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Hey Goldman, Tell Us, Are These Countries Really That Stupid To Buy Gold?
We’re nearing the end of this year, and that’s when the major banks come out with their Christmas shopping lists. And of course as you could have expected, not a single decent bank is even considering to add gold to the list, and the bearish voices are now stronger than ever before.
Source: birchgold.com
Goldman Sachs expects the price of the yellow metal to fall to $1000/oz whilst the Bank of America, BNP Paribas and ABN Amro all expect the gold price to fall below the $1000-level in 2016. That reminds us of the exact opposite stance just a few years ago when gold was skyrocketing. Back then everybody was saying the yellow metal was a very useful addition to a portfolio and even the common man in the street was considering buying gold.
And of course, that has proven to be a good counter-indicator. The more gold is liked/hated by the common man, the higher the chance is its price will undergo a correction/put a bottom in place. And that might be exactly what we are seeing here at the $1080-1060-level. The gold price has tested this theoretical and technical bottom a few times but has repeatedly failed to fall towards a triple-digit number and always bounced slightly. Of course, that’s not a good enough reason to run out and increase your exposure to gold as we’re obviously not out of the woods just yet, but there’s a bigger picture we’d like to present here.
Source: silverdoctors.com
We all know the non-conventional countries are still keen on getting their hands on even more gold, and when the gold price falls, these countries are actually stepping up their buying pace. Russia, for instance, has purchased 5.27 million ounces in the first ten months of this year and will very likely end 2015 with a 6M oz higher gold position compared to the end of 2014. That by itself already is a very interesting and important fact as it shows that even when the Russian economy is falling apart it still considers gold to be a very important part of its strategic reserves. The next chart shows you how gold as a percentage of Russia’s official foreign assets has evolved.
And Russia obviously isn’t alone. Its friends in Kazakhstan have increased their gold holdings by 13% YTD and gold now accounts for 28% of the total amount of official reserve assets.
Source: bullionstar.com
China also continues to buy more gold and is believed to have purchased no less than 35 tonnes of physical gold in just October and November alone, increasing the official stash by 1.1 million ounces in just two months. In fact, when the gold price was correcting in November, China stepped up its buying rate by a stunning 40%, and we wouldn’t be surprised to see the country having imported an additional 20-25 tonnes of gold in December.
And no, it’s not just Russia & friends and China that are buying gold, but India has also confirmed it expects to import 1,000 tonnes of gold this year, roughly 100 tonnes more than originally anticipated as the jewelers are stepping up the plate to take advantage of the current low price.
All of this leads us to one question. Please, Goldman Sachs, BNP Paribas, JP Morgan and other Bank of Americas, please tell us why these countries are so keen to destroy their own wealth? There’s no fundamental reason why the gold price should go further south and the country with probably the best long-term vision (China, which is also stockpiling as much oil as its strategic reserve tanks can hold) is filling the basement of its Central Bank with newly-smelted shiny bars.
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hey, can't confiscate jewelry
I am amazed why average people buying gold jewellery because it is not pure gold and the mark up is very high for labour cost. Perhaps they stupidly want to show off.
Gold might pop in the next worldwide financial crisis but I wonder if longer term even its overvalued. Is the deflation spiral at hand?
all i need to know is that there are 300 paper contracts per every one real deal ounce. sounds like a 300x increase in purchasing power is in store to me regardless of deflationary trends
WTF are you talking about mate?
When the common man is talking about gold. Its time to sell. Thats how I called the 1900 top. I saw 3 'buy gold' tv commercials in 1 day, and I knew that was it.
I'm not greedy...Just want a small bar like Putin is holding in the picture.
is that asking too much
The common man is balls deep in credit card debt, has a mortgaged house and a leased vehicle. No common man is buying gold, they are selling all their gold, notice the "We buy gold!" signs all over?
At some point the rug will be pulled out from the debtor nations, and even Hugo Salinas Price says all that will be left standing is gold. When? Who knows, but I'd rather have my savings in gold, than in fiat paper that can vanish via a bail-in.
