China gold reserves and gold’s likelihood of a strong H2. My latest posts on sharpspixley.com

My two latest posts on sharpspixley.com.  Click on the titles to read in full.

LAWRIE WILLIAMS: CHINA UPPING THE ANTE IN GOLD RESERVES

The Chinese central bank reports having added 15.86 tonnes of gold to its reserves in May – the highest level so far in its current spate of reporting apparent monthly increases.

LAWRIE WILLIAMS:; GOLD COULD HAVE AN EXTREMELY GOOD H2 – MURENBEELD

The latest Gold Monitor from Murenbeeld & Co suggests that the dollar may have peaked and that there are a number of factors out there that are looking to be gold positive for 2019 H2 and 2020

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Put Your Trust in Gold

The latest blog post from Frank Holmes, CEo and chief investment officer for U.S. Global investors follows on a similar subject on one  we made ourselves a week or so ago – see: Trust in Gold and Indian Gold Demand Strong

Put Your Trust in Gold

Put Your Trust in Gold

Americans’ trust in institutions, from the federal government to banks to the news media, has been deteriorating for decades. Sixty years ago, three quarters of Americans expressed faith in the government to do the right thing “most of the time” or “just about always.” Today, only one in five people, a near-record low, believes our leaders make decisions in the country’s best interest.

The news media fares just as poorly. A new survey finds that Americans believe “fake news” is a bigger problem right now than violent crime, illegal immigration and terrorism.

Just take a look at the chart below, based on Gallup polling data going back to 1973. Whether it’s newspapers, television news or, more recently, online news, Americans’ faith is steadily eroding. Last year, the percent of Americans who said they have a “great deal” or “quite a lot” of confidence in newspapers stood at a near-record low of 23 percent. Trust in television and online news was even lower.

Americans trust in news media has been slipping for decades
click to enlarge

So where can you still put your trust in today’s often cynical world? Friends and family. Our churches and other religious organizations. Our jobs.

As an investor, I continue to have great faith in gold as a store of value during times of economic and geopolitical uncertainty. It’s behaved precisely as I expect it to. In response to heightened global trade concerns and weakening economic indicators, investors have piled into the yellow metal, pushing its price up for a remarkable eight straight days as of last Friday. We haven’t seen such a winning streak since June 2014, when gold traded up for 10 straight days.

Late last week, it was within striking distance of its 2019 high of about $1,356 an ounce, which should spur even more investors to get off the sidelines and participate.

Gold within striking distance of 2019 high
click to enlarge

Indeed, there are a number of warning signs that suggest investors should proceed with caution as the U.S. economic expansion turns 10 years old. Global manufacturing growth reversed for the first time since 2012, with the purchasing manager’s index (PMI) falling for a record 13 months in May.

This weakness turned up in the monthly jobs reports from the federal government and payroll services provider Automatic Data Processing (ADP). The Labor Department reported Friday that U.S. employment edged up only 75,000 in May, far below expectations of 175,000.

According to ADP, the U.S. added 27,000 jobs, making May the weakest month for job gains in more than nine years. I don’t know about you, but I can’t help reading this as a direct negative consequence of the White House’s escalating trade war with China and earlier threat to impose a tariff on all imports from Mexico. The U.S. goods producing sector was hit hardest, with construction losing 36,000 positions, natural resources and mining losing 4,000 and manufacturing losing 3,000.

US had the smallest monthly job gain since economic expansion began
click to enlarge

The 5 percent Mexican tariff was “indefinitely suspended,” according to Trump Friday evening, in exchange for Mexico doing more to stem the flow of illegal immigration into the U.S.

As I’ve explained elsewhere, tariffs are essentially taxes and, as such, they’re inflationary. This has historically supported the price of gold.

Besides Walmart and Costco, a number of other retailers have been telling customers and investors that prices will be going up thanks to the Chinese tariff. Discount retailer Five Below said it will likely need to raise prices on certain items above $5 for the first time. Dollar General and Dollar Tree both alerted shoppers that they will be “facing higher prices as 2019 progresses.”

Trump Could Be a One-Term President Thanks to Mexican Tariffs

Discussing the trade war, JPMorgan’s Michael Cembalest, who hosts the “Eye on the Market” podcast, reminded listeners last week of an article written back in August 2015 by Trump’s National Economic Council director, Larry Kudlow, and former Trump pick for the Federal Reserve Board of Governors Stephen Moore. In the article, titled “Why Trump’s protectionist ways will hurt the economy,”Kudlow and Moore compared then-candidate Trump unfavorably to Herbert Hoover, the last Republican “trade protectionist.”

“Does Trump aspire to be a 21st century Hoover with a modernized platform of the 1930 Smoot-Hawley tariff that helped send the U.S. and world economy into a decade-long depression and a collapse of the banking system?” the two asked.

For better or worse, we may end up getting an answer to this question in the coming weeks and months.

What the Gold/Silver Ratio Is Telling Us

Another sign of slowing economic growth is the gold/silver ratio. This ratio tells you how many ounces of silver it takes to buy one ounce of gold. Last week it crossed above 90 for the first time in 26 years, meaning silver has not been this undervalued relative to gold since the first year of Bill Clinton’s first term.

Gold to silver ratio at highest level since 1993
click to enlarge

The reason this is important is that half of silver demand comes from industrial applications. When the demand cools, the price of silver falls. One of the metal’s primary uses is in semiconductors, sales of which have been slipping. According to the Semiconductor Industry Association (SIA), global sales were $32.1 billion in April, a 14.6 percent decrease from the same month last year. This is the deepest plunge since the financial crisis.

