Posted at 10:36 AM (CST) by & filed under Jim's Mailbox.


A man speaks his mind!


CIGA Wolfgang R

“I Own Krugerrands” Says Legendary Jim Grant
Submitted by GoldCore on 07/28/2015 07:06 -0400

“I Own Krugerrands” Says Legendary Jim Grant

- He is “very bullish indeed” on gold

- Gold is “investment in financial and monetary disorder” – says Grant

-  It thrives in current environment – “uncertainty, turbulence and disorder”

- “One of the most radical periods of monetary experimentation in the annals of money”

- “Gold…is now the conjunction of price, value and sentiment”

- Reminds owners of gold that the original reasons for buying gold have not gone away

- Believes Fed will raise rates despite deflationary environment

- Explains detrimental effect of excessive debt on an economy

- Grant light-heartedly destroys Jason Zweig’s “pet rock” gold jibe

Jim Grant, publisher of Grant’s Interest Rate Observer says that gold is “an investment in financial and monetary disorder.” He believes that today we are experiencing “uncertainty, turbulence and disorder”.

When asked how he liked to own gold he said he owned physical, generic, non-numismatic coins – specifically mentioning South African Gold Krugerrands and also mining shares.

Krugerrands are one of the cheapest and most cost effective ways to buy gold with very low premiums. Clients in Ireland, the UK, the U.S. and internationally are currently buying Krugerrands at extremely low premiums of just 2.5%. They remain some of the most popular bullion coins in the market due to their durability (harder 22-carat gold coin), recognisability, portability and liquidity throughout the world.

He warns:

“You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing — we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks”.

He adds, “We are in one of the most radical periods of monetary experimentation in the annals of money”, with a “low probability” of a favourable outcome.

Given the disorder he sees in the world due to monetary experimentation and the very low gold price Grant says,

“You want to have exposure to the reciprocal asset of the paper assets that are the most popular – so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”

He describes the recent fall in prices as “terrifically vexing but a wonderful opportunity” and reminds owners of gold that the reasons for owning gold have not gone away. He emphasises that gold thrives in periods of turbulence and disorder and uncertainty adding “I think we have all three of these things.”




Yet, within all this flux, I’m constantly seeking a snippet of wisdom in any article I read. Today, it appears I’ve found one.

From the article below, Simona Gambarini, commodities economist for Capital Economics, makes an astute observation: the reduction of exposure to dollars, which brings up the question…WHY? A very important question that is never addressed!

"She added that emerging market central banks looking to reduce exposure to U.S. dollars also have “few credible alternatives to gold” right now."

If that is the case, then all this talk of the U.S. Dollar being the ultimate safe haven, is nothing more than wishful thinking. Hogwash, I believe they called it in my day.

CIGA Wolfgang Rech

Central Bankers To Save The Day For Gold – Commodities Economist
By Kitco News
Monday July 27, 2015 15:40

(Kitco News) – One research firm says central bankers may help gold find a floor after prices dropped below $1,100 an ounce last week.

“[W]e argue that the official sector will remain a net buyer of gold for the foreseeable future and that the additional demand will help to set a floor under the gold price,” said Simona Gambarini, commodities economist for Capital Economics, in a note Monday.

According to the UK-based firm, central banks have become major gold buyers, with the official sector accounting for roughly 10% of total gold demand over the past five years, after having been net sellers of the metal from 1989 to 2002.

She said the tide had turned by 2010 as the official sector became net buyers of gold again.

“Since then, 1,537 tonnes of gold have been added to global reserves, with China and Russia accounting for about 80% of this amount,” she explained, adding that the International Monetary Fund (IMF) remains one of the largest official holders of gold with 9% of global reserves under its belt.

She added that there is good reason to expect the pace of gold purchases to pick up this year, especially from emerging market economies.

“[T]he World Gold Council (WGC) reported that 120 tonnes of gold were added to global central banks reserves in Q1 in 2015 and a further 11.4 tonnes were accumulated in April and May. However, these figures do not take into account the 604 tonnes addition to China’s official reserves, announced last week, as the time of the buying has not been confirmed and it likely happened over several years,” she said.

“While the increase was (arguably) less than might have been expected given the surge in total reserves over this period, this does suggest that there is more buying to come [from China].”


