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China
by
Adam Taggart
Executive Summary
- Large players (and likely price manipulators) now have incentive for precious metals prices to rise
- Investor demand for bullion remains at record highs
- Competition for bullion from the East continues to heat up
- Central banks buy more bullion as Comex inventories deplete
- The key signs to know when it will be time to sell your gold & silver
If you have not yet read Part I: Is Gold at a Turning Point? available free to all readers, please click here to read it first.
Manipulation
Much has been written across the Web (including here at PeakProsperity.com) about whether or not the precious metals markets are manipulated in price by big players (major multi-national banks such as JP Morgan). Without delving into the many arguments on both the pro and con sides, Chris and I are of the opinion that sufficient data exists to convince a reasonable observer that price manipulation in the PM markets is indeed real, or, at the very least, highly probable. (For those remaining doubters out there, have a look at the evidence here, here, and here, and let us know if you have a rational, non-manipulative explanation.)
One of the most glaring signs of likely manipulation has been the massive short positions that a small number of large banks (JP Morgan being the most prominent among them) have held for many years, particularly in the silver market [measure positions as % of world silver production]. And not only were these unlimited positions allowed, but this cabal of banks was allowed to naked-sell PMs short (i.e., sell metal without actually owning it first). On the other side of the coin, the long side, position limits were enforced, and there was no similar ability to buy more metal than one could pay for. This imbalance of rules certainly provides the mechanism by which PM prices could be artificially jockeyed more easily to the downside. In this context, a decline from the high $40s to the low $20s looks more understandable.
Well, a very important part of this story has just shifted. The CFTC (Commodities Futures Trading Commission) publishes a monthly report illustrating the positions taken in Comex Futures Contracts
After nearly ten years of being net short in Comex gold futures, U.S. banks have been recently decreasing those short positions, and – for the first time since 2004 (with the exception of a single month in 2008) – they have flipped to become net long gold in May (see bottom chart below)…
The New Game-Changers for Gold & Silver
PREVIEW by Adam TaggartExecutive Summary
- Large players (and likely price manipulators) now have incentive for precious metals prices to rise
- Investor demand for bullion remains at record highs
- Competition for bullion from the East continues to heat up
- Central banks buy more bullion as Comex inventories deplete
- The key signs to know when it will be time to sell your gold & silver
If you have not yet read Part I: Is Gold at a Turning Point? available free to all readers, please click here to read it first.
Manipulation
Much has been written across the Web (including here at PeakProsperity.com) about whether or not the precious metals markets are manipulated in price by big players (major multi-national banks such as JP Morgan). Without delving into the many arguments on both the pro and con sides, Chris and I are of the opinion that sufficient data exists to convince a reasonable observer that price manipulation in the PM markets is indeed real, or, at the very least, highly probable. (For those remaining doubters out there, have a look at the evidence here, here, and here, and let us know if you have a rational, non-manipulative explanation.)
One of the most glaring signs of likely manipulation has been the massive short positions that a small number of large banks (JP Morgan being the most prominent among them) have held for many years, particularly in the silver market [measure positions as % of world silver production]. And not only were these unlimited positions allowed, but this cabal of banks was allowed to naked-sell PMs short (i.e., sell metal without actually owning it first). On the other side of the coin, the long side, position limits were enforced, and there was no similar ability to buy more metal than one could pay for. This imbalance of rules certainly provides the mechanism by which PM prices could be artificially jockeyed more easily to the downside. In this context, a decline from the high $40s to the low $20s looks more understandable.
Well, a very important part of this story has just shifted. The CFTC (Commodities Futures Trading Commission) publishes a monthly report illustrating the positions taken in Comex Futures Contracts
After nearly ten years of being net short in Comex gold futures, U.S. banks have been recently decreasing those short positions, and – for the first time since 2004 (with the exception of a single month in 2008) – they have flipped to become net long gold in May (see bottom chart below)…
by
Chris Martenson
Executive Summary
- The current gold slam has *nothing* to do with the fundamentals for precious metals, which are very favorable right now
- How bad would deflation be?
- Evidence that deflation is arriving
- Why our current monetary system has become so compromised by the banks
- How to best protect your wealth from both deflation and the banks
If you have not yet read Part I: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks, available free to all readers, please click here to read it first.
About Those Wealth Transfers
The biggest news of the recent past is the flow of gold from West to East.
(Source)
With China importing 835 tonnes of gold in 2012 – that we know about (and they may well be doing more under the table for official purposes) – and also standing as the number one producer of gold, with ~360 tonnes of domestic production, none of which is exported, China is consuming at least 44% of total yearly world gold production.
