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China Hasn't "Seen This Gold Rush In 20 Years"
As we noted last week, all around the world the demand for physical precious metals has soared in the days following paper gold's price collapse. As the FT reports, from Shanghai and Hong Kong to India, one dealer noted, "Older members who have been in the business for 50 years haven’t seen such a thing." The feverish buying has left many of Hong Kong's banks, jewelers, and even its gold exchange without enough gold to meet demand. Record volumes on Shanghai's exchange, lines outside Beijing jewelry stores, and the proximity of Hindu festivals drove "Indian physical demand and premiums," higher as the worlds two largest gold buying nations prompted one exchange CEO to note that we hadn't, "seen this kind of gold rush in over 20 years." It would seem the concerted effort to collapse paper prices in London and New York has provided the rest of the world a multi-decade buying opportunity.
Via The FT,
Asia is witnessing one of the strongest waves of physical gold buying in 30 years, with bargain hunters using the drop in prices to secure jewellery and gold bars.
The feverish buying has left many of Hong Kong’s banks, jewellers and even its gold exchange without enough yellow metal to meet demand. In Shanghai, the gold exchange saw volumes – often seen as a proxy for demand – rising to a record on Monday, while queues formed outside some jewellery shops in Beijing.
...
Haywood Cheung, president of the Hong Kong Gold & Silver Exchange Society, said the exchange had effectively run out of most of its holdings as members looked to meet a shortfall in supply amid rampant retail demand for gold products.
“In terms of volume, I haven’t seen this gold rush for over 20 years,” he told the Financial Times on Monday, adding that the exchange only had around twenty 1kg bars, and 100 five-tael bars left in its inventory. “Older members who have been in the business for 50 years haven’t seen such a thing.”
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Trading volume on the Shanghai gold exchange jumped to a record high on Monday, reaching 43 metric tonnes, according to data compiled by Bloomberg. The previous record, set on April 19, was just 30.4 metric tonnes.
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[In India, traders] reported stronger-than-usual buying as bargain hunters feared that prices had bottomed and would start rising once again.
The proximity of some Hindu festivals, usually trigger points for gold demand, further exacerbated buying. “Indian physical demand and premiums rose,” Suki Cooper, metals analyst at Barclays in London, said in a note to clients on Monday.
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Most of the popular online dealers have ASEs at $6-plus for deliveries starting around April 30. The paper - physical spread is getting ridiculous. Can you point to a website that has sliver at only $4.50 over spot?
Hey Al,
I've seen a couple of different numbers used when it comes to the tonnage sold on Friday/Monday.
Andrew Mcguire on KWN expressed 500+ tonnes of paper sold from 1550 into the fix and 90+ tonnes of physical CB buying.(Friday)
Can you point me in the right direction as far as to how to calculate and source the tonnage bought/sold and divergence between paper and physical?
I don't have access to a Bloomberg terminal, unfortunately, hopefully that isn't required.
Thank You!
The numbers are always all over the place - the 'gold' market is far from transparent. I just use the 400 tons because that number's been put out as the 'reason' for the collapse in gold even by the MSM. I've heard the higher numbers as well, but I think you'd have to be actually on the inside, involved with the trading to get the real number for paper and physical.
I don't think the exact number matters as much as the possibility (probability) that there's a growing discrepancy between the paper price and the physical price, and if the arbitrage opportunity isn't being jumped on to close the gap then it suggests that the paper price is becoming increasingly irrelevant, and being more widely recognized as such. That's why I say I can't wait to see what happens going into the expiry and notice days.
Thanks for the reply!
I am also of the opinion that the divergence between the paper and physical price is growing but I wish I had more data to sift through. Don't get me wrong, Eric Sprott does some great work but I'd like to be able to express a view without saying, "Welllllll, Mister Sprott said so"
I guess I should have expected the lack of transparency given the general gov't/CB tomfoolery(gold/gold recievables discrepency on CB balance sheets for instance).
Maybe open interest is the best place to start.
Cheers
Oops.
And with bank accounts now earmarked for cyprusing why would you store your money there?
The Market has been broken today. Come back tomorrow.
