11-3-2015 TUESDAY AFTER LUNCH MONEY MEMO
By the Financial Foghorn
China Gold Exchange is Selling Tonnes of Gold. Tiki Has Answers
“After being a Senator in Washington for a while, I began to miss the honesty and sincerity of Hollywood.” Fred Thompson, actor, 1942-2015
Tuesday: Gold $1114.20 down $21.60. Silver: $15.24 down 17 cents
I had thought Halloween was over and scary stories and slimy government budget deals had run their course. But NOOOOO. We still have the lying, cheating Wall Streeters beating up PMs in spite of massive scarcity data. The recent blurb by Lawrence Williams, sometimes frightfully called “Lawrie” is timely. [The quoted story below is taken from lemetropolecafe, and is more updated than the gold-eagle story below.] My snowglobe of Tiki Voices says Lawrie is on to something here. (Um, yes – Tiki Voices from a snowglobe. And only Foghorn can hear these Tiki Voices. But let’s not dwell on that right now…)
“Full month figures for October aren’t yet available, but announced gold withdrawals out of the Shanghai Gold Exchange (SGE) up to October 23rd have already exceeded last year’s full year total – and last year was the second highest full year ever for SGE gold deliveries. With the SGE, withdrawals are in physical form in small bars only…this is mega tonnage folks in a world that only produces some 2600 tonnes of gold a year out of gold mines. (Scrap or recycled gold doesn’t amount to much these days, maybe a couple hundred tonnes. The reason is lousy prices…)
SGE GOLD WITHDRAWALS – YTD AND PREVIOUS YEAR TOTALS
Year SGE gold withdrawals:
2015 (to Oct 23rd) 2,119 tonnes
2014 2,102 tonnes
2013 2,181 tonnes
2012 1,134 tonnes
2011 1,043 tonnes
2010 814 tonnes
Source: Shanghai Gold Exchange, Sharelynx.com
There are various reasons suggested for the enormous discrepancy between known supply and SGE deliveries. Some are valid, some very silly. See the gold-eagle article sited below for details. The obvious fact is that SGE deliveries have been enormous this year, and that should tell you that China is sucking the West dry of gold. And Chinese mothers didn’t raise no stupid communists.
Together with Indian demand running at close to 900 tonnes this year, sooner or later the level of gold flows draining western inventories must have an impact.” See http://www.gold-eagle.com/article/latest-sge-gold-deliveries-suggest-enormous-2015-total-over-2650-tonnes
Oh, and the Russkies are absorbing all of their own gold production (over 200 tonnes) and that production never comes onto the world market either. And the ever so crafty Russkies are buying in London as well.
Doug Casey had a three “litmus tests” for gold’s portfolio-diversifying relevance which we believe every global investor should currently be considering. If the litmus turns turgid, I’d suggest buying some gold, and maybe a lot of silver:
First – could the U.S. financial system endure even moderate normalization of interest rate structures?
Second – has the process of debt rationalization been allowed to proceed in U.S. financial markets?
Third – is the U.S. economy capable of 3%-to-4% GDP growth with a healthy net national savings rate of say 8%-to-10%, alleviating the need for copious amounts of U.S. nonfinancial credit growth?
If your answer to these three questions is Not a Chance, Hell no, and Have You been drinking? then gold remains a mandatory portfolio-diversifying asset.
Post-Litmus Upshot: I’m going with the anti-Ahu Tiki God of Revenge above, and heading for gold and PM shares. I’m not beating a dead horse. I’m trusting the eerily accurate Tiki Voices of prognostication. I’m just the messenger here.
Tiki Voices Newsflash: Rubicon (RBY) got taken out and acid-washed today. Gold Stock Analyst still kept it on their Top Ten list, but it’s gonna take some courage to buy this one. RBY announced over the weekend that they’d halted their mine and mill construction, and oh yes, fired the president. Mr. Market hates that. The stock dropped from 43 cents to…wait for it, 19 cents. Twenty two million shares traded – for a stock that usually trades about 1.3 million a day.
IF you believe in the gold story and RBY’s huge acreage surrounded by Gold Corp up in Ottawa, you ought to put away a 1000 shares or so. It’ll cost you 200 bucks. Foghorn owns a 1000 shares, and he’ll probably buy more.