"The Chinese Don't Want Dollars Anymore, They Want Gold" - London's Gold Vaults Are Empty: This Is Why

Tyler Durden's picture

Today gold slid under $1200 per ounce, dropping to a level not seen in three years. Judging by the price action one would think that gold is not only overflowing from precious metal vaults everywhere, but can be found thrown away on the street, where nobody even bothers to pick it up. One would be wrong. In fact, as Bloomberg's Ken Goldman reports, "you could walk into a vault in London and they were packed to the rafter with gold, and the gold would trade from me to you to somebody else. You could walk into these vaults today and they are virtually empty. All that gold has been transferred out of London, 26 million ounces...." To find out where it has gone and why it is never coming back, watch the clip below (spoiler alert: listen for the line: "the Chinese don't want US dollars anymore, they want gold").

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thestarl's picture

They seem to be on a property buying orgy at the moment DoChenRB very very active down here in Oz and right across the board 

IridiumRebel's picture

Right cuz it's the metals that are the problem and not the slave driving owners of the mines. Oh if we all could have intangible digitry, a sheep marketplace if you will....problem solved. Keystroke Karma will become you.

Bay of Pigs's picture

Let's recap, record demand from China (imports), record exports from the USA, refiners going berserk in Switerland and now this.....near empty vaults in London.

You got to be fucking kidding me that the price of gold "should be" lower in light of these facts. It's like the Twilight Zone these days...

James_Cole's picture

It's like the Twilight Zone these days...

Because you don't understand it = twilight zone. How much has gold demand fallen in India again? Globally?

CosmicDebris's picture

"Suck a bag of dicks James."

That's the funniest fuckin thing I've heard all day.

Thanks. I needed that.

fooshorter's picture

"That sucks a fat bag of dicks"

 

 

I wanted to class up the place.

GetZeeGold's picture

 

 

Pull the ejection handle James.....get the hell out of there man!

Crash N. Burn's picture

"How much has gold demand fallen in India again?"

Amazing how much it fell after importing gold was banned.

"Informed precious metals investors are well aware of the tremendous “squeeze” placed upon gold demand in India, via the draconian suppression of imports. Regular readers of my work understand that this gold-squeeze was, in fact, instigated by the One Bank – through placing enormous pressure on India’s government.

This economic blackmail took the form of attacking India’s currency, the rupee, in global currency markets, and driving its value to record-lows, until the government of India capitulated. With the global rigging of currency markets (by these same Banksters) now being fully-exposed; this is nothing more than “business as usual” for the One Bank.

But as readers are frequently reminded, actions have consequences. When the supply of gold to the world’s largest precious metals market (and most-astute precious metals investors) was severely restricted; Indians switched to silver – and in a big way.

Even by June of this year, the Indian stampede into silver was already apparent. As noted in a previous commentary; it was at that time that the One Bank was maximizing its efforts at Indian gold-suppression (resulting in a total ban on imports) because monthly Indian gold imports had exploded to an annualized rate of around 2,000 tonnes/year.

In the silver market meanwhile, by the end of May; India had already imported over 2,400 tonnes of silver to meet surging demand, versus 1,900 tonnes in all of 2012. By the end of October, India’s total silver imports amounted to over 4,600 tonnes. Barring a complete collapse; 2013 silver imports in India will hit an all-time high – eclipsing the previous high-water mark of 5,048 tonnes, set back in 2008."

Gold-Starved Indians Still Soaking-Up Silver

 

 Maybe not so amazing.

giggler321's picture

Ofcourse in your argument you never presented a reason why the Indian government might want to limit imports?  Truth hurts...

 

http://www.youtube.com/watch?feature=player_detailpage&v=Ce0fR2NH53w#t=364

 

Crash N. Burn's picture

Ah the old "current account deficit" bullshit, lmfao:

"What is phony here is the lie behind the mythical “current account deficit” of India. As the world’s largest importer of gold bullion, each year India has a large out-flow of the bankers’ bogus paper currencies and a large in-flow of real money: gold. Obviously you cannot have a “current account deficit” (or surplus) in exchanging one form of money for another."

