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Gold Demand In One Chart: Physical vs ETF

Tyler Durden's picture


China's demand for gold jumped 20% to 294 tonnes in the first quarter of 2013, while global gold demand overall slid 13% thanks to the dramatic rotation of demand from paper to physical. Chinese demand in gold bars and coins grew to 109.5 tonnes - more than double the five-year quarterly average of 43.8 tonnes. Central banks added 109.2 tonnes of gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. But it was the Q1 ETF outflows of 176.9 tonnes, equating to a 7% decline in total gold ETF holdings that obscured the strong rise in investment for gold bars and coins at the retail level. In the face of the huge 'paper' gold ETF outflows, 'physical' gold demand surged to its highest in 18 months...


And direct from the WGC showing Q1 demand breakdown:

More from the WGC:

Overall total global demand for gold in Q1 2013 was 963t, down 19% from Q4 2012.


Marcus Grubb, Managing Director, Investment at the World Gold Council commented:


“The price drop in April, fuelled by non-physical moves in the market, proved to be the catalyst for a surge of buying that has left many retailers short of stock and refineries introducing waiting lists for deliveries. Putting this into context, sales of bars and coins, jewellery and consumption in the technology sector still make up 81% of the market.


“What these figures show is that even before the events of April, the fundamentals of the gold market remain robust with growing demand in India and China, central banks consistently adding gold to their reserves and strong buying of investment products such as gold bars and coins.”


The key findings from the report are as follows:


• Total demand in China totalled 294t in the first quarter, a rise of 20% on the same quarter last year, as the economy continued to pick up from the downturn experienced in the second half of 2012. Of that figure, jewellery demand in the quarter was a record 185t, up 19% on last year, while bar and coin investment was 110t, rising by 22% from last year.


• The Indian market also demonstrated a continued appetite for gold. Total demand was 257t, up 27% on the same quarter last year. Retail investment was up 52% while jewellery was up 15% on Q1 last year.


• Q1 2013 was the seventh consecutive quarter in which central banks acquired more than 100t of gold, and the ninth consecutive quarter in which central banks have been net purchasers as they diversify their portfolios. Central bank net purchases were 109t in Q1 2013, although the figure was 5% lower than the purchases a year ago.


• ETFs saw a net outflow of 177t in the quarter. By contrast there were strong inflows into other forms of investment: bar and coin demand was 378t, 10% higher than last year.


Marcus Grubb, Managing Director, Investment, at the World Gold Council commented further:


“Gold-backed ETFs, which made up 6% of gold demand in 2012, have seen some holders, primarily in the US, collect profits and move into equities. While gold ETF holdings are down, this has been balanced by 378t of investment in bars and coins, an increase of 10% on the same period last year, and up 12% on Q4 2012.


“Overall, the long-term appetite for investment remains strong, demonstrated by the continued demand for bars and coins.”

Source: World Gold Council


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Thu, 05/16/2013 - 09:35 | 3568622 the not so migh...
the not so mighty maximiza's picture

looks like a soft on

Thu, 05/16/2013 - 09:38 | 3568638 fonzannoon
fonzannoon's picture

I just read this on another site. Awesome explanation of supply. Tyler should consider posting this as anarticle imho.

Thu, 05/16/2013 - 09:45 | 3568673 MillionDollarBonus_
MillionDollarBonus_'s picture

Interesting. I wonder what the sell side analysts make of all of this? I'm still learning about the gold market, but I know that in an efficient market there cannot be as much arbitrage between the various gold assets as this article suggests. It’s certainly an amusing thought though. As usual, the question of why gold and silver are falling is one that I will leave to the experts.

Thu, 05/16/2013 - 09:49 | 3568686 The Juggernaut
The Juggernaut's picture

@MillionDollarBonus_: I told you yesterday to look up Andrew Maguire.  And who junked me when I said that there is almost a perfect negatively correlated relationship of paper gold versus physical delivery?  Who dun did it?!


You sound sarc all the time so you're more entertaining than anything.

Thu, 05/16/2013 - 09:54 | 3568696 EscapeKey
EscapeKey's picture

You're trying to have a reasoned debate with the biggest troll on this site?

Thu, 05/16/2013 - 09:57 | 3568732 Pinto Currency
Pinto Currency's picture


These are World Gold Council numbers and are incomplete.

LBMA is allocating 15 to 20 tonnes per day for delivery and Shanghai allocating 10 tonnes per day for delivery.  Those numbers not included in this WGC "analysis".  And then there is Mumbai, Dubai, Singapore, Hong Kong physical gold market off-take as well.


Alos, ETF draw-down is partially investors taking delivery of gold and geting off the financial market grid post Cyprus 'bail-in' surprise.

Thu, 05/16/2013 - 09:59 | 3568756 Charles Nelson ...
Charles Nelson Reilly's picture

ehhh, he's not really a troll.  More like someone who crowbars their way into a conversation and then after talking for 5 seconds you debate whether you should knock his teeth out or put ex-lax into his drink?

Thu, 05/16/2013 - 10:03 | 3568780 Pinto Currency
Pinto Currency's picture



Re. supply - these types of articles are a bit of a distraction because they look at mine supply which is 75 million oz. per year when there are 5,000 million oz of gold above ground.

The real issue is the supply from this vast pool is disappearing as gold is increasingly tightly held due to c.b. money printing and Cyprus event while those two factors have also ramped demand in the West.

Thu, 05/16/2013 - 10:06 | 3568797 fonzannoon
fonzannoon's picture

Hey Pinto what's up man. I hear you. Sorry if this is a bit lengthy, but I thought he addressed that here:

"Some investors argue that mined gold supply is irrelevant to the gold price because above-ground gold stocks are much greater than annual mined supply. While it is true that above-ground stocks dwarf mined production, this argument stems from a lack of understanding about marginal supply in the gold industry.

Investors must understand that mined gold supply from gold miners can be regarded as gold in the "weakest of hands" - they are the most marginal sellers. Gold miners produce gold and sell that gold on the market at the spot price because they have to use the money to meet their production costs.

If gold miners reduce production, then day-to-day demand must be met from other sources that are much more sensitive to prices. The buyers who ordinarily find the 2700 tonnes a year of mine supply to meet their demand will have to make due with 2500, 2200, or 2000, and so forth. This differential will have to be made from existing holders of gold, who care much more about prices than miners, and as gold drops they will be less willing to sell at a loss or small profit. Thus this supply will not be available to the market at any spot price (unlike newly-mined gold) and these sellers would prefer to wait for higher prices - which ultimately will result in a further constriction of supply.

