”
It was that kind of dance. And so, he expected revenue growth to be “in the range of 3% to 5% on a year-over-year basis” – down from prior expectations of 5% to 7%, and down from the 12% to 17% range he’d offered as “long-term guidance” during the earnings call in November 2007, a month before all heck broke lose.
He saw an economic recovery that was “slower and more inconsistent” and global GDP that was “continuing to sit down for calendar year 2013.” And laying off 5% of the workforce? That was “just good business management,” given the “inconsistent data even in our own operations,” which was “more lumpy than I’d like to see.”
But he had a consolation. It wasn’t Cisco; it was the economy: “our peers in the high-tech industry, many of them are going flat or negative,” he said.
In 2007, it was the US where demand had been “very lumpy.” This time around, the US – which was “kind of the good news” – was “one of the strongest engines right now in the world.” But then he lamented GDP growth in the US, which “has been projected decelerating from what we would have thought just one or two quarters ago,” he said. And that’s where the warning hit: China and Japan were having deep problems, the US, the strongest engine in the world economy, was losing what little steam it had, and everything was connected, even more so than in 2007. So this could get tough.
Home prices have jumped in some cities over 20% on an annual basis. “Recovery of the housing market,” is what this phenomenon is called. Everyone from President Obama on down has taken credit for it, particularly the Fed, whose handiwork this is. But there is a very ugly fly in this illusory ointment. Read…. “How The Wealth Effect” Mucks Up The Housing Market.
Cisco CEO John Chambers gushed with positive vibes during the earnings call on Wednesday: “unbelievably strong results,” is what he called the fourth quarter. He talked about record revenues. “We have strong momentum,” he said, “very solid execution,” that allowed the company to close “a very successful fiscal year.” But he lowered guidance, lamented the debacles in China and Japan, announced “workforce rebalancing” to axe 4,000 people, mostly middle managers – that’s 5% of the company’s global workforce – and estimated write offs of “up to $550 million.” Then he uttered the word “lumpy.”
He’d used that word before – to describe growth in the US during the earnings call on November 7, 2007, weeks after the S&P 500 and the DOW had set all-time highs, when the market was still jubilant and oblivious to the hissing from the housing bubble and the stench from the banks.
That November, too, Mr. Chambers brimmed with optimistic energy. It was a phenomenal quarter. Revenues jumped 17%. He talked about the factors that were “driving our current growth to these record levels,” and why they’d be able to maintain that growth. “Over the last 17 quarters, our growth in terms of orders at Cisco has averaged in the mid-teens,” he said. “This quarter continues that momentum. So, “with the appropriate caveats, our long-term guidance should be in the 12% to 17% range year over year.” Growth numbers from corporate nirvana. Then the appropriate caveats. “Probably as a surprise to no one,” he said, they were experiencing “some softness,” and growth in the US would be “very lumpy.” The Financial Crisis was next.
This time around, he was just as chipper. “Q4 was a record quarter on many fronts with record revenues of $12.4 billion and record non-GAAP operating income, record non-GAAP net income….” You get the idea. And then the first warning: “…despite the challenging macroeconomic backdrop.”
He is a unique gauge into the world economy: one, because of Cisco’s global reach, he can take the heartbeat of corporate and government demand around the world; and two, because he knows how to issue a warning.
As in November 2007, the warning was sandwiched between bouts of enthusiasm and talk of opportunity…. How Cisco was “leading many of the technology transitions” and tidbits like “revenue growth of over 30% in our wireless business.” He raved about the data-center cloud business whose revenue grew “over 40% year-over-year in the most recent quarter, and we’re not stopping” [not until Edward Snowden’s revelations appalled Cisco’s foreign customers; my take.... NSA Pricked The “Cloud” Bubble For US Tech Companies].
Product orders grew only 4% year over year. But in the US, there was “continued momentum,” with enterprise orders up 9%, commercial up 12%, and the public sector up 4%. Or at least a “solid minimum,” as he called it a little later. “This recovery is more mixed and inconsistent than the others I’ve seen,” he said.
Alas, in China and Japan, the second and third largest economies in the world, and in some of Cisco’s top emerging markets, including Brazil, the lumps appeared. In China, “we saw the same weakness many of our peers experienced,” he said, but the company was continuing “to work through the challenges,” and orders declined “only 6%.” And in Japan, where Abenomics has become the religion of salvation? “They’re down in the teens,” he said. Maybe down 15%?