Posted at 10:32 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’

- Complacency on the U.S. Economy and the U.S. Dollar Could Be Shaken in the Week and Month Ahead
- Durable Goods Orders in a Pattern of Intensifying Monthly and Quarterly Year-to-Year Contractions
- Second-Quarter Durable Goods Orders (Ex-Commercial Aircraft) in Steepest Annual Decline Since Economic Collapse
- Second-Quarter New-Home Sales Fell 7.3% (-7.3%)

"No. . 738: June Durable Goods Orders, New-Home Sales, Household Income"


Jim Sinclair’s Commentary

These kids have moxie

A Renegade Trawler, Hunted for 10,000 Miles by Vigilantes
For 110 days and across two seas and three oceans, crews stalked a fugitive fishing ship considered the world’s most notorious poacher.

ABOARD THE BOB BARKER, in the South Atlantic — As the Thunder, a trawler considered the world’s most notorious fish poacher, began sliding under the sea a couple of hundred miles south of Nigeria, three men scrambled aboard to gather evidence of its crimes.

In bumpy footage from their helmet cameras, they can be seen grabbing everything they can over the next 37 minutes — the captain’s logbooks, a laptop computer, charts and a slippery 200-pound fish. The video shows the fishing hold about a quarter full with catch and the Thunder’s engine room almost submerged in murky water. “There is no way to stop it sinking,” the men radioed back to the Bob Barker, which was waiting nearby. Soon after they climbed off, the Thunder vanished below.

It was an unexpected end to an extraordinary chase. For 110 days and more than 10,000 nautical miles across two seas and three oceans, the Bob Barker and a companion ship, both operated by the environmental organization Sea Shepherd, had trailed the trawler, with the three captains close enough to watch one another’s cigarette breaks and on-deck workout routines. In an epic game of cat-and-mouse, the ships maneuvered through an obstacle course of giant ice floes, endured a cyclone-like storm, faced clashes between opposing crews and nearly collided in what became the longest pursuit of an illegal fishing vessel in history.

Industrial-scale violators of fishing bans and protected areas are a main reason more than half of the world’s major fishing grounds have been depleted and by some estimates over 90 percent of the ocean’s large fish like marlin, tuna and swordfish have vanished. Interpol had issued a Purple Notice on the Thunder (the equivalent of adding it to a Most Wanted List, a status reserved for only four other ships in the world), but no government had been willing to dedicate the personnel and millions of dollars needed to go after it.

So Sea Shepherd did instead, stalking the fugitive 202-foot steel-sided ship from a desolate patch of ocean at the bottom of the Earth, deep in Antarctic waters, to any ports it neared, where its crews could alert the authorities. “The poachers thrive by staying in the shadows,” Peter Hammarstedt, captain of the Barker, said while trying to level his ship through battering waves. “Our plan was to put a spotlight on them that they couldn’t escape.”


Posted at 11:11 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

While taking a short vacation last week, this article was intended to be my first one upon returning.  That plan was squashed a week ago with the brutal "interventions" upon gold and silver during the illiquid overnight hours early Sunday morning.  Let me add to what I wrote last Friday by saying the phrase "TIME AND SALES"!  For anyone who does not know what this means, any trade on any market anywhere in the world has a "paper trail".  It is called a "time and sales report".  Very simply, it reports who traded what, in what amounts and to whom.  Once the broker is identified, then regulators can query as to who the customer was for whatever trade in question.  If they want to know "whodunit", it’s quite simple.

This is not rocket science.  It is not hocus pocus or even anything "special".  Time and sales have been around since the dawn of trading.  Even prior to computers, handwritten records were taken to record who traded what, when and in what quantities.  Should the SEC, NYSE, CFTC or anyone else want to know who is doing what, it takes five seconds or less to find out.. (This includes the Chinese who have outlawed selling under the penalty of firing squad!!!  So who is doing all the selling?) In my opinion, the regulators should be strung up on lampposts for their lack of doing the jobs they are being paid public tax money to do.  They have turned a blind eye, presumably because they are told or believe it is for "the greater good"?  …the greater good… sounds like something out of Russia or China back in the day when I was a youngster in the 1960′s – or even something in the history books we read as kids in school regarding Nazi Germany.

Do you remember this time period?  I still remember this time frame very well and pine for it every day.  Back in those days we couldn’t wait to get home from school so we could get to play baseball, football, basketball or even hike it to the nearest pond in winter time to play some pickup hockey.  Back in those days our parents knew where we were by where our bicycle was.


