Western Speculators Sell Gold; Asia And West Buy Bullion - Coin and Bar Supply Increasingly Tight

Tyler Durden's picture

From GoldCore

Western Speculators Sell Gold; Asia and West Buy Bullion - Coin and Bar Supply Increasingly Tight

Gold is higher in most currencies but especially in dollars and Swiss francs. The dollar and European equities are lower due to nervousness prior to Bernanke’s speech at Jackson Hole. Expectations are waning that Federal Reserve Chairman Bernanke will indicate further quantitative easing measures to prop up the ailing U.S. economy – at least in the short term.   

Gold is trading at 1,790.80 USD , 1,241.10 EUR , 1,098.90 GBP, 1,422.50 CHF and 137,779 JPY per ounce.

Cross Currency Table

Gold’s London AM fix this morning was USD 1,787.00, EUR 1237.10, GBP 1094.17 per ounce (up from yesterday’s USD 1,716.50, EUR 1191.10, GBP 1049.59 per ounce).

Gold rose sharply from the low of $1,704.25 yesterday and eked out a 0.3% gain. It is too soon to say if the sell off is over though.

Gold is set to finish the week lower as it is 3.7% lower so far on the week. This will embolden the momentum traders on the COMEX. There is also the risk of another margin increase from the CME. Although it is hard to know how they could justify this as gold’s leverage is now in line with most commodities and less than that on US Treasuries.

Gold in US Dollars – Two Weeks (Tick)

The correction was primarily due to the Shanghai and COMEX margin increases. Profit taking and short selling also took place due to gold’s short term very overbought status. 

Mitsui in London note the unusual nature of the PM fix yesterday "in an extraordinary afternoon fix in London, gold was pushed down from a starting price of $1,806 to fix at $1,770."

Sharps Pixley’s respected Ross Norman noted that the furious nature of the selling could be motivated by Jackson Hole: "I have never been a fan of conspiracy theories but I do wonder about the manner and timing of the sell-off. Much of the selling was conducted through the London p.m. fixing (when New York was active) which is a favored route for official (central bank) selling rather than being finessed into the market as a fund might prefer. It was, if you like, a statement - and quite a handy and effective one just in advance of the Jackson Hole meeting."

Our conversations with people in the industry and our own experience makes us confident that this is a paper driven sell off drive primarily by speculative, leverage interests on Wall Street.

Bullion dealers and banks have not changed their long term outlook for gold and are ignoring the considerable “noise” and bubble chatter on Twitter and in the media in recent days. This chatter has again come from those who have little understanding of the reality of the gold market.

GoldCore like other bullion dealers, bullion banks and government mints internationally have experienced near record demand for physical bullion coins and bars in recent days.

Overall supplies of small gold coins and bars are at low levels and some refiners are having difficulty meeting demand with some indicating delays in providing stock of six weeks. Perth Mint gold bars (1 oz) at competitive prices remain available in volume.

UBS note that their gold bullion sales to India were the best this week since May – twice the average daily volume.

Robust physical demand from Asia is again clearly seen in premiums for bullion in Asia. In India, ex-duty premiums were $5.82 on the London AM Fix and $10.80 on the London PM Fix with world gold at $1,732.62 and $1,707.10.  These are high premiums and show that demand from the sub continent remains very healthy.

Bloomberg Composite Gold Inflation Adjusted Spot Price - U.S. Urban consumers price index (CPURNSA)

High premiums in India have been a fairly good indicator of lows in the world gold price. Sometimes, world gold rises high enough that imports stop.

India’s economy is strong and growing thereby creating a significant‘wealth affect’. There are now more than 83,000 US dollar millionaires in India along with 1 billion people with an affinity for and belief in gold.

India remains a significant buyer today and that is before September which is the big month for gold demand as the Indian wedding season begins.

In Vietnam, local gold was at a premium of $34.22 to world gold of $1,761.90 as inflation has surged in Vietnam on dong depreciation. Limits on gold shipments have been removed for some companies as part of attempts to halt a surge in domestic prices.

Bloomberg reports that in Vietnam, gold rose to as high as 47.1 million dong ($2,263) per tael in Hanoi as of 3 p.m. local time, compared with 45.6 million dong yesterday, according to the Vietnam Posts and Telecommunications. One tael is about 1.2 ounces. “Banks continued to buy dollars to import gold due to the significant gap between domestic and international gold prices,” Viet Capital Securities Joint-Stock Co. wrote in a note late yesterday.

Premiums on gold bars in Hong Kong and Singapore have also been healthy in recent days. "Investors are feeling really comfortable holding the metal at any prices," a Hong Kong-based trader told Dow Jones on Wednesday when gold has corrected to $1844/oz.