To put this into perspective, if mined gold supply drops 10% because miners are cutting back production and struggling to survive, that would be around 250 tonnes (8 million ounces) of gold supply that would be removed from the market. This is equivalent to 25% of the GLD gold trust or all of the gold held by COMEX - this is a significant amount of supply that would have to be found from existing holders of gold. If it is not then gold prices will jump significantly higher.

Thus mined supply makes a huge difference to the supply and demand equation because it supplies physical gold to buyers regardless of spot price. When mine supply is forced down because mines are unprofitable then this difference in the physical market has to be made up from current physical holders of gold - which will be very tough to do in a tight physical market."

Do you think he makes a good point?

Thu, 05/16/2013 - 10:13 | 3568830 Pinto Currency
Pinto Currency's picture



The gold mine supply is marginal supply and a marginal change in marginal supply has very little impact.

LBMA and Sanghai are allocating ~ 7,500 tonnes of physical per year and there is incredible pull from the other physical markets that is rapidly adding-up while the vast gold pool is drying-up very quickly.  That is to me the real story.

Difficulty in finding new deposits to increase supply is interesting but it is a fraction of the physical story.

Thu, 05/16/2013 - 10:14 | 3568842 fonzannoon
fonzannoon's picture

Thanks Pinto. Always appreciate the insight.

Thu, 05/16/2013 - 11:02 | 3569098 Pinto Currency
Pinto Currency's picture


Also, the draw-down in ETFs appears to be due to investor moving to allocated physical gold (probably in private vaults post Cyprus):

Moving Metal

While some investors have sold gold to buy stocks, others may have just changed the method of their allocations, according to Marcus Grubb, managing director of investment research at the World Gold Council in London. The $20 billion drop in the value of gold exchange-traded products and funds this month may signal some investors are moving metal to new accounts after banks adjusted their fees.

“There is evidence of some switching from safer assets into risky assets,” Grubb said in a telephone interview yesterday. “Some investors are still negative, they still see a lot of risk out there. They may have switched from the ETFs to the allocated bullion accounts.

UBS AG, Switzerland’s biggest bank, said yesterday that investors are more interested in converting ETP holdings into allocated accounts. The bank in January said it revised fees for unallocated accounts and was offering an alternative physical account that had a “lower fee structure.” Credit Suisse Group AG, Switzerland’s second-biggest bank, also adjusted precious metals charges.

Thu, 05/16/2013 - 11:51 | 3569196 Manthong
Manthong's picture

“was offering an alternative physical account that had a “lower fee structure.””

..and that differs from allocated ABN AMRO un deliverable gold in what way?

sounds like a credit scam to me..

Q.. If a man controlled the credit of a country, he would have a control of all its affairs?

A." He might have that, but he would not have the money. If he had the credit and I had the money, his customer would be badly off.””
..said J P Morgan to Congress.

So who exactly is “he” and who is “the customer”?

btw.. that was after he said  "Gold is money and nothing else"

Thu, 05/16/2013 - 11:05 | 3569113 Acet
Acet's picture

I think that the missing piece of the puzzle is that until recently the weakest hands were not miners. The weakest hands of all were those who leased gold from the trustees of central bank gold.

Now that central banks all over are demanding repatriation of their gold, this is starting to go into reverse.

That and the detail that Gold spot price is actually the price of paper in the Comex, the supply of which is near infinite.

Thu, 05/16/2013 - 12:45 | 3569646 Not My Real Name
Not My Real Name's picture

If only there was a reliable metric available to track the ratio of gold holders with strong hands vs with those weak hands.

That being said, I think the overall evidence out there supports an increasing ratio.

Thu, 05/16/2013 - 21:27 | 3571377 widget
widget's picture

Publicly available market depth and order book in the futures would be nice too...

Thu, 05/16/2013 - 10:20 | 3568847 DoChenRollingBearing
DoChenRollingBearing's picture

THAT is an interesting comment fonzannoon.  Thanks for posting that snip and the link.


The 24hgold/eBay gold price/premium widgent shows an even higher than premium of AGEs to spot of 17.6%.  I have followed that widget for a couple fo years now, 17.6% is pretty high., at the bottom of their home page.

Thu, 05/16/2013 - 13:35 | 3569872 BoNeSxxx
BoNeSxxx's picture

Thanks DCRB, I was trying to remember the widget you mentioned months ago... You just saved me the time of digging. I think the premiums on phyzz are THE thing to watch - especially in light of the chart posted above by Tyler(s).

The premium % is the only real arbiter we have (today). That too may change soon. Stay frosty my friend.

Thu, 05/16/2013 - 10:35 | 3568961 HedgeHammer
HedgeHammer's picture

I equate MDB to be more like a Turkey Vulture out of season. Those who hunt know just what I'm talking about, those who do not well they like to perch in the trees but their fat ass breaks every branch on the way in looking for something that will hold its own weight meanwhile the noise they create sends all the animals of the surrounding forest in all directions.

Thu, 05/16/2013 - 11:47 | 3569351 BLOTTO
BLOTTO's picture

Its like trying to swat away a fly that is trying to land on a big pile of dog shit on the sidewalk...

...the fly is just as determined as the swatter.


So, just like when you see shit on the sidewalk, you ignore it and dont pay any really attention to it.


Time to get baked.

Thu, 05/16/2013 - 12:03 | 3569437 Long-John-Silver
Long-John-Silver's picture

That reminds me of the time we had a fridge-thief. Someone was taking food from the communal refrigerator. I cooked a cake and blended an entire bar of ex-lax in the frosting. The fridge-thief was soon discovered.

Thu, 05/16/2013 - 14:08 | 3570020 Miffed Microbio...
Miffed Microbiologist's picture

You are very kind and mericiful to those horrible SOBs. One even had the audacity to steal the cheese out of my sandwich! We microbiologists have come up with strategies that have been so much worse to our victims ( I'm a bit ashamed I was a part of it) they would have chosen the free colon cleansing any day. Aways be aware from whom you are stealing. Revenge is a dish best served microbiological.


Thu, 05/16/2013 - 10:03 | 3568779 Badabing
Badabing's picture

"Alos, ETF draw-down is partially investors taking delivery of gold and geting off the financial market grid post Cyprus 'bail-in' surprise".

Investors = big bank crooks harvesting ETFs

Thu, 05/16/2013 - 10:07 | 3568800 Pinto Currency
Pinto Currency's picture



In part but a large number appear to be bailing on the ETF's and just getting the metal.