There were no cell phones and if we needed to make a call from a public place, we would pull the dime out of our pocket our parents always insisted we have.


We could sell (or even buy) lemonade without a health department license and had no fear of arrest – we even gave the police free samples.  We walked a half mile or even a full mile to get to school (but not uphill both ways nor always in the snow).  We did this with friends or if we were late we did it alone.  Back then this was the norm.  Today, parents are regularly being arrested for allowing a child to go two blocks away on their own… not to mention the nine-year-olds for selling lemonade!!!
  After playing, we’d all head home for dinner and get to watch some TV.  Remember?  " TV" where no cussing was allowed.  Most shows had a "theme" or an underlying lesson that taught kids "good always triumphed over evil".  We watched Batman, Superman and others.  Western’s were in vogue and there was always a lesson to be learned from watching The Rifleman or Gunsmoke.  I have said several times over the years when writing on this subject, "Leave it to Beaver cannot even be found on syndicated reruns anymore".  My point is, the "wholesome" world we grew up in is so far gone, current history books don’t even mention it as a footnote!

Think about where we are today.  Where handshakes used to suffice, contracts are now drawn up to be purposely broken.  More than half of our population "takes" while less than half the population supports this spending habit.  Worse, it is the "supporters" who are vilified today because they don’t "give enough."  We used to have free speech as outlined in The Constitution, now there is only free speech for the "special" groups.  Anyone who speaks against any of these very special groups is branded a racist, sexist, homophobe, or religious persecutor (except of course, unless you’re speaking against Christians – that’s OK… even seemingly encouraged).  Or worst of all, you could be labeled a "CONSERVATIVE!"

Today it is OK to burn the American flag, outlaw the quaint historical  Confederate flag …while flying the flag of any other nation (here in Texas the favorite to fly is that of Mexico) on our own sovereign soil.  I noticed yesterday while in a very long  U.S. Customs line upon returning home, how much longer, formal and probably difficult it was rather than just swimming across the river!  Many states no longer require a voter registration card to vote or even a driver’s license, so the motto "vote early and often" applies.  Citizens who pay for "old" health insurance now get "charged" extra on their taxes, while those who can’t afford insurance get it for free… along with cellphones, housing, food, stipends for each child etc. …and anyone who speaks out about it is branded a "crazy."  Please let me remind you, this country was originally formed because of oppression and the practice of "taxation without representation."  Have we pretty much gone full circle?

You could not have told me even 20 years ago we would be where we are today.  We have a system where the president makes up laws as he goes along, the Supreme Court rubber stamps his illusions and Congress has been relegated to irrelevance.  Speaking of Congress, didn’t "We the People" just throw the bums out?  Didn’t the Republicans run on a ticket that said they would overturn all sorts of ridiculous (and if you ask me) tyrannical laws?  Have they overturned anything?  No, they just passed the fast track trade bill which will gut our economy even further …while the Democrats voted against it …?  Forget about the giant sucking sound Ross Perot spoke of, we will soon hear the wheezing and gurgling last breaths of a nation, in my sad opinion.  In the interest of not losing you as a reader, I could go on and on about subjects like guns, GMO’s, baby parts for sale or whatever but I think you get the point and I’ll stop here.

From an economic and financial standpoint, it is funny that while away I read "The Scarlet Woman of Wall Street."  This was the story of Daniel Drew, Vanderbilt, Fisk, Gould and Erie railroad during the mid to late 1800′s.  There were no financial laws back then that prevented anything with the exception of bribery which was impossible to prove unless the giver and receivers were both stupid beyond their years.  Then all sorts of laws were written and the playing field was somewhat leveled (as much as it could have been).  Now, there are so many laws on the books, it is impossible not to break one of them.  The thing is, financial institutions do not care.  Since no one goes to jail (except for a couple of hedge fund managers), it is more profitable to illegally and blatantly swipe $10 billion because you know your fine will only be $100 million.  If you think about it, management in today’s world could probably be held accountable in today’s civil legal system for NOT BREAKING THE LAW and leaving money on the table.  Why play fair when everything is rigged, while you can steal and pay only 1% or less of what you made?  It is almost management’s "fiduciary duty" to lie, cheat and steal in order to not fall behind!

