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SGE Withdrawals Equal Chinese Gold Demand, Part 3

On April 4, 2014 Alasdair Macleod published an extensive analysis on the Chinese gold market. I felt obligated to respond to it by sharing my point of view and explain where I disagree with his analysis. I think his estimates are largely overstated because he double counts certain demand categories. He states Chinese gold demand in 2013 was 4843 metric tonnes, according to me it was 2197 metric tonnes (my estimate excludes some hidden demand and PBOC purchases on which I have no hard numbers).

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Edward Snowden Testimony At PACE, April 4, 2014

For the ones that are interested in Privacy and the NSA, this testimony of Edward Snowden at The Parliamentary Assembly of the Council of Europe (PACE) is a comprehensive summary of all his revelations as yet. In 30 minutes you will be fully updated and refreshed!
 
 

 
 
 
In Gold We Trust

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Weekly SGE Withdrawals Dropping, YTD 585 MT

SGE withdrawals have been in a down trend for five weeks. In these weeks withdrawals have been lower than the year to date weekly average. This is not surprisingly after an unprecedented start of 2014. During four of the first seven weeks of this year SGE withdrawals, which equals Chinese demand, transcended global mining production.
 
SGE withdrawals are still 23 % up compared to the same period last year. This will most certainly change in the period after April 15, which was the date in 2013 the gold price tumbled more than $100 and Chinese demand for physical gold exploded.

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New Physical Gold Exchange In Singapore

I was tipped of by one of my readers on a new gold exchange operating in Singapore; Allocated Bullion Solutions Singapore. After taking a look on their website I asked their public relations desk for the details of their business. Websites can be incomplete and I wanted to be sure on what kind of exchange it was. They kindly responded whereupon a comprehensive Q&A followed.
 
 
 
 
 
Who are the customers of ABS?
 
ABS targets customers in the global investment sector. 

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Golden Ruble Symbol Appears In Front Of Russian Bank

Silverdoctors published an article on April 9, 2014 titled: PUTIN SENDS THE WEST A GOLDEN MESSAGE: CENTRAL BANK OF RUSSIA CHANGES LOGO TO GOLDEN RUBLE. The article presents a “Google Translate” from the Russian website 1prime.ru and states the Russian central bank has changed it’s logo into a Golden Ruble. From Silverdoctors:
 
According to reports from Russian media, Putin appears to have sent the west a golden message in the aftermath of JPMorgan unilaterally deciding to block an official Russian wire transfer, as the Central Bank of Russia has introduced a new logo, which just happens to be a gold ruble.

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Chinese Gold Demand 559 MT YTD, Up 22 %

In week 13 (24-03-2014/28-03-2014) 36 metric tonnes of gold were withdrawn from the vaults of the Shanghai Gold Exchange. This is the fourth week in a row withdrawals are below the weekly average year to date, which is currently is 43 metric tonnes. Chinese physical demand is dropping from extremely high at the beginning of this year to high in recent weeks. The weekly average of the last four weeks was 35 metric tonnes.
 
An “at the back of an envelope” calculation: weekly domestic mining is 8.3 tonnes, scrap can’t be more than 5 tonnes (a high estimate), which leaves 21.7 tonnes to be imported per week at recent demand (35 – 8.3 – 5 = 22.7).

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January India Silver Import 462 MT

The DGCIS, India’s customs department, just released the trade numbers for January 2014. Strangely For gold and silver they only disclose the import numbers. To figure out net import I’m aware of only one other source; COMTRADE, but they haven’t caught up until January. For gold we know the Indian government implemented the 80/20 rule in August 2013, meaning gold traders have to export 20 % of their imported gold. By knowing how much gold was officially imported we can thus calculate how much was officially exported.

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Deposit Insurance System Will Increase Physical Gold Demand China

Within 2014 the State Council aims to implement a new deposit insurance system for its banks. While one might think this is meant to lower systemic risk, it’s actually meant as a step to shift risk from te government to its citizens. Handing the people the opportunity to be more responsible for their own financial health, introducing more laissez-faire. I present a translation from a Chinese commentator on this matter, published on March 21, 2014.
 
Notes from the translator, LK:
 
The fact the Chinese government is pushing to introduce a nation wide deposit insurance system in 2014 tells a lot; according to the author, we are in an environment of heightened financial uncertainty and default risks.

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GOFO Turned Negative AGAIN: The Consequences

Today (April 3, 2014) the one month Gold Forward Offered Rate (GOFO) turned negative again. This is the seventh time since July 8, 2013 this has happened. I would like to share a few thoughts on this.
 
A few weeks ago when I wanted to see and download GOFO rates these were easily accessible on the LBMA website. This site, however, recently suffered a makeover. A few days ago I couldn’t find the GOFO rates at all, then when I did find them I noted they weren’t allowed to copy!

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The Great HFT Debate With Michael Lewis On CNBC

Great watch on High Frequency Trading Trading rigging markets. The debate about HFT is between William O’Brien, BATS Global Markets Presidents, Brad Katsuyama, IEX Group President, and Michael Lewis, Author of Flash Boys. Broadcasted on CNBC April 2, 2014.
 
