How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring

A little over a month ago, we reported that following a year of record-shattering imports, China finally surpassed India as the world's largest importer of physical gold. This was hardly a surprise to anyone who has been following our coverage of the ravenous demand for gold out of China, starting in September 2011, and tracing it all the way to the present.

China's apetite for physical gold, which is further shown below focusing just on 2012 and 2013, has been estimated by Goldman to amount to over $70 billion in bilateral trade between just Hong Kong and China alone.

Yet while China's gold demand is acutely familiar one question that few have answered is just what is China doing with all this physical gold, aside from filling massive brand new gold vaults of course. And a far more important question: how does China's relentless buying of physical not send the price of gold into the stratosphere.

We will explain why below.

First, let's answer the question what purpose does gold serve in China's credit bubble "Minsky Moment" economy, where as we showed previously, in just the fourth quarter, some $1 trillion in bank assets (mostly NPLs and shadow loans) were created  out of thin air.

For the answer, we have to go back to our post from May of 2013 "The Bronze Swan Arrives: Is The End Of Copper Financing China's "Lehman Event"?", in which we explained how China uses commodity financing deals to mask the flow of "hot money", or the one force that has been pushing the Chinese Yuan ever higher, forcing the PBOC to not only expand the USDCNY trading band to 2% recently, but to send the currency tumbling in an attempt to reverse said hot money flows.

One thing deserves special notice: in 2013 the market focus fell almost exclusively on copper's role as a core intermediary in China Funding Deals, which subsequently was "diluted" into various other commodities after China's SAFE attempted a crack down on copper funding, which only released other commodities out of the Funding Deal woodwork. We discussed precisely this last week in "What Is The Common Theme: Iron Ore, Soybeans, Palm Oil, Rubber, Zinc, Aluminum, Gold, Copper, And Nickel?"

We emphasize the word "gold" in the previous sentence because it is what the rest of this article is about.

Let's step back for a minute for the benefit of those 99.9% of financial pundits not intimate with the highly complex concept of China Commodity Funding Deals (CCFDs), and start with a simple enough question, (and answer.)  

Just what are CCFDs?

The simple answer: a highly elaborate, if necessarily so, way to bypass official channels (i.e., all those items which comprise China's current account calculation), and using "shadow" pathways, to arbitrage the rate differential between China and the US.

As Goldman explains, there are many ways to bring hot money into China. Commodity financing deals, overinvoicing exports, and the black market are the three main channels. While it is extremely hard to estimate the relative share of each channel in facilitating the hot money inflows, one can attempt to "ballpark" the total notional amount of low cost foreign capital that has been brought into China via commodity financing deals.

While commodity financing deals are very complicated, the general idea is that arbitrageurs borrow short-term FX loans from onshore banks in the form of LC (letter of credit) to import commodities and then re-export the warrants (a document issued by logistic companies which represent the ownership of the underlying asset) to bring in the low cost foreign capital (hot money) and then circulate the whole process several times per year. As a result, the total outstanding FX loans associated with these commodity financing deals is determined by:

the volume of physical inventories that is involved

commodity prices

the number of circulations

A "simple" schematic involving a copper CCFDs saw shown here nearly a year ago, and was summarized as follows.

As we reported previously citing Goldman data, the commodities that are involved in the financing deals include copper, iron ore, and to a lesser extent, nickel, zinc, aluminum, soybean, palm oil, rubber and, of course, gold. Below are the desired features of the underlying commodity:

• China is heavily reliant on the seaborne market for the commodity
• the commodity has relatively high value-to-density ratio so that the storage fee and transportation cost are relatively low
• the commodity has a long shelf life, so that the underlying value of the commodity will not depreciate significantly during the financing deal period
• the commodity has a very liquid paper market (future/forward/swap) in order to enable effective commodity price risk hedging.

Here we finally come to the topic of gold because gold is an obvious candidate for commodity financing deals, given it has a high value-to-density ratio, a well-developed paper market and very long "shelf life." Curiously iron ore is not as suitable, based on most of these metrics, and yet according to recent press reports seeking to justify the record inventories of iron ore at Chinese ports, it is precisely CCFDs that have sent physical demand for iron through the proverbial (warehouse) roof.

Gold, on the other hand, is far less discussed in the mainstream press in the context of CCFDs and yet it is precisely its role in facilitating hot money flows, perhaps far more so than copper and even iron ore combined, that is so critical for China, and explains the record amount of physical gold imports by China in the past three years.

Chinese gold financing deals are processed in a different way compared with copper financing deals, though both are aimed at facilitating low cost foreign capital inflow to China. Specifically, gold financing deals involve the physical import of gold and export of gold semi-fabricated products to bring the FX into China; as a result, China’s trade data does reflect, at least partially, the scale of China gold financing deals. In contrast, Chinese copper financing deals do not need to physically move the physical copper in and out of China as explained last year so it is not shown in trade data published by China customs.

In detail, Chinese gold financing deals includes four steps:

1. onshore gold manufacturers pay LCs to offshore7 subsidiaries and import gold from bonded warehouses or Hong Kong to mainland China – inflating import numbers
2. offshore subsidiaries borrow USD from offshore banks via collaterizing LCs they received
3. onshore manufacturers get paid by USD from offshore subsidiaries and export the gold semi-fabricated products to bonded warehouses – inflating export numbers
4. repeat step 1-3

This is shown in the chart below:

As shown above, gold financing deals should theoretically inflate China’s import and export numbers by roughly the same size. For imports, they inflate China’s total physical gold imports, but inflate exports that are mainly related to gold products, such as gold foils, plates and jewelry. Sure enough, the value of China’s imports of gold from Hong Kong has risen more than 10 fold since 2009 to roughly US$70bn by the end of 2013 while exports of gold and other products have increased by roughly the same amount (shown below). This is in line with the implication of the flow chart on Chinese gold financing deals: the deals inflate both imports and exports by roughly equal size.

Given this, that the rapid growth of the market size of gold trading between China and Hong Kong created from 2009 (less than US$5bn) to 2013 (roughly US$70bn) is most likely driven by gold financing deals.

However, a larger question remains unknown, namely that as Goldman observes, "we don’t know how many tons of physical gold are used in the deals since we don’t know the number of circulations, though we believe it is much higher than that for copper financing deals."

Recall the flowchart for copper funding deals:

1. Step 1) offshore trader A sells warrant of bonded copper (copper in China’s bonded warehouse that is exempted from VAT payment before customs declaration) or inbound copper (i.e. copper on ship in transit to bonded) to onshore party B at price X (i.e. B imports copper from A), and A is paid USD LC, issued by onshore bank D. The LC issuance is a key step that SAFE’s new policies target.
2. Step 2) onshore entity B sells and re-exports the copper by sending the warrant documentation (not the physical copper which stays in bonded warehouse ‘offshore’) to the offshore subsidiary C (N.B. B owns C), and C pays B USD or CNH cash (CNH = offshore CNY). Using the cash from C, B gets bank D to convert the USD or CNH into onshore CNY, and trader B can then use CNY as it sees fit.
3. Step 3) Offshore subsidiary C sells the warrant back to A (again, no move in physical copper which stays in bonded warehouse ‘offshore’), and A pays C USD or CNH cash with a price of X minus $10-20/t, i.e. a discount to the price sold by A to B in Step 1.
4. Step 4) Repeat Step 1-Step 3 as many times as possible, during the period of LC (usually 6 months, with range of 3-12 months). This could be 10-30 times over the course of the 6 month LC, with the limitation being the amount of time it takes to clear the paperwork. In this way, the total notional LCs issued over a particular tonne of bonded or inbound copper over the course of a year would be 10-30 times the value of the physical copper involved, depending on the LC duration.