This and people pulling their gold from bullion banks is causing stress in the gold market due to the fractional reserve (multiple sales of given bars) gold market that exists.

It's coming to head now all the while the financial media talks-down gold and silver.

Thu, 05/16/2013 - 10:10 | 3568819 Badabing
Badabing's picture

+1 agree

Thu, 05/16/2013 - 12:35 | 3569536 Kirk2NCC1701
Kirk2NCC1701's picture

It'd be nice to see more serious posts & analysis in the blogs, not just a ZH version of 'The View' -- with a bunch of gold bulls from the hills agreeing with each other and yanking each other's dicks.  So to speak. /s

The (serious) questions I have not seen raised or answered, include:

1. Quis Bono (Who Benefits) from the extreme price beat-down of PM.  Price-suppression ("keep it range-bound between, say, $1500 and $1700") I get.  But beating it down to the point of creating a "bullion run"?  Hello, hello!?  There is nothing to be gained by the CBs in Club-Fed.  Only the BRICs gain, and perhaps it is their CB's that are beating it down via our commercial banks.  Unless...

2. It is part of Iran's gold for oil revenues game -- played by both sides.  You know this does enter the trade dynamics and the Iranian economy.  Club Fed just does NOT want Muslim countries to use gold-backed currency.  Look what they did to Iraq and Libya -- and their gold and oil.

Thu, 05/16/2013 - 13:22 | 3569763 James_Cole
James_Cole's picture

It's easy to understand the price direction as long as you ignore the bullshit. The important number here is this one:

while global gold demand overall slid 13% thanks to the dramatic rotation of demand from paper to physical


People (on here anyway) CONSTANTLY misunderstand the gold market. 


For some comparison:

Thu, 05/16/2013 - 13:52 | 3569941 akak
akak's picture


People (on here anyway) CONSTANTLY misunderstand the gold market.

There are also certain people here who constantly attempt to misrepresent, mischaracterize and minimize key aspects of the gold market as well.

Thu, 05/16/2013 - 13:57 | 3569960 James_Cole
James_Cole's picture

There are also certain people here who constantly attempt to misrepresent, mischaracterize and minimize key aspects of the gold market as well.

According to you that's me & the WGC, the same WGC which the content of this article comes from. 

Don't click on the link to their report - will infuriate you that they break out jewellery as a separate category. 

Thu, 05/16/2013 - 19:43 | 3570219 akak
akak's picture

Yes, James, both you and the so-called World Gold Council are bald-faced liars and full of shit when it comes to acknowledging the primarily monetary nature of gold, as well as the full degree of investment demand for it.

According to your beloved WGC, the primary world demand for gold is for 'jewelry' (i.e., baubles), followed by "speculation"/investment, coins/medals, and various industrial purposes.  They go to absurd lengths to separate out coins, bars and all jewelry from overall investment demand for gold (as if the physical form of the gold matters to its ultimate purpose), thereby falsely downplaying and misrepresenting it, and almost NEVER do they, nor will they, acknowledge the monetary nature of gold, whether past or most especially present.


EDIT: Read a scathing indictment of the so-called World Gold Council (Jame's friends) here:

Thu, 05/16/2013 - 15:35 | 3570434 Kirk2NCC1701
Kirk2NCC1701's picture

Interesting links.... that bring attention to the 'other gold':  Platinum.  The even scarcer and under-discussed PM.

Thu, 05/16/2013 - 13:54 | 3569935 BoNeSxxx
BoNeSxxx's picture

Firstly, why call the posts here anything other than serious? And compare ZH to The View? Are YOU serious? Because most of us on here (troll bashing and potty jokes aside) are deadly so.

Secondly, your questions/points are interesting and valid ones... Why poison the very well you seek to drink from?

Speaking purely for myself, ZH is about the only thing keeping my head from spinning off my shoulders most days. I come for the articles but I stay for the comments... Insightful, intelligent, witty, poignant, funny, sometimes moving.... And with just the right mix of fart jokes.

Edit: you mostly answered your own question... Look at Iraq and Libya. There simply are no lengths they won't go to when it comes to preserving the ponzi... Gold... Must... Not... Win.

Fri, 05/17/2013 - 22:14 | 3575018 papaclop
papaclop's picture

A wise man once said that the WorldGold Council was formed by central bank influenced lackeys to keep a real World Gold industry group from forming. A lot of what they write is a little shakey. The central banks are all buying but trying to discourage the public from buying.

Thu, 05/16/2013 - 10:40 | 3568982 quasimodo
quasimodo's picture

Perhaps, just MAYBE, if we all started to up arrow 5 dollar boner, he/it would short circuit--thus going full on retard and quit posting? 

One can dream


Thu, 05/16/2013 - 11:26 | 3569228 Hippocratic Oaf
Hippocratic Oaf's picture

"You're trying to have a reasoned debate with the biggest troll on this site?"


He's not a trol. When you see the green $ sign, you know he hits below the belt.

We need him and his buffoonery

Thu, 05/16/2013 - 09:57 | 3568746 MillionDollarBonus_
MillionDollarBonus_'s picture

I didn't look up Andrew Maguire because I want an objective take on the gold market. I will listen to the opinions of a range of experts, and then make up my own mind based on what I hear.

Thu, 05/16/2013 - 10:02 | 3568767 Charles Nelson ...
Charles Nelson Reilly's picture

Maguire has been in the bullion business for 3 decades, and worked for your boys at Goldman Sachs.  I'd say he is in the know.

Thu, 05/16/2013 - 10:06 | 3568794 Deo vindice
Deo vindice's picture

MDB - you need to understand there is a difference between an "objective take" and an "objectionable take".

You seem to be holding out for the latter.

Thu, 05/16/2013 - 10:05 | 3568787 Beam Me Up Scotty
Beam Me Up Scotty's picture

How's FaceBook working out for you?  Does FB pay a dividend?

Thu, 05/16/2013 - 10:15 | 3568844 greatbeard
greatbeard's picture

>> I want an objective take on the gold market.

But you're hanging out at ZH and sparing with gold bugs?  Tell me, what other venues do you search for an objective take?

Thu, 05/16/2013 - 10:27 | 3568906 HedgeHammer
HedgeHammer's picture

MDB, I have never spoken to you nor have I ever had the urge to reply to you mainly due to the condescending tone in your posts, among other things. Andrew Maguire would be considered to be within that "Range of Experts" you so loosely refer too.

