The Gold Rush Spreads From China And India To Saudi Arabia

Tyler Durden's picture

In the "west", the higher the price of gold rose, the more demand there seemingly was by momentum-chasing gamblers investors, if only for paper certificates claiming to represent gold, or GLD as the case may be. Conversely, once the momentum turned, the same investors couldn't be bothered with gld (sic) even at 30% lower. At the same time, in the "east" the higher the price of gold rose, the lower the demand was for physical, which for that extinct breed of deranged gambler known as "value investor" is a familiar concept."  And now that gold's price is not only back to early 2011 levels, but is essentially below production costs, demand out of China is off the charts. Demand in India - traditionally the greatest in the world - continues to also at unprecedented levels, although now that official purchases of gold are regulated and limited through capital controls, it is forcing the local population to smuggle in gold through the most innovative of schemes.

But while the west is the west, and the east is the east, and no amount of adaptive behavioral modifications can change that, much to central bankers' chagrin, what lies in-between? Courtesy of the Saudi Gazette we learn that the uber-rich middle eastern kingdom, which floats on a sea of oil has picked its side... and it has chosen to take advantage of the ongoing paper-driven price collapse and load up on as much gold as possible.

From the Saudi Gazette:

The gold shops in Jeddah are now flourishing as more customers are buying various gold types thanks to the international drop of gold prices.


Saleh who works in Al-Amari gold shop said that more people are now buying various gold jewelries and others are buying gold bullions to store their money after staying away from gold for quite sometime.


According to him various nationalities are approaching them including Saudis, Africans and Indians. The prices he said range from SR165 to SR140 per gram based on the item being sold. The price is set based on any additional work or jewelries being added. The country where the gold comes from also determent the price, “We have Italian Indian, Bahraini, Korean and local gold creations each with a distinct price,” said Saleh.


Speaking to the Saudi Gazette, Ali Batarfi,  deputy chief of gold in Jeddah, said that they anticipate that the gold prices will continue to drop towards this month to reach $1150 per once, however the prices are likely to increase during the first quarter of 2014.


Batarfi said “the gold market is now witnessing an increase in sales thinks to the drop in gold prices, however not only that but also the school break that will start very soon will also drag more consumers into the market who will buy gold for their special occasions especially weddings.”


The gold has marked a drop this year from $1,920 per once to $1,193.3, which crated a difference in the costumer attitude in buying and storing gold, said Batarfi and added, “we anticipate that more gold will be sold both with jewelries and pure bullions.”

Experts in the field believe that the international move towards investing in various sectors and the stabilization of these moves have decreased the investment in gold with China and India lessening their investment in gold. The demand on gold from central banks has also lessened. Consumer demand for gold jewelry worldwide grew by 20 percent for the year ending September 2013, reaching 3,757 tons and valued at $183.9 billion.


According to a report released lately by The World Gold Council’s Gold Demand Trends, regional consumer demand for gold jewelry has grown by 25 percent, reaching 225.8 tons and valued at $10.9 billion, with the UAE and Saudi Arabia featuring prominently.

So while the rest of the world celebrates the anti-Giffen good nature of gold, a function of sophisticated US investors for whom only momentum and 200 DMA lines matter, and is buying it up at an unprecedented pace, these same sophisticated investors in the US are dumping the certificates representing to be backed by the yellow metal in droves and are BTFATHing stock certificates exchangeable for a currency that is being diluted at a pace of $85 $75 billion per month, even as more and more gold miners are set to go out of business if the price of gold continues to drop below production cost.

We are confident that we know how this latest "conflict" between "east" and "west" will end...

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RockyRacoon's picture

Remarkable.  Imagine a product/asset/commodity with infinite marginal utility becoming less expensive, and desirable, being snapped up as described.  Now, what genius finds that unusual?

kliguy38's picture

relax rocky.....when this game is over, the paper price will be long gone and the only way you'll carry an ounce of gold on you is with your glock tucked in your pants and a cover long gun a couple hundred yards off............transactions will be vethy vethy dangerous.....muy peligro

malikai's picture

Wow that sounds like a fantastic future.

I'll try civilization instead. Thanks.

GetZeeGold's picture



Those guys are clearly idiots.


.....these are not the droids you're looking for.


Have you guys heard about Bitcoins?

Dark_Horse's picture

I like civilization(since I'm in the top dog civ currently) especially ones that are majorly funded by the rest of the world, but look at the track record of all cilvilizations in history.