In Shanghai yesterday, near record volume saw gold close at a premium of $9.02 to world gold of $1,744.80. China’s total demand for gold has increased on average 14% every year since 2001, but much of it has been propelled by individual investors, Caixin Online reports.

Asians beg to differ with those calling gold a bubble and Asia is clearly a buyer at these levels.

Asians understand gold is a store of value and financial insurance.

Gold's value is that it is a safe haven asset. These are not the claims of a vested interest but an empirical fact backed up by much international academic research.

For the latest news and commentary on financial markets and gold please follow us on Twitter.

NEWS

(The Street) -- Gold Prices Rally Ahead of Bernanke's Speech
http://www.thestreet.com/story/11231717/1/gold-prices-rally-ahead-of-bernankes-speech.html

(Bloomberg) -- Gold May Rebound After Plunge From Record Price, Survey Shows
http://www.bloomberg.com/news/2011-08-25/gold-may-rebound-after-plunge-from-record-price-survey-shows.html

(MarketWatch) -- Gold advances ahead of Bernanke speech
http://www.marketwatch.com/story/gold-advances-ahead-of-bernanke-speech-2011-08-26?link=MW_latest_news

(Bloomberg) -- Gold Set to End Best Weekly Run in More Than 4 Years, Dropping From Record
http://www.bloomberg.com/news/2011-08-26/cash-gold-poised-for-worst-week-since-2009-after-plunging-8-from-record.html

(Wall Street Journal) -- Gold's Violent Slide Shows Strains Among Investors' Ranks
http://online.wsj.com/article/BT-CO-20110825-714805.html

COMMENTARY

(Forbes) -- Gold Tumbles 10% Due To Over-Extension: Bullish Fundamentals Still In Place
http://www.forbes.com/sites/afontevecchia/2011/08/25/gold-falls-10-due-to-over-extension-bullish-fundamentals-still-in-place/

(Reuters) -- "Increasingly obvious that we're approaching some kind of end game of our paper money system"
http://insider.thomsonreuters.com/link.html?cn=uidTWEMEA&cid=254660&shareToken=MzozYjRiMDI1Ni05YzlhLTRiNTAtYmY3MS1iMGFlYjY3NzIzMGM%3D&start=30&end=86

(ZeroHedge) -- Caution: Another Gold Margin Hike Imminent
http://www.zerohedge.com/news/caution-another-gold-margin-hike-imminent

(CNBC) -- QE3 Is Coming by Year End: Roubini
http://www.cnbc.com/id/44276918

(The Telegraph) -- Nobel gurus warn Britain on fiscal overkill and Fed on monetary overkill
http://www.telegraph.co.uk/finance/financialcrisis/8723302/Nobel-gurus-warn-Britain-on-fiscal-overkill-and-Fed-on-monetary-overkill.html

(MarketWatch) -- After the Gold Rush
http://www.marketwatch.com/story/after-the-gold-rush-2011-08-25

(The Irish Times) -- Gold Bubble?
http://www.irishtimes.com/newspaper/finance/2011/0826/1224302992827.html

(CNBC) -- Roubini: “Cash is going to be king; Gold is in a hyperbolic bubble”
http://www.cnbc.com/id/44276918

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malikai's picture

Let the backwardation begin!

Thomas's picture

Could we collectively raise funds to find the guy who coined the phrase "backwardation" and send him to the Strunk and White College of Grammar? That term is a grammatical trimester abortion.

malikai's picture

Agreed. At the same time, 'contango' is also quite fucked as a term as well.

Oracle of Kypseli's picture

Con-tango is the opposite of sin-tango or retardo

Flakmeister's picture

Contango:  Dance Club for grifters...

Snidley Whipsnae's picture

Specialist groups always invent their own language to keep the rubes in the dark as long as possible... and to make them seem smarter than they are...

RockyRacoon's picture

So, that explains all the legal terminology as well.

Bananamerican's picture

the heavier the jargon...the heavier the flim flam

DrStrangelove's picture

The Definitive Gold Price Discovery Video...

So Definitive, I Capitalized The First Letters Of All The Words...

 

http://nationaleconomist.blogspot.com/2011/08/gold-video-production-soro...

 

yeah, thought you would like it...

 

warning: there is no mention of Goldfinger

doomandbloom's picture

Roubini going mad with rage....cos he cant eat gold...cant understand why people are buying gold...yet at the same time wants QE3...

DrStrangelove's picture

on his third set of dentures...

 

still can't eat this darn gold...

 

that was a bad joke

doomandbloom's picture

i actually think Roubini is frustrated because of his incorrect calls on gold...and nothing to do with any other economic theory...afraid of being butt of jokes .

 

Meanwhile Turd says that gold at 1800 would make a H&S....which if it happens, gold falls by around $400....I would say good time to buy...but Roubini and gang will be out in full force then..dickheads

Snidley Whipsnae's picture

I respect Turd and enjoy his site... But I wouldn't put any faith in technical patterns in the current economic environment... For instance, notice how Jim Sinclair's call for gold to 'go parabolic' when it reached $1764 was a non starter...