To wrap this piece up I would like to say this, if you don’t believe or cannot see that all markets are rigged all of the time I’m sorry.  If I offended anyone for any reason, again I’m sorry.  If you believe today is "normal" in any way, I am sorry.  Actually, let me clarify this: I am not sorry, but I am sorry you don’t understand the point I am trying to get across and sorry you cannot see it.  Unfortunately, the American people have been slow boiled into believing our lives are normal and things are "just the way they are."  We have been lulled into believing we are an "exceptional" people and "deserve" the finer things in life.  What we have forgotten is that hard work, hard money, and innovation is what made this country great to begin with.  Many today don’t remember or never knew this very basic tenet…but ignorance does not change the fact.  Truth and justice (and for the most part "business") was what America was once all about.  Please do not tell me I am naïve.  I am not.  Please do not tell me this is not being done according to a plan.  It is.  There is zero percent probability the policies in place today are by mistake.  They are not by mistake and no one could be so stupid which leaves only one option …"purposeful" is the operative word.

The United States was the shining light of the world in so many ways.  We are no longer.  We were built as a Republic that followed The Constitution which was written mainly by God fearing Christians.  We have evolved into a perverted, apologetic, weak and slovenly society with little to no values regarding anything from our ethics, morals, constitutions, or anything else.  We believe we deserve the best and should work the least (if at all).  It’s the American WAY!!!  Unfortunately, what I write here is now considered by the majority as either anti-government or unpatriotic.  It is neither.  In fact, all I advocate is following The Constitution.  You know, that "thing" our politicians "swear to God to uphold" (did you catch that?  They swear to God!  Not to Walt Disney, Facebook or even the almighty Google!) while raising their right hand with their left hand on The Bible?  I am a true patriot in a world where burning the flag, shredding The Constitution and spitting on The Bible is considered sane and normal.  I am here to remind you it certainly is not!  I am not writing this to convert the perverts, only to let those who are still sane know that yes, you are still sane.  That said, in today’s ludicrous world, what I write here can be used as proof of my "insanity" and my lack of "patriotism."  You decide.

I guess I would sum it all up by twisting the words of Superman, "Truth, Justice and (is no longer) The American Way!

Standing watch (with tears in my eyes),

Bill Holter
Holter -Sinclair collaboration
Comments welcome!
[email protected]

Posted at 1:42 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

FT article "Gold a Flight to Safety" was in the main a review of gold’s fall over the past years, as is most reporting. It is however impressive that that Henry Sanderson of the prestigious Financial Times reached out to provide needed balance to the subject by interviewing gold and PM expert Bill Holter. Bill, as always, is a master at laying out the entire situation without exaggeration in precise, easy to understand language. Bill went directly to the points.

Well done Bill Holter.

Gold: Flight from safety
Henry Sanderson, David Sheppard and Neil Hume
July 24, 2015 7:18 pm

(Excerpts from article)

“Over the past year, our physical gold sales in branches have not been very good,” says an employee at one of China’s largest state-owned banks in Shanghai, who asked to be called Mr Chen. “Gold prices had a big fall, no aunties have come to buy,” he adds, referring to the middle-aged women who were big buyers when the price last posted a big fall in 2013.

But the gold bugs are not for turning: Texas-based former stockbroker Bill Holter believes it remains a buying opportunity. 
“I can calculate on the back of a napkin that China is buying more gold,” says Mr Holter, adding that import data supports his view. He also believes that gold will have its moment again when the world’s current build up of debt pops.

“Mathematically it’s guaranteed to happen, it is just a question of when,” he says. “You cannot try to time gold. You just buy it and close your eyes and you know time is on your side.”



Credit card debt makes up for lack of income growth: Credit card debt outstanding back up to $900 billion. Since 1980 household income up 300% while credit card debt up 1,760%.

The middle class started disappearing in earnest in the late 1970s.  Massive inflation started eating away at the standard of living for most Americans.  Yet much of this was covered up by access to debt.  Credit cards, creative mortgages, student loans, and auto debt all allowed Americans to continue acting as if prosperity was only an American Express card away.  Credit card debt outstanding is now back up to $900 billion, a number last seen during the Great Recession before the great deleveraging.  Americans have used debt as a means to cover up the reality that the middle class is disappearing.  Credit cards are probably the clearest example of spending money you don’t have.  Credit cards allow you to literally spend future earned money today.  We always hear that many pay their balance off each month.  Well the data shows something else.  There is $900 billion in credit card debt floating out in the system.