Nero(Obamba) has rosened up the bow, and I'm putting some attention and some allocation to mitigate the turn.

My disaster holdings of PM's was put together long ago at $350 gold and $5handle silver, with some additional activities at short term manias, both up and down.

Now I just watch the flapping which has been exceedingly entertaining, and tailor my own course accordingly.



TheLoveArtist's picture

Biggest GOLD deposits in Europe, in Romania, maybe 100 billion or more at Rosia Montana, and the US govt just secured full military base privilages in the country.  Who says the powers that be are not smart.  The local population has stymied the richest man ie crook in Israel Beny Steinmetz from getting his hands on it with demonstrations.  The deal the govt made with Beny didn't even see them getting their twenty percent stake in the deal in gold but in dollars instead.  I tell you its easy to steal when the govt officials are corrupt as you know what.  Even the Africans manage to get maybe half out of the mining operations in their countries.

Agent700's picture

Yeah, how about some credible links to this story......?

Bangin7GramRocks's picture

Enough with the "cheaper than the cost of production" bullshit. Gold has only been over $1000 for a few years. How did all the miners survive the other 6,000 years of gold production history? I heard the same gay shit about oil. Oh no! Oil can't drop below $90 a barrel or Exxon will go bankrupt! I am a fan of gold and am buying, but to make such claims, you look exactly like a Bitcoin pumper.

Midas's picture

Well, I agree the phrase is over-done, but there is a kernal of truth.  I don't think you can talk about the cost of production without mentioning what amount.  Undoubtedly the first 10% of world production is much less than $1000.00.  At this year's prices and the demand we have had, it does seem like there is nothing left for the producers in aggregate.  Have you seen the gold companies share prices?  I don't know what the break even price is for today's demand, but we are probably close.  I don't think that means an imminent price increase however.  What I learned growing up on a farm is that producers will produce for free for quite some time.  The will do it until they go bankrupt.  

akak's picture

You obviously have no connections to the mining industry (which is no sin), but if you had you would know that mining-related costs have been rising over the past decade or two FAR faster than the officially promulgated CPI, and have easily doubled over the past decade alone.

DoChenRollingBearing's picture

Yes.  And "total costs" for mining gold is a complicated subject.  The best information that I trust, and in aggregate, points to a roughly $1200 / oz to produce gold.  The high cost mines are in trouble through time at these low levels.

If "paper price" keeps going down, less gold will hit the markets.  Same with increase of mining costs.

That can only be good for holders of physical gold, whether sooner or later.

Buy and hold on to your gold to the limit of your comfort and understanding of it.

Dugald's picture

And as I said here before......

Many mines are scraping the bottom of the barrel....its taking more muck to produce one ounce of gold.....

Steaming_Wookie_Doo's picture

I heard tell a story where the Saudis were encouraged by the Americans to buy gold back at $800 (around 1980 or so), 'cos those nosebleed highs just go on forever, you know. Then the Americans encouraged the Saudis to sell around $300, 'cos the stupid yellow metal was doing a dead cat bounce. Wonder how much that good advice cost them. Now it's cheap again (relatively) but I do have to wonder if some parties are getting set up for another price gouge one way or the other. I don't see the Saudis as particularly astute investors, rather they simply can hide their errors with that eternal gush of oil coming out of the ground.

sun tzu's picture

I guess you've never heard of inflation. How much were the miners paid 6,000 years ago? How much did mining tools cost 6,000 years ago?

SolidSnake961's picture

how has gold still not spiked on all this physical buying??

RockyRacoon's picture

I reckon that's because the "price" is not based upon regular supply/demand functionality.  When you have a huge paper market overhanging the physical market disparity in "value" results.

seek's picture

I'd throw in that it's entirely possible the large physical transactions may be occurring at prices that aren't being disclosed. Trades on the CME are one thing, but if you're trying to reacquire German gold that was illegally lent to bullion banks that sold it, you might not want that trade's volume or price information hitting the ticker.

DoChenRollingBearing's picture

FOFOA would agree with that kind of thinking re large volumes of gold behind closed doors going for much higher than the CME "paper gold" price.

FOFOA also says that the big price spike will come not so much from new Buyers as much as it will come when Sellers decline to sell.

Got strong hands?

Gordon Freeman's picture

Of course, there is absolutely no concrete evidence of that--just an anonymous blogger's statement. I guess that's good as gold...

