Buy Gold Bullion | China's <b>Gold Bullion</b> Imports Slump as $15bn of "Fake Deals <b>...</b> | News2Gold |
- China's <b>Gold Bullion</b> Imports Slump as $15bn of "Fake Deals <b>...</b>
- Baseball Cards or <b>Gold Bullion</b>? Why 'Intrinsic Value' Won't Make or <b>...</b>
- The World's Cheapest Asset - Trusted Resource For <b>Gold</b>, Silver <b>...</b>
- Possession Is 9/10ths of the Law - Trusted Resource For <b>Gold</b>, Silver <b>...</b>
| China's <b>Gold Bullion</b> Imports Slump as $15bn of "Fake Deals <b>...</b> Posted: 27 Jun 2014 12:38 AM PDT Copper "trade financing" scam seen hitting gold, deterring investors and imports... GOLD BULLION imports to China halved in May from the same month last year, and could drop further say analysts as a "metal trade financing" scandal spreads from copper to include the precious metal. Gold imports through Hong Kong – the primary route for bullion shipped into the world's No.1 consumer nation – totaled 52 tonnes last month net of exports, new data showed Thursday. The lowest since January 2013, those gold bullion imports were down by more than 20% month-on-month for the third time running. China's auditor general has meantime uncovered CNY 4.4 billion ($15.2bn) of what he calls "fictional" trades used to borrow money against gold bullion since 2012 – echoing trouble in copper, where the same underlying metal has been used multiple times as collateral for loans. With an on-going investigation at Qingdao – the world's 7th busiest port – now "trying to establish who has proper title to the pledged metal," says a note from French investment and bullion bank Natixis, "Chinese demand for copper imports dropped significantly. "This pattern could be repeated in gold, where investors may be reluctant to engage in new financing deals until the situation is clear." "Any scaling back by banks of gold-backed financing deals," agrees senior analyst Liu Xu at Capital Futures Co. in Beijing, quoted by Bloomberg, "might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders." The auditor general's report says 25 gold processing companies – early-stage refiners in the scrap recycling business – falsified raised loans against bullion collateral, and made a profit by investing the money overseas at higher rates of interest in what he calls "idle arbitrage". Research for market-development organization the World Gold Council said this spring that Chinese warehouses may hold up to 1,000 tonnes of gold bullion as collateral for loans, but said the amount linked to speculative rather than corporate investment was small. Such estimates stand against 2,000 tonnes of metal delivered in 2013 through the Shanghai Gold Exchange, the state-approved entry route for bullion bars. So far in 2014, gold bullion import growth into China "has almost flat-lined," says Standard Bank's commodities unit. "Unless the price drops, demand from Asia, and China specifically, is unlikely to increase." "When these [trade financing] gold deals begin to unwind," Reuters quotes a Shanghai trader today, "there could be an easing of imports though not a sharp decline."  |
| Baseball Cards or <b>Gold Bullion</b>? Why 'Intrinsic Value' Won't Make or <b>...</b> Posted: 01 Jul 2014 08:58 AM PDT I was going through some old boxes in the garage the other day, when lo and behold, I came across a time capsule full of childhood memories: old action figures, Garbage Pail Kids, comic books and, of course, a hoard of thousands of old baseball cards. I'd long since come to grips – like every child of the '80s and '90s – with the reality that my stash of Jose Canseco Rated Rookie cards was not, after all, going to put my kids through college. Heck, my own kids barely showed a passing curiosity toward them. Somewhere around the turn of the century, people lost interest in baseball cards, and once that happened, they were worthless, junk, just scraps of paper. Well, I guess this is a market where the bubble burst, I thought. At least I had a lot of fun memories to show for it. Funny thing – the fate of baseball cards is also what a lot of the naysayers are predicting will happen to Bitcoin one day, and "intrinsic value," or the lack thereof, is the centerpiece in that argument. I remember an article in a hobby magazine from the late 1980s, in which a card dealer marveled at the precarious success of his own profession:
His words are paraphrased through a 25-year lens, but the dealer's revelation about the baseball-card bubble was essentially the same as what people are claiming about Bitcoin today: Without tangible assets to back it up, an arbitrary value that we affix to something only remains for as long as people stay interested in it. That assertion is true whether we're talking about baseball cards, Cabbage Patch Kids, Bitcoins, or anything else whose worth is not attached to its practical value. What's interesting, though, is that detractors of baseball cards and Bitcoin both use precious metals as a counterpoint – gold and silver are examples of things that do makes sense as tokens of value, because they possess intrinsic worth. If the baseball-card dealer from the late'80s had listened to his own advice and put his money into