The growth of credit card debt

Our entire system is built on easy money.  Debt is the spending elixir for many households.  Unfortunately as wages have gone stagnant people have found it necessary to be reliant on debt to purchase the artifacts of middle class living.

Here is a sobering thought; household income is up 300% since 1980 while credit card debt is up 1,760%.  As the middle class standard of living has fallen, people simply cannot give up on this path and have borrowed their way up:


And Americans have gotten more comfortable going into debt for a variety of things.  Credit card debt used to be the number one non-housing related debt class in the country.  That award now goes to student debt reaching $1.36 trillion.  But as the recession looks further in our past, Americans are quickly going back into credit card debt:


Gold and Gibson’s Paradox
Tyler Durden on 07/26/2015 17:15 -0400

Submitted by Alasdair Macleod via,

There is a myth prevalent today that the gold price always falls when interest rates rise.

The logic is that when interest rates rise it is more expensive to hold gold, which just sits there not earning anything. And since markets discount future expectations, gold will even fall when a rise in interest rates is expected. With the Fed’s Open Market Committee debating the timing of an interest rate rise to take place possibly in September, it is therefore no surprise to market commentators that the gold price continues its bear market. Only the myth is just that: a myth denied by empirical evidence.

The chart below is of a time when the opposite was demonstrably true. From March 1971 to December 1979 the trends in both interest rates and the gold price rose and fell at the same time. It is worth noting that this occurred over more than one business cycle, so it is not a relationship which was cycle-dependant.


The myth is therefore satisfactorily debunked.

To understand why this relationship between interest rates and gold is not as simple as commonly believed, we must take the argument further to bring in commodities generally and visit the tricky subject of Gibson’s Paradox. This paradox is based purely on long-run empirical evidence, when gold was transaction money, covering the two centuries between 1730 and 1930. It observes that the level of wholesale prices and interest rates are positively correlated. It is not the price relationship that is consistent with the quantity theory of money, which presupposes that interest rates correlate to the rate of price inflation instead of the price level itself. This maybe a reason why monetarists mistakenly argue, as we also discovered in the seventies, that central banks can manage the rate of inflation through interest rate policy.The common view in markets today about the relationship between interest rates and price inflation is wholly at odds with the longer-run evidence of Gibson’s Paradox and accords with the more fashionable quantity theory instead.


Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down
Tyler Durden on 07/27/2015 06:32 -0400

This was not supposed to happen.

After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!


The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg’s Richard Breslow: "fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day." Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.


The last thing the communist party and the PBOC wanted was another massive sell off after having not only fired the "bazooka" but come up with a different bazooka to halt "malicious sellers" virtually every day, including threats of arrest.


Posted at 11:31 AM (CST) by & filed under Jim's Mailbox.


From your posting yesterday (listed below), July 26, 2015, one must take note of the corner the Fed has painted itself into.

A true definition of “Between a rock and a hard place.”


To save the housing market, the Fed must increase inflation. However, in doing so they would crash the bond market.

Sadly, there is no respectable choice.

And the longer they wait, the more severe the consequences.

CIGA Wolfgang Rech

The Most Dangerous Bubble In History And Why The Central Banks Are Now In A Panic
July 24, 2015
By Michael Pento of Pento Portfolio Strategies

July 24 – (King World News) –

According to Trulia, at its 2006 peak home prices were 39% overvalued based on consumer incomes and cost to rent

But the bond bubble is a classic bubble thanks to Wall Street and the Federal Reserve. The bond market qualifies as being in a state of over supply because there has been an additional $60 trillion in total global debt that has accrued since 2007.

During the first half of this year, $891 billion in bonds were issued in the U.S. alone. That’s up 7.5% from the same period in 2014, which was itself a record year, according to the Securities Industry and Financial Markets Association.


Posted at 1:52 PM (CST) by & filed under In The News.

The Most Dangerous Bubble In History And Why The Central Banks Are Now In A Panic
July 24, 2015

On the heels of another chaotic trading week in major markets, today one of the top economists in the world sent King World News an incredibly powerful piece warning about the most dangerous bubble in history and why the central banks are now in a panic.  Below is the fantastic piece from Michael Pento.

