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China Gold Demand Voracious - Chinese Yuan Gold Standard?

Tyler Durden's picture





 

From GoldCore

#000000;">Gold and
silver have recovered somewhat from slight falls in Asia overnight and
are now higher against the British pound and Swiss franc which are
weaker this morning. With geopolitical instability looking set to
escalate and the real possibility of a military confrontation in the
Mediterranean, any sell off in the precious metals will likely be
tentative.

Cross Currency and Precious Metal Table GoldCore

Cross Currency and Precious Metal Table

$1,500/oz for gold and $40/oz for silver remain viable
short term targets and any price dip should be seen as a buying
opportunity. Bullion dealers, including GoldCore, are experiencing only
tentative buying and indeed some selling; buying of bullion is nowhere
near the levels seen during the Bear Stearns, Lehman Brothers or more
recent Eurozone sovereign debt crises.

Total Known Gold ETF Holdings GoldCore

Total Known Gold ETF Holdings

The lack of animal spirits in the gold and silver bullion
markets is also seen in the decline of the gold ETF holdings (see chart
above) and the Commitment of Traders open interest (see below). Neither
show any signs of speculative fever whatsoever.

This would suggest that the recent record prices are due to
short covering on the COMEX (possibly by Wall Street banks with
concentrated short positions as alleged by the Gold Anti-Trust Action
Committee or GATA and being investigated by the CFTC) and buying of
bullion in the Middle East and Asia, particularly in China.

GoldCore

While all the focus is on the geopolitical risk in the
Mediterranean, the not insignificant risks posed by the European
sovereign crisis, the possibility of a US municipal and sovereign debt
crisis and continuing currency debasement internationally are the prime
drivers of gold today.

Quantitative easing, debt monetisation and competitive
currency devaluations have not gone away and are leading to deepening
inflation which will likely result in much higher prices in 2011 and
2012.

Enter the Chinese Gold Dragon

Overnight, UBS confirmed in a Bloomberg article that China
alone imported a massive 200 metric tonnes of gold in just the first two
months of 2011. This gold is being bought by China’s 1.3 billion people
in order to protect against surging inflation (see news).

The FT last week quoted a senior executive of the world’s
largest bank by market capitalisation Industrial and Commercial Bank of
China Ltd. (ICBC) about the “voracious” appetite for gold in China. ICBC
bank has in some two months opened gold savings accounts for more than 1
million savers with more than 12 tons of gold stored on their behalf.

Shopping malls in China are experiencing massive buying of
gold jewellery and ingots as shoppers buy gold as a store of wealth in
order to protect against surging food and energy inflation. Statistics
from Beijing Caibai, Beijing’s largest jewellry store, show sales of
gold bars and jewellry have totaled an incredible 4 billion yuan or
about $600 million US dollars so far this year, a 70-percent increase
year-on-year (see news).

This demand is only the demand from Chinese investors and
savers. It does not include purchases by the less than transparent
People’s Bank of China who are almost certainly continuing to diversify
their massive nearing $3 trillion currency reserves into gold bullion in
order to protect themselves from their massive dollar ($1.6 trillion
dollars of US debt alone, according to the Treasury Department) and
other currency exposure.

Chinese Yuan Gold Standard

China is clearly trying to position the yuan or renminbi as the
alternative global reserve currency. The Chinese likely realise that
they will need to surpass the Federal Reserve’s official, but unaudited,
gold holding of 8,133.5 tonnes. China is the sixth largest holder of
gold reserves in the world today and officially has reserves of 1054.1
tonnes which is less than half those of even Euro debtor nations France
and Italy who are believed to have 2,435.4 and 2,451.8 tonnes
respectively.

China’s ambitions to rival and even supplant the dollar
were seen overnight with news that China is to allow all exporters and
importers to settle their cross-border trades in the yuan this year. The
People’s Bank of China said that it was “part of plans to grow the
currency's international role” and “would respond to overseas demand for
the yuan to be used as a reserve currency.”

Russia is also attempting to position the Russian ruble as a global reserve currency (see news).

World Bank President Robert Zoellick recently mooted the
possibility of a return to some form of gold standard. It seems
extremely likely that senior and influential Chinese policy makers,
bankers and government officials may be having similar thoughts.

Gold Bubble?

#000000;">The lack of knowledge of the vast majority of
people about gold and the very important developments in the gold
markets with significant macroeconomic, monetary and geopolitical
ramifications is hardly indicative of a bubble.

Nor is the instinctual aversion and bias against gold by
some today. Indeed, the negativity displayed against gold by a minority
(normally vested interests offering other investment or saving products)
in recent years and continuing today may be partly due to some feeling
unwise due to their failure to predict gold’s rise and return as a
global currency.

The significant and continuing price appreciation of
something they don't own, they don't understand and did not advise
people to diversify into has some looking somewhat imprudent.

NEWS

#000000;">(Bloomberg) -- Gold Is Heading for $2,000 in 12 Months, Deutsche Bank Says

Gold is heading for $2,000 an ounce in the next 12 months, Deutsche
Bank AG said in a report. Silver may average $50 an ounce next year,
Deutsche Bank analyst Daniel Brebner said in the report e-mailed today.

(Bloomberg) -- Russia Depository Bought 3.4 Tons of Gold in 2011, Interfax Says

Russia’s Gokhran state depository
bought 3.4 metric tons of gold from producers last year, more
than the 2.5 tons previously reported, Interfax reported, citing
unidentified sources in the organization.

The state precious-metals and gems depository purchased 5
tons of gold in 2009, according to Interfax. Russian banks last
year bought 148.8 tons of gold from producers, led by OAO
Sberbank, Nomos Bank and OAO Sberbank, the news service
reported.

(Russia-Media.RU) –Russia’s currency- and gold reserves up 4.8 billion USD during last week

The External and Public Relations Department of the Bank of Russia
informed on Thursday that the country’s international currency and gold
reserves are up 4.8 billion USD or 1.0 percent during last week to a
volume of 492.2 billion USD per 25 February 2011.

Since 1 January 2011 the reserves are up 12.8 billion USD.

The reserves have been on 478.7 billion at 1 January 2008, 427,1
billion 1 January 2009, 440,6 billion USD January 2010 and 479.4
billion USD at 1 Januar 2011. They reached their highest volume with
598,1 billion USD before the conflict with Georgia about South-Ossetia
in the beginning of August 2008.

(Bloomberg) -- World Food Prices Rose to a Record in February, UN Says

World food prices rose to a record in February, the United Nations
said. Its FAO Food Price Index averaged 236 points, the group said in a
notice on its website today.

(Bloomberg) -- Commodity Index Extends Rally to 29-Month High on Cotton, Sugar

The Thomson Reuters/CRB Index of 19 commodities rose to a 29-month
high, led by gains in cotton, sugar, silver and crude oil. The index
advanced 0.6 percent to 357.32 at 9:33 a.m. in New York, after touching
357.67, the highest since Sept. 29, 2008.

(DPA) -- Swiss central bank reports loss of 20.7 billion dollars in 2010

The Swiss National Bank (SNB) reported Thursday a consolidated loss
of 19.17 billion Swiss francs (20.7 billion dollars) last year, largely
due to the appreciating value of the Swiss currency.

The results compare with a profit of 9.96 billion francs in
2009. A profit of 2.6 billion francs was recorded by its so-called
stability fund, which holds toxic assets from UBS AG, the Swiss bank
that required a bailout in 2008.

But currency interventions were costly for the central bank, which
has tried to prevent too quick a rise in the franc versus the dollar
and the euro. Despite these market interventions, the franc has hit
new highs against the major currencies.

Philipp Hildebrand, head of the SNB, has warned of deflationary
risks from a strong franc to justify the interventions, which at
times have been controversial in Switzerland.

The sharp rise in the price of gold resulted in valuation gains of
5.82 billion francs for the SNB, on unchanged gold holdings of 1,040
tonnes.

