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A Vision Of Gold

Discussion in 'Gold Silver (All things Metal)' started by searcher, Sep 2, 2016.



  1. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Mechanics of the Chinese Domestic Gold Market

    -- Published: Monday, 14 August 2017

    By BullionStar

    https://www.bullionstar.com/

    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 to as the Chinese ‘domestic’ gold market since gold flows and gold trading in the market are predominantly domestic in nature. Despite these trade restrictions, China still manages to be the largest importer of gold in the world. Furthermore, the Chinese gold mining sector is also the largest producer of gold in the world.

    At the heart of the Chinese domestic gold market lies the Shanghai Gold Exchange (SGE). Due to the depth of SGE liquidity and the centrally imposed rules of the Chinese gold market such as cross-border trade rules and VAT rules, nearly all gold flows in China are required to and/or are incentivized to pass through the SGE trading and vaulting system. This includes nearly all gold imported into China and nearly all gold mined within China. The SGE vaulting system consists of 61 vaults across 35 Chinese cities.

    In 2016, China net imported an estimated 1300 tonnes of goldhttps://www.bullionstar.com/blogs/koos-jansen/china-net-imported-1300t-of-gold-in-2016/'>[1], and Chinese gold mines produced an estimated 455 tonnes of goldhttps://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2017-gold.pdf'>[2].

    During 2016, physical gold withdrawals from the SGE totalled 1970 tonneshttps://www.bullionstar.com/blogs/gold-market-charts/gold-market-charts-january-2017/'>[3], and total gold trading activity on the SGE during 2016 reached a record 24,338 tonneshttp://www.en.sge.com.cn/upload/file/201701/11/o9wsyZKEsMfjf0cp.pdf'>[4].

    Since nearly all physical gold supply in the Chinese market flows through the SGE vault network, by definition nearly all Chinese gold demand has to be met by withdrawing physical gold from the SGE (i.e. SGE gold withdrawals). Therefore an analysis of SGE gold withdrawals provides a realistic window into the true size of the Chinese gold market and the true size of Chinese gold demand.

    Physical gold withdrawal volumes from the SGE vaults are now remarkably large each year, and have continued to ramp up noticeably since 2013. In 2012, SGE gold withdrawals totalled 1139 tonnes. By 2013, gold withdrawals from the SGE vaults nearly doubled to 2197 tonnes. In 2014, the Exchange saw 2102 tonnes of gold withdrawn, and in 2015 a huge 2596 tonnes of gold left the SGE vaults. Gold withdrawals in 2016 were slightly down on 2015 with 1970 tonnes withdrawn.

    Some high-profile precious metals consultancies such as Thomson Reuters GFMS and the World Gold Council still publish annual Chinese gold demand figures that are far lower (for example 900 tonnes per annum) than the annual SGE gold withdrawal figures. These discrepancies are so large that they call for rigorous analysis and explanation. Not that other bodies, such as the China Gold Association (CGA) do state that Chinese gold demand equals SGE gold withdrawals.

    Contents
    Highlights
    • The Shanghai Gold Exchange (SGE) was established in 2002 as a free-market gold allocation mechanism for the domestic Chinese gold market in place of the previous central allocation model employed by the Chinese central bank.

    • By 2007, physical gold withdrawals from the SGE (SGE Gold Withdrawals) were fully meeting Chinese wholesale gold demand. Therefore SGE Gold Withdrawals are a suitable proxy for Chinese wholesale gold demand.

    • Gold supply in China can be accounted for by gold imports, gold production from mining, gold recycling, disinvestment and recycling distortion

    • Gold demand in China comprises both consumer gold demand and institutional gold demand, both of which are met from gold withdrawals from the SGE

    • Since the SGE plays such a central role in the Chinese gold markets, the Chinese gold supply-demand equation can be overlaid on to SGE Supply and SGE Gold Withdrawals
    https://www.gold.org/download/file/2756/151200a.pdf'>[5]. The structure of this Exchange, still under the administration of the PBoC, would allow the Chinese State to monitor gold trading in the Chinese market, while giving China’s population access to the wholesale gold market. The Exchange was launched in October 2002, and by 2004, private citizens in China were allowed to trade in and own gold bullion.

    Prior to the launch of the SGE in 2002, the Chinese State had for 50 years practised a centralised model of gold allocation in the economy, with the PBoC solely responsible for trading gold in China and supplying the Chinese gold ‘market’ with an adequate allocation of gold each year.

    The adjustment from centralised allocation of gold to free market allocation of gold took a few years to reach a stage at which the Exchange was fully playing the allocation role. This is evident from the fact that between 2002 and 2006 inclusive, annual Chinese wholesale gold demand still exceeded SGE gold withdrawals, which meant that SGE gold supply was only partially meeting the national wholesale gold demand, with the PBoC still facilitating residual supply by direct allocation.

    Then in 2007 for the first time, physical gold withdrawals from the SGE began to equal Chinese wholesale gold demand. This signalled that the SGE had begun to fully fulfilling its gold allocation function for the entire Chinese gold market.

    The 2007 China Gold Association (CGA) Gold Yearbook confirmed this milestone:

    “2007年,上海黄金交易所黄金出库量363.194 吨,即我国当年的黄金需求量,

    In 2007, the amount of gold withdrawn from the warehouses of the Shanghai Gold Exchange, the total [wholesale] gold demand of that year, was 363.194 tonnes …”

    The relevant CGA Gold Yearbooks from 2008 to 2011 also confirm that in each of these years SGE withdrawals exactly matched Chinese wholesale gold demand. Following this, from 2012 to the present, annual SGE withdrawals have approximately matched Chinese wholesale gold demand.

    SGE gold withdrawals are therefore a suitable proxy for Chinese wholesale gold demand. However, note that true Chinese gold demand is slightly lower than SGE gold withdrawals due to adjustments for gold recycling.

    https://www.goldbarsworldwide.com/PDF/NBA_91_Shandong_Zhaojin_Gold_Bars.pdf'>[6].

    Specifically, the physical gold ingots /bars deliverable on the SGE Main Boardhttp://www.en.sge.com.cn/upload/resources/file/2015/01/26/29484.pdf'>[7] are:
    • gold ingots with a standard weight of 1 kg and a fineness of >= 999.9
    • gold ingots with a standard weight of 3 kg and a fineness of >= 999.5
    • gold ingots with a standard weight of 12.5 kg and a fineness >= 995.0
    • gold bars with a standard weight of 0.05 kg and a fineness of >= 999.9
    • gold bars with a Standard Weight of 0.1 kg and a fineness of >= 999.9
    Note that the gold ingots /bars deliverable on the SGE International Boardhttps://www.bullionstar.com/gold-university/the-mechanics-of-the-shanghai-international-gold-exchange'>[8] are the 1 kg and 12.5 kgs gold ingots and the 0.1 kg gold bars.

    In July 2015, the LBMA and the SGE announced that they would both mutually recognise specifications for 9999 gold kilobarshttp://www.lbma.org.uk/_blog/lbma_media_centre/post/9999-kilobar-standard-endorsed-by-lbma-sge/'>[9], such as weight, dimensions, fineness, marks on bar.http://www.lbma.org.uk/assets/Press%20Releases/9999%20Kilobar%20Standard.pdf'>[10]

    [​IMG]


    Chinese VAT rules for Standard and non-Standard Gold on and off the SGE



    As regards trading liquidity, this creates a virtuous circle for the SGE since the rules on Standard Gold and the VAT rules funnel more gold trading activity through the Exchange. This boosts liquidity which in turn attracts more trading to the SGE to the higher trading liquidity present on the Exchange.

    http://www.en.sge.com.cn/eng_news_Announcement/542320'>[11]

    https://www.bullionstar.com/blogs/koos-jansen/china-net-imported-1300t-of-gold-in-2016/'>[12].

    Only PBoC approved commercial banks can import gold bullion into the domestic gold market. Currently there are thirteen banks approved by the PBOC to import gold bullion into China, four of which are foreign banks, namely HSBC, ANZ, Standard Chartered and United Overseas Bank (UOB), and the other nine of which are Chinese banks including ICBC, Bank of China, and China Construction Bank. See BullionStar Gold University article “Chinese Cross-border Trade Rules on Gold” for more details and a list of approved bankshttps://www.bullionstar.com/gold-university/chinese-cross-border-trade-rules-gold#heading-3'>[13]:

    All bullion imported into the Chinese domestic gold market by PBoC approved banks above must be in the form of Standard Gold. And since Standard Gold must be first sold through the SGE, all bullion imported by the approved banks is first sold on the SGE.

    Chinese cross-border gold trade rules, specifically Article 6 of the PBoC “Measures for the Import and Export of Gold and Gold Products” states that:

    “Gold to be imported … shall be registered at a spot gold exchange [SGE] approved by the State Council where the first trade shall be completed”https://static.bullionstar.com/blogs/koos-jansen/wp-content/uploads/2015/11/PBOC-2015-gold-trade-rules-announcement.pdf'>[14]

    Since only Standard Gold is tradable on the SGE, only Standard Gold is allowed into SGE certified vaults. Non-bank gold enterprises can also gain PBoC approval to import (and export) gold doré, ore and jewellery into / out of the domestic market.

    In general, gold bullion exports from the Chinese domestic gold market are prohibited. However, a number of forms of gold exports out of China are allowed. These include gold exports via processing trade, China Panda gold coin exports by the Chinese Mint, and small individual limits (50 grams) on individuals legally carrying gold across the border when leaving China.

    https://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2017-gold.pdf'>[2], gold mining production in the People’s Republic of China (PRC) is the second largest source of gold supply for the Chinese domestic gold market after gold imports.

    The vast majority of this Chinese gold mining output is initially sold through the SGE. This is because trading liquidity is highest on the SGE. Since Standard gold is VAT exempt when traded on the SGE and since only Standard Gold can be traded on the SGE, Chinese miners are incentivized to cast their output into Standard Gold and sell it on the SGE.

    Note that overseas gold mining output from Chinese owned mines abroad can also be imported into the Chinese domestic gold market and then refined into Standard Gold by an SGE approved refinery before being traded over the SGE.

    Note also that Chinese gold mining companies are permitted to sell Non-Standard gold and other gold products off of the SGE. For example, the large gold miner China National Gold Group Corporation operates its own physical shop outlets / stores in which it sells gold bars and gold ornaments.

    [​IMG]

    Recycled Gold in the Chinese Domestic Market, by Category

    GFMS’ recycled gold data focuses only on scrap gold. This includes old gold jewellery sold by consumers and industrial product scrap. Conversely, the CGA data for recycled gold consists of three elements, namely, scrap gold, disinvestment, and a category of recycled gold known as recycled distortion. Some of these categories have a net effect on the gold price and some do not.

    Scrap Gold: Scrap gold refers to old gold products (from either jewellery or industrial products) that are sold for cash by consumers at the retail level. Scrap gold boosts real gold supply and has a net effect on the gold price. Both GFMS and the CGA include scrap gold flows in their respective gold supply statistics.

    Disinvestment: Disinvestment has an effect on institutional gold supply and also has a net effect on the gold price. In China, any individual or institutional investor can buy gold directly at the wholesale level on the SGE (investment demand) and then withdraw this gold from the SGE. If some of these investors subsequently decide to sell (supply) their gold again, they can sell it directly to a gold refinery. These gold flows are defined as disinvestment and these flows can then make their way back to the SGE vaults for trading on the SGE.

    Disinvestment of large amounts of investment gold will tend to be executed not at the retail level such as at a jewellery store but more likely at a gold refinery. But because disinvestment bypasses the retail level (e.g. jewellery shops and bank branches), disinvestment will not be captured by GFMS in its gold supply statistics. Note that the CGA does include disinvestment in its gold supply statistics.

    The final category can be labelled as Recycled Distortion, an example of which is “Process Scrap”. Process scrap refers to residual metal left over after fabrication or manufacturing of gold jewellery or industrial products. This could, for example, be from metal spilled during jewellery fabrication. The fabricator sells this scrap to a gold refinery which then reforms the gold into Standard Gold and the gold makes its way back to the SGE. Process scrap gold overstates supply to the SGE and also subsequent demand on the SGE but has no net effect on the gold price. So both supply and demand would need to be adjusted downwards in this case.

    Recycled distortion is a term used at BullionStar to refer to recycled gold that is not scrap and is not disinvestment, and that could include process scrap but also other types of recycling. Recycled distortion is not included in GFMS data, but is included in CGA data.

    Recycled distortion that flows through the SGE overstates both the supply and demand sides. When the volume of recycled distortion is subtracted from SGE withdrawals, the result is ‘True Chinese gold demand’.

    [​IMG]

    Chinese Domestic Gold Market Supply & Demand Balance

    The above supply and demand equation still excludes two further variables that may have an impact on supply or demand. On the supply side, stock carry over in SGE vaults from previous years is omitted as this information is not publicly available. On the demand side, gold purchased on the SGE that is left in the vaults is also omitted from the analysis since the size of these holdings are not known.

    From the above bar chart, it can be seen that the main reason why annual gold demand as defined by the consultancy Thomson Reuters GFMS is far lower than the size of SGE withdrawals each year is because GFMS only estimates consumer gold demand and ignores institutional demand.

    GFMS Demand Data = Chinese consumer gold demand data

    By ignoring institutional demand which is essentially investment demand, the GFMS data is vastly underestimating investment demand for gold in China. The GFMS data is therefore incomplete and is not an accurate representation of full gold supply and demand in China.

    On a cumulative basis from January 2007 to September 2016, the difference between SGE gold withdrawals and GFMS gold demand reaches a massive 5922 tonnes of gold, as can be seen in the following chart:

    [​IMG]

    GFMS


    GFMS Gold Demand and SGE Gold Withdrawals, 2007 – 2016

    Remembering that:

    Chinese Wholesale Gold Demand = SGE Withdrawals = Consumer Demand + Institutional Demand + Recycled Distortion

    and that:

    Institutional Demand = Direct Purchases At The SGE

    and that:

    Consumer Demand + Institutional Demand = True Chinese Gold Demand

    Then it’s interesting to note that the China Gold Association (CGA) defines the difference between Chinese total gold demand and Chinese consumer gold demand as ‘Net Investment’. i.e.:

    Net Investment = SGE Withdrawals – Consumer Demand

    Net Investment = Institutional Demand + Recycled Distortion

    The composition of ‘Direct Purchases on the SGE‘ is also illuminating. In China, anyone can open an account and buy gold directly on the Shanghai Gold Exchange. This includes individual citizens and wholesale enterprises such as jewelry manufacturers and bullion banks. About 50% of SGE gold withdrawals are from wholesale gold manufacturers/fabricators. The other 50% of SGE gold withdrawals are from individual and institutional customers who purchase gold on the SGE and then withdraw it from the SGE vault network.

    Some of the difference between GFMS consumer gold demand numbers and SGE gold withdrawals can legitimately be explained by phenomena that would inflate Chinese gold demand, such as inventory / stock movement changes and gold-for gold scrap (process scrap). Inventory / stock movement changes would, for example, be gold that jewellery manufacturers, gold refineries, industrial companies and the mint have bought at the SGE, but not yet sold in the retail market. But after adjusting for these legitimate explanations, whatever is left is genuine gold demand, created by direct purchases from individual and institutional customers on the SGE.