precious metals, he could have earned 10 times his money in silver, or quadrupled it in gold, instead of ending up with nothing. But there's a more important question lurking here: WHY is gold a good store of value? As a metal, it has its niche purposes, but other metals like iron, copper and aluminum are far more useful. It's widely used as a decoration, but its appearance is simple to copy. When it comes down to it, the only reason why gold has any intrinsic value is that we all agree on it as a standard. That tells us two things about Bitcoin. First, it's not destined for failure, because gold, and for that matter, most national currencies, have already proven that something need not have "intrinsic" value in order to be valuable. The most important thing is that it's agreed upon. This is not to say that Bitcoin is necessarily destined for success either – baseball cards (among countless other examples) show us just how easy it is for tokens to lose their value when times change. The second important message that gold tells us is that, where permanently successful stores of value are concerned, inertia is a powerful force. The U.S. dollar has been used as such a value store for centuries; precious metals and gems have been around since the beginning of recorded history, and that's about it as far as truly standard tokens of value go in this country. Other alternatives have succeeded in spots, but if we're talking about the goal of becoming a long-term, universally accepted measure of worth, that's so far been a once-in-a-lifetime thing, if that. Not that it never happens: When Magellan set out on his famous circumnavigation of the globe, risking hundreds of lives, what was his practical motivation? Pepper and cloves, which used to be their own sort of "precious metals," but which you can find today at the local dollar store. It's not that things never change, it's just that it's a big deal when they do. So the question we should be asking is not, "Will Bitcoin fail because it has no inherent value?" – because inherent value isn't the point. A better question is: "What about the current situation favors it becoming agreed upon?" If I were to make a purchase today, what would make Bitcoin a more attractive form of payment than the U.S. dollar? The first answer typically given is privacy; since Bitcoin doesn't have your name on it, per se, it is more anonymous than other online payments. While true, this argument fails the test of creating a compelling reason for universal adoption, simply because for the great majority of transactions, anonymity doesn't matter. Sure, there is always a certain segment of the public that will go out of its way to stand up for privacy on principle, and another segment that may prefer to keep certain types of legal but somewhat dodgy transactions – for example, adult entertainment – a little more "private." But that's only ever going to be a relatively small percentage of transactions by a relatively small segment of the population. As for the rest: If I'm the average person and the FBI can find out that I bought a wheelbarrow or subscribe to Netflix, I probably don't care enough to use a virtual currency that I know little about, and about which I may have heard some nasty rumors concerning safety and black-market practices. In other words, for most of my purchases, the additional cost of using Bitcoins is the trouble it takes to obtain them, and the very real chance that the seller does not accept them; the benefit is anonymity that I don't need for an ordinary transaction. Maybe this changes over the next several years as online tracking and snooping become ever more pervasive, but for now, the regular dollar wins out there. The other major upside people see in Bitcoin is its potential as a sort of fluid border-free currency, and that's where the real promise lies in my mind. It would be nice not to worry about foreign exchange rates, extra fees and time spent, or in some cases, simply not being able to execute a foreign transaction at all. We've already seen steps taken to address this in areas where it was a problem (see: the European Union), so the proof-of-concept is there. Will there be a form of global currency some day? It's entirely possible. Will it be Bitcoin? It's too early to tell. The key, of course, will be the ability to easily exchange Bitcoins for real-world goods – a difference between real money and sort-of money that everyone involved with cryptocurrencies is well aware of. I personally mined a few thousand Dogecoins just for fun, knowing that for the time being, there was really nothing I could "buy" with them. With Bitcoin, that trend seems to be going in the right direction, but will it reach a critical mass? Who knows. A big retailer like eBay or Amazon could start accepting it (for a fee, of course) and change things overnight. Or, it could continue on its current course as a specialty form of payment – an occasional star, but a curiosity to most. And there's nothing wrong with that. A global currency just has to do its own job; it doesn't have to dominate all other forms of payment – a mistaken impression that a lot of people rooting both for and against Bitcoin