(Wall Street Journal) -- Bernanke Unfazed By Gold Standard, Currency History Queries

WASHINGTON -- Federal Reserve Chairman Ben Bernanke defended the
central bank's effect on the dollar Tuesday, pushing back at the idea
that policy makers should consider alternative proposals like the gold
standard.

Bernanke, appearing before the Senate Banking Committee, was
pressed by Sen. Jim DeMint, R-S.C., on the viability of a return to a
gold-backed economy or the idea of the Treasury Department issuing bonds
payable in gold.

Bernanke, who has studied the issue, said a return to the gold standard wouldn't work.

"It did deliver price stability over very long periods of time,
but over shorter periods of time it caused wide swings in prices related
to changes in demand or supply of gold. So I don't think it's a
panacea," Bernanke told DeMint.

Additionally, Bernanke said there were a number of practical
issues that would prevent the return of gold as the world standard.
Namely, there's not enough gold in the world to effectively support the
U.S. money supply.

"I don't think that a full-fledged gold standard would be
practical at this point," Bernanke said, declining to opine on the
gold-backed bond issue because he was not familiar with the idea.

Sen. Mark Kirk, R-Ill., also engaged Bernanke on the currency
issue, questioning whether the Fed's $600 billion bond-purchase program
is in effect monetizing the U.S. debt. Bernanke noted that the U.S
couldn't have currency outstanding if there were no Treasury securities
to back it up, and that even the most steady economic times the Fed
engages in the buying and selling of U.S.-backed securities.

Kirk, however, noted that the United States did have currency
not backed by federal debt at one time in its history: under the
administration of President Andrew Jackson, the nation's seventh
president.

Bernanke, appearing amused, was quick to respond.

"So this was before the Civil War. This was during the period
where individual banks issued currency. We didn't have a national
currency," Bernanke said.

Not to be outdone, Kirk asked whether it was possible for a
country to have a currency without a trillion-dollar debt. Bernanke said
that was the case.

(Bloomberg) -- Turkey Gold Imports 5.48 Tons in February, Exchange Data Show

Turkey’s gold imports reached 5.48
metric tons in February, the Istanbul Gold Exchange said in a
report on its website.

The country imported no silver in February, the data show.

(Bloomberg) -- Gold Buying in China Jumps as Inflation Flares, Boosting Demand, UBS Says

Gold purchases in China, the world’s largest producer, climbed to
200 metric tons in the first two months of 2011 as faster inflation
boosted consumer demand, according to UBS AG, which said the price may
gain to $1,500.

“China is the big buyer,” Peter Hickson, global commodities
strategist at Switzerland’s largest bank, said by phone yesterday,
without giving a comparable figure for 2010. The estimate for the
two-month period compares with full-year consumer demand from China of
579.5 tons for last year, according to the World Gold Council, a
producer-funded group.

Bullion, which rallied 30 percent last year, surged to a record
yesterday as uprisings in the Middle East, quickening inflation and
currency debasement boosted global demand. China’s consumer prices rose
4.9 percent in January from a year earlier, exceeding policy makers’ 4
percent ceiling for a fourth month.

“Chinese interest is huge,” said Peter Tse, Hong Kong- based
head of precious metals at Bank of Nova Scotia. “Demand for physical
gold and imports has increased substantially” due to the Lunar New Year
holiday, Tse said today, referring to the week-long break that began
Feb. 2.

Immediate-delivery gold was at $1,429.05 an ounce at 5:08 p.m.
in Singapore compared with yesterday’s peak of $1,434.93.
Yuan-denominated bullion rose 0.5 percent to 303.58 yuan ($46.19) a gram
in Shanghai, approaching the record 314 yuan, set Nov. 9.

‘Gold Is Attractive’

“Gold is attractive,” Hickson said. “The more the market becomes
concerned about inflation or concerns about unrest in Africa, more and
more people will look to gold.” The price may rise to $1,500 an ounce in
the next six months, said Hong Kong- based Hickson, who’s worked for
UBS since 1996.

Blackstone Group LP’s Byron Wien said in January that gold may
rise to more than $1,600 this year “as investors across the world place
more of their assets in something they consider ‘real’.” The price may
reach $1,600 this year, Wayne Atwell, a managing director at Casimir
Capital LP said the same month.

Protests partly linked to record food prices have erupted across
North Africa and the Middle East this year, toppling leaders in Tunisia
and Egypt and boosting oil prices. Libyan rebels braced for renewed
clashes today with forces loyal to leader Muammar Qaddafi. Iranian
protesters have clashed with security forces in Tehran, Al Arabiya
reported.

Gold investment in China, the largest buyer of the precious
metal after India, may gain 40 percent to 50 percent this year amid a
lack of alternatives, Wang Lixin, China representative for the World
Gold Council, said last month. He called that forecast a “conservative
estimate.”

Bars and Coins

China’s investment demand in 2010 jumped 70 percent to 179.9 tons,
surpassing Germany and the U.S., as buyers sought out bars and coins,
the London-based industry group said. Consumption by the jewelry sector
rose to a record 399.7 tons, it said. China imported more than 300 tons
last year, People’s Bank of China Vice Governor Yi Gang said on Feb. 26
in Beijing.

China may be the “next big buyer” of gold, driven by
institutional and retail demand, Credit Suisse Group AG analyst Tom
Kendall said in Cape Town on Feb. 7. “If you’re sitting there in China
with money in a deposit account, you’re losing between 1-2 percent a
year through inflation,” Kendall said.

The boom in gold demand in China is driven by concern about
inflation pressure and the poor performance of alternative investments,
the producer-funded council has said. Premier Wen Jiabao pledged on Feb.
27 to boost food supplies to hold down costs, and to tackle surging
property prices.

Spooked by Inflation

Jewelers at shopping malls across Beijing are witnessing a gold rush
as residents spooked by inflation look to protect their money, the
China Daily reported on Feb. 28

Statistics from Beijing Caibai, the city’s largest jewelry
store, show sales of gold and other jewelry have totaled about 4 billion
yuan so far this year, a 70 percent increase from a year ago, the
report said.

China displaced South Africa as the world’s biggest gold
producer in 2007. Imports through last October rose almost fivefold to
209 tons from the total shipped in the previous year, according to the
Shanghai Gold Exchange. Mine output reached a record 340 tons last year,
the China Gold Association has said.

The Industrial and Commercial Bank of China Ltd., the world’s
biggest lender by market value, started physical-gold linked savings
accounts in December with the World Gold Council. Account openings have
surpassed 1 million, with more than 12 tons of gold stored on behalf of
investors, it has said.

(China Radio International - CRI) - Malls Witnessing Gold Rush as Shoppers Fear Inflation

Jewellers at shopping malls across Beijing are witnessing a gold rush amid inflation fears.

Statistics from Beijing Caibai, the city's largest jewellry
store, show sales of gold and other jewellry have totaled about 4
billion yuan or about $600 million US dollars so far this year, a
70-percent increase year-on-year.

Wang Chunli, general manager, said that hundreds of customers
are lining up outside every day to buy gold accessories, such as
necklaces and rings.

After seeing the enthusiasm for gold investment, insiders predict prices will continue to rise this year.

The price has already reached 338 yuan a gram at Caibai, according to data from cngold.org, a popular gold investment website.

A report released by the World Gold Council at the end of 2010
said China is the strongest market for gold investment and gold
accessory purchase.

(Zero Hedge) -- As Silver Touches $34.90, US Mint Runs Out Of Bullion
Blanks, Halts American Eagle Silver Coin Production

The scramble for non-dilutable currencies hits a frenzy as silver
just touches on a fresh 31 year high of $34.90. To commemorate this
historic event, the US Mint has halted American Eagle silver coins
production, in addition to its ongoing halt of American Buffalo coins:
"because of the continued demand for American Eagle Silver Bullion
Coins, 2010-dated American Eagle Silver Uncirculated Coins will not be
produced. The United States Mint will resume production of American
Eagle Silver Uncirculated Coins once sufficient inventories of silver
bullion blanks can be acquired to meet market demand for all three
American Eagle Silver Coin products."

