Gold Surges $50 Or 3.3% - Brinks Sees 55% Decline In Gold Inventories In Week

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Today’s AM fix was USD 1,280.75, EUR 981.87 and GBP 848.91 per ounce.
Yesterday’s AM  fix was USD 1,252.25, EUR 977.02 and GBP 840.78 per ounce.

Gold climbed $2.70 or 0.22% yesterday and closed at $1,251.10/oz.
Silver fell $0.07 or 0.36% and closed at $19.15 prior to some sparks
that were seen in after hours and Asian trading. 


Gold Prices/Fixes/Rates/Vols - (Bloomberg)

Gold surged 3.3% or nearly $50 from $1,248/oz to $1,298/oz after
Federal Reserve Chairman Ben Bernanke admitted that the U.S. economy
continues to need a highly accommodative monetary policy and will do for
the “foreseeable future”.

 

Gold climbed for a
fourth day to the highest level in more than two weeks due to safe
haven buying after Bernanke also admitted, what many more realistic
analysts have been saying for some time, that the 7.6% unemployment rate
probably "overstates the health of the labor market."


Comex Gold Inventories (Millions of Ounces)

Gold’s record 23% fall last quarter was attributed to Bernanke’s
“jawboning” when he again claimed that the Fed would reduce its $85
billion of monthly asset purchases this year. Minutes of that meeting
released yesterday showed many officials wanted to see more signs that
employment is improving before backing a trim to bond buying.

This is  gold bullish and suggests that gold’s recent fall is overdone.


Comex Gold Inventory Data/Brinks Inc Total

The Fed, in conjunction with the BOJ, ECB and BoE is set to  continue
pursuing extremely accommodative monetary policies which should see
fiat currencies continue to fall in value versus gold. 


Comex Gold Inventory Data/JP Morgan Total

Record high gold borrowing costs due to significant physical demand, especially in China and much of Asia, continues.

Although Bernanke’s comments are the ostensible reason for gold’s
price rise, a more fundamental reason, and less reported upon, is likely
to be the continuing decline of COMEX gold inventories. 

Bullion buyers internationally and particularly in Asia are taking
delivery of physical gold which is draining inventories on the COMEX.
COMEX inventories fell another 1.5% yesterday (see table).

Brinks has seen a massive decline in its gold inventories in recent
days. The huge decline in Brinks inventories is being seen soon after a
similar decline in JP Morgan’s gold inventories.

Brinks inventories have fallen from 570,000 ounces on July 3rd to
257,000 ounces today which is a drop of 313,000 ounces - a drop of 55%
in just one week.

The entire inventories on the COMEX, of bullion banks and
depositories is now just 7.096 million ounces and is worth just $9.1
billion at today’s prices. This is a very small amount vis á vis the
amount of money in stocks, bonds, cash and other assets today throughout
the world and in Asia where much of the gold seems to be flowing East.

This has all the hallmarks of a ‘run’ on the COMEX and needs to be
monitored. A default on the COMEX would see the price of physical gold
rise substantially and potentially in a very short period of time. 


Cross Currency Table - (Bloomberg)

Has Gold's 'Bubble' Burst Or Is This A Golden Opportunity? 
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NEWS
Gold Nears $1,300AfterFed’s Bernanke Backs Sustained Stimulus - Bloomberg

Gold futures rally 3%after Bernanke backs stimulus - Investing

Gold climbs to 2-1/2weekhigh on Fed stimulus hopes - Reuters

Bullion demand fromChinawill fuel gold price rebound – The Australian

COMMENTARY
Europe’sDebt-CrisisStrategy Is Near Collapse – The Telegraph

CME Reports ThatBrinksHas a Seventy Percent Decline in Registered Gold Bullion Supply - Jesse's Café Américain

Telegraphing theTurnaround in Gold – Casey Research

 

How Low Will The Pound Go? – Money Week