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BullionStar quoted in Wall Street Journal article on New York Fed gold

Fri, 08/18/2017 - 10:07
On 10 August, the Wall Street Journal published an article on its front-page about the New York Federal Reserve’s gold vault, and the central bank gold said to be stored there. The article featured a quote from Ronan Manly about this Fed stored gold. A short blog post has now been added to the the BullionStar website featuring this coverage by the Wall Street Journal, with some background and development of points that were referred to in the Wall Street Journal article.

The Mechanics Of The Chinese Domestic Gold Market

Fri, 08/11/2017 - 09:55
Introduction The Chinese gold market is the world’s largest physical gold market. It is also one of the world’s most protected gold markets given that the importation of gold into China is still strictly controlled by the Chinese authorities, and the exportation of gold out of China is generally prohibited. Hence, the market is often referred … Continue reading The Mechanics Of The Chinese Domestic Gold Market

BullionStar Presentation on Real Vision TV – Bullion Banking, ETFs & Physical Gold

Fri, 08/11/2017 - 06:41
During June, Real Vision TV filmed a presentation by BullionStar addressing some topical areas of the gold market. This presentation was originally produced exclusively for the subscription-based Real Vision audience and covers the fractional-reserve gold trading in the London Gold Market, some concerns and risks of gold-backed ETFs, and the benefits and attractions of real physical gold ownership in a world of limitless synthetic gold creation.

Real Vision TV has now kindly made the full presentation available to the BullionStar audience via a dedicated link to the video on the Real Vision website. The presentation is 20 minutes long and will be of interest to BullionStar readers and customers, and to anyone with an interest in the gold market.

Gold Price: USD 65,000/oz in 5 years?

Sun, 08/06/2017 - 23:14
Although the international price of gold is set by paper gold markets, these markets cannot price physical gold accurately because they don’t trade physical gold. Instead they trade infinitely scalable fractional claims on physical gold. Conversely, real physical gold is not a claim on gold. It is gold. Real physical gold is real money, and is the ultimate form of saving and store of value.

Given the fractional-reserve nature of the contemporary paper gold trading markets, and the ongoing large-scale movements of real physical gold from West to East, this is akin to a slow and silent bank run, the end-game of which could result in holders of claims on physical gold rushing to be the first to convert their paper claims into physical gold.

But what could the real price of physical gold be in the absence of the subduing influence of the fractional and limitless paper gold market? For the US money supply of $18 trillion to be fully backed by the US Treasury’s gold, this would require a gold price of $68,840 per troy ounce. Even a 40% gold-backing of the US money supply would imply a gold price of $27,500 per ounce.

For the worldwide money supply ($85 trillion) to be fully-backed by total worldwide central bank gold holdings (33,000 tonnes) would require a gold price of $82,600 per troy ounce. Even if world money supply was 100% backed by all the gold ever mined, this would require a gold price of $13,900 per ounce. For total outstanding global debt ($200 trillion) to be backed by all the gold ever mined would require a gold price of $32,700 per ounce.

LBMA Gold Vault Data – How low is the London Gold Float?

Wed, 08/02/2017 - 04:48
The LBMA has just released its first update on the quantities of physical gold and physical silver stored in the LBMA vaulting network in London. This network comprises precious metals vaults of 7 commercial operators and also the Bank of England gold vaults. As of the end of March, there are said to be about a combined 7,450 tonnes of gold and 32,000 tonnes of silver across these vaults.

Gold holders at the Bank of England vaults include central banks and bullion (commercial) banks. Gold in the other London vaults is either owned by Exchange Traded Funds (ETFs), bullion banks, or other holders such as institutional investors. The Bank of England does not hold any silver. About 12,000 - 13,000 tonnes of the silver in the London vaults is owned by ETFs. The ownership of the rest of the silver (about 20,000 tonnes) is a mystery but is probably owned by a combination of institutional customers and bullion banks.