From the US Mint: Production of United States Mint American
Eagle Silver Uncirculated Coins continues to be temporarily suspended
because of unprecedented demand for American Eagle Silver Bullion Coins.
Until recently, all available silver bullion blanks were being
allocated to the American Eagle Silver Bullion Coin Program, as the
United States Mint is required by Public Law 99-61 to produce these
coins “in quantities sufficient to meet public demand . . . .”

Although the demand for precious metal coins remains high, the
increase in supply of planchets—coupled with a lower demand for bullion
orders in August and September—allowed the United States Mint to meet
public demand and shift some capacity to produce numismatic versions of
the American Eagle One Ounce Silver Proof Coin.

However, because of the continued demand for American Eagle
Silver Bullion Coins, 2010-dated American Eagle Silver Uncirculated
Coins will not be produced.

The United States Mint will resume production of American Eagle
Silver Uncirculated Coins once sufficient inventories of silver bullion
blanks can be acquired to meet market demand for all three American
Eagle Silver Coin products.

 


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Thu, 03/03/2011 - 10:14 | Link to Comment GetZeeGold
GetZeeGold's picture

 

Nothing to see here....move right along.

 

 

 

Thu, 03/03/2011 - 10:15 | Link to Comment bankrupt JPM bu...
bankrupt JPM buy silver's picture

But Ben told us and Congress that he's not monetizing the debt..!  LOL

 

www.silvergoldsilver.blogspot.com

Thu, 03/03/2011 - 10:33 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Name one official that does not lie through his teeth and I'll show you a pink unicorn...

BTW, as you are aware, the daily fluctuations in the price of silver mean little overall. Buy today at any price and come back in a few months.

As I said, every tick higher in the "stock markets," every pip lower in the dollars value brings the whole global economy closer to total and complete destruction; in the interim, it makes one's 401k look good and the "economy" look like it's recovering, but it becomes a deal with the devil...

 

Thu, 03/03/2011 - 10:45 | Link to Comment SheepDog-One
SheepDog-One's picture

Thats the only thing Im watching now, what the dollar does. Stocks are a the boy in the bubble on life support and meaningless, except that dollar plunges like today have to be met with a big stock pump just to stay even.
Its the DOLLAR! Which soon will be removed from world currency status and Id rather have silver and gold than Rubles or Yuan which oil will soon be traded in. Oh yea, and guns.

Thu, 03/03/2011 - 10:30 | Link to Comment Imminent Crucible
Imminent Crucible's picture

Great article, but it contains a misconception: the idea that a decline in GLD fund's holdings indicates declining interest in gold.  The opposite is the case here.

GLD doesn't sell gold when the ETF's share price falls, and buy it when the price rises.  That's not how it works.  Gold flows out of the fund's holdings when outstanding shares are redeemed for physical gold.  According to GLD's prospectus, this has to be done in baskets of 100,000 shares, and must be done through an "authorized participant" (aka a big, crooked primary dealer bank, see prospectus for list of AP's).

At today's gold price, it only takes about $14 million to force GLD's manager and custodian to cough up a nice stash of real gold. Since they probably don't have much, they may have to go source it on the open market to meet these redemptions.

Now, consider that in December 2010, the ChiComs lifted the ban on Chinese investment in foreign gold ETFs.  The State Administration for Foreign Exchange may well be using GLD as a covert way to add to China's gold reserves, even as wealthy Chinese investors slip gold out of GLD, $14 million worth at a time.

Thu, 03/03/2011 - 10:37 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Correct. That is a misconception that many here hold. For a very small window, ETFs were great to trade before POMO stepped on the equity side, so it is interesting the Chinese allow investment in foreign ETFs... why? Not to add IMO.

Take physical delivery now- it's the only way of knowing you're covered safe.

Thu, 03/03/2011 - 10:45 | Link to Comment Math Man
Math Man's picture

Huge misunderstanding, Imminent.  

While parties can redeem and take delivery, most Metals are added or removed from the ETF by APs arbing the creation/redemption mechanism.

When the price of GLD is below the NAV, APs arb gold out of the ETF by redeeming shares and selling the gold on the open market.

When the price of GLD is above the NAV, APs arb gold in to the ETF by creating shares and buying gold on the open market.

In both cases the make risk free money - and the arb is what keeps the price of GLD inline w/ the NAV.

And as for GLD not having the gold, you can print out the bar list and check out the audit on their website.

It is 100% allocated gold.

Thu, 03/03/2011 - 11:41 | Link to Comment akak
akak's picture

And as for GLD not having the gold, you can print out the bar list and check out the audit on their website.

 

And Alan Greenspan told us in 2005 that housing was "not in a bubble", and Ben Bernanke told me that the "subprime crisis" would not spread to the broader economy, and Bernie Madoff, pre-conviction, told all his customers that his fund was safe and secure, and my good Nigerian email friend assures me that I will share in his $50,000,000 as soon as I give him my checking account information for him to deposit it into.

Such touching naivite.  Or maybe, such disingenuous pro-Establishment misinformation?

Thu, 03/03/2011 - 12:27 | Link to Comment TeamAmerica
TeamAmerica's picture

So everything everybody else says is a lie?  If I buy gold from you, how do I know it's the real thing without smelting it myself?

Better question is how do we know China has any actual gold holdings at all?   They can declare an underground vault holding tons and tons...and who's going to audit it?  It would be the ultimate victory of the communist ideal to scam the capitalist world...create a gold-standard currency without any need to have actual gold to back it up.

Thu, 03/03/2011 - 13:39 | Link to Comment GoinFawr
GoinFawr's picture

Epistemological conundrums bitchez!

Ask yourself what your criteria for knowledge is, and things may clear up for you, a bit.

Or you could just read the GLD and SLV prospectus, and ask yourself if there is a possibility for a conflict of interest when the proprietors of those ETF's carry large short positions...

Would you buy a license to shoot yourself in the face?

I mean, just saying: it might be wise to hold off any purchases until you know how the mountain of litigation alleging impropriety turn out, hmmm?

Thu, 03/03/2011 - 21:09 | Link to Comment akak
akak's picture

So everything everybody else says is a lie? 

Specious argument.

Of course not, but why should anyone put any trust in those with a demonstrated pattern of lying?  Do you REALLY believe that the managers of the silver and gold ETFs GLD and SLV --- JPMorgan and others who are clearly working for, or with, the Federal Reserve and other top financial PTB to prop up the dollar via their massive naked PM shorts --- are REALLY to be trusted to hold all the physical metals which they claim (in copious legalese giving them almost limitless back doors to default) are backing up the shares of these ETFs?

Thu, 03/03/2011 - 21:06 | Link to Comment Papasmurf
Papasmurf's picture

And whos vault is it stored in?  Allocated my ass.

Fri, 03/04/2011 - 02:31 | Link to Comment h3m1ngw4y
h3m1ngw4y's picture

somebody did check the bar list. and there were lots of incongruencies found. double entries, serial numbers which were out of the serial range of the suppliers etc. etc.

 

what did you think where the rumors concerned about the actual holding of the etf originated?

been there done that big time

Thu, 03/03/2011 - 11:28 | Link to Comment Raynja
Raynja's picture

Lately I've been wondering if the point of GLD and SLV ETF isn't to create a new reserve currency with JPM acting as central bank, all you need is some fancy paper and ink that can be exchanged in private transactions or redeemed for a set amount of PM.

Thu, 03/03/2011 - 10:33 | Link to Comment Math Man
Math Man's picture

Exactly.  China is buying because they have an inflation problem.  And that is because they continue to peg the yuan to the dollar and won't let the yuan out of the country.   If they remove the peg - like ZEROHEDGE speculated they would earlier today.  Then - POOF - Chinese inflation and gold demand disappears.

And since the chart above shows that the ETFs have stopped buying , Gold longs are going to be in for a some big, big, big problems.