Gold might drop to $800/oz, but in Canadian dollars, it will still be $1500/oz, so why do I care?
As we know, gold does well when the economy stinks. Right now, it does not, and with all these cheap rates HOW ELSE can you go past putting your money in US STOCKS, ENERGY, and even EUROPE. These have been battered and will have a GOOD RUN in 2016. As in BUY LOW, and SELL HIGH. Its buffett old strategy, that always works.
The PMO chart here => http://www.bit.ly/1fMcakI suggest this rally is not done yet, and santa [or what is termed by the professional traders on WALL ST each year] is still coming!!!
When you look back, people who have paniced about getting back in the market, have not missed out, the market hardly did anything this year. But its a consolidation year on the stock market. Usually after a consolidation year on the stockmarket, you get a NICE RALLY year straight after. That is looking back at over 300 years of data.
Gold tends to plunge during a recession - chief...
good luck with your dip, lol. your ass is gonna hurt something fierce sooooon.
ooooeeeyaaaa, an ass raping coming for a dipper, ohyea, comidy central here...
Hoarding GOLD has become a religion for countries like China - Russia - India and Iran - To think they don't have a PLAN would be naive !
Exactly. There is a doins' transpiring, and I don't trust them yiddish bankers.
They're called zionists.
Goldman must change name to Fiatman
I like buying gold at any price. And I'm sure the Chinese, Russians, and Indians do too.
The TBTF banks subsidized by free money have predicted $800 gold. There's so much talk of $800 gold. OK, say it does. Will it stay there? Can it stay there?
If the metal's paper price goes that low, the physical won't. Already the premium is 40% or more on silver bullion coins! If that doesn't indicate that the Comex price is irrelevant, what does?
The Comex does bring down the price by allowing traders to leverage naked shorts while possessing none of the underlying commodity! Yet this dynamic could easily flip, and cause a melt-up.
The nice part about net inflows is that the new money can cover the sale of uncollateralized paper contracts, masking the lack of collateral.
A rising paper price might make the the current 345-1 ratio of claims sufficient to meet redemptions (assuming new buyers and cash come in with the higher price--the opposite of what's happening now.) A rising price installs false confidence and the lack of collateral isn't an issue if buyers line up. But if the paper price goes low enough, there will be redemptions in physical, especially with a rising premium for phyz.
Holders of physical outside Comex can come in with their physical and stabilize the demand for redemptions, but this requires new money to be put in by existing paper contract-holders in order to pay for "outside" gold--the exact opposite of holding something and therefore not needing to buy it (again).
The problem is that the Comex physical supply is insufficient to meet demand. Once holders of paper metals try to redeem, they'll likely realize 1) the Comex doesn't have the metal and 2) whatever capital Comex has will be drained by the bigger players, if Comex can raise any capital at all, being that it has no net assets and may owe more once its liabilities are considered.
If the paper Comex can't be redeemed into physical, the contracts don't have value. This is a terrifying scenario. Paper investors might try to dump their Comex contracts that can't be redeemed for phyz. Why would anyone want them--if they can't be redeemed?
Fabricated prices for commodities that aren't available for redemption--nor could be--zooms counterparty risk. Right now getting phyz is easier but not if prices go down significantly more and the premium for phyz expands.
Selling Comex contracts will actually make it easier and cheaper to meet physical redemption demands, a dynamic which is fueling the price mechanism ATM. The only question is if the paper contracts will have any value at all, should a race to redeem occur, something already occurring in the vaults of the big players if Comex's un- and registered holding data is correct.
The silver precious metals dealer racket needs a time out. Look at the premium on buy:sell (or bid:ask) prices- 14% to 20%! What is with that? 14% mark up on "an investment" ??? plus freight / postage / insurance??? the carrying costs are uber-ridiculous with these gouge-level spreads. Different dealers report spot prices with as much as $1 variance, so what is the real silver spot price?