Buying silver, then, could be a contrarian play, but I recommend also that you maintain a 10 percent weighting in gold. Although the yellow metal’s price surged last week, it’s still not quite in overbought territory when you look at the 14-day relative strength index (RSI). There could be further upside potential, especially if Trump revisits the Mexican tariff.

Sharps Pixley back on line and Gold, GLD and Palladium article updates

After a couple of days where the Sharps Pixley site went offline following an attempted hack, I can report that it is now up and running again and my future articles will find a home there rather than here.  However I will continue to publish articles of interest here as well as occasional links to articles on Sharps Pixley.

Meanwhile I did publish a couple of articles here when the Sharps Pixley site was down – and I have now reposted them on Sharps Pixley with some minor updates.  Links to the updated versions may be accessed by clicking on the links below:

LAWRIE WILLIAMS: UPDATE: GLD TURNAROUND VERY POSITIVE FOR GOLD

06 Jun 2019 – There have been some positive inflows into GLD, the world’s largest gold ETF, since the Memorial Day holiday after around a month or so of almost-continual withdrawals. This represents an important change in sentiment towards gold.

LAWRIE WILLIAMS: UPDATED: GOLD PRICE BACK AHEAD OF PALLADIUM AGAIN

04 Jun 2019 – A rising gold price and a falling palladium one have seen gold regain its crown as the highest priced principal precious metal. Both metals do seem to have a fair amount going for them but, for now, the sentiment appears to be with gold..

LAWRIE WILLIAMS: GLD turnaround very positive for gold

With the Sharps Pixley Site still Down for Direct Posts I am continuing to post my articles here with the link to them picked up by sharps Pixley’s alternate site Metalsdaily.com

Gold showed signs of weakness through most of April and May and no less than 35 tonnes of gold were liquidated out of GLD, the world’s largest gold ETF, between April 1st and the Memorial Day holiday on May 27th. But as so often seems to be the case, the U.S. holiday seemed to trigger a turning point and, since then, GLD has added 22 tonnes of gold to its holdings. And the GLD increase has coincided with a very sharp uptick in the gold price which is currently approaching $1,350 spot as I write – a big increase from a low point of around $1,275 only a week ago.
This is no coincidence as both the GLD deposits and the rising gold price signify a major change in sentiment about the prospects for gold from some of the big money funds. Ray Dalio’s Bridgewater, reputed to be the world’s biggest hedge fund with around $150 billion under management, has been leading the clarion call for gold. Dalio is said to be a gold believer and is reported as recently having his fund increase its gold exposure in the light of what he sees as an escalating trade war between the U.S. and China which he regards as potentially moving out of control. In a recent blog post he noted “History shows that countries in conflict have seen that such conflicts can easily slip beyond their control and become terrible wars that all parties, including the leaders who got their countries into them, deeply regretted, so the parties in the negotiations should be careful that that doesn’t happen. Right now we are seeing brinksmanship negotiations, so it is a risky time.”
While that may be a contentious assessment of the current trade negotiations, many feel that Dalio has a strong point here and President Trump’s ‘shoot from the hip’ approach to weaponise U.S.-assumed financial clout certainly has huge dangers – not least for segments of the U.S.’s own business structures. National leaders, who have ‘face’ to protect, may not cave in to bullying tactics of this type as easily as Trump’s business rivals may have done in the past. Equity markets in the U.S. and globally are looking nervous and there are fears around of a full-on global recession.
Where Dalio is seen to go, others follow, so it is not too surprising that GLD seems to be seeing gold inflows. The big question is how far can this apparent change in sentiment boost the gold price before it is seen as having risen too far too fast with a correction coming back in?
But meanwhile there are other elements boosting the gold price – not least a falling U.S. dollar index which usually coincides with a rising gold price. Geopolitical tensions seem to be ever-present, there are ongoing tariff, counter-tariff and economic sanction impositions, the U.S. Fed is now seen as more likely to cut interest rates rather than raise them, equity market nervousness, central bank gold buying, etc. All these would seem to be in favour of an increasing role for gold globally. Thus the target for a $1,400 plus gold price in the second half of the year would seem to be comfortably in play again. Indeed even higher price levels may come about should some of the current global tensions remain unresolved or escalate further.

LAWRIE WILLIAMS: Gold price back ahead of palladium again

the sharps pixley site still appears to be down so posting this article here and seeing if I can upload the Link to sharpspixley.com

A rising gold price and a falling palladium one have seen gold regain its crown as the highest priced principal precious metal. Both metals do seem to have a fair amount going for them but, for now, the sentiment appears to be with gold.

Nervousness about the onset of a possible global recession plus a perceived drop in gasoline (petrol)-powered automobile sales worldwide has seen the high-flying palladium price slip back.  With gold showing some strength, the price positions between the two precious metals have again reversed – as predicted in early year price forecasts – with gold trading as I write at about a $20 premium over the pgm.  However palladium supply/demand fundamentals remain strong and the price tends to be much more volatile than gold so don’t be too surprised if it regains its price ascendancy over gold in the short to medium term, but perhaps only briefly.

Historically gold has usually traded at a substantial premium over palladium, although not over the latter’s sister metal, platinum.  We suspect over time there will be something of a return to the status quo with platinum playing catch-up, but that may take some years to come about.  Palladium demand is hugely dependent on the autocatalyst market – a recent estimate is that this sector accounts for 80% of palladium demand – so a continuation in the drop in auto sales could hit the metal hard.  But there remains a big supply deficit overhang which will take some time to eliminate so palladium could yet benefit from the occasional price spurt.