There is a war on gold. The crooks (banks) dont like it since they cant cook the books, inflate earnings, release fictitious news, dilute shares, etc. However, people have an unexplained bond to gold. These price swings are on purpose in an attempt to break this emotional bond; but from the physical buying, appears to be backfiring.
I love all the cooky blog analysts preaching about gold top and gold being dead. They use flawed analysis to state how predicatable the "top" was. They will piss themselves when it bottoms and goes back up.
they will repeat as per 2006 and 2008 erasing their blog entries and hoping too many people didn’t save a copy, upload pictures to twitpick and flickr showing the folly of the fools always top-calling gold before it goes up another $500/oz
doesn't make a lot of when it was the Shanghai Exchange that took it down to the low of $1322 in the first place...
Everyone RUSHING in to buy? Not really sure if that's actually bullish.
I know you can't print Gold, BUT, if you think we're heading for tough times, Gold would probably be one of the things people would need to sell.
Just a thought!!
Unless of course your currency is circling the drain....
Remember people started selling gold, jewelry and the like, back in 2000 when they though it was high after doubling. Then those that didn't sell thought $600 was high and sold, then maybe soime held out to $800, maybe even $1000! No where are they? People used to brag "I got this much for my "junk" gold" but they haven't been around in years. Where are people going to sell their gold from now? The 1-2% of people that have any "investment" gold are going to flood the market; the very people that want to keep buying and holding it?
My neighbour sold at $900 because he had to pay the farm bills. Farm went bust anyways and now he is living on credit, which he will never pay. I think he did it backwards but that is 20/20 hindsight.
No. You would sell AFTER the tough times hit.... after your fiat currency was suitable only for wiping your ass. You'd wait until a new currency was issued (assuming it was not gold) then you would sell some of your gold (which would have retained its value) for the new currency then you would go to the shop and buy food, a car, a house ...
And on your way home you would pass the stupid fucks who had kept their fiat paper - you'd easily recognize them... they'd be the sad fucks sleeping under plastic tarps in the ditch - they'd be spooning dog food out of cans warmed on a fire of plastic bags.
To BARTER not to sell. Same with silver. You can leverage trade paper for paper profits long or short as you wish but in the end if you have stored water, food, silver, gold, tools, stored fuel & a good vehicle of some sort, that’s who will be taking trades, not the market, when things go bad.
I tidied up well selling gold bars for cash into the last peak but in retrospect I wish I had used gld calls for leveraged paper (without margin) and held the bars. I only made 25% profit after all premiums & currency conversion and I could have made much much more all the while KEEPING the gold bars. I still have my gold coins & never sold any silver.
So this is Wall street vs India, China, Japan, USA, Europe ...
To many fronts to cover.
Go physical.
Eurofags and Team Fagnanke must be shitting their pants. Your move Satanists!
The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players.
The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.
The markets will fall only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls
OR
When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.
http://www.marketoracle.co.uk/Article35345.html
www.letstalkmoney2012.in
"Paper Gold", I love that term. It reminds me that if I spill coffee on my stack, it won't dissolve.
This is all just one of those unexpected consequences that the banksters have brought upon themselves. Here is hoping that the public are not asked to pay for the horrendous losses these parasites are likely to suffer as the prices rebound. How about jailing these bastards this time?.
Pretty sure the multi-decade buying opportunity was more like 10 years ago...
What they refuse to admit is the fundamentals involved. In this part of the world, Gold is cultural.
It is deemd an "auspicious" metal.
You buy it for weddings, you buy it for Birthday gifts, you buy it for good luck, the point being if you are upwardly mobile, you buy it.
So gold is in cultural demand in the part of the world where there is a growing middle class and wealth is currently accumulating.
The math must be frightening to the banksters.
let them eat iCake!
Why is silver not following gold on this rally? Gold to silver ratio is now 61 to 1 and climbing. One of two things needs to happen.... #1 Silver catches up with gold and the ratio falls back in the low 50's, where it should be. This would bounce silver to the 27-28 range. Or....#2 this gold rally is short lived and it will end.... with gold falling back to the 1350 level. Also note that the miners are once again not following physical which isnt good. I just have a bad feeling that we are in the midst of a gold bounce before further correction. The other metals/miners arent following along.
