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China Successfully Hunts Where There is Gold
Courtesy of Russ Winter of Winter Actionables
(Originally published on Dec. 20)
JP Morgan is procuring gold on behalf of China. That’s according to TFMetalsReport’s “Turd Ferguson,” who wrote an article on this topic on Wednesday. I think it’s basically true, keeping in mind that other offshore agents are working for China through JP Morgan. It’s logical when one considers that JPM is the largest bullion bankster and, as the report indicates, it has a huge long position [see "One for the Ages"]. China and its agents hunt where there is treasure.
Here’s how I think it works: The Peoples Bank of China and sovereign wealth funds don’t operate directly with JP Morgan but through offshore funds and representatives. Many are just hired guns, or even American or British firms. They procure gold for China’s huge appetite.
Ferguson writes that the forensics point to kilobars showing up in JPM’s customer warehouses, which don’t conform to normal Comex standards. But who is looking anyway. I believe it is quite logical that recently refined kilobars could show up in JPM’s customer warehouses. After all, a Chinese firm now owns Chase Manhattan Plaza, which contains a big gold vault. The point is that this is a logical transit point on the way to China, meaning it probably won’t stay there long. At the moment, there are nearly 1.14 million ounces being held in JPM’s customer accounts.
Let’s dispense with the absurd notion that these are bars recycled back out of China. Absolutely not. Once it goes into China’s vault, it’s like going into a black hole. Remember the interview Koos Jansen conducted with the chief market strategist of Anglo Far-East for insights into the gold refinery business. He said:
“In China, there are six LBMA refineries, but he has never seen a Chinese gold bar. They’re keeping it all. Gold that goes into China is like going into a black-hole.”
The bottom line on this theory it that is logical and likely that a portion of the huge JPM long position demonstrated by the banker participation report could represent gold destined for China on behalf of these agents. As Ferguson asserts: By extension, China is a party to the bullion bankster net long position. But for the Chinese, this is not just a paper long. It’s a mechanism to take physical gold.
Meanwhile, gold is finally being settled out of the puny deliverable or registered stash on the Comex, which dropped to 490,000 ounces today. Here, JPM holds only 87,071 ounces.
There has been some speculation as to who keeps indiscriminately selling gold in the paper market. Central banks are mentioned a lot. However, at these prices, I don’t think it serves the interests of the U.S. to create conditions whereby China grabs thousands of tonnes of cheap gold in lieu of U.S. Treasuries. Nor is it in U.S. interest to encourage China to make an announcement that the PBoC holds more gold than Fort Knox. It is a little thing called prestige and waving a big stick.
That’s why I keep coming back to a rogue or a whale or series of whales within the fund or speculative community. These function as foils and allow the bullion banksters and Chinese to get cheap gold. During the housing bubble, Bear Stearns, Lehman Brothers and AIG were the aggressive players at the margin that allowed the extreme risk and froth in that market. Something similar is going on in the short gold trade. New commitment of trader data released Friday by the CFTC will show the extent through last Tuesday (before the FOMC announcement).
Incidentally, I think these short attacks as occurring in the middle of the night. More accurately, a slinger shows up in the access market after London opens or in the Globex session. Since I am up and awake in Europe during that period, I can see the plunges and the rapid quick-hit volume on the Globex during the speculative attacks. Afterward, when the Comex opens, volume tends to shrivel. Late in the session yesterday, the Comex exhibited signs that some remaining spec longs were being margin liquidated. Those are 2,000- to 3,000-contract sell offs, that are then reversed and have a completely different hallmark from a spec short attack.
Thursday in the comments section on my site, I remarked that GLD showed signs of a high-volume final capitulation. Volume was 90% higher than average. I said that we could see a large extraction. But only 125,400 ounces came out of GLD SPDR. There could still be a delayed release from GLD today, but that seems like chump change for such intense post Mini Me taper market action. More and more, the forensics point to extremely offside slingers driving this action through off-the-deep-end short sales, much more so than western gold liquidations, margin calls and central banks.
Meanwhile on the Shanghai Exchange, it was a very busy night as a stunning 21,392 kg (754,585 oz) was physically delivered. Gold procurement in China appears to be a well oiled machine at this point and gold extraction out of GLD looks exhausted. For its part, the Chinese must be sending the slinger speculators a last minute Christmas card as we speak.
During the session, Pretium released its reserves and resources numbers for Valley of the Kings. This does not include the other previous zones in PVG’s district. It uses a very conservative 5-gram cutoff. Notice that the inferred — which I think is the more recent step-out holes that hit new veins — is 25.6 grams. And here is what’s especially bullish about this report: They only used 0.06 tonnes from the Cleopatra vein,which will be evaluated separately. This is very conservative, making it all the harder to believe they were subjected to such caca a few month ago.
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Shanghai gold exchange delivered 12,596 kg or 444,315 oz Monday.
http://www.sge.sh/publish/sgeen/sge_price/sge_price_daily/11045.htm
In nominal terms Chinese foreign currency reserves and purchases of gold are huge but on a per capita basis they are irrelevant.
