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Gold Bear Market or Physical Gold Discount Sale??
Back in 1980, just as the gold price blasted upwards past $800/oz, buyers reportedly lined up in droves at various bullion dealers to participate in the rally. Investment analyst Jay Taylor writes, “I remember 1980… there was panic buying of gold by people in the streets of New York City. They were lined up around the block to buy gold and Krugerrands at that time.” That flurry of buying ended up representing a classic top. As gold failed to move higher, the speculative frenzy soon reversed into a despondency that dragged gold into a twenty year bear cycle. For those investors who bought at the top, it was a hard lesson learned.
Fast forward to today, and in the days that have followed this past Friday’s (and Monday’s) incredible gold price smash, the strangest thing has happened: physical buyers have come out in droves, but this time they’re buying immediately following an unprecedented $200 price decline.
Consider the following:
The US Mint reported selling 63,500 ounces (2 tonnes) of gold on April 17th alone, which brought total April month-to-date sales up to 147,000 ounces – more than the previous two months of gold sales combined.1 The US Mint’s year-to-date sales are now up 79% from the same period in 2012.
Coin dealers in Tokyo and Dubai reported an immediate spike in sales following the gold smash this past Friday. Reuters writes, “A week ago, as the yen-denominated price neared a new peak, jewelry stores and gold merchants across Japan saw long lines of mostly older Japanese looking to cash in on unwanted jewelry and other items that they had held for years… But on Tuesday, buyers outnumbered sellers by a wide margin. At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction.”
In Dubai, jewelry outlets reported they are now temporarily out of gold coins and all sizes of gold gram “biscuits”.2
In India, retailers also saw an immediate surge in demand following the price decline, prompting some retailers to predict up to a 50 percent spike in sales volume in the upcoming marriage season.3 The Wall Street Journal quoted a jewelry salesman in Mumbai’s Zavery Bazar, who stated, “We have not seen such strong demand in many years. Our order books are already 30%-40% more than last year’s festival day… We don’t have enough staff to keep up with this kind of mad demand.”4
We have also seen the same reports coming from the Perth Mint in Australia, and even here in Toronto, where the line-up at Scotia Mocatta’s bullion desk numbered more than one hundred long on Wednesday. A colleague confirmed that virtually all participants where there to buy more bullion, rather than to sell.
This phenomenon clearly appears to be happening globally. A friend of the firm had this to report from Hong Kong: "Went to Hang Seng bullion counter yesterday. The line was out the door. It took an hour wait to see a teller. When I asked if people were buying in the dip or selling in panic, she told me that they haven't had one ounce of gold sold back to them all day. She told me they have sold more gold in 24 hours than they normally do in three months. Yes, there was a lot of extra security. The guy in front of me bought over $1 million USD in gold. He paid in cash and walked out of the door with the bullion in a Nike bag. Amazing."
Regardless of one’s view on gold, one must admit that this kind of buying frenzy defies the traditional rules of investor psychology. After two days of what looked like outright panic selling from precious metals futures participants and ETF holders, we wouldn’t expect to see such a massive surge in physical bullion demand from individuals across the world. When gold fell precipitously in 2008, there was no such reaction.
For now, all we can conclude is this: There is definitely a striking psychological disconnect growing between the buyers of physical gold and silver, and the financial community that trades precious metals through ETF’s and futures contracts. While the latter have ostensibly turned their back on gold (see the plethora of negative sentiment expressed by various pundits over the past three days), the former group has been spurred into action as if they know something the other group does not. Certainly we wouldn’t expect individuals to be buying these metals if they believed the price was going to drop further, or perhaps they don’t care either way and simply want to own something tangible. Nonetheless, it is a wholly peculiar phenomenon, and it is definitely not the same investment behaviour we have seen before.
We still don’t know what entity chose to crush the gold price with a 400 tonne sell order last Friday. Certainly no rational group would dump that much paper gold on the market without a pre-established desire to torpedo the gold price. Their efforts clearly worked in the short-term, but the reaction from physical buyers strongly indicates an official bifurcation between physical metals investors and the exchange-oriented investors who trade gold through financial products.
The days to come will prove if this surge in physical demand is an aberration, or the beginning of a new chapter for the physical gold market. If it represents the latter, precious metals investors may be wise to ignore the ‘paper’ price of gold altogether. The line-ups in 1980 represented the top of the gold bull market. But what do line-ups for gold represent when the price has already fallen 30% from its all-time high? That’s the question, and we’re guessing it means this current gold bull market isn’t close to being over.