Thu, 05/16/2013 - 10:32 | 3568919 EscapeKey
EscapeKey's picture

I didn't look up Andrew Maguire because I want an objective take on the gold market. I will listen to the opinions of a range of experts whose opinion piss off the most people on this site, and then make up my own mind based on what I hear.

Fixed it for you.

Thu, 05/16/2013 - 10:58 | 3569073 RockyRacoon
Thu, 05/16/2013 - 10:41 | 3568984 SMG
SMG's picture

Here you go...point and click.

Andrew Maguire is an independent bullion trader and a whistleblower. He alleged to United States regulators that fraud had been committed, and that prices in the international gold and silver markets had been manipulated. Maguire and his wife were injured in a hit-and-run accident a day after he was identified as the source of the allegations.

Thu, 05/16/2013 - 11:09 | 3569137 Eastwood
Thu, 05/16/2013 - 12:07 | 3569459 A. Magnus
A. Magnus's picture

What, an actual TRADER isn't an 'expert' enough for you? Does one need to have a pointy head, talk with an effeminate lisp and come from a particular 'Ivy League' pedigree for you to consider their opinion?

You sir, are a piece of shit elitist troll. And you're wasting everybody's time here, including your own. NOBODY here wants to hear a bunch of banker propagandist bullshit, otherwise we'd frequent online Wall Street fecal depositories like CNBC, CNN and Fox News. Your mindless parroting of extablishment tripe is like the asshole Uncle in everyone's family who just won't leave shit alone - even when it's obvious that nobody gives a fuck...

Thu, 05/16/2013 - 12:34 | 3569576 RebelDevil
RebelDevil's picture

Maybe he IS a banker or trader for a major instituition? How do we know?

Thu, 05/16/2013 - 13:35 | 3569873 MarsInScorpio
MarsInScorpio's picture



"Don't you know who I am??!!


"You must not know who I am . . .


"I'm the Juggernaut, BITCH!!"


Thu, 05/16/2013 - 09:51 | 3568704 The Proletariat
The Proletariat's picture

It is all fundamental MDB.  You obviously know that when demand is high and the supply is low....prices must fall.....right?

Thu, 05/16/2013 - 09:58 | 3568750 ArkansasAngie
ArkansasAngie's picture

They're just trying to make all those JPM shorts in the money.

You'd think that national security would stop the selling of gold at discount to China.  Obviously some people's national security issues are more important than others.

What a crock of odiferous material. 


Thu, 05/16/2013 - 10:51 | 3569027 GeezerGeek
GeezerGeek's picture

Perhaps we ought to consider the possibility that China is behind the crushing of PM prices? Did they threaten to dump US debt and destroy the dollar if the US PTB didn't play their game? And what makes you think that the current administration's idea of national security bears any resemblance to what the average American would find proper? 

Just asking, as nothing makes sense to me in these spheres; consider me a charter member of the Club of Cluelessness.

Thu, 05/16/2013 - 11:59 | 3569412 Herd Redirectio...
Herd Redirection Committee's picture

Oh for sure, thats why the slam happens as soon as NYMEX opens.  Because its the folks in Beijing and Shanghai selling!  LOL. 

Thu, 05/16/2013 - 10:05 | 3568789 Imminent Crucible
Imminent Crucible's picture

MDB: Just two points to consider--

First, "why gold and silver are falling"....Yep, you need to study the real markets. It's PAPER gold and silver that are falling, while physical premiums rise. I'm looking at severe bottlenecks in silver bullion items and seeing premiums of $6 over spot, $8 over spot, etc. In the scarcer items (MX Libertads, which I specialize in, are going for DOUBLE silver spot and higher) premums are insance. Check out Apmex:

They're embarrassed to tell you what the 2009 premium over spot is, when one ounce costs $47.

Second, you must be the only person left on earth who doesn't know that Efficient Market theory is utterly discredited. It's one of those scholarly mirages that appeals to ivory tower theorists: simple, reasonable-sounding and totally useless. The real world is far too complex for "everything is instantly known and discounted".

What did the market "know" in the third week of October 2007 that it didn't know the week before? The Transports had been diverging for months. Here's the Real "Reality": We don't have real markets. What we have instead is a giant rigged casino run by and for the benefit of the multinational banks, with the collusion of their cronies in govt, the so-called "regulators". The giant banks make money because they know where the market is moving; they move it themselves, with the aid of their CNBC's and Marketwatches. Always jerking sentiment around with: "Housing starts up, consumer sentiment up, jobless claims down", and then "Whoops! Housing starts plunge, sentiment falls, jobless claims spike".

How long will it take you to catch on?

Thu, 05/16/2013 - 10:14 | 3568840 Diogenes
Diogenes's picture

"If the efficient market hypothesis were true I'd be standing on the corner with a tin cup full of pencils"

                                                                          -Warren Buffett

Thu, 05/16/2013 - 10:55 | 3569051 Lebensphilosoph
Lebensphilosoph's picture

It's not even false. It's positively meaningless.

Thu, 05/16/2013 - 12:03 | 3569435 Herd Redirectio...
Herd Redirection Committee's picture

But for some people all that complexity is just too much, so they take the 'Ostrich Approach', and when they hear about EMT they think "Yes!  That sounds simple!  Lets go with that!"

I had a teacher in Business School who swore by EMT and buying index funds....Then again, I was also taught treasuries are 'risk-free assets'.

Thu, 05/16/2013 - 10:35 | 3568962 Lebensphilosoph
Lebensphilosoph's picture

So a nonsenscal theory (EMH) trumps reaity in your world, does it?

Thu, 05/16/2013 - 10:06 | 3568795 Rory_Breaker
Rory_Breaker's picture

Thanks for sharing Fonz

Thu, 05/16/2013 - 10:21 | 3568877 Panafrican Funk...
Panafrican Funktron Robot's picture

Saw that too Fonz, his article that I linked regarding the marginal cost of production was also very good.  

Thu, 05/16/2013 - 10:25 | 3568895 TheEdelman
TheEdelman's picture

so fonz...according to that article..."cost to extract" was $1300 last year.  Yet just ~5 years ago golds average price was $700/oz.  This implies "cost to extract" increased close to 100% in ~5 years???  Something about that $1300 "cost to extract" smells very foul.  

Thu, 05/16/2013 - 10:29 | 3568923 fonzannoon
fonzannoon's picture


I can't speak to that because I am not the author, I have seen that guy write a few articles and not only does he seem to do a good job, but he is usually all over the comments section defending his work. It might be worth it for you to log in there and post your question. I am pretty sure it will get answered.