For a meaningful per capita balance sheet of gold and foreign exchange reserves to be achieved the Chinese would have to blow up the system through more accumulation of both.
The US might not be overly perturbed buy the Chinese accumulation as long as it's not made public which might start a gold mania and as long as they feel that they have military superiority over the Chinese. As for the Chinese holdings of US dollar treasuries etc, the US could easily repudiate that debt and no other US debt held by other nations.
We have more information since this was written. Comex open interest rose from 385,432 to 398,101 contracts. If the big price drop below $1,200 was a long liquidation, one would expect to see open interest fall, not rise. A rise of nearly 13,000, or 1.3 million ounces, in open interest shows in spades that speculator slingers are now up to nearly 9 million ounces in naked shorts, and that correspondingly, the commercials, bullion bankers and producers took the other side of this trade. This is by far a record, and one for the ages, a 9.0 on the Richter scale .
On Thursday, GLD SPDR saw a muted 125,400 oz extraction, especially considering the magnitude of the POG drop. Now the Friday release actually shows a rare addition of 46,000 ounces. There were 754,585 oz delivered on the Shanghai Exchange Friday.
Comex registered inventory has fallen to a mere 432,612 ounces.
I heard that the eligible moth inventory was at an all time high at Comex. Aparaently they are at an infestation phaze with all the dark empty space and paper laying all around.
Go long MTHX contact March.
Thanks for the timely and useful info Russ. Many of us here welcome and applaud your efforts. Just ignore the blathering idiots. As they say, the empty vessels make the most noise. Happy Holidays to you!
For China to have the same per capita gold hoard as the USA (8100 tons = .8 Oz/person) they would need about 35,000 tons. Expect them to continue to add gold until it breaks.
They will continue to buy what miners and 'scrap' can provide. The remaining 814 tons in GLD probably won't last the year.
Then we will have no gold derivatives market.
Then....
market is in a deflationary state; and gold is reflecting this... as well as other commodities in general; fed is in a real pickel in my opinion.... economy contracting, more taxes being layed on people which furthers the contraction...may have to wait for some time for the gold upturn to return.. oil may be the tell tale sign of golds return.. however, right now i think gold is leading oil.. meaning oil is going to follow golds downturn...but maybe not as sharply.... in summation...we are in a deflationary environment for the medium term.. ie: next 2 to 3 years.
The gold game is over and the "bulls" cannot stop themselves from trying to find a case for their position. China is in deep trouble and most strong economic minds know this. Hoarding a metal is not going to help them. Gold has been a terrible investment since it peaked in 1980 at $800 per oz. Bonds have done far better...buy corporates and munis at these levels. : )
The paper gold game is well on its way to being over, and, more importantly, so is the system that paper gold was erected to support.
Here in Australia i just looked at the price of an ounce of AU.
i last stacked after the big drop about 6 months ago and since then its supposed to have been down all the way.
due to the strong AUD at the time it cost me $1320 an ounce.
today its $1350.
a store of wealth indeed.
in other currencies gold is holding steady but in FRN's its down.
Yanks cant have it all ways - either you have a strong USD or high gold.
The best advice you can get on this site is hold physical, no more than 15% of your assets in PM's and relax and let the tribe that owns congress do their work. America is winning. A few more folks on foodstamps and drones everywhere is the price.
Don't you just love the anit-goldbugs? So persistant, so dedicated, so wrong.
The gold haters have a number of issues, including, but not limited too:
a) They just don't understand gold is the ultimate store of value and has been throughout human history. They seem to be unable to conceptualize anything beyond the closing bell.
b) It annoys them to no end that PM holders are not enthralled by the pretty peices of multicolored paper with imaginitive numbers all over it, like they are. They are cultists and insist that you be a cultist too. Or else.
c) They enjoy the safe feeling afforded to them by being part of the "flock", in spite of the fact that the flock always ends up getting "sheared".
and
d) They are too stupid to recognize the obvious.
Yeah...deflation in all the things we DON'T need and all too real (and understated) inflation in the thigs we DO need - like food. Same pattern has occurred in ALL hyperinflationary economies just before thing ffell apart.
Meanwhile we're supposed to believe that a stock market fed by trtillions in newly created money is a good long term investment (Yeah - the Zimbabwe Stock Market was the fastest rising one in the world for a while as the buying power of $Zim dropped at an exponential rate).
All those who pushed for 'free trade' - shipping western factories overseas to China - and the banks facilitating China's accumulation of gold should be shot as traitors for undermining the economies of the West.
China has industrialized for free courtesy of the West, and has a real productive capacity compared to the US which makes NOTHING these days. They have created a growi middle class - and internal markets for the goods they produce. They have exchanged the increasingly worthless debt they hold denominated in $US into tangible assets - gold, mining companies, African farmland, and more while the US sits on worthless paper 'assets'. I'm a lot more worried about the current and future state of the US than China.
c skep
and all the US got out of it was the 'exorbitant privelege'...imports at half price for 30 years. Read about Triffin's Dilemma. He saw it coming in 1960 and told Congress. They ignored him because being able to print free money was fun. No country can resist the temptation of having the reserve currency when it is a pure fiat currency. We would trade our industry for the privelege again if we could.