KWN will be releasing interviews all day today with Eric Sprott and many others, but first…

By Michael Pento of Pento Portfolio Strategies

July 24 – (King World News) – One of the most ironic and fascinating characteristics about an asset bubble is that central banks claim they can’t recognize one until after it bursts. And Wall Street apologists tend to ignore the manifestation of bubbles because the profit stream is just too difficult to surrender.

The excuses for piling money into a particular asset class and sending prices several standard deviations above normal are made to seem rational at the time: Housing prices have never gone down on a national basis and people have to live somewhere, the internet will replace all brick and mortar stores, and perhaps the classic example is that variegated tulips are so rare they should be treated like gold….

Continue reading the Michael Pento piece below…

I am willing to let the Dutch off the hook; back in the seventeenth century asset bubbles were virtually nonexistent because money was still in specie. But central banks have created the perfect petri dish for asset bubbles over the past three decades. Therefore, it’s imperative for investors to understand the classic warning signs of a bubble so you can avoid the inevitable carnage in the wake of its collapse.

As I identified in my book “The Coming Bond Market Collapse”, there are three classic metrics to determine when an asset has grown into a bubble: it becomes extremely over supplied, over owned and overpriced compared to historical norms.

The real estate market circa 2005 was a great example of a classic bubble. The supply of new homes boomed as new home construction rates peaked around 2 million units per annum in the middle of the last decade.  That’s about 400k units higher than what would be considered the historical average.

Just prior to the start of the Great Recession the level of home ownership in the U.S. soared. This rate hit a high of 69% during 2005, after bouncing around 64-66% for decades.  Today’s home ownership rate has fallen back to just 63.7%, which is the lowest in 25 years.

And finally, during the real estate bubble homes were massively overpriced. According to Trulia, at its 2006 peak home prices were 39% overvalued based on consumer incomes and cost to rent. On a national level the median home price to income ratio shot to 4.7 in 2006, compared to the 2.6 historical average. The current home price to income ratio has climbed back to 4.4 on a national basis. However, even though home prices are currently vastly overvalued, the housing market is not in a classic bubble because the real estate market is not currently in the conditions of being over owned or over supplied.

But the bond bubble is a classic bubble thanks to Wall Street and the Federal Reserve. The bond market qualifies as being in a state of over supply because there has been an additional $60 trillion in total global debt that has accrued since 2007.

During the first half of this year, $891 billion in bonds were issued in the U.S. alone. That’s up 7.5% from the same period in 2014, which was itself a record year, according to the Securities Industry and Financial Markets Association.


Two Week Shanghai Gold Exchange Withdrawals Exceed All 2014 Comex Deliveries

The numbers below are simply SHOCKING:

Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:

The Shanghai Gold Exchange is the only major official physical gold trading market in the world.  All trades on the exchange are settled with the exchange of ownership on physical gold bullion.   Paper future contracts do not trade on the SGE.   In contrast, trading occurs on the LBMA and Comex in paper gold.  The Comex is de facto a 99.999% paper gold exchange for which the percentage metal backing the paper traded is minuscule.  The LBMA has been rapidly “catching up” to the Comex in this regard, although on a percentage basis the LBMA experiences a higher amount physical gold exchanged than the Comex.

Because of the way in which the SGE functions, gold withdrawn from the SGE measures the true demand for gold in China in a given time period.  All gold – except for the gold purchased by the Peoples Bank of China – purchased by any form of end user must pass through the SGE by law.  It is for this reason that “withdrawals” represent the most accurate measurement of demand for gold in China – except the Central Bank’s demand.

In the past two weeks, 106.1 tonnes of gold were withdrawn from the SGE.  As has observed:

Gold withdrawals on the Shanghai Gold Exchange the past two weeks were larger than the amount of gold delivered on COMEX during 2014 and greater than the amount of gold Germany has repatriated from the New York Fed since 2013.

I’ll point out one minor correction to the fact above:  it’s more gold than the U.S. Government has been able to repatriate back to Germany.

Year to date SGE withdrawals are 1,260 tonnes.  This translates into an approximate annualized run-rate of 2400 tonnes – with one of heaviest seasonal periods of Chinese gold demand still to come.

I find it fascinating how the entire world, including and especially the U.S. media, has summarily dismissed the unwillingness of the U.S. Government to return Germany’s gold. Recall, Germany originally asked for over 600 tonnes of gold to be returned.  This was after the Fed refused a request by a German delegation to inspect its gold (the Fed allowed the delegation into one of the nine vaults where the gold is supposedly being “safekept”).