 

 
 
In Gold We Trust

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West to East Gold Exodus In Full Swing

Chinese gold demand remains extraordinary robust in 2014. Last week (17-03-2014/21-03-2014) wholesale demand, aka SGE withdrawals, was 36 metric tonnes, year to date demand is 523 tonnes.
 
This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.  
 
 

 
 
Of course the big question is; where on earth is this gold coming from?

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A First Glance At US Official Gold Reserves Audits

I probably missed this story because I didn’t have a blog when this came out in 2011, but apparently the official gold reserves of the United States are being audited every year. I thought the last audit was done in 1974, based on information from the mainstream and alternative media; darn media! Though I haven’t been the only one who has ever been misinformed on this subject.
 
Ron Paul, who was a a well informed member of the US House of Representatives in 2011, proposed new legislation at the time to have yearly audits of the US official gold reserves: The Gold Reserve Transparency Act (not enacted).

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Dutch Youth Buying Goldbars

In the financial section of the biggest newspaper in The Netherlands, De Telegraaf, an article was published on March 22 about a growing Dutch population investing in physical gold; a young generation is becoming more aware of finance and is acting accordingly. This generation no longer chooses to save in saving accounts, but prefers to buy physical gold. “They see their parents don’t receive their promised pension and they expect themselves to get even less. They spent each month, for example, €200 or €300 euros on physical gold.”
 
The article is titled “Youth Buys Goldbars“. 

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Interview Jim Rickards On The Death Of Money

I had the privilege to meet with Jim Rickards, while he was in The Netherlands for one day, to do an interview about his new book “The Death Of Money“. Accompanied by friend (and author of the book the The Big Reset) Willem Middelkoop we met at the hotel were Jim was staying and for one and a half hours we fired questions at him. Below you can read the highlights of the conversation.
 
March 12, 2014
 
Koos Jansen: Do you think there will be a collapse in the worldwide monetary system, including chaos, social unrest and bank failures because all policy makers will do too little too late?

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Jayant Bhandari: Indians Are Desperate For Gold Because They Know Their Rulers Are Thieves

I found this a very informative interview about the Indian gold market. Sunny Pannu asks Jayant Bhandari, institutional advisor and writer with jayantbhandari.com, to briefly summarize the most important aspects of the Indian gold market.
 
 
The Asian Gold Myth
 
 

 
 
In Gold We Trust

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Matterhorn Interview With Koos Jansen

Lars Schall interviewed Koos Jansen on March 10, 2014.
 
 

 
 
In Gold We Trust

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Chinese Gold Demand 488 MT YTD, Up 29 %

Although  last week only 34 metric tonnes of gold were withdrawn from the vaults of the Shanghai Gold Exchange (SGE), down 6.52 % from the prior week, year to date there has been a staggering 488 metric tonnes withdrawn, up 29 % to compared to last year. Year to date demand will probably come on par with last year when we enter april, as withdrawals exploded in April 2013. What will happen after April is hard to say, this year’s average daily withdrawals stand at 6.7 metric tonnes, last years daily average was 6 metric tonnes (2197 mt / 365).

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In Gold We Trust Under Attack

Since a couple of months there have been several cyber attacks on this website. Often I have trouble reaching the server to write and publish articles, WordPress (the software I use that manages my site) is very slow and all sorts of errors appear; drafts are deleted and certain functions in the software stop working. Drives me nuts. That’s from the inside. From the outside, for all you readers, my website has been offline for many hours, in certain areas of the world sometimes many days.

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Guest Post: The Gold Market, Part 5

Written in the late nineties by James Orlin Grabbe. This is the last part of the series.
 
 
Gold FRAs
 
A gold forward rate agreement (FRA) is a contract whose payout depends on whether the market interest rate diverges from an agreed “contract rate”. It is called a “forward rate” agreement, because the interest rate applies to a gold deposit or loan starting at some time period in the future. That is, the interest rate in question is the gold lease rate (also called gold libor).

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New York Federal Reserve Lying About Gold Storage?

There is about 6700 metric tonnes of gold stored 80 feet below street level on the bedrock of Manhattan, in the vaults of the New York Federal Reserve. None of this gold is owned by the New York Federal reserve, they are merely the custodians for the US treasury (that holds approximately 400 metic tonnes in NY), 60 sovereign countries and the IMF; completely free of charge! From the NY Fed website:
 
The New York Fed charges account holders a handling fee for gold transactions, including when gold enters or leaves the vault or ownership transfers (moves between compartments), but otherwise does not charge fees for gold storage.

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Week 10, SGE withdrawals 36 MT, 454 MT YTD

The price of gold is rising, but is this purely because of the tensions in the Ukraine? Not entirely, I think it adds fuel to a supply shortage created by enormous Chinese physical demand since April 2013. While paper sentiment might change today or tomorrow, the physical reality will eventually be the main driver to push the pice upwards.
 
 

 
 
Throughout history gold has always been the most constant form of money. In 1900 you could buy roughly the same amount of breads with one gram of gold as two thousand years ago.

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