The spread price on 10 oz. bars should be a lot less than rounds or coins but the 14% is across the board. These spreads tell me the smart money is not buying.
The following link shows one of several 1oz silver round for less than 7% above the spot price of silver.
http://www.apmex.com/product/83620/1-oz-silver-round-apmex-rmc-9999-fine...
I'm sure you can find sellers who charge more, but doing so isn't fair.
You could argue that 7% markup above the spot price of silver is too much, and I won't dispute that (or agree either, because I'm not sure).
I would guess a reasonable price to convert a blob of silver (spot price) into a pretty round disk with pretty pattern and exact weight (1oz) has to be worth 3% or 4%... which is $0.50 per round at current prices.
Is that really so unreasonable? Is 6.7% that far outta line?
As an aside, the round I mentioned has the additional advantage of being one of very few silver rounds that are 99.99% pure (most are 99.9% pure).
PS: It does seem reasonable to say 10oz rounds and bars should have lower percentage markups over spot. However, against that, the volume of 1oz rounds is probably hundreds or thousands of times greater, and higher volumes generally are associated with lower costs. So... not sure.
Thanks for the thoughtful correction though you didn't note the 6.7% markup was only for 500 oz buys. $7500 is a fair amount of "liquidity" which may be more of the problem causing the spread to be so wide on smaller buys.
Yes, the price of that 1oz silver round is somewhat higher for smaller quantities.
I guess I automatically look at the 500oz price because I never ordered less than 1000oz or silver or 25oz of gold at a time back when I was accumulating.
BTW, as an aside. Back when I was spending my silver and gold coins, most people and stores would give me the price listed on APMEX for 1 coin. Since I always purchased them in higher quantities (at the lowest price), I actually recovered some of the difference above spot.
The bottom line is, I'm not sure what the appropriate "markup" is for converting blobs of metal to nice, round, exact-weight rounds and coins. I don't know how to figure that beyond supply and demand.
I will say, though, that the whole issue is confused by the massive manipulation of the spot price of silver and gold via paper silver and gold futures markets (not to mention misdirection of massive orders into fake paper instruments like SLV and GLD). I can at least understand when people with physical start to say "I'm not gonna sell for that bogus price" and demand a larger "premium" for their physical precious metal. This phenomenon will probably get much worse before the manipulation explodes and ends.
There are a lot of places one can read about the U.S. having the largest most advanced military. There are also places writing of Americas need for wars and military interventions to stay afloat. I have yet to see a conjecture of an military alliance that would dwarf ours. Suppose Russia and China were to act together militarily as they are now financially. What if they were to bring in their fellow communist junkyard dog North Korea, now could the U.S. military prevail ? Our track record since WWII is really not so good. The Korean "police action" was a push. The Vietnam War was a bust. THe continuing "wars" in Iraq and Afghanistan aren't exactly proceeding according to plan. I think the last claim to fame or any resemblance to a military victory was Desert Storm, big deal. Anyway the U.S. should probably exercise caution when poking a stick at countries, they may just band together and form an adversary we more than likely could not defeat, even with our delusions of grandeur and superiority.
The only way we won WW2 was with nukes and carpet bombing Germany.
As we will not use either method now, we will no longer win any wars.
But winning wars is not the goal. Having ongoing conflicts that drive up debt and kills off the youth is.
Its like Big Pharma...don't cure cancer....just provide long term and very expensive treatments that end up killing the patient after sucking out all the family wealth for 10+ years.
Sick evil people rule the world, and the sickest and most evil run America
The "Police Action" was in Vietnam not Korea.
Korea was a real war which technically is still going on as only an armistice was agreed upon.
Track record since WW2 and including WW2 has been amazing.... if you are a war profiteer.
War is Peace
"Even the common man in the street was considering buying gold. And of course, that has proven to be a good counter-indicator."
The arrogance behind that statement is starting to become pretty fucking annoying. Some asshole author has read that 'theory' at least 500 times in articles written by others, and decides to parrot it one more time since it he read it so many times it must be true.