If the gold is there and it belongs to Germany, why is the U.S. Government dragging it’s feet on this matter?   The question, of course, is highly rhetorical.  With China moving  more gold into the country and delivering to the entities who pay for this gold, transportation and delivery is not the issue.

At some point in the future, I have no idea when and neither does anyone else, there will be a massive upward explosion in the price of gold which is ignited by investors and Governments holding paper gold and who make move to take delivery of physical gold that no longer exists in the custodial vaults listed on their paper claims.


Posted at 3:10 PM (CST) by & filed under In The News.

US Mint Sells Most Physical Gold In Two Years On Same Day Gold Price Hits Five Year Low
Tyler Durden on 07/24/2015 20:49 -0400

Three weeks ago, we reported that the US Mint had run out of physical silver on the same day silver plunged to its lowest price in 2015. This happened just days after the UK Royal mint announced that “during June, we experienced twice the expected demand for Sovereign bullion coins from our customers based in Greece.”

While the surge in physical demand clearly did not explain the liquidation in the price of “paper” silver, we are still hoping that the OCC writes us back with an explanation why this happened, and maybe it can clarify also just how much more silver the mint will sell before it runs out of silver in inventory again as it did 20 days ago.

We bring all of this up because just like 20 days ago when unstoppable demand for physical silver met an immovable paper silver selling object (with the “object” for now winning), so earlier today the price of gold tumbled to the lowest level in 5 years, some $1,072 per ounce, before it staged a dramatic comeback closing just under $1,100…


… thanks in no small part to the illegal spoofing we noted earlier.


Posted at 4:31 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

After planning to take this week off for a little rest, market gyrations have changed the plan.  Initially next week I was going to pen a piece titled “Truth, Justice and no longer the American way”.  This will now wait a bit.

This past Sunday night and Monday’s action in gold needs to be discussed of what I believe is now a rapidly moving big picture.  $2.7 billion worth of gold futures were sold in just 2 minutes Sunday night.  As I have asked before, “who” could possibly “own” this much gold other than an official source?  The answer of course is nearly no one other than a very small handful of ETF’s.  In perspective, $2.7 billion worth of gold is roughly 3% of global production.  Said differently, it amounts to nearly 10 days worth of labor and production worldwide… sold in less than two minutes!

  Next, assuming there really is an entity that owns this much gold, “who” in their right mind would sell it in this fashion?  Who would sell so much and so rapidly concentrated in time as to knock the price down $50?  What trader would still have a job the following day if their own sale created a drop of four percent in the proceeds received?  Traders today fight over one thousandth of a percent, are we to believe a trader was willing to give up 4%?  Was this trader so “scared” that gold was going to drop Mondaythat he just “had to get out”?  No, it is obvious to even the most disingenuous, this was purely an “operation”, one meant to depress the price of gold at any cost.  In perspective, this trader by not spacing out the trade cost his “firm” $40 million if you only use the midpoint of the trade.  Will this be reflected in his year end bonus (sarcasm)?  As of today, finally, the hunt is on as to “whodunit” ???

  In my opinion they may need to look to only two sources though only one is necessary.  In every trade there are two sides, the buyer and the seller.  Have you ever wondered “who” the buyer is in the middle of the night to such large sales?  What if it is principally only two houses who trade back and forth with each other and then flatten out over the course of the next few days?  In essence, if this is the case there is not really any risk because they would always be “flat” between each other.  I don’t know if we will ever find out “whodunit”.  This is certainly a possible scenario and one in a world where the rule of law has been revoked …certainly feasible.

  Switching over to silver, the low prices have again created havoc in the physical market.  Prior to Sunday, the U.S. mint had already suspended sales of Silver Eagles.  This was done for one of only two possible reasons.  1. demand was so great they could not keep up with it or 2. they could not source physical silver to mint the coins.  This is exactly akin to Venezuela’s toilet paper shortage.  They have mandated a retail price below what it can be produced for and thus …manufacturers have stopped making it because they cannot earn a profit.  Simple!Another analogy would be a butcher who advertised $1.99 filet mignon.  Even if he had any to begin with, it would not last more than a few moments and you would be stuck slapping some $3.99 a pound hamburgers on your grill.