The order debacle in China and Japan was woven around India, where orders jumped 19% – he wasn’t “doing back flips on any of the major countries” in Asia “other than India,” he explained. Mexico was up in the “double digits” and Europe 6%. But Brazil and Russia were “approximately flat.” So, on a macro basis, it would be a “mixed environment.”
It was that kind of dance. And so, he expected revenue growth to be “in the range of 3% to 5% on a year-over-year basis” – down from prior expectations of 5% to 7%, and down from the 12% to 17% range he’d offered as “long-term guidance” during the earnings call in November 2007, a month before all heck broke lose.
He saw an economic recovery that was “slower and more inconsistent” and global GDP that was “continuing to sit down for calendar year 2013.” And laying off 5% of the workforce? That was “just good business management,” given the “inconsistent data even in our own operations,” which was “more lumpy than I’d like to see.”
But he had a consolation. It wasn’t Cisco; it was the economy: “our peers in the high-tech industry, many of them are going flat or negative,” he said.
In 2007, it was the US where demand had been “very lumpy.” This time around, the US – which was “kind of the good news” – was “one of the strongest engines right now in the world.” But then he lamented GDP growth in the US, which “has been projected decelerating from what we would have thought just one or two quarters ago,” he said. And that’s where the warning hit: China and Japan were having deep problems, the US, the strongest engine in the world economy, was losing what little steam it had, and everything was connected, even more so than in 2007. So this could get tough.
Home prices have jumped in some cities over 20% on an annual basis. “Recovery of the housing market,” is what this phenomenon is called. Everyone from President Obama on down has taken credit for it, particularly the Fed, whose handiwork this is. But there is a very ugly fly in this illusory ointment. Read…. “How The Wealth Effect” Mucks Up The Housing Market.
Bloodbath Coming? US Margin Debt Reaches ‘Danger’ Levels, China, Japan Lead Record Investor Flight From US Bonds, ‘Hindenburg Omen’ Looms Over S&P, Treasury Yields Keep Rising
Rates, Yen, And Another Fat Finger Trader All Moving Today’s Market
Investors euphoric as US margin debt reaches ‘danger’ levels
Fund managers are around the world are gripped by euphoria, convinced that America is in full recovery and Europe has overcome its debt crisis.
China, Japan Lead Record Investor Flight From US Bonds
China and Japan led an exodus from U.S. Treasurys in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasurys.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
http://www.moneynews.com/FinanceNews/china-japan-trasury-bonds-investor/2013/08/16/id/520728
Treasury yields keep rising
http://www.marketwatch.com/story/treasurys-slide-ahead-of-housing-consumer-data-2013-08-16
’Hindenburg Omen’ looms over S&P 500 as stocks stall
A technical analysis pattern for stock traders has pointed to an impending crash in stocks, adding to an increasing chorus of voices that have turned bearish on equities for the second half of the year.
The “Hindenburg Omen” – named after the Hindenburg disaster of 1937, in which the Zeppelin airship Hindenburg crashed and burned – is once again hovering over markets, according to Ron William, founder and principal market strategist at RW Market Advisory.
“The S&P 500 has hit an all-time high not so long ago, yet a lot of the stocks within the S&P 500 are actually making their yearly lows, suggesting some internal weakness in the stock market,” he told CNBC Friday.
“[It's] maybe a good time to take profits within the market if indeed you see more downside risk coming up.”
http://www.cnbc.com/id/100967640
Investors Are Rotating Out Of The US And Into Europe
European equity funds just had their biggest week in more than two years, taking in $2.3 billion in new assets under management (AUM).
Curiously, in the same week, U.S. equity funds – which have seen robust expansion of AUM all year, including recent notable inflows of $2 billion a day at the beginning of July – got hit with their first outflows in seven weeks as investors redeemed $1.9 billion.
Jim Paulsen: End of QE Could Be a Tonic For Stocks
Jim Paulsen, chief investment strategist of Wells Capital Management, is a contrarian when it comes to the end of the Federal Reserve’s quantitative easing (QE) program. Instead of it being the disaster for stocks that many predict, he says it could set the stage for a market liftoff to the upside.
http://www.moneynews.com/FinanceNews/Paulsen-QE-Fed-stocks/2013/08/15/id/520581
Jobs, Inflation Data Support Tapering of Fed Bond Purchases
The number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July, which could draw the Federal Reserve closer to trimming its massive bond buying program.
http://www.moneynews.com/StreetTalk/Jobs-Inflation-Federal-Reserve-Taper/2013/08/15/id/520548
Is Selling Bonds the Taste of Things to Come?