Thu, 05/16/2013 - 10:39 | 3568979 TheEdelman
TheEdelman's picture

Posted.  Sez "Waiting moderation" or something like that.

Thu, 05/16/2013 - 12:05 | 3569447 Herd Redirectio...
Herd Redirection Committee's picture

I think they are including exploration, etc. in the most recent cost, whereas it would not be counted in the number from 5 years ago.

Thu, 05/16/2013 - 10:44 | 3568997 Debugas
Debugas's picture

the most expensive mines (with highest cost of extraction) operate at about $1200-$1300. That is called marginal (i believe it is 95% percentile) cost.

the average cost is below $1000


So what it means is that if price fells to $1200 the 5% of miners will shut down and the supply decreases

Thu, 05/16/2013 - 11:01 | 3569095 gonetogalt
gonetogalt's picture

It's not that simple, in cases of falling prices the mine shifts to higher grade ore and stockpiles or bypasses lower grade ore, if possible.  Reduce mill throughput but keep running is the trick, because re-starting is soooo expensive.

Thu, 05/16/2013 - 13:14 | 3569788 James_Cole
James_Cole's picture

It's not that simple, in cases of falling prices the mine shifts to higher grade ore and stockpiles or bypasses lower grade ore, if possible.

"if possible" the key here, because for a lot this is not possible. 

Thu, 05/16/2013 - 13:13 | 3569784 James_Cole
James_Cole's picture

so fonz...according to that article..."cost to extract" was $1300 last year.  Yet just ~5 years ago golds average price was $700/oz.  This implies "cost to extract" increased close to 100% in ~5 years??? 

This is because of lower grades. As the spot price has moved up every crap mine has been re-opened, dramatically increasing average costs. 

Thu, 05/16/2013 - 11:39 | 3569298 chindit13
chindit13's picture

His methodology is not good.  If a HF analyst produced a report like that, he'd get fired.

He calculates based on 25 publicly traded companies, who produce 800 of 2700 reported ounces per year, all of whom operate according to US, Canadian, Australian or South African Government standards, and have pay scales that reflect their domiciles.  A lot of gold mining, however, takes place in countries where 1) they don't report 2) they pay miners/workers a dollar a day 3) there's no OSHA  4) there's no EPA.  Losts of cost savings right there.

Some Russian mines in Siberia produce at $200/oz, according to the CEO of Yamana Gold.  In northeast Burma the Chinese mine heavily in land around Hpakant and Myitkyina, use local labor, recover with cyanide or by hand kneading Hg into the gold bearing soil (Mad Hatters result), and do all this in fields that have better than 30 ppm.  Given the location and proximity to the border, it is possible Chinese mining in Yunnan mines the same field, uses the same techniques and has similar (non-reported) production.

Thu, 05/16/2013 - 12:07 | 3569458 Herd Redirectio...
Herd Redirection Committee's picture

Cyanide and mercury you say.  So how long do we expect these 'low costs' to remain?  Until workers start dying?  Going a little crazy?  Until they realize there are safer ways to extract the gold?

There is a huge environmental and human cost to grinding and milling gold in the way you describe.

Thu, 05/16/2013 - 12:24 | 3569538 chindit13
chindit13's picture

Of course there is a huge environmental cost, but it is the land of the great cliche:  life is cheap.   Neither the Chinese mine owners nor the authorities who granted them the license could care less what happens to either the people or the environment.  As Bernanke might say, it's tradition.

Thu, 05/16/2013 - 13:43 | 3569918 Panafrican Funk...
Panafrican Funktron Robot's picture

How much of that Russian and Chinese gold is made available to the LBMA?  

Thu, 05/16/2013 - 09:41 | 3568653 Stuart
Stuart's picture

another perspective, paper = momentum chasers , physical = value buyers... hence the disorted impact of each category on price.   Physical supply is being drained globally... in a BIG WAY.  They are going to break and bifurcate the bullion market.  Maybe that's the plan. 

Thu, 05/16/2013 - 10:05 | 3568792 Panafrican Funk...
Panafrican Funktron Robot's picture

Sorry for linking SA, this was actually a pretty reasonable analysis of where the price of gold would need to be for them to break even.  He's looking at $1400 an ounce, which I've read in a few other places as well.  It would be reasonable to buy below the $1400 spot price.

Thu, 05/16/2013 - 09:42 | 3568658 Theta_Burn
Theta_Burn's picture

OR it could be a prone-boning by the real vs. the conjured up..

Thu, 05/16/2013 - 09:56 | 3568738 SRSrocco
SRSrocco's picture

Controlling the Beginning Stages of Hyperinflation by Manipulating the Precious Metals

Just to let you know this is the newest post to my site SRSroccoReport that went live this monday.

Thu, 05/16/2013 - 09:36 | 3568628 vmromk
vmromk's picture

Bernanke can take his paper contracts and shove them up his mother's ass.

Thu, 05/16/2013 - 09:52 | 3568707 BigJim
BigJim's picture

"You know how suggestible he is! Please don't give him any more ideas!"

~Mrs. Bernanke, Snr.

Thu, 05/16/2013 - 10:12 | 3568833 Sudden Debt
Sudden Debt's picture


                                        Mao She Tungsten

Thu, 05/16/2013 - 11:08 | 3569130 LawsofPhysics
LawsofPhysics's picture

No, I give you soybeans, you give me gold motherfucker - signed the American farmer.

Thu, 05/16/2013 - 09:37 | 3568632 Dexter Morgan
Dexter Morgan's picture

Take that Paper Bitchezz!!

Thu, 05/16/2013 - 09:37 | 3568635 Smuckers
Smuckers's picture

Is most of that physical being bought on Tuesdays?


Thu, 05/16/2013 - 09:37 | 3568636 Stuart
Stuart's picture

Phony paper still rules price though.  Corrrupt CBs and exchanges in London and NY still control the trade.  Until this changes....   At what point do paper prices become irrelevant when they no longer represent the price anyone would really pay for the real stuff.   

Thu, 05/16/2013 - 09:40 | 3568649 LawsofPhysics
LawsofPhysics's picture

"At what point do paper prices become irrelevant" - when the bread and circuses can no longer be delivered, in other words when the EBT cards no longer work.  Same as it ever was.

Thu, 05/16/2013 - 10:00 | 3568763 FeralSerf
FeralSerf's picture

The EBT cards work because Bernanke keeps feeding the system with liquidity by buying debt regardless of its likelihood of being paid, (currently about 85 billion $$ a month).