A 'head and shoulders' with an accompanying margin hike would cause another temporary drop in gold price... but the game changer is the margin hike...

Best advice, imo, is buy and hold physical... preferably out of the reach of desperate governments... Maybe the insiders have info on gold comments/regs to be made by Ben today? Who knows... When govs get desperate they will stop at nothing to save their worthless carcasses...

 

theMAXILOPEZpsycho's picture

if the effect of the margin hikes only brings the price down to what it was less than two weeks ago, I'd say Jom sinclairs theory would've been proved correct.

We'll see, but if the correction is short and sharp and basically knocks no exuberence out of the market, Jim Sinclair will be right - and I think he will be.

Snidley Whipsnae's picture

I like Jim but his old prediction has already been proven wrong... Gold has not gone parabolic at $1764...

and margin hikes will continue to work until they don't...

I hope the paper system shatters and burns but the fact is that it is still working NOW...

Argentinian Moment's picture

I think Jim's prediction was long term in nature and he did not mean that gold would go to the moon this week.  He made a similar call in the mid $500's and was right (long term).  Is he right or wrong on his $1764 call?  We'll probably have to wait a year and see.

Snidley Whipsnae's picture

Jim said 'gold will go parabolic when it reaches $1764'... Hell, we can wait 50 years and all of our crazy azz predictions will prove correct at some point in time...

IMO, Jim was saying that at $1764 TPTB would not be able to contain the price of gold from rising in a parabola... He is wrong... $1764 was just another number and gold has already crossed it going up and down several times...

I am physical only except oil so I don't give a damn how many time paper gold trades above and below Jim's number... But, when a call is wrong a man/woman should admit it...

dumpster's picture

jim dead wrong  lol

1764  then streightto 1910   what is that a limp dick.  the gold story has yet to be played out . And sand box league critics bounce spit balls off the top of their pointed heads and then trot off to work waiting for the bell to ring to further their adventure i trying to make them selves into market pundents

read the rest of his statements about gold once it hit those angels would see a sharp sell off deep but quick.

and by nthe way where were the critics at 250 gold .. and also in 1972 when he called the top at gold . for 1980.. probably having their diaper changed 

Snidley Whipsnae's picture

I've been buying and stacking physical since 1968... I doubt Jim has been doing so much longer than me... My first purchases were worn out numismatic gold double eagles for $60-65 each... Owning bullion was still illegal in 68... I still have them plus a whole lot more...

You won't find anyone that believes in physical more than me...

If you want to buy into someone calling gold futures/physical prices based on voodoo, go for it... 

malikai's picture

I wouldn't call the H&S theory dead just because of the managed state of the markets. TPTB know that there's plenty of people still relying on TA, so they will be happy to give them the prints necessary to get them to do the selling for them. I'm not saying it's game over for gold, I'm just saying that they will use every trick in the book to manage the markets. We should expect nothing less.

Snidley Whipsnae's picture

"TPTB know that there's plenty of people still relying on TA, so they will be happy to give them the prints necessary to get them to do the selling for them."

Might as well look at chicken guts or goat entrails... Voodoo still works with some ignorant groups only because they truly believe that it works...

It's just another yoke to throw off...

malikai's picture

Funny you should say that. I just sacrificed a virgin chicken this morning. It's entrails told me we'll see QE3 today. Let's see if it's right. Either way, I'll be eating chicken and dumplings tonight.

Snidley Whipsnae's picture

The entrails were wrong... enjoy the chicken and dumplings... lol

malikai's picture

Glad I killed that damn chicken! Never liked it anyway. I'll like it more in a warm bowl of soup. :)

Smiddywesson's picture

With this much manipulation, Ben Bernanke laughs at wave patterns, tech analysis, and fundamentals.  The disinformatin campaign extends to technical patterns too.

 

This means Ben can make any pattern he wants and sucker you in or scare you out, like say, before Jackson Hole.  We'll see if that little theory holds true today.

Raymond Reason's picture

Technical analysis and analysis of economic fundementals aren't useful in determining artificial prices.  I'd like to see the US mints run out of metals, then the black market prices would would take over.   

lawrence1's picture

Exactly.  With such tremendously managed markets, TA is not just useless but misleading. We have a criminal kleptocracy supported by a criminal wall street and no regulation. I would like to see bullion dealers, large and small, set their own prices, which is happening more and more.  Some dealers here just refuse to sell at CRIMEX prices when they sudden fall drastically and I dont blame them.

DosZap's picture

Snidley,@08:16

You need to read what Sinclair said again, go to his BLOG.

JSmineset.com

And read what he said........................

