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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Let’s Examine Some Facts About Gold and Silver, Precious Metals

Commodities / Gold and Silver 2013 Dec 02, 2013 - 10:47 AM GMT

By: Submissions

Commodities

Mark Evans writes: I thought it would be instructive to examine some real concrete factual data rather than rely on the musings, conjectures, assertions, speculations and opinions from the masters of Newspkeak, Fedspeak and Doublespeak, that are nearly devoid of facts.  The misinformation, disinformation and white noise is deafening.......mission accomplished, but not in the rest of the world!


Silver:

09/79 Silver was $49.45 and the CPI was 74.6.  10/13 the CPI was 233.546.  That is an increase of 213%.

11/29/13 Silver, adjusted for inflation, would be $154.78 per Oz. today.

Today’s price is an 87.1% discount to the 1979 price, 34 yrs. ago.

Which One Is Different?

                                                      1979                    2013           Change

1979 Mustang Standard Coupe   -         $  4,494                   $22,200        394%

New Home                                   -         $71,800                   199,500        178%

1st class stamp                             -         $    .15                       .46              207%

1 gallon of milk                            -         $  1.62                     3.60              122%

1 gallon of gas                             -         $    .86                     3.30              267%

Bushel of Corn (2013 avg.)                    -         $  2.25                     6.56               192%

Copper per lb.                              -         $    .922                   3.20              247%

Iron Ore Metric Ton                      -         $39.96                 159.50              299%

Nickle lb.                                      -         $  2.66                     6.10              129%

Zinc lb.                                         -         $    .373                     .85              228%

Silver Oz.                                     -         $49.45                   19.94              -59.68%

Which metal has the most patents and uses?

Which metal has 17 yrs. remaining global supply?

Which metal has both monetary and industrial uses?

Which items have a 5,000 yr. history as a store of value?

Silver remains a tiny market with all above ground refined silver in the world at roughly 1 billion ounces for a total valuation of less than $20 billion at today’s prices.

Therefore, all the silver in the world is worth less than the total market capitalization of…..Twitter.  It is worth less than the total market capitalization of Tesla.

All the investment grade silver in the world, is worth less than what the Federal Reserve prints in one week - $23.4 billion. Incredibly, The Fed has been buying $93.453 Billion per month (01/13 – 10/13) not the Newspeak/Fedspeak $85 billion….LOOK at the balance sheet! 

A Tale of Two Markets

The “Paper” Market:

The “paper” gold market (Comex and LBMA) is a $20 Trillion per year market and determines the SPOT PRICE that the whole world is so enamored with.  The LBMA traded $33 Billion per day and the Comex traded $29 Billion per day, in 2012.

Total global mining production was 2,659 Tonnes (USGS) in 2012 with a 1.2% increase over 2011 (compare that with money printing).  That is 85,489,509 Oz X $1,252.10       =     $107.041 Billion.

That is trading 186.8 times the total annual production per year and sometimes more than a yr. of production in 1 day (April 15th 2013).

I love this model so, Today I have an infinite number of (synthetic, artificial, imaginary, make believe, non-existent) I-Pads and I-Phones for sale, at a Very, Very good price (the other markets are taken).  Here’s how it works:

  1. You send me some money for as many as you want.
  2. I make an electronic entry for you.
  3. I send you an electronic receipt for the (synthetic, artificial, imaginary, make believe, non-existent) I-Pads and I-Phones you want…..but you never get a real I-Phone or I-Pad…..you can print the receipt and show your friends how many you own.
  4. You get a very, very good price.

 

The only thing missing from making this a real “license to steal” business would be, to set the Global price for all I-Pad’s and I-Phone’s based on MY “paper” sales.  Now, if I wanted to convert my “non- existent” I-Pads and I-Phones to very cheap real ones, I could sell millions of my “paper I-Pads and I-Phones (remember, mine aren’t real) at 3 am in the morning EST, while the world is sleeping and crater the price for all of the real I-Pads and I-Phones in the entire world.  Then, I buy up millions of real ones, very cheap because I made the price go down.  Did I say, I love this business model!  That might be how JP Morgan (first among equals) has ended up with a record long position in Gold.  It really is like the old Dire Straits song “Money for Nothing”.