 

Thu, 03/03/2011 - 10:41 | Link to Comment Long-John-Silver
Long-John-Silver's picture

You've been predicting a crash of gold prices sense it was 100% lower than it's current price.

Thu, 03/03/2011 - 10:47 | Link to Comment SheepDog-One
SheepDog-One's picture

MathMan the fact is anyone in DOLLAR denominated things are the ones who will soon be in deep, deep, trouble. Gold and silver is the REAL world currency!

Thu, 03/03/2011 - 11:18 | Link to Comment Math Man
Math Man's picture

The dollar index is HIGHER than it was when Lehman collapsed.  I know, it is hard to believe, but it is true.

The dollar is not collapsing, but rather PMs are bubbling higher.

Thu, 03/03/2011 - 11:57 | Link to Comment SheepDog-One
SheepDog-One's picture

Dollar INDEX means nothing.

Thu, 03/03/2011 - 12:14 | Link to Comment Imminent Crucible
Imminent Crucible's picture

The dollar index is a measure of the dollar against six other worthless fiat currencies. It has little to do with the dollar's purchasing power, unless you want to buy Euros or some other central bank fiction.

The fact is that all the paper currencies are collapsing in purchasing power. It isn't just PM's "bubbling higher", it's every dang thing in the way of grains, softs, metals, energy....

In other words, the supply of paper "money" is soaring while the supply of useful goods is essentially flat, and in some cases declining.

Thu, 03/03/2011 - 12:28 | Link to Comment Math Man
Math Man's picture

Have you ever left the country? 

US dollar purchasing power is higher now than pre-Lehman.  End of Story. 

It always needs to be measured against another currency.

 

Thu, 03/03/2011 - 12:42 | Link to Comment Harmonious_Diss...
Harmonious_Dissonance's picture

GEN droppinglike  a STONE!  Damn what a shitty stock.

Thu, 03/03/2011 - 12:58 | Link to Comment Harmonious_Diss...
Harmonious_Dissonance's picture

GenOn Energy, Inc. (NYSE:GEN) recently reported adjusted EBITDA of $638 million for 2010 compared to $890 million for 2009

Thu, 03/03/2011 - 13:12 | Link to Comment Math Man
Math Man's picture

Dude, Give it up.

I have over 40 line items in my PA.  One down stock means nothing.

BTW, have you seen your Gold and Silver today?

Thu, 03/03/2011 - 13:49 | Link to Comment Harmonious_Diss...
Harmonious_Dissonance's picture

GEN sucks.

Thu, 03/03/2011 - 21:07 | Link to Comment Papasmurf
Papasmurf's picture

You can't visit your gold every day.  You'll wear a path in your lawn and neighbors will find it.

Thu, 03/03/2011 - 13:24 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Stop it. You sound like that lying Dr. Deficit in front of congress. The dollar/euro/yen/renminbi should be guaged against gold and silver basket... end of story. That is purchasing power.

Thu, 03/03/2011 - 11:04 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

GLD is effectively a stealth short on physical. It's pure genious. A thing of beauty really. So the first question you have to ask yourself is, when is the right time to sell USD after the Yuan de-pegs? (long evil belly laugh here) Question two is what are your going to trade for the dollars? more virtual money, or real money?

Thu, 03/03/2011 - 12:18 | Link to Comment Imminent Crucible
Imminent Crucible's picture

Precisely.  I believe that TPTB endorsed the proliferation of PM exchange-traded funds because it gave them multiple new venues to manipulate the price of gold and silver.  The Comex game was wearing very thin.

Thu, 03/03/2011 - 11:50 | Link to Comment bankonzhongguo
bankonzhongguo's picture

At least some government is taking a serious interest in a gold-backed currency.

I don't think the Chinese can do anything less than unpeg from the USD and back the CYN with gold - even if it was a minuscule amount.  The act alone in this environment would be more than symbolic.

Likewise, China can still force its own currency to a new peg with the euro and dollar and anytime for any reason.

Imagine if CYN went to a hybrid like the XDR, but adding in PM, copper and rare earths and then forced all export settlements into CYN.  That "unpeg" could turn into a re-peg to the detriment to the US.  Prices could double overnight at Wal-mart because there is no other source for these goods.

The Chinese have figured out they sell us their labor and we give them paper.  Payback may be a bitch.  In time the China system will fail - the country is too big and feudal to run centrally.

Thu, 03/03/2011 - 15:57 | Link to Comment Hugh G Rection
Hugh G Rection's picture

I'm looking to invest in a puppymill.  Anyone know which breed of dog is the most nutrient rich?

Thu, 03/03/2011 - 22:58 | Link to Comment StychoKiller
StychoKiller's picture

You are what you eat...so are dogs, so feed'em nutrient-rich food.

Thu, 03/03/2011 - 10:13 | Link to Comment Turd Ferguson
Turd Ferguson's picture

Every time I've ever said this...that China will, one day, partially back its currency with gold so that it may become a "reserve currency"...people scoff and tell me I'm an idiot.

They're right, I am an idiot, but that doesn't mean that this isn't happening.

Thu, 03/03/2011 - 10:33 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

They must prove they are a safe haven for assets .... When is that going to happen ?

 

Stability , Tiananmen Square , the Jasmine Revolution , the censorship of the internet , no banking transparence , the peg , child labor , no social safety net , ect , ect , ect .......... Who can trust the accounting book businesses , province • local borrowing all murky , fogged up lies .......

 

Long , long time down the road ....

Thu, 03/03/2011 - 10:35 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

in another sign of weakness, China threatens to expel foreign reporters....

 

http://nakedempire.wordpress.com/

Thu, 03/03/2011 - 10:48 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Noooooooooooooooooooooo really ...... ?

But , but , but someone just told me they where the new Reserve Currency .......... Bwahahaha, Whew ........

Thu, 03/03/2011 - 11:14 | Link to Comment Snake
Snake's picture

"Who can trust the accounting book businesses , province • local borrowing all murky , fogged up lies ......."

as in the fogged up lies of Domingo Cavallo before the 2001 crash in Argentina?  you should know a lot about that, no?


Thu, 03/03/2011 - 23:00 | Link to Comment StychoKiller
StychoKiller's picture

EVERY Govt is an organized criminal setup!  Do you want to pay extortion to the Gambinos, or the Chin-lis?

Thu, 03/03/2011 - 14:49 | Link to Comment doggings
doggings's picture

Turd, can I call you that? sounds a bit rude :)

youre not the only one who thinks that, Bob Chapman does too

http://buygoldsilver.org/2010/11/global-currency-crisis-gold-whats-really-going-to-happen-2011-2012/

I think it's inevitable at some point.


Western powers have tried to destroy gold as a backing for currencies for many years. Presently the major media won’t touch the story and that is understandable. For years we have been writing about the SCO  (www.sectsco.org) or the Shanghai Cooperation Organization

Few have been listening and few have been interested in what their mission is and what they have been up to. Some of the members are large oil producers and some, like China, are large oil users. Some have very large US dollar surpluses. As well, some are large commodity and gold and silver buyers. In fact, members are in a great part responsible for driving these prices higher.

It is debatable, but we believe there is a conscious effort to accumulate gold and silver, dump dollars and to back their currencies with gold.

Thu, 03/03/2011 - 10:16 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Somehow, I still cannot see gold shine too much further. Went and traded in a big bit for silver today. Dealer thought I was nuts. But he had the same look a year ago when I told him silver would double.

Gold, old, fold.... sun is sick. Got to think outside the box folks. It's a change of the ages happening here!

Gold, oil, war.....

Silver linings abound.

ORI

http://aadivaahan.wordpress.com/2011/03/01/on-outsourcing-and-its-ills/

Thu, 03/03/2011 - 23:02 | Link to Comment StychoKiller
StychoKiller's picture

Bigger question is, is the Age of Kali ending, or is Kali just getting warmed up?

Thu, 03/03/2011 - 10:14 | Link to Comment traderjoe
traderjoe's picture

But Spalding says you can't buy gas with it, therefore it's not money!?