Are you claiming that as long as Bernanke keeps this up, gold will be in the shitter?

Thu, 05/16/2013 - 10:10 | 3568815 LawsofPhysics
LawsofPhysics's picture

"Are you claiming that as long as Bernanke keeps this up, gold will be in the shitter?" - No.  It's a complex world.  What I am saying is, just like every other similar period in history (when paper promises grew exponentially relative to the physical assets of real value), the only thing that will bring about real change and the restoration of a real market that allows for true price discovery, will occur once supply lines break and the whole world goes "to the mattresses".  Some things never change.

Thu, 05/16/2013 - 09:41 | 3568656 DeadFred
DeadFred's picture

Quarter 1 numbers don't include the last Great Takedown. I'm looking forward to Q2 numbers for a told-you-so smile.

Thu, 05/16/2013 - 09:47 | 3568685 Jdog
Jdog's picture

Paulson is holding all the garbage paper gold. So either he is in with the scam or he is the biggest tool on this planet!

Thu, 05/16/2013 - 09:50 | 3568698 new game
new game's picture

paulson is a crook, the enemy...

Thu, 05/16/2013 - 09:56 | 3568743 DaveyJones
DaveyJones's picture

When this paper tiger is done filling the cat box

Thu, 05/16/2013 - 10:15 | 3568804 Downtoolong
Downtoolong's picture

When they start allowing shorts to settle paper contracts in cash instead of delivering the real stuff. Then it's clearly just a market in cash and credit, and might as well be labeled a market in golf balls or hairballs as gold.

Thu, 05/16/2013 - 10:28 | 3568912 Beatscape
Beatscape's picture

Fascinating. The phantom paper market for gold is so large compared to the physical stock of actual gold (120:1 paper:physical) that the banksters can use this tremendous leverage to manipulate the physical market down and then add to their stacks of actual gold bars at a lower price. The paper gold ETFs have completely distorted the market for supply vs. demand in the physical market. 

Thu, 05/16/2013 - 09:38 | 3568643 LawsofPhysics
LawsofPhysics's picture

This will end exactly as it has every other time throughout history...   in world war.  Divergences like this signal the destruction of trust in the current monetary and "market" mechanism.  Truer words have never been sppoken - Once money and goods and services stop crossing boarders, troops will.  Hedge accordingly.

Thu, 05/16/2013 - 09:48 | 3568687 The_Alchemist
The_Alchemist's picture

If only we can finagle that gold from central banks back into the hands of the people, where it belongs.

Thu, 05/16/2013 - 09:52 | 3568711 LawsofPhysics
LawsofPhysics's picture

If you are holding dollars, they recently strengthed relative to PMs.  Go exchange that paper promise for some physical and take possession.  After all, when fraud is the status quo, possession is the law.  Dold, silver, lead and brass..  chemistyr is what it is some metals preserve others.  Having some purchasing power is always important.

Thu, 05/16/2013 - 10:07 | 3568801 FeralSerf
FeralSerf's picture

And if you're holding physical gold or silver and need dollars to pay your mortgage, utility bill, health care costs and other living expenses you're fucked. That's especially true if one considers the buy-sell spread for PMs.

Thu, 05/16/2013 - 10:19 | 3568864 Panafrican Funk...
Panafrican Funktron Robot's picture

If you're too stupid or unfortunate not to have 6 months of cash for expenses before you start thinking about wealth preservation, then you're fucked regardless.

Thu, 05/16/2013 - 11:39 | 3569297 SilverSavant
SilverSavant's picture

Fuck you, fuck you and fuck you some more.  In fact, long after it begins to hurt.   The central banks are fucking all long term PM holders and all this talk about buying more at a great price is just more fucking bullshit.  I have been getting fucked for so long that I am reallly tired of it and you can crawl back into your hole and die.   Just be glad I don't tell you how I really feel.  I want some blood for my PM's.  i guess I am a little bit "unfortunate".

Fri, 05/17/2013 - 00:54 | 3571897 FeralSerf
FeralSerf's picture

A year ago I had 6 months of cash. That's been spent and then some. Now I need to sell silver to raise cash and it ain't much fun.

Thu, 05/16/2013 - 10:19 | 3568870 LawsofPhysics
LawsofPhysics's picture

Please, if this is the case, it would be the case for everyone.  I promise you, the doctor next door (who can't pay his mortgage or student loan) will be all too happy to exchange some of his time/labor for PMs or even a can of beans.  Tell me, what service of real value will that fucking paper-pusher have to offer in such an environment?

Thu, 05/16/2013 - 10:31 | 3568929 MachoMan
MachoMan's picture

Liquidity is the biggest impediment for holding physical PMs...  delicate balance for sure.

Thu, 05/16/2013 - 14:08 | 3570017 Herd Redirectio...
Herd Redirection Committee's picture

You have to know your time frame.  You don't take possession because YOU KNOW when shit is going to happen, you take possession because YOU DON'T know.   If we knew the time frame, it would be a no-brainer to buy call options on leverage.  But because timing matters, thats actually a great way to lose your ass.

Thu, 05/16/2013 - 10:36 | 3568965 oddjob
oddjob's picture

The homeless and unemployed are the big buyers of PM's, nice reasoning.

Fri, 05/17/2013 - 00:59 | 3571903 FeralSerf
FeralSerf's picture

Retired folks are often unemployed and need some inflation protection for their savings. Yes, they are big buyers of physical PMs, nimrod. Not all of them are homeless yet.

Thu, 05/16/2013 - 11:04 | 3569108 greatbeard
greatbeard's picture

>> and need dollars to pay your mortgage, utility bill, health care costs and other living expenses you're fucked.

If that is your investment method, you'd be screwed by something, if not a need to cash in at the wrong time.  Nobody should have 100% of their liquid assets tied up in anything.

Thu, 05/16/2013 - 10:08 | 3568803 malikai
malikai's picture

If this ends in world war, I'll venture to say that iodine tablets and potable water will be worth more than gold.

Thu, 05/16/2013 - 10:11 | 3568823 LawsofPhysics
LawsofPhysics's picture

No shit sherlock, that's why one should always have a diverse portfolio and dependable tribe.  In these situations, economies also become very local in a hurry.

Thu, 05/16/2013 - 10:53 | 3569033 Bay of Pigs
Bay of Pigs's picture

I know you can't eat gold, but can you drink water?

(For the troll that junked you)

Thu, 05/16/2013 - 11:21 | 3569190 semperfi
semperfi's picture

"dependable tribe"

Like, perhaps a few friends/family that are loyal to the US Constitution Jarheads/Ex-Jarheads?