Housing Starts Miss Expectations
http://www.businessinsider.com/july-housing-starts-2013-8?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29
CONSUMER CONFIDENCE UNEXPECTEDLY PLUNGES IN AUGUST
The headline index of confidence fell to 80.0 in August from July’s 85.1 reading. Economists had predicted a tick up to 85.2.
The sub-index of economic conditions fell to 91.0 from 98.6.
The economic outlook sub-index fell to 72.9 from 76.5.
Read more: http://www.businessinsider.com/umich-advance-consumer-confidence-august-2013-8#ixzz2c8o72b00
Investors euphoric as US margin debt reaches ‘danger’ levels
Fund managers are around the world are gripped by euphoria, convinced that America is in full recovery and Europe has overcome its debt crisis.
Bank of America’s monthly survey of investors showed a dramatic rise
in confidence in August, with a net 72pc expecting growth to accelerate
over the next year. It is the highest in reading since 2009.
Almost everybody expects bond yields to rise as deflation fears
evaporate, with just 3pc still worried about the risk of an economic
relapse. Managers have slashed their bond allocation to a 28-month low.
China, Japan Lead Record Investor Flight From US Bonds
China and Japan led an exodus from U.S. Treasurys in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasurys.
The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed.
China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.
http://www.moneynews.com/FinanceNews/china-japan-trasury-bonds-investor/2013/08/16/id/520728
Treasury yields keep rising
http://www.marketwatch.com/story/treasurys-slide-ahead-of-housing-consumer-data-2013-08-16
’Hindenburg Omen’ looms over S&P 500 as stocks stall
A technical analysis pattern for stock traders has pointed to an impending crash in stocks, adding to an increasing chorus of voices that have turned bearish on equities for the second half of the year.
The “Hindenburg Omen” – named after the Hindenburg disaster of 1937, in which the Zeppelin airship Hindenburg crashed and burned – is once again hovering over markets, according to Ron William, founder and principal market strategist at RW Market Advisory.
“The S&P 500 has hit an all-time high not so long ago, yet a lot of the stocks within the S&P 500 are actually making their yearly lows, suggesting some internal weakness in the stock market,” he told CNBC Friday.
“[It's] maybe a good time to take profits within the market if indeed you see more downside risk coming up.”
http://www.cnbc.com/id/100967640
Investors Are Rotating Out Of The US And Into Europe
European equity funds just had their biggest week in more than two years, taking in $2.3 billion in new assets under management (AUM).
Curiously, in the same week, U.S. equity funds – which have seen robust expansion of AUM all year, including recent notable inflows of $2 billion a day at the beginning of July – got hit with their first outflows in seven weeks as investors redeemed $1.9 billion.
“Largest weekly inflows to European equity funds in more than 2 years
($2.3bn) confirms Europe back in fashion,” says BofA Merrill Lynch chief investment strategist Michael Hartnett.
Read more: http://www.businessinsider.com/investors-rotating-out-of-us-into-europe-2013-8#ixzz2c8bdUIidJim Paulsen: End of QE Could Be a Tonic For Stocks
Jim Paulsen, chief investment strategist of Wells Capital Management, is a contrarian when it comes to the end of the Federal Reserve’s quantitative easing (QE) program. Instead of it being the disaster for stocks that many predict, he says it could set the stage for a market liftoff to the upside.
http://www.moneynews.com/FinanceNews/Paulsen-QE-Fed-stocks/2013/08/15/id/520581
Jobs, Inflation Data Support Tapering of Fed Bond Purchases
The number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July, which could draw the Federal Reserve closer to trimming its massive bond buying program.
http://www.moneynews.com/StreetTalk/Jobs-Inflation-Federal-Reserve-Taper/2013/08/15/id/520548
Is Selling Bonds the Taste of Things to Come?
Treasury yields are on the rise as I have noted on numerous occasions recently.
The action has prompted the world’s largest hedge-fund manager, to throw in the towel on treasuries and inflation-linked TIPS.
….
What I do know is leverage works both ways. I also know that the Fed has so distorted the economic horizon that it is next to impossible to predict what’s coming down the pike.
Stocks, bonds, and commodities other than gold all rose in union over the past few years. My bet is on an unwinding of that trade.
