UK And US Data Shows Stagflation Threat Deepening - Asian Gold Demand Remains Very High

Tyler Durden's picture

From GoldCore

UK and US Data Shows Stagflation Threat Deepening - Asian Gold Demand Remains Very High

Gold and silver have snapped their three day losing streak so far
this morning and both are higher in all currencies. Sterling has fallen
on this morning’s very poor UK employment data. This in conjunction
with yesterday’s high inflation figure in the UK and negative data in
the U.S. confirm the increasing threat of stagflation to western

Cross Currency Rates

U.K. unemployment claims rose in April at the fastest pace since
January 2010, showing the very fragile nature of the recent tentative
economic recovery. Government spending cuts, austerity measures and
accelerating inflation are clearly beginning to impact embattled

G10 and Precious Metal Returns – Year to Date

In the U.S., stagflation is also an increasing, if unacknowledged,
threat as the classic symptoms of inflation - slow growth, high
unemployment and inflation are present. Weak U.S. factory output and
home building data yesterday suggests that the world's largest economy
is slowing down again.

Official inflation figures in the U.S. remain benign but hedonic
adjustments and many adjustments to the methodology of calculating
inflation in the last 20 years mean that that the Consumer Price Index
is no longer an accurate measure of real inflation in the economy.

Total Known ETF Holdings of Gold

This macroeconomic risk coupled with continuing geopolitical risk is
supportive of gold continuing to receive safe haven demand.

Geopolitical risk remains ever present as seen in Pakistan yesterday
where two Pakistani troops were injured after exchanging fire with
NATO helicopters that had entered Pakistan’s airspace in the tribal
region of North Waziristan. The conflict in Libya looks like it may
soon escalate and tensions between Israel and the regimes in Syria and
Iran remain high.

Asian Demand for Gold Remains High as Seen in Gold Bar Premiums

A clear sign of healthy appetite in China are the premiums being
paid for gold bars in Shanghai and Hong Kong. Shanghai gold closed at a
premium of $3.57 to world gold of $1,495.95. The premium increased from
that seen Monday when it was $3.09 at $$1,497.45.

The premium on gold bars in Hong Kong increased 10 cents this week
to between $1.30 and $1.80 per ounce over London spot prices.

Reuters reports that gold bars in Vietnam, where demand has been
voracious in recent months due to a sharp depreciation in the
Vietnamese dong, were trading at a $3.92 premium to world gold spot

India’s banking system was closed yesterday and there are therefore
no reported premiums but recent days have seen healthy premiums for
gold around the $1,500/oz level in India.

The launch of the new Hong Kong Commodity Exchange will result in
Asia having an even bigger say in prices of commodities and precious
metals. The exchange is backed by China’s biggest bank and a Russian
tycoon and will challenge established markets and exchanges in Europe
and the U.S.

Asians increasing power in financial markets and the fundamentals of
robust and sustainable demand for gold and silver bullion throughout
Asia will mean that speculative interests on Wall Street will find it
harder to artificially suppress prices and the massive concentrated
short positions on the COMEX may be forced to close their positions
propelling bullion prices higher.

George Soros – Bullish or Bearish on Gold?

Despite his exit from ownership of the gold ETFs, Soros continues to
have large allocations to gold investments through owning more high
risk gold mining shares and a gold mining ETF.

Soros’ fund added Eldorado Gold, Freeport-McMoran Cooper & Gold and Goldcorp to their investments during Q1 2011.

This would suggest that contrary to simplistic reporting Soros continues to remain positive on the gold sector.

It also suggests that as we have long pointed out, a hedge fund
selling their gold ETF position does not necessarily mean they are
bearish on gold. It can mean that they are concerned about the nature
of the structure and intermediation involved in an exchange traded fund
and prefer the security of actual physical bullion.

UBS pointed this yesterday. “Some of the ETF liquidation in the
quarter was not actually outright gold selling,” UBS’s Tully said. “In
some cases, investors switched their gold exposure from ETP-based to
allocated, and so this somewhat distorts the ETP ownership picture.”

In the first quarter, gold ETP holdings declined 3.3 percent (see
chart above), the first decline in a year. Silver holdings rose 1.9
percent, palladium assets fell 1 percent, and platinum holdings gained
12 percent.


World Bank sees end to dollar’s hegemony

The World Bank expects the US dollar to lose its solitary dominance in the global economy by 2025, as the euro and the renminbi establish themselves on an equal footing in a new “multi-currency” monetary system.

The shift will be driven by the increasing power and strength of emerging market economies, with six countries – Brazil, China, India, Indonesia, Russia and South Korea – accounting for more than half of global growth in 14 years.

Deutsche Bank Sees Gold Rising as High as $2,000 as George Soros Pares Bet

Gold, which reached a record on May 2, may surge a further 30 percent by January as investors seek to protect themselves from “economic uncertainty,” according to Deutsche Bank AG.

“I’m bullish on gold despite its current levels,” Hal Lehr, Deutsche Bank’s managing director for cross-commodity trading, said in an interview in Buenos Aires. “It could reach $2,000 an ounce in the next eight months.”