 

Before you jump to the conclusion that this is ridiculous, it is based on the model of the unimpeachable and above reproach Comex and the LBMA, which does a “Price Fix” twice a day (10:30 am and 3:00 pm London time) with 5 bullion banks for Gold and 3 bullion banks for Silver. (Liebor had 16 banks).  New York open is also notable.  Naturally, New York and London are instrumental and central here, just like ALL other financial frauds and manipulations.

As of 11/22/13 there were a total of 408,300 open gold futures contracts, representing 40,830,000 ounces of gold.   At the same time, there were 589,000 ounces of "registered," available for delivery ounces of gold.  That's a mind-boggling 69.3 X times more “paper” gold than available physical gold to deliver to the holders of those contracts.  Think about that for a minute.  If more than 1.4% of those longs stand for delivery, the Comex defaults.  Think of it like musical chairs where, 69 people are circling 1 chair until the music stops.  You see, it is possible to have the “paper” tail wag the whole elephant……for a while.

The “Real” Physical Market:

The Rest Of The World (China, BRICS, OPEC, SCO, ASEAN, Emerging Markets) don’t do the “paper” thing that is the obsession of western media.

For 53 years the Chinese people were banned from owning gold. But that all changed in 2003, and now the enormous demand by 1.3 billion Chinese over the last ten years is causing a paradigm shift, as gold and silver moves from the West to the East (at a huge discount).

Shanghai Gold Exchange (SGE), the largest physical gold exchange.

In 2002 the Shanghai Gold Exchange (SGE) was launched and within 10 years it had become the biggest physical gold exchange in the world. In the year to the end of June 2013 (6 months) contracts for delivery of gold to the SGE were thought to exceed1000 tonnes, or 40 percent of total global production.

Oct 18, 2013  JPMorgan Chase & Co. (JPM) has agreed to sell 1 Chase Manhattan Plaza, the tower built by David Rockefeller, to Fosun International Ltd., the investment arm of China’s biggest closely held industrial group, for $725 million.  This building happens to have the world’s largest commercial gold vault.

Nov 25.2013   Today the Shanghai exchange announced that they had added 216 tonnes of gold so far this month!!  This represents 123% of global production as each month the globe produces 175 tonnes…….what about Hong Kong? (131 Tonnes, 10/13).

Nov 26, 2013 Chow Tai Fook Profit Almost Doubles on Higher Gold Demand

Chow Tai Fook Jewellery Group Ltd. (1929), the world’s largest listed jewelry chain, forecast “steady” growth for the rest of the fiscal year after first-half profit almost doubled on a surge in Chinese demand for gold. Net income rose to HK$3.5 billion ($451.5 million) from HK$1.82 billion a year earlier for the six months ended Sept. 30

November 4, 2013 China 2013 gold production pegged at 430 tonnes - MINING.com |

China's 2013 gold output is predicted to hit 430 tonnes, with consumption set to exceed 1,000 tonnes, according to the China Gold Group.  China's gold output hit 403 tonnes last year, having risen for the sixth consecutive year and retaining its title as the world's top gold producer. China is likely to overtake India as the no. 1 consumer.  In the first half of 2013, consumption jumped a remarkable 54% year over year.

Note: ALL of this production is retained domestically and is added to all import numbers.

If you thought this is a China only phenomenon, you would be badly mistaken.  India remains the 2nd largest importer of Gold, in spite of an all-out and losing war on Gold (est. smuggling up 1000%).  Their currency has declined 13% over the past 6 mos., 70% of the population does not have a bank acct., their borders are as porous as the southern U.S. and they have a more corrupt and less efficient Police State.  They will have their gold, come hell or high water!  Russia is the 4th largest producer and a top 10 importer of Gold (also the No. 1 or 2 oil and gas exporters, adding vulnerability to the sacred Petro Dollar).  Thailand gold imports were up 125% in the last quarter.  Turkey and the UAE are also huge importers of Gold with the trend growing among (solvent) sovereign countries and their citizens. 