Gold has been hammered down from $1,500 in the past two years, in the face the most dangerous financial period in human history. What better time to be buying 'anything' than at, or near, a low? Because let me enlighten this author about something... gold is nowhere near a peak or a recent high. In fact, the only currency on earth where gold is not higher than it was 13 months ago is the US dollar. In terms of the Euro it is up 7%. In terms of the Loonie, it is up 12% in that same period.
"And of course as you could have expected, not a single decent bank is even considering to add gold to the list."
I wonder if the author would like to name one of those "decent" banks. Because US banks or Wall Street banks do not qualify. Russian banks and Chinese banks do. Ironic isn't it, that they aren't Rotschild banks?
And just to give this author a little pat on the head, I also think gold has further to fall. And the common man will be buying all the way down to... what... $970. So what? We'll see who gets the last laugh.
Our gold is aimed at the common man, but the biggest flaw in our model is the common man has no idea what golds purpose In society. We give lectures and info evenings we do get the message across but we simple cannot get the penetration to actually make any difference.
So in essence the common man will remain just that and will never own gold in sufficient numbers to influence the market. So take solace in the face that if you own a few grams of gold and know the reason for owning gold you are light years ahead than joe six pack
www.teamramgold.com
Same story with Bitcoin. 90% of all in existence reside in the top 100 wallets. Those people will never part with them... why would they ever have to? Or want to? So the common man will never be a big holder of Bitcoin OR gold. Yet they will be much better off for holding just a fraction than none at all. Don't get me wrong, although blockchain technology is here to stay, I still trust gold (in my case, silver for now) a hell of a lot more than I trust digits that could easily vanish if we are ever flung back into the dark ages.
To those still stuck on the U.S. as 'biggest' military - and by extension, still-reigning Uber-Hegmon, you would be wise to disabuse yourself of the dated Sgt. Rock fantasy and recall what just took place in Moscow with the U.S. Secretary of State. More importantly, the underlying reason why.
Generally speaking, I agree that Gold may drop below $1000 in 2016. That doesn't mean it isn't a good low right now to begin buying at. Silver, gold, and platinum are good buys right now. My take on the charts is that we are reaching an extreme in precious metals right now and patterns seem to indicate a larger move to the upside is very likely, but that doesn't mean it couldn't be just a large upward correction before continuing lower later this year or that gold could take a brief dip below $1000 near term. The eventual bottom in gold seems unlikely to be below the 2008 lows and most selloffs of that depth are quickly retraced.
If you have a big Military, you have a big business.
If you have a big Military, you have a big business.
And a big debt.
The U.S. military is about 20% of the total federal budget. Wealth transfers from one entity to another entity makes up about 66% of the U.S. budget. Yes, the military helps create a big debt. Do the math to see what is more than three times more expensive than the military, running up the national debt.
The main difference is a huge chunk of the military budget has no oversight and is spent outside the US, creating a debt that benefits far fewer Americans than the rest of the debt and budget outlays.
Paying people to sit on their asses, not working (EBT kings/queens, and similar), does not benifit anyone and has no oversight as well. In most cases it harms society. It is also 2/3 of the federal budget and growing fast.
The golden rule; "Buy low sell high" still applies. I'll buy gold when nobody wants it, when the gold bugs fall silent and the central planners claim victory. When I see the air, the momentum and the hope die....that's when I'll start buying gold again.
Yes, brushhog, as long as you buy physical and not paper, not on margin, are prepared to wait, and can transport, store and protect it with your life by yourself, and won't try eating any of it when it all goes to shit, in the end you will be the smart one. In the end.
Dumb shit
...and as long as you can get delivery, which will become more and more difficult.
...and as long as your gold is not confiscated by TPTB.
Now, Martin Armstrong is clearly not sharing your opinion about the bright future of gold,which will only appreciate -in his mind- when the govts' debt makes a big pop. And this could take long, given the reseve of ink at the central banks.