    ^ “China Net Imported 1,300t Of Gold In 2016”, BullionStar blogs, February 2016 https://www.bullionstar.com/blogs/koos-jansen/china-net-imported-1300t-of-gold-in-2016/

    ^ U.S. Geological Survey, Mineral Commodity Summaries ‘Gold’, January 2017 https://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2017-gold.pdf

    ^ Gold Market Charts, January 2017 https://www.bullionstar.com/blog

    s/gold-market-charts/gold-market-charts-january-2017/

    ^ Shanghai Gold Exchange trading volumes, December 2016 and Year-to-Date http://www.en.sge.com.cn/upload/file/201701/11/o9wsyZKEsMfjf0cp.pdf

    ^ World Gold Council, “2000 China Gold Economic Forum release action plan to deregulate China’s gold market”, press release, 15 November 2000 https://www.gold.org/download/file/2756/151200a.pdf

    ^ Shandong Zhaojin Gold & Silver Refinery Co Ltd https://www.goldbarsworldwide.com/PDF/NBA_91_Shandong_Zhaojin_Gold_Bars.pdf

    ^ Spot Trading Rules of the SGE, January 2015, Article 89 http://www.en.sge.com.cn/upload/resources/file/2015/01/26/29484.pdf

    ^ “Mechanics of the Shanghai International Gold Exchange”, BullionStar Gold University https://www.bullionstar.com/gold-university/the-mechanics-of-the-shanghai-internati

    onal-gold-exchange

    ^ “9999 Kilobar Standard – Endorsed by LBMA & SGE”, LBMA website http://www.lbma.org.uk/_blog/lbma_media_centre/post/9999-kilobar-standard-endor

    sed-by-lbma-sge/

    ^ “Specifications for a 1kg 9999 gold bar endorsed by the LBMA and SGE” http://www.lbma.org.uk/assets/Press%20Releases/9999%20Kilobar%20Standard.pdf

    ^ list of SGE Standard Gold Bars and Standard Gold Ingots Delivery Refiners, February 2017, SGE website http://www.en.sge.com.cn/eng_news_Announcement/542320

    ^ “China Net Imported 1,300t of Gold In 2016”, BullionStar blogs, February 2016 https://www.bullionstar.com/blogs/koos-jansen/china-net-imported-1300t-of-gold-in-2016/

    ^ “Chinese Cross-border Trade Rules on gold – Importing Gold: Authorisation and Licensing” BullionStar Gold University https://www.bullionstar.com/gold-university/chinese-cross-bord

    er-trade-rules-gold#heading-3

    ^ “Measures for the Import and Export of Gold and Gold Products” People’s Bank Of China, https://static.bullionstar.com/blogs/koos-jansen/wp-content/uploads/2015/11/PBOC-2015-gold-trade-rules-announcement.pdf

    ^ U.S. Geological Survey, Mineral Commodity Summaries ‘Gold’, January 2017 https://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2017-gold.pdf

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  2. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The Gold Is SAFE Fort Knox!!!
    SalivateMetal



    Published on Aug 22, 2017
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    China's Get the Gold Plan: Part II


    -- Published: Wednesday, 23 August 2017

    By David Smith

    Money Metals readers may remember my November 2014 report in which I discussed how gold flowed into China in "tributary fashion" like small streams flowing into a giant one. In this case, the gold has been streaming into China's increasingly massive thousands-of-tons gold hoard.

    [​IMG]

    In January, 2015, I penned an essay titled "China's Global Gold Supply "Game of Stones," outlining China's long-range goal to dominate the world's physical gold market.

    Well, events have moved massively forward since then. I want to update you as to just how much things have changed – and how close we may be to experiencing a "defining moment" in the gold market.

    I’m talking about a game-changing event that could, with little warning, propel the price of gold upward by hundreds – even thousands – of dollars per ounce in the space of a few weeks... conceivably overnight! (And since silver's price movements are highly correlated with that of gold, we could expect an upside explosion in silver as well.)

    China's 4-pronged gold accumulation strategy:
    First: Buy physical gold in world markets, re-fabricate it when necessary (into .9999 fine bars in Switzerland), and ship to the mainland.

    Second: Hoard all domestically-produced gold... which is now being done, even when produced from operations with foreign-partners. This is also true with silver production, e.g. Silvercorp Metals – a Canadian silver/lead producer with operations on the Chinese mainland.

    Third: Partner with (e.g. Pretivm Resources; Barrick Gold-Pascua Lama) or buy outright, gold explorer-producers located on foreign soil.

    Fourth: Purchase for cash, gold production "off the books" from 'informa' miners in S.E. Asia, Africa, and South America. China's intent is to supplant the U.S. as the largest holder of physical gold (claimed to be around 8,000 metric tons) on the planet. (Disclosure: I, David Smith, have held for several years, positions in Silvercorp and Pretivm, purchased in the open market.)

    Right now, China is vastly understating what it actually holds as well as how much is being imported.

    This deception is easier than ever because a significant amount is no longer routed (and thus reportable) through Hong Kong, but rather through other mainland entry ports. What the authorities admitted holding as of last summer was almost unbelievably small compared to what even the official figures streaming through Hong Kong alone, plus domestic production add to the total, and China is now the number one global gold producer.

    As reported by Steve St. Angelo China has, during Q1, 2017, imported a record 57.4 metric tons of gold to the mainland, from Australia.

    [​IMG]

    Notice the Australian/U.S. multi-year pattern of gold mine exports vs. production

    In Addition: A parallel determinant is China's effort to lessen its holdings of U.S. dollar reserves, by signing infrastructure agreements (denominated in yuan) with countries participating in its massive, long-term New Silk Road project. It's been reported that China has even approached Saudi Arabia about yuan-based oil sales – a direct threat to the decades-long monopoly of the U.S. petrodollar.

    And then there's this:

    The Perth Mint sold $11 billion worth of bullion to China last year alone, and demand continues to climb. Demand is so strong that Perth Mint brings in gold from mines in other countries like Papua New Guinea and New Zealand, and jewelry from South-East Asia that is refined down to the Mint's signature 99.99 percent gold bullion. (ABC News)

    and:

    Steve St. Angelo reports that so far in 2017, scrap gold recovery is down sharply, even though the price of gold has risen – an unusual historic occurrence.

    His projection for the year? "...as the price of gold has increased in 2017, global gold scrap supply will fall by almost a third, or 32% versus 2010... this major gold market indicator trend shift suggests that individuals are now holding onto their gold rather than sell it for a higher FIAT MONETARY PRICE."

    A Surprising Shock-Rise?
    Precious metals prices have been in a cyclical decline since mid-2011 – not unlike the last secular bull market in the 1970's – before gold's eight-fold rise less than two years later.

    It's understandable that you might meet this latest suggestion of an unexpected, massive rise in the price of gold and silver with skepticism. A rise that could take place so quickly that those who hesitate could not react before prices had climbed far above prevailing levels. Before the supply cupboard had been swept clean. But the truth is – it's not a pipe dream, not blowing smoke, not wishful thinking. This is not just possible, but increasingly probable.

    Everything in life involves playing the odds. If something is "unlikely" but possible, and if that something taking place had the potential of being a "game-changer," would you not seek to prepare for it in some measure?

    A vertical up-move in gold would place you in a tidy profit position, even if you held a relatively small amount (e.g. the oft-touted 5% of your investable assets). So, it's not necessary to mortgage the house or go into debt in order to "participate."

    I believe it's almost "a given" that precious metals will resume their secular bull run, which could continue for the next three to five years. If you agree, does it not make sense to begin (or continue) a conservative metals' acquisition plan? With little worry as to the price where you began?

    It's not that difficult. Either buy metals when you have some surplus investible funds, and/or do so on a regular, dollar-cost-average basis. If the "China card" never gets played, you'll still do well as metals' prices advance over the coming years. You'll have been purchasing "paid-up insurance" for the rest of your holdings, hedging more as time goes on.

    And one more thing. Don't think of it as "spending money" on buying gold and silver. You're simply exchanging continually-depreciating "paper promises" – the enduring term coined by David Morgan at TheMorganReport.com – for "honest money" which has stood the test for millennia and will likely continue for as far as the eye can see.

    Remember, if you don't hold it in your hand, you can't be sure you really own it. John Hathaway, Tocqueville Asset Management covers this precisely, saying,

    When the market reverses, the diminished physical anchor to paper claims, concerns over title and encumbrances on central bank bullion, and worries over the drift of public policy will drive liquid capital into gold. However, this time around, it seems to us that the major recipient of flows will be the physical metal itself. Holders of paper claims to gold will receive polite and apologetic letters from intermediaries offering to settle in cash at prices well below the physical market. To those who wish to hold their wealth exclusively in paper assets, implicitly trusting the policy elites to resurrect normally functioning capital markets and economic conditions, we say good luck. For those who harbor doubts on such an outcome, we say get physical.

    David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector findings with readers, the media, and North American investment conference attendees.

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  5. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Golden Gamble. Gold mining in the Philippines, a dirty business
    RT Documentary



    Published on May 4, 2017
    More films about the Philippines: https://rtd.rt.com/tags/philippines/
    - The use of child labour in the Philippine’s Paracale, or ‘Goldtown’, is widespread
    - Extracting gold involves diving into mud-filled shafts and using toxic mercury
    - Poverty and lack of alternative jobs force people into this highly dangerous work
    - Many die young due to work accidents or breathing problems, others develop chronic illness


    The Philippines’ town of Paracale was dubbed “Goldtown” for its rich deposits of the precious metal. Despite government attempts to regulate mining, illegal pits are still commonplace. They lack even the most basic health and safety and workers are exposed to toxic mercury fumes. Dirty water causes skin diseases and they live with the constant threat of being buried alive. Workers continue to take these risks day after day, because there is no other source of income. Many of the gold miners are children whose families can’t afford to send them to school.

    Some gold is panned on the surface, but a lot has to be extracted from underground. To do that, prospectors dive into narrow, mud-filled shafts, uses snorkelling masks and long tubes too breathe. If the mine collapses, they have no chance of escape. They have a saying here, ‘while you’re down the mine, you have one foot in the grave’. Several miners have already died that way, others from respiratory diseases caused by inhaling mercury fumes. The toxic metal is used in gold extraction with no safety precautions, so it poisons the air, the ground and the water, causing long-term harm to the whole community.

    Another danger to the inhabitants of Paracale comes from disused mines, abandoned and left open, waiting for unsuspecting victims to fall in. The business takes its toll on workers, their families and the community. They have been known to demonstrate, demanding safer working conditions, better pay and other job opportunities, but change is slow. Meanwhile, extreme poverty among people who produce one of the world’s most precious metals leaves them no option but to continue with this pitiless occupation.

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    When the United States Owned Most of the Gold on Earth



    -- Published: Wednesday, 6 September 2017

    By Michael J. Kosares
    Author, The ABCs of Gold Investing: How To Protect and Build Your Wealth With Gold
    Founder, USAGOLD

    Few Americans know that, just after World War II, the United States owned most of the gold bullion on earth – about 22,000 metric tonnes. In fact by 1945, it owned over 80% of the gold held by nation-states and central banks – an impressive display of economic power. Now it owns just over 8000 metric tonnes, which represents about 42% of the total global reserve.

    The lost 14,000 tonnes were expended in defense of the $35 per ounce gold benchmark price established under the 1944 Bretton Woods Agreement. In addition to the fixed price of gold, the U.S dollar came to represent a fixed weight of gold, i.e., 1/35th of a troy ounce, and the rest of the world’s currencies were then pegged to the dollar. The United States agreed under Bretton Woods to redeem gold from the other signatories at the rate of $35 per ounce should any of the participants determine that gold might be a better alternative for a portion of their reserves than U.S. dollars. “The dollar,” American policy makers were wont to say, “was as good as gold.”

    Germany, France get the idea dollar not as good as gold

    All proceeded in orderly fashion with little in the way of redemptions from the massive U.S. stockpile until the 1960s. Then a group of European nation-states, led by Germany and France, got the idea that U.S. inflationist economic policies had undermined the dollar, making gold a bargain at $35 per ounce. In other words, they came to the conclusion that the dollar was not as good as gold. Steadily, over a decade long period, they exchanged dollars for gold at the U.S. Treasury’s gold window. By the early 1970s, 14,000 tonnes of gold – or 64% of the stockpile – had departed the U.S. Treasury for European shores never to return.

    In 1971 President Richard Nixon finally decided enough was enough. He closed the so-called gold window, devalued the dollar against gold, and freed the greenback to trade at market prices against other currencies. Fully abrogating the Bretton Woods Agreement, Nixon declared, in one of the more famous quotes of his presidency, “we are all Keynsians now.” The era of global fiat money, with a fiat U.S. dollar as its centerpiece, had begun.

    Had the United States refrained from its defense of the $35 benchmark, it would still own about 75% of the present 29,000 tonne global gold reserve. As it is, Nixon’s revocation of the Bretton Woods architecture set the stage for the modern gold market. You can see the result in the chart immediately below. From it, I can draw three conclusions:

    –– First, we are now in the 46th year of a super-cycle, secular bull market in gold that began in 1971 – a bull market directly tied to the fate of the now fiat U.S. dollar.

    –– Second, the very same conditions which created that bull market are still in place today – nothing has changed fundamentally.

    –– Third, as long as the same cause and effect remain in place, we can assume gold will continue to make sense as a long-term portfolio hedge.

    Some will agree with those conclusions. Some will not. Some are on the learning curve, and it is to that group this piece is largely addressed.

    [​IMG]

    Chart courtesy of GoldChartsRUs/Nick Laird with thanks

    In the end, it is the times that need to be hedged

    Those who do not agree with those conclusions, it has been my experience, will continue to put their faith in the stock and bond markets and ignore the precious metals. There is no amount of persuasion that will convince them to do otherwise, and to try is pretty much a waste of time. Most importantly, whether they care to acknowledge it or not, they will put their faith ultimately in the federal government and the Federal Reserve.

    Those who do agree will continue to hedge their portfolios with the precious metals, just in case the long history of economic breakdowns beginning with 1971 repeats itself yet again. To this group, the proper diversification is a small price to pay, a matter of practical financial planning that, in these times, provides some much-needed peace of mind. As for an end game to all this, they will keep in mind one of history’s immutable lessons – sometimes the problems become too large for the government and central bank to control.

    For those on the learning curve, a post I made at the USAGOLD blog recently titled “Historical inevitability and gold and silver ownership – In the end it’s the times that need to be hedged” would be an informative follow-up to what you just read, another piece in the puzzle. It got significant play on the wider internet and speaks to the possibilities of an end game from the perspective of Strauss and Howe’s fourth turning.

    One more chart for those who want the complete picture:

    [​IMG]

    Chart courtesy of GoldChartsRUs/Nick Laird with thanks

    http://www.usagold.com/

    http://news.goldseek.com/GoldSeek/1504725175.php
     
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    Infrastructure of the Shanghai Gold Exchange


    -- Published: Sunday, 10 September 2017


    By BullionStar

    https://www.bullionstar.com/

    Introduction
    The Shanghai Gold Exchange was established in October 2002 by the People’s Bank of Chinahttps://www.bullionstar.com/gold-university/chinese-gold-market#heading-5'>[1]http://www.en.sge.com.cn/eng_about_Overview'>[2]. The goal of the Exchange at launch was to become the central hub of the Chinese gold market, a goal which has fully been met.

    Physical gold flows through the Shanghai Gold Exchange in response to Chinese private sector demand (institutional, commercial and retail demand). To facilitate this demand, trading account facilities on the SGE are available to anyone in China, i.e. private citizens can open an SGE trading account and trade gold at the SGE as easily as a wholesale enterprise or a financial institution can.

    The SGE classifies its gold trading activities into a ‘Price Matching’ market, which trades physical and deferred gold contracts, and a ‘Price Inquiry’ (OTC traded) market which offers bilateral spot, forward, swaps and options trading in an OTC ‘Price Inquiry’ environment. The SGE Shanghai Gold Price Benchmark auction, launched in April 2016, is additional to both the above SGE ‘Markets’. The SGE also facilitates gold leasing and pledging activities which are also distinct from its price matching and price inquiry markets.

    Although the SGE has a headquarters ‘Exchange’ building located in the central Huangpu District of Shanghai, all SGE’s trading platforms are electronic. The SGE also employs a central market clearing process to clear all of these products. An extensive network of 61 SGE gold vaults across 35 Chinese cities facilitates the vaulting, delivery, and transfer of gold that flows into and out of the vaults due to SGE trading.

    Contents
    Highlights
    • The Shanghai Gold Exchange (SGE) operates a comprehensive suite of gold trading services both ‘on Exchange’ (Price Matching market) and ‘off Exchange’ (Price Inquiry /OTC market).

    • Contracts on 12 gold products are offered ‘on exchange’ while ‘off exchange’ trading offers contracts in 5 gold products. Transactions from both venues are settled and centrally cleared by the SGE.
    • In April 2016, the SGE launched its twice daily SGE Gold Benchmark Price auction. This auction generates a usable gold reference price.

    • In January 2016, the SGE facilitated the launch of an interbank gold leasing market with official market makers aimed at enhancing Chinese gold market liquidity.
    https://www.bullionstar.com/gold-university/the-mechanics-of-the-shanghai-international-gold-exchange'>[3]. Given that the SGEI is known as the ‘International Board’, the existing Shanghai Gold Exchange is often referred to as the ‘Main Board’.