In other words, the only limit on the amount of leverage, aka rehypothecation of copper, was limited only by letter of credit logistics (i.e. corrupt bank back office administrator efficiency), as there was absolutely no regulatory oversight and limitation on how many times the underlying commodity can be recirculated in a CCFD.... And gold is orders of magnitude higher!

Despite the uncertainty surrounding the actual leverage and recirculation of the physical, Goldman has made the following estimation:

We estimate, albeit roughly, that there are c.US$81-160 bn worth of outstanding FX loans associated with commodity financing deals – with the share of each commodity shown in Exhibit 23. To put it into context, the commodity-related outstanding FX borrowings are roughly 31% of China’s short-term FX loans (duration less than 1 year) .

Putting the estimated role of gold in China's primary hot money influx pathway, at $60 billion notional, it is nearly three time greater than the well-known Copper Funding Deals, and higher than all other commodity funding deals combined!

Under what conditions would Chinese commodity financing deals take place. Goldman lists these as follows:

• the China and ex-China interest rate differential (the primary source of revenue),
• CNY future curve (CNY appreciation is a revenue, should the currency exposure be not hedged),
• the cost of commodity storage (a cost),
• the commodity market spread (the spread is the difference between the futures
• China’s capital controls remain in place (otherwise CCFD would not be necessary).

All of these components are exogenous to the commodity market, except one – the commodity market spread. This reveals an important point that financing deals are, in general, NOT independent of commodity market fundamentals. If the commodity market moves into deficit, or if the financing demand for the commodity is greater than its finite supply of above ground inventory, the commodity market spread adjusts to disincentivize financing deals by making them unprofitable (thus making the physical inventory available to the market).

Via ‘financing deals’, the positive interest rate differential between China and ex-China turns commodities such as copper from negative carry assets (holding copper incurs storage cost and financing cost) to positive carry assets (interest rate differential revenue > storage cost and financing cost). This change in the net cost of carry affects the spreads, placing upward pressure on the physical price, and downward pressure on the futures price, all else equal, making physical-future price differentials higher than they otherwise would be.

* * *

That bolded, underlined sentence is a direct segue into the second part of this article, namely how is it possible that China imports a mindblowing 1400 tons of physical, amounting to roughly $70 billion in notional, demand which under normal conditions would send the equilibrium price soaring, and yet the price not only does not go up, but in fact drops.

The answer is simple: the gold paper market.

And here is, in Goldman's own words, is an explanation of the missing link between the physical and paper markets. To be sure, this linkage has been proposed and speculated repeatedly by most, especially those who have been stunned by the seemingly relentless demand for physical without accompanying surge in prices, speculating that someone is aggressively selling into the paper futures markets to offset demand for physical.

Now we know for a fact. To wit from Goldman:

From a commodity market perspective, financing deals create excess physical demand and tighten the physical markets, using part of the profits from the CNY/USD interest rate differential to pay to hold the physical commodity. While commodity financing deals are usually neutral in terms of their commodity position owing to an offsetting commodity futures hedge, the impact of the purchasing of the physical commodity on the physical market is likely to be larger than the impact of the selling of the commodity futures on the futures market. This reflects the fact that physical inventory is much smaller than the open interest in the futures market. As well as placing upward pressure on the physical price, Chinese commodity financing deals ‘tighten’ the spread between the physical commodity price and the futures price .

Goldman concludes that "an unwind of Chinese commodity financing deals would likely result in an increase in availability of physical inventory (physical selling), and an increase in futures buying (buying back the hedge) – thereby resulting in a lower physical price than futures price, as well as resulting in a lower overall price curve (or full carry)." In other words, it would send the price of the underlying commodity lower.

We agree that this may indeed be the case for "simple" commodities like copper and iron ore, however when it comes to gold, we disagree, for the simple reason that it was in 2013, the year when Chinese physical buying hit an all time record, be it for CCFD purposes as suggested here, or otherwise, the price of gold tumbled by some 30%! In other words, it is beyond a doubt that the year in which gold-backed funding deals rose to an all time high, gold tumbled. To be sure this was not due to the surge in demand for Chinese (and global) physical. If anything, it was due to the "hedged" gold selling by China in the "paper", futures market.

And here we see precisely the power of the paper market, where it is not only China which was selling specifically to keep the price of the physical gold it was buying with reckless abandon flat or declining, but also central and commercial bank manipulation, which from a "conspiracy theory" is now an admitted fact by the highest echelons of the statist regime. and not to mention market regulators themselves.

Which answers question two: we now know that of all speculated entities who may have been selling paper gold (since one can and does create naked short positions out of thin air), it was likely none other than China which was most responsible for the tumble in price in gold in 2013 - a year in which it, and its billionaire citizens, also bought a record amount of physical gold (much of its for personal use of course - just check out those overflowing private gold vaults in Shanghai.

* * *

This brings us to the speculative conclusion of this article: when we previously contemplated what the end of funding deals (which the PBOC and the China Politburo seems rather set on) may mean for the price of other commodities, we agreed with Goldman that it would be certainly negative. And yet in the case of gold, it just may be that even if China were to dump its physical to some willing 3rd party buyer, its inevitable cover of futures "hedges", i.e. buying gold in the paper market, may not only offset the physical selling, but send the price of gold back to levels seen at the end of 2012 when gold CCFDs really took off in earnest.

In other words, from a purely mechanistical standpoint, the unwind of China's shadow banking system, while negative for all non-precious metals-based commodities, may be just the gift that all those patient gold (and silver) investors have been waiting for.  This of course, excludes the impact of what the bursting of the Chinese credit bubble would do to faith in the globalized, debt-driven status quo. Add that into the picture, and into the future demand for gold, and suddenly things get really exciting.

Comments

[The wheels on t...]

China now is diversifying a little and buying up mining shares and mining companies to complement the physical gold they have. There is an overall long term strategy for gold and its global importance.

Step away from China and witness Russia's continued increase in gold buying, also witness India's record buying of Silver during 2013, watch for a reversal of the current indian regulations that will ease the restrictions of gold imports / exports.

Looking at the bigger picture, going long on precious metals has more upside than it does downside, even if it gets hammered in the short term.

The BRICS nations are definelty the ones to watch for the short and medium future, these are very interesting times!

[SubjectivObject]

Yeah, in all the digital ink spilled thus far, why does Goldman figure large in knowing what is going on but no mention of any role by JPM?  Noting that JPM is reputed to have switched massive short to massive [cornering?] long poesition as the paper trended down and through the bottom.  Riding coattials or aiding and abbetting?

In any case, it appears yet another example of how the US govt and financial cabal colludes to sell out the fundamental interests of the Country.