seem to share. The idea of a world in which cryptocurrencies exist alongside the current system and make certain things easier is both pleasant and achievable. Talk of Bitcoin obsoleting the dollar and creating some chaotic, lawless new financial system just tends to alienate, or at least confuse, the average outsider. As it stands right now, Bitcoin is surviving, a notable achievement in itself. Because of the difficulties mentioned above, I don't think it's going to become a large-scale replacement for ordinary currency anytime soon, but then again, it doesn't need to. The door is wide open for it to fill a useful role in payments – and once we get past the boom-or-bust mentality that so many of us observers have, we'll start to get a real idea of what that role is. |
| The World's Cheapest Asset - Trusted Resource For <b>Gold</b>, Silver <b>...</b> Posted: 01 Jul 2014 12:15 PM PDT  For the past week, my "spider senses" have been tingling – as something tells me the window to own the "world's cheapest asset" may shortly be closing. No, this is not a "market timing" call. To the contrary, given the 100% rigged nature of today's financial "markets," traditional tools have limited short-term usefulness; and thus, we simply focus on the long-term nature of our investment thesis. That said the most important aspect of said thesis is that in fact, precious metals are not "investments" but savings. It matters not when you buy them, so long as you store significant amounts of your net worth in them. Unless alchemy somehow becomes feasible or an alternate currency emerges possessing all the key definitional parameters of money, physical gold and silver will NEVER be usurped of their time honored monetary roles. In the case of silver specifically its unique tripartite role as the world's most indispensable industrial metal, timeless wealth preserver and universal medium of exchange makes it one of the most valuable substances ever known. Unlike gold, nearly all above ground silver has been consumed by industry, to the point that total inventories are no more than two billion ounces – the majority of which sits in private safes never to see the light of day. Moreover, in recent decades, emerging technology has made it the second most widely used commodity in the world trailing only crude oil in number of applications. There's a reason the U.S. Geological Service claimed in 2010 that silver will be the first "extinct" element on the periodic table; and in our view, once the global fiat Ponzi scheme goes into its final death throes said "extinction" will shift from inevitable to imminent. Jim Sinclair believes this historic economic inflection point will commence this fall; and whether he is correct or not, that time is coming – and soon. For years we have written of our firm belief the gold/silver ratio must revert to at least its historic ratio of 15:1, and potentially significantly lower for reasons detailed in countless articles such as August 2013's "Silver Prices Way Below The Cost Of Production" and last month's "Silver Prices At Historic Disparity With Fundamental Reality." You know "little things" like surging global demand and plunging supply.
The gold/silver ratio fell as low as 32 in April 2011 – before the Cartel's "Sunday night paper silver massacre" was executed in a "no offer" environment; when for the second time in three years, global physical silver supply completely dried up.
In our view, it's just a matter of time before TPTB lose control over this, the "Achilles Heel" of the global financial system – as silver's supply/demand balance has never been tighter nor its fundamental, technical and sentimental fundamentals more bullish. Frankly, we don't think the case for silver has been more compelling in our lifetimes; and certainly, not since the late 2008 "low" – when physical silver supplies ran out amidst blatant Cartel paper raids, yielding physical premiums of nearly 100% and multi-month delivery delays. This morning, the key "story" – outside a brutal Japanese Tankan sentiment survey, increased U.S. troop deployments in Iraq, and the end of the Ukrainian "cease-fire" – cumulatively, pushing the dollar index below the key 80 level – is the Cartel's unceasing attempt to quell the burgeoning PM re-emergence. Oh, did I mention the biggest news of all? The anticipated reduction – perhaps, by a significant amount – of India's gold and silver import duties to be announced in the July 10th budget statement? To wit, after yesterday's "unexpected" PM surge – "coincidentally," the second the COMEX' first delivery day period concluded at 1:30 PM EST – the Cartel has made it blatantly obvious that their new "line in the sand" has been raised from $1,320/oz. to $1,330/oz. Simultaneously, they are quite obviously "clinging for dear life" at $21/oz. silver, just above the "battlefield $20 silver" level they have fought tooth and nail for the past six years (whilst production costs have risen by 30%-50%). I mean, can you imagine how gold can be the best performing asset class of 2014?; yet, despite being up every day the past week has been hit every day at the "2:15 AM" open of the thinly-traded London paper markets?