Read more at http://globaleconomicanalysis.blogspot.com/2013/08/reflections-on-leverage-is-selling.html#buOb7xP1avow5vmL.99The action has prompted the world’s largest hedge-fund manager, to throw in the towel on treasuries and inflation-linked TIPS.
….
What I do know is leverage works both ways. I also know that the Fed has so distorted the economic horizon that it is next to impossible to predict what’s coming down the pike.
Stocks, bonds, and commodities other than gold all rose in union over the past few years. My bet is on an unwinding of that trade.
Housing Starts Miss Expectations
http://www.businessinsider.com/july-housing-starts-2013-8?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheMoneyGame+%28The+Money+Game%29
CONSUMER CONFIDENCE UNEXPECTEDLY PLUNGES IN AUGUST
The headline index of confidence fell to 80.0 in August from July’s 85.1 reading. Economists had predicted a tick up to 85.2.
The sub-index of economic conditions fell to 91.0 from 98.6.
The economic outlook sub-index fell to 72.9 from 76.5.
Read more: http://www.businessinsider.com/umich-advance-consumer-confidence-august-2013-8#ixzz2c8o72b00
Record High Demand For Physical Gold Threatens To Break The Back Of The Paper Gold Market
The demand for physical gold is
exploding all over the world, and bullion banks are now experiencing a
supply crunch that is absolutely unprecedented.
As physical demand continues to rise, the massive Ponzi scheme that the bullion banks have been engaged in is going to become increasingly obvious, and at some point the lack of physical gold is going to break the back of the paper gold market and we are going to see the price of gold go to levels that we have never seen before.
You see, the truth is that the central banks of the world and the bullion banks have made “paper promises” that vastly exceed the amount of actual physical gold in existence. This kind of scheme works fine if everyone does not come asking for their gold at the same time.
Unfortunately for the ones running this scheme, people are now starting to ask for their gold back and it is causing huge problems.
From End of the American Dream:
It started earlier this year when Germany asked for 300 metric tons of their gold which was supposedly being held at the New York Fed. If the New York Fed really did have as much physical gold as they claim that they do, that request should have been no problem. Instead, the Germans were told that it would take seven years to fulfill the request.
At that point, alarm bells started to go off in financial circles all over the planet. People all over the globe began asking for their gold back, and now this is causing serious stress for the bullion banks. The following is what Hong Kong hedge fund manager William Kaye told King World News the other day…
At some point the lack of physical gold and the lack of physical silver are going to become glaringly apparent to the general public, and at that point we could see a fundamental shift in the marketplace. Keith Barron speculated on what the “trigger” for this shift might be during a recent interview with King World News…
There is only so much physical gold out there. Warren Buffett once estimated that if all of the gold in the entire world was gathered into one place, it could be formed into a cube that would only be 69 feet long by 69 feet high by 69 feet wide.
That isn’t a whole lot of physical gold.
But there is a massive amount of “paper gold” out there today. In fact, as I noted recently, the Reserve Bank of India says that “the traded amount of ‘paper linked to gold’ exceeds by far the actual supply of physical gold: the volume on the London Bullion Market Association (LBMA) OTC market and the major Futures and Options Exchanges was OVER 92 TIMES that of the underlying Physical Market.”
Did you grasp that?
The reserve bank of India says that there is more than 92 times as much “paper gold” as there is physical gold.
This is why you want to own physical gold.
And right now the global appetite for physical gold is absolutely voracious.
According to CNN, consumer demand for physical gold is now at an all-time record high…
At some point the paper market is going to break.
When that happens, the price of gold is going to go absolutely skyrocketing.
As physical demand continues to rise, the massive Ponzi scheme that the bullion banks have been engaged in is going to become increasingly obvious, and at some point the lack of physical gold is going to break the back of the paper gold market and we are going to see the price of gold go to levels that we have never seen before.
You see, the truth is that the central banks of the world and the bullion banks have made “paper promises” that vastly exceed the amount of actual physical gold in existence. This kind of scheme works fine if everyone does not come asking for their gold at the same time.
Unfortunately for the ones running this scheme, people are now starting to ask for their gold back and it is causing huge problems.
From End of the American Dream:
It started earlier this year when Germany asked for 300 metric tons of their gold which was supposedly being held at the New York Fed. If the New York Fed really did have as much physical gold as they claim that they do, that request should have been no problem. Instead, the Germans were told that it would take seven years to fulfill the request.