The ever growing take-up of battery electric powered vehicles, and perhaps longer term of fuel cell power, will also severely dent the prospects for palladium, as it will for another pgm group metal, rhodium, which tends to be utilised – in very small quantities – alongside palladium in autocatalysts, but it will take a few more years yet for these alternative drive systems to put a serious dent in the internal combustion engine market,  Given that the world’s second biggest auto market is the U.S., and that country is currently led by a climate change sceptic who perhaps sees less need for non-polluting vehicles, and has a strong vocal following, the take-up of alternative-powered automobiles may move slower than anticipated in that part of the world.  However the world’s biggest auto market currently is China, and given that country’s air pollution problems electric vehicle take-up there is likely to be strong.  Swings and roundabouts!

As for gold itself there appears to have been a major change in sentiment towards the yellow metal which has certainly been price supportive over the past few days.  Futures markets are pricing gold higher than current spot levels so it could have further to run. Outflows from the world’s biggest gold ETF, GLD, have been replaced by inflows which is a guide to where the big money is now headed.  Some commentators see the gold price as now threatening this year’s high of around $1,350 over the summer.  We shall see.

All in all though there are a number of factors which look to be in favour of a rising gold price.  Tariff wars instigated by President Trump’s aggressive foreign trade policies, geopolitical instabilities in several parts of the world which could blow up any time, fearful equity markets and the now likelihood of U.S. Fed rate cuts all would appear to be gold price supportive.  Gold investors may yet have something to cheer about as the year progresses.

Gold powers through $1,300, but will it stay the course?

This article was posted to Sharps Pixley yesterday but the site is down so I am copying it here

Gold has made several attempts to consolidate above $US1,300 so far this year, but has so far always been brought back down through concerted activity in the U.S. futures markets.  This past Friday, and today, gold has driven up through the $1,300 level again and has seen good strength in Asian and European markets, but will it survive the U.S. markets when they open today?  In other words will this time be different?

The trigger on this occasion for the uplift in the gold price has been President Trump’s announced intention to weaponise further trade tariff impositions – this time on Mexico to try and force the latter to put a stop to illegal immigration into the U.S.   The problem with this is that the U.S. President seems to think the carrot and stick approach to international diplomacy (rather more stick than carrot) will work as well as it may do in business.  But the difference here is that other sovereign nations may just dig in their heels and resist such policies to their fullest extent.  National pride is at stake here.  Governments are not subject to shareholder needs – indeed they may be subject to electoral dismissals, but these are much longer term scenarios and an aggressive approach like that of the U.S. President can have a counter-productive effect in uniting the affected populace against what they see as unwarranted foreign intimidation.

Sanctions and tariffs seldom work.  The imposition of sanctions on Russia for example, which have now been in place in some form or other for around five years now, if anything have seen the latter nation go from strength to strength and have done nothing to dampen President Putin’s popularity.  He is seen by the Russian people as instrumental in ‘Making Russia Great Again’ – or MRGA – even outdoing, in effect, President Trump’s MAGA clarion call.  Arguably Russia is now a much stronger player on the global stage than it was before U.S. sanctions were implemented.  Counter measures by Russia and an ever increasing political and financial relationship with China may well be more damaging to U.S. global interests than a rather more laissez faire attitude may have been.

Likewise the imposition of swingeing trade tariffs on Chinese goods and the strictures on Chinese tech giant Huawei may end up being counter-productive.  It much depends who out of Presidents Trump and Xi blinks first – but the U.S. President, who claims a deep understanding of China – must be aware that ‘saving face’ is probably a far more important part of Chinese culture than it is of Western political expediency.  While on the face of things the far higher level of Chinese exports to the U.S. dwarfs the latter’s exports to China suggests that the U.S. would be the winner in a trade war, the differing political and economic cultures of the two protagonists suggest that China may be in a far stronger position than the U.S. is counting on!

Be all this as it may, the intransigence of the U.S. President, his propensity to announce significant policy changes on twitter and his perhaps less than honest recollections/interpretations of some of his past utterances could well have the unintended consequence of precipitating a stock market collapse and the triggering of a global recession.  We could even be heading for some kind of superpower shooting war – there are enough global flashpoints for this to happen very quickly.  American military technology may yet not be sufficiently dominant to ensure U.S. victory if such a war springs up.

All the above may be in investors’ minds at the moment.  Equities markets are, to say the least, nervous.  They look to have risen too far too fast, way beyond normally justifiable levels.  Many big players may well have had their profits prospects seriously damaged by the seemingly ever-escalating trade wars.  In the U.S. the all important FAANG stocks which have been instrumental in driving the market upwards look increasingly vulnerable to the U.S./China trade war and the hugely important U.S. auto manufacturing sector to the potential trade dispute with Mexico.

So what does all this mean for gold and the other precious metals?  Gold, in theory at least, thrives on uncertainty.  We are already beginning to see inflows into the gold ETFs which had been seeing liquidations for much of April and the first half of May which suggests the big money is taking notice – not before time.  The pgms would probably suffer in a recession – particularly palladium and rhodium which are hugely dependent on the petrol (gasoline) driven auto market.  Silver may well benefit, despite its strong industrial usage.  The gold:silver ratio has been at close to 90 and will probably come down in a rising gold price scenario suggesting that percentage gains in silver may exceed those of gold.  But silver is not known for nothing as ‘the devil’s metal’ because of its unpredictability so it may be better to play safe and stick with gold as your market crash/recession insurance.  The omens look positive for gold but we shall see whether the U.S. market agrees!