The most important number in all of this is how much gold do the LBMA bullion banks in London own and control. It cannot be more than about 1500 tonnes on the high side and less than 1000 tonnes on the low side. But still the London gold market trades over 6000 tonnes of gold equivalent each day, which is over 143,000 tonnes per month or 1.6 million tonnes per year. This is only possible because the London gold market is a giant fractional-reserve system of paper gold trades with very tiny physical gold underpinnings.

The West lost at least another 1000 tonnes of large gold bars in 2015

Mon, 07/31/2017 - 04:31
One of the most important trends in the physical gold world is the ongoing depletion of Western gold inventories to supply the relentless demand for high purity small bar denominations (such as kilogram gold bars). Most of this demand is coming from Asian markets such as China and India. Most of this supply is coming from the London gold market.

Based on LBMA gold refinery production statistics, massive numbers of large 400 ounce gold bars that are usually found in central bank vaults and in gold-backed ETFs have been sent to gold refineries, mostly in Switzerland, and melted down and transformed into kilo bars.
Recent data from the LBMA now infer that during 2015, it is likely that between 1100 and 1300 tonnes of large 400 oz gold bars were processed through LBMA gold refineries into smaller bars. This is gold supply distinct from gold mining and scrap gold recycling. These 2015 figures follow conversions of similar magnitude in 2014 and even higher conversions of possibly 2000 tonnes of large gold bars in 2013.

This extra supply of gold into the market is unsustainable, unless gold-backed ETFs and central bank gold, and other unreported stockpiles continue to be tapped. But for how long can that continue before these sources of supply become unsustainable?

Estimated Chinese Gold Reserves Surpass 20,000t

Sat, 07/29/2017 - 15:57
My best estimate as of June 2017 with respect to total above ground gold reserves within the Chinese domestic market is 20,193 tonnes. The majority of these reserves are held by the citizenry, an estimated 16,193 tonnes; the residual 4,000 tonnes, which is a speculative yet conservative estimate, is held by the Chinese central bank the People’s Bank of China.

Gold Market Charts – July 2017

Thu, 07/27/2017 - 12:07
The July edition of BullionStar’s monthly gold chart analysis has now been published to the BullionStar website.

Physical gold demand in all of the world’s largest physical gold markets remains strong, from robust Indian gold imports to consistently strong gold withdrawals from the Shanghai Gold Exchange. The Russian central bank continues to patiently accumulate further stocks for its official gold reserves. This month there is a short explanation of how the Russian central bank is believed to make these accumulations.

Meanwhile, Swiss gold imports in June were being sourced from a variety of locations including France and the US, while 75% of Swiss gold exports in June went to Hong Kong, China and India. Finally, on the COMEX there are now 68 owners per ounce of registered gold, meaning that the open interest of COMEX gold futures contracts is now 68 times larger than the registered gold held in the COMEX approved vaults in New York.

The charts featured in this article have been created by the ever impressive GoldChartsRUS market chart website.

RTLZ in DNB Gold Vault, Amsterdam

Mon, 07/24/2017 - 13:21
RTLZ Money Talks inside the Dutch central bank's (DNB) gold vault at Amsterdam, the Netherlands. For more info read https://www.bullionstar.com/blogs/koos-jansen/did-the-dutch-central-bank-lied-about-its-gold-bar-list/

Did The Dutch Central Bank Lie About Its Gold Bar List?

Sun, 07/23/2017 - 09:14
The Dutch central bank states that releasing a bar list of the Dutch gold “would cost hundreds of thousands of euros”. In this post we’ll expose this is virtually impossible.

Is the COMEX Rigged?

Tue, 07/18/2017 - 13:20
Many people will by now have heard of COMEX gold futures price 'flash crashes' during which the gold price collapses in free fall fashion over a few second interval. Whether these flash crashes are the result of trading errors, futures market illiquidity, computerized trading patterns or deliberately engineered moves is debateable.

