Volcanic Eruption of Gold and Silver Demand: Shanghai’s Blast

post dateOctober 27, 2014  •   post categoriesBRICS, China, Russia, Silver & Gold, US Dollar  •   post comments number30 comments

 

 The BRICS Just Don’t Stop

Very recently, this Watchman wrote a series about world demand ramping up in precious metals. This is doubly true of Eastern demand.  Yet, unsurprisingly over the past few weeks, as the bullion banks have used a rising U.S. dollar as cover to knee-cap Comex spot prices repeatedly, Asia has stepped up their gold-buying game even more.  In fact, the numbers coming in are stretching the “just in time” precious metals delivery system to the brink, once more.

As great as the demand figures were going into early October, they’re even better now, and deserve another look.

As I wrote before, the West’s exchanges, specifically the Comex and LBMA, are the crooked mechanisms which control prices for silver and gold for the rest of the planet.  Yet, the pricing power of those two crooked exchanges is not long for this world.  Those wolverines are being de-fanged by the BRICS as we speak.  It is not an easy process, nor is it a terribly quick one, as stackers well know, but once again, I urge those in our community to show the kind of self-assured patience that the Chinese and Indians nationals are showing.

Shanghai: A Black Hole for the World’s Gold

Not only have the Chinese kept up this brisk pace of gold-accumulation since late September, they’ve upped the ante several notches!

Check out these withdrawals:

Week 39:  Demand was 45 tonnes.

Week 41: Demand was over 68 metric tonnes!  This is the 3rd-largest, weekly demand total on record for Shanghai

Week 42: 51.5 tonnes of gold was withdrawn.

Incredible.

Look at this graph beneath, via Koos Jansen’s abode:

See that yellow line that represents the entirety of world gold mining supply?  Now see the blood-red bar on the furthest right, slicing through the top of it like a lovely stream of magma from the exploding volcano, which we casually refer to as “Chinese gold demand”?

Make no mistake about it, the Chinese appetite for gold is most definitely volcanic!

Shanghai gold delivery weekly

 

In the last 3 weeks alone, Chinese wholesale gold demand has surpassed 165 tonnes!

165 tonnes of gold is greater than all the world’s newly-mined gold during those 3 weeks!

165 tonnes of gold, annualized at that rate, would be over 2,800 tonnes of gold, or roughly 400 tonnes greater than available world mining supply!

165 tonnes of gold is greater than Kazakhstan’s, Thailand’s, or Singapore’s gold reserves….stacked in just 15 business days!

Though this chart reflects unparalleled gold demand, I believe their strongest demand isn’t behind them, but is yet to be released.  Why do I say that?  Remember, things are “still A-ok” in China.  

The factories are all still churning out world consumer goods.

The banks are are still making business loans.

The people are all still out, confidently flexing their newly-acquired “middle class” muscle!

“Business as usual” is still in business.

Shield brothers, let me ask you a question, though:

What happens when this “casual” amount of gold-buying (which is mostly just savings, gift, and luxury-buying)…What happens…

When it turns into panic buying?

How much gold will China buy in a systemic, financial panic?

Remember: 165 metric tonnes of gold, while it sounds like a great deal, at roughly $1,200 per oz, is a mere $6.4 billion dollars.

Watchman, what are you talking about?  $6.4 billion is alot of cash!  The Chinese have engorged themselves on so much gold, they’re bound to quit buying any second now!

Yeah, um, there’s a word in Mandarin for $6.4 billion dollars, friend!

Peanuts 3

 

In fact, Mr. Planter “sez”:

Planters peanuts 3

How much gold do you think China would buy in just one week, if they were hit with another 2008-style crisis?

200 tonnes?  500 tonnes?  1,000?  

No, I’m not saying the world could get that much gold to China that quickly, I’m saying the demand will one day hit those levels, and gold in those quantities, will not be there when it’s needed most.

5 Years of Shanghai Gold Dominance

As those in the Truth HQ well know, this chunky gold-buying isn’t a new phenomenon in Shanghai either!

Just check out the latest 5 year chart for Shanghai gold demand!

SD Bullion


Shanghai gold delivery

In just half a decade, the Chinese nationals, through the bourse of Shanghai, have taken delivery of nearly 7,500 tonnes of gold!  This has never happened before in the history of the world.

But, that only tells half of the story!   If you include the gold imports from the previous 10 years, since 1995, the picture becomes even more incredible:

Chinese gold reserves

The speed at which the Chinese people have amassed such an enormous share of available gold is virtually unprecedented.

Its importance cannot possibly be overstated.

Remember, the U.S. government, the world’s largest gold holder(I’m sorry, I can’t type that with a straight face! ROFL), has…

A vast 8,133 tonne, golden hoard

Dozens of vault rooms stacked sky-high with yellow bricks

A 4 digit journal entry of “gold owned”, in a..