    The SGEI offers ‘international’ members access to Renminbi trading of gold on both the Main and International Boards. If trading on the International Board, the associated physical gold is vaulted in the International Board’s certified precious metals vault, located in the Shanghai Free Trade Zone. If trading on the Main Board, the associated physical gold can be in any of the domestic SGE vaults, however, International Members are not allowed to load in or load out metal from domestic vaultshttps://static.bullionstar.com/blogs/koos-jansen/wp-content/uploads/2014/09/Screen-Shot-2016-12-22-at-4.54.43-pm.png'>[4].

    In addition, the SGEI allows domestic members to trade gold located in the SFTZ but they are, in turn, not allowed to load in or load out metal from the SGEI vault.

    CCTV.com, January 2016 http://english.cntv.cn/2016/01/13/VIDECIyZTNdLnmCfXrduywEf160113.shtml'>[5].

    More than 50% of trading volume in the SGE Price Inquiry segment is traded through the China Foreign Exchange Trade System. In 2016, there were 55 institutional participants in the OTC gold market, 41 of which were small and medium-sized banks. Other participants include securities firms, fund management companies and trust companies. This market also uses 2 introducing brokers which are Tullett Prebon SITICO (China) Ltd, and Shanghai CFETS – ICAP International Money Brokering Co Ltdhttp://www.en.sge.com.cn/upload/file/201704/28/MMbZIzgfDPuMWKwA.pdf'>[6] Reuters also publishes real-time quotes for these SGE OTC gold products.

    In 2016, the ‘Price Inquiry’ market recorded gold trading volumes of more than 8,800 tonnes.

    https://www.bullionstar.com/blogs/ronan-manly/shanghai-gold-benchmark-price-new-sge-gold-fix/'>[7]http://www.en.sge.com.cn/upload/resources/file/2016/04/20/32405.pdf'>[8].

    The contract specifications of the auctionhttp://www.en.sge.com.cn/upload/file/201703/24/yPyEmZo2HvDG11IN.docx'>[9] are as follows:

    Shanghai Gold Benchmark Price auction

    Abbreviation: SGE Gold Fix

    Exchange Code: SHAU

    Frequency: Twice per trading day at 10:15 am and 2:15 pm (Shanghai / Beijing Time)

    Platform: SGE’s electronic trading platform

    Auction Model: Centralised Pricing Trading

    Objective: Derivation of a ‘Benchmark Price’ at which supply and demand are in balance

    Unit of Trading: Physically-delivered 1 kg lots of 99.99% purity gold or higher

    Imbalance Tolerance: within 400 kgs

    Quotation: Renminbi (RMB) per gram

    Tick Size: RMB 0.01

    Delivery: 1 kg Standard gold ingots of fineness 999.9 or higher

    Delivery Location: SGE’s certified vaults, i.e. 61 vaults across 35 Chinese cities

    Settlement / Delivery: T + 2

    Clearing: Central Clearing (with SGE acting as counterparty to all buyers and sellers)

    Note: Standard gold is either gold from an SGE approved refinery or gold from a LBMA approved refinery.

    The auction utilizes an opening price known as a ‘Reference Price’ that is calculated from prices entered into the trading system by both ‘Fixing Members’ and ‘Reference Price Members’ during a 5 minute pre-auction window period between 10:09 am – 10:14 am before the morning auction and between 2:09 pm – 2:14 pm before the afternoon auction.

    There are 12 Fixing members in the auction, all of which are banks. These banks include ICBC, Bank of China, China Construction Bank, ANZ, and Standard Chartered. There are 6 Reference Price members in the auction such as gold mining companies (China Gold and Shangdong Gold Group), gold jewellery companies (Shanghai Lao Feng Xiang and Chow Tai Fook), and gold trading company MKS PAMP.

    Briefly, the auction mechanism is as followshttp://www.en.sge.com.cn/upload/file/201703/24/RGDmtsfPVEzy935O.pdf'>[10]. Fixing members and Reference Price members initially submit reference prices. After establishing the opening price / calculated reference price, SGE member and customer then submit buy and sell orders. There is then at least one round (the first round) and possibly subsequent rounds. As soon as the imbalance between auction supply and demand is less than 400 kgs, the imbalance is shared out among the Fixing members. The price is then balanced and is published by the SGE as the benchmark price.

    Each round includes a ‘market tendering‘ segment and a ‘supplementary tendering‘ session. During the market tendering segment, all auction participants and their clients submit orders. During the supplementary tendering session, Fixing members can submit supplementary orders against the remaining imbalanced quantity. This is done so as to try to speed up the auction and end with an imbalance of less than 400 kgs of gold bars.

    An SGE Surveillance Committee oversees the auction’s functioning. This Committee comprises representatives from the SGE, ICBC, Bank of China, Standard Chartered Bank (China), ANZ Bank (China), China Gold Coin Corporation, Baird Mint, the China Gold Association, and the World Gold Council and has a remit of monitoring trading, clearing, delivery, in terms of the SGE Benchmark’s trading and compliance rules.

    Daily, monthly and annual prices for the ‘Shanghai Gold Benchmark Price’ and associated charts of this data are viewable on the SGE Benchmark web page on the SGE websitehttp://www.en.sge.com.cn/data_BenchmarkPrice'>[11].

    Since it was launched in April 2016, nearly 600 tonnes of gold have been traded through the SGE Gold benchmark auction, with 284.5 tonnes traded during 2016, and a further 302.6 tonnes traded during the first seven months of 2017http://www.en.sge.com.cn/upload/file/201707/04/VGPtuzaznTIWONZ0.pdf'>[12]http://www.en.sge.com.cn/upload/file/201708/02/X7oGq02Qt18dy9b8.pdf'>[13].

    https://www.bullionstar.com/blogs/koos-jansen/in-china-everyone-can-buy-gold-at-the-sge/'>[14]. Users of Yijintong first open an SGE account online and then execute SGE gold transactions online. In SGE documents in English, Yijintong is sometimes known as the ‘SGE Gold App’.

    ^ “Chinese Gold Market”, People’s Bank of China https://www.bullionstar.com/gold-university/chinese-gold-market#heading-5

    ^ SGE Overview, Shanghai Gold Exchange website http://www.en.sge.com.cn/eng_about_Overview

    ^ “Mechanics of the Shanghai International Gold Exchange” https://www.bullionstar.com/gold-university/the-mechanics-of-the-shanghai-international-gold-exchange

    ^ Chart of Vaulting scenarios for Main and International Boards cros-referenced with Domestic and International Members, Koos Jansen, BullionStar https://static.bullionstar.com/blogs/koos-jansen/wp-content/uploads/2014/09/Screen-Shot-2016-12-22-at-4.54.43-pm.png

    ^ “China launches interbank gold trading system”, CCTV.com, January 2016 http://english.cntv.cn/2016/01/13/VIDECIyZTNdLnmCfXrduywEf160113.shtml

    ^ SGE Annual Report, 2016 http://www.en.sge.com.cn/upload/file/201704/28/MMbZIzgfDPuMWKwA.pdf

    ^ “Shanghai Gold Benchmark Price – New Kid on the Block”, BullionStar, April 2016 https://www.bullionstar.com/blogs/ronan-manly/shanghai-gold-benchmark-price-new-sge-gold-fix/

    ^ “SGE Gold Fix White Paper, SGE website http://www.en.sge.com.cn/upload/resources/file/2016/04/20/32405.pdf

    ^ “Contract Specifications for Shanghai Gold Benchmark Price Trading”, Word Document, SGE website, http://www.en.sge.com.cn/upload/file/201703/24/yPyEmZo2HvDG11IN.docx

    ^ “Trading Rules of the Shanghai Gold Benchmark Price auction”, May 2016, SGE website http://www.en.sge.com.cn/upload/file/201703/24/RGDmtsfPVEzy935O.pdf

    ^ SGE Gold Benchmark Price data page, SGE website http://www.en.sge.com.cn/data_BenchmarkPrice

    ^ SGE Trading Data Highlights report, December 2016 http://www.en.sge.com.cn/upload/file/201707/04/VGPtuzaznTIWONZ0.pdf

    ^ SGE Trading Data Highlights report, December 2017 http://www.en.sge.com.cn/upload/file/201708/02/X7oGq02Qt18dy9b8.pdf

    ^ “In China Everyone Can Buy Gold At The SGE”, BullionStar, January 2016 https://www.bullionstar.com/blogs/koos-jansen/in-china-everyone-can-buy-gold-at-the-sge/

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    LARGEST GOLD MINES of NEVADA !!! The Comstock Lode. ask Jeff Williams
    Ask Jeff Williams



    Published on Sep 15, 2017
    Let's take a look at the mines that put Nevada on the map. The Mighty Comstock Lode. Plus we will be giving away another metal detector at the end of the month. https://www.patreon.com/askJeffWilliams
     
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    Diwali, Lord Rama, and the Return of Gold from Exile


    Published: Tuesday, 19 September 2017

    By Jp Cortez


    October 19, 2017 marks an important holiday in the Indian culture. Diwali begins.


    Diwali is one of the biggest festivals for Hindus, Sikhs, and Jains. It is a lavish celebration of the victory of light over darkness with its gleaming candles, luxurious works of art, and opulent feasts. Diwali is also characterized by gift giving. Buying and gifting gold is considered auspicious during Diwali.

    Given the nature of the holiday and the number of people who celebrate it, according to CNBC, the past few years have seen a tendency for the gold price to rise around Diwali. Last year during Diwali, Mihir Kapadia, founder & CEO of Sun Global Investments, said “As heavy consumers, the festive seasons always tend to surge the demand, and considering the current low prices, this should increase the market activity and thus push the prices a little.” Kapadia continued, “We do not expect it to boost prices significantly as the overall market is subdued due to the worries about rising interest rates.”

    There is no shortage of economic analysis during the buildup to this year’s celebration as The Economic Times reported “bullion has climbed almost 10 percent on the Indian market this year as world prices increased on… reduced chances of a further hike in U.S. interest rates in 2017.”

    However, history shows that rising interest rates do not necessarily make bonds and cash more attractive or push the demand for (and therefore the price) gold down. Interest rate hikes are usually a gold bullish event.

    “Gold prices going down after rate hikes is a myth propagated by the financial establishment and portfolio managers who may be intellectually lazy or have a vested interest in scaring people away from gold,” says Stefan Gleason, president of U.S. precious metals dealer Money Metals Exchange. "In reality, central banks are almost always behind the curve, and real interest rates may be going in the opposite direction despite the rate hikes."

    Slaying the Beast Takes Multiple Blows

    Diwali is a grand, extravagant multi-day festival celebrating many things by many different groups of people. One of the more popular tales remembered and celebrated during Diwali is that of the brave Lord Rama. According to legend, he returned from exile after having saved his kidnapped wife and slayed the evil demon Ravanna.

    This tale of glory and triumph evokes the sound money camp’s monetary hero, gold, facing the evil government and its minions, the “professionals” who often have a cynical bias against the yellow metal.

    In the grand battle, Rama fights fiercely against Ravanna and his footmen. After a long and taxing battle, Rama delivers a blow that decapitates Ravanna’s central head. Unfortunately, another head appears in its place. Finally learning that Ravanna’s secret was an immortality nectar held in his stomach, Rama fired an arrow that finally laid Ravanna to rest.

    Like Rama, gold finds itself fending off attacks from all sides. The federal government has been striking blows at gold since 1933, when Roosevelt banned all private possession of gold and required it be handed over in exchange for paper money. Gold has had all sorts of taxes levied against it. Gold and silver coins were stripped of their constitutional role as the only forms of money states could recognize as legal tender in payment of debts. Today, countless Wall Street types make a living trying to pierce the armor of gold in print and on television.

    Fear not! It’s true that sound money’s lionhearted soldier hasn’t launched the fatal arrow that finally slays the fiat money system run by the world’s central bankers. But the battle is tipping further in the direction of our fearless hero every day.

    States are taking the necessary steps to unshackle gold from its bureaucratic chains. 36 states across the union have an exemption against sales taxes being levied in precious metals purchases. Arizona has moved towards widespread acceptance of gold and silver by recognizing its legal tender status while removing capital gains taxes on precious metals holdings, with Wyoming, Idaho, and Tennessee not far behind. Texas is setting an example on how to shore up pension funds using gold, not to mention creating its own bullion depository.

    Step by step, hard money forces are making advances. They still have a long way to go, of course. But they can draw inspiration from previous epic struggles against powerful foes.

    During Diwali, millions of people around the world will celebrate the victory of their courageous and valiant hero, Lord Rama. Meanwhile, we can all celebrate gold’s continued ability to not only survive the onslaught coming from gold-cynics everywhere, but also to steadily re-establish itself as constitutional money.

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    Wealth In Gold Motivation
    Junius Maltby



    Published on Sep 20, 2017
    Junius Maltby channel motivational examination and dialogue on a historical and stable wealth preservation vehicle. Welcome to the conversation.
    SUPPORT: https://www.patreon.com/JuniusMaltby
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    **FAIR USE STATEMENT**
    This video may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This material is being made available within this transformative or derivative work for the purpose of education, commentary and criticism, is being distributed without profit, and is believed to be "fair use" in accordance with Title 17 U.S.C. Section 107.

    For more information go to: http://www.law.cornell.edu/uscode/17/
     
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    3 Pounds Of Viking GOLD Treasure Found!!
    SalivateMetal



    Published on Sep 21, 2017
     
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    $771 Trillion Worth Of Gold In The Ocean!
    SalivateMetal



    Published on Sep 25, 2017
     
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    Gold Standard Resulted In “Fewer Catastrophes” – FT



    -- Published: Thursday, 28 September 2017

    Editor Mark O’Byrne

    – “Going off gold did the opposite of what many people think” – FT Alphaville
    – “Surprising” findings show benefits of Gold Standard
    – Study by former Obama advisor in 1999 and speech by Bank of England economist in 2017 make case for gold
    – UK economy was ‘much less prone to extremes’ under than the gold standard – research shows
    – ‘Gold standard seems to have produced fewer catastrophes for Britain’ – data shows
    – FT still wary of gold standard arguing ‘stability can be overrated and growth is worth having’
    – Finding is not surprising and joins a wealth of evidence and research that shows gold’s importance as money, a store of value and safe haven asset

    [​IMG]

    300 years ago last week on the 21st September, 1717 Sir Isaac Newton, Master of the Royal Mint of Great Britain, accidentally invented the gold standard.

    Last month it was the 46th anniversary of President Nixon ending the gold standard. Since then the world has existed on a system of fiat paper and digital currency. It works so badly that it has lead to the global financial crisis, unending debt issues and a dramatic devaluation in sovereign currencies.

    Despite this, much of the media and central banking system remain supporters of the current financial and monetary status quo.

    They are so convinced that the time before fiat money was a disaster that anyone who suggests otherwise is labelled a gold-bug and told to move along.

    Last week, there was a glimmer of light when the Financial Times’ Matthew C. Klein uncovered some 18-year old research into the gold standard and a recent speech by a Bank of England economist.

    Mr Klein although a young man has quite an impressive journalistic c.v. He writes for FT Alphaville and Bloomberg View about the economy and financial markets.

    He previously wrote for the Economist magazine and before that, Klein was a research associate at the Council on Foreign Relations (CFR), where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics.

    Going off gold did the opposite of what many people think

    Klein writing in FT Alphaville draws on research from former economics advisor to President Obama, Christina Romer:

    Imagine you can choose between living in two kinds of societies:

    1. Dynamic world prone to wild swings and big crashes, but ultimately more growth in the long run
    2. Safe and stable world with greater consistency, less volatility, and much lower risk of catastrophe
    You might think that Americans and Europeans effectively decided to move from option 1 to option 2 between the late 19th and mid-20th centuries. Depending on your politics, you might attribute this to the stultification of modernity, or the triumph of the enlightened welfare state.

    Regardless, you would be wrong.

    The growth of government as a service provider and guarantor of financial security — backed by fiat money — has actually coincided with faster trend growth and greatervariance around that trend line. Moreover, the likelihood of particularly bad events has increased since the escape from the “golden fetters”.

    Klein refers to this and subsequent information from Romer as ‘surprising findings’. They are not likely suprising to Klein but would be too many FT readers given its generally negative stance towards gold in recent years.

    The gold standard: Reduced volatility

    Klein reports that in 1999, Romer made some interesting findings regarding the stability and volatility of various business cycles in the 20h century.