But beyond the actual flash crash incidents on the COMEX, it’s important to realize that the very structure and mechanics of the COMEX create a system in which gold futures trades can be executed in large volumes in a virtual vacuum that has no connection to the physical gold bullion market, no connection to gold bar and gold coin wholesalers and retailers, and no connection to even the vaulted gold residing within the COMEX warehouses.

These underlying mechanics of COMEX allow a small number of banks and other traders to generate massive gold futures trading volumes and open interest out of thin air. Annual COMEX gold futures trading volumes for 2017 now look like they’ll exceed 200,000 tonnes, which is more than all the gold ever mined in the history of the world.

Chinese Cross-Border Trade Rules on Gold

Tue, 07/11/2017 - 20:14
Chinese Cross-Border Trade Rules on Gold Introduction Chinese cross-border trade in gold occurs any time gold is imported into, or exported from China. This gold trade can be in one of two forms of trade, General Trade or Processing Trade. At a high level, ‘General Trade’ refers to the importation of goods by Chinese entities … Continue reading Chinese Cross-Border Trade Rules on Gold

CME Stays Silent on Cause of COMEX Silver Price Glitch

Fri, 07/07/2017 - 17:27
Following an incident which caused a large rapid drop in COMEX gold futures prices last week, this week was the turn of COMEX silver where a short-lived and rapid ‘flash crash’ caused the price of COMEX silver futures prices to fall by more than 10% within 1 minute only to rebound strongly in the subsequent minute. While the CME Group which operates the COMEX has not provided an explanation for what caused these price gyrations, the CME immediately decided to adjust up prices on some trades done during the flash crash. This could indicate that there were rogue algorithms involved.

Whatever the cause, this latest COMEX episode demonstrates yet again that precious metals futures trading is completely detached from the reality of the physical silver and gold markets, and is completely unanchored from the real fundamentals of the physical gold and silver markets.

Bullion Banks line up in London to support LME’s Gold Futures

Fri, 07/07/2017 - 00:45
The London Metal Exchange (LME) is about to launch a range of new gold and silver futures in the London market (LMEprecious). Crucially though, these gold futures do not deliver physical gold or silver. Instead they transfer around unallocated gold and unallocated silver, units of which are fractionally-backed in the London precious metals markets.

This LME development is also backed by the World (Paper) Gold Council and supported by a large cast of investment banks, some of which are even part of a joint venture company which has struck a revenue sharing deal with the LME. For all the background on these new LMEprecious futures and to find out who these banks are, read on.

How many Silver Bars are in the LBMA Vaults in London?

Mon, 07/03/2017 - 00:48
BullionStar has previously analyzed how many gold bars are in the LBMA London gold vaults. Now we turn our attention to how many real physical silver bars are in those same LBMA London vaults. The subject is topical because the LBMA is about to start reporting the total quantity of both gold and silver stored in its network of vaults in London.

But whereas with gold, the vast majority of the gold bars in London are either stored at the Bank of England or stored on behalf of gold-backed ETFs, with silver, the situation is slightly different. There is no silver stored at the bank of England. But in addition to many silver-backed ETFs storing their silver in London, there are likely to also be large quantities of silver bars stored in these vaults that have previously gone unreported, a situation that may surprise some people when the full figures are released.

Gold Market Charts – June 2017

Wed, 06/28/2017 - 16:39
The June edition of BullionStar’s monthly gold chart analysis has now been published to the BullionStar website. The featured charts have been created by the Gold Charts R US market chart website.

This monthly series analyses recent developments in the world’s largest physical gold markets such as India, China, Russia and Switzerland. During May, Russia added a sizeable 22 tonnes of gold to its official reserves, India remained the largest destination for Swiss gold exports, and London again emerged as the largest supplier of non-monetary gold to the Swiss refineries. On the Shanghai Gold Exchange, monthly gold withdrawals reached 138 tonnes, and 2017 is now on course to be as active a year for Chinese wholesale gold demand as 2016 was. On the COMEX, nothing much changed with, as per usual, very small and static registered gold inventories backing up mammoth paper gold trading.

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