Hong Kong Mercantile Exchange Launches Trading

The Hong Kong Mercantile Exchange began trading U.S. dollar-denominated gold futures on its electronic platform Wednesday, as the exchange attempts to lure commodities traders in the rapidly growing Asia-Pacific economies away ...

Gold steady, euro zone debt fears support

Gold held steady on Wednesday as worries about the euro zone's debt crisis lent support to bullion, after weak U.S. industrial and housing data triggered declines in oil and metals in the previous session.


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KlausK's picture

I know someone who knows someone who says we're all fucked.

Seacap81's picture

Hadn't seen that....thanks for the link.

KlausK's picture

Yeah, that's him. He bought his silver in May '69 and went away.

breezer1's picture

do you know this guy? can you get me whatever shit hes taking?

Kyron95131's picture

welcome to 30 years ago? lol

writingsonthewall's picture

You Americans are amatuers - if you want to wreck an economy then the UK is the place to come. We have the experience, we have the gullible voting public (slaves) and we have the total reliance on the housing market.

Ben Bernanke is getting shown up for the amatuer he is, you can't just rely on printing to ruin the economy, you need to print - and create deflation simultaneously (what do you mean you didn't think it was possible? - stand back and take notes)

Next up, America gets a lesson in revolution from Europe - the French and Germans have been quiet so far but I have a feeling the people are soon going to speak - and it won't be through the ballot box.


So come on America - up your game, let the repuli-tards loose on your economy and you will be in the 'A league' of economic destruction, rather than the slightly pathetic 'B league' you are currently residing in.


Hell we've even destroyed our currency and only now are we realising that "we have nothing to export" - which means we destroyed the currency for nothing.

pan-the-ist's picture

Europe has been second best since WWII, and I suspect it will stay that way for some time.

writingsonthewall's picture

There's a 'best'???


I'd say Europe was 'second least worst' as everyone is going down the toilet....just at different speeds.

Fred C Dobbs's picture

You are correct sir. Very few of my fellow americans get it.  But if you rely only on the corporate owned news media for information then it is understandable.  I wonder if any of the old american traits will come to fore when the new reality comes.  I have my doubts.  

JW n FL's picture

sorry Fred! squirls in da servers!

JW n FL's picture

Fred it would take and act of God to get the old ways into the post crack up.. new normal rule book!

No Loyalty, everyone is a King and no one is a soldier.. the crème' rising to the top would only be killed in a drive by so some wigger wanna be gangsta could run shit!

and the majority Fred.. is Fernando'! and they are used to a lot worse so what will be offered is still better than what they had..

So, the Majority! will Duly Elect! Corporate Puppets! Post Crash and Burn!

I am seriously.. NO! really! I have said before I was looking for a way out.. but seriously I am Looking at leaving the U.S.!

anyone who wants to wonder why..

here ya go ------------> let George dumb it down for ya! he dumbed it down for me!

start there and then read this one next..

People! it is time to go! will the last person out take down our flag and let them put up the Mexi-Amero-Can Flag! Thanks!


Sudden Debt's picture

Why do those Asians buy more gold?


Don't they believe the bernanke can fix the economy?



Let's all go back into the shart invested swimming pool! The sharks haven't been fed for a week now, so they are to weak to attack us!


Fred C Dobbs's picture

I guess they don't know you can't eat it.

FoieGras's picture

Is the health care price index really 100000000000000000% higher than it was 100 years ago? Did you get the same level of health care service in 1911, considering the advances in medicine and surgery? Yet that's what the hedonic critics are trying to make us believe.


Without hedonic adjustments you get an inaccurate inflation rate. Just an inconvenient fact.

Sean7k's picture

Well, considering the American population was not nearly as poisoned, polluted or starved on nutritionally inferior foodstuffs- therefore not needing as much medical care. Further, they were not fed outrageous amounts of drugs that caused new medical problems. I can see where the costs are higher. 

Of course, you can always brag about our position of 40th in infant mortality. All the advances that still cannot cure the common cold, back pain or any of a hundred other maladies. We are great at treatment (drugs), but not at cures. Wonder why? Merck and others?

We have accurate inflation rates- see the MIT tables.  

GFORCE's picture

The UK and US are spent. The obsession with GDP, big government and globalisation has led to their slow demise.

Just puffing out the last of the debt based growth and then it will unravel. Greece, Ireland, Portugal. No one is able to grow out of this mess.

Sean7k's picture

My list of disturbing trends is a little different:

Heard first call for the S&P to 400. The mega bears are beginning to make a showing.

Silver and gold leaving the customer accounts at comex are double the payouts to longs.

Courts all over America have eliminated the 4th amendment.

Pensions are under fire, how long until they come for the 401k under the authority of "national security".

While presumably having a "deal" on the national debt limit, it has now desintegrated into a long term holding pattern.

The trolls on zh have become so numerous, they are now tripping over themselves on silver threads.


FoieGras's picture

Back in 1998/1999 we had the AOL chatrooms with self-proclaimed tech experts. Now we have precious metal experts everywhere. They're all experts yet whenever their favorite investment drops they are mentally unable to sell (like a trader should) but just whine about manipulation (like a girl).