    The findings initially suggest results that would make modern bankers rest on their laurels in terms of how they manage things today, but dig deeper and things don’t look so straight forward.

    He reports that Romer concluded:

    that business cycles had roughly the same amplitude both before WWI and after WWII. Volatility was slightly lower in the modern period:

    [​IMG]
    Credit: FT, Romer

    But this was entirely attributable to the unusual calm of 1985-1997:

    [​IMG]
    Credit: FT, Romer

    Given what’s happened since then, the pre-WWI period might look more stable than the era of the “countercylical” Federal Reserve. Romer measured the severity of a downturn by looking at how far industrial production fell from its peak and how long it took to return to its old level. Using her method, the financial crisis was about as painful as the depression of 1920 and the contraction of 1937 — and about 2.5 times as bad as any post-WWII downturn.

    Bank of England’s economist makes case for gold

    Gertjan Vlieghe, an economist and former economic assistant to Lord Mervyn King at the Bank of England, gave a speech last week entitled ‘Real Interest Rates and Risk’.

    The speech presented research on and linked the history of interest rates, economic volatility, and stock market returns.

    As Klein points out in the FT the most important part of the speech is most likely to the be most underreported.

    Vlieghe’s research finds that whilst the UK economy off the gold standard was better at allocating resources, the dangers it brought to the financial system made it “more fragile” and “lead to a financial crisis”.

    Vlieghe at the Bank of England says:

    I suspect the increase in the importance of private sector debt and financial intermediation plays an important role, which in turn was facilitated by moving off the gold standard. An economy where debt and financial intermediation play a more important role can allocate resources more efficiently and achieve a higher growth rate, but also becomes more fragile. Small set-backs can have amplified downside effects and even lead to a financial crisis

    Klein draws our attention to an interesting chart presented as part of Vlieghe’s speech.

    [​IMG]
    Credit: FT, Vlieghe

    Klein explains:

    The table, based on nearly three centuries of UK data, shows that the economy grew much less (in per person terms) under the gold standard than in the period of fiat money, but was also much less prone to extremes.

    The distribution of growth performance during the gold standard era was much more tightly concentrated around the average than the distribution in the epoch of fiat money. The comparison is even more stark when comparing average consumption, which is the best single measure of living standards. (That’s what the kurtosis numbers show.)

    [​IMG]
    Credit: FT, Vlieghe

    Klein clearly recognises that this shows the gold standard for what it is: a monetary system which brings far fewer disasters to an economy than one easily manipulated by central bankers and governments.

    This, says Klein, requires some serious consideration.

    the gold standard seems to have produced fewer catastrophes for Britain. There is no negative (or positive) skew in the distribution, unlike in the modern period, which has been blighted by several profoundly unpleasant downturns.

    the standard arguments in favour of the flexible and “counter-cyclical” state we have today, need serious revision.

    Very little desire for serious revision

    Throughout history, the majority of fiat currencies have met a miserable end, succumbing to hyperinflation after just a few decades.

    So far the current global fiat monetary system has survived just over 45 years. Few can seriously look at it and argue that it is healthy. It is increasingly unstable and is in terminal decline.

    It is not unfathomable to expect it to fail in the coming financial crisis. Unfortunately bankers and governments have not woken up to this thought yet.

    Ignorance is apparently bliss when it comes to believing a decade of money printing can be unwound without serious consequence.

    Whilst it is refreshing to see the Financial Times take a positive look at the gold standard, it is unfortunate that they have failed to recognise this simple fact from looking at monetary history and at the wealth of research out there which makes very similar arguments.

    One of the world’s most famous bankers, Alan Greenspan, recognised the destructive nature of the fiat system:

    ‘In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value …’ (Greenspan, 1967)

    In a study which used data from 15 countries from as early as 1820 to as late as 1994, Rolnick and Weber (1997) found ‘money growth and inflation are higher’ under fiat standards than those seen in gold and silver standards. They found during the fiat standard the average inflation rate was 9.17% per year compared to 1.75% per-cent found in gold standards.

    The result of the FT’s approach is their readers (you, I, central bankers, finance ministers) are easily swayed into believing that a system of debt, volatility, high returns and high risk is preferable to the gold standard. We come to believe it is ‘the norm’.

    But a system which repeatedly fails cannot be ‘the norm.’ Surely the one that we ultimately return to after each failure should be ‘the norm’?

    Did we learn anything about money?

    Following the financial crisis, a 2009 UN report concluded that the disaster was not a result of failures, instead the result of bad political choices:

    ‘…our multiple crises are not the result of a failure or failures of the system. Rather, the system itself – its organization and principles, and its distorted and flawed institutional mechanisms – is the cause of many these failures… our global economy is but one of many possible economies, and, unlike the laws of physics, we have a political choice to determine when, where, and to what degree the so- called laws of economic behaviour should be allowed to hold sway.’

    Luckily gold’s role as a store of value and important monetary asset is being increasingly appreciated. This is happening both on the part of governments and individuals alike.

    Major holders and buyers of gold include the world’s largest central banks, the largest global banks, the largest insurance companies in the world, the largest hedge funds in the world, the largest pension funds in the world and of course many wealthy and prudent investors.

    The idea of returning gold to the monetary system is clearly not a crazy one – it is already slowly happening and the Chinese look set to take the lead in this regard.

    The mainstream media should not be surprised by this. After all, the evidence shows gold’s ability to protect wealth, reduce volatility and protect us from the policies of central banks and increasingly populist governments.

    Klein’s article can be read in full here Going off gold did the opposite of what many people think – FT Alphaville

    News and Commentary

    Gold rises from 1-mth lows; palladium at discount to platinum (Reuters.com)

    Ex-UBS metals trader indicted over alleged metals price rigging (Reuters.com)

    Bonds Slide as Dollar Climbs on Tax Plan, Economy (Bloomberg.com)

    Trump proposal slashes taxes on businesses, the rich amid deficit worries (Reuters.com)

    Billionaire Paulson Targets CEOs Of Poorly Performing Gold Miners (Bloomberg.com)

    [​IMG]

    Source: City AM

    London house prices to fall this year and next on Brexit – Experts (CityAM.com)

    This Is Not A Time To Buy Anything – Zell Warns Retail Real Estate Market Is A “Falling Knife” (ZeroHedge.com)

    A Real Republic of Opportunity would Tax Land and Property to the Hilt (DavidMCWilliams.ie)

    You’re Likely A Lot Less Prepared For Crisis Than You Realize (PeakProsperity.com)

    Jim Rogers on why you should get “less passive” today (StansBerryChurcHouse.com)

    Gold Prices (LBMA AM)

    28 Sep: USD 1,284.30, GBP 961.04 & EUR 1,091.40 per ounce
    27 Sep: USD 1,291.30, GBP 963.83 & EUR 1,099.54 per ounce
    26 Sep: USD 1,306.90, GBP 969.59 & EUR 1,105.38 per ounce
    25 Sep: USD 1,295.50, GBP 957.89 & EUR 1,089.26 per ounce
    22 Sep: USD 1,297.00, GBP 956.15 & EUR 1,082.09 per ounce
    21 Sep: USD 1,297.35, GBP 960.56 & EUR 1,089.00 per ounce
    20 Sep: USD 1,314.90, GBP 970.53 & EUR 1,094.79 per ounce

    Silver Prices (LBMA)

    28 Sep: USD 16.82, GBP 12.53 & EUR 14.28 per ounce
    27 Sep: USD 16.89, GBP 12.58 & EUR 14.38 per ounce
    26 Sep: USD 17.01, GBP 12.67 & EUR 14.43 per ounce
    25 Sep: USD 16.95, GBP 12.57 & EUR 14.27 per ounce
    22 Sep: USD 16.97, GBP 12.52 & EUR 14.18 per ounce
    21 Sep: USD 16.95, GBP 12.58 & EUR 14.24 per ounce
    20 Sep: USD 17.38, GBP 12.84 & EUR 14.48 per ounce

    http://www.goldcore.com/us/

    http://news.goldseek.com/GoldSeek/1506603120.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Fort Knox: “Glad Gold Is Safe!”


    -- Published: Thursday, 28 September 2017

    By Gary Christenson

    Secretary of the Treasury Steven Mnuchin visited Fort Knox on August 21. He tweeted “Glad gold is safe!” He told an audience in Louisville, “I assume the gold is still there.”

    The Fort Knox Gold was last audited in the 1950s. Secretary Mnuchin’s statements were not helpful.

    Questions:

    1. The gold is safe, but where is it? Has most or all Fort Knox gold been shipped to Asia?
    2. How much gold is safe? A few bars? Hundreds of bars in a locked and dimly lit room visible only through a small window? Was it gold or gold plated tungsten?
    3. Does his assurance reduce suspicions of “missing gold” or encourage those speculations?
    4. To whom does it matter if the gold is safe? Total value at current prices for the Fort Knox gold supposedly vaulted is about $200 billion. The annual U.S. government deficit is several times that amount. The official national debt is 100 times larger. Yes, it is important if the gold is vaulted, as claimed, or missing. The truth should be reported.
    5. Will the truth be more unsettling than the suspicions of “missing gold?”
    6. When will an independent and comprehensive audit be conducted?
    7. Assuming a “cover-up” exists, what information besides “missing gold” has been concealed?
    *******

    From an article posted April 5, 2016:

    Fort Knox Paradox
    Officially the Fort Knox Bullion Depository contains 147.3 million ounces of gold. However, the last audit was performed over 60 years ago. According to reliable sources “audits” since then have been incomplete and inadequate.

    Second Thoughts on US Gold Reserve Audits

    Hiding the Elephant: Fort Knox’s Vanishing Act

    Doubts about America’s Gold Holdings

    Question: If the Bullion Depository contains over 147 million ounces of gold, why not audit it, prove the existence of the gold, and eliminate speculation? The US government spends over $70 billion on “food stamps” every year and nearly one $ Trillion per year on “defense,” so cost is not the issue.

    Current policy seems to be “don’t ask, don’t tell” because the answer might be disconcerting, might destroy the narrative that the US gold exists, and the revelation of missing gold might encourage other embarrassing questions …

    Speculation and possible scenarios:
    Scenario One: Fort Knox Bullion Depository contains 147 million ounces of gold, as claimed, but the Department of the Treasury ignores calls for a comprehensive audit.

    1. “Trust but verify” apparently applies to the nuclear weapons in other countries but not our gold. Why?
    2. Why refuse to perform a comprehensive audit? Cover-up?
    3. If an audit proved that 147 million ounces of gold were safely stored inside the vaults, it would be a political victory. Why would the Bush or Obama administration, such as in 2008 or 2016, NOT want a political victory when their credibility was weakening?
    4. The implication is that an audit would fail and no political victory was possible.
    Scenario Two: Fort Knox Bullion Depository is essentially empty – say it contains less than ten million ounces of gold.

    1. That begs the questions: Where did the gold go? Who should be indicted? Why have politicians for the past 50 years lied about it?
    2. Under scenario two the Department of Treasury cannot do an audit and desperately wants to avoid the scandal of missing gold.
    3. The only viable option is “stonewall.” Maintain that an audit is unnecessary, too expensive, or already has been done.
    Scenario Three: Fort Knox Bullion Depository is essentially empty of real gold – say it contains less than ten million ounces of gold but also contains perhaps 140 million ounces of gold plated tungsten.

    1. A comprehensive audit would easily detect the fake gold.
    2. The same questions from scenario two would plague the Department of the Treasury, the President, and the Federal Reserve.
    3. The only viable option is “stonewall.” Maintain that an audit is unnecessary, too expensive, or already has been done.
    CONCLUSIONS:
    • If the Fort Knox Bullion Depository gold exists, as claimed, there is little reason to refuse a comprehensive audit.
    • Since all requests for a comprehensive audit have been rejected, it seems likely that a “cover-up” continues.
    • If an unpopular President wanted a political victory, he would have ordered an audit of the Fort Knox gold if an audit had been a viable option. Since no audit was initiated, it seems likely that a gold audit would have produced problematic results with unanswerable questions.
    • Gold “leasing” has been documented. Gold leased by a bullion bank from a central bank can be sold in the international market, yet is still officially listed in the vaults of the central bank. Official gold can exist in two (or more) places at once …
    • It is possible that most sovereign and central bank gold in the United States, including the Fort Knox gold, the United Kingdom gold, and German gold is no longer stored in western vaults, and has been melted down and converted to the one kilo bars preferred in Russia, India and China.
    • An honest and credible audit would confirm or deny such speculation. Further “stonewalling” encourages such speculation. What is the rest of the story?
    Gary Christenson

    The Deviant Investor

    http://news.goldseek.com/GoldSeek/1506624114.php




     
  19. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Dude Arrested With 1 KG Of GOLD Hidden Up His ASS!
    SalivateMetal



    Published on Sep 29, 2017
     
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    The Gold Coin Dilemma, Politics and Nonsense


    -- Published: Tuesday, 3 October 2017

    By Gary Christenson

    There are five identical bags of gold, and each contains ten gold coins. However, one of the five bags contains fake gold. The real gold, fake gold, and five bags appear identical, except the coins of fake gold each weigh 1.1 ounces, and the real gold coins each weigh 1 ounce. You have an accurate digital scale and CAN USE IT ONLY ONCE.

    How do you determine which bag contains the fake gold?
    (Thanks to my friend Brian C. for sending me this dilemma.)

    There is a straight-forward answer to this question, but let’s speculate on what happens when we involve politics and prejudice.
    The European Politician: As Prime Minister Junker said, “When it becomes serious, you have to lie.” Forty ounces of gold is serious wealth, and we discourage using gold, so this is one of many times when lying is required. These gold coins are fakes and we are confiscating them. The supposed owner will be charged with several crimes.

    The Dallas School Politician: We are planning to rename schools bearing the names of Confederate generals and leaders because the Confederate economy used slavery and slavery was bad. The Southerners also used gold for trade, so we are opposed to using gold as well.

    The Chicago Politician: These gold coins symbolize the oppression of the masses and the unfair distribution of wealth across racial lines in America. As your public servant I am personally confiscating these coins so they will no longer remind my many supporters of racism and inequality.

    The Swiss Gold Refiner: We’ll perform a simple and non-invasive test, return the fake gold to London, melt and refine the genuine gold into 99.99% purity and cast it into a one kilo bar. The remaining gold bullion will be used in another bar and both will be sold to China where gold is understood and valued.

    The DEA Agent: No American has any business carrying 40 or 50 ounces of gold. These gold coins resulted from illegal drug sales, so we are confiscating them.

    The NFL Player: Hey man, like we’re protesting social issues or somethin’ and don’t know about no gold coins.

    Ben S. Bernanke: Nobody really understands gold prices and I don’t pretend to understand them either.” These coins will be shipped to my friend, the CEO of Goldman Sachs, for evaluation.

    Democratic National Committee Executive: I understand this question will be presented to both candidates in the next debate. I’ll make certain our Democratic candidate receives both the question and answer in advance.

    Republican Senator: Don’t bother me with trivial issues. I’m on my way to collect a $2,000,000 “thank you gift” from a major defense contractor because I wrote legislation that will boost his profitability by over one $billion in the next five years. American business must be supported.

    Professor funded by a grant from Global Warming Advocate: My extensive computer analysis shows that production of these gold coins increased the average temperature of the planet by 0.000003 degrees Celsius, plus or minus 0.0002 degrees. Further, I calculated the gasses created from fossil fuels burned in the production of these gold coins were equal to the flatulence expelled by 137 average cows over the course of one year. The production of these gold coins and excessive cow flatulence are two causes of the global warming catastrophe that will destroy the planet.

    Conservative Austrian Economist: The real gold coins are money. The fake coins are similar to debt based fiat currency units with no intrinsic value. The free market can decide which should be used.

    Congressman: I will convene a committee of distinguished colleagues and we shall hold public hearings accepting fair and objective testimony as to which coins are real, which are fake, and why people bother with the barbaric concept of gold coins. Hearings and analysis should last no longer than ten months. I will present the committee report about six weeks before my next election. All television networks are invited to broadcast my presentation of our findings. I trust my American voters will appreciate me, their congressional representative, and how I am dealing with this pressing problem.

    Mainstream News Reporter: We believe these coins are fake news. An anonymous source has confirmed that all 50 coins are fake gold and were manufactured in Russia, possibly at the request of our Republican President. This is another example of Russian gold hacking that must be stopped.