Trust in Gold and Indian Gold Demand Strong

To keep lawrieongold.com readers  up to date with my musings on gold here are my two latest articles published on the Sharps Pixley website.  Click on titles to read:

TRUST IN GOLD

Both Michael Lewitt’s The Credit Strategist newsletter and Ronni Stoeferle and Mark Valek’s very comprehensive 340 page In Gold we Trust report suggest gold is the ultimate investment to protect your wealth

INDIA BACK ON TOP FOR SWISS GOLD EXPORTS IN APRIL

India received a little more gold from the key Swiss refineries in April than Mainland China and Hong Kong combined, confirming something of a pick up in gold demand in the sub-Continent

In Gold we Trust – New Edition

Today marks the release of THE 13th Edition of the In Gold we Trust annual treatise.  it is one of the most comprehensive reports and analyses of the global gold sector available anywhere.  It is published by Leichtentstein’s Incrementum AG and authored by Ronni Stoerferle (who initiated this annual report when he worked for Austria’s Erste Bank some years ago) and Mark Valek.
The Incrementum AG press release on the report is published below for the benefit of Lawrieongold readers together with links to enable you to download the full report – or an abridged version
Highly recommended for followers of the Gold Market
In Gold We Trust report 2019 – Gold in the Age of Eroding Trust

This year’s In Gold We Trust report was presented at an international press conference on May 28, 2019. The authors of the report are the two fund managers Ronald-Peter Stoeferle and Mark Valek from Liechtenstein-based Incrementum AG.

The more than 300-page In Gold We Trust report is world-renowned and has been named the “gold standard of all gold studies” by the Wall Street Journal. Last year’s edition was downloaded more than 1.8 million times. This makes In Gold We Trust, which will be published for the 13th time this year, one of the most widely read gold studies internationally.

For the first time ever, the study will also be published in Chinese on June 15.

The following topics are covered in the In Gold We Trust report 2019, among others:
– Review of the most important events in the gold market over the past 12 months
– Is gold the last monetary anchor of trust in a world suffering a general loss of confidence?
– “The Monetary U-Turn”: The reversal of monetary tightening and its impact on gold
– The increasing importance of gold in a time of de-dollarization
– Gold and cryptocurrencies – a solidifying friendship
– Gold stocks: reasons for our confidence (ESG, technology, valuation)
– Outlook for gold price development

Further highlights of this issue are:
Exclusive interviews with
► Jim Rogers, the world-renowned investor: “Whenever you see problems, remember weiji!”
► Freegold/FOFOA: In Gold We Trust 2019 contains the highlights of an interview with the legendary blogger.

Guest contributions by
► Prof. Steve Hanke: “Hyperinflation: Much Talked About, Little Understood.”
► Keith Weiner on “Gold Bonds”
► Mark Burridge (Baker Steel Capital Managers LLP): “Reforms, Returns and
Responsibility – How can gold mining equities become more important during the next

This year’s In Gold We Trust report can be downloaded free of charge under the following links:

Extended Version (340 pages)

Compact Version (100 pages)

The Authors
Ronald-Peter Stoeferle is Managing Partner & Fund Manager of Incrementum AG. Previously, he spent seven years in the research team of Erste Group in Vienna. In 2007 he published his first annual In Gold We Trust report, and it has gained international renown over the years.
Stoeferle is a lecturer at the Scholarium in Vienna and at the Vienna Stock Exchange Academy. In 2014, together with Rahim Taghizadegan and Mark Valek, he published the book Austrian School for Investors: Austrian Investing Between Inflation and Deflation. Recently he co-authored the book The Zero Interest Trap. He is also a well-known keynote speaker and consultant for Tudor Gold, a promising Canadian exploration company.

Mark Valek is Partner & Fund Manager of Incrementum AG. Previously, he worked for Raiffeisen Capital Management for more than ten years, most recently as a fund manager in the Multi Asset Strategies Department. In this role he was responsible for inflation-hedging strategies and alternative investments and managed portfolios worth several hundred million euros.
Valek is a lecturer at the Scholarium in Vienna and at the Vienna Stock Exchange Academy. Together with Rahim Taghizadegan and Ronald Stoeferle, he published the book Austrian School for Investors: Austrian Investing Between Inflation and Deflation.

More recent posts on Sharps Pixley

Another set of recent articles I’ve published on the Sharps Pixley website – click on the titles to read

LAWRIE WILLIAMS: Best March Quarter from Australia’s Gold Mines for 21 years

26 May 2019 – The March quarter production figures for Australia’s gold mines are the highest for 21 years putting the country on track for an annual output of around 320 tonnes of gold this year.

Lawrence Williams

LAWRIE WILLIAMS: Favourable outlook for gold – Murenbeeld

25 May 2019 – In his latest Gold Monitor newsletter Martin Murenbeeld paints a moderately positive view for the gold price in the face of numerous geo-economic and geopolitical issues facing us all.

Lawrence Williams

LAWRIE WILLIAMS: Palladium/platinum premium to persist – Metals Focus

23 May 2019 – In its take-away from opinions expressed at London Platinum , Metals Focus sees palladium’s price premium over platinum continuing for years to come despite a number of risks facing the catalytic metal.

