Originally posted on Sprott Money [9] October 6, 2014
In 2013; a chain of events led to what was (at the time) the greatest stampede into gold in human history. It began with the Cyprus Steal, the West’s first “bail-in”. This led to the realization (by the Smart Money) that no paper assets were safe any longer, within any Western financial institution or market.
In turn, this led to an unprecedented stampede out of the banksters’ paper-called-gold “products”, primarily their ultra-fraudulent bullion-ETF’s. With the paper-called-gold market being 100 times larger than the real (physical) gold market; this naturally caused a plunge in the official price of gold.
It was at this point that the stampede into (physical) gold began. Some of this demand was from the West: sellers of these vast quantities of paper-called-gold suddenly saw the wisdom in holding real bullion: having physical custody of their asset, and thus zero counterparty risk.
Most of the demand, however, came from the East. With the price of gold falling roughly 30%, from already depressed levels; this was nothing less than a “dinner chime” for Pavlov’s dogs. Unlike the serf-populations of Western nations; appreciation (and understanding) of precious metals has not been blunted by roughly 30 years of relentless anti-gold (and anti-silver) propaganda.
With this Eastern understanding; the world had already been witnessing a relentless transfer of the world’s bullion holdings from West to East. Thus like women flocking to a shoe-store sale; this “30% off” on the price of gold in 2013 led to a spike in Asian demand beyond anything previously seen.
As indicated in a previous commentary in June of last year; at that time both China and India were on a pace to import roughly 2,000 tonnes of gold – surpassing any previous total for either nation. China, indeed, ended 2013 with net imports exceeding 2,000 tonnes, according to gold analyst (and China specialist) Koos Jansen.
Gold demand in India was temporarily derailed, however; as India imposed (what was at one point) a near-total embargo on (legal) gold imports into that nation. This draconian measure was a capitulation to blackmail from the One Bank, which had caused a “currency crisis” in India by attacking the value of the rupee in (rigged) global FX markets. The bankers made it explicitly clear that nothing less than a dramatic drop in gold imports would/could rescue the rupee from these currency market attacks.
Official imports into India plunged dramatically, and India ended the year having imported considerably less than 2,000 tonnes. A precise number is not possible; as the legal restrictions on gold imports into India reignited gold smuggling into that country. Indeed, the Indian government had spent years previously “liberalizing” its gold market, precisely in order to stem blackmarket flows across its porous borders.
As gold-smuggling exploded, and it became more and more obvious that a legal ban on importing gold could not stop the flow of bullion into that nation; the bankers themselves capitulated, and allowed India’s government to restore official gold imports to somewhere close to “normal” (i.e. pre-2013 levels). However, making it easier to legally import gold into India has not resulted in a drop-off in smuggling. Indeed, recent reports indicate that gold-smuggling into India is accelerating further.
Now, as more bankster manipulation has caused a (relatively) modest further retreat in bullion prices (roughly a 5% recent drop in the price of gold, and 10% for silver); we see indications of gold demand into China and India returning to that torrid pace of 2013 – just as the beginning of the seven-month “gold season” in India looms before us.
One would never know this, however, from listening to the mainstream propaganda. According to the “World Gold Council”, the sycophantic industry trade group which claims to represent the global gold-mining industry, but actually functions as nothing more than a mouth-piece for the bankers; “consumer demand” into China was only 1097 tonnes last year. This is roughly half the total reported by Mr. Jansen.
As explained by Jansen; this is just more of the bankers’ lying-with-numbers, which we have now come to expect in the gold and silver markets. Regular readers here are already familiar with the serial, absurd lies which we have been fed (primarily over the past decade) concerning “inventory levels” for the gold and silver markets.
We now see even quasi-mainstream analysts simply ignoring the WGC propaganda, and reporting on China import totals for 2014 via the methodology put forward by Koos Jansen: focusing on “SGE delivery data” (the Shanghai Gold Exchange). Based on those numbers, and with recent demand accelerating; we see China once again on pace to approach (or exceed?) that 2,000-tonne level.
Meanwhile, with gold-smuggling spiking, official imports steadily rising, and Indian (gold-buying) “festivals” approaching; India is once again importing gold into the country, legally and illegally, at roughly an annualized rate of 2,000 tonnes per year. Almost certainly, total imports will fall short of that number in 2014 due to the earlier (temporary) disruption of import restrictions. But if one were to take a snap-shot of the gold market today, in many respects it would look nearly identical to the mid-point of 2013.
There are, however, some key differences between the snap-shot from 2013 versus the snap-shot of 2014, making this not quite “déjà vu all over again” (to quote the legendary Yogi Berra). The first of these differences is the overall context of the market itself.
In 2013; gold demand in China and India was exploding to previously unprecedented levels, and as a direct consequence of a dramatic drop-off in price. In 2014; there has not been any sudden/precipitous fall in price, nor are such demand levels “unprecedented” any more. Indeed, to borrow the propaganda buzz-words of the Corporate media; such massive, Asian demand now appears to be “the New Normal”.
More specifically; the context within the giant gold market of India (still the world’s largest repository and hub for the global gold trade) could not be more different. In the middle of 2013; torrid gold demand into that market was about to be (temporarily) curtailed via the extortion operation of the One Bank.
In the fall of 2014; import restrictions into India are still being relaxed, as the One Bank has ‘thrown in the towel’ with respect to its efforts to block the flow of gold into that nation. Meanwhile, gold-smuggling routes into that nation have been fully (and permanently?) re-established. In 2013 the flow of gold into India was about to be interrupted; in 2014, it appears that demand can only go higher.
This raises a question to which no commentator has been able to supply (definitively) a satisfactory answer: where is all this gold coming from? In 2013; with Indian/Chinese gold demand at this level, we saw what can only be characterized as a “panic response” by the One Bank: its draconian (but futile) attack on the Indian gold market.
In 2014, however, with gold demand in these two, giant markets at similar levels (and rising?); we see absolutely no sign of any similar panic from the Western banking cabal. Unless this is merely a façade; it suggests one of two explanations. Either the banksters are unafraid/unconcerned about such demand because they have (somehow) come up with a means of satisfying demand at this level; or, they have simply resigned themselves to some sort of near-term “default” event in global markets.
With respect to the former explanation; one area where the banksters have had some success is with respect to introducing various forms of their paper-called-gold and gold-fraud into China’s gold market. Indeed, here we also see some “Chinese entrepreneurs” seeking to emulate Western fraud in the gold market.
From fake-gold bars [10] to bogus “collateralized loans”; we now see most of the gold crimes which are either well-known or long-suspected in the West being copied in China (but on a much smaller scale). Along with that; we see explosive growth in gambling (rather than investing) in the gold market by Chinese players, in one form or another of paper-called-gold.
Geopolitically, the One Bank has also been busy looting the gold of other nations, mostly through getting its puppet-government in the United States to overthrow the governments of other, gold-rich nations – and then installing new puppets (eager to please their Western masters). Ukraine and Libya are just two recent names which come to mind in this regard.
The near-total lack of transparency in these fraudulent markets makes any precise conclusion at this time impossible. The only inference which can be offered with some degree of reliability is that whatever the explanation to which one subscribes, 2015 is likely to be a “more interesting” year than 2014.
This brings to mind the purported, Chinese curse: “may you live in interesting times.”
-------- Jeff Nielson for Sprott Money [9]