Jam Akin's picture

In this case, take it to the bank... er Credit Union, Gordie.

sun tzu's picture

When all of the central banks of the world throw out their worthless gold bullion reserves, then I'll start believing idiots like you

RockyRacoon's picture

Amen to that.  So much for price discovery....

lewy14's picture

Germany's due only a few hundred tons.

Not that much in the scheme of things.

cynicalskeptic's picture

What ever happned to Libya's gold?  That was enough to take care of Germany.....

GetZeeGold's picture theory anyway.

Obese-Redneck's picture

Obonma took Libyas,  gold all 6 billion.  That would keep things rolling in the states for about 3 minutes, probably about half the fuel the fleet burnt to get there, but I look back and see the real problem...... then there were death panels, fisting kits, walking machine guns, birth certificates, fema camps, 800 billion , trillion rounds of ammo for the FBI, NSA, CIA,  etc etc ad nauseum,  lets keep our conspiracy theories clear, ok?

Attitude_Check's picture

And yet the Fed told Germany to wait 7 years to get thier gold back.

GetZeeGold's picture



Minimum......could be longer.

Downtoolong's picture

how has gold still not spiked on all this physical buying??

Because, when the paper tail is at least ten times the size of the physical dog, the tail wags the dog. 

Diablo's picture

>how has gold still not spiked on all this physical buying??

simple. because there is no physical buying...despite what ZH and all the other goldidiots might say. all these stories are made up bullshit.


doubt it? just check the mintages of this years' gold buffalos and eagles....they are the lowest or close to the lowest in history.  


Xibalba's picture

You are counting the one month reverse proof numbers as well, right.  Otherwise you might sound a bit like a tool. 

Diablo's picture

THe only tools are the ones still holding onto their doom and gloom fantasies about trading their little coins for a loaf of bread when the apocaplypse comes.  

gold is down 30% this year, stocks are up 30%....i'l let you geniuses figure out what your opportunity costs are for that.

if you cant see that the gold trade is over then you deserve all the pain thats coming for you.

gold bitchez.  LOL




Abitdodgie's picture

Diablo , is right , every time gold gets knocked down in price your physical gold price gets stolen , they dont have to break into your house and take the gold they just make it worthless on the exchanges.I bought a shit load back in 2011 and now its worth less than then great fucking investment , now if i had bought Bitcion back then I would never of had to work again, but no I got gold shiney shit coins that the wealth can be stolen on a daily bases.

Squid-puppets a-go-go's picture

lol you guys really need to try an awful lot harder if you're gonna troll on this site. first day on the cocksucking job?

malikai's picture

Troll or not, the facts speak for themselves.

And I love and hold gold, too.

JonNadler's picture

which "facts" speak for themselves?


the bolder the trolls get, the closer it usually gold is to a bottom. It has been a reliable indicator. Of course in this site trolls get so bloodied so fast that you have to give this guy credit just for trying

GetZeeGold's picture



They're just gold bullies Jon.....they like to bully people that actually own real gold.


Don't know why....there's not actually that many of us.

SoilMyselfRotten's picture

Agree Zee, also could be a little combination of gold envy with Monday morning quarterback syndrome. Pretty simple to repeat what went up or down and by how much and how smart you are for recognizing it. Let's see how much these momos chirp in 2014.

malikai's picture

Fact: $1700 in gold bought in August 2011 will equal about $1180 today.

Fact: $1700 in BTC bought in August 2011 will equal about $98700 today.

Sorry you can't do the math yourself.


Fact: If you are looking to book fast profits flipping Gold and Silver short term in a manipulated market then you are a cocksucking moron.

akak's picture

Also fact: infallible crystal balls and the ability to hear the bell that God rings at market tops only ever seem to belong to cocksucking morons such as the trolls above.

FreeNewEnergy's picture

Hey, guys, let's not conflate issues here, as you're on the brink of giving cocksucking a bad name. Some, sorry, ALL of my favorite girlfriends were great cocksuckers.

Zero Point's picture

Doesn't take a genius to see that buying actual physical gold is a terrible investment for a speculator.

With premiums, and delivery costs.

Some here seem to miss the point that physical gold owners are short civilization.

I mean, you can bet on the eternal continuation of the perpetual growth model if you wish, but it would seem a terrible consequence to be wrong.


Debugas's picture

that is why one needs to always diversify his/her portfolio

just have enough gold to feel comfortable with it (not getting scared to sell it when the price falls)

sun tzu's picture

Fact: tulip bulbs once brought great riches to people until it became absolutely worthless in a matter of years

bitcoins are nothing but a stock-like scam, not a store of wealth