Lawrence Williams

LAWRIE WILLIAMS: Russia adds another 15.6 tonnes to gold reserves in April

21 May 2019 – Russia is continuing to build its gold reserves monthly and remains on track to become the world’s third largest national gold holder by early next year.

Lawrence Williams

Gold Price Manipulation Explained

I may be winding down this site but i will still be publishing occasional articles here which i think will be of interest.  This one by Frank Holmes has appeared on the U.S. Global Investors website and covers one of the most contentious subjects for today’s gold investor

How to Unrig the Gold Market, According to GATA’s Chris Powell by Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors

In an earlier post, I gave you a sneak preview of my interview with Chris Powell, secretary/treasurer at Gold Anti-Trust Action Committee (GATA). For 20 years now, Chris and others at GATA have made it their mission to expose collusion by international financial institutions to control the price and supply of gold.

Below are highlights from the interview. I have to say that during much of our conversation, my jaw was on the floor. I don’t want to say much more than that! Read on, and remember to share widely.

Tell us about GATA’s background and what it does.

GATA was founded in 1999 to expose and litigate against the longstanding Western central bank policy of suppressing the price of gold. At first we weren’t even sure if it was Western banks that were doing it. But after a year or so of research and investigation, we concluded that the bullion banks were operating surreptitiously as brokers for governments, giving cover to their intervention in the gold market. At the time, we had a law firm advise us that this rigging was very likely authorized by the Gold Reserve Act of 1934, as amended since then, and as such, there may not be grounds to sue the government directly over gold price manipulation.

We went ahead and filed suit in 2001 anyway, in the U.S. District Court in Boston. We had a consultant, a Harvard-trained lawyer and gold investor, who brought a case against the Bank of International Settlements (BIS), the U.S. Treasury and various bullion banks.

One particular hearing I attended that year produced a remarkable admission from an assistant U.S. attorney. In short he said that, while the government was not admitting to the complaint, it nevertheless had the power and authority to do all the things the suit complained of—manipulating the price of gold, in other words. I made a record of this admission and put out a press release. The lawsuit was ultimately dismissed by the judge on technical jurisdictional grounds.

Having lost a little hope of suing the government directly, we determined that the best course of action going forward was to try to publicize our findings. We’re convinced that the Gold Reserve Act gives the U.S. government, particularly the Treasury Department and the Exchange Stabilization Fund (ESF), the unrestricted authority to intervene in and secretly rig any market in the world. Our work now is simply to expose this policy to as large an audience as possible.

On a practical level, how does manipulation like this occur on such a global scale?

It’s done largely in the futures markets. It’s also done in the London over-the-counter (OTC) market. The mechanisms are gold swaps and leases between central banks and bullion banks, and through the sale of futures contracts.

We’ve seen a number of flash crashes in the price of gold, but lately they’ve been happening every few weeks. Somebody will dump a billion dollars or more of gold futures contracts in New York. That can be achieved only by someone with infinite resources and money, who also has a powerful interest in suppressing the price of gold. Nobody interested in making good money would dump that much gold all at once. He would sell it gradually over a period of time. I think these flash crashes are irrefutable evidence of price suppression.

the gold futures flash crash of January 6, 2014
click to enlarge

Are there any public records that point to all of this?

Yes. There’s all sorts of material in the Treasury Department and Federal Reserve archives about gold price suppression being U.S. policy. Jelle Zijlstra—the former president of the Netherlands’ central bank, who simultaneously served as president of the BIS—wrote in his memoirs that the gold price has always been suppressed at the behest of the United States through international action. You can go back to the years of the London gold pool in the 1960s, where the control of the gold price through international action was a matter of public record, operating through the Bank of England (BoE).

A very remarkable transcript exists of a meeting in April 1974 between Secretary of State Henry Kissinger and Thomas Enders, the assistant under secretary of state for economic and business affairs. Enders explains to Kissinger that U.S. government policy is to drive gold out of the world’s financial system and prevent European governments from remonetizing the metal in any way. The purpose of this policy is to support the U.S. dollar as the world reserve currency, and if not the dollar, then the International Monetary Fund’s (IMF) special drawing rights (SDR).

The most compelling evidence, I believe, are letters sent by Representative Alex Mooney of West Virginia to the Federal Reserve, Treasury Department and U.S. Commodity Futures Trading Commission (CFTC). Mooney asked the Fed and Treasury to identify which markets they’re secretly trading in, and to explain the purposes of this trading. Fed Chair Jerome Powell essentially refused to answer the question, as did the Treasury. Mooney asked the CFTC to state whether manipulation trading in the futures markets undertaken by the U.S. government or its agents or brokers is subject to the CFTC’s jurisdiction, or whether such manipulation is actually legal or exempt from ordinary commodities law. The CFTC refused to answer the question.

I think these agencies’ refusal to answer Mooney’s questions is quite revealing. And notably, mainstream financial journalists don’t find any of this curious. They have a rule never to put a critical question to any central bank about anything. Theoretically, somebody could do it. It’s being attempted by alternate news agencies and research organizations, but you can’t get an answer. That’s a good indication, I believe, that central banks are doing things they don’t want the markets to know about.

My next question has to do with central banks and their consumption of gold. They’ve been net buyers since 2010. The United States continues to be the single largest holder of gold of any institution on the planet. How do we reconcile that? If they own all this gold, wouldn’t it go against their self-interest to suppress its price?

global central banks have been net buyers of gold since 2010
click to enlarge

That seemed to be a paradox to GATA some years ago, but we don’t believe it is any longer. To suppress the price of gold, you need a certain amount of inventory to knock the market down. You can’t do it entirely through the naked shorting that they do in the futures market. You always need to be bleeding a certain amount of the metal into the market to maintain the appearance of a gold market. You can’t just be trading paper all the time—it’s not enough.