Gold-Confiscation Coming To India?

 

Truth is the Indian government (like other governments) is betraying  the people in favour of you know who!
GetZeeGold's picture

 

 

Gold-Confiscation Coming To India?

 

Yeah that's gonna happen.....those guys have been operating the world's most efficient black market for thousands of years now.

They have it down to a freakin art.

Crash N. Burn's picture

 Unintended consequences incomming? *disclaimer - wall of text

"As is typical of human behavior in any sphere, when demand (i.e. desire) in one form is restricted or prohibited, it morphs into a new form. In the case of Indian demand for bullion, as has been well-documented, some of that demand has moved into the exploding Indian blackmarket for gold. Gold-smuggling into India has now regressed to the same levels which existed before India “liberalized” its market – precisely to eliminate the scourge of gold-smuggling.

But much of this demand also simply morphs into “frustrated demand”, pent-up demand; the economic equivalent of a spring being even more-tightly coiled. The desire for the good (in this case gold) remains, and (as with any un-met desire) if anything it increases with the passage of time.

The obvious example here is China. Until the middle of last decade; purchasing gold in any form other than jewelry was tightly-restricted (and nearly prohibited) in China. What happened when China liberalized its domestic gold market?

Despite being the world’s largest producer of gold; gold imports into China have steadily risen, and now will easily exceed 1,000 tons this year. That is double the amount of gold which the central banks used to dump onto the market each year, which by itself was enough to permanently stifle the global gold market. Clearly after being deprived of gold bullion products for many years, the Chinese people are now buying with both hands.

Meanwhile, with central banks themselves now buying (on a net basis) more than 500 tons per year; this alone amounts to nearly a 2,500 ton/year swing in the supply/demand equation – in a world which mines less than 3,000 tons per year (in total), and that number is now in decline.

Now we have pent-up demand being built-up in other traditional gold markets in Asia. Sooner or later the internal problems caused by the brute-force suppression of gold demand will be worse than the threats/coercion of the One Bank, and these gold markets will be liberalized – as is now taking place in Sri Lanka. Then, like the explosion of gold-demand in China, we will see similar (proportional) tidal waves of demand hit the market when these temporarily suppressed markets are liberalized.

But I’ve left the most-important consequence of this demand-suppression for last: the decoupling of prices in these markets. What was previously described as simply higher and higher “premiums” for the purchase of real bullion (but with one price) is now being simply described as two prices for gold.

This is far more significant than mere semantics, and there could be no better illustration of this important concept than a recent headline:

Smuggled gold has its own price in India"

Gold Market Secretly Decoupling

 

Banksters have created two gold prices in India and the only way to restore it is to liberalize it (as was done in China). Hold a ball underwater - what happens when you let go?

James_Cole's picture

 

The reason the demand is down is completely fucking irrelevant to the point - demand is down, gold price is down - makes a lot of sense when you look at it. No big gawddamn mystery there.

Demand may be up in china, but 28% down in India (alone). It ain't the fucking twilight zone, ok? 

 

G.O.O.D's picture

I have figured it out lille piggy.. If China has all the gold, there wont be any for sale, so the  price will drop to 0 b/c there is no market any longer.

 

 

i am a genius

 

<<pats himself on back...

 

Ye all blow the trumpets as GOOD is a fvking number one certified genius!

new game's picture

to a certain degree you are correct.  phyzz at honker hongy exchange will exchange phyzz at phys clearting price whilst over in fiat phoney merical they will be trading paper gold for who the fuck cares price, because the phyzz will be all gone..the markets will be replaced on e-bay, kitco ect. that exchange of phys will set price.

Dugald's picture

Many mines are scraping the bottom of the barrel, take more muck to yeild an ounce of gold....

Dugald's picture

Many mines are scraping the bottom of the barrel, takes more muck to yield an ounce of gold....

Cacete de Ouro's picture

So, this Bloomberg guy Ken Goldman talk about walking into a London vault a few years ago and walking into a London vault today. Hold on...! Nobody just walks into any London vaults. This guy is either just lying or else is on hallucinogens. And the interviewer didn't take him up on this....

