World Gold Demand is Off to the Races, as Yellen Chickens Out
Vote of No Confidence
As Greece concludes its meaningless elections, and sends the same powerless “yes-men” back to Athens to rubber stamp whatever schemes of dispossession that Dijsselbloem has crafted for the Greek people, the rest of the world continues to cast the only vote that matters! For since June, the already high levels of gold and silver purchases have not only continued, but have soared, both in Western retail demand, and in the far East.
Many of those Eastern powers have also escalated the pace at which they’ve bid their US treasury holdings adieu! It’s one thing however, just to say that the world is now leaving treasuries behind, it’s quite another to show it, as this chart so powerfully does…
As they say, a picture is worth 1,000 words, and these words are full of rejection toward the idea of furthering their balances anymore, with putrid US debt. Country after country in that chart is doing precisely the same thing: diversifying out of US treasury securities. It seems quite possible, in fact, that the world has seen “Peak Treasuries”, and that spells a world of hurt coming for US citizens…
Fleeing Toward Strength
However, it’s not simply enough to sell treasuries. You cannot be truly diversified and independent of the US, if you simply swap that country’s debt in exchange for its currency(US dollars). Nor are many of those nations simply deciding to buy a new country’s debt, as they’re continuing to pour tens of billions of dollars each month into gold bullion.
Russia, for starters, has really upped the ante in their gold buying, as they purchased another million ounces of it, in just the month of August! This is one of the highest one month additions since the records began. That’s over 31 tonnes in one entry.
See that 2 month blip in the middle of the chart where no gold was added? That occurred during the height of the US’s attack on the Russian Ruble. The gold accumulation only stopped briefly, to allow Moscow to deflect that blow…but once the Ruble was stabilized, the gold buying was kicked up a notch to make up for lost time.
Since the year’s beginning, Russia has now stashed away 112 tonnes of gold, bumping their central bank’s reserves to well over 1,300 tonnes, and could conceivably reach 1,400 by year’s end. Here’s what the healthy climb looks like on the longer chart:
However, the real show-stopper continues to be China, where the average shoppers removed nearly another 74 tonnes of gold from deliverable stockpiles in just one week!
At this rate, Chinese demand will account for more than 2,500 tonnes, and perhaps as much as 2,600(a new record) in 2015, and that’s just through Shanghai! It’s not just Shanghai where the gigantic demand is reflecting either, as recently there were different days in Hong Kong, where the exchange there delivered over 19 tonnes of kilo bars, each in a single day!
However, these gold deliveries in China are now clearly affecting the vaults in the City of London. Just have a gander at this excellent chart via Koos Jansen, on the steady outflow of gold toward China:
Hundreds of tonnes of gold(that we know of), are leaving London, and that’s just a crying shame! What just happened last week however, with Yellen’s interest rate decision will only serve to increase that gold demand higher.
However…as bad as that was for global confidence, it’s what financial analysts are now pushing for as the next ‘solution’, which will truly blast gold and silver demand into stratospheric heights!
Yellen’s Next Rumored Action
For months the Federal Reserve, and its many bobble head apologists on TV, had assured everyone that a rate hike was “imminent” as soon as this month. Now though, as Yellen has absolutely chickened out on a September interest rate hike, the world is beginning to understand, that the Fed has simply been attempting to buy time, and steer markets through mere talk.
The time for real action has arrived though: Yellen must soon either raise rates(either a quarter point), introduce new QE measures, or actually cut rates further. The problem is…the Federal Funds rate has been ‘sittin’ pretty’ at zero for over 6 years!
“Watchman, I don’t get it! How can they lower rates from there?”
Why, by going into negative interest rate(NIRP) territory of course, my friend!
By the way, if you think this course of action(which has already been seen in several European countries), can’t or won’t happen here…you haven’t been paying careful attention. The Bank of England’s chief economist is already telling his fellow Britains that negative interest rates must be put into motion, in order to “protect the UK economy”!
Then there’s CNBC, who never met a helicopter money dump they didn’t like, has already, shamelessly, started shilling for negative interest rates! Read em’ and weep(about Michigan “econ professor” Mike Kimball):
“Kimball has travelled the world talking about the effects of subzero rates with central bankers around the world—including Fed policymakers. His goal is to show policymakers that “it’s actually really easy” to effectively make interest rates negative.
Moreover, he believes adding the tool to a central banking policy toolbox is critical to ending recessions and combating deflation.
‘What I’ve been working on is trying to make sure that the intellectual foundation for negative interest rates is laid in time for the next recession,” Kimball told CNBC in an interview. “It’s important for people to realize that the zero lower bound is ultimately a policy choice, and it’s a bad one. And it’s something that come another big emergency, we can do away with.'”
There now! Ya see, brothers?
All this worry has been over nothing! All this can most easily be fixed! Yessir, deflation can be pistol-whipped, falling wages can be steamrolled, and the world economy can be jump-started once more…if we but have the courage to send interest rates down, dooown, dooooooown into the 7th circle of Hell!
Eager to make mountains of cash slosh around your economy once more?
Well then, why not just pay banks to borrow from the Fed?
Why not just pay folks to borrow from the banks?
Heck, why not set up secondary “individual lending accounts”, where all bank depositors can quickly borrow from their local bank(at profit), and then immediately loan that cash out to ‘high risk’ clients(for a small fee), who can’t qualify for a normal micro loan on their own?
I’m sure the derivatives on this new, exciting market can be bundled into packages that Wall Street can then pyramid and glean many billions from, all while calling it “AAA Individual Depositor Loans”!
For those of you who think that these ideas sound crazy, or that your pensioner grandparents, living on a fixed income, will be annihilated by such decisions….then don’t worry...it just means that, unlike central bankers, all your grey cells are still firing! You’re not crazy, but perhaps, in a financial world gone insane…you and I might be considered not sufficiently “creative” to be successful in the current banking climate.
Ya know what though, I’ll wear that as a badge of honor any day of the year!
As we continue to receive multiple confirmations that we’ve hit peak gold and silver, demand for both metals will reach levels never before seen in history. London is now exporting many hundreds of tonnes of gold straight to China, and the US is exporting many hundreds of silver tonnes to India!
This was never intended to be a long-term solution, the powers that be understand that it’s only to buy precious time. With each passing day, the future powers of the world are running further away from the the current world power’s *ahem* “assets of choice”: the US Dollar, and US treasuries. For years the world stockpiled far too many dollars, either out of coercion, or out of blind trust. Clearly though, that trend is over, and with it, the US’s role as global leader on the world stage.
Greece’s new election, is now as meaningless as all other Western-bankster elections. The system cannot be reformed through itself, as the owners of the political system, are the same owners as the financial system.
With each new anti-dollar trade deal signed between Asian countries, humanity further embraces its dollarless future.
US Treasuries, once the preferred instruments of sovereign countries, are now considered the toxic, refuse of an illegitimate, bankrupt regime, that’s totally out of control. No one country can personally reign in DC, the only thing that will stop it will be the global community revoking their “national credit card”.
The US has dumped its toxic debt on the world for far too long, and until now, the world sat tight, and bided their time. Now however, one country after another, has gotten “NIMBY Syndrome”, declaring:
“You will not dump this refuse in our backyard! In fact, we’re going to dump it on you!”
What goes around, usually comes around…and seeing the writing on the wall, many nations are now acting to dump US Treasuries(and by extension, US hegemony), where they so desperately belong:
In the landfill of history…
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