  As of now, coin dealers across the U.S. are on back order for nearly all silver products.  The premiums as in other similar previous instances have risen and product has been swept off the shelves.  What is the “real price” of silver you ask?  It is whatever you must pay to receive real metal.  As it stands now, COMEX paper prices and real physical prices are about 15-20% apart from each other.  In my opinion, should COMEX press prices further down, they risk exposing themselves as a fraud.  Already in July, some 3 million ounces have jumped queue and been demanded for immediate delivery.  In other words, COMEX is risking creating a “run” on physical metal which is 100% contrary to what low prices have been used for.  Low prices are the main tool used of “sentiment discouragement”, it very well may turn out that these low prices create a stampede into their laughably small inventory!

  From a broader perspective, what I believe we are seeing is simply one “skirmish” (but at the very core) in a global financial war between the West and the East.  We now know several other pieces to the puzzle.  China, the leader of the East is clearly economically slowing down as evidenced by many recent statistics, the container trade numbers being most recent;

Their stock market is imploding and capital flight is in the hundreds of billions.  Couple this with China dumping U.S. Treasury securities via their “Belgium accounts” and we have a better picture of the “financial war” being waged.

  As a theory, most believe the 600 tons of gold announced by China last week was the reason for the Sunday/Monday drop.  This I believe is correct but for 180 degree wrong reasons.  Many were shocked and disappointed at the number of only 600 tons.  It truly is laughable as it represents about 3 months worth of gold China currently imports and has been for over 5 years.  I believe they made this announcement for two reasons.  First, they needed to show more gold in order to be considered by the IMF for inclusion into the SDR this fall.  I also believe they wanted to show a lower number so as not to spook gold higher as they are clearly a buyer each month.  If you are a buyer, why press the price higher as long as you are receiving delivery?

  Going a step further and tying this all together we can see several things happening.  China is now witnessing an unprecedented capital outflow while the U.S. dollar has gotten stronger.  A strong U.S. dollar is textbook warfare against Russia and aimed at tightening the screws further both financially and economically. We have heard from Sergei Glayzev on several occasions, Russia/Mr. Putin plan on dropping a financial and moral “truth bomb” on the United States.  They will only be pushed so far, I believe some sort of data dump can be expected at any moment.

  If you look at this from the standpoint of “war”, these are all chess moves between those issuing a fake currency and those wanting to do real trade with real settlement.  Did the U.S. just “punish” China for being a gold buyer and making an announcement (even though miniscule)?  I think this can be looked at as the Western banks are short paper gold derivatives and long dollars whereas the East is long real metal and desirous of leaving the Western banking system behind.  There is no other reason China and Russia would have set up trade banks, clearing systems, currency hubs etc. all over the world if they did not expect to use them.  This is a war between the West wanting to prolong their own current fiat system and the East wanting to move away to one that is equitable to all involved.

  We are already in WW III.  It is because of and being waged in financial assets.  It is clear to me the U.S. is in panic mode and trying to break the long term bull trend in gold.  If the trend cannot be broken, the dollar will be zeroed out.  Unfortunately, both sides know this full well.  The military warnings of late from both Russia and China have become much louder and the actions and movements by the U.S. (staging in Turkey for Syrian raids for example) much more dangerous.  As I see it, the U.S. “needs” war to cover many dirty financial tracks.  China/Russia on the other hand may try to prevent war by releasing “the truth” and thus crippling the U.S. financially and thus the ability to wage aggression.  The problem as I see it is the world is too far along technologically and the days of having to pay and fund an army long term is behind us.  Now, “kicking the table over” is a simple as pushing a button.  Unfortunately, this may be the only remaining choice for the U.S. in the financial collapse I see coming.

  Let me finish with a couple of questions.  Who do you believe is more levered, the East or the West?  Yes, China is levered and unquestionably going to suffer short term during the unwind.  Xi Jinping said this himself.  Who has a financial system layered with trillions of dollars in derivatives?  Which direction has physical gold been flowing for at least a decade?  Finally, what is the “real” price of gold or silver?  Is it what the paper exchanges say?  Or is it what it actually costs to purchase …in size?  I believe we will find out all of these answers and many more over the next few months.  The entire world will be shocked to its core when nearly everything we have come to believe in turns out to have been a Hollywood production of “Wag the Dog”!  I pray there will be “options” available to the West, though deep down I know this is not the case.

Regards,  Bill Holter
Holter-Sinclair collaboration
Comments welcome!  [email protected]