Maybe the vaults have low inventory levels but this guy did not provide any proof. Export data and ETF data is not proof.

 

 

eclectic syncretist's picture

And as of last night the total COMEX registered gold dropped by a quite substantial 20% to less than 500,000 ounces.  The bitch is about to break.  JPM has already stopped more than 500,000 ounces this month alone, and they won't be getting it in physical gold.

jballz's picture

 

desperate much?

Nobody gives a shit. You know what China will do? Lease it all back to th bankers, You know what you and all your goldbug bottomfeeder stash amounts to? Not enough to move the market a nickel, and you all lose,

Gold will be back to 300 in a couple years. Worst invetment ever. 

caShOnlY's picture

Nobody gives a shit. You know what China will do? Lease it all back to th bankers

China did that back in the 1990's with W.st. and lost it.  Unlike most americans Chinese learn lesson one time.  Now run along and buy some STAWKS for your 401(k) because the bull run in stawks is different this time. 

GetZeeGold's picture

 

 

Gold will be back to 300 in a couple years. Worst invetment ever.

 

Priced in what?

 

Are you skipping class again?

jballz's picture

 

must hurt watching us stock bulls profit huge while your shiney metal drops like a ,,,, rock.

lol.

thanks for the investment wisdom see you at gc700 and sp3000

Harlequin001's picture

Yeah, makes me cringe every time I look at the screen.

Do us a favour will you, come back and let us all know how you get on when interest rates pop, which they seem to be in the process of doing now.

Then we can discuss how much my sides hurt trying to find dumb fucks like you who are too stupid to know what they're doing.

Where've you stock bulls been for the last ten years? Let me guess, trying to ectricate your head from your arse so you could see the screen? That must have really hurt...

We've been making money dude, still up 400% last count...

donsluck's picture

Hmm, you actually make a good argument against gold.

Billy Sol Estes's picture

Right, because we're all furiously hitting the sell button whenever it rises $20.

At the end of the day, you'll only have a certificate of participation...

Deathrips's picture

Yes my good man...see i have a bet on gold, id like to turn into gold?

 

Cue retarded look.

 

See how that works.

 

Stack it.

 

RIPS

Keyser's picture

Hmm, someone doesn't have a clue about investment strategies. 

Agstacker's picture

Shoot, why stop and S & P 3000?  I say S & P 1,000,000!  Stawks to the moon!

XenoFrog's picture

Lots of time has to be spend writing articles pumping bitcoin.

zaphod's picture

People are spending lots of time trying to educate people and open their eyes to new possiblities. The vast majority of bitcoin supports are long-term believers, that is different from a short term pump.

CognacAndMencken's picture

I'm not sure where the makers of this video are getting their data, but it's absolutely wrong. Please consider the following information when making your opinion:

The most recent data on foreign Treasury holdings shows that China is actually *increasing* their holdings of US debt. In October 2013, China held $1.3045T in US debt, a $10.7B increase from September and the second highest month ever. The highest ever was July 2011 when China held $1.3149T. For the entire year, China's holdings have *increased* by over $84B.

http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/...

Just FYI....

TruthInSunshine's picture

The different Tylers have been all over the map regarding China, from gold, to the strength/weakness of their economy & banking system, to their strength in terms of economic & military power on a relative global scale.

It's my belief, and this is not a morally or emotionally driven statement, but one based on the best objective evidence available and in consideration of current events, that China & Japan are both extraordinarily susceptible to full blown economic crises at this point and into the foreseeable future, but for very different reasons (Brazil, INDIA - I am tempted to put India into the "as bad as" basket with China but they're on the road to massive debasement of their currency as an attempted cure-all" - & Russia have massive problems, too, so the entire BRIC wall is weakening).

I'm speaking of the types and depths of crises that could manifest themselves as full blown economic depressions.

