$14.3 Trillion U.S. Debt Ceiling Threatened; Silver Bullion Buying Spree In India After Price Falls

Tyler Durden's picture

From GoldCore

$14.3 Trillion U.S. Debt Ceiling Threatened; Silver Bullion Buying Spree In India After Price Falls

Gold and silver are lower this morning as the recent bout of weakness continues. Equities in Asia were lower on economic growth and inflation concerns and European indices are also lower as Greek debt talks are in disarray after the weekend arrest IMF’s Dominique Strauss-Kahn.

Cross Currency Rates

There are concerns that the IMF’s chiefs’ arrest may delay resolution of Europe’s deepening debt crisis and Greek bonds have fallen again seeing the 10 year yield rise to 15.58% - close to the record highs seen last week.

Greek Government Bond – 10 year (Daily)

Oil prices are lower again on growth concerns despite a significant increase in tensions in the Middle East with clashes on Israel’s borders with Syria, the Lebanon and Egypt.

Gold is likely to find support from geopolitical risk emanating from the tinderbox that is the Middle East.

NYMEX Crude Oil – 5 Year (Daily)

Gold and silver’s fundamentals remain very sound and yet the majority of the western public remain unaware of the fundamentals and unaware of the significant macroeconomic, monetary and geopolitical risk facing them today.

Tensions in the Middle East and North Africa, concerns that Japan is on the verge of a severe recession (due to its earthquake, tsunami and its worsening nuclear catastrophe), risk of sovereign debt contagion in Europe and the U.S. (the U.S. is set to reach its $14.3 trillion 'debt ceiling' this week) and ultra loose monetary policies, currency debasement and inflation are contributing to continuing safe haven demand.

This is especially the case in China and India where strong demand has continued after the recent sell off and where demand continues to surprise analysts and market participants.

The Financial Times reported on Saturday that “the sharp drop in gold and silver prices has stimulated a surge in buying from India in a sign that consumers in the world’s largest gold-buying country retain faith in the decade-long bull story for precious metals.”

Chhabil Jain, a Mumbai silver trader told the Financial Times that “demand for silver bars was going through the roof” and that “many vendors were starting to run low on stocks”.

“People are booking incredible amounts of silver as they see the current drop in prices as a great opportunity to buy more ... most are buying for pure investment,” he added.

Bloomberg reports this morning that silver was the most traded commodity in April.

Incredibly, the value of trading in silver futures in India was four-times greater than gold. Trading of silver futures on the Multi Commodity Exchange gained more than sevenfold to 4.1 trillion rupees in the April 16-30 period from a year earlier, regulator’s data showed.

Indians unlike their western counterparts still see silver as an important store of value to protect against the declining purchasing power of paper currencies.

U.S. Debt Ceiling of $14.3 Trillion To Be Reached

While the media focuses on the weekend arrest IMF’s Dominique Strauss-Kahn, a more fundamental and important story is that of America’s debt ceiling of $14.3 trillion which is likely to be reached, possibly today or tomorrow. America’s budget deficit this year alone is set to be a record breaking $1.5 trillion.

These figures and America’s appalling fiscal state means that gold and silver remain important diversifications.

Should the US Congress fail to vote to increase the debt limit today or this week, the White House has warned that the country would default on its debt and spark a new financial crisis.

The US Treasury has threatened to implement "extraordinary measures" so America can keep paying its bills until August.

Federal Reserve Chairman Ben Bernanke told Congress last week that any delay in increasing the debt limit would result in higher interest rates and could have "extremely dire consequences for the US economy".

The reality is that the continuing imprudent and profligate fiscal and monetary policies in the U.S. are likely to lead to higher interest rates and have "extremely dire consequences for the US economy".

Recent and continuing unsustainable fiscal and monetary policy have led to safe haven demand for gold and silver and the continuation of the bull markets in the precious metals.

Until, fiscal and monetary discipline and sanity returns to America and the world, gold and silver will continue to be bought in order to hedge the continuing debasement of fiat currencies.


(Bloomberg)--Commodity Futures Turnover in India Jumps on Silver Trade (1)

Turnover on commodity futures exchanges in India, the biggest consumer of gold, surged 73 percent in April as silver’s rally to a record and price volatility spurred trading in the metal.

Turnover on the Multi Commodity Exchange of India Ltd., the nation’s biggest bourse and rivals, jumped to 12.9 trillion rupees ($286 billion) last month from 7.5 trillion a year ago, the Forward Markets Commission said today on its website. Turnover gained to 7.02 trillion rupees in the fortnight ended April 30, from 4.4 trillion rupees, the regulator said.

Bullion trade, comprising silver and gold, almost tripled in April, the commission said. Silver futures rallied to a record 73,600 rupees per kilogram in India on April 25, before slumping 28 percent through today. The value of trading in silver futures in India, the most traded commodity in April, was four-times greater than gold, data from the regulator showed.