In fact, today's "news" strongly validated that last week's powerful breakouts – pushing gold and silver well above their respective 200-day moving averages of $1,287/oz. and $20.41/oz., respectively, may have some serious legs. Not to mention, confirming exactly what we wrote in last week's "Beach Ball At Record Depths" – in which per the below damning chart, we are simply baffled as to how Wall Street is projecting 2Q GDP growth of 3.5% when all relevant real data screams flat, flat, flat! To wit, today's "ISM" and "PMI" diffusion indices were in the mid-50s (as expected), supposedly suggesting economic "growth." However, the only real data released was construction spending – which came in at a whopping +0.1%, below the +0.2% estimate. In other words, not a shred of real growth to be seen putting yet another chink in TPTB's dying "recovery" propaganda scheme – which we assure you, must inevitably be addressed by Whirlybird Janet Yellen likely, sooner rather than later.
In the aftermath of said data, the Cartel is doing everything it can to protect its gold "line in the sand" at $1,330/oz.; but increasingly so, it is looking as if $20/oz. silver is on the verge of moving from a long-term ceiling to a permanent floor. The biggest test of all will be on Thursday morning when the BLS propaganda team has the unenviable task of trying to create 210,000 jobs that don't exist, whilst preventing the entire world from permanently losing faith in fraudulent U.S. economic data. As we continue to trumpet each day, it's just a matter of time before the "propaganda leg" of TPTB's perception altering toolbox dies, leaving only the transparency of money printing and market manipulation that inevitably yields hyperinflation.
On that note, we penned "charts even we can appreciate" on January 2nd, with gold and silver trading at $1,220/oz. and $20/oz., respectively. Again, we cannot emphasize more how short-term charts have become meaningless in today's rigged markets. However, even we can't ignore charts going back to the abandonment of the gold standard 43 years ago – depicting dramatically oversold technical conditions, which recently turned upward amidst the most bullish fundamentals imaginable. Such charts depicted the MACD or Moving Average Convergence/Divergence variable; which today, were validated by these charts depicting both metals on the verge of making long-term "golden crosses" – i.e., 50 month moving averages crossing above 200 month moving averages. The last time this occurred – for both metals – was at the bottom in 2009; and thus, even we are hard pressed to ignore such action. Given the enormous "commercial" naked shorting we wrote of yesterday – particularly after last Thursday's post-FOMC PM surge – commentators like James Turk are writing of the potential for a near-term commercial "short squeeze." We are as always skeptical of anything occurring on the fraudulent COMEX including the data it publishes. However, as Bill Holter wrote this morning it is quite eerie seeing silver open interest near record levels – as following last week, the only time open interest has been this high was in early 2008, just before Financial Meltdown I commenced. As silver prices were rising in early 2008 – as opposed to this year's tight trading range – the majority of the 2008 open interest increase was due to speculative buying. However, three weeks ago, "large speculators" were net flat; and today, hold a net long position less than half that of early 2008. In other words, it would be difficult to make a case that "speculation" is behind the recent open interest surge; but to the contrary, enormous Cartel naked shorting.