[Atomizer]

NSA hacks Chinese Servers | NSA gets defunded.

drudge.. http://www.nytimes.com/2014/03/23/world/asia/nsa-breached-chinese-servers-seen-as-spy-peril.html?hp&_r=0

[zionhead]

Where in the fuck does this article talk about the NSA being defunded.

Lastly, the question is "Is Huawei a MIL outfit", forever since MAO all technlogy came out of MIL in CHINA,

The PLA is self-funded they never take money from citizens, they have their own tech companys that make a profit and fund the MIL on their own nickel, unlike the western model, where polticians give the MIL money ( well in theory, now free FIAT feeds the MIL in the USA ).

*

This article is bullshit, ... it just bashes china for doing what all governments do, but most telling is that the NSA is turning their finding over to USA corporations and stealing chinese secrets.

[ Passing secrets to tribal companys ZIO fascist companys like facebook and google to make them richer, and zio-brats richer. ]

[Atomizer]

It doesn't, call it a inside joke.

Where in the fuck does this article talk about the NSA being defunded.

[walküre]

NSA is funded by tax payers. This is a case where an American tax payer should support NSA activities. That is why we created NSA. To spy on foreign entities, not our own people!

The Chinese are masters at reverse engineering and have stolen decades worth of European and North American R&D. To the extent where German high profile companies are no longer filing patents. The Chinese don't give a fuck about patents. They steal what they can. Always have done that. Better not to file anything and develop technology and hardware so well and secure that it cannot be easily disassembled.

Question is, who leaked that NSA has been looking into Chinese military technology? At a time when US and Russia relations soured and China makes statement of support for Russia? Did the Russians leak it?

[zionhead]

That's funnier than shit.

The Chinese built the railroad in the west.

The Chinese have built the software in the west ( microsoft, oracle, google ) since the 1980's with H1B visas,

Apple quit even fucking around and just moved operations to china to get real employees.

WHITE FOLK can fucking engineer shit.

[walküre]

You're out of your depth here.

[css1971]

didnt the us government define hacking as an act of war?

[Atomizer]

In tears laughing,, off to bed

[russwinter]

The GS part of the story is a false narrative. GS claims Chinese gold exports offset their imports. There is no way that is correct except perhaps as false or doctored transactions and invoices involving trinkets with a little gold plating.  

Essentially the way I see it is that gold ends being the only real monetary collateral worth having when this credit bubble unwinds. The paper side of this scheme is closed out or even defaulted on. Secondly as the PBoC is forced to print money and devalue the Yuan, a scramble for unfettered gold will further accelerate.

[zionhead]

GS is fascist corporation in search of a customer.

Yep false narrative from GS to create the illusion theyr'e still relevant in the NWO.

They're NOT.

Just replace every nuance of GS with Tyler or ZH and the article will make more sense.

GS is fascist corporation in search of a customer.

[Peter Pan]

Brilliant article but I still believe these bastards have more up their sleeve to keep their gold manipulation scheme going.

[GFORCE]

Has it dawned on you yet that the FED is selling all your gold to China in a Gordon Brown moment??

[GFORCE]

As for the Gold manipulation... grow up. If there was enough demand in the public for gold, no ponzi bank could keep the price down.

[Peter Pan]

The general public can't afford its mortgages and its bills let alone buy gold. In Europe and elsewhere the public handed its gold over to the pawn shops over the last 5 years as evidenced by the proliferation of such shops.

Rest assured there is demand out there for gold and with each price drop the general buyers freeze light deer in headlights while the hunter does his job.

[walküre]

General public doesn't matter, never mattered much. Trillion Dollar Hedgies, private banks and CBs are the only players big enough to make a dent.

General public however will never know until it is too late. Only chance us peons have is to steadily accumulate and pass forward with proper education into coming generations. You could call that the dawn of a new tribe. TIFWIW

[holgerdanske]

They can, as long as there is physical gold they can put their hands on, and they do.

That is why the turning point comes when the physical vanishes and people no longer have a choice, but to accept cash settlement.

Don't forget that the central banks have had acces to other peoples gold, many times over.

But I sincerely believe that physical will run out, and then things will change drastically.

[overmedicatedun...]

a question, I have seen "buy your gold" businesses closing down, in my town, I asked one owner to sell to me, He said, " I bought at much higher prices, I can't sell." he is now BK. the fact is he could not take a loss on the gold he borrowed against, and with the recent price drop he is now BK...who gets his gold? so I ask:
have the gold buyers businesses of which there were many adds on TV and in print, (now I see none of these adds), only coin seller adds)) go BK? and who got their gold? did all the gold held by those in America who did sell to them over the last few years take all the non investment gold out of our population?

Is the impact of above that even fewer americans now own gold (esp the lower middle and poor)?

what does this do to the price of gold going forward?????

[daedon]

I stopped off at one of these money for Gold booths in a mall last year with my gf. I calculated at the time that they were offering her 25 cents on the dollar.  That's a lot cheaper than digging Gold out of the ground. Some of these guys operate out of a junker with a digital scale, they resell to a jeweler (who can melt or resell himself) for a markup. Aside from being scammed and buying fake gold, it a lucrative no brainer.

[MeelionDollerBogus]

This story doesn't add up. cash4gold type places broker with a refiner & move it as fast as possible at a locked in price. They might sit on a ring or something to re-sell in a shop if they're a combo pawn-shop and cash for gold type, but if it's straight up buy-only they sit on nothing. They also pay 50% of spot or less so no way this story makes sense to me. Even pawn shops would offer me no more than 60% of spot on silver maples, brand new, good condition, handled but untarnished, unscratched. I asked them only to see how badly they'd try to rip me off.

[daedon]

You are way too late to be posting this kind of comment, the genie has long been out of the bottle.

[olenumbersix]

Rats good eatin ! Tough but they make good gravy.

[MeelionDollerBogus]

Whin all's you gots is a pot, a fahr and some rats they'se aint nuthin a slowcookin' cain't make edible.

[muleskinner]

Me thinks the Chinese manipulated the markets just right to accumulate all of that gold at no cost to them.  They basically obtained it all for free.

I could be wrong.

[d edwards]

Were they quietly exchanging their dollar holdings for gold?

[Notarocketscientist]

I own gold - but i suspect when this plays out if i left my gold in a pile next to a pile of canned food - the gold would be ignored

High energy prices = less consumption because everything including the fuel in your tank costs more = layoffs = less tax revenue = government cutbacks, layoffs and debt increases = less consumption = more layoffs = less taxes =====  economic death spiral.

Compounding the problem is the fact that a weak labour market means real wages drop - as they are across the world right now - that means everything is more expensive and your buying power is dropping at the same time.

Governments recognize this and are trying to offset with debt, easy lending (they are purposely inflating bubbles), lower interest rates and money printing.

Of course they will fail - because the disease is expensive oil.  And there is no substitute

The economic death spiral will accelerate when the QE and ZIRP no longer have any effect and the confidence game collapses.

This moment will be known as the end of the industrial revolution by the few who survive.

This is not a Hollywood movie where the hero saves the day.  This is the reality we are facing.