Now we face the end game, hyperinflation...enjoy.
When that is over industry will return as American labor will be at world levels price wise. Then we will be able to demonstrate our real exceptionalism.
you forgot the <sarc> tag
Well if china is buying up all this gold and enjoying the corruption down why shouldn't I?
Venezuela also bought trinkets for all. ..something very odd going on there
Venezuela was giving trinkets for votes - like all socialists do. Venezuela's currency reserve is down to near zero. They have 75% of their total foreign reserves in gold and of course its 35% loss year to date has also further depleted their reserves.
One thing does not jibe with this story. China declined to loan Venezuela additional money last month even after Venezuela offered to put gold up as collateral. If they truly are looking under every rock for gold why did they pass on this opportunity. Venezuela is the 7th largest holder of gold and it would have represented the easiest way to get a large amount of cut rate gold. Venezuela ended up having to go to the hated US banks to pawn their gold.
I don't believe Venezuela would truly go to through US banks to sell gold. In fact, DENIED as per this ZH article. Neither would Venezuela or China be required to state what happened to the gold. China recently invested in the las Cristinas gold mine in Venezuela. So one can bet, one way or another, that gold in Venezuela is going to China.
Such innnocence is almost heart warming. And I guess you believe in Santa? Didn't you ever consider (even remotely) the possibility that China is using the US banks to buy Venezuela's gold at a cut rate price?
Doubtful. Why would China do that when they could make a totally private deal directly with Venezuela? Why bring in the evil US banks and bring your dealings into the public realm? Your argument has no logic. Your zeal to find some reason to remain bullish is showing. Yes I believe in Santa - in that I get to make money off people who trade on baseless beliefs who believe in Unicorns and fantasy conspiracies. Meanwhile I trade on logic and trends. Keep on holding on to your fantasy Aphids but meanwhile those acting on logic are cleaning your clock. Guys like you are like Santa bringing me presents each day!
If China was behind the manipulation to obtain cheap physical gold, the "regulators" would be all over the bullion banksters. So, it is not China.
These "regulators" have overseen open borders, shipping all our industry to Asia, and the complete corruption of Congress.
Yeah, I'll give you a hint. The manipulation is by those who sewed it into their clothes when they ran.
and if the US 'regulators' are in on the game too - part of a deal cut with China to prolong the game for as long as possible - let China accumulate gold at a cut-rate price while continuing to prop up the illusion of a sound $US.....
So I guess the fact that China literally owns the US debt is of no import to your understanding of the situation, C. Please try to think things through, for you own sake.
you'd think if Russ Winter wanted to give Turd some kudo's he could have at least gotten the name of his website correct in the article.
It's "TFMetalsReport", not "TPMetalsReport". He probably doesn't even get the connection of what the "TF" even stands for, lol.
Come join us all in Turdville, folks...you're missing out on the best precious metals community and informational forums on the entire planet hands down, bar none, no competition comes close.
http://www.tfmetalsreport.com/
Sometimes one who is inferior can also be in an advantageous posture if he makes use of the situation and all the advantages that he has.
Sun Tzu
So the Planet gets Nuclear toasted, Aliens show up and offer us a ride off planet.. cost of Passage is One oz Physical Gold.. your gonna have a lot of Chinese Cabin mates
The Wisp:
Did you read Ricardo last night and are now really confused? Are you still wondering if time is real?
Do you remember James Dine riding Gold up to $800 and then down to $137?
Are you long pecans? Are you suffering Twitter remorse? Corinithian withdrawal?
You'd have a full blown invasion by the west on India and China. If history repeats itself or rhimes, the empires of China and India where brought to their knee's by the west and all the wealth was taken with violence after it first flowed to azia during the silk an thee trade periods
If you think the West (USA) has the wherewithal to launch a ground war against China and India, I'd say you're nuts. We can't even build a website these days, let alone launch a Chinese invasion.
A Billion Dollars can't build a functional website (It takes most folks about $2K). But a Billion Chinese could.......
Answers please to........
Now that is funny. Also I can't believe that the US is so stupid, they have to know that this is happening but they don't stop it. I think they are powerless to stop it because if they allow gold to go up exponetially by stopping the whales and others from manipulating it would then show that the dollar IS losing value and people would be getting out of dollar denominated assets. So yea they know it's happening, but doing something about it couold hurt the dollar and our economy alot worse.
Go Dubai Ports on them on the large scale(and this time, count all third parties involved with China) and go Japan on them to get back the property.
US wins, China loses, and all is good at the end of the day.
More likely a boatload of Au moves every day thru Dubai to the East.
WTF are you talking about?
He's a stupid asshole that would like for Congress to step in and try to steer economic currents, because they are so good at it. He also loves licking the boots of his paymasters.