Connect that with India importing between 200 and 300 tons per quarter (2011 imports were 967 tonnes, and 2012 was 864 tonnes), and this represents another 33% of total world mine output. Add in Russia buying more official gold, and you suddenly find that a commanding proportion of the newly mined gold in the world is headed East, where it used to stay largely in the West.
To be clear, I view gold as money and therefore wealth itself. Everything else that can be manufactured out of thin air is merely a claim on wealth. In these terms, the West is slowly but steadily bleeding control of wealth to the East, something I thought our leaders were both aware of and focused on.
Knowing the lower prices will only exacerbate this West-to-East flow, I therefore thought that the bullion banks and central banks would not have dared push that dynamic any further. But apparently – no, obviously – I was wrong, which pains me on several levels.
Add to this the various things going on in the world today, and I honestly thought we were in the most gold-favorable landscape of my life.
Consider:
- Negative real interest rates (powerfully gold- and commodity-friendly throughout history)
- North Korea threatening nuclear and conventional war
- Open confiscation of wealth in Europe from bank accounts
- Japan doubling their monetary base in a brazenly desperate bid to stoke inflation by attacking Japanese trust in their own currency
- Extremely unfavorable bond yields up and down the yield ladder
- Continued European stress and discord with the possibility of a Eurozone disintegration
Taken together, this level of system, sovereign, and institutional uncertainty is about as gold-friendly a situation one could concoct…
Protecting Your Wealth from Deflation
PREVIEW by Chris MartensonExecutive Summary
- The current gold slam has *nothing* to do with the fundamentals for precious metals, which are very favorable right now
- How bad would deflation be?
- Evidence that deflation is arriving
- Why our current monetary system has become so compromised by the banks
- How to best protect your wealth from both deflation and the banks
If you have not yet read Part I: This Gold Slam is a Massive Wealth Transfer from Our Pockets to the Banks, available free to all readers, please click here to read it first.
About Those Wealth Transfers
The biggest news of the recent past is the flow of gold from West to East.
(Source)
With China importing 835 tonnes of gold in 2012 – that we know about (and they may well be doing more under the table for official purposes) – and also standing as the number one producer of gold, with ~360 tonnes of domestic production, none of which is exported, China is consuming at least 44% of total yearly world gold production.
Connect that with India importing between 200 and 300 tons per quarter (2011 imports were 967 tonnes, and 2012 was 864 tonnes), and this represents another 33% of total world mine output. Add in Russia buying more official gold, and you suddenly find that a commanding proportion of the newly mined gold in the world is headed East, where it used to stay largely in the West.
To be clear, I view gold as money and therefore wealth itself. Everything else that can be manufactured out of thin air is merely a claim on wealth. In these terms, the West is slowly but steadily bleeding control of wealth to the East, something I thought our leaders were both aware of and focused on.
Knowing the lower prices will only exacerbate this West-to-East flow, I therefore thought that the bullion banks and central banks would not have dared push that dynamic any further. But apparently – no, obviously – I was wrong, which pains me on several levels.
Add to this the various things going on in the world today, and I honestly thought we were in the most gold-favorable landscape of my life.
Consider:
- Negative real interest rates (powerfully gold- and commodity-friendly throughout history)
- North Korea threatening nuclear and conventional war
- Open confiscation of wealth in Europe from bank accounts
- Japan doubling their monetary base in a brazenly desperate bid to stoke inflation by attacking Japanese trust in their own currency
- Extremely unfavorable bond yields up and down the yield ladder
- Continued European stress and discord with the possibility of a Eurozone disintegration
Taken together, this level of system, sovereign, and institutional uncertainty is about as gold-friendly a situation one could concoct…
by
Adam Taggart
by
Chris Martenson
In this week's Off the Cuff podcast, Chris and Adam discuss:
- A classic symptom of Peak Oil
- The 4 largest oil majors report production declines for 2012
- Rampant insider selling
- The selling-to-buying ratio is at an abnormally high 9-to-1
- Gold's flight to China
- The West-to-East bullion transfer accelerates
- Scarce platinum
- Mine shutdowns and growing demand sends prices higher
- The upcoming Peak Prosperity Seminar at Rowe, MA
- Now's the time for those interested to register
Off the Cuff: Disturbing Data
PREVIEW by Chris MartensonIn this week's Off the Cuff podcast, Chris and Adam discuss:
- A classic symptom of Peak Oil
- The 4 largest oil majors report production declines for 2012
- Rampant insider selling
- The selling-to-buying ratio is at an abnormally high 9-to-1
- Gold's flight to China
- The West-to-East bullion transfer accelerates
- Scarce platinum
- Mine shutdowns and growing demand sends prices higher
- The upcoming Peak Prosperity Seminar at Rowe, MA
- Now's the time for those interested to register
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