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2 http://gulfnews.com/about-gulf-news/al-nisr-portfolio/xpress/gold-in-short-supply-in-dubai-1.1171987
4 http://online.wsj.com/article/SB10001424127887324493704578430083162803860.html
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I still see people saying silver will go to $500. I'm not saying it won't dramtically go up in price some day, but if it does we may be using something besides the USD by then. And certainly there will never be a dramatic rise in price unless naked short selling of paper stops.
Silver going to $500 means the USD going to 5 cents.
When I was a little kid you could buy a candy bar for a nickel -- the same bar now costs a dollar. That was 50 years ago -- I don't expect it to take as long this time.
when I was a kid I had a friend who was published in the local
newspaper when he wrote ...
" what has the world come to when a kid finds a penny on the street
and can't afford a piece of bubble gum?" s.a.
as the price went from one cent to two cents.
that was the second or third important economic lesson I learned on
this planet.
This is war.
Buy more.
Do you know what it means?
Do you know what it means?!?
Blue horseshoe loves Anacott Steel?
James Sinclair: There is no gold there to deliver. What first gave rise to this was the German situation, but then when ABN AMRO shut gold deliveries down it accelerated. The reason they blasted the gold market was to camouflage the fact that the fractional reserve gold system, which is very important to financing and to the government, failed.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/19_Si...
Yeah, and Sinclair, who is CEO of a gold mining outfit, said gold would never go below $1600 after the Cyprus theft from bank accounts.
It's almost like they don't really know the future.
What you say is true.
It is also true that ABN AMRO refused to deliver physical. The seven years for German delivery is of course open to wide interpretation. Who knows about the LBMA?
The fact of the huge paper ofers at very unusual times must be taken as proof that the gold markets were manipulated lower. I can't find anything coming out of CFTC/Gensler about this little anamoly. The silence is becoming deafening.
I don't think that one can be accused of irrationality by seriously considering the notion given the facts, that bullion has been rehypothecated multiple times and that physical metal loans are being called. If the bulliuon banks can't provide the physical, then there will be a financial settlement - which might break them and/or show some very serious black holes in some very important balance sheets.
I hear ya. I just think that the pumping on sites such as King World News is just WAY too much. And as a chartist, the [current short-term] trend for gold and many mining stocks is down. That is the trend. But to hear excuses week after week from the gold pumpers is just way too much.
Those short-term ‘trends’ have never been calculated properly.
The only trends are 30-90 day extensions on 1-5 year trends or… none at all.
I myself have for 2 years predicted out to end of year very well but this last shove down went outside my predicted ranges. I have had no time to re-calibrate for now. You either look 5 years back to data or you have no trend data.
When one takes into account the descending heptagonal wedge formation in the 123 and 834 day moving averages of the price of gold in Botswana pula terms, in combination with the ambiguously rising stochastics, bombastics, elastics, and spastics, not to mention the well-formed Bollinger bandaids and some randomly-thrown chicken entrails, one can clearly see a camelish thigh-and-buttocks formation that portends either steeply rising prices, or steeply falling prices (or something in between) for the precious metals.
IS OF COURSE!
Genios, genios - GENIOS
'pythagorean' chartizenism is restore confidence for teknikkal anal-isis!
How come no one quotes Martin Armstrong on this site?
Good question. Let's fix that. Martin Armstrong says we MAY see $1160 and then $900 gold in two weeks:
http://armstrongeconomics.com/2013/04/19/gold-silver/
And Sinclair is now squawking $50,000 gold at some indeterminate time. And I thought the reckless pumpers on the various message boards were bad.
Financial settlement for the bullion banks and/or CRIMEX goes bust. Damn, this smells like Lehman.
Watch for the after 5:00 news dump. Hope you didn't have plans for the weekend.
when price drops by another $200, I wonder if lines will have buyers or sellers
Neither. Lines will be empty.
Admiral Sprott et al. be saluted!
we few, we happy few, we band of silver holders . . .
Added to my modest (but growing) stack this week. Usually when I buy PMs it means the spot price tanks for a week or more straight. So far I haven't single-handedly caused "the price" to collapse (yet)...
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When teacher's funds and others start buying phyz, we'll know the real ramp up is coming.
(And guys like my old man! When they start buying, I know it'll be time to sell! Sorry Dad!)
•J•
V-V
You mean like Texas A&M taking delivery of gold? That already happened.