Thu, 05/16/2013 - 12:26 | 3569550 LawsofPhysics
LawsofPhysics's picture

A well-regulated militia, being necessary to the security of a free State, the right of the people to keep and bear arms, shall not be infringed.

Thu, 05/16/2013 - 09:56 | 3568740 DosZap
DosZap's picture

This will end exactly as it has every other time throughout history... in world war. Divergences like this signal the destruction of trust in the current monetary and "market" mechanism. Truer words have never been sppoken - Once money and goods and services stop crossing boarders, troops will. Hedge accordingly


Won't need to here,200+ yrs of law overturned on a dime.

Thu, 05/16/2013 - 10:03 | 3568777 DaveyJones
DaveyJones's picture

that site does interesting work

the biggest things happen quietly

Thu, 05/16/2013 - 12:20 | 3569517 Herd Redirectio...
Herd Redirection Committee's picture

"The authorization has been around over 100 years; it’s not a new authority."

Any time you grant yourself new powers, remember to use this line.  "No, I haven't granted myself new powers.  The authorization has been around over 100 years."

Same as when a new king would take over in feudal times, "No, I didn't TAKE the throne. I rightfully reclaimed what was mine.  I restored order.  I threw out the imposter."

Basically you rewrite history, and paint yourself as "the good guy, always have been".

Thu, 05/16/2013 - 10:13 | 3568837 LawsofPhysics
LawsofPhysics's picture

Right, "all the best laid plans of mice and men..."  Something about theory versus practice come to mind.

Thu, 05/16/2013 - 11:11 | 3569136 RockyRacoon
RockyRacoon's picture

Well, this certainly clears it up -- crystal clear:

"Federal military commanders have the authority, in extraordinary emergency circumstances where prior authorization by the President is impossible and duly constituted local authorities are unable to control the situation, to engage temporarily in activities that are necessary to quell large-scale, unexpected civil disturbances."

I especially like the "temporary" part.  Government, especially the military, is always good at "temporary".

Five people on a street corner throwing rocks at a B of A branch is a civil disturbance.   Call in the tanks and the tear gas.

Thu, 05/16/2013 - 11:18 | 3569164 DaveyJones
DaveyJones's picture

and of course another tricky method to remove another profound bedrock of this "democratic republic" - the ability of the local authorities to police their own.

and like, say Iraq (or 911), "we're only here to assist you" a problem we created  

Thu, 05/16/2013 - 10:27 | 3568910 Crash Overide
Crash Overide's picture

@Law    This time it's different!

Thu, 05/16/2013 - 09:39 | 3568647 Charles Nelson ...
Charles Nelson Reilly's picture

Wait... MarketWatch said the gold bull run is over.  What is this physical gold everyone wants?  Isn't paper the same thing?

Thu, 05/16/2013 - 14:02 | 3569984 akak
akak's picture

No, paper is even better, because you can eat it (sort of).

Thu, 05/16/2013 - 09:40 | 3568650 new game
new game's picture

paper vs phys ~ the real war bitchez...

Thu, 05/16/2013 - 11:04 | 3569107 Gene8696
Gene8696's picture

Like any bookie will attest. .. It's not about which is your favarate Team, it's about the point spread. This round I'm betting long on paper. Collapse of the AG ETF market alone is a risk I can sleep with.

Thu, 05/16/2013 - 09:42 | 3568652 Hulk
Hulk's picture

It saddens me to see ourselves (the west) comit financial suicide via fraud and corruption.

Get physical Bitchez, its the reason these prices are so low, and time IS running out now...

Thu, 05/16/2013 - 10:25 | 3568896 mayhem_korner
mayhem_korner's picture



Bingo.  This is a clear an unadulterated signal to those in the know to get yours now before the sand in the hourglass is forcably run out.

Thu, 05/16/2013 - 10:45 | 3569004 The_Alchemist
The_Alchemist's picture

I find it funny and ironic that paper-lovers love to BTFD, but when they have their perfect opportunity in precious metals, they condem it! - Idotic I tell you!

Thu, 05/16/2013 - 10:50 | 3569025 mayhem_korner
mayhem_korner's picture



Idiotic?  Or planned, like Braer Rabbit?

Thu, 05/16/2013 - 11:07 | 3569126 GeezerGeek
GeezerGeek's picture

Is it really suicide, or is it homocide? How many Western leaders really believe in free markets/capitalism/individual liberty? How many are despots at heart, eager to ruin the middle classes and rule with an iron fist?

Thu, 05/16/2013 - 09:42 | 3568654 Seasmoke
Seasmoke's picture

I just look at the paper price of Gold every day and then multiply by three.

Thu, 05/16/2013 - 09:42 | 3568659 orangegeek
orangegeek's picture

Gold priced in US Dollars should continue to slide - yes, I know, unpopular comment - go ahead and down arrow.


The USD is negatively biased to six currencies - the Euro is the mostly heavily weighted.  The Euro (amongst others) is trending bearish.


Overlay of USD and Gold - inverse relationship.


And the USD should continue to rise.

Thu, 05/16/2013 - 10:05 | 3568783 DosZap
DosZap's picture

Gold priced in US Dollars should continue to slide - yes, I know, unpopular comment - go ahead and down arrow.


The USD is negatively biased to six currencies - the Euro is the mostly heavily weighted. The Euro (amongst others) is trending bearish.


Overlay of USD and Gold - inverse relationship.


And the USD should continue to rise.

Totally unlike the past the dollar is the stronger of the weakest,but still weak and getting weaker.Nothing will stop it from continuing.

The Fed cannot raise rates,stop QE, or the defict to GDP will me more than the GDP.Then the SWHTF for sure.

Thu, 05/16/2013 - 14:48 | 3569999 akak
akak's picture

DosZap, you are of course correct, and OrangeNadler is just another of those clueless and/or disingenuous idiots who cannot or refuses to distinguish between the actual US Dollar, whose value is ONLY and constantly decreasing, and the outdated and artificial US Dollar Index, which manifestly does NOT measure, nor represent, the true value, the purchasing power, of the US Dollar.

Thu, 05/16/2013 - 10:05 | 3568786 All_Is_Well
All_Is_Well's picture

Totally agree OG, but that trend will not go on forever.