Only you can decide if what we're writing is important to your personal due diligence process. However, that is the beauty of the Miles Franklin Blog; as between David Schectman, Bill Holter, and myself you'll receive multiple fundamental, technical and sentimental angles to analyze. Our goal is simply to assist in this process; and ultimately, help you understand that the only way to guarantee the preservation of purchasing power over time is with the time-honored value of physical gold and silver. Whether or not the "world's cheapest asset" breaks its Cartel shackles now – as Jim Sinclair and others anticipate – or sometime slightly later on is immaterial. At current prices – and retail availability – you may never get another chance to protect yourself as is the case today. And in the particular case of silver, it's a fait accompli its "ultimate quadruple top breakout" inevitably occurs; and when it does, not only will the artificially created "gold/silver" ratio return to historic levels, but at absolute levels most of us cannot comprehend. As always, we encourage you to call Miles Franklin at 800-822-8080 – where our extremely experienced team will answer any and all questions you may have. Not to mention, you can always email me at ahoffman@milesfranklin.com. Similar Posts: |
| Possession Is 9/10ths of the Law - Trusted Resource For <b>Gold</b>, Silver <b>...</b> Posted: 01 Jul 2014 08:15 AM PDT Over the weekend, I received an e-mail with some commentary written by Bix Weir. Within the commentary was a paragraph and a link to an article that he penned 5 years ago. There was also a link to a statement that was made by the Chinese back then that "they reserved the right to default on derivatives." The paragraph and links follow: "In August of 2009 China stated publicly that they "reserve the right" to default on any derivative contracts… I had completely forgotten all about this, I'm sorry to say, but glad to have again come across it because it's a piece to the puzzle that is needed. China's SOE's (state owned enterprises) reserve the right to default on derivatives. Do you understand what this means? It means that China is playing the "game" and will play the game only for as long as it benefits them to do so. They are also playing the game with the knowledge that they hold all of the cards and can press the default button when, how, and with whom they want to. Let's expand on this a bit. We know that China has been a huge buyer of physical gold for several years and that they have now accumulated a minimum of 5,000 tons. This would make China the 2nd largest holder of gold in the world if the U.S. were to still have their 8,000+ tons. As I've written many times before, logic tells us that the U.S. cannot have this gold because too much physical has been purchased in relation to production; it had to come from "somewhere." If you recall, Zero Hedge has hypothesized that gold futures were used to depress price over the last two years even as physical demand argued for higher prices. If this is true (which I believe it is) then what exactly have the Chinese done? I believe they have accumulated the metal which is now safely onshore and vaulted while they are short derivative contracts. Do you see how the old saying "possession is 9/10ths of law" applies here? Does it even matter "how short" they are if they reserve the right to default? I'd like to add that in my opinion, if this has been done and the short sales truly exist (again, I firmly believe that they do), it was not to depress the price. I don't think the Chinese care one way or the other whether they were paying $1,000 per ounce or $10,000 per ounce as long as they got delivery of it. The suppression of price acted to scare buyers away and shake some loose change out of the pockets of nervous or scared owners. The price suppression was meant to create less competition and even a little bit of added supply, "dollar price" was unimportant. In my opinion, the Chinese found out and knew for sure back in 2009 that "they had been had" by the West. I believe that they knew for sure that they were the object of a Ponzi scheme and would ultimately be defaulted on with their dollar assets. They announced their gold holdings, said that they reserved the right to default on derivatives and spent the following years building infrastructure, stockpiling raw materials (and gold) and went on a buying spree where they promised to "pay in dollars." Do you understand the last sentence and what it really means? It means that "the joke" is not on China because they figured out the punch line before it was given! Before finishing this I would like add just a little bit more opinion. We know that the COMEX silver open interest has recently soared to near record amounts. I have speculated that this might well be Chinese proxies. The open interest for July could close to half of dealer held metal, the September contract could completely clean out and default the COMEX silver vaults if current open interest stood for delivery. Is it possible that the Chinese would create a default in the West and then make good on their word and default on their derivatives positions? Could they say "we would not have defaulted if we were not defaulted upon first?" What would the end result be if this theory is correct? Let's see, the Chinese have the infrastructure built, they have raw materials and contracts for more using dollars to pay, they have been building political bridges all over the world and most importantly they have the gold! I also must wonder if this "right to default" is what the Chinese used as leverage to get official gold to move from West to East. Could they have threatened default unless they really got paid …in gold? For what reason would the West (the Fed) deliver gold and empty the vaults? To buy a little bit of time? If they did not make the deliveries then what would the world look like today? Possession isn't 9/10ths of the law; I think we will find out that it is the law! Similar Posts: |
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