Thu, 03/03/2011 - 10:49 | Link to Comment SheepDog-One
SheepDog-One's picture

Well Spalding is a liar, here I know of 2 gas stations/truck stops that DO take PM's!

Thu, 03/03/2011 - 11:13 | Link to Comment william the bastard
william the bastard's picture

The article is issued by "Goldcore". That ought to key you in to a bit of bias.

Thu, 03/03/2011 - 10:16 | Link to Comment Ray1968
Ray1968's picture

"$1,500/oz for gold and $40/oz for silver remain viable short term targets"

If you are short term, just stick to your GLD and SLV. If you are long term... cold metal in your hand feels awful good!

Thu, 03/03/2011 - 10:16 | Link to Comment RagnarDanneskjold
RagnarDanneskjold's picture

Chinese imported 200 metric tons in the first two months of 2011...is that sustainable? The average Chinese investor is no more intelligent or rational than the average American investor.

Thu, 03/03/2011 - 10:21 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

You are comparing apples and lemons, we Americans being lemons.

The Chinese government is actively encouraging the Chinese people to buy Gold. The American government claims it doesn't even know what Gold is. And if it did know, they claim Gold is a barbarous relic only the Chinese would try to eat.

Nuff said.

Thu, 03/03/2011 - 10:23 | Link to Comment Oh regional Indian
Oh regional Indian's picture

CD, that is where the rub lies for me. 

When has the chinese government, or any govewrnment done anything good (like really good) for their people? I'd say never.

Why are they suddenly being such good investment advisors to their people?

ORI

Thu, 03/03/2011 - 10:36 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

They aren't trying to do anything "good" for their people. They are simply doing what the Chinese have always done very well, to organise large numbers of their own people to work together for a common cause. The only question is the definition of "common".

I suspect that soon enough, when Gold has quadrupled in price and there is a global cry for the reintroduction of at least a partial Gold standard, that the Chinese government will tell it's people to turn their Gold over to the government in the interest of national security and the common good. This will, of course, be done at the end of a gun.

I'm not saying it will work, only that this is what they are trying to do, to get many many people all rowing in the same direction. The government itself would upset political alliances if it really tried to buy Gold in huge quantities. It must still play the present global fiat game. But it can tell it's people to prepare for the next game. 

Thu, 03/03/2011 - 11:02 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Hmmm.... interesting thesis.

ORI

Thu, 03/03/2011 - 11:01 | Link to Comment SWRichmond
SWRichmond's picture

...the Chinese government will tell it's people to turn their Gold over to the government in the interest of national security and the common good. This will, of course, be done at the end of a gun.

It may be that sinister, but it needn't be.  It might just be that gold acumulation is wealth accumulation, and to be rich as a nation requires a large stock of wealth inside the nation.  If China is indeed vying to be the new reserve (and it's plainly obvious they are), or at least one of several, it makes complete sense for them to be accumulating wealth by whatever means necessary.  Wealth in the hands of individual Chinese is economic power for China.

Thu, 03/03/2011 - 11:09 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

And if it turns out that the Chinese government doesn't actually need to take the Gold from private hands that's great. But if it does, they know where to find it.

The Chinese have never forgotten the lessons they learned from Western gunboat diplomacy and they will never again allow themselves to be utterly under the thumb of a foreign power. They have been working towards that goal for decades.....albeit in fits and starts.

Thu, 03/03/2011 - 11:31 | Link to Comment ItsEvolutionBaby
ItsEvolutionBaby's picture

Good job CD.

 

I agree.

Thu, 03/03/2011 - 12:48 | Link to Comment GoinFawr
GoinFawr's picture

http://www.youtube.com/watch?v=CAKdck1OOM0

"Woooooooooooooooooooo....aaaaoooooo!

...Buyin' stocks on the day of the crash!"

++

 

Thu, 03/03/2011 - 13:43 | Link to Comment Bay of Pigs
Bay of Pigs's picture

CD,

Excellent point. The trolls seem to vanish when confronted with a logical and rational argument like yours. It shows how dumb they really are. No understanding of other cultures and/or history for that matter.

The fact that their citizens can go into a bank and buy physical gold and silver hand over fist tells you all you neeed to know. 

 

Thu, 03/03/2011 - 14:54 | Link to Comment RockyRacoon
RockyRacoon's picture

How come they never forget and we always do?

Thu, 03/03/2011 - 15:17 | Link to Comment oddjob
oddjob's picture

Water fluoridation?

Thu, 03/03/2011 - 23:05 | Link to Comment StychoKiller
StychoKiller's picture

Lots of people will go broke by under estimating the intelligence of the Chinese.

Thu, 03/03/2011 - 11:03 | Link to Comment Bob
Bob's picture

Nice dot-connecting, CD!

Thu, 03/03/2011 - 11:49 | Link to Comment three chord sloth
three chord sloth's picture

I suspect that soon enough, when Gold has quadrupled in price and there is a global cry for the reintroduction of at least a partial Gold standard, that the Chinese government will tell it's people to turn their Gold over to the government in the interest of national security and the common good. This will, of course, be done at the end of a gun.

Yep.

Here's the thing about gold today... it's just another investment. It is not a store of wealth, like it was back in the real gold standard days. And that is done on purpose.

No government wants their citizens to have a real, genuine store of wealth; they do not want anyone (except maybe the top 1% of the top 1%) to have any real way to preserve their accumulated wealth, withdraw from the debt economy, and sit on the sidelines... and that includes China, of course.

They will not introduce a true gold standard for that reason -- they want the common man to stop saving so much and work, work, work, and spend, spend, spend to create a widespread middle class. They need more money velocity, not less.

With a true gold standard, it is possible to convert cash directly to gold at a fixed rate, sit out unstable times without investing, and re-enter the economy at the same place you exited. And that is a big no-no in the synthetic economies of today's so-called modern world. That is true independence, and that is dangerous, toxic even, to the system.

Thu, 03/03/2011 - 10:56 | Link to Comment Bastiat
Bastiat's picture

Encouraging their people to buy gold damps the inflation fire and preserves wealth. The Chinese leaders care about stability and maintaining their power.

Thu, 03/03/2011 - 13:30 | Link to Comment trav7777
trav7777's picture

I personally think this whole China gold thing is overstated and misleading.  Chinks are buying gold because it's a symbol of wealth and it is an asset, the same as indians do.

There just aren't that many assets out there with comparable attributes in this regard.  I don't think that the average chinaman understands "inflation" all that well nor the broader concepts of monetary policy or the yuan peg.  They just know that gold is worthful, they desire it, and with all the money flowing in China they are buying symbols of affluence, gold, cars, etc.

Thu, 03/03/2011 - 14:54 | Link to Comment RockyRacoon
RockyRacoon's picture

True.   Those countries have the cultural aspect about gold that the U. S. has lost in its zeal to spend money.

Thu, 03/03/2011 - 10:31 | Link to Comment Pants McPants
Pants McPants's picture

Not only is it a barbarous relic, but there's not enough gold to return to the gold standard even if the US wanted to!  Tough times all around.

(CD, enjoyed your latest essay.  Well done.)

Thu, 03/03/2011 - 10:43 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Thank you. I enjoyed writing it and the comment section was fantastic. For those who missed it, here it is.

http://www.zerohedge.com/article/end-game-would-us-policetroops-fire-upon-us-citizens

There is plenty of Gold to return to a (partial) Gold standard. Only not at $1,400 per ounce.

At $5,000, there is more than enough to backstop say....20%.

At $30,000, there is more than enough to back stop it all. The question really is, how expensive is Gold or how debased is the fiat?

Thu, 03/03/2011 - 10:53 | Link to Comment Pants McPants
Pants McPants's picture

The comment section may or may not have gotten me through an otherwise dull afternoon yesterday.  There's no shortage of thoughtful, articulate folks on this board.

Peter Morici is the Maryland business school's rock star.  He teaches a few courses each semester, and he is a regular guest on CNBS.  While I never took any of his classes several of my friends told me his standard response to anyone asking about the gold standard was "there's not enough gold"

Good grief.