“The large swings have resulted in large trading volumes,” Kishore Narne, head of research at Anand Rathi Commodities Ltd., said from Mumbai. “Speculators, especially the intra-day traders, have shifted from gold to silver because it appeared to them it’s a good way to make a quick buck.”

Trading of silver futures on the Multi Commodity Exchange gained more than sevenfold to 4.1 trillion rupees in the April 16-30 period from a year earlier, regulator’s data showed.

Silver futures for July-delivery on the exchange fell 1.6 percent to 52,860 rupees per kilogram at 12:21 p.m. in Mumbai. The metal has added 80 percent in the past year.

Trade in metals other than bullion dropped 38 percent in April, the regulator said. Trade in agricultural commodities rose 23 percent in the period and energy gained 14 percent.

(Bloomberg) -- Shanghai Gold Exchange May Cut Silver Daily Trading Limit to 10%

The Shanghai Gold Exchange may cut the trading band for silver contracts to 10 percent from 13 percent, the bourse said on its website.

The band will be reduced if the metal doesn’t rise or fall by the current 13 percent limit today, according to the statement. If reduced, the new 10 percent limit will be effective from tomorrow, it said.

The exchange will also reduce the margin requirement for silver contracts by 3 percentage points to 15 percent if the metal doesn’t rise or fall by the daily limit today, it said. The change in margin requirements would be effective from today, according to the statement.

(US Mint) -- 2011 American Buffalo Gold Proof Coin Available May 19

WASHINGTON - The United States Mint will begin accepting orders for the 2011 American Buffalo Gold Proof Coin on May 19 at noon Eastern Time (ET).  There is no mintage or household order limit for this product.

The designs on the obverse (heads side) and reverse (tails side) of the 24-karat one-ounce gold coin are based on the original 1913 Type I Buffalo nickel by James Earle Fraser.  The obverse features the profile of a Native American and the inscriptions LIBERTY, 2011, the initial F for Fraser and the W mint mark for the United States Mint at West Point.  The coin's reverse features the revered American Buffalo-also known as the bison-along with the inscriptions UNITED STATES OF AMERICA, E PLURIBUS UNUM, IN GOD WE TRUST, $50, 1OZ. and .9999 FINE GOLD.

Each American Buffalo Gold Proof Coin is presented in an elegant hardwood box with a matte finish and a faux leather inset.  The coin is exhibited on a platform which can stand at an angle for display when the box is open.  A Certificate of Authenticity is also included.

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breezer1's picture

no silver in china. none for sale at any price is what i've heard.

Oh regional Indian's picture

While not quite that bad here, I can say that SIlver, as I had reported a couple f months ago, has suddenly see the light in India, so to speak. Never before this has India seen a silver shortage.

And many dealers have huge mark-ups on physical deliveries. Many bullion dealers used to run gold schemes here (deposit Rs. 1,000 every month towards gold). Now we will start seeign them in Silver I think.

Good stuff all around. Equally interesting is that India has always owned it's bullion (Au0 in Jewellery. 

With Ag, it's bars. I like it.




lsbumblebee's picture

Maybe if we manipulate the price lower they'll stop buying.

cossack55's picture

I promise to quit buying at $1.00.

tmosley's picture

I don't think I would make such a promise.

I will quit buying when I can no longer get a significant amount for my surplus salary.

cowdiddly's picture

And what does the Pilgrim Society do? Makes it even cheaper. LOL Thanks Pilgrims.

Diatribe's picture

I think ya'll ran that same India article/quote a couple days ago.  

tmosley's picture

No, they didn't.

Feel free to prove me wrong.

Quixotic_Not's picture

Another idiot with bouncing meat on the hook for an avatar.

Tyler, could we just go ahead and ban these greasy miscreants?

The IQ curve has really taken a dump since Robo started the jerk-off trend...

Hephasteus's picture

They think they are fucking hypnotists with titty watches.

At least this one tried to pretend to be someone different before shilling. But is clearly muir the sec porn addict that needs to get fucked by a donkey at farmfreakville.com

Bay of Pigs's picture

I posted that info the other day. Got it from the FT.

I am calling Tulving today and asking them for some hard numbers on sales if they will share them with me. I'm assuming they are setting records on this dip.


Franken_Stein's picture


Us PM bulls are Tyler Durden's biggest fanbase.

Thanks for this juicy yummy tidbit.


Stormdancer's picture

Incredibly, the value of trading in silver futures in India was four-times greater than gold.

That sentence alone deserves a few minutes careful thought and a bit of extrapolation.

Crisismode's picture

Well, Indians have a long tradition of buying gold, and silver was formerly shunned. The fact that they are now buying up silver is a major turnaround in their traditional thinking.