TA is absolutely worthless in this current environment.
Place your bets...
TA is absolutely useful but it’s invalid TA to use gold/silver ratio
Use a scatter-plot
Or 3, Gold is wealth, silver is NOT. But, I'd be quite content with option number 2 as well. One last dip in the pool.
Silver is also a hard currency and has the advantage of representing a lower denomination of value per oz. Also silver is to a certain extent safer than gold because when SHTF the first thing they will come after is privately held gold. You may not be able to use your gold for some time if this happens. 50/50 gold and silver accumulation is what I do.
It is – you need to measure it % vs % using a scatterplot
My brother was there in HK when gold was $1,850 and women and girls were buying like crazy...they love gold....I bet the stores are now almost overwhelmed buying those gold dragons, peacocks, etc.....I wish i could go.....
Wait, I thought the girls loved men with bonds.
Did your brother see any shirts sewn out of warehouse receipts?
That's in Japan though.
I keep 2000 in cash in my mattress. If I had gold it would be lumpy and then I'd have trouble sleeping.
Have the gold woven into sheets, like that guy in India with the gold shirt.
2000 in cash isn't very much at all to be honest. And frankly a 50g bar is far easier to move around or keep safe.
I know it's not much. It's just bank holiday money. And it's gone if I get broken into. I'm trying to think where to hide it. I also have 15 dollars in nickels.
Convert 600 dollars of that 2K into a Glock 23. Convert the rest into a few boxes of ammo and rolls of Nickels.
Nickels protect against deflation and hyper-inflation and are difficult for an out of shape thief to trundle off. Stealing a large amount of Nickels seems suspiciously like work, and work is kryptonite to most theives.
Lead, projected out of a Glock can help defend you and your precious Nickels.
1 Gold ASE and 1 1/4 ounce gold ASE isn't that lumpy unless you are the same princess that couldn't sleep because of the pea.
The cash will be helpful in a few years when you can just move it to the bathroom.
Some pics from the flagship Caibai in Beijing where they moved more than 1 ton of gold last week.
http://investinginchinesestocks.blogspot.com
The bankers got so excited when they pushed the paper price down. Now the high fives have been replaced with full diapers. They can't get the paper price up to stop the physical demand. They can't meet the physical demand. I am sure they are all lying to each other right now about how everything is under control.
Now Think????
What marks a market top????
What marks a market bottom???
Retail, the little guy buying, line up to buy>>>
= TOP!!!
Blood in the streets>>>
= Bottom!!
I got a rsi buy short term on gold, covered shorts for $$$$
I got a vix buy on stock market, Long term, But I sell in May and go away, Out of margin now and run 2% stops on rest. I am hitting many stops now.
Did get a buy on Gasoline.
And AAPL.
My last buys, SKYY, MUNI, PEY, MSFT.
Put a profit stop and sell in May.
I see no reason to to buy coins.
Gold and GLD are trading in lockstep, But watch out when this ends.
Someone have a better compare chart?
http://finance.yahoo.com/q/bc?t=5d&s=GCV13.CMX&l=on&z=l&q=l&c=GLD%2C+&ql=1
I think buy coins @ $700s
or over $2,000 for 30 days.
it seems like everyone and his cousin are buying gold at this point. scary.
The COMEX always has paper for sale.
Uh....all.....can we quit responding to PUD with arguments please?
He has repeatedly stated his case. We know his position.
All your responses make it difficult to read what other people are saying with their respective points. I use ZH to see the various view points. I've seen his enough to last a lifetime.
And you do know that there are 'groups' out there that troll on purpose. They get 'points' for illiciting the most anger, the most responses..etc.etc.
The idiocy at play...
Exchange and store sold their gold based on paper market price, basing paper market as supply/demand rule, instead of monitoring their own price and stock.
That proves the owners do not care about their actual supply and demand for physical and do not adhere to elastic curve. Guess what, their new order price will be higher than they sold the gold for.