He never said it woud go PARABOLIC when it hit $1,764.00 IMmediately, that was ONE of is angels................read his take on the dumpers on the pullback.He has stated many times how this plays out, and it's working like a clock.

Thomas's picture

...or because the world is beginning to recognize the one-trick pony.

Snidley Whipsnae's picture

Yeah, Ben had 2 levers before... interest up or down... print up or down...

Now his interest lever is stuck at zero... his print lever is still operating... for now... but if he leaves the print lever in up then it becomes a useless lever...

Never forget what Greenspan said in his 1966 Ayn Rand magazine article...

http://www.321gold.com/fed/greenspan/1966.html

narapoiddyslexia's picture

He can still extend the duration of his spreadsheet. Forcing down the 10-year might have an effect on the housing market. I know I'll refi a mortgage if he does. With the interest tax credit, plus inflation, my house will be free. 

Snidley Whipsnae's picture

"With the interest tax credit, plus inflation, my house will be free. "

Your house will be nearly free but everything else in your life will not be free... Unless you are one of the fortunate few with an income that is inflation indexed to medical costs, gas, groceries, et al...

I don't have a mortgage and would not take one on now... and if the bankers smell a bout of deflation coming they will not be offering refis... they are greedy but they ain't dumb...

ShouldveLeftHer's picture

As a homeowner who isn't underwater I'd like to add a few ticks to this. The government aggressively tries to buy my mortgage by offering me slightly lower interest rates and ineffectual principle reductions. No joke I get 5 offers a week in the mail and some by phone. I tell them over and over I died in the war but they won't go away! I'll take a principle hike and a 30% rate before I set myself up to fail by signing over my house to Barry and the Gang. Its a ploy gents. What happens when a disaster or emergency "happens" and the gov declares what's yours is his? Legally they can jack your shit without goon squads raiding you or henchmen lurking your every move, they just claim title or demand payment all at once. Not a single shot fired, not a single lawyer hired. With only a penstrokes flex, they leave you vexed. Only through a hail of lead and shrapnel and when Im cold and gone will my shit belong to The Dark Prince and his throng of demonic fork tongued serpents. Come and take it, stop calling and writing, for I have become deaf dumb and blind to your sugar coated goat shit nuggets you call stimulus and "help".

Manthong's picture

Thanks for posting the link for the Greenspan piece that 321Gold has up.

I’ve read it before and I knew that Greenspan was a sellout who claims to be having second thoughts and regrets, but reading it again in light of all that I have learned in the last handful of years was sobering.

Recall that under “The Maestro’s” irrationally exuberant watch that Brooksley Born’s attempt at regulation was squashed and the derivatives bucket shop was legalized.

When the autopsy of the US economy is finally performed, Greenspan will be identified as a once healthy clump of brain cells that went malignant.

 

Elmer Fudd's picture

"Gold falls to 400," you have been living in your western paper-asset loving society bubble much too long...

Get you some brass, lead, and sulfer products, those are cheap.

 

RockyRacoon's picture

...gold falls by around $400...

mac768's picture

.. but you can drink a "Gold-Weizen", still better than "Euro-Beer"

HelluvaEngineer's picture

I hope he has fun wading in 6 feet of water while clutching his handfuls of cash, only to discover that sometimes inflatable boats are king.

Dr. Richard Head's picture

You can't eat inflatable boats.  Plus, boats are a barbaric relic of tradition.  Who fucking needs tradition?  They don't pay dividends.  I mean come on.  You can't chase alpha in a boat.

knukles's picture

Hey, Ms. Silocone Bubblehead said the same thing on CNBS today!
Must be true.  Guess I'll sell all my boats when I'm in NYC this weekend.  (sigh)

MFL8240's picture

Roubini has never been right on any one issue yet because he shares the views on paper versus metal, they utilize his view reagrdsless.

lawrence1's picture

Roubini, a Houdini who cantfind the rabbit in his hat.

akak's picture

Rube-ini, a Keynesian weenie and a gold-hating meanie with the Bernankster's zucchini up his wazzini.

DrStrangelove's picture

We've been bouncing around $1760-1790 since NY closed. 

 

 

I think we have a modest GREEN open. 

 

 

SheepDog-One's picture

Gee, and to think when I bought a lot of gold way back in the old days (2009) it was around $500 and a big daily move on gold was $4.

Optimusprime's picture

Gold At $500 in 2009?  Where?

 

Either your date or your amount is screwy.

grey7beard's picture

>> Gold At $500 in 2009?  Where?

These market wizzards who supposedly buy the lows and sell the highs always crack me up.  This is the third jackwad I've seen claim to have loaded the boat with $500 gold in '09.

 

 

Pladizow's picture

I call BULLSHIT on your elleged purchase!

2009 low about $800.

Last time gold at $500 = 2006.