by
Adam Taggart
China
by
Alasdair Macleod
Executive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
The Very Real Danger of a Failure in the Gold Market
PREVIEW by Alasdair MacleodExecutive Summary
- Central planning are colluding – but failing – to diminish world demand for bullion
- The BRICS are planning a future of less dependence on the West, and gold will play a role
- The East sees gold as "on sale" at today's prices
- Analysis shows they're right; gold is much cheaper than it should be compared to pre-QE levels
If you have not yet read There Is Too Little Gold in the West, available free to all readers, please click here to read it first.
In Part I, I went through the history of Asian demand for gold, starting with the Arabs’ need to find a home for increasing quantities of petrodollars from the late 1960s onwards. My conclusion was that there is very little bullion in private ownership left in the West, there is an unmanageable short position in the unallocated gold accounts held with the bullion banks, and the bulk of accessible monetary gold controlled by central banks is already leased and has been sold into the market to satisfy Asian demand.
The result is that merely suppressing the gold price to enhance credibility of the dollar as a reserve currency is no longer the problem. The problem is now one of crisis management. Western central banks have done everything they can, even persuading the Reserve Bank of India to suppress India’s gold imports. We know this is most probably the case because the Indian authorities have already learned the lesson that gold imports could not be controlled, which is why the Gold Control Act was abolished in 1990. Furthermore, the newly-appointed RBI Governor, Raghuram Rajan is an ex-IMF chief economist, has spent a significant part of his career in the U.S., and is therefore likely to be fully sympathetic with Western central bank objectives. He appears to be the West’s place-man.
Other than the question of Indian demand, there are two possible reasons for the flows of gold from West to East: geo-political, whereby one or more Asian nations are deliberately creating a potential crisis for the West, and different valuation criteria. Both are true and…
by
Adam Taggart
by
Adam Taggart
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
Adam Taggart
by
Adam Taggart
by
Adam Taggart
Total 153 items
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