[muleskinner]

Stand 13 barrels of oil next to one ounce of gold and it is a no brainer which will be gone first.

[post turtle saver]

well, it's all about value over time isn't it...

http://www.incrediblecharts.com/economy/gold_oil_ratio.php

[muleskinner]

Those 13 barrels of oil will supply enough fuel to run a tractor probably for six years.  Tractors are very fuel efficient considering the amount of work they can do.

An ounce of gold won't do squat.

You will starve.

13 barrels of oil will feed you, hundreds of others and provide a sizeable income.

Trumps the gold by a country mile.

[walküre]

How do you refine that oil into diesel?

[g'kar]

The new fossil fuel, FSA dinosaurs. They render down to the perfect fuel for a diesel, no refining needed after that.

[post turtle saver]

dunno what tractors you're used to working with, but the ones I used to work on wouldn't get very far in a season on 130 gallons of diesel (10 gallons of diesel per barrel roughly after refining)

now, if you're talking subsistence farming, then yes that would make a little more sense as the fuel hours required for that are going to be much less... if you're smart about it you use that refined petro diesel to bootstrap a peanut farm, that's food and fuel all in one shot... soybeans are good for that, also...

[FredFlintstone]

Give the man a break. 1 oz gold = 330 gallons of diesel. He is trying to make a point. And you get other thinks from a barrel of oil such as 25 gallons of gasoline.

[Volkodav]

Traktors we use here consumes 14 gallon diesel per hour each.

Even substinence few acres average one 1/10 size (36 horsepower) use 1.4 gallon diesel per hour....

Garden tiller use 1/2 gallon hour gasoline..

Your expectations are bad...

You know nothing about this subject.

[MeelionDollerBogus]

That oil can't be used until processed. That processing costs energy & has huge infrastructure. You might just find in the near future that gold film nano-catalysts will greatly reduce the energy & infrastructure size required to do this processing. Crude oil won't run a tractor, petrol will.

[FredFlintstone]

Muleskinner, I am with you on that. I was thinking of what it might cost to store diesel fuel and whether it would be worth the investment. With EPA and other regulations, the cost might too high to make sense at today's fuel prices. I could buy #2 fuel oil at maybe $4/gallon. I would avoid the taxes for diesel, but it is the same stuff.

My guess is that it might cost half as much or even as much for the infrastructure to store it as the fuel itself costs if it were all done legally per code and all. Maybe $200k to $400k in tanks and monitoring to hold 100,000 gallons. Then you need to consider keeping it clean and "polished". 

Now if one were to do it under the radar on the cheap...

[MeelionDollerBogus]

If you make biodiesel you need only store the plant material in advance of needing to make a batch.

[MeelionDollerBogus]

Depends on how much time I have/need for eating and how much time/need I have for running. I can run with 10 oz gold faster than I can run with 4 decent cans of food.

[if]

Excellent article, although the data presented does not support the "speculative conclusion".

Curiously iron ore is not as suitable, based on most of these metrics, and yet according to recent press reports

An additional metric might be the local end user demand for the physical which would tend to lower the storage costs for iron ore. 

[Kina]

And so...right now where is the physical located....we know he cant find it to hand it over, who refuse to hand it over, where it is being melted down and recast..... so the phyisical gold movements have been where....

[Dr.Engineer]

Thank you for this article.

[vyeung]

Its not accurate. Goldman would not let you know whats really happening. They are trying to use the CCFD as a conduit to explain something for other motives. Just becoz they put up a few fancy charts you think what they type is true. hahahahahahha. Makes me laugh. I'd know becoz I'm cut from the same cloth. And all the sheep think they provided some enlightenment.

Also, when the SHTF, go back in history and see how trade is conducted in a warring world. Not fiat.....but precious metals and materials. So funny when viewing some of the comments. I though ZH readers were clever. HK provides a QFII/QDII window for investment purposes for companies onshore / offshore. There is only need to use the CCFD mechanism if you don't want anyone to know the origins and purpose of the money or that its got some smoking agenda. Also, $60B is a drop in the bucket. If you simply consider the annual HK import/re-export of gold to china to be the nice round number of 1000 tons (32,000oz) just via HK you are looking at $40 Billion dollars worth of gold imports alone. This excludes direct imports through London, Switzerland, US, Canada etc. Basically the above tells you nothing. With regards to price suppression, you don't need Goldman to explain it, people are already busy investigating the whole thing. When do you believe the crooks in explaining their schemes.

[fooledbyfiat]

1000 tons is 32mn ounces not 32,000... check your calculations.

However your "When do you believe the crooks in explaining their schemes." is spot on

[all-priced-in]

I understand what the article is trying to say - and seems to add up - seems logical.

But - for price equilibrium to be reached (at any price point low or high) you need not just willing BUYERS at the price - but also willing sellers.

All the financial hocus pocus in the world still doesn't explain why people holding gold would be willing to sell it if the price was too low.

So -  the article helps explain how the China is BUYING gold at an artificially low price - but who are the sellers at this price? The only way someone sells at a price that is significantly lower than true value is if they are FORCED to sell.

Who are the sellers? How are they being manipulated to part with gold for $1,200-$1,350 an ounce when the "true value" is much greater?

[lakecity55]

Why could the buyers and sellers not be the same guys operating under different guises?

"Yang, have company A buy copper from company B."
"OK. Just did deal."
**********
"Yang, it has been a week, sell the copper back to company B from company A."
"Is the profit in our account yet?"
"Yes."
"I am off to buy gold. Your usual # of bars?"
"Yes, Ying. Thanks!"
"Yang, do not forget to ship Mr Brankfein's bar to him. He lent us the money to start our firm."
"I will fly it out of Malaysia to his secret Island."
****
Many thanks for this piece. It is the reason for ZH. It is too early for me to digest or even 100% understand, but I think the comments above relate to the basics. I am going to read it again tonite.

[all-priced-in]

How do you profit from buying and selling something from/to yourself?

If I buy and sell myself the same ounce of gold 100 trillion times a day for the next 100 years it will not impact the price one bit.

This would not be gold manipulation - it would be gold masturbation.

The Chinese circle jerk of gold.

[MarcusAurelius]

Great piece Tyler. That is why I come here daily. To get the facts in an unbiased way and to see the light. 

It is amazing to me how corrupt our financial system is right now. Not just at home here in North America but globally. How these parties continue to find ways to leverage and ratchet up profits while most of the world struggles to make ends meet. 

I find it even more ironic that these so called communistic regimes like Russia and China to name a couple are some of the worst offenders in how they conduct "off the record" transactions which only serves to create even more black market dealings. 

He who can steal, lie and swindle the best in the new world order seems to be the "motto". It should be interesting to see where all this corruption gets us. 

[doggis]

3RD PARTY BUYER OF PHYSICAL GOLD = PBOC!

ONLY A FOOL THINKS THAT CHINA WILL LET ONSHORE PHYSICAL GOLD HOARDS BE EXPORTED IN A SALE AS HEDGES UNWIND...... REALLY ........REALLY

...AND LET ME GUESS - THE OTHER SIDE OF THE INFORMATIONAL TRADE IS THAT THE FED [THAT WHICH IS ALL EVIL] IS PAINTED AS INNOCENTLY NAIIVE, AND A VICTIM [A VICTIM I SAY] OF THIS BLATANT MARKET MANIPULATIONS! UH HUH!