At that point, alarm bells started to go off in financial circles all over the planet. People all over the globe began asking for their gold back, and now this is causing serious stress for the bullion banks. The following is what Hong Kong hedge fund manager William Kaye told King World News the other day…
There are serious strains in the (gold) system. I’ve never witnessed such a serious strain in my lifetime in terms of the backwardation of gold, and in terms of the lease rates being negative for such an extended period of time. This suggests that there are two forces at work: One is that there are serious strains in the system — that the bullion banks are struggling to come up with the physical gold for spot delivery that the market demands.Right now the bullion banks are experiencing unprecedented difficulties coming up with the physical gold and physical silver that they are supposed to have. Evidence of this supply squeeze is starting to pop up all over the place. Some of this evidence was summarized in a recent article by Jim Willie…
It’s so ugly that in the silver market, JPMorgan has not yet satisfied and delivered on the June silver futures contracts! It’s so ugly that using hidden entities that Andrew Maguire has detected in London, JPM is using hidden entities to hog 90% of the July silver deliveries! It appears that JPM doesn’t have the silver to meet June delivery, and is trying to replenish their own vaults by taking delivery in London, secretly, to replenish their inventory! Where are they getting it from? Maybe the SLV!
The JPM clients have removed between December and June- close to 40,000 kg of gold- thats 40 metric tons. While JPM’s house account has removed over 40 tons in the same period! What’s the lesson there? It appears JPM’s best friends and clients don’t trust them anymore!
My best source (originally a trader with Scotia Mocatta) tells me that the allocated gold account raids have resulted in 40-60,000 tons of gold! (The US likely doesn’t have any of its reported 8,500 tons left at all!). Rubin and Clinton might have made $2-$3 trillion leasing and selling the US gold. Someday the US may have to replenish its gold.
We’ve had other things like ABN Amro’s default, and another small Dutch bank just made the same statement that they’re not going to redeem on gold accounts. Morgan Stanley is stalling on every single metals transfer request. When it is finally transferred the serial numbers and weights are different than what was documented. Clearly the broker dealers are going into the market to find the gold, to find supply just in order to meet their daily requirements.
The Brinks’ accounts are going bare and are almost down to zero – these are all problems on the supply side!
At some point the lack of physical gold and the lack of physical silver are going to become glaringly apparent to the general public, and at that point we could see a fundamental shift in the marketplace. Keith Barron speculated on what the “trigger” for this shift might be during a recent interview with King World News…
All I know is that this ‘trigger’ which is going to ignite this move is coming, and it will involve substantial repricing of both gold and silver. One possible trigger may turn out to be a failure of the COMEX. We do know that there is a shortage of physical gold for delivery, and that’s because so much gold is going to Asia right now.Barron is fully convinced that we will eventually see a “breaking” of the COMEX which will shock the world…
You can see by the price action in the U.S. dollar right now that the Asians are dumping their dollars. But, interestingly, they are also paying a premium to get physical gold right now with no delay in shipment. So there is a loss of faith in the paper gold and silver markets by major participants. It’s almost as if they expect a failure.
I firmly believe there will be a point in the future when this sort of event triggers a run on the COMEX, and more and more entities are going to ask for physical delivery. This will have the effect of breaking the COMEX and creating a failure. When that takes place you will see an explosion in the prices of gold and silver that will literally shock market participants around the world.And the truth is that this has been a long time in coming. The bullion banks should never have made so many empty paper promises.
There is only so much physical gold out there. Warren Buffett once estimated that if all of the gold in the entire world was gathered into one place, it could be formed into a cube that would only be 69 feet long by 69 feet high by 69 feet wide.
That isn’t a whole lot of physical gold.
But there is a massive amount of “paper gold” out there today. In fact, as I noted recently, the Reserve Bank of India says that “the traded amount of ‘paper linked to gold’ exceeds by far the actual supply of physical gold: the volume on the London Bullion Market Association (LBMA) OTC market and the major Futures and Options Exchanges was OVER 92 TIMES that of the underlying Physical Market.”
Did you grasp that?
The reserve bank of India says that there is more than 92 times as much “paper gold” as there is physical gold.
This is why you want to own physical gold.
And right now the global appetite for physical gold is absolutely voracious.