Stormdancer's picture

The silver market is a fraction of the size the gold market.  Try to dump a river into a tiny creekbed for very long and you're gonna trip some flood guages.

Sean7k's picture

By the time Americans figure this out, there won't be any left at a reasonable price and they will be stuck with fiat. Mission accomplished.

disabledvet's picture

who pays for CNN's "global invasion"?  Syria is "on deck" now (of course--we are the global police, right?)--anyone?  or is it "just everyone"?  anywho we shall see if the markets themselves "create the decision" as everyone must "stand around and wait for something to happen" again.  i sense "credit risk."  as in "it's everywhere" and "very near" at the same time.  always entertaining of course!

Diatribe's picture

All the Slumdog Millionaires are buying silver

cossack55's picture



Azannoth's picture

Ah the good old days when you could buy 1 oz. of silver for less than 20 euro

SilverFocker's picture

Silver Slurpee's for everyone, coming to a 7-11 near you.

tiger7905's picture

Interview of Embry by Turk, covers all topics from silver to hyperinflation. At the end Embry basically says BTFD.


speedy's picture

A question: What if the debt ceiling is breached?  Does someone go to jail? I mean it's nothing important like rape is it?

Just wondering....

speedy's picture

What's with junks? Does everyone here think breaching the debt ceiling is more serious than rape?

Oh regional Indian's picture

Curious, what is with these booby avatars. 

Mostly grown men here, ne? Capable of looking at pornography if they so desire?

So, what's up with the breathless reception of Robo's boob girls and other booby avatars?

Eh? strange.


Quixotic_Not's picture

Agent provocateurs...

Baiting the hook with the hope that they'll be popular with the  dumbed-down sheeple.

ZH is getting pretty dangerous to THEM it seems...two new "members" in this thread alone flashing titties to get attention, and a third I'm sure is on his/her way.

gratefultraveller's picture

Why do you put flowers in an office? To make something unappealing look pleasant ;-)

ivars's picture

Buying spree failed to lift the prices. The silver correction is not over yet.

tmosley's picture

Of course.  Didn't you read the article?  They are buying bars, not paper.

Paper is going to zero, or else paper trading is going to flee the corrupt West.  One of the two.

stopthenewworldorder's picture

i miss johnny bravo.....someone go fetch him from his cave

stopthenewworldorder's picture

not so sure...i think their styles are similar but not identical - although both are troll-tastic!

Bansters-in-my- feces's picture

"Gold and silver are lower this morning as the recent bout of weakness continues"


"weakness"......and manipulation....

Both have the same meaning...right...???


reachsb's picture

The UK Times reported that Indians possess more than 18000 Tons of Gold in the private household (mostly in the wearable form). And now there have been a bunch of news reports indicating that Silver is also being added aggressively in the Indian households. What needs to be noted is that during this steady accumulation phase in India, spread out over many decades, the Chinese govt actually discouraged bullion ownership among its citizens. It's only recently that the Chinese govt reversed gears sharply and is now all-out encouraging its citizens to load up on PMs. 

Since it has been openly speculated among numerous pundits that we are one major crisis away from the world adopting a Gold standard backed reserve currency, I wonder what role countries like India will play in drafting the new standard (since it can leverage the huge reserves amongst its citizens).


Crisismode's picture

(since it can leverage the huge reserves amongst its citizens).


You mean as in confiscation??

reachsb's picture

Confiscation exacerbates the problem and is not practical when you are talking about such a large population base. I'm sure that private ownership of PMs will also be taken into account during the weighting process while drafting the new currency standard (just like Canada and Saudi Arabia are going to also insist that their petroleum reserves also be taken into account). And what will the private citizens from the western world bring to the table during this drafting process? T-bills, T-bonds, notes, etc. Guess which asset class will be assigned a much higher weightage during these calculations? 

Bull_Dragon's picture

I read in my Economics text book in 9th grade that the Reserve Bank of India holds equal amounts of bullion and foreign currencies in its vaults. Now I know the reason behind it.

Strider52's picture

I BTFD last night. I saw the price at below $35, and I pulled the trigger, and got me a horse-choking pile of the 'other' Precious. It seems like it's been around $35 for too long, and with all of the shortages reported here and other sites, I just had to push the "Buy a Hooker' button. Happy Camper.

ZombieHuntclub's picture

So there's a caste system for metals in India as well as people? Silver was untouchable and now it is ok? Im thinking not quite Bhramin, maybe Viasya.

How does one say "Physical bitchez" in Hindi?


Ryman1075's picture

For anyone looking for physical PMs, look up your local coin shops.  Even if they don't have .999 bullion available, you can pick up pre 1964 junk silver coins.  They are 90% pure, and an easy way to buy some bullion.  The last confiscation did not include "numismatic collectables".  These junk silver coins would fit that category.

If anyone knows the confiscation act of '33, please correct me if I am wrong.