SO HERE IS MY QUESTION - CAN THESE CCFD DEALS INCLUDE ES MINI FUTURE CONTRACTS? ARE THE CHINESE RESPONSIBLE FOR THE MELT UP IN THE SPX BECAUSE OF THESE CCFD DEALS? WILL THE SPX COME CRASHING DOWN NOW AS THESE DEALS ARE UNWOUND?

[Schmuck Raker]

"CAN THESE CCFD DEALS INCLUDE ES MINI FUTURE CONTRACTS?"

No. And stop shouting.

[RevRex]

he is only shouting if you are only whispering

[MeelionDollerBogus]

OH WELL THAT IS A VERY GOOD QUESTION. Y U NO ASK EARLIER?

[dizzyfingers]

http://www.usatoday.com/story/money/business/2014/03/22/wall-st-cheat-sheet-nations-gold/6709493/

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/22_Maguire_-_Goldman_%26_Media_Full_Of_Shit_When_It_Comes_To_Gold.html

[MeelionDollerBogus]

Horseshit.

Goldman has gold in their name. How could I not trust them?

Oh wait, do not drink the LSD? Ooohhhhh now I get it.

[fiftybagger]

Western banksters have robbed China blind at least twice.  Once by stealing their silver through opium gunboats and then by demonetizing the silver they had accumulated through collusion with other banksters.  The Chinese are not stupid and have very long memories.  They intend to come out on top this time.  Apparently the banksters think they will as well, as they have been spending quite a bit of effort building a police state.  Perhaps they are hoping to fend off millions of peeved peasants with pitchforks.  Either way, hell awaits them ;-)

23 Divers weights are an abomination unto the LORD; and a false balance is not good.

King James Bible Proverbs 20

Bye Bye Banksters

Silver For The People

The Bitcoin Channel

[Quaderratic Probing]

http://en.wikipedia.org/wiki/Code_of_Hammurabi

Well before the Bible

[Drifter]

Whether China or Wall Street is holding "spot" price down doesn't matter, China is capitalizing on western central banker "we hate gold" ruse to accumulate enough for a new gold-backed world reserve currency, something Ghadaffi tried to do regionally and was killed for it, but China has nuclear weapons backed up by Russia and India with boatloads more nuclear weapons, so their new gold-backed currency WILL fly, and will be the end of USD.  Just a matter of time now.

[AynRandFan]

Conclusion: China is hedging its purchases with short options.

Why write an article so long and complex where the crux of it is buried? I'll tell you why: to hide the uncertain nature of its opinion.

[AynRandFan]

Maybe the spot price is the price of paper, not physical gold. After all, there are many more paper ounces than physical ones, so the actual prices paid for physical are not known, or stated, or vary widely depending on import restrictions and other local factors.

Try to buy gold in India at the spot price.

[litemine]

Kitco, even pays more than Spot for Physical.

[MeelionDollerBogus]

http://comparegoldprices.com/

[Herdee]

I believe,and I stand corrected that by an Act of Congress that what remains of The Federal Reserve gold holdings(8,800 tonnes),cannot ever be sold.But that doesn't mean that foreign gold holders that store their gold at The Fed such as Germany cannot have their gold disappear in swaps and leasing programs.U.S. gold is protected but everybody else(including the holdings of The IMF) have fallen victims to the big scam which in turn secures U.S. Dollar dominance.At least temporarily.That gold in Chineses vaults will never come back.Any payback scheme will happen in the distant future in an engineered way by paying back in devalued Dollars or confiscated in National interests due to stupid U.S. politicians and their trade sanction beliefs.Any entity can easily set up another SWIFT system almost instantly,it's not rocket science.

[lakecity55]

But, wait! What about my Ag and Au Pandas???

They are shipping a miniscule amount out...........

[DoChenRollingBearing]

The US national gold ("ours") is held at Ft. Knox.  Most of our 8100 tonnes is there.

At the Fed Reserve Bank of New York, there is about 8000 tonnes of (mostly) other people´s gold.  Almost all of that foreign.  Some 400 tonnes of US gold is held their for convenience.  And a small amount in Denver, SF and West Point, IIRC.

The Fed had it gold taken in 1933 and was issued non-transferrable Gold Certificates in lieu of the physical confiscated by FDR.

"Our" (mostly at Ft. Knox) 8100 tonnes <> to the gold at the FRBNY.

[Herdee]

And one more thing,if you look at what James Rickards has to say.He says that The Fed knows that gold has to go up,but the Fed wants it to rise in a controlled way.It would be interesting if James would fill us in more on what he means now by " a controlled way" and what is really going on behind the scene.As well,what are monetary implications are for the U.S. Dollar if gold rises dramatically or if gold rises "controlled".

[Quinvarius]

I think the Fed's concern is that a lot of bankers are stuck in unreported legacy shorts from their leasing activity.  They probably report they are borrowing at 42 an ounce from the gov, which is what the Fed and the US Treasury says gold is worth, and selling at 1300 an ounce.  That allows them to report a lot of "right now" profits.  A good reason the Fed and Treasury would continue undervaluing gold would be to protect these balance sheet lies and allow the operations to continue.

There would not be so much secrecy and BS surrounding the gold market if there was not a serious issue.  Some people need a full confession or the courts stamp of approval.  I don't need anyone to admit anything.  Liars lie until the end.  Then they start making excuses for why they had to do what they did.  Stacking now is like selling out of Madoff's scam early. 

[hooligan2009]

kind of misses the point entirely of the why prices for gold fell, and the role that occidental central banks play in supplying the gold via lending it out and assuming they will get it back.

central bank lending of gold when the rehypothecation of the gold (by commercial banks) is permanent and is a systemic risk to occidental central banks these central banks have ignored.

if commodities (and gold) are used to finance trade and avoid government regulations, closing the loop hole will force it elsewhere or collpase global trade where China acts as the marginal buyer (to propel its exports).

If the Chinese growth rate is being guided downward to a more bearable 4-5% real from 9-12% real, this is a good thing for China and the RoW, provided of course that China actually can refocus its economy to a self-sustaining consumer based one with the rising living standards for its people that the (failed) western/occidental model of favoring FIRE sectors at the expense of the consumer.

FIRE companies in the west v the Red Army and the Politburo in China...interesting..I for one hope that the consumer gets a better deal in both territories, perhaps China has a better way to do this, with central planning...I am not yet convinced.

[Pejorative Requiem]

Whaaa?

[homiegot]

I went straight to this line:

"The answer is simple: the gold paper market."

This is all you need to know.

[Quaderratic Probing]

China has bought into the paper game like all the others.
A run on gold will not be allowed.
Move Physical..Paper Check and Mate

[Quinvarius]

My take away is that when institutions with accountants and financial bigwigs buy for their strategies, they hedge with shorts driving up the cost of hedging by pushing down the paper price with their activity--Meaning they sell paper low as a hedge.  Futures is for hedging in the miopic world of paper.  Physical is for dealing with the reality of economics.