Thu, 03/03/2011 - 14:56 | Link to Comment RockyRacoon
RockyRacoon's picture

Pretty soon there won't be enough ink or rag paper.

Not to worry, however, there will always be enough electrons.

Thu, 03/03/2011 - 10:45 | Link to Comment Long-John-Silver
Long-John-Silver's picture

I can't remember where I read it but one article claimed that the Gold price wound need to inflate to $42,200 an ounce in order to cover all the Worlds currencies if all switched to a Gold Standard.

Thu, 03/03/2011 - 11:15 | Link to Comment william the bastard
william the bastard's picture

If that were your only data point then the fact that gold is not 5% of that price tells you it won't be happening.

Thu, 03/03/2011 - 11:37 | Link to Comment High Plains Drifter
High Plains Drifter's picture

http://www.taxfreegold.co.uk/rothschildsgoldbars.html

Well the Rothschild cartel own most of it and they apply their special stamp to it and it is my understanding that most of it does not get into public circulation. When the time is right, they will do what they want because they own most of it and also own the means of mining and production. That is , after they eliminate all of the useless eaters, by whatever means necessary.

Thu, 03/03/2011 - 23:10 | Link to Comment StychoKiller
StychoKiller's picture

Your entire argument is true only if the price of Gold is FIXED.  A lot
of people are snowed by the $50 denomination on the current Gold Eagle coin (1 Troy ounce of 24karat Gold), whereas in reality, Gold is trading at
the price of $1,400/Toz (more or less).  Others have calculated that if Gold were priced at around $5000/Toz, there would be enough to replace FRNs -- you should know this already, you've been here long enough.

 

Thu, 03/03/2011 - 10:32 | Link to Comment RagnarDanneskjold
RagnarDanneskjold's picture

The Chinese government also actively encouraged Chinese people to buy houses. Unless one is making the argument that these are proxy purchases by the central bank (which is quite possible, gold nationalization would be easy to sell to the public), government encouraged economic activity tends to end badly.

I live in a middle class apartment in Beijing and there are ads for gold in the elevator, next to the add for corn oil and one for car rentals. Gold is an international currency, but the behavior of local markets still matters. If (big if) Chinese demand is driving the current move in the gold price, then I'm near term neutral-bearish. If not, then it doesn't matter anyway.

Thu, 03/03/2011 - 10:52 | Link to Comment SheepDog-One
SheepDog-One's picture

Yep CD, nuff said.

Thu, 03/03/2011 - 11:03 | Link to Comment TGR
TGR's picture

I'm continually surprised at this comment - the old "the Chinese government is actively encouraging the Chinese to buy gold".

No offense, but this generalized and innacurate statement has morphed into something so far out of context, that I find it bizarre that those here long physical persist in perpetuating it.

The reality is the Chinese government is no more encouraging 'gold' to the masses than did Australia or the US in the '70s when these countries made gold available to the public. It is simply liberalizing the market, as it said it would in 2000.

This is the bullish factor many don't see - the truth of the matter is that there is a hell of a long way to go.

First up, as far as physical goes, there is a hefty 17% tax on gold in China. Not all that encouraging. Second, as someone who has lived in China for the past 13 years, I have yet to see just one - one - article, advertisement, new piece whatever actively encouraging people to buy gold or silver. I've seen the couple of youtube vids on the introduction of silver to the public etc (what responsible media entity would ignore the opening of a new market?) and the very rare, occasional objective piece on the gold market, but certainly they are so very, very, very few and far between as to be inconsequential. Simply put, there is absolutely zero kind of media campaign, now or in the past, encouraging people to buy gold and silver.

Don't get me wrong, gold is popular, but hardly in no more greater proportion per capita than many other countries. There is so much liquidity sloshing round in China that if there were such a campaign, we wouldn't be at 1421, but way way higher.

This is another fact any government keen on building up it's gold reserves would not wish to compete with - millions of its own citizens bidding up the price.

I'm very bullish on gold, but I believe the party for gold buying has hardly even started in China. People will buy on their own volition. Apart from the fact that hardly anyone watches the endemic CCTV anyhow (less than 17% market share), the fact gold is increasingly available is sufficient enough in itself.

Anyway, I'm not having a go at anyone, or you CD as I've read a lot of your good input and know you've got your act together, just trying to point out there is zero media campaign, no active encouragement, and a long long way to go.

 

 

Thu, 03/03/2011 - 11:26 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I appreciate your thoughtful reply. May I only say that in a managed economy such as practiced by the Chinese something can be "encouraged" simply by not discouraging it.

The Chinese could prevent Gold from flowing to private hands. They are not. They could also simply let the Gold market be "free" publicly (but tax it as well because tax policy is an economic tool after all that will feed other initiatives) but sing a different tune privately and whisper it in the "right" ears.

Duplicitous intent isn't just an American policy tool.

Thu, 03/03/2011 - 12:09 | Link to Comment TGR
TGR's picture

True, and fair enough..."not discouraging" could be deemed 'encouraging' in some ways.

Don't forget though what is happening re China's liberalization of the gold market was announced back in 2000 - I think in either the 9th or 10th Five-Year Plan - the path was cleared for what we see today.

In 2001/2002 investment grade bullion bars were proffered to the public, but received little fanfare in the world media back then. It was, however, broadcasted and written up in the Chinese press, briefly, and objectively.

So, what we are seeing today - in terms of planned economics - would have happened no matter what the gold price, no matter what the state of the dollar or, irrespective of the state of the world economy.

Anyhow, what you are saying is more or less in line with my thoughts, the fact PMs are increasingly available is bullish in itself, and MORE bullish because there is not an active media campaign or the like so to speak. It would suggest there is a very deep pool of buyers yet to be tapped.

Thu, 03/03/2011 - 13:50 | Link to Comment GoinFawr
GoinFawr's picture

We been down this road before TGR... a couple of times and a couple of hundred US bitz and bytes/Au ounce ago.

When it comes to understanding the reasons for investing in PM's the Chinese populace doesn't need to be 'asked' or 'encouraged', just 'allowed'; you know this.

And since that last caveat has been realized demand has been increasing at an exponential rate, but not supply.

Thu, 03/03/2011 - 10:33 | Link to Comment tmosley
tmosley's picture

That's about 0.17 grams of gold per citizen.  

Thu, 03/03/2011 - 11:16 | Link to Comment william the bastard
william the bastard's picture

When it suits them, the PRC leadership will sieze/outlaw personal gold possession.

Thu, 03/03/2011 - 10:48 | Link to Comment Math Man
Math Man's picture

And psst: another secret.

Those Gold imports where for the Chinese new year celebration, which is now over.  Expect imports to decline.

China is tightening... as inflation goes, so goes gold demand.

Thu, 03/03/2011 - 10:51 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

OK folks. Now we know this truly is a Gold thread because Meth Man is here.

Elvis has entered the building.

Thu, 03/03/2011 - 10:53 | Link to Comment SheepDog-One
SheepDog-One's picture

Whaaaaaa.....
So the only reason China is buying gold is due to the 'New years celebration' so every year China hoards gold then?
Seriously, WTF are you talking about?
So why is Russia also stockpiling gold, for the Chinese New Year? Seriously dude, get a grip.

Thu, 03/03/2011 - 10:59 | Link to Comment Math Man
Math Man's picture

Russia CB purchases are forecast to be down from 2010.

Thu, 03/03/2011 - 11:37 | Link to Comment tsx500
tsx500's picture

uhhh . . .  forecast by whom ?

Thu, 03/03/2011 - 11:49 | Link to Comment Math Man
Math Man's picture

Russia.  They announced they were buying 100 tons this year.  Last year they bought 140 tons.

Thu, 03/03/2011 - 12:16 | Link to Comment Harmonious_Diss...
Harmonious_Dissonance's picture

Your stock pick GEN is sucking ass. Just broke down below $4...