The U.S. economists Paul Brodsky and Lee Quaintance wrote a paper a few years ago that floats a plausible hypothesis of what’s going on. The two hypothesized that the policy in recent years has been to redistribute world gold reserves among central banks so that those banks that have been overweight in U.S. dollars and Treasuries could hedge themselves in anticipation of an inevitable devaluation of the dollar and revaluation of gold. Central banks, the two allege, intervene together in the futures market to drive the nominal price down to facilitate easy acquisition of gold. They would prefer to keep the public out of acquiring the metal.

Full disclosure, I don’t have any particular evidence from government sources that confirms Brodsky and Quaintance’s hypothesis. But it certainly fits the facts as we understand them.

As you likely know, a JPMorgan trader is awaiting sentencing right now for his participation in gold price rigging. What’s your reaction to this?

His sentencing has been delayed twice now. It was delayed again the other day for another six months.

I’m not sure what to make of it, to be honest. There’s some confusion here because a few years ago, the chief executive of JPMorgan, Jamie Dimon, and the woman who was running its commodities desk at the time, Blythe Masters, both gave interviews saying that JPMorgan has no position of its own in the monetary metals markets. They were trading them only for clients. Of course, nobody in journalism followed up by asking Dimon or Masters who the clients were. I would have wondered if the bank was acting as the broker for the U.S. or Chinese government. That was certainly implied from the answers they gave.

Now this trader, John Edmonds, apparently had to admit that he was rigging the gold and silver markets while trading at JPMorgan. He was allegedly doing it with the knowledge and counsel of his superiors, and if it were done on behalf of the government, presumably it’s legal under the Gold Reserve Act. But as Charles Peters, former editor of the Washington Monthly, used to say: “The scandal is never what’s illegal. The scandal is what’s perfectly legal.”

So why is Edmonds being prosecuted? Because he was front-running government trades? Was he doing it just for himself? I can’t imagine the Justice Department would be prosecuting him if his trading was being conducted on behalf of the U.S. government.

Where do you think gold prices would be right now if not for this manipulation? What’s the true value of gold?

The true value of gold is whatever our free market wants it to be. Our attitude toward money is very libertarian. Let there be free markets and currencies, and if governments are intervening, they should be transparent about what they’re doing.

Having said that, the disparagement of gold for years is that its price has not kept up with inflation. Everything keeps up with inflation. That in itself is pretty powerful evidence of government intervention. It’s not keeping health insurance costs and medical care prices down. It’s not keeping college tuition down. It’s not keeping grocery prices down. How come gold is the only thing that doesn’t keep up with inflation? Silver, too? All of the traditional ratios of monetary metals values compared to stock market levels and other prices have been thrown off in recent years because of government intervention.

global central banks have been net buyers of gold since 2010
click to enlarge

So what would those prices be if the traditional ratios were enforced again? I can’t say for sure, but obviously they would be far, far higher than they are today. And the government knows this. If the government ever got out of the futures market and abandoned its manipulation scheme, metal prices would remonetize in as little as a week.

I’ll add that if you want the gold or silver price to go up, you’ve got to buy real physical metal. Take it out of the banking system and weaken the futures market, which is where the manipulation takes place.

If readers are interested in learning more, where should they go?

They can go to our site, GATA.org. In the upper right-hand side, visitors can subscribe to our daily newsletter, the “GATA Dispatch.” That’s absolutely free. On the left, in the “Articles” section, you’ll find a link to “The Basics” and “Documentation.” All of the documentation of gold price suppression and secret intervention in gold markets by governments is contained there. And if they’re searching for anything in particular, I’d be happy to help them or refer them to someone who can. They can just email me at cpowell@gata.org.

Thank you for your time, Chris! It was a pleasure.

The pleasure was all mine.

My recent postings on Sharps Pixley website

In the interests of keeping Lawrieongold readers up with my latest musings on precious metals, here are links to my most recent articles published on the Sharps Pixley website

SHARPS PIXLEY MARKET REPORTS

Winding Down

To all Lawrieongold readers

This is to let you know I’ll be winding this site down, but am still writing on precious metals.  You can still read my writings on the Sharps Pixley site.  I may still publish the occasional article here if the mood takes me but in general old age is eating into my time availability so am heading towards long overdue retirement.

I’ve been involved in the precious metals sector – firstly as a mining engineer, and latterly as a publisher/writer/analyst, for over 50 years so its probably time to call at least some of what I do to a halt.