But I don't see why this would be any different for copper or anything else.  And if these deals are all hedged, then what we are looking at are extremely low paper prices on all of these commodities and no reason to put the physical on the market at all--Because it is hedged. 

I don't think it matters how the price gets where it is going.  It is 90% undervalued by my math.

[ohaitieaqui]

Not only gold is undervalued, but oil, and a lot of commodities,we aren't tzaking paper, but getting  gold and is incredibly hard labour, don't think the miner will survive at 1300, same for oil it's has one way up, rice, etc

[Millivanilli]

Gold is not money- dr bernank

No, money is what the central bankers use to steal the land labor and resources of the commoners.

[MollyHacker]

"As Goldman explains,...and the black market are the three main channels". was Malaysian 777 caring black-market gold hidden within empty battery cases ~

~ "Asked about lithium batteries known to be aboard MH370, the official said the amount and weight of the potentially flammable cargo "has been classified" secret by investigators
http://abcnews.go.com/International/new-object-spotted-plane-search/stor...
Is the PBOC eye-winking the black-marketer's in commodities, especially 'gold' to import, and now maybe facing exposure if there is a connection with this Malaysian flight that has "disapered". Some down-playing the weighted cargo...

[Ocean22]

After they ran-sac the plane for gold, bury the people, the wreckage will show up soon ( or parts of it)...

[zionhead]

MH-370 was lost 6-1/2 hours, at 900km/hour, that be 5850 KM,

They could have flown the airplane over the highway from KLM to KABUL, and it would be 6,000 KM, the direct flight is much shorter.

No problem in 6-1/2 hours the plane could have been taken to KAZAKHSTAN.

Let's ALSO not forget that the PLANE was re-insured by KAZAKHSTAN.

*

The plane was not announced LOST until it landed, the Plane even now we don't know what was on the plane cuz it was SECRET.

Who would allow a plane to be lost for 6-1/2 hours if it contained secret shit? Nobody.

Nobody started looking for the plane until well after 8am, 'daylight'.

All according to plan.

[zionhead]

So the 'density' of the Cargo is top-secret, ... well we know that the MALAY gubmint was involved in the cover-up, after all, they didn't release news of the heist until 6+ hours later than when the plane dissapeared, short and sweet they waited until the plane had landed and hangared, before notifying the world it was missing.

The cargo was clearly something of infinite value, the gubmint was clearly involved,

The question only remains, .... to WHOM did this 'GOLD' belong too? Who has lost?

Why would MALAY gold be in CHINA?  Unless for instance somebody thought it was 'safer' there?

Also SINAPORE is 'tight' with china, where are they on all this?

*

We need to be researching WHY all this 'gold' was in MALAY in the first place?

[fooledbyfiat]

What if there is no physical left to unwind?

[Heiman Van Rock...]

Very convenient. Be very wary of data coming from a shareholder of the federal reserve and a serial manipulator. I smell a rat, again.

[highwaytoserfdom]

Did the Vampire Squid  put this  work in progress idea out there to protect paper?  Gee you would think the High Frequency guys would gladly pay for their Huawei Routes in physical gold...  Wake up Brenton reboot. 

[I Write Code]

FWIW I can't follow most of the post nor comments.

Something the physical gold is masking financial flows something something.

But who is on what side, I cannot tell.

[Kelley]

Same here. 

We need a master's in business or finance to decipher most of the reports on ZH.

[AndrewJacksonsGhost]

This is a financial blog......

[401-Kulak]

No you dont - just dont get caught holding the bag.

[Quaderratic Probing]

2614 tons X 2000 = 5,228,000 pounds X 16 = 83,648,000 Oz X $1350 = $1.129248 X ten to 11th

Bullshit detector just went into the red

[Bugsquasher]

12 ozt not 16 oz to the pound.

[Kelley]

Troy tons and ounces, not av. tons and ounces.

Nor was all the gold purchased at the same price.

[Quaderratic Probing]

Most of the time frame gold was over $1600 and only a few months below $1300 so my $1350 is low. The reference to 70 billion is crap or the total gold is untrue.

[jomama]

gold isn't measured in pints, dawg.

[Quaderratic Probing]

Tons to ounces conversion factors are listed below. To find out how many ounces in a ton, multiply by the right conversion factor or simply use the converter below.

1 Short Ton [US] = 32 000 Ounces ( 2000 X 16 )

1 Long Ton [UK] = 35 840 Ounces
1 Metric Ton = 35 273.9619 Ounces
Ton is a unit of mass in different measurement systems and usually mistaken with each other. The short ton (also known as net ton) equals to 2000 pounds and used in north america (united states and canada), the long ton (also known as weight or gross ton) is used in imperial system (UK and some of the other english speaking countries) and defined as 2240 pounds or 1016 kilograms and finally the metric ton (also known as tonne) equals to 1000 kilograms and used in metric system. The abbreviation is "T".

Ounce is an imperial and U.S. customary mass unit. It should not be confused with fluid ounces which is a volume measurement unit. The abbreviation is "oz".

[MeelionDollerBogus]

One TROY ounce is NOT an IMPERIAL ounce. It's an old standard from the city of TROY as in TROJAN HORSE, that story.

One TROY ounce is 31.103476 grams & you can see it from Google's unit conversion

and you can see then 1 metric ton is 32,150.7466 troy ounces

Do yourself a favour & -1 your own post, thanks.

[Quaderratic Probing]

Then $1.129248 X ten to 11th is too low

You show me how to get to 70 billion with 2614 tons times 32,150 troy

I'm saying 70 billion and 2613 tons is not correct

Thanks for showing me more correct

[MeelionDollerBogus]

Anything the good for blobbing up the maths. Much welcoming.

[it aint easy]

Kudos, ZH.

[22winmag]

Let's sell shark fins to those chinky bastards in gold terms.

[Hannibal]

Foreign Ministry goes on strike(?), all Israel's embassies and consulates abroad to close.

http://www.jpost.com/Diplomacy-and-Politics/Foreign-Ministry-goes-on-str...

[zionhead]

Hey spread the free FIAT, ... how  you feel if you were in their shoes seeing  everyone else become a billionaire,... they're not asking for much, just to be millionaires,

Fuck the FIAT is free courtesy of ColonyUSA, ... its not like this FIAT costs anything  for anyone.

I say make everyone in Tel-Aviv a millionaire, and every politician a billionaire, and every Oligarch a Trillionaire, ...

Wait a minute, ... we're already here :(

[foxmuldar]

Wasn't Goldman talking the price of Gold down while all this was going on? We know how those shysters can manipulate almost anything in their favor. I bet Goldman has been loading up their own vaults with the yellow stuff while talking the price lower.  Ok time for more important stuff. Walking Dead is on. 

[Sirius Wonderblast]

All else aside, and speaking as a simple country boy, anything that complex has to be wrong.

[exartizo]

Good article Tyler(s).

But I am still of the opinion that supply and demand equilibrium are not so much out of whack as many would have us believe, even though it is possible that some paper gold rehypothecation is causing some distortion.

i.e. those that stand to make a buck on good folks who think gold can only go up.

The bottom is NOT in for gold.

I know I said that before.

It's still true.