If you read Martin Armstrong carefully, you would understand that he said the future for gold in the medium term is not good when priced in US dollars. If you bought gold in Canadian dollars you are up 17% this year. Martin points out that the value of gold reflects the confidence in the currency in which it is priced. When confidence fades, the currency weakens and gold prices rise in that currency. Since the US dollar is the reserve currency it is likely to be the last currency to fall. In the meantime, the dollar continues to strengthen relative to the euro, pound, and yen, and as such, the short term trend is lower gold prices in US dollars. It is all relative.
Armstrong sold out to exit his prison term. Don't blame him, but beware. Idiots who claim gold can't be eaten have never had a petite fore with gold foil or an ayurvedic tablet. But they regularly eat that dirty paper/linen with kethsup and mustard.
Armstrong dold out to exit his prison term. Don't blame him, but beware. Idiots who claim gold can't be eaten gave never had a petite fore with gold foil ir an ayurvedic tablet. But they regularly eat that dirty oaper/linen with ketsup
Unfortunately, when it comes to gold (and silver) price and supply & demand. The market is slightly twisted.
Because of places like the COMEX, paper PM is treated the same as physical PM. Until a distinction is made, I can only take this at face value.
And it not just PM's that have this problem. When one is buying a financial product, you've no idea what it is backed up with (if, indeed, it is backed up by anything). Remember all those AAA rated products before 2007? You know, the ones which actually had junk mortgages in them?
This is why I am extremely distrusting of the "mainstream". In fact, as it stands, I am debating harshly witgh myself about how much to deposit in my bank account. I distrust the TPTB so much, something as simple as a cash deposit in a bank is something where I need to research!
One more thing, I should mention, is don't count GS out. I reckon the reason they are saying this about gold is because either: A. they want to launch a counter bet and/or B. they are prepared to slam gold with contracts of fake gold. Either way, I am hedging my bets, I have enough gold and silver (well, I did until that boating accident), so now, let's play the TPTB's game...
dup
You're spot on about GSCO, Chuck.. JPM played three card Monte in the street for years by juggling actual PM commodities using beards and private warehouses co-located within fork truck driving distance of bonded COMEX storage facilities. Nobody understands how the prices of physical gold or paper can be fixed and manipulated because the COMEX is supposed to be regulated, so people believe precious metals prices cannot continue to be suppressed forever. Eventually someone will ask to take delivery on all those futures contracts upon expiration instead of rolling them over into new futures contracts, right? And there won't be enough physical gold to back up all those paper derivatives, and when that happens theoretically the price of gold will skyrocket.
So stack. Simply double your bet when you're losing. The centuries old Martingale system. Eventually you get all your money back plus the original bet. It seems that would be correct, but you would be wrong again.
If buying paper or shorting on margin we're screwed when the bet exceeds our ability to double up and we get called to exit our position. That's the real beauty, whether it's done with commodities futures, stocks or forex. The house, being both the casino and the counterparty in the trade, plays for free. They are paid fees to screw us and also get to use free money too, the proceeds from short sales, for other trading while they wait on the market to collapse, then buy back and cover at the lower cost for a net gain. If they're holding shares of stocks for us, they can sell them and replace them at a lower cost and we'll never be the wiser. We have to keep any funds from short sales in one of their escrow accounts; there's no advantage for us. Every aspect of the game has been rigged in favor of the house.
Remember when Hillary made 100K in the commodities market thanks to her very first incredibly prescient trades? It was sussed out to be a payoff with the house taking both sides of a trade and then crediting her with picking the winning side after the fact. That's what you need, Chuck. A friend in the house.
When all the tom foolery is over those who have to gold win.
2016 is going to be a good year for FNV
The future of currency will be decided by those in the EAST that have THE "money".
The future of currency will be decided by those who manage to survive the next world war (unfortunately).
That either have The Money, or that actually 'make things' or that have natural resources that the world needs.
I love your attitude and I wish you were right; and maybe someday in the future you will be right.
BUT Sadly, today, the future of money will be defined by those with the biggest military.