There is NO Bear Market for REAL precious metals, global sales have eclipsed all records by huge margins and there is no letup in sight!!

As Winston Churchill said: "Men stumble over the truth from time to time, but most pick themselves up and hurry off as if nothing happened.

While The West Spins, Obfuscates and Manipulates, the Chinese are playing a masterful game of Weiqi*

Nov. 21 2013 China's planned crude oil futures may be priced in yuan – SHFE - Reuters

SHANGHAI - The Shanghai Futures Exchange (SHFE) may price its crude oil futures contract in yuan and use medium sour crude as its benchmark, its chairman said on Thursday, adding that the bourse is speeding up preparatory work to secure regulatory approvals.

China, which overtook the United States as the world's top oil importer in September, hopes the contract will become a benchmark in Asia (that would be where most of the Emerging Markets and fastest growth is) and has said it would allow foreign investors to trade in the contract without setting up a local subsidiary.

"China is the only country in the world that is a major crude producer, consumer and a big importer. It has all the necessary conditions to establish a successful crude oil futures contract," Yang Maijun, SHFE chairman, said at an industry conference.

Yang's presentation slides at the conference stated that the draft proposal is for the contract to be denominated in yuan and use the type of medium sour crude that China most commonly imports.

Industry participants with direct knowledge of the plan have said the contract would be priced in the Yuan, otherwise known as the Renminbi, and the U.S. dollar. Yang would not say whether Yuan pricing was only for Chinese investors.

"The Yuan has become more international and more recognized by the financial market," Chen Bo, Chinese trading firm Unipec's executive general manager, told Reuters.

"I don't think it would be unacceptable for the world to use the Renminbi for commodities trading."

The contract pricing will exclude custom tariffs and value-added tax and allow for physical delivery in bonded storage areas, Yang said.

The SHFE is awaiting Beijing's final approval to launch the contract. That may come soon as the bourse has set up an international energy trading platform in the Shanghai free-trade zone, which is touted as a testing ground for China's financial reforms, especially on Yuan convertibility and interest rates.

The SHFE has previously said the contract has support from China's top economic planner, the National Development and Reform Commission, the State Administration of Foreign Exchange and the China Securities Regulatory Commission.

A successful launch could pave the way for the opening of other Chinese commodities futures to more foreign investment (and affect the preeminence of the Petro Dollar). Mon Dieu!

Incidentally, China is Saudi Arabia’s largest customer and then, there is the recent anointing of Iran and the little Syrian issue (ongoing) with the U.S. and Saudi Arabia on the opposite side of the both issues.  Saudi Arabia would make an excellent addition to the currency swap list below.  China is also Venezuela’s 2nd largest customer and with the Canal expansion, very large tankers and political hostility with the U.S., I think Venezuela should use Yuan too and join the growing list below……just a thought.  I’m new at Weiqi but, I am enjoying it so far.

Nov 20, 2013 PBOC Says No Longer in China’s Interest to Increase Reserves - Bloomberg

“It’s no longer in China’s favor to accumulate foreign-exchange reserves (but boat loads of Gold, yes!),” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. Neither Yi nor Zhou gave a timeframe for any changes.

China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe’s largest economy. Yi, who is also head of the State Administration of Foreign Exchange, said in the speech that the yuan’s appreciation benefits more people in China than it hurts.

‘Less Interventionist

His comments are “consistent with the plans to increase the renminbi’s flexibility so they become less interventionist,” Sacha Tihanyi, senior currency strategist at Scotiabank in Hong Kong, said by phone today. The central bank may widen the yuan’s trading band in “the coming few months,” he added.