[Baby Eating Dingo22]

They did it using the Obama women as mules

Shouldn't they be in school? Going on a weekend jaunt to China?

First lady and her daughters visit Great Wall

Michelle Obama takes Sasha and Malia for a stroll along a popular section on China's famous landmark.  Minor security scare »

[dexter_morgan]

squatchy

[zionhead]

MALAYSIA/USA REFUSE TO SAY WHAT WAS ON BOARD AIRPLANE

Ongoing Malaysian refusals to share the cargo manifest of missing flight MH370 with Australian authorities will hold back efforts to find the missing aircraft, an aviation expert says.

http://news.ninemsn.com.au/national/2014/03/24/12/21/malaysian-refusal-t...

WHAT THE FUCK ARE THEY HIDING? MAYBE GOLD THEORY TRUE?

*

The Malaysian authorities have refused to release the manifest, saying it is with police who are conducting their own investigation into the aircraft's disappearance.

Professor Jason Middleton, the head of the school of aviation at the University of New South Wales, said there was "No reason: for the Malaysians not to share the information with AMSA.

"I would have viewed that (not sharing the information) as unusual," he said.

The professor speculated that Malaysia's recalcitrance may be because something in the "Malaysian national interest" was being carried on flight MH370.

"But in that case you could just redact that bit," he said.

"One of the possibilities is that someone put something on board that wasn't supposed to be there."

[Ocean22]

Global reset coming. Got gold? The Chinese apparently do.

[zionhead]

Can anybody speculate why ZH is not touching any of this?

It appears that western media has completely gone full retard like; see no evil, think no evil, hear no evil.

Even the sujbect "boeing un-interruptible autopilot", has disspeared from google news the last few days.

*

All the decent news I'm getting is coming from Austrailia ( anti-USA ), and Malaysia ( anti-USA opposition to malay gubmint ).

*

The first casualty of WAR is TRUTH, and thus IMHO ZH doesn't want their google rank to plummet, cuz no fucking doubt that these subjects are fucking taboo on the GOOGLE NSA/CIA controlled ranking algorithms.

[Ocean22]

Could not agree more zionhead.

[MeelionDollerBogus]

All Aboard Zerohedge Airlines Malaysia! The best boating accidents involve winged aircraft aka boats that only sink on "landing".

[yogibear]

China,

It's time to kill the US dollar. Russia and others want to join the party.

[peakaboo]

blah blah blah

http://investmentresearchdynamics.com/zerohedge-is-wrong/

                                                         ----------------------

[Kina]

There is a rebuttal to this analysis over at King World News  that deals with this particular article.

So nice to see the issue discussed.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/23_Wh...

[MeelionDollerBogus]

FedRes special delivery: 1 box of monkey hammers overnight shipping express-rush.

While I find the theory & conclusion interesting and not impossible I still find it unlikely.

Gold never really failed its true role in balancing trade deficits between nations which means budget & trade deficits as evidenced by bonds & sanctions, shipping costs & which trade deals get better preference still has the strongest power over gold's paper price, bonds & currency being the most powerful, as in, a currency collapse ruins it all but puts gold square up as the only real international money, a unit of account that has value but isn't energy (food, oil), while the consumables (food, oil, lumber) will certainly retain their own natural level (of use, not necessarily fiat price).

[Tabarnaque]

ZeroHedge is totally wrong on this one.

http://investmentresearchdynamics.com/zerohedge-is-wrong/

The stench of a well-trodden cow pasture is emanating from the Zerohedge article which tries to blame the decline in the price of gold during 2013 on China’s use of a complicated commodities financing structure.   Long time readers know that I always give ZH credit for digging up a lot of information and news items that we might otherwise miss.   It is invaluable in that respect.  However, Zerohedge has historically missed the boat with respect to knowledge and understanding of the precious metals market... Keep reading, it is worth.

[fijisailor]

You beat me to it posting this link.  Here's another one ZH is totally negligent in reporting:

http://www.cnbc.com/id/101497635

It shows that QE tapering is smoke and mirrors.

It's becoming more and more necessary to look elsewhere from ZH in order to find the truth.  What's up with that ZH?  Have the Tylers been infected with the MSM disinformation disease?

[yogibear]

The US is the largest debtor nation in the world. Seems logical to take it down financially.

Move the party from Wall Street to China.

After that plenty of real estate in the Hamptons and NYC drop in price.

Asia also deserves the commodity markets as well.

Wall Street  built  the Chinese monster. The Chinese monster then consumes Wall Street. How fitting.

[techstrategy]

It was all fun while it hurt middle class manufacturing jobs.  They will hate it now that it is their turn.

[techstrategy]

It was all fun while it hurt middle class manufacturing jobs.  They will hate it now that it is their turn.

[techstrategy]

It was all fun while it hurt middle class manufacturing jobs.  They will hate it now that it is their turn.

[Philalethian]

When confidence dies, what happens?

Here is the latest report from Mr. Greg Hunter in this interview of Mr. James Rickards discussing the collapse of the dollar that is coming as everybody knows.

http://www.youtube.com/watch?v=xCsm5m89SVM

What is the question of the millennium?

Can it be changed into a good thing?

[zionhead]

MH-370 Obama's "Obama Care Chip" falls into CIA Hand's

Why would the CIA want 20 men heading to CHINA with this technology, to NOT GO to CHINA?

Obama-Care Chip can track you for life, even if battery dies the RFID can passively ID a corpse with NO power, and of couse any user can be traced 24/7 his entire life, and all medical control can be externally controlled by a 3rd party in any human, including the release of drugs into a 'patient'.

Freescale Semiconductor announced the creation of the world’s smallest (by size) ARM-powered chip. The Kinetis KL02 measures 1.9 by 2 millimeters and is a full microcontroller unit (MCU), meaning the chip sports a processor, RAM, ROM, clock and I/O control unit. The chip competes with the Atmel M0+ offerings, which are the low-power leaders in the industry ^[18] One application that Freescale says the chips could be used for is swallowable computers. Freescale already works with a variety of health and wellness customers. Both the Fitbit and OmniPod insulin pump use Freescale chips.

[zionhead]

MH-370 Obama-Chip Tech Details ...

"Comply with OBAMA, or your BODY will be Sedated" - Cass Sunstein

Chipmaker Freescale Semiconductor has created the world’s smallest ARM-powered chip, designed to push the world of connected devices into surprising places.

Announced today, the Kinetis KL02 measures just 1.9 by 2 millimeters. It’s a full microcontroller unit (MCU), meaning the chip sports a processor, RAM, ROM, clock and I/O control unit — everything a body needs to be a basic tiny computer.

The KL02 has 32k of flash memory, 4k of RAM, a 32 bit processor, and peripherals like a 12-bit analog to digital converter and a low-power UART built into the chip. By including these extra parts, device makers can shrink down their designs, resulting in tiny boards in tiny devices.

How tiny? One application that Freescale says the chips could be used for is swallowable computers. Yes, you read that right. “We are working with our customers and partners on providing technology for their products that can be swallowed but we can’t really comment on unannounced products,” says Steve Tateosian, global product marketing manager.