Thu, 03/03/2011 - 12:37 | Link to Comment Math Man
Math Man's picture

Oh no!  It's down 7c!  Whatever will I do?

Thu, 03/03/2011 - 12:41 | Link to Comment Harmonious_Diss...
Harmonious_Dissonance's picture

Double Down, BTFD!

Thu, 03/03/2011 - 14:02 | Link to Comment GoinFawr
GoinFawr's picture

Last time I went out drinking I 'announced' that I would only have 3 drinks before I left the house; I kinda remember that third scotch,  but shots of absynthe aren't really 'drinks' are they...? And after that I vaguely recall they had some kind of insane special, where I was certain that they must have been selling the liquor below cost. Suffice to say that by the end of the eveining I think I can safely estimate that the number of drinks I had had the integer 'three' in it, but as I was seeing double I think the total was more like '3 to the third' or some'at.

No reason.

Thu, 03/03/2011 - 23:19 | Link to Comment StychoKiller
StychoKiller's picture

I can tell you're trying to snow us -- NO ONE does shots of Absinthe (around 70% alcohol!).  Since I've become a lightweight wrt consuming alcohol, the most Absinthe I can handle and still be able to put myself to bed, is 4 drinks (1 shot Absinthe, 7 oz.s iced water, 1 cube of sugar)

Sat, 03/05/2011 - 14:25 | Link to Comment GoinFawr
GoinFawr's picture

Heh, yah got me, it was an hyperbole. I've only ever done one absynthe 'in a row', the blaCK stuff, at a bar in Pest; any more and I doubt I would be here to tell the tale, as you say. Though what I recall of the evening following that is a bit of blur...

It was more of a metaphor; what gets 'announced' often doesn't define what actually happens. You knew that too though, I'd wager.

Thu, 03/03/2011 - 11:01 | Link to Comment Math Man
Math Man's picture

Chinese demand is extremely cyclical...  the largest buying period occurs leading up to the chinese new year.

Indian Gold demand is also extremely cyclical, and is strongest leading up to Diwali.

 

Thu, 03/03/2011 - 14:17 | Link to Comment akak
akak's picture

You know, there has been something about the egregiously illogical, irrational, hate-filled anti-precious metals rants of MathMan that kept striking me as somehow familar.  The focus on minor and potentially PM-negative factors while ignoring the ongoing numerous, massively pro-PM factors, the denial of gold and silver's decade-long price run, the denial of inflation and its obvious connection to the rampant money creation by the US Federal Reserve, the fervent defense of fiat currency, and everything status-quo in general, the smug arrogance overlying it all .... now it all fits.

"MathMan" is in fact our dear friend Jon Nadler.

Welcome to the ZH forum, Jon.  May your tenure here be long and exceedingly painful.

Thu, 03/03/2011 - 19:45 | Link to Comment JonNadler
JonNadler's picture

Shit, I knew Akak would find me out. Well...it's pretty obvious isn't it? If I could just keep it a little less condescending, arrogant, disingenuous and pro-establishment and might have fooled you.

OK I'll get a new screen name now

Thu, 03/03/2011 - 19:47 | Link to Comment akak
akak's picture

You can run, Jonny, but you can't hide.

Thu, 03/03/2011 - 23:21 | Link to Comment StychoKiller
StychoKiller's picture

If you don't know what to look for, you can dismiss the idea that termites are eating your house, until one day, you fall through the floor! :>D

Thu, 03/03/2011 - 10:16 | Link to Comment savagegoose
savagegoose's picture

????

 

Thu, 03/03/2011 - 10:17 | Link to Comment slackrabbit
slackrabbit's picture

Another choice may be a combination currency backed by gold, with France, Germany, Russia, Japan, China all putting in gold portions to equal the current supposed US gold deposits....you just need enough countries to join...and many although reluctant, would rather be in than out.


And remember help a banker skit

http://www.channel4.com/programmes/10-oclock-live/video/series-1/episode-4/bankers-in-need

Thu, 03/03/2011 - 14:17 | Link to Comment viahj
viahj's picture

what's wrong with this picture if you are China?

SDR basket 12/2010

Euro

37.4

Japanese yen

9.4

Pound sterling

11.3

U.S. dollar

41.9

of course they need the Yuan in this basket and in order to get it there, what do they need to do?

 

Thu, 03/03/2011 - 10:17 | Link to Comment youngman
youngman's picture

I think they want and will become the new reserve currency....with Russia...gold and silver backed....they think long term...we do not...at some point the trading countries will just say ..."pay in gold"...end of dollar...imho

Thu, 03/03/2011 - 10:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This would suggest that the recent record prices are due to short covering on the COMEX (possibly by Wall Street banks with concentrated short positions as alleged by the Gold Anti-Trust Action Committee or GATA and being investigated by the CFTC) and buying of bullion in the Middle East and Asia, particularly in China.

Let me fix that for you.

 

....as alleged by the Gold Anti-Trust Action Committee or GATA and not being investigated by the CFTC....

 

Much better.

Thu, 03/03/2011 - 10:17 | Link to Comment High Plains Drifter
High Plains Drifter's picture

buying of bullion is nowhere near the levels seen during the Bear Stearns, Lehman Brothers or more recent Eurozone sovereign debt crises. <<<<

For any of you who think that PM's are in a bubble read up. Almost all Americans are not buying any PM and don't even know anything about it. There is no big rush to buy gold by most people. Check it out. Are things better now than back in 2008? I think not. It appears the dichotemy beteen paper gold and bullion is closing. Paper gold may be dying. Those that know, want the shiny stuff in their hot little hands. Then we read about Chinese buying of gold and look at kitco this morning and we see all red. Yeh that makes a lot of sense....

Thu, 03/03/2011 - 10:18 | Link to Comment savagegoose
savagegoose's picture

but if china has to print to peg then they inflat as much as america/ they'll stop buying gold when who stops printing.

Thu, 03/03/2011 - 10:21 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

You guys can't see the light.

 

A Chavez rumor hammers Gold • Silver • Oil .... LOL'

 

What's going to happen when all this is over and new leaders / dictators rule the middle east. Ever fucking notice they have kings / dictators ruling the arab lands going way back - back - back ? Why , because they are wacko's who need an iron fist ruling over their lands keeping the people on a short leash.

 

This will all blow over in a few weeks then gold gets hammered again ...... 

 

Ride that bubble Bitchez !!!

 

Thu, 03/03/2011 - 10:24 | Link to Comment velobabe
velobabe's picture

but but, dennis gartman said if peace prevails in the middle east, gold and silver will go lower.

Thu, 03/03/2011 - 10:34 | Link to Comment tmosley
tmosley's picture

Yeah, you just BET on peace in the middle east.

Christ, are you seven or something?

Thu, 03/03/2011 - 10:52 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Middle east has been this way for how long ? Thats right, years , dictatorships , kings , unrest .......

 

Nice theory on china dropping peg and the people just start consuming and everything is hunky dory ...

 

You didn't think that through in regards to the manufacturing complex getting blasted • forced to take up shop • move • searching for cheap labor ( Africa ect .... ) and then they fire all the workers • consumption what consumption ........ But just keep spewing forth misinformation.

 

Are you seven ? That was a real, real stupid theory with a 15 minute shelf life • Lol

 

Keep that uneducated pie hole, shut

Thu, 03/03/2011 - 10:53 | Link to Comment High Plains Drifter
High Plains Drifter's picture

Just ignore him.

Thu, 03/03/2011 - 11:17 | Link to Comment william the bastard
william the bastard's picture

Tin foil hats

Thu, 03/03/2011 - 13:15 | Link to Comment GoinFawr
GoinFawr's picture

"You guys can't see the light."

You mean the light that you think shines out of your ass? No, no, you're right, we can't; unfortunately neither can you. But that certainly is not for lack of trying as you peer up there as deeply as you can in search of it

Thu, 03/03/2011 - 15:22 | Link to Comment greenbear
greenbear's picture

"This will all blow over in a few weeks then gold gets hammered again ......"