According to CNN, consumer demand for physical gold is now at an all-time record high…
Bargain-hunters are snapping up gold jewelry and coins as investors desert the metal and world prices plunge.In fact, according to the latest World Gold Council Gold Demand Trends report, demand for gold bars and gold coins in the second quarter was up 78 percent over the same quarter last year…
Global consumer demand for gold hit its highest level ever in the second quarter, spiking to 1,083 tons, up 53% compared to the same time last year.
Most of that demand came from China and India, where consumers rushed to buy jewelry, coins and gold bars.
Globally, jewellery demand was up 37% in Q2 2013 to 576 tonnes (t) from 421t in the same quarter last year, reaching its highest level since Q3 2008. In China, demand was up 54% compared to a year ago; while in India demand increased by 51%. There were also significant increases in demand for gold jewellery in other parts of the world: the Middle East region was up by 33%, and in Turkey demand grew by 38%.All of this physical demand is putting a tremendous amount of pressure on the paper market.
Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500t in a quarter for the first time. In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083t in the quarter, 53% higher than a year ago.
For the tenth consecutive quarter, central banks were net buyers of gold, purchasing 71t, which reinforces the trend that began in Q1 2011.
At some point the paper market is going to break.
When that happens, the price of gold is going to go absolutely skyrocketing.
Gold Analysts Most Bullish Since March On Physical Demand
by GoldCore
Today’s AM fix was USD 1,360.75, EUR 1,020.59 and GBP 870.10 per ounce.
Yesterday’s AM fix was USD 1,339.50, EUR 1,008.05 and GBP 859.37 per ounce.
Gold climbed $27.90 or over 2% yesterday, closing at $1,362.90/oz. Silver surged another $1.09 or nearly 5%, closing at $22.93. Platinum rose 1% to $1,504.00/oz, while palladium rose 0.5% to $746/oz.
Gold and silver inched down today on profit taking after their respective 3.7% and 11.85% gains seen this week. Gold surged through resistance at the $1,340/oz level yesterday. The next level of resistance is between $1,400/oz and $1,423/oz.
Gold in USD, 1 Month – (GoldCore)
Gold analysts are the most bullish in five months according to Bloomberg. Thirteen analysts surveyed by Bloomberg expect prices to rise next week, four were bearish and five neutral, the highest proportion of bulls since March 8.
Store of wealth buying of physical gold surged 53% in the second quarter from a year earlier, making up for the record sales of gold ETFs.
Investor and store of wealth demand coin, bar and jewellery demand jumped by 376.5 metric tons to 1,083.2 tons in the second quarter as global bar and coin purchases reached a record and jewelry usage was the most since 2008.
Nations added 534.6 tons to reserves last year, the most since 1964, and may buy 350 tons this year, the World Gold Council said.
“People buying physical gold are more about having a store of wealth in the medium to long term whereas the ETP liquidations are more the speculative side,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars.
“Physical demand remains very robust. People see gold prices as good value at these levels.”
Gold in USD, YTD 2013 – (GoldCore)
Store of wealth and financial insurance demand jumped by 376.5 metric tons to 1,083.2 tons in the second quarter as global bar and coin purchases reached a record and jewelry usage was the most since 2008.
Demand was particularly strong in China and India which both look set to have demand of over 1,000 tonnes in 2013.
There may be a decline of demand in the next few months in India, last year’s biggest buyer, due to restrictions on imports. However, 2014 imports should be higher than this year in the nation and in China, the next biggest user, the World Gold Council said yesterday.
There are signs of rising demand elsewhere. Turkey’s bullion imports this year through July were a massive 80% higher than in all of 2012, data on the Istanbul Gold Exchange’s website show.
Billionaire George Soros and Daniel Loeb sold their entire SPDR stakes in the past quarter, filings showed yesterday.
Billionaire investor John Paulson cut his gold ETF holding for the first time since 2011 and it is believed he did this due to the falling gold price and negative media coverage. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake by 53% in the second quarter, an August 14 government filing showed.
Paulson, Soros and Loeb may be following in the footsteps of Einhorn and Bass and deciding to liquidate the more risky gold ETF, futures and paper gold and instead opting for the safety of allocated physical bullion.
Physical demand helped push August futures on the Comex in New York above the December contract for the first time on August 2, compared with trading at a discount before then.
Backwardation, when nearby contracts are more expensive than longer-dated futures, very rarely happens and it often shows a lack of physical bullion supply.
The three-month lease rate, reflecting the cost of borrowing gold, reached a four-year high on August 7 also signalling tight physical supplies globally.