Sean7k's picture

Not sure if you're calling me a precious metals whinner, but I have been clear that I am enjoying Blythe's sale on metals. I did not mention manipulation at all. I did sell the market top in equities. 

Forward History's picture

I'm an investor, not a trader, and I'm long precious metals. Trying to call tops and bottoms is a risky business; my silver position at 10% of my income is an economic insurance policy, not something to be trifled or needlessly risked with over a spur-of-the-moment lunge at "phat money". More power to you, if you pull it off, but with all respect, people like you that come out at this time in the "you should have sold, lolz" echo chamber are so many pigeons, tweeting away for now and, as always, will go strangely silent when pm's take the next long rise.

By the way, I'm no trader, but I even I know you don't sell on the dip.

Long-John-Silver's picture

I'm not a PM trader or investor. I have a choice of which currency I want to use. I have chosen Gold and Silver. Keep using Jew Confetti if that's where you think your wealth is safe.

Bay of Pigs's picture

You twist his words and miss the point. He was talking about trolls.

So what's your point, aside from taking "profits", Mr. Short Term Trader?

JW n FL's picture

the reality is...


Long John and some others! trade! to earn more money to buy more PM's with!


Some people Like YOU! Mr. Bay.. own PM's and abstain from the system as much as possible to bring about an end quicker! or to starve the beast! and or other!


But what we really have.. and T Mosely and Long John helped explain to me.. with thier back and forth.. is that we are family here.. we many not always agree on the nuts and bolts.. but the big stuff! we are all together on.


so, lets not feed on each other.. lets bounce ideas off of each other to make our arguments stronger but NOT kill each other.. there is no reason that anyone who hates the FED should not be welcome here in these rooms!


no reason! now the people who get off on personal bullshit rants and undermine the Larger idea of Killing the FED (executive order 11110, BITCHEZ!!) should stop working for the Government.. if you are not build popular opinion to get rid of the FED then you are a FED worker bee whether you think so or feel like it or not!

Bay of Pigs's picture

No need for him to insult like he did. Yes, there is room for both trading the swings and long term investing. No argument there.

Manipulation is another topic altogther, which is legitimate and real. Casting disparaging remarks on that is not only foolish, but trollish, IMO.


YHC-FTSE's picture

It's really interesting how links and events mentioned in the threads (Zeek kindly gave me a link to the launch of the HKMex yesterday) suddenly become main articles with pretty good commentary. This is why I keep coming back here - bravo.   

(Edit: I still don't like the word, "Stagflation". It seems semantically lazy to use something defined in 70-80's Britain from which recovery was seemingly easy and swift. As somebody else mentioned, we're in an infinitely worse situation). 

Math Man's picture

Soros’ fund added Eldorado Gold, Freeport-McMoran Cooper & Gold and Goldcorp to their investments during Q1 2011.

This would suggest that contrary to simplistic reporting Soros continues to remain positive on the gold sector.




The man sold $650mm of GLD and bought $3mm of Freeport and Goldcorp.

He reduced his allocation to the sector by 95%.


So Should You.

Sean7k's picture

Naw, think I'll bet against Soros and Buffet and all the other little Bilderberger boys- it just feels good.

tmosley's picture

Yeah, he reduced the allocation that you can see.

You don't get to be a billionaire by letting the world know what you are doing before or as you are doing it.  He NEEDS idiots like you who just take everything at face value "It's the ultimate bubble, HUUUURRRRRRRR."

oddjob's picture

His GLD was called away,hardly bearish.

Bay of Pigs's picture

Maybe he went and bought some real gold Math Boy? Ever think of that?

So what's with your love affair with Soros anyway? You think any of us give a rats ass what he does with his money?


Fred C Dobbs's picture

I already own Goldcorp.  

Math Man's picture

Tyler, how much does Goldcore pay Zerohedge?  Or do you just get a cut of their bullion sales?

writingsonthewall's picture

Sore loser....or is it just 'loser'?

zaknick's picture

Well, we now see the "world bank" (shudder) changed its tune from gold standard to US$ WRC 'til 2025. DSK who also wanted Bancor funny money to play with is getting it up the old Hershey Highway at Riker's Island gladiatorium. China piped down after being threatened and is using N Korea to transfer ballistic and nuke tech to all enemies of the KKK Empire. The Iranians are even going so far as attempting to cock a WMD gun at the KKK Empire's visible head in DC from Venezuela.

Ah, this is going to get very interesting very fast!

PulauHantu29's picture

Looks like we will see gold hit $3,000 this year as some serious stagflation hits the globe and China RE plunges.

zippy_uk's picture

UK unemployment count is going up because there has been massive abuse of the "sickness" benefits which pay more. This is being unwound.

This sham started in 1984 due to the miners strike. The mining industry was a lame duck with lots of jobs supporting older workers with little in the way of eduction or alternative skills. They used mining industry ailments as an excuse to put these people on incapacity benefit to substitute for lost careers.

Then word got around and incapacity benefit doubled in the last 10 years. This is despite massive money being pumped into the NHS during this time.