    ***

    Another solution to the gold coin dilemma is:
    Take one gold coin from the first bag, two from the second bag, three from the third bag, four from the fourth bag, and five from the fifth bag. If the weight on the scale ends in .1, then you know the first bag contains the fake gold. If the weight on the scale ends in .2, then the second bag contains the fake gold, and so on.
    ***

    Gold has been money for thousands of years. It has no counter-party risk and, based on history, has significant intrinsic value.
    Regardless of its value and our economic history, gold is affected by the intrigues of central banks and politicians. However, gold will be the “last man standing” after the global fiat currencies have been devalued to worthlessness.

    Gary Christenson

    The Deviant Investor

    http://news.goldseek.com/GoldSeek/1507039361.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    GOLDEN Moments On The SILVER Screen
    SalivateMetal



    Published on Oct 1, 2017
     
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    Gold Investment In Germany Surges – Now World’s Largest Gold Buyers


    -- Published: Friday, 6 October 2017

    – Gold investment in Germany surged in past 10 years
    – Germans are largest gold buyers in world: WGC research
    – Gold investment in Germany surges to €6.8B in 2016
    – Gold demand per person is highest in world – double Chinese, UK and U.S. demand

    – Gold one of the most popular investment for retail investors especially those with high incomes
    – 59% of respondents agreed with the statement that
    gold will never lose its value in the long-term
    – 48% agreed with the statement that owning gold
    makes me feel secure for the long-term
    – Prudent Germans more aware of financial and monetary risks


    [​IMG]

    Click on chart to enlarge

    Germany’s Golden Decade from the World Gold Council
    Germany’s gold investment market has boomed in the past 10 years.

    In the face of successive financial crises and loose monetary policy, German investors turned to gold to protect their wealth. In response, new product providers entered the market making it easier for people to invest.

    Last year, more than €6bn was ploughed into gold investment products in Germany and, encouragingly, there is room for further growth: consumer research indicates there is latent retail demand which the industry can tap into.

    [​IMG]

    Must read research from the World Gold Council confirming that prudent Germans are the largest gold buyers both in Europe and in the world has just been published and can be accessed on Gold.org here.

    News and Commentary

    Gold prices steady ahead of U.S. payrolls data (Reuters.com)

    Gold settles lower, builds on a weekly loss (MarketWatch.com)

    U.S. jobless claims fall; rise in exports helps narrow trade deficit (Reuters.com)

    Crypto Coin Sales Get Fresh Regulatory Scrutiny as ECB Weighs In (Bloomberg.com)

    US Mint Gold-Coin Sales Drop to Decade Low: Chart (Bloomberg.com)

    [​IMG]
    Source: Gold.org

    Gold Investment In Germany Surges To €6.8B In 2016 (Gold.org)

    Why Precious Metals Are The Better LONG-TERM Store Of Value Over Bitcoin (GoldSeek.com)

    U.S. Treasury increased the public debt by $318 billion (GoldSeek.com)

    Europe Could See Another Brexit-Like Rupture—Beyond Spain (Bloomberg.com)

    Puerto Rico Is Running Out of Money (Bloomberg.com)

    Gold Prices (LBMA AM)

    05 Oct: USD 1,278.40, GBP 969.28 & EUR 1,086.51 per ounce
    04 Oct: USD 1,275.55, GBP 960.87 & EUR 1,085.11 per ounce
    03 Oct: USD 1,270.70, GBP 959.00 & EUR 1,081.87 per ounce
    02 Oct: USD 1,273.10, GBP 956.48 & EUR 1,084.55 per ounce
    29 Sep: USD 1,286.95, GBP 963.15 & EUR 1,090.82 per ounce
    28 Sep: USD 1,284.30, GBP 961.04 & EUR 1,091.40 per ounce
    27 Sep: USD 1,291.30, GBP 963.83 & EUR 1,099.54 per ounce

    Silver Prices (LBMA)

    05 Oct: USD 16.66, GBP 12.64 & EUR 14.19 per ounce
    04 Oct: USD 16.83, GBP 12.67 & EUR 14.29 per ounce
    03 Oct: USD 16.61, GBP 12.53 & EUR 14.13 per ounce
    02 Oct: USD 16.58, GBP 12.46 & EUR 14.12 per ounce
    29 Sep: USD 16.86, GBP 12.60 & EUR 14.27 per ounce
    28 Sep: USD 16.82, GBP 12.53 & EUR 14.28 per ounce
    27 Sep: USD 16.89, GBP 12.58 & EUR 14.38 per ounce

    http://www.goldcore.com/us/

    http://news.goldseek.com/GoldSeek/1507293696.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The Chinese Gold Market Essentials


    -- Published: Friday, 6 October 2017

    By BullionStar

    https://www.bullionstar.com/

    A series of eight articles covering the Chinese Gold Market has recently been added to BullionStar’s Gold University portal. This series is titled “Chinese Gold Market Essentials”. Links to all 8 articles can be found on the left-hand frame of the Gold University pages under Research on the BullionStar desktop site, and under the “Chinese Gold Essentials” section of the Gold University, under Research on the BullionStar mobile site.

    These new Gold University articles draw on both information from BullionStar analyst Koos Jansen’s Chinese gold market blogs as well as new material. The eight articles in the series follow the style and format of all other articles within the BullionStar Gold University pages. i.e. to be a reference resource for all who are interested in the global gold markets, be they industry participants, reporters and journalists, precious metals investors, or indeed general readers.

    The framework for the “Chinese Gold Market Essentials” series centres around the Supply - Demand equation of the Chinese Gold Market and the infrastructure of this market.

    The article “Mechanics of the Chinese Domestic Gold Market” explains the core concepts of the Chinese gold market and the central function that the Shanghai Gold Exchange (SGE) plays as the market allocation mechanism within the Chinese gold market. By design, nearly all gold in China flows through the SGE trading and vaulting network, and gold withdrawals from the SGE are therefore a suitable proxy for Chinese wholesale gold demand. This wholesale gold demand includes consumer gold demand and direct purchases of gold on the SGE (institutional gold demand). Wholesale gold demand is therefore a far broader measure of gold demand than just the consumer demand which precious metals consultancies such as GFMS and the World Gold Council report on.

    There is therefore a simple and elegant gold supply-demand equation at the heart of the Chinese gold market.

    Two other articles in the series address the supply side of the Chinese gold market, each of which focuses on one of the two large components of gold supply in China, namely gold imports and gold mining production.

    In 2016, China net imported about 1300 tonnes of gold, making gold imports the largest single source of supply to the Chinese gold market. The article “Chinese Cross-Border Trade Rules on Gold” discusses these gold imports, and the rules around importing gold into and exporting gold from China.

    Although Chinese cross-border trade rules on gold apply to both gold imports and gold exports, gold flows mostly into China, and not out again, due to the general prohibition on gold exports. Rules on gold imports are also strict and are administered by the People’s Bank of China, which issues gold import licences to the small number of authorised domestic and foreign banks. Some Chinese mining companies now also import their own gold directly into China.

    As regards mining, China is also the world’s top gold producing country, with Chinese mines producing over 450 tonnes of gold output during 2016. Gold mining output is therefore the second largest source of gold flowing into the Chinese gold market. The article “Chinese Gold Mining as a Source of Gold Supply” provides an overview of the Chinese gold mining industry, and profiles some of the larger domestic gold mining companies in this sector.

    The gold mining supply article also looks at the fact that China now claims to have over 12,100 tonnes of in-ground identified gold reserves that can be mined in future, and that there are even regiments of the Chinese army which specialise in surveying and exploring for gold across China.

    Gold Demand within the Chinese Gold Market” expands on the idea that Chinese gold demand is not just consumer gold demand (jewellery demand, coin and bar demand, and industrial demand) but includes substantial direct purchases of gold at the Shanghai Gold Exchange. Chinese commercial banks also hold gold on their balance sheets to cover a number of activities such as gold accumulation plans, gold leasing etc.

    The article “Infrastructure of the Shanghai Gold Exchange” looks at the trading mechanisms and contracts of the Shanghai Gold Exchange. The SGE is the world’s largest physical gold exchange, an exchange in which real physical gold stored in the exchange’s vaults changes hands between trading participants via exchange traded contracts. All trading is conducted on an electronic trading platform, and counterparties are required to have the full amount of gold and cash before trading. Gold contracts traded and cleared on the SGE are known as the SGE’s ‘Price matching’ market.

    Gold contracts traded bilaterally off Exchange (i.e. traded Over-the-Counter between counterparties) can also be entered into the SGE trading platform and then cleared through the SGE’s clearing and vaulting system. This is known as the SGE’s “Price Inquiry” market. Additionally, a twice daily gold price auction, known as the Shanghai Gold Price Benchmark auction, is a distinct third spoke of trading on the SGE.

    There are 8 physical gold product contracts traded on the SGE representing gold bars and gold ingots ranging in weight from 50 grams through 1 kg and up to 12.5 kgs. Five of these products trade on the Main Board of the Exchange (domestic), and a further 3 trade on the Shanghai International Gold Exchange ( International Board).

    A specific article in the series covers the "Shanghai International Gold Exchange". Sometimes known as the SGE International Board or SGEI, this international board is an internationally focused physical gold trading platform launched by the SGE in September 2014. This platform offers 3 Renminbi-denominated physical gold contracts, one of which, the iAu99.99, sees significant trading volume. The aims of the International Board include boosting internationalization of the Chinese Yuan, introduction of offshore Yuan to SGE trading, and internationalizing the membership of the SGE.

    The SGEI also has a designated gold vault in the Shanghai Free Trade Zone. Gold imported to this vault remains outside the domestic Chinese gold market. Both domestic and international members of the SGE can trade the International Board contracts in either onshore or offshore Yuan, which as a stated aim of the Chinese authorities, supports the internationalization of the Chinese currency.

    The official gold reserves of the Chinese State (monetary gold) are held by China’s central bank, the People’s Bank of China. Currently, these gold reserves are claimed (by the Chinese State) to be in the region of 1840 tonnes. However, the real level of Chinese State gold holdings may be significantly higher than official published figures suggest. The article “PBoC Gold Purchases: Secretive Accumulation on the International Market” presents evidence that the Chinese State purchases monetary gold on the international market including in the London gold market, and ships this gold back to Beijing. It also looks at the possibility that the Chinese central bank may be buying up to 500 tonnes of gold per year and that it may have in the region of 4000 tonnes to 5000 tonnes of gold in its 'real' gold reserves.

    The Value Added Tax (VAT) system in the Chinese gold market exerts an important influence on both gold imports and the types of gold that flow to and through the Shanghai Gold Exchange. The article "Value Added Tax (VAT) in the Chinese Gold Market" looks at the general VAT system in China and on gold specifically, and the types of VAT receipts generated on gold transactions. It also explains when imported gold is exempt from VAT and how 'Standard' gold sold on the SGE is VAT exempt. Standard gold is gold bars or gold ingots of 50 gram, 100 gram, 1 kilogram, 3 kilogram or 12.5 kilogram form, with a fineness (gold purity) of 9999, 9995, 999 or 995.

    BullionStar
    E-mail BullionStar on: support@bullionstar.com

    http://news.goldseek.com/GoldSeek/1507294980.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Can Gold Cure Cancer?
    SalivateMetal



    Published on Oct 15, 2017
     
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    Over $3 Million Of Gold & Silver Found In Swiss Sewers!
    SalivateMetal



    Published on Oct 16, 2017
     
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    Swiss gold sewage: Switzerland has $1.8 mil in gold flowing through its sewers each year - TomoNews
    TomoNews US



    Published on Oct 12, 2017
    SWITZERLAND — Scientists say around 43 kg of gold worth around $1.8 million is flushed through Switzerland's sewer system each year.

    The report was released by researchers at the Swiss Federal Institute of Aquatic Science and Technology, Bloomberg reported.

    According to the report, the gold is lost through sludge and effluent from the country's waste treatment facilities.

    Scientists believe the gold flecks originate from the watchmaking industry and gold refineries.

    Switzerland is a major gold-refining hub with about 70 percent of the world's gold making its way through the country's refineries every year, according to Bloomberg.

    The study looked at 64 water treatment plants and also found around 3,000 kg of silver worth around $1.7 million.
     
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    Neck and Neck: Russian and Chinese Official Gold Reserves


    -- Published: Monday, 16 October 2017

    By Ronan Manly

    https://www.bullionstar.com/
    Official gold reserve updates from the Russian and Chinese central banks are probably one of the more closely watched metrics in the gold world. After the US, Germany, Italy and France, the sovereign gold holdings of China and Russia are the world’s 5th and 6th largest. And with the gold reserves ‘official figures’ of the US, Germany, Italy and France being essentially static, the only numbers worth watching are those of China and Russia.

    The Russian Federation’s central bank, the Bank of Russia, releases data on its official gold holdings in the Bank’s monthly “International Reserves and Foreign Currency Liquidity” report which is published towards the end of the third week of each month, and which confirms gold reserve changes as of the previous month-end.

    The Chinese State releases data on its official gold holdings via a monthly “Official Reserve Assets” report published by the State Administration of Foreign Reserves (SAFE) that is uploaded within the Forex Reserves pages of the SAFE website. This gold is classified as held by the Chinese central bank, the People’s Bank of China (PBoC). The SAFE report is published during the 2nd week of each month, reporting on the previous month-end.

    In both reports, official gold reserves (i.e. monetary gold) are specified in both US Dollars and fine troy ounces. Monetary gold is gold that is held by a central bank or other monetary authority as a reserve asset on a central bank’s balance sheet.

    Delta: 100 Tonnes
    For the Bank of Russia, its latest report, published on 19 September 2017 addressing August month-end, shows the Bank holding 56.1 million fine troy ounces of gold (1745 tonnes). For the Chinese State, the latest SAFE release is reporting Chinese official gold reserves of 59.24 million ounces (1842 tonnes).

    Officially reported Russian gold reserves of 1745 tonnes are now just 100 tonnes shy of the ‘official’ gold reserves of the Chinese central bank. Given that the Bank of Russia is expected to add about another 70 tonnes of gold to its official reserves during the remainder of 2017, then if the Chinese State does not reveal any increase in its ‘official’ gold reserves between now and the first quarter of 2018, Russia will most likely surpass China in terms of official gold reserves by April 2018.

    While its possible and probable that the Chinese State / PBoC really holds more gold than it claims to hold, any upcoming scenario in which the Bank of Russia surpasses the People’s Bank of China in terms of gold holdings would at least be symbolic in terms of international monetary developments, and would be sure to generate some chatter in the financial press.

    Although the official gold reserves of these two key nations are now nearly neck and neck, there are still some interesting contrasts between them, not least the way in which the Bank of Russia’s reported gold holdings have been steadily increasing month on month, while the reported gold holdings of the People’s Bank of China have remained totally unchanged for nearly a year now, since the end of October 2016.

    Therefore the situation which is now emerging, i.e. the distinct possibility that Russian official gold reserves will surpass those of China something in early 2018, is a situation which is emerging precisely because the Russian Federation keeps adding to its gold reserves, while the Chinese State seemingly does not.

    Differing Styles of Communication
    The routes via which these two strategically important nations have amassed their official gold reserves are also quite different, at least at a public reporting level.

    [​IMG]

    Official Gold Reserves of the Bank of Russia: Annual Purchases 1994 – 2017. Source:www.GoldChartsRUs.com


    It wasn’t so long ago (2007) that the gold reserves of the Russian Federation were still in the region of 400 tonnes. However, beginning in about the third quarter of 2007, the Bank of Russia began a concerted campaign to rapidly expand its official gold holdings, a trend which never subsided and which has been ongoing now for exactly 10 years. By early 2011, official Russian gold reserves had exceeded 800 tonnes. By the end of 2014, the Bank of Russia was reporting holding more than 1200 tonnes of gold. And by the end of 2016, Russian official gold were more than 1600 tonnes. For full details on the Bank of Russia’s gold holdings, including gold storage, gold reserve management, gold purchases and Russian government views on gold, see “Bank of Russia, Central Bank Gold Policies” at BullionStar’s Gold University.

    From the above chart, it can be seen that during 2014, 2015 and 2016, respectively, the Bank of Russia added 171 tonnes, 208 tonnes, and 199 tonnes to its gold reserves, or in total 578 tonnes over a 3 year period. In 2017, with the Bank of Russia having added another 130 tonnes of gold for the year to end of August, its official gold reserves now stand at 1745 tonnes.