Thank you for reading my material – I hope you’ve enjoyed it and found it useful

With best wishes

Lawrence (Lawrie) Williams

World Top 20 Gold 2018 – Countries, Companies and Mines

Top independent precious metals consultancy, Metals Focus, has published its latest analysis of the World’s gold supply and demand and the following 3 tables break down global production showing the Top 20 gold producing nations, companies and mining operations last year and their relative performances compared with a year earlier.  What will perhaps be disappointing for gold investors and some analysts is that the figures do not yet show that Peak Gold has been achieved, with new mine production growing by around 1.8% last year,

Table 1: Top 20 Gold Producing Nations 2017/2018 (Tonnes)

Rank Country 20 18 Output 2017 Output %  Change
1 China 404 429 -5.9%
2 Australia 315 293 +7.6%
3 Russia 297 281 +5.9%
4 USA 222 236 -6.3%
5 Canada 189 171 +10.4%
6 Peru 158 167 -4.9%
7 Indonesia 137 114 +20.0%
8 Ghana 131 130 +0.7%
9 South Africa 130 154 -15.7%
10 Mexico 115 119 -3.4%
11 Brazil 97 96 +1.3%
12 Uzbekistan 92 89 +3.9%
13 Sudan 77 88 -13.0%
14 Papua New Guinea 69 64 +7.4%
15 Kazakhstan 68 56 +22.1%
16 Mali 61 50 +21.3%
17 Argentina 60 63 -4.6%%
18 Burkina Faso 59 53 +12.8%
19 Tanzania 48 55 -12.7%
20 DR Congo 45 37 +22.8%
Others 728 697 +4.4%
  Total 3,503 3,442 +1.8%

Source: Metals Focus, lawrieongold

Table 2: Top 20 Gold Mining Companies 2017/2018 (Tonnes)

Rank Company 2018 Output 2017 Output %  Change
1 Newmont Mining 158.7 163.8 -3%
2 Barrick Gold 140.8 165.6 -15%
3 AngloGold Ashanti 105.8 116.8 -9%
4 Kinross Gold 76.5 78.6 -3%
5 Polyus Gold 75.9 67.2 +13%
6 Freeport McMoran 75.9 49.1 +55%
7 Newcrest Mining 76.7 71.1 +6%
8 Goldcorp 71.4 79.9 -11%
9 Navoi MMC (est) 64,7 62.3 +4%
10 Gold Fields 58.9 62.5 -6%
11 Agnico Eagle Mines 50.6 53.3 -5%
12 Shandong Gold 47.7 43.9 +4%
13 Harmony  Gold 44.1 34.0 +30%
14 China National Gold 40.4 42.4 -5%
15 Randgold Resources 39.9 40.9 -2%
16 Polymetal 37.8 33.4 +13%
17 Zijin Mining 37.0 37.5 -1%
18 Sibanye Gold 36.6 43.6 -16%
19 Yamana Gold 32.1 30.4 +6%
20 Glencore 31.2 32.1 -3%

Source: Metals Focus, lawrieongold

Table 3.  World’s 20 largest gold mines in 2018 (Production in tonnes)

 Rank Mine Country Owner(s) 2018 2017 Change
1 Grasberg Indonesia Govt ., Freeport 83.9 43.3 +74%
2 Muruntau Uzbekistan Govt. 61.5 61.0 +1%
3 Olimpiada Russia Polyus 41.1 36.6 +12%
4 Cortez USA Barrick 39.3 45.0 -13%
5 Lihir PNG Newcrest 30.3 28.6 +6%
6 Pueblo Viejo Dominican Rep Barrick/Goldcorp 30.1 33.7 -11%
7 Zarahshan Uzbekistan Govt. 30.0 30.0  –
8 Carlin USA Newmont 28.8 30.2 -5%
9 Goldstrike USA Barrick 26.0 26.9 -3%
10 Kibali DRC Randgold/AngloGold/Sokimo 25.1 18.5 +35%
11 Cadia Valley Australia Newcrest 23.4 17.0 +38%
12 Boddington Australia Newmont 22.1 24.5 -10%
13 Canadian Malartic Canada Agnico Eagle/Yamana 21.7 19.7 +10%
14 Kalgoorlie Super Pit Australia Newmont/Barrick 19.5 22.9 -15%
15 Detour Lake Canada Detour Gold 19.3 17.8 +9%
16 Geita Tanzania AngloGold 17.5 16.8 +5%
17 Veladero Argentina Barrick/Shandong 17.3 19.9 -13%
18 Kumtor Kyrgyzstan Centerra 16.6 17.5 -5%
19 Merian Suriname Newmont/ Govt. 16.6 16.0 +4%
20 Yanacocha Peru Newmont/Buenaventura/Sumitomo 16.5 16.6 -1%

Source: Metals Focus, lawrieongold

 

 

Very irreverent Brexit ditty

In the UK we are bombarded with pro and anti Brexit media coverage day in day out.  As someone who voted to Remain in the referendum 2 years ago, but has changed his view since, particularly in the light of intransigent EU negotiators, I hope others may find this ditty, posted on YouTube by Dominic Frisby, amusing if NSFW due to the language used.  Dominic will be known to many lawrieongold readers as an astute commentator on precious metals.  I wasn’t previously aware of his comedic singing abilities, nor of his Brexit viewpoint until this YouTube posting was brought to my attention by Canadian blogger ‘Otto Rock’ (a pseudonym) on his regular Inca Kola News blog (which I would recommend as must reading for anyone interested in the nefarious goings-on in the Canadian junior mining and exploration sector.

What has to be surprising for anyone who follows the UK economy is that it hasn’t collapsed under Brexit uncertainty.  Indeed key indicators like the number of people in work is at its highest level since records began in huge contrast to a number of EU nations which are suffering record unemployment levels.  Global growth is set to expand far faster than EU growth and the UK is one of the world’s biggest economies in its own right, which is why the EU is desperate to keep us in the Common Market and is making it so difficult for us to leave.  Enough said.