For all the talk of the weak growth in the U.S. and the sickness in the EU, Japan & China are the nations to watch in terms of spotting systemic risks to the global economy for at least the next several years, as they both are dealing with major demographic headwinds & mountains of public and private debt (whether officially recognized or not, and whether in the form of recognized or unrecognized losses on spoiled loans) that make western levels of public/private debt look positively mild by comparison.

James_Cole's picture

China & Japan are both extraordinarily susceptible to full blown economic crises at this point and into the foreseeable future

You saying Chinese ripping every last dollar that isn't nailed down out of the country as fast possible isn't bullish?

TruthInSunshine's picture

China, of the emerging market economies, probably has bigger economic and financial problems than just about any country aside from India, and that's a toss-up.

in fact, aside from the PIIGS, which are alleged "developed" economies and fully integrated with their EU brethren, China's probably facing some of the biggest issues of any major economy in the world, and its provincial banks are in deep shit (the extent to which they are has been MASSIVELY understated).

The whole, repeated ad nauseam meme about China dumping the USD and being on the cusp of "winning" the global game of economic & financial chess is 100% unmitigated horseshit of the highest grade.

dark pools of soros's picture

what the hell is an economic problem these days??  It seems if you are a country with no economic problems you get your ass blown up

 

 

Tapeworm's picture

The US demographic headwinds are bad too. The population is expanding with the least economically valuable people.-Non white trash crackers not so much.

Urban Redneck's picture

I can't see web video on this computer, but the size of the pie and the relative (fractional) size of the slice are different issues... Between July 2011 and June 2013 SAFE's f/x reserves have increased by $250 billion from 3.25T to 3.50T.

If China was not diversifying away from UST (and the only sizable sovereign non-USD alternatives are the Brussels Clusterfuck or the radioactive Yen, since Ben has long since bought all their worthless US Agency paper at mark-to-myth valuations and that game is now off the table) then China would now own $1.4T in Treasury securities not $1.3T (so 100B up is actually 100B less than would be required for constant weighting).

http://www.safe.gov.cn/

(and that's just the official f/x reserve growth and doesn't take into account the financial system spending spree fueled by the PBOC printing press)

James_Cole's picture

then China would now own $1.4T in Treasury securities not $1.3T (so 100B up is actually 100B less than would be required for constant weighting).

Yeah but seems that could be explained by a number of things, esp. considering the Chinese economy has been sliding and China being super exposed to credit tightening. 

http://qzprod.files.wordpress.com/2013/07/china-s-forex-reserves-china-s...

TruthInSunshine's picture

No one knows what China's actual financial situation is (or how bad it is, to be more precise & accurate), because the PBoC and various Chinese bureaucracies that are charged with compiling & reporting official economic & financial data make the their counterparts in the west look great & totally transparent by comparison.

China is intensely export dependent, whether they wish this to be the case or not, and they will be for a long time.

If the world thinks they saw global consumer deleveraging of the discretionary kind as China's exports were shunned in the wake of the 2008 meltdown, they really should prepare themselves for the real deal that still lay ahead.

The already busted Chinese banks and up-to-their-eyeballs-in-debt Chinese speculators that we somehow rarely read about in the west are not going to solve the sliding Chinese export problem through domestic consumption, and the Chinese Government is cutting subsidization of consumption as I type this, and not growing it (just look at repo trends as but one example).

FredFlintstone's picture

He who run in front of car get tired. He who run behind car get exhausted.

 

He who go through turnstile sideway going to bangcock.

drdolittle's picture

Had to read it twice, the only one I got on the first read was bangcock. Thanks.

Rafferty's picture

Or else the wide guys know what's really going on and are yet again gaming the market?

Thomas's picture

I cannot "follow their twisted logic" at all. The guy describes huge demand and then declares the market dead. Unless he is simply confused by the track of the conversation, this guy needs a CAT scan.

GetZeeGold's picture

 

 

He either works for the government.......or CNBC.

InspectorBird's picture

@Thomas and @layman_please

You misunderstood him... he is saying that unless gold jumps to 1700 dollars before year ends then this will be first year of this bull run when gold finishes a year lower, thats what he means, not that gold will go to 700.