Capital inflows into China accelerated in October, official data suggest. Yuan positions at the nation’s financial institutions accumulated from foreign-exchange purchases, a gauge of capital flows, climbed 441.6 billion yuan ($72 billion), the most since January.

Stronger Yuan

The yuan has appreciated 2.3 percent against the greenback this year, the best-performance of 24 emerging-market currencies tracked by Bloomberg. “It appears that many in the People’s Bank think the time is about right to scale back currency interventions,” Mark Williams, London-based chief Asia economist at Capital Economics Ltd., wrote in an e-mail yesterday

Less intervention and smaller gains in foreign-exchange reserves may damp China’s appetite for U.S. government debt. The nation is the largest foreign creditor to the U.S. and its holdings of Treasuries increased by $25.7 billion, or 2 percent, to $1.294 trillion in September.

Yi’s comments didn’t imply China will be cutting its holdings of U.S. government debt, said Scotiabank’s Tihanyi. “They are probably going to keep their allocations reasonably stable unless there’s a big policy shift, but it means they will possibly be buying less at the margin,” he said. (Gee, ya think?)

The Chinese have $1.294 Trillion of U.S. Treasuries that have declined in value more than 10% over the past 6 mos.  This is a 6 month loss of $129.4+ Billion and annualized at $258.8+ Billion, with little prospect of that improving.  The Fed and Treasury are stealing the savings of our creditors and they don’t like it.  What do they do?  WEIQI!

November 18, 2013 - U.S. Treasury  There was a net outflow in September 2013 of $106.8 billion,  for the heaviest outflow since the beginning of 2009 (What was happening then?).  Treasury International Capital (TIC) Report.  These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.  If the world is dumping this toxic waste (Certificates of Confiscation), how can there be a Taper…..ever?  The Fed IS the US Bond market and has been buying $93.453 Billion per month (01/13 – 10/13), Not the $85 Billion Newspeak number….LOOK at the balance sheet!  The Emperor looks naked to me, what say you?

Currency swap agreements with China (bypassing the Dollar), since 2005.

    1. Pakistan
    2. Argentina
    3. South Korea
    4. Indonesia
    5. New Zealand
    6. Malaysia
    7. Belarus
    8. Hong Kong
    9. Japan
    10. Uzbekistan
    11. Thailand
    12. Turkey
    13. Singapore
    14. Kazakhstan
    15. Australia
    16. Brazil
    17. Russia
    18. UAE
    19. Iceland
    20. France
    21. England
    22. Albania
    23. Hungary
    24. European Union
    25. India (in process)
    26. Tuesday, October 22, 2013  China is to further internationalize its currency by allowing Singapore-based investors to buy Renminbi-denominated securities, paving the way for direct trading between the two countries' currencies.
     *Weiqi (pronounced Way Chee), and it’s similar to chess. In Weiqi you have to surround your enemy slowly and lay a trap, and then, close the trap all at once. That’s the way the Chinese think, they don’t really disclose what their plan is, they just move tiny pieces around the board in a seemingly incoherent way, but when all the pieces are lined up that’s when the trap is sprung.  All of the government party leaders play this game, and the CEO’s and chairman of China’s largest businesses are all part of the party.  History indicates that victory favors those that are awake.  Do you Weiqi?

 

Model 1                                        Model 2

Consumer                                     Producer                                     

Debtor                                           Creditor                                      

Spender                                        Saver

Welfare/Warfare Based                Production/Trade Based

IOU’s & Financial Engineering     Hard tangible assets and value added

 

Hmmmmm……..this is a hard one……..Let me think…………I think I’ll have what 2 is having.

 

Finally, I will leave you with a favorite motivational poster of the TBTF crime families Western Banks that control the “paper” markets.

 

Mark Evans

Eagles Edge

  I am a precious metals dealer (one of very few) in Panama.  I produce, what I call, the Eagle Update every week and send it to my client/customer list. 

© 2013 Copyright  Mark Evans - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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