    The route to the Chinese State accumulating 1842 tonnes of gold is a different one to that of the Russians, again at least from a publicly reported angle. While the Bank of Russia has historically published changes to its gold reserves on a monthly basis, the Chinese central bank has chosen to remain very secretive, and between 2001 and mid 2015 had only issued four public updates addressing the size and growth of its gold reserves. These 4 updates were as follows:
    • 4th Quarter 2001: From 394 to 500 tonnes: A 106 tonne increase
    • 4th Quarter 2002: From 500 to 600 tonnes: A 100 tonne increase
    • April 2009: From 600 to 1,054 tonnes: A 454 tonne increase
    • July 2015: From 1,054 to 1,658 tonnes: A 604 tonne increase
    Beginning in July 2015, however, the Chinese State started to report changes in its official gold reserves on a monthly basis, and by July 2016 was reporting 1823 tonnes of official gold holdings. The following graphic, taken from a BullionStar infographic on the Chinese gold market, illustrates the sporadic reporting of Chinese official gold reserves between the early 2000s and July 2015. Note that between July 2016 and October 2016, the Chinese State through SAFE reported that the PBoC had acquired another 19 tonnes of gold, taking its total reported gold reserves to 1942 tonnes as of the end of October 2016.

    [​IMG]

    Chinese Official Gold Reserves, 2003 – 2016 Source: Chinese Gold Market Infographic, BullionStar


    The sparse official reporting by the Chinese is also clear in the below chart from the GoldChartsRUS website, which shows cumulative holdings of monetary gold by the People’s Bank of China (PBoC) between 2000 and 2017. Looking at the top panel of the chart, it can be seen that between 2001 and 2015, there were only 4 distinct jumps in the quantity of gold held by the PBoC.

    This was followed by a period of about 15 months from July 2015 during which SAFE reported small monthly accumulations in PBoC’s gold holdings, as can be seen from the gradual increases in the bars in the top panel from July 2015 to October 2016, and the corresponding presence of frequent activity in the monthly changes in the lower panel of the chart.

    [​IMG]

    Official Gold Reserves of the Chinese central bank: Divulged Holdings 2000 – 2017. Source:www.GoldChartsRUs.com


    By September 2016, Chinese State gold reserve holdings had reached 59.11 million ounces. In October 2016, the SAFE report announced that Chinese official gold holdings had reached 59.24 million ounces, a 0.13 million ounce increase from the previous month. However, then something unusual happened, at least in terms of monthly updates. Since October 2016, Chinese official gold reserves have not changed at all. The SAFE updates are still published each month, but the gold holdings figure has remained unchanged at 59.24 million ounces (1842 tonnes).

    Therefore, for nearly a year now, the Chinese authorities are signalling that they have not acquired any new gold. At least that is what they want the public to believe. Hence the constantly recurring headlines from the financial media, such as this one from Reuters a week ago, “China gold reserves steady at 59.24 mln ounces at end-September – central bank”.

    But is it true that China only holds 1842 tonnes of gold and that it has not been active during the last year in continuing to accumulate monetary gold as part of its reserve assets? And for that matter, is it the case that the Bank of Russia and Russian Federation only hold 1745 tonnes of monetary gold?

    While its difficult to know for sure, it is possible that the People’s Republic of China and the Russian Federation both hold additional gold that is not reported by their monetary authorities. This is so for multiple reasons, including the opaque ways in which these monetary gold reserves are accumulated, the traditional secrecy of both governments, and the fact that both countries have access to other investment pools that might hold gold that can be transferred at short notice into the respective central banks’ official gold holdings.

    How Much Gold could the Chinese State really have?
    The historical track record of the Chinese State in sporadically communicating the size of its monetary gold holdings shows that there has often been a large gulf between the true size of its gold reserves and what the Chinese claimed to have via its piecemeal and rare updates. For example, even based on its official numbers, the PBoC accumulated over 600 tonnes of gold between April 2009 and July 2015 but did not reveal this until July 2015.

    The nearly year-long hiatus between October 2016 and the present, during which the Chinese authorities, via SAFE, claim that the PBoC’s gold holdings have remained at 1842 tonnes, could be true, but only in so far as the Chinese State does not wish to inform the world about its sovereign gold reserves. Beyond this, the true gold holdings of the Chinese central bank may be significantly higher than even official published figures suggest.

    There is very little transparency into how the Chinese authorities accumulate monetary gold. In July 2015, when SAFE announced the first update to its gold holdings since 2009, it stated that the “major channels of accumulation” of gold were from purchases in foreign markets, domestic gold production, domestic scrap sources, and other transacting in the domestic market. But beyond this, the Chinese authorities never comment on where they source gold from.

    There is lots of evidence that the Chinese State purchases significant quantities of gold in the international market, including in the London Gold Market, and then monetises this gold (i.e. classifies it as monetary gold) , before transporting it back to Beijing. See “PBoC Gold Purchases: Secretive Accumulation on the International Market”, at BullionStar Gold University for further details.

    The Chinese State is also a possible candidate for having purchased a tranche of the IMF’s gold during IMF gold sales in 2010. See BullionStar blog “IMF Gold Sales – Where ‘Transparency’ means ‘Secrecy’” for further details.

    There are also plenty of other State entities and state controlled entities in addition to the Chinese central bank that could conceivably be holding gold reserves that could in time be reclassified as PBoC gold, and brought into the sphere of reporting. See section “Gold Transfers from other Chinese State entities” in BullionStar Gold University article “Gold Policies of the People’s Bank of China” for further details.

    There is also evidence to suggest the Chinese State is really buying about 500 tonnes of gold per year, and that it has a first step target of holding at least 4000 tonnes of gold. This evidence, which is from 3-5 years ago, comes from senior people in the China Gold Association (CGA). See section “How much gold might the PBoC be buying each year?” in article PBoC Gold Purchases.

    A gold reserves-to-FX reserves ratio of 5% would currently put Chinese state gold holdings at nearly 4000 tonnes. A gold-to-GDP ratio of about 1.77%, which is the equivalent of the gold-to-GDP ratio of the US, would currently put Chinese state gold holdings at nearly 5000 tonnes of gold.

    Russia: Golden Pipelines and Stockpiles
    In its “Methodological Notes to International Reserves of the Russian Federation“, the Bank of Russia defines “monetary gold” as:

    “standard gold bars and coins with a purity of at least 995/1,000 held by the Bank of Russia and the Government of the Russian Federation. It comprises gold in vault, en route and in allocated accounts, including that which is held abroad. The item monetary gold includes unallocated gold accounts with non-residents.”

    The primary source of gold flowing to the Bank of Russia comes from Russian gold mining production, with the Russian Federation acquiring a large percentage of domestic gold mining production each year. In practice, a small group of state influenced Russian banks are authorised to intermediate between the gold mining companies and the State, acting as a gold pipeline between the mines and the Bank of Russia / Government. These banks finance the mining companies, purchase their gold output , have it refined into gold bars by Russian gold refineries, and then offer this gold to the Russian State.

    Some of these banks include Sberbank, VTB, Gazprombank and Otkritie. For details see section “Russian Banks as bulk buyers of Russian Gold” in the Russian gold market article in BullionStar’s Gold University.

    But its possible that some of this gold ends up not with the Bank of Russia, but with other Russian State entities, one of which is the “Gosfund” or “Precious Metals and Gems fund” operated by “The Gokhran”.

    This Gosfund could be buying a portion of Russian gold mining output, stockpiling it, and intermittently releasing some of its stockpile to the Bank of Russia. When I asked the Gokhran last year could it reveal its gold holdings, the Gokhran replied to me that “it does not publish information about the amount of gold reserves in the Russian Gosfund nor any data about its precious metal operations.” See letter reply from Gokhran below (for those who can read Russian).

    [​IMG]

    Gokhran reply January 2016 to query on whether it could publish its Gold Holdings.


    Conclusion
    Given the high degree of opacity with which both the Russian State and Chinese State accumulate monetary gold, and the fact that they both can probably tap additional gold stockpiles for boosting their official gold reserves, it will be interesting to see whether China, through SAFE, announces any increase in the PBoC’s gold holdings between now and the end of Q1 2018.

    Because if China does not do so, the Russian Federation will soon have the distinction of being the world’s 5th largest gold holder, pushing China into 6th place. My hunch is that China will update its gold holdings before the end of 2017, or at least by early 2018, but let’s wait and see what happens.

    Note: The Bank of Russia is expected to update its official gold holdings within the next few days, revealing how much gold it purchased during September (probably 15 – 20 tonnes). When this update comes in, this article will be updated to reflect the new numbers.

    Ronan Manly
    E-mail Ronan Manly on: ronan.manly@bullionstar.com

    http://news.goldseek.com/GoldSeek/1508173969.php
     
  29. Thecrensh

    Thecrensh Gold Member Gold Chaser

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    I wouldn't be suprised if China "allows" it's citizens to "own" gold, but reserves the right to claim all gold for the government. It would make sense to take a lot of their production and imports and inject it into their economy rather than stockpile it in a vault somewhere. At least this way, their citizens can benefit whenever they convert to BRICS standard and the government doesn't have to pay for storage and security...but can seize it at any time. Genius if you think about it.
     
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  30. edsl48

    edsl48 Silver Member Silver Miner

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    Sounds like they might have learned something from that great father of American socialism -FDR
     
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  31. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    How Gold Bullion Protects From Conflict And War

    -- Published: Thursday, 19 October 2017
    – Gold and silver’s historical role in conflict shaped the world today and the modern financial system
    – Gold played an important function in the great conflicts up to and throughout the 20th century
    – Gold and the effective use of bullion played a crucial role in the outcome of the American Civil War
    – Gold was an important economic agent in both World Wars, conferring a huge advantage on the allies
    – In a world beset with risks of war both in the Middle East and with North Korea, Russia and China … gold will protect

    Editor Mark O’Byrne

    [​IMG]

    Gold and silver have played important roles during periods of conflict and have protected people but also protected nations and conferred power. HSBC Chief Precious Metals analyst James Steel has written a fascinating piece for this month’s Alchemist about this.

    The article takes us through the major wars and conflicts from the 15th century to modern times. Each major war serves as a reminder that success is as much down to the management of bullion and finance as it is about the role of gold and silver.

    …the way bullion was used, moved, stored and shifted had profound effects on long-term economic or military success. Indeed, the role of gold and silver in wars not only in influenced the shape of the world today, but laid the foundations for the modern financial system.

    When managed effectively we see how important gold and silver were for victorious countries. Central bankers and politicians of today should use the following historical examples of military successes to appreciate the importance of a strong source of bullion and conservative financial planning both in and out of peacetime.

    Though not a guarantor of victory, gold played an important function in the great European rivalries and struggles up to and throughout the 20th century, as well as in civil wars and revolutions, notably the American Civil War, and the Spanish and Russian Revolutions.

    Below we bring some of our favourite examples from Steel’s article.

    How Spain showed you can mismanage too much gold

    [​IMG]

    Spain’s conquering of the New World brought the country immense wealth thanks to the ‘massive influx’ of precious metals. Spain became a super power after the 15th Century, funnelling much of the wealth into military endeavours and troops.

    However, as Steel explains the new found wealth was not utilised enough in the domestic economy:

    The influx of bullion effectively buoyed the money supply without stimulating additional production of goods and services. The result: domestic in ation. Most of it ended up simply ‘passing through’ Spain. That is to say the bullion headed into the more productive economies of England or the Netherlands, where goods were produced and sold to Spain. So much bullion was imported that it devalued those precious metals already in the European economy for decades afterward.

    Steel hypothesises that this had both a domestic and external effect. It hindered the domestic development of Spain and externally, weakened the Spanish Empire’s position in future conflicts with other powers. Thus, ironically, Spain’s vast bullion wealth strengthened her enemies. This was down to serious financial mismanagement on the part of the Spanish Crown and government.

    In Economic Possibilities for our Grandchildren, economist John Maynard Keynes dates the development of Britain’s capital account directly to the capture of Spanish treasure by Sir Francis Drake in the 1570s. Queen Elizabeth I was able to pay off the existing national debt and invest an additional £40,000 with the crown’s share of the proceeds from Drake’s raids of
    Spanish commerce.

    One could perhaps draw parallels with the Spanish Empire’s financial downfall and the countries today that choose to channel so much of their wealth into a global military presence. Their efforts to take military action in continents far from their own whilst their domestic economies suffer are an echo back to the misdirected efforts of the Spanish Empire.

    The American Civil War: the best example of gold’s power

    Steel believes the American Civil War ‘may be one of the best examples of a conflict where one side, the Union, had access to considerable gold, while the other, the Confederacy, was effectively starved of bullion.’

    Gold was key to financing the Union’s victory and helped them maintain a strong position throughout the war. This was mainly thanks to their access to California’s gold (thought to have financed 10% of the Union’s war effort), financing from the West and purchase of the gold by the Bank of England.

    General Grant said in regard to California’s support to the war effort: “I do not know what we would do in this great national emergency if it were not for the gold sent from California.” Although not paid directly to the troops, the gold was used to raise cash, and most of the Union government’s gold was sold to the Bank of England at a price of US$16/oz.

    World Wars: he who controls the gold wins

    [​IMG]

    During both World Wars the British had an excellent network and source of supply for their bullion requirements.

    During the First World War this was largely thanks to the British Empire, namely South Africa’s mining output and the Empire’s reputation as a country that pays her debts.

    South Africa provided two-thirds of all the gold production in the British Empire. In addition to supplying the UK, the South African government, in collaboration with the Bank of England, effectively blocked gold shipments to Germany. Mine owners were also compelled to sell bullion exclusively to the UK Treasury. This provided a ready source of capital to pay for wartime imports, mostly from the US. Being cut off from fresh gold supplies crimped Germany’s ability to import goods needed for the war effort.

    Whilst Britain’s gold reserves were a level of concern for the country it was Great Britian’s ability to control supply and flow of gold that helped to support it during the war.

    The UK did not hold particularly large gold reserves at the start of the conflict. Even before the war, City of London banks had argued that the Bank of England’s gold stocks should be higher. The war would put further strain on bullion reserves. As during the war years in
    the late 1700s, the UK abandoned the gold standard with the Currency and Bank Notes Act of 1914. This was issued just one day after Britain declared war on Germany and allowed the government to print notes as legal tender in place of gold sovereigns and half-sovereigns…

    …The UK authorities required at least some payment in gold for credits and imports. France shipped nearly £117 million worth of gold to the UK, while Russia sent nearly £68 million during the war.

    …France held the largest gold reserves in Europe and Britain had the best public credit in the world. Both worked to finance the war.

    Of course, in World War II similar tactics were used by the Allies in order to finance fighting and protect economies. German’s efforts to take gold from occupied countries were limited in their success and the reputation of the Reich mark prevented the Nazi regime from receiving much finance.

    The strain on Nazi gold reserves was always severe and by the end of the war, as had happened during WWI, virtually all of the few imports that could get into Germany were paid for by gold. The Allies went off what can best be described as a modified gold standard but had access to immense gold reserves in the many parts of the British Empire and the US. Japan also looted gold, but to a lesser extent than Germany, and an increasingly effective Allied naval blockade inhibited the use of gold, with much of it kept out of the Japanese home islands until late in the conflict.

    Conclusion: Use gold wisely

    Steel brings his study of seven major conflicts to a conclusion that is as relevant today as it has been throughout history:

    Gold and silver are not just spoils of war, they have been the means by which wars and conflicts can be financed and prosecuted. Gold has played a central role in conflicts ancient and modern. However, it is not simply a question of which side has the most gold, but which sides utilises it most judiciously.

    What Steel’s study shows is that, as with any monetary force, it is how it is managed rather than what it is that carries responsibility for conflicts and the resulting financial situation.

    Steel’s work also demonstrates the strength and protection access to gold will give a country or army during times of conflict. Allies are able to have faith in countries that have managed their gold supply and economy responsibly, helping to finance conflicts and maintain crucial trading relationships.

    We are at an unprecedented time in our global history. Countries have far larger weapons and armies than we have previously known. The financial system is also more connected than ever before. In the background super powers such as China and Russia are accumulating gold, whilst preparing their militaries.

    Meanwhile the likes of Britain no longer has quite the same access to either based gold reserves or the Empire, as she once did.