Thanks for the infomercial. Always smart to buy when the smart/powerful interests are selling. As the old saw goes, "Don't fight the Fed."
Have you seen a single of those "powerful interests" selling actual gold, rather than paper IOUs?
I went twice to my LCS in the past week to buy gold, last Friday and yesterday. In both cases, I could only buy just one A.G.E. at a time. Gold may be getting scarce in a hurry.
First guns and ammo get scarce, then gold and silver .... what's next? Gasoline? Food?
I’ve read enough of your comments to know that you know that’s already in the cards…
Vodka!?
I am wanting you to be doing the biting of your tongue!
is biting...
IS BLOBBING! Now is question even 'Russian' citizenism!!
WHO SAID THE HYDRA WOULD TAKE IT LYING DOWN
while its several heads were being chopped off one-by-one?
Antal E. Fekete
New Austrian School of Economics
http://feketeresearch.com/upload/Who-said-the-hydra-would-take-it-lying-...
The big question is where has the gold been going?
It's okay if the disappearance of physical gold is evenly distributed among all existing private hoards, but there is no way to know this.
If, in fact, the hoarding of physical gold has been concentrated into one or two hands... it is going to mean a nightmare future of economic slavery for us all, unless that concentration is forcibly disrupted from those one or two hands.
This is a far greater concern than the shorting of the futures market, which is merely a signal and an ineffectual attempt to stop the inevitable.
Obviously China has been getting a lot of this gold & buying in Japan and China has been up and the gold is in hand so it can’t all be going to one spot. No doubt many central banks are buying too & those who lease gold out for the slam-down still have a claim on it therefore legally they still own some gold somewhere and don’t mind a brief wait to get it back or they wouldn’t have leased it.
Cornering the gold market is not as profitable to the bankster overlords as the ability to print money.
It is, however, an important factor in getting that profit. There’s no end to profit for those who can print money but to get profit they care about, power & leverage, balances of monies must be in line with political & military goals of their host governments & favoured insiders. That is how they measure profit. Those with the least need to measure profit in currency are those who can issue currency freely as special legal counterfeiters.
Don't know if you are aware of this but "cornering the gold market" is another term for hyperinflation.
Exactly. Hyperinflation is not as much profitable. They would have to adopt sound money, and even if they got their hands full of it, they can only spend it once.
On the other hand with FIAT money they can spend as much as they want.
Exactly. Even if you own 70% of ALL gold, it is not as much power as owning the WORLD'S BIGGEST PRINTING PRESS.
One is a stash of wealth. The other is a source of unlimited INCOME, as far as power is concerned.
A source of income as long as people accept your funny money, I should clarify.
if you can buy it, then you know where it is.
The day is coming when you will not be able to buy it... what then?
Barter.
Not typically an option for slaves.
But don't worry, you will be clothed, sheltered and fed... somewhat.
then you will trade something or be self sufficient
amid unforeseeable and unprecedented conditions.
No.
If gold is concentrated in one or two hands, you will end up slaving for another in field or factory. And you WILL know where the gold was concentrated because it will be holding the whip and the Wesson.
blind...did you catch his 2 part interview withe kieser...episodes 411 and 412...it was awesome...
here the links ...
....info on topic.
Jim Willie interview April 15 2013 about the metal smash down - Real physical
http://www.youtube.com/watch?v=c5rZlkoDZKQ
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» Update to the Update: The Attack on Gold — Paul Craig Roberts
By: pcr3| April 16, 2013
http://www.paulcraigroberts.org/
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minute 12.00.
[KR411] Keiser Report: Media Moron Mockery
http://maxkeiser.com/2013/02/26/kr411-keiser-report-media-moron-mockery/
".. Professor Antal Fekete, about the gold basis – cash versus the nearest futures
contract and why that the cash price for gold is never reported is by design. They also
discuss gold repatriation from Germany as a trial balloon, to see how much demand there
is for cash gold and how it is that permanent backwardation means internal bleeding in
the monetary system.
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minute 12 again ...
[KR412] Keiser Report: Slime Mold For President!
http://maxkeiser.com/2013/03/01/kr412-keiser-report-slime-mold-for-presi...
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The Secret World Of Gold (Documentary)
http://news.goldseek.com/GoldSeek/1366397576.php
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MeSSaGe To Mr KRuGMaN...
williambanzai7's pictureSubmitted by williambanzai7 on 04/19/2013
http://www.zerohedge.com/contributed/2013-04-19/message-mr-krugman