The link to the YouTube video for Dominic’s song entitled 17 million f**ck-offs (I warned you so don’t view this if of a sensitive nature) is as follows: https://www.youtube.com/watch?v=jiUFPjulTW8

The latest updates on China’s gold

The Chinese central bank, The People’s Bank of China, has announced a 9.95 tonne increase in the country’s gold reserves and its subsidiary, The Shanghai Gold Exchange (SGE) has come up with its gold withdrawal figures for February (which we equate to China’s real gold demand).  My comments on both these have been published on the Sharpspixley.com website and links to the two, admittedly opinionated, articles are shown below:

CHINA ADDS 10 TONNES TO GOLD RESERVES, BUT IS THAT ALL?

The Chinese central bank has reported adding a fraction under 10 tonnes of gold to its forex reserves in February, but is the new total any more accurate than in the past?

CHINA’S GOLD DEMAND LOOKS TO BE SLOWING THIS YEAR SO FAR

The Shanghai Gold Exchange has now released gold withdrawal figures for the first two months of 2019 and if we equate SGE withdrawal figures to Chinese gold demand, as we do, these suggest the nation’s demand may be slowing this year/

Gold & Silver Awaken from Eight-Year Slumber

The article below was written ahead of this week’s FOMC meeting and statement from Fed Chair Powell which intimated a sharpish slowdown in the US Fed’s tightening programme.

By David Smith, writing for Money Metals Exchange

Two years ago at a conference during which I both presented and attended, a Keynote speaker, “Rich Dad” Robert Kiyosaki, introduced me to a different way of looking at things. He posed the question, “How many sides does a coin have?”

The correct answer is “three.” The front (obverse), back (reverse) and… the edge!

When you think about it, this makes sense. From this angle – uncommon to most observers – a person can begin to look more deeply at a given subject. From the edge, you are able by definition, to see “both sides” of the story.

Using Rich Dad’s perspective as a research tool helps define and validate the premise of this essay… that the price action right now of gold – and soon silver – are giving us important clues about the direction, strength, and durability of the next price trend.

It’s easy and understandable for Norteamericanos to become fixated on the price of gold and silver, expressed in their domestic currency, the U.S. dollar.

But once in a while, it’s important to take a step back and gauge how much people in OTHER countries are paying in their currency when they exchange fiat for some of the honest money that gold and silver have historically represented.

When gold is in an uptrend against other currencies it lets you know that something is going on under the hood that most people are missing.

When precious metals’ buying in these countries continues to increase in spite of the fact that it has become even more expensive to do so, Mr. Market is letting you in on just one more reason why you should pay attention… and either start “stacking” or add to your current insurance/investment position.

The Trend is Your Friend

Increased gold purchases by “Silk Road” countries – for going on two decades – have continued unabated in spite of periodic currency devaluations and loss of purchasing power to the U.S. dollar. Not to mention that China, which used to export millions of ounces of silver annually, has for some years, not only been keeping all of its internal production, but importing more!

The Shanghai Gold Exchange (SGE) chart demonstrates that this trend shows no signs of letting up.

Going forward, plan on gold being more challenging to find, and due to increased regulation along with overall country risk, more complicated, costly and time-consuming to produce. And, not to mention, more expensive to buy as mushrooming demand across the globe kicks in and continues with a vengeance.

Goldcorp was recently bought out by Newmont Mining, creating the world’s largest producer. This is the second recent gold company mega-merger – with others almost certainly to follow – indicating the need these operators have for nailing down future ore bodies, as every ounce they produce depletes their reserves.

Ian Telfer, Goldcorp’s Chairman, has said, “If I could give one sentence about the gold mining business… it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years. Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down… We’re right at peak gold here.”

Physical Silver Deliveries in Shanghai Are Skyrocketing

After a brief time lag, when gold experiences a sustained and robust rise price rise, so does silver.

The directional correlation between gold and silver is close to 90%. When you observe the statistical rarity of a gold/silver ratio above 80:1 – which happens to be where we are right now – a “reversion to the mean” is in the offing.

Central Bank Gold Holdings Reveal What “The Man” Is Doing

Even as the new gold secular bull run got underway in 2000, central banks continued to sell gold for nine more years.

However, in 2010 that trend reversed and has continued upward through the present day. From 2015 through the end of 2018, central bank buying has noticeably accelerated.

One writer has referred to central banks as “one trick ponies with printing presses.”

But even as they push out more paper promises, these tricksters continue to covet the Midas metal. Former Federal Reserve Chairman, Ben Bernanke, pressed to answer why they still held gold, replied curtly, “because of tradition.”

We’d say there’s more to it than his brief reply – a lot more.

Central Banks Are Stockpiling Gold Once Again (Courtesy World Gold Council)

Way back in 2002, David Morgan made the following comment:

“For the record, I will state, there will be another, more frenzied, scramble that will carry silver prices to highs that will repair all the excess paper money creation, price suppression, supply deficit, and bearish sentiment over the past two decades. This will become known as the Great Silver Crisis.”

Gold, silver and the mining stocks are finally awakening from an eight-year slumber.

While no one can predict just how far and how fast prices will rise, the odds of missing out for those who continue to look the other way or who hesitate to act, will parallel the metals’ upside trajectory.

Then at some point, as surely as the sun rises each morning, many of these same people will decide to step up to the plate and start buying at much higher prices. They will be driven – not by calm, calculated decision-making, but rather by FOMO – the fear of missing out.

Do yourself a favor. Behave like “Rich Dad.” Get up on “the edge of the coin” and take a look at both sides.

Then start “vaulting” gold and silver on a regular basis, while availability is good, and the price is still reasonable.

About the author

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com as well as the LODE Cryptographic Silver Monetary System Project. He has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sector observations withr eaders, the media and North American investment conference attendees.