Oh sure, peace will prevail in middle east in a few short weeks so the "gold bubble" is doomed. Riiight!  MI6, CIA, Muslim Brotherhood Biatchez! 

Bwahahahaha!! 

Thu, 03/03/2011 - 17:15 | Link to Comment SilverFiend
SilverFiend's picture

Does anyone know who holds the record for most junks issued for a single post?

Thu, 03/03/2011 - 10:23 | Link to Comment velobabe
velobabe's picture

g l o r y H O L E , bitchez†

Thu, 03/03/2011 - 10:31 | Link to Comment monopoly
monopoly's picture

GM. as long as we have investors, Ahem, who think gold is in a bubble, then all is well. How can any intelligent being not think that this is all going to go nuclear at some point. Gold bubble, keep it up, luv it, and I continue to buy every dip. Just amazing comments here.

 

 

Thu, 03/03/2011 - 10:37 | Link to Comment MsCreant
MsCreant's picture

I keep waiting for the dip. It always gets monkey hammered later in the month. AGGGGHHHH!

Thu, 03/03/2011 - 10:55 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Just jump right in. It really is about faith despite all our claims about this or that. If you believe, then there is only now. If you have doubts, then there are always questions about timing.

Do you believe? :>)

Thu, 03/03/2011 - 15:03 | Link to Comment RockyRacoon
RockyRacoon's picture

Yup.   There are times when "dollar cost averaging" makes sense.

Thu, 03/03/2011 - 11:04 | Link to Comment GetZeeGold
GetZeeGold's picture
by MsCreant
on Thu, 03/03/2011 - 09:37
#1014731

I keep waiting for the dip. It always gets monkey hammered later in the month. AGGGGHHHH!

 

That IS the DIP...........BTFD!!!!!

 

 

Thu, 03/03/2011 - 11:05 | Link to Comment Long-John-Silver
Long-John-Silver's picture

I went "All In Silver" when it peaked at $12 an ounce on the day my wife thought I had lost my mind doing that. Dips only occur in history. Jump in and buy while you can still purchase physical metals.

Thu, 03/03/2011 - 11:22 | Link to Comment william the bastard
william the bastard's picture

You'd be crazy not to own a ton of silver here!

Thu, 03/03/2011 - 10:43 | Link to Comment 6 String
6 String's picture

No way folks. Money out of treasures, into common: gold, silver, commodites slammed. No margin compression with Oil at 200 a barrel, I mean, um, 100, and no margin compression with food inflation surge. Means absolutely fucking nothing at all.

S + P bitchez.

Thu, 03/03/2011 - 11:17 | Link to Comment edmondantes
edmondantes's picture
China: a dystopian scenario  Clearly they do want to get away from the dollar, somehow.  Here is another, more far-fetched, dystopic and admittedly slightly paranoid Fantasy: In an 'ideal' world, from their point of view, one could imagine that they are ultimately aiming for a new Chinese world economic order, not dissimilar to the way they run China itself: in this order they would continue running surpluses, ever more monopolizing manufacturing, ever more high-tech, in China, and export manufactures  in exchange for commodities. If everything would be denominated in RMB, they could then finance deficit countries via RMB loans, RMB bond issues abroad etc. (plus buying up and bringing under their control everything which stands).  The US could not print its way out of debt any longer, but Chinese mercantilism would instead face the problem of default by its debtors (similar to Germany in the Eurozone). Might be OK with them,because their creditor power would be greatly enhanced. They could dictate political and economic conditionality in return for bail-outs and so on, especially if they controlled the strategic heights of global production with their SOEs.  From  a liberal point of view this is not all that attractive a scenario, as the German case shows: German banks' exposure,private investors' losses, financing by German taxpayers, voter dissatisfaction. But for China such a position might be more attractive, since China wants control, global control, first of all, and can squeeze its own masses easily to buy and bribe itself into global control.They do not have to care about the private sector, private investors, or citizens in general. They can squeeze surplus out of them to finance foreigners' deficits, and to finance their own capitalist cronies in the cities, with their long tail of rent-seekers and speculator. They will be reaping huge  monopoly rents and subsidised profits. There would be unimaginable opulence in the cities, and below this a billion of worker ants. That is the secret to the glory of old despotic civilisations: using your own people as slaves.  In this scenario China's strategy is essentially one of world domination (Ernst Stavro Blofeld-style) in completely illiberal atavistic fashion. They use their billions of cheap labour to build global strength. Classic mercantilism: the country's wealth is build to enhance first of all the nations international power (not for individual citizens welfare). You squeeze your people to build global strength. But it is a balancing act: they might rebel at some point if they don't get their grab. So, you have to use global power as well to deliver the minimum for stability in your domestic industrial labour camp: food, work, work, work, and basic housing. So, what China wants is not necessarily proper market returns on foreign investments, but control of foreign resources and key industries as  at almost any prize, to maintain a stable and sufficient flow to keep the domestic labour camp machine rolling, compensating the masses with bread and circus and by restoring China's rightful place at the centre of the world. This might to some be a loss making exercise as to foreign economic interaction, but such a global command economy will allow you to monopolize the commanding heights of economic activity in a new global command economy . If this is sub-optimal in terms of market-based profit, who cares, as long as it puts you in control. From an liberal economic point it would be stupid to create a world of permanently imbalanced creditor-debtor relations. But from a political control point of view it opens the option of a new world tributary system of dominance and subservience, where bail-outs (financed by squeezing your mass population)  can be granted in return for obedience and respect and for accepting a global economic hierarchy centred on Beijing. But of course, all this will only work if you provide the global currency. WH
Thu, 03/03/2011 - 13:47 | Link to Comment dalkrin
dalkrin's picture

A thought-provoking, fleshed-out conjecture you present regarding China.  In a world without the presence of the West, I would say it could be plausible.  However, the US, not to mention Europe, may not go quietly into the night and give up their military and economic hegemony.  Our banking system has been building itself up for hundreds of years, while China has only joined the capitalism camp in the past 30.  I don't care how good of savers the individual Chinese may be, when compared to the exponential potential growth of fortunes in Western hands over decades and centuries, they will always be dwarfs of true clout.  Add to this the track record of the UK + US never having lost a major war, and I am comfortable that any usurpers will be quashed.

Thu, 03/03/2011 - 15:25 | Link to Comment RockyRacoon
RockyRacoon's picture

Gee.   That sounds a lot like the path the U. S. has taken.   How's that workin' out for ya?

Thu, 03/03/2011 - 11:41 | Link to Comment Bastiat
Bastiat's picture

Billy the B, Smailes and Mathman are all massively rich now by trading their convictions over recent months.  You should all listen to them!

 

Really: if your money is not where your mouth is then it's all mouth.

Thu, 03/03/2011 - 13:54 | Link to Comment Bay of Pigs
Bay of Pigs's picture

The trolls have no skin in the game. That's why they just take potshots from the peanut gallery. 

On Turd's board, douchebags like them get banned quickly. And while I don't support censorship of any kind, these creeps add nothing to the topic at hand. But TD can do whatever he wants, as it's his blog.

Thu, 03/03/2011 - 11:51 | Link to Comment quo vadis
quo vadis's picture

If Turd's prediction about china quietly backing yuan w/gold is correct, then what will US do to protect her interests?

Confiscation of citizen's PM in effort to play catch-up?

Thu, 03/03/2011 - 11:57 | Link to Comment celticgold
celticgold's picture

 jesus wept

Thu, 03/03/2011 - 15:28 | Link to Comment Samuel Morales Jr.
Samuel Morales Jr.'s picture

Heh. Come on, there won't be any gold standard. Gold if anything is a just a savings bank sealed in a lump of rock, doesn't mean a gold standard is imminent. Government will not return to gold standard in the US, or any where else. They will simply say they didn't print enough money, or printed money the wrong way, that's why money printing failed. Chinese using it as a safety hedge obviously because it's tied directly to the US economy via dollar peg.

Mon, 03/07/2011 - 20:46 | Link to Comment lsjcma
lsjcma's picture

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