Highly-respected

Easily-verified

Independently-audited

Hilarious claim that no one but the planet’s most gullible people even repeat!

Because this is true, it makes Chinese nationals one of the largest gold-holding parties on planet earth.

Again, China’s citizens(and central bank) own at least twice as much gold, in reality, as Fort Knox and the NY Fed claim to own, in fantasy!

By 2014’s end, that amount of gold delivered within simply the last 5 years, will reach within a hair’s breadth of the magical 8,000 tonne benchmark!  This is a game changer.

Gold is the ultimate money, which, by extension, equates to the ultimate power and influence.  This has recently made China infinitely more influential in world affairs.  As their gold holdings grow, expect their influence to amplify by orders of magnitude.

 

The Real Hidden Dragon

Remember though, as impressive as this unheard of demand is, it doesn’t even include official government demand at the People’s Bank of China(PBOC)!

Koos Jansen has said many times, that in his estimation, the demand numbers from the Shanghai Gold Exchange don’t include PBOC numbers, because he doesn’t believe the PBOC sources its gold from that arena!  But I’ll let the man speak in his own words:

First, the withdrawal data reflects the actual gold wholesales in China. In 2013, the total gold withdrawal from the SGE vaults amounted to 2,196.96 tonnes. The President of SGE Transaction Department (The President) said: “This 2,200 tonnes of gold, after leaving our vaults, they entered thousands of Chinese households in the form of jewellery and investment purchases.”

Second, none of the 2,200 tonnes of gold was bought by the Chinese central bank. The President said: “The PBOC does not buy gold through the SGE.”

 

So, while Chinese gold demand in 2014 reached a blistering 2,200 tonnes, an annual total that’s never been matched by anyone else, this figure didn’t even take their central bank demand into account.  

How much gold was really sucked into China last year?

2,500 tonnes?  2,700?  3,000?  More?

We simply don’t know, and Beijing’s too smart to spill the beans just yet.

I believe Andy Hoffman is right, we probably won’t receive an updated PBOC gold reserve total, until they’ve at least reached stage 1(4,000 tonnes), or perhaps even stage 2(8,500 tonnes) of their gold accumulation plan.

It has recently been suggested by Chris Hamilton, that China has had both the resources and the time, to acquire up to 10,000 tonnes of gold for the PBOC’s balance sheet(assuming such a mountain of gold could even be sourced).  The numbers are there….

But I have a sneaky suspicion the available gold to enact this scenario isn’t.

Nevertheless, it’s an interesting piece in showcasing how much buying power the Chinese government actually has, and how the world’s gold stockpiles could be cornered, with effortless ease.

Such a mission on the PBOC’s part, requires utter secrecy.

The plan doesn’t work if everyone knows it.

If the world at large understood the real magnitude of what’s happening in the gold market, they’d all want to go out and buy some.  They’d all see gold for what it is: the ascendant, once and future money.

Furthermore, once they realized that, they’d logically understand that silver’s available physical market(which is hundreds of times smaller than gold’s, due to the daily price rigging scam), would evaporate in a literal blink.

Conclusion

This is a reminder: that the Dragon is rapaciously eating all the gold, everywhere.  This is not hyperbole, but rather the most shocking monetary truth in our time.

Earlier this year, for many months, Chinese nationals were absorbing roughly 65 to 70% of global mining supply, and now they’ve cranked it up to figures which are at, or well above, 100% of non-Russian, non-Chinese mining supply.  

By the end of 2014, they’ll probably have soaked up nearly 80% of this year’s available world mining supply, like a giant sponge.

SD Bullion


The Dragon I spoke of, is now demanding so much gold, that GOFO has plummeted to near negative territory once more.  This unheard of demand does not even begin to include the gold being accumulated and absorbed by the People’s Bank of China, this is simply what the Mr. and Mrs. Wangs of China are buying!

After 3 years of spattering gold and silver’s price all over the wall, the banks can’t convince the East that precious metals are undesirable in the least.  D.C., London, the Fed, the Bank for International Settlements, the whole motley crew…..

They’ve lost.

The central and bullion bank demons continue to sweat and bleed gold from every pore in their bodies.  It’s now clear that the gold supply “cushion” which the banks spent building up over the spring and early summer months is now exhausted once more.

Further prosecution of this scam, in the same manner they’ve done since 2011, will utterly rout them.  Prudence would seem to suggest that they, once again, should engage in a managed retreat, so they could live to fight another day.

Instead of merely managing an upward price retreat though, as they did for a decade(up and til 2011)….they now seem bound and determined to charge, full-bore, along with bullion prices, headlong over the cliff’s edge.

Now, since our band of merry shield brothers here at the Truth HQ, are such polite and helpful folks, let’s all be sure to give these psychotic money masters…

A friendly nudge!

ET.1227.300.01

Continued, in Pt. 2

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