    Steel reminds us that it is not who has the most gold, but who is able to best utilise it. Central bankers should take note of this, but so too should investors. A judiciously managed, well-balanced portfolio with an allocation to gold is a prudent way to secure your wealth in these uncertain times.

    News and Commentary

    Gold prices steady amid firm dollar (Reuters.com)

    Gold slips as dollar firms on speculation over Fed chief (Reuters.com)

    More than 4 MILLION are ‘living on the brink of financial meltdown’ (DailyMail.co.uk)

    Scotiabank mulls sale of gold trading unit (Reuters.com)

    Bitcoin falls on reminder that CFTC might regulate it (Bloomberg.com)

    [​IMG]
    Potential Gold Prices In Terms Of Money Supply.
    Source: Incrementum via Money Week

    Key Charts: Gold is cheap & US recession may be closer than think (MoneyWeek.com)

    Authoritarian cryptocurrencies are coming (Bloomberg.com)

    War on Cash and the Future of Cryptocurrencies (InternationalMan.com)

    Silver coin proposal discussed by Salinas Price on Mexican TV (Plata.com.mx)

    Ray Dalio Is Shorting The Entire EU (ZeroHedge.com)

    Gold Prices (LBMA AM)

    19 Oct: USD 1,283.40, GBP 975.64 & EUR 1,087.42 per ounce
    18 Oct: USD 1,280.65, GBP 972.53 & EUR 1,090.47 per ounce
    17 Oct: USD 1,289.70, GBP 973.47 & EUR 1,097.02 per ounce
    16 Oct: USD 1,305.15, GBP 981.08 & EUR 1,107.03 per ounce
    13 Oct: USD 1,293.90, GBP 972.88 & EUR 1,093.73 per ounce
    12 Oct: USD 1,294.45, GBP 977.96 & EUR 1,092.26 per ounce
    11 Oct: USD 1,290.20, GBP 978.62 & EUR 1,091.90 per ounce

    Silver Prices (LBMA)

    19 Oct: USD 17.03, GBP 12.93 & EUR 14.40 per ounce
    18 Oct: USD 16.95, GBP 12.86 & EUR 14.42 per ounce
    17 Oct: USD 17.11, GBP 12.96 & EUR 14.55 per ounce
    16 Oct: USD 17.41, GBP 13.09 & EUR 14.75 per ounce
    13 Oct: USD 17.20, GBP 12.94 & EUR 14.55 per ounce
    12 Oct: USD 17.20, GBP 13.06 & EUR 14.50 per ounce
    11 Oct: USD 17.15, GBP 13.00 & EUR 14.51 per ounce

    http://www.goldcore.com/us/

    http://news.goldseek.com/GoldSeek/1508416020.php
     
  32. Thecrensh

    Thecrensh Gold Member Gold Chaser

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    What's really a tragedy is that they melted down all those priceless Aztec and Incan works of art to turn them into dubloons...
     
  33. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    THE FRAGILE GOLD INDUSTRY: Gigantic Equipment, Massive Capital Expenditures And Rising Costs

    -- Published: Thursday, 19 October 2017

    By Steve St. Angelo

    The gold industry has been built on the leveraging of debt and energy. The days of using human and animal labor to produce the precious yellow metal are long gone. While some gold is still mined the old fashion way, the overwhelming majority is produced by using colossal-sized mining equipment, massive amounts of capital, energy, and materials. Thus, the global gold supply comes via a very complex industry with a lot of moving parts. When one of these critical parts are in short supply or removed, then the entire gold supply system disintegrates.

    [​IMG]

    An example of one of the newest complex gold mines in the world is the Pueblo Viejo Mine in the Dominican Republic, owned by Barrick (60%) and Goldcorp (40%), which cost a staggering $3.7 billion to build. The Pueblo Viejo Mine started production in 2013 and is now running a full capacity. Gold production at the Pueblo Viejo Mine is over one million ounces per year. According to Barrick, it’s cost of sales at Pueblo Viejo was $564 an ounce in 2016. However, cost of sales does not include “all costs.” We must also factor General and Administrative, Exploration-Evaluation, Mine Closure and Income Tax expenses.

    However, these additional expenses do not include the initial $3.7 billion cost to build the mine. According to data, the Pueblo Viejo Mine has approximately 15.5 million oz (Moz) of proven and probable gold reserves. Even though additional gold discoveries at the mine will be added in the future, if we assume a 15-year initial payback period, the annualized capital cost would be an extra $250 per oz of gold produced.

    Thus, the $564 cost of sales plus $250 capital cost now equals $814 an ounce. But, this does not include the additional expenses which would push the actual total cost from the Pueblo Viejo Mine over $900 an ounce. This is just my simple calculation which shouldn’t be compared to the industry’s more complex accounting of Net Present Value. Even though the Pueblo Viejo Mine is Barrick’s lowest cost gold mine in the company, Barrick’s total cost to produce gold last year was $1,125, based on the $1,251 spot price. Again, that is my simple “Net Income Break-Even Analysis.”

    Regardless, the Pueblo Viejo Mine is a very advanced complex mine that processed 7.5 million tons of ore to produce the 1.1 Moz of gold last year. According to Barrick’s 2016 Sustainability Report, the Pueblo Viejo Mine consumed the following in 2016:

    Pueblo Viejo Mine Materials & Energy Consumed:
    1. 4.9 billion gallons of water
    2. 3,100 metric tons cyanide
    3. 338,000 metric tons lime
    4. 18.7 million GigaJoules of Energy (3.1 million barrels of oil equivalent)
    There are many other materials not included in that list above, but the ability to produce gold at the Pueblo Viejo Mine is only possible from a very complex supply chain. The majority of materials and energy consumed by the Pueblo Viejo Mine has to be transported to the Dominican Republic Island in the Carribean.

    For example, Barrick’s mining equipment fleet at the Pueblo Viejo Mine includes following (info from OSIsoft Report):
    1. (34) CAT 789 Haul Trucks
    2. (2) Hitachi 3600 Shovels
    3. (3) CAT 994F Front Loaders
    4. (30) Support equipment
    The estimated maintenance budget for just the haul truck fleet is $18 million. And when one of the 34 trucks goes out of service, it cost one hell of a lot of money. The truck downtime cost is $700 per hour. The six tires the CAT 789 Haul truck uses cost approximately $30-40,000 a piece and last a little more than a year. The CAT 789 Haul truck gets about 0.3 miles per gallon.

    [​IMG]

    (CAT 797F transported by Mercedes Semi-tractor)

    Now, the featured picture (above) that I used for this article is not the CAT 789; it is the CAT 797. The CAT 797 weighs twice as much as the CAT 789, used at the Pueblo Viejo Mine. However, I just wanted to give an idea of just how big these haul trucks can get.

    Furthermore, the mining, excavating and hauling of ore out of the Pueblo Viejo Mine is controlled by high-tech computerized systems. The hauling of the ore by the large truck fleet is monitored by state of the art technology that designs the most efficient method to remove the ore out of the mine, so very little time is wasted. Again, time is money.

    We must remember, the more technology that is used in a system, the more complex and fragile it becomes. Of course, technology is great at making large operations run more efficiently and faster, but the downside is that if one or more critical parts are removed, the complex mining system breaks down. What would happen to gold production at the Pueblo Viejo Mine if cyanide becomes in short supply? Without cyanide, the processing of gold ore grinds to a halt.

    While I have provided one example of the enormous cost and massive amounts of capital needed to produce gold and one mine, let’s take a look at what is going on at the top 8 gold mining companies in the world.

    Top 8 Gold Mining Companies Costs & CAPEX Spending Surge
    It is quite amazing how much more it costs to produce an ounce of gold today than it did at the beginning of the century. The huge rise in the total cost to produce gold is why the price is nearly five times higher. Unfortunately, many precious metals analysts suggest that the increase in the gold price is due to either market sentiment or increased demand. I have stated in several articles that the tremendous increase in the gold price was due to the rise in the price of oil:

    [​IMG]

    However, there are additional factors that also impact the cost to produce gold. For example, the gold mining industry now has to move a great deal more ore to produce the same amount of gold it did in 2000. The next chart shows the falling yield in the top gold mining industry from 2005 to 2013:

    [​IMG]

    In just eight years, the top five gold miners experienced a near 30% decline in average gold yield from 1.68 g/t (grams per ton) to 1.2 g/t. If we went back five more years to 2000, I would imagine it would be closer to a 40% decline in average yield. Thus, it now takes the processing of 40% more ore to produce the same amount of gold today. Which means, it now takes a hell of a lot more energy and materials to produce gold today than it did 16 years ago.

    This next chart puts into perspective the increased cost to produce gold today versus in 2000:

    [​IMG]

    This graph shows the increase “Cost of Goods Sold” for producing gold at the top 8 gold mining companies in the world. Even though many of the companies have seen a decline in the Cost of Goods Sold since the peak in 2013, the overall figure is still much higher than it was in 2000. Some of the companies included in the chart above have seen their Cost of Goods Sold increase significantly because they increased their gold production substantially. However, Barrick did not have that excuse.

    Barrick produced 5.9 Moz of gold with a $553 million cost compared to $5.4 billion in 2016 on 5.5 Moz of gold production. Here we can see that Barrick’s Cost of Goods Sold increased ten times while production is about the same.

    According to the data at YCharts.com and these companies’ annual reports, the total Cost of Gold Sold in 2000, was $4.9 billion ($4,953 million) versus $23.6 billion ($23,588 million) in 2016:

    [​IMG]

    Now, what is amazing about the figures in the chart above is that the Cost of Goods Sold figure has more than quadrupled while total gold production in the group only increased by 2 Moz. The top 8 gold miners Cost Of Goods Sold increased from $206 per oz in 2000 to $907 last year. The huge increase in cost to produce gold is the very reason the price surged from $279 in 2000 to $1251 in 2016. Let’s look at the comparison:

    Cost of Goods Sold vs. Gold Price:

    2000 vs. 2016 Cost of Goods Sold = 4.4 times increase

    2000 vs. 2016 Gold Price = 4.5 times increase

    So, if we removed all SUPPLY & DEMAND forces from the equation, it is quite surprising that the gold price is up by the same amount as the cost to produce gold. However, we need to also look at the rise in capital expenditures. During the same period, the top 8 gold miners total capital expenditures increased from $1.7 billion ($1,723 million) in 2000 to $6.1 billion ($6,088 million) in 2016:

    [​IMG]

    Again, we can see that total capital expenditure (CAPEX) increased from $72 per ounce in 2000 to $234 an ounce in 2016, while overall production only increased by 2 Moz. The group’s CAPEX spending only increased 3.2 times versus the 4.4 times in the Cost of Goods Sold, but it shows that it cost a heck of a lot more money to sustain or replace production.

    If we understand that the present value of gold is tied to its cost of production, then we would realize it has a PRICE FLOOR. Sure, the gold price could spike lower, but its average annual price has remained close to (or above) its cost of production for quite some time:

    [​IMG]

    This chart represents my “Net Income Breakeven Analysis” for Barrick and Newmont, the two top largest gold companies in the world. As I also mentioned above, Barrick’s cost to produce gold in 2016 was $1,125 when the spot price was $1,251. Thus, the market has priced gold above its cost of production (in these two companies) since at least 2000.

    Lastly, the gold mining industry needs a vast amount of materials, parts, energy as well as a very complex supply chain system to produce the precious yellow metal. If one part of the supply chain breaks down, then it becomes extremely difficult or impossible to produce gold. While there are many fragile aspects of the modern high-tech gold industry, I believe ENERGY is the most crucial.

    Once the world starts to experience a decline in global oil production, the vast supply chain system will begin to break down. This will impact the largest mines the most. I will be writing more about this subject matter and also why a declining global oil supply will push the price of gold up much higher.

    Check back for new articles and updates at the SRSrocco Report.

    http://news.goldseek.com/GoldSeek/1508418180.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    World's Oldest Gold Trader To Sell Due To Scandal
    SalivateMetal



    Published on Oct 22, 2017
    The Gold Trade for sale!! The oldest and very influential. Will they sell to the May Queen or the Snow Queen? Watch to the end to find out!
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Gold Is Better Store of Value Than Bitcoin – Goldman Sachs


    -- Published: Tuesday, 24 October 2017

    – Gold is better store of value than bitcoin – Goldman Sachs report
    – Gold will continue to perform well thanks to uncertainty and wealth demand
    – Bitcoin’s volatility continues to impact its role as money
    – Gold up 12% in 2017, bitcoin over 600%
    – BTC is six times more volatile than gold – see chart
    – Gold’s history and physical property shows it meets requirements as a medium of exchange and store of value


    [​IMG]

    Since the birth of bitcoin there has been one question that has repeatedly grabbed headlines and led debates all over the world – will bitcoin replace gold?

    The latest to weigh in on this question is Goldman Sachs which, in a research note entitled ‘Fear and Wealth’, has concluded that gold is better than bitcoin.

    Examining gold and bitcoin against the key characteristics of money, the report concludes that “Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield…They are neither a historic accident or a relic.”

    Goldman Sachs looked at four key properties of a long-term store of value – durability, portability, intrinsic value and unit of account – concluding that the reasons why gold was originally adopted remain relevant to today.

    They believe as the level of uncertainty increases investors increase their exposure to gold. Fear is the medium to short-term driver of the gold price. The long-term driver, Goldman Sachs believes, is wealth.

    The debate of gold versus bitcoin is really a rather tedious one. So rarely do you see any other two assets pitched against one another. Yet those choosing to debate it manage to find common ground between the two, so the debate rages on. Bitcoin’s finite supply and occasional rise on the back of geopolitical tensions has led to such comparisons.

    Conversely the debate is relevant as both assets are ones which evoke a strong emotive reaction and raise similar questions about the state of the economy and the investment space. As bitcoin’s market cap increases (heading to $100 billion) it is inevitable that it will continue to grab the attention of the likes of Goldman Sachs and institutional investors. Most recently, Ray Dallio, the world’s biggest fund manager felt the need to point out the bitcoin bubble and how he favoured gold over the cryptocurrency.

    The debate is of particular interest this year given bitcoin’s performance. It has climbed from around $1,000 at the start of the year to nearly $6,000. In the same period gold is up 12%.

    “Gold wins out over cryptocurrencies in a majority of the key characteristics of money,”

    [​IMG]

    The first record of gold being used as money is from around 700 B.C. when the Lydians combined it with silver, to form electrum coins.

    Bitcoin’s role as money is one which is still being established. Many of the problems it faces are down to infrastructure and price volatility.

    Goldman Sachs addressed the main characteristics that make a medium of exchange and found gold to outperform bitcoin.

    The findings were summarised by Bloomberg:

    Durability: While both require expertise for correct long-term storage, gold wins because cryptocurrencies are vulnerable to hacking through online wallets or the user’s computer or smartphone, are subject to regulatory risk, and network and infrastructure risk during a crisis.

    Portability: Transferring bullion can be expensive, given its weight, need for a high level of security and high import taxes in some countries, such as India. In contrast, it’s much faster and cheaper to move bitcoins.

    Intrinsic value: There’s a limited supply of gold and other precious metals in the Earth’s crust, whereas in the case of cryptocurrencies, it’s easy to create alternatives, meaning there’s effectively no control over supply at a macroeconomic level and no intrinsic value due to rarity.

    Unit of account: Gold is better at holding its purchasing power, and has much lower daily volatility. Bitcoin/dollar volatility has averaged almost seven times that of gold in 2017, the bank said.

    [​IMG]
    Chart from March 2017

    In regard to volatility the Fear and Wealth report stressed how “a 3-day USD/BTC put option at historical average volatility results in a premium of around 2.3%.” This is clearly a prohibitive premium. Fiat to bitcoin volatility this year stands at more than six times that seen with gold.

    The authors conclude that these factors “clearly illustrate that Bitcoin as a unit of account and medium of exchange is nowhere near as favourable as it first appears.”

    Is gold that immovable?

    Goldman Sachs found gold was only at a disadvantage to bitcoin when it came down to portability. This is something that is often cited about gold.

    Bullion is often accused of being bulky and therefore dysfunctional as a form of money. However, there are two main factors that are overlooked by those who argue this:

    – Size of gold bars and coins relative to value

    If you consider that the high income households in the UK are estimated to have around £63,000 (on average) in savings then this would be just 2 kilogram bars of gold. About the size of a smart phone each. Not exactly immovable.