Support & Resistance Chart – (GoldCore)
Gold has fallen 19% this year after some more speculative investors decided to sell, sparking losses for mining companies and hedge funds.
Gold reached a low of $1,180.50 on June 28 and this low looks increasingly like it may be the low for 2013.
The slump led to strong buying globally and a 16% price rally from a 34 month low on June 28.
As we pointed out yesterday, physical gold demand surged 53% and total supply was down 6% in Q2, 2013 and yet curiously prices fell 35% in the quarter – the worst quarterly fall on record.
Gold prices fell in eight of the past 10 months despite rising demand and falling supply.
Today’s AM fix was USD 1,360.75, EUR 1,020.59 and GBP 870.10 per ounce.
Yesterday’s AM fix was USD 1,339.50, EUR 1,008.05 and GBP 859.37 per ounce.
Gold climbed $27.90 or over 2% yesterday, closing at $1,362.90/oz. Silver surged another $1.09 or nearly 5%, closing at $22.93. Platinum rose 1% to $1,504.00/oz, while palladium rose 0.5% to $746/oz.
Gold and silver inched down today on profit taking after their respective 3.7% and 11.85% gains seen this week. Gold surged through resistance at the $1,340/oz level yesterday. The next level of resistance is between $1,400/oz and $1,423/oz.
Gold in USD, 1 Month – (GoldCore)
Gold analysts are the most bullish in five months according to Bloomberg. Thirteen analysts surveyed by Bloomberg expect prices to rise next week, four were bearish and five neutral, the highest proportion of bulls since March 8.
Store of wealth buying of physical gold surged 53% in the second quarter from a year earlier, making up for the record sales of gold ETFs.
Investor and store of wealth demand coin, bar and jewellery demand jumped by 376.5 metric tons to 1,083.2 tons in the second quarter as global bar and coin purchases reached a record and jewelry usage was the most since 2008.
Nations added 534.6 tons to reserves last year, the most since 1964, and may buy 350 tons this year, the World Gold Council said.
“People buying physical gold are more about having a store of wealth in the medium to long term whereas the ETP liquidations are more the speculative side,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars.
“Physical demand remains very robust. People see gold prices as good value at these levels.”
Gold in USD, YTD 2013 – (GoldCore)
Store of wealth and financial insurance demand jumped by 376.5 metric tons to 1,083.2 tons in the second quarter as global bar and coin purchases reached a record and jewelry usage was the most since 2008.
Demand was particularly strong in China and India which both look set to have demand of over 1,000 tonnes in 2013.
There may be a decline of demand in the next few months in India, last year’s biggest buyer, due to restrictions on imports. However, 2014 imports should be higher than this year in the nation and in China, the next biggest user, the World Gold Council said yesterday.
There are signs of rising demand elsewhere. Turkey’s bullion imports this year through July were a massive 80% higher than in all of 2012, data on the Istanbul Gold Exchange’s website show.
Billionaire George Soros and Daniel Loeb sold their entire SPDR stakes in the past quarter, filings showed yesterday.
Billionaire investor John Paulson cut his gold ETF holding for the first time since 2011 and it is believed he did this due to the falling gold price and negative media coverage. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake by 53% in the second quarter, an August 14 government filing showed.
Paulson, Soros and Loeb may be following in the footsteps of Einhorn and Bass and deciding to liquidate the more risky gold ETF, futures and paper gold and instead opting for the safety of allocated physical bullion.
Physical demand helped push August futures on the Comex in New York above the December contract for the first time on August 2, compared with trading at a discount before then.
Backwardation, when nearby contracts are more expensive than longer-dated futures, very rarely happens and it often shows a lack of physical bullion supply.
The three-month lease rate, reflecting the cost of borrowing gold, reached a four-year high on August 7 also signalling tight physical supplies globally.
Support & Resistance Chart – (GoldCore)
Gold has fallen 19% this year after some more speculative investors decided to sell, sparking losses for mining companies and hedge funds.
Gold reached a low of $1,180.50 on June 28 and this low looks increasingly like it may be the low for 2013.
The slump led to strong buying globally and a 16% price rally from a 34 month low on June 28.
As we pointed out yesterday, physical gold demand surged 53% and total supply was down 6% in Q2, 2013 and yet curiously prices fell 35% in the quarter – the worst quarterly fall on record.
Gold prices fell in eight of the past 10 months despite rising demand and falling supply.
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