The KL02 is part of Freescale’s push to make chips tailored to the Internet of Things. Between the onboard peripherals and a power-management system tuned to the chemistry of current generation batteries, the KL02 is intended to be at the heart of a network of connected objects, moving from shoes that wirelessly report your steps (a natural evolution of Nike+) to pipes that warn you when they are leaking.

There are some clues we can glean about how this chip might end up inside our digestive tracts. Freescale already works with a variety of health and wellness customers. Both the Fitbit and OmniPod insulin pump use Freescale chips. It’s not hard to imagine a new generation of devices designed to monitor your internal health or release drugs and medicine from within your body. Such tiny implements, however, also creates the possibility that discarded micro-devices could soon collect in sewers and waste treatment plants.

Though Moore’s law has become largely uninteresting at the scale of desktop and laptop computers (when all you’re doing is watching videos, writing, and surfing the web, you don’t need that much power), there is still plenty of room at the bottom.

“We come across hundreds of [microcontrollers] embedded in the devices we use throughout the day,” says Tateosian. “For example, you may come across them when your alarm wakes you up, you brush your teeth, make your coffee, unlock your car door, open your garage, put down the car window, pay the parking meter, tell the time on your watch, measure your heart rate, distance, and pace. While running you may listen to your music player with several controllers inside, including in the ear buds themselves.”

Though it’s going to be available for general retail, Freescale says that the KL02 was specifically designed in response to a Obama Care. There was a need for a chip smaller than 3 by 3 mm and this was the result.

Who needs a chip this tiny? 

Why would you want to sedate somebody that has read 'non approved materials'?

Where is Cass Sunstein?

[techstrategy]

I've been saying for almost a year that the unholy alliance between China and the bullion banks was behind this move.  Unlimited leverage pain trade in paper assets.  But, we can end the games forever by buying GLD (whose short interest is constrained by underlying physical currently around $35B) in scamopoly (AMZN and similar bubble terms).  Check out my posts on AMZN board about the source of increase in book equity since 2010... It has all come from additional paid in capital from employee purchases that are then sold on open market at bubble prices which only works while price keeps increasing.  It truly is a ponzi (would have negative net working capital today without the paid in capital increase) and is extremely vulnerable to macro issues because of sales stop growing its negative cash conversion cycle will consume cash it doesn't have.  Convert scamopoly money to gold while you can and call the BB/CB/Chinese manipulation of gold in the process.  It will accelerate price discovery, even for you physical only guys.  It is how we take control again.

[techstrategy]

I've been saying for almost a year that the unholy alliance between China and the bullion banks was behind this move.  Unlimited leverage pain trade in paper assets.  But, we can end the games forever by buying GLD (whose short interest is constrained by underlying physical currently around $35B) in scamopoly (AMZN and similar bubble terms).  Check out my posts on AMZN board about the source of increase in book equity since 2010... It has all come from additional paid in capital from employee purchases that are then sold on open market at bubble prices which only works while price keeps increasing.  It truly is a ponzi (would have negative net working capital today without the paid in capital increase) and is extremely vulnerable to macro issues because of sales stop growing its negative cash conversion cycle will consume cash it doesn't have.  Convert scamopoly money to gold while you can and call the BB/CB/Chinese manipulation of gold in the process.  It will accelerate price discovery, even for you physical only guys.  It is how we take control again.

[zionhead]

MH-370: New autopilot Allows Remote 911 Takeover

How 'autoland' will work [ Passenger Monitoring of all bodily functions to find 'terrorists' ]

A hijack-proof piloting system for airliners is being developed to prevent terrorists repeating the 9/11 outrages. [ Well that is how its SOLD. ]

The mechanism is designed to make it impossible to crash the aircraft into air or land targets - and enable the plane to be flown by remote control from the ground in the event of an emergency.

Scientists at aircraft giant Boeing are testing the tamper-proof autopilot system which uses state-of-the-art computer and satellite technology.

It will be activated by the pilot flicking a simple switch or by pressure sensors fitted to the cockpit door that will respond to any excessive force as terrorists try to break into the flight deck.

Once triggered, no one on board will be able to deactivate the system. Currently, all autopilots are manually switched on and off at the discretion of pilots.

The so-called 'uninterruptible autopilot system' - patented secretly by Boeing in the US last week - will connect ground controllers and security services with the aircraft using radio waves and global satellite positioning systems.

After it has been activated, the aircraft will be capable of remote digital control from the ground, enabling operators to fly it like a sophisticated model plane, maneuvering it vertically and laterally.

A threatened airliner could be flown to a secure military base or a commercial airport, where it would touch down using existing landing aids known as 'autoland function'.

After it had landed, the aircraft's built-in auto brake would bring the plane safely to a halt on the runway.

Boeing insiders say the new anti-hijack kit could be fitted to airliners all over the world, including those in the UK, within 2007-2014 timeframe.

* Obama Chip to be digested by all Passengers to study anxiety

The latest move to combat airline terrorists follows The Mail disclosure that scientists in Britain and Germany are developing a passenger-monitoring device.

This will use tiny cameras linked to specialist computers to record every twitch, blink, facial expression or suspicious movement made on board flights in order to identify potential terrorists.

A Boeing spokesman said : "We are constantly studying ways we can enhance the safety, security and efficiency of the world's airline fleet.

"There is a need in the industry for a technique that conclusively prevents unauthorized persons gaining access to the controls and threatening the
safety of passengers.

"Once this system is initiated, no one on board is capable of controlling the flight, making it useless for anyone to threaten violence in order to gain control."

[acttang]

Read it, and then checked the price of paper gold - down 10 points. According to the logic presented here, it must be caused by the doubling down of the spot/forward hedging, instead of the supposed unwinding?

[zionhead]

MH-370 Malay/CIA first said to ignore eye witnesses who saw plane flying low and west, ...

Now the MALAY/CIA is admitting the analyzed radar is showing that all the eye-witnesses were right

A few weeks ago the GUBMINT said "PAY NO ATTENTION TO YOUR EYES THE PLANE WENT SOUTH".

http://www.smh.com.au/world/missing-malaysian-airlines-plane-flew-low-bu...

*

Now every eye witness said the plane was flying low and north up malaysian penninsula towards myanmar, on towards Kabul (CIA) or Kazakhstan(CIA).

*

If they don't find something in the SOUTH the Malaysia government is going to have a lot of explaining about sending all the CHINESE search crews south.

[zionhead]

MH-370 INMMARSAT senior ZIONIST leadership looking like Retards for sending all the First Responders to the Indian Ocean ...

Just remember this the ENTIRE reason for searching in the Indian Ocean is because ZIONIST's in LONDON said to go there ....

Only when Inmarsat's senior people appear wandering round London in sackcloth and ashes. They've been very clear.

Before the Inmarsat statement, there was no reason to look anywhere else but the South China Sea. Now there's no reason to look there.

Yesterday's French radar note was interesting, but it's gone quiet since. It might be that it took France two weeks to extract the information, and so it'll take everyone else with similar tools another two weeks to confirm it.

[kurt]

This artikle haz too many squiggly things and stuff.

[RottenAlpha]

ETHAN MICHALY: QE-MANIA http://t.co/8zhU2bJJ3u

— Ethan Michaly (@EthanMichaly) March 24, 2014