Thu, 05/16/2013 - 09:48 | 3568661 OpTwoMistic
Thu, 05/16/2013 - 10:33 | 3568945 A82EBA
A82EBA's picture

Interesting article..wish the folks on here would give their opinions on that happening

Thu, 05/16/2013 - 11:43 | 3569322 GeezerGeek
GeezerGeek's picture

Did the article really posit that Bernanke is intent on destroying the system in order to replace it with something better? That sounds eerily like some of the ideas found at, with some significant exceptions. One might wonder if Bernanke (or anyone else) is really smart enough to come up with a better system unless it's based on gold somehow.

Further, while the article is thought-provoking, one wonders if the BRICS would be willing to go along with any new currency plan proposed by Bernanke/the US. Somehow I just don't trust some self-selected group of elitists to devise something that will work to the benefit of We the People.



Thu, 05/16/2013 - 12:44 | 3569642 Herd Redirectio...
Herd Redirection Committee's picture

People have been saying for YEARS that Bernanke is trying to destroy the USD.  And you don't destroy something without having a replacement in mind.  I mean, that would be the WHOLE POINT.  But for the benefit of all mankind?

At that point you have to be accused of not paying attention.  Bernanke works for the banks.  The author of the article figured that out, but then still came to the conclusion that Bernanke is looking out for all of us?

Thu, 05/16/2013 - 12:49 | 3569664 A82EBA
A82EBA's picture

What I read is the author is trying to make sense of why they would keep flooding the banks with reserves, concluding that the Fed wanted the banks to have enough liquidity to withstand a run after the next crash which they see as inevitable. And after the world has been in recession for awhile they would offer a partially gold-backed currency to all nations including the BRICS who are hoarding dollars anyway.

Thu, 05/16/2013 - 10:53 | 3569037 Panafrican Funk...
Panafrican Funktron Robot's picture

Brings to mind this highly influential document:

Thu, 05/16/2013 - 11:46 | 3569343 GeezerGeek
GeezerGeek's picture

I'd never trust any plan that came out of Chicago. (I admit that I only read the title page.)

Thu, 05/16/2013 - 09:43 | 3568663 Kaiser Sousa
Kaiser Sousa's picture

of course the rabid demand for the physical coupled with the drainage of fraudulent ETF non existent Gold would explain why Gold is under $1400 and Silver is $22 and change...

yeah, now i get it.....


Thu, 05/16/2013 - 09:48 | 3568689 EscapeKey
EscapeKey's picture

I don't get it - why so angry? We all know where the game ends, and if you weren't planning on selling, what's the big fucking deal?

My gold and silver - um, I mean the g&s I USED to own, before the tragic boating accident - is, er, would have been locked up, and hopefully never used. Literally nothing but a worst-case-scenario hedge, which I hoped would never have had to be used.

Thu, 05/16/2013 - 10:09 | 3568813 Kaiser Sousa
Kaiser Sousa's picture

why so angry???

man, i've got mine as im 100% percent vested in both forms of real money since the beginning of this debt based paradigm collapse...

but think about the innocents who r being destroyed and led into serfdom simply because they never understood the grand game - having been misinformed and mislead since birth as to what money is and the true nature of this shithole they live in under the complete control of the money changers... 

you got a mom??? you got a brother??? you got friends and loved ones??? think how fucked they r or are gonna be as a result of the dollars destruction at the hands of the Fed and the bankers...


Thu, 05/16/2013 - 10:36 | 3568963 EscapeKey
EscapeKey's picture

I don't want anyone dead. I want them prosecuted to the fullest extent of the law.

And if the lawyers can't find anything that sticks, then we try the next set of lawyers. And why not allow these to go after the ill-gotten proceeds, potentially offering a percentage of the returns? That would attract exactly the kind of lawyer the City usually employs.

Oh and - fix - those - fucking - revolving - doors.

And transparency. Lots and lots of REDACTED.

Thu, 05/16/2013 - 10:58 | 3569069 Kaiser Sousa
Kaiser Sousa's picture

"I don't want anyone dead. I want them prosecuted to the fullest extent of the law..."

"“Let me issue and control a nation’s money and I care not who writes the laws.”

—Mayer Amschel Bauer Rothschild (1744-1812), founder of the private International Banking House of Rothschild.


yeah, keep hope alive and all that bullshit.....

Thu, 05/16/2013 - 12:57 | 3569706 Herd Redirectio...
Herd Redirection Committee's picture

Right when Mayer Amschel died, his family secured the Almaden silver/mercury mines in Spain... Mission accomplished.  Thats right, a banking family bought one of the biggest mines in the world, 200 years ago.  Hmm, its almost as if...  They viewed the precious metals themselves as money.

Thu, 05/16/2013 - 10:13 | 3568839 Ignorance is bliss
Ignorance is bliss's picture

I agree with your statement. "Why so angry..." Some Gold pundits state Gold should be repriced to between $5K to 10K dollars. I don't think I'd have a very big stack at those prices. I hope this manipulation continues well into the future. The longer the better, because afterwards I suspect things will be very different.

Thu, 05/16/2013 - 11:53 | 3569375 GeezerGeek
GeezerGeek's picture

I mostly concur, although I won't be adding to my stack any time soon. (I've given up boating, and the stack is under water - H2O variety, that is, not underwater in the other sense.)

And at my stage of life, I also hope the manipulation continues into the future (much as I'd like to see justice served), but my take is "the longer the better, because afterwards I suspect things willl be very difficult." 

Yes, different, but also difficult. 

Thu, 05/16/2013 - 09:43 | 3568668 scatterbrains
scatterbrains's picture

The world now understands the fiat game to be completely corrupted so now with the silent bank runs in Europe, tax havens about to be raided and sovereign powers in near panic to GTFO of paper and into real money, it's over.. and this is what stops BB and his merry gang of printer pussies right there. Real money is being drained from the system and best believe they will start hording what little metal they have left.

Thu, 05/16/2013 - 09:46 | 3568681 Hulk
Hulk's picture

Absolutely spot on...

Thu, 05/16/2013 - 10:13 | 3568828 mayhem_korner
mayhem_korner's picture



And all that printed money is simply sitting in the banks as 'reserves', which Ben and his cohort CB elites hopes will be sufficient to withstand the runs.  And until the pace of withdrawals gets to a boiling point, the TBTF banks simply inject liquidity into stawks, propping them up like the Tower of Babel.

Thu, 05/16/2013 - 09:44 | 3568670 Beatscape
Beatscape's picture

Fascinating. The creation of all the phantom paper gold (100:1 paper:physical) allows the banksters to manipulate the price of physical gold downwards while they stack more bars in their vaults.  The gold ETFs are the strings by which the banksters control the market. 

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