    Then consider coins, far more portable and a great way to divide up your gold holdings.

    Should you hold gold (either at home or in a vault) then you are rarely under the same requirements to move the gold as you are if you had the equivalent held in a bank. Often banks demand a few days’ notice, or limit the amount of cash you can move in one go. Arguably, less portable than a trusty gold bar.

    – Technology

    In order to spend bitcoin you are required to be ‘online’. Fantastic for those of us who are able to go anywhere without worrying about connectivity. Not so great for those countries, remote areas or disaster struck places (such as Puerto Rico) that do not find it so easy to just jump online and shift a few bitcoin.

    Spending a few gold coins, or even a small gold bar, does not require you to partake in an online transaction. Should you find yourself in a position where you need to spend your gold, a power outage or loss of connection will not be your biggest problem.

    Uncertainty and fear: the drivers of gold

    [​IMG]

    It is interesting that given the title of the report is Fear and Wealth, the authors do not consider why gold’s portability is relevant and addresses fears surrounding uncertainty.

    There are a number of fears about the direction both the financial and political spheres are heading in. Consider real interest rates issues, debasement, sovereign balance-sheet, geopolitical and other market risks.

    The main fear is that no-one knows how bad things will be and so investment decisions are coming down to uncertainty. This is good for gold and its price.

    “Stated more simply, we are talking about the drivers of ‘risk-on, risk-off’ behavior in markets…This factor matters so much to gold precisely because it is a safe-haven asset. Accordingly, as uncertainty increases, preferences shift towards having more gold in the portfolio, driving prices higher.”

    People like to hold gold because they can balance the uncertainty with the certainty that gold will be accepted regardless of how things pan out. Holders know that they can easily transport and transfer it, in order to make an exchange for goods. They cannot know this with bitcoin, both because of its design and because it has never been tested in such a way.

    Gold investors are also exposed to far less uncertainties when it comes to professional storage, something Goldman Sachs does acknowledge:

    “While both require expertise for correct long-term storage, gold wins because cryptocurrencies are vulnerable to hacking through online wallets or the user’s computer or smartphone, are subject to regulatory risk, and network and infrastructure risk during a crisis,”

    Despite this acknowledgement it is interesting that ‘portability’ is still seen as a negative for gold. This has not restricted gold too much in the past.

    Long-term investors are clearly also not too concerned about portability either. Goldman Sachs believes these investors are the key to gold’s long-term performance, thanks to a desire to build and protect their wealth.

    Gold’s future

    Goldman Sachs forecasts that emerging market economies will be the key drivers of wealth-based demand for gold.

    “As more EM economies — including China — are set to grow to these income levels over the next few decades, the underlying long-term demand picture remains supportive of gold prices…While fear can spike or fall relatively quickly, wealth tends to accumulate slowly. This makes wealth an important, but easy to overlook in short-term forecasting, driver of gold.”

    The likes of China and India are experiencing a rapidly growing middle-class, all of whom are interested in buying gold. Between the two countries they account for 60% of the global jewellery market.

    This is likely to boost long-term demand for the precious metal given rapid accumulation of gold tends to occur when per-capita gross domestic product reaches roughly $20,000 to $30,000.

    There is still a long-way to go for 29 developing countries, each of whom have an interest in holding gold.

    “Our modeling, based on the historical experiences of 29 countries at various stages of development since the early 1990s, suggests that this is still very far from peak annual demand,”

    Uncertainty will lead to wealth protection in the future

    Goldman Sachs expects to see the price of gold falter somewhat before reaching nearly $1,400/oz in 2018. The expected stumble is down to tightening of monetary policy and a moderation of the fear factor.

    Investors should not be put off by Goldman Sachs’ forecast. If there is any takeaway from their report it is that gold is both a long-term investment and a safe haven.

    Whilst fear and uncertainty may well subside, they will not disappear until the factors that cause them also vanish. In all likelihood this is impossible without years of serious economic and political change. Unlikely, especially in the West with short-term policies for maximum political gains and disastrous economic consequences.

    By showing gold has true value as a medium of exchange and store of value, Goldman Sachs has demonstrated how important it is to hold some in your portfolio. You may not feel fearful but you cannot be be sure of no uncertainties.

    Those who hold gold as a form of financial insurance will benefit in two ways. Firstly, they have a balanced portfolio that will support them in times of unforeseen crises. Secondly, should a crisis be averted then gold will accumulate in value as fiat devaluation continues, thus still protecting the investor and their savings.

    Bitcoin has done a stellar job in motivating millennials into taking an interest in money and investments, however the cryptocurrency market is in itself an entire uncertainty. It’s main premise – as a medium of exchange – has been rapidly dismissed on several accounts.

    As throughout history, gold remains a vital store of value. It’s role as money and as a safe haven continues to be proven thanks to the actions of central bankers and those using technology to affect monetary markets.

    News and Commentary

    Gold recovers from two-week low on softer dollar (Reuters.com)

    Gold recovers from 2-week lows and rises above $1280 (FXStreet.com)

    Wall St. retreats from record highs; tech, industrials drag (Reuters.com)

    U.S. Stocks Drop at Start of Big Week for Earnings (Bloomberg.com)

    Venezuela allows $1.7 billion gold swap with Deutsche to lapse (Reuters.com)

    Spanish Banks Fall on Fresh Political Upheaval (TheStreet.com)

    [​IMG]
    Source: US Funds via Forbes

    Here’s Why Bitcoin Won’t Replace Gold So Easily (Forbes.com)

    Americans Have More Debt Than Ever — Creating An Economic Trap (BusinessInsider.com)

    Here Is The IMF’s Global Financial Crash Scenario (ZeroHedge.com)

    Politicians and Unfolding Pensions Disaster – Are You Infuriated Yet? (GoldSeek.com)

    History Of Gold and Silver Flows From South America to Medieval Europe and Today (LMBA.org)

    Gold Prices (LBMA AM)

    24 Oct: USD 1,278.30, GBP 970.36 & EUR 1,087.32 per ounce
    23 Oct: USD 1,275.25, GBP 967.79 & EUR 1,085.62 per ounce
    20 Oct: USD 1,280.25, GBP 974.27 & EUR 1,084.76 per ounce
    20 Oct: USD 1,280.25, GBP 974.27 & EUR 1,084.76 per ounce
    19 Oct: USD 1,283.40, GBP 975.64 & EUR 1,087.42 per ounce
    18 Oct: USD 1,280.65, GBP 972.53 & EUR 1,090.47 per ounce
    17 Oct: USD 1,289.70, GBP 973.47 & EUR 1,097.02 per ounce

    Silver Prices (LBMA)

    24 Oct: USD 17.04, GBP 12.92 & EUR 14.49 per ounce
    23 Oct: USD 17.00, GBP 12.90 & EUR 14.47 per ounce
    20 Oct: USD 17.08, GBP 12.96 & EUR 14.46 per ounce
    20 Oct: USD 17.08, GBP 12.96 & EUR 14.46 per ounce
    19 Oct: USD 17.03, GBP 12.93 & EUR 14.40 per ounce
    18 Oct: USD 16.95, GBP 12.86 & EUR 14.42 per ounce
    17 Oct: USD 17.11, GBP 12.96 & EUR 14.55 per ounce

    http://www.goldcore.com/us/

    http://news.goldseek.com/GoldSeek/1508849520.php
     
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    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    'We'll keep resisting until the last of us is dead': Ancient Amazonian tribe facing extinction vows to fight against mining companies planning to destroy their homes to dig for gold in Brazil
    • The Waiapi, an ancient tribe living in Brazil's Amazon rainforest, live in the Waiapi reserve - a pristine rainforest near the eastern end of the Amazon river
    • The tribe operates almost entirely according to its own laws, with a way of life at times closer to the Stone Age than the 21st century
    • They were nearly wiped out by disease after being discovered by outsiders in the 1970s
    • Now the center-right government is pushing to open Renca to international mining companies who covet the rich deposits of gold
    • From a tiny settlement of palm-thatched huts hidden in foliage, the tribesmen streaked in red and black dye have vowed to defend their territory


    Read more: http://www.dailymail.co.uk/news/article-5015975/Amazonian-tribe-vows-fight-against-mining-companies.html#ixzz4wWU1o8W7
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
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  39. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Chris Powell: The essentially prohibited questions about the price of gold

    By: Chris Powell



    -- Published: Thursday, 26 October 2017

    Gold Market Manipulation Update

    Remarks by Chris Powell
    Secretary/Treasurer, Gold Anti-Trust Action Committee Inc.
    New Orleans Investment Conference
    Hilton New Orleans Riverside Hotel
    Wednesday, October 25, 2017


    All you really need to know about gold could have been surmised from a story on the front page of The Wall Street Journal on August 10:

    http://www.gata.org/node/17562

    http://www.gata.org/files/WallStreetJournalFrontPage-08-11-2017.jpg

    In that story the newspaper quoted four experts on the gold market, all of them associates of the Gold Anti-Trust Action Committee and all of them introduced to the newspaper's reporter by me.

    Those four experts -- gold researcher Ronan Manly, Sprott Asset Management's John Embry, GoldMoney founder James Turk, and futures market analyst James McShirley – accused the Federal Reserve of being involved with the suppression of the gold price through the surreptitious lending and swapping of central bank gold reserves.

    The Wall Street Journal story was a triumph for GATA, even though the Journal declined to mention GATA by name. (The reporter told GATA Chairman Bill Murphy that the newspaper just ran out of space.)


    But the story would have been a much greater triumph for us -- indeed, it would have been a triumph for free markets -- if the newspaper had not decided, in reporting these complaints about surreptitious government intervention in the gold market, to violate the first rule of journalism. That's the rule about getting both sides of a story.

    The Journal reported: "Some gold bugs -- investors bullish on the yellow metal -- think the Fed secretly lends it out to suppress prices, partly to protect the dollar's value. In theory, the Fed can feed gold into the market through swaps with other countries."

    So where were the Journal's questions about this for the Fed and the Treasury Department? Are the Fed and the Treasury Department involved in keeping the gold price down through surreptitious interventions, or are they not involved?

    But the Journal never asked such questions, even though for a year and a half, as I provided the Journal's reporter with the documents of these interventions, I repeatedly pressed her to put the questions to the Fed and Treasury Department. I even provided the Journal's reporter with a video showing New York Federal Reserve Bank President William Dudley refusing to answer a question about gold swaps during his appearance at the Virginia Military Institute on March 31, 2016:

    http://www.gata.org/node/16341

    https://www.youtube.com/watch?v=p0JYoJ_rKxQ

    Ordinarily news organizations are most interested in questions that high government officials refuse to answer. But mainstream financial news reporters are not interested in questions about secret government intervention in the gold market and secret interventions in markets generally. No, such questions are too sensitive, considered matters of national security.

    The best that mainstream financial news organizations can do is just to acknowledge the questions sometimes. Mainstream financial news organizations can never pursue the answers, no matter how easy it would be to do so.

    Unfortunately most gold market analysts themselves will not pursue these questions either -- at least not yet. GATA will continue working on them.

    But market manipulation issues have kept coming close to the surface since we met here last year.

    Last month it was reported that former Federal Reserve Board member Kevin M. Warsh was under consideration by President Trump to become Fed chairman.

    Warsh is well known to GATA. He was the Fed board member who, adjudicating our freedom-of-information request to the Fed in September 2009, admitted in a letter to our lawyer that the Fed has secret gold swap arrangements with foreign banks and that the Fed insists on keeping them secret:

    http://www.gata.org/node/7819

    Also last month, GATA consultant Robert Lambourne, an expert on the Bank for International Settlements, reported that in the last year gold swaps undertaken by the BIS have exploded from zero to close to 500 tonnes:

    http://www.gata.org/node/17646

    This is revealed in the footnotes of the BIS' latest annual report:

    http://www.bis.org/publ/arpdf/ar2017e.pdf

    The relevant page is isolated in PDF format here:

    http://www.gata.org/files/BISGold&GoldLoans2017.pdf

    Lambourne says there is reason to believe that these swaps were undertaken by the BIS just as the gold price showed signs of breaking upward.

    The BIS is the primary gold broker for its central bank members and does all sorts of gold business for them. This business is acknowledged in the bowels of the BIS' internet site:

    http://www.bis.org/banking/finserv.htm

    The relevant section is isolated in PDF format here:

    http://www.gata.org/files/BISForex&GoldServices.pdf

    Contrary to what some people would have you believe, central bank gold reserves don't just sit quietly in their vaults all day. They are mobilized every day, often with the help of the BIS, not just through sales and leases but also through issuance of the various kinds of derivatives listed on the screen.

    Indeed, when the BIS thinks that only its central bank members and potential members are listening, it even advertises that its services include secret interventions in the gold market.

    This advertisement was part of the BIS presentation that was made to potential central bank members during a conference at BIS headquarters in Basel, Switzerland, in June 2008:

    http://www.gata.org/node/11012

    http://www.gata.org/files/BISAdvertisesGoldInterventions_0.pdf

    The BIS is a powerful organization but most of its power comes from the refusal of mainstream financial news organizations and gold market analysts to ask the bank to explain what it does in the gold market and then to report the bank's refusal to explain.

    Confirmations of gold and silver market rigging below the central bank level have poured in during the last year.

    In December last year Deutsche Bank agreed to pay $60 million to settle a class-action anti-trust lawsuit's complaints that it had manipulated the gold market. In October last year Deutsche Bank agreed to pay another $38 million to settle a similar complaint that it had manipulated the silver market. Perhaps more importantly, Deutsche Bank agreed to provide the plaintiffs with evidence against the banks it admitted conspiring with:

    http://www.gata.org/node/16964

    Unfortunately the discovery and deposition procedures in the class-action anti-trust lawsuits against Deutsche Bank have been put on hold at the request of the U.S. Justice Department, which purports to be undertaking its own investigation of the bank. More likely the Justice Department is just trying to delay exposure of the U.S. government's own involvement with the market rigging.

    http://www.gata.org/node/17157

    In June a former metals trader for Deutsche Bank pleaded guilty in federal court in Chicago to using “spoofing” techniques to manipulate the futures markets for gold, silver, platinum, and palladium. The former trader for Deutsche Bank also admitted front-running customer orders:

    http://www.gata.org/node/17407

    In May gold researcher Ronan Manly, reviewing records at the Bank of England discovered minutes showing that Western central bankers conspired in the early 1980s to suppress the gold price in exchange for continued cheap oil exports from the Middle East. These Bank of England minutes are confirmation of the long-held belief in gold circles that gold price suppression originates in part from the desire of Middle Eastern oil exporters to be able to exchange their oil for better money than U.S. dollars, money that can't be devalued so easily:

    http://www.gata.org/node/17386

    Reviewing those Bank of England records, Manly also discovered that Western central banks conspired in 1979 to create a second London gold pool to control the metal's price:

    http://www.gata.org/node/17372

    Last May GoldMoney Vice President John Butler discovered another U.S. State Department memorandum detailing U.S. government policy to drive gold out of the world financial system in favor of the U.S. dollar and the Special Drawing Rights issued by the International Monetary Fund, which then was under U.S. government control.

    http://www.gata.org/node/17361

    The memo was written in 1974 by Deputy Assistant Secretary of State Sidney Weintraub for Secretary of State Henry Kissinger and the Treasury Department's undersecretary for monetary affairs, Paul Volcker, who of course went on to become chairman of the Federal Reserve.

    Weintraub wrote: "To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market."

    In April the British Broadcasting Co.'s “Panorama” program obtained and broadcast a recording of a conversation between two officials of Barclays bank that implicated the Bank of England in the infamous rigging of the London Interbank Offered Rate, the LIBOR interest rate:

    http://www.gata.org/node/17303

    In the recording a senior Barclays manager, Mark Dearlove, instructs the bank's LIBOR rate submitter, Peter Johnson, to lower the rates Barclays is submitting.

    Dearlove tells Johnson: "We've had some very serious pressure from the UK government and the Bank of England about pushing our LIBORs lower."

    Johnson objects, saying that this would mean breaking the rules for setting LIBOR, which required Barclays to submit rates based only on the cost of borrowing cash. Johnson asks: "So I'll push them below a realistic level of where I think I can get money?"

    His boss Dearlove replies: "We've got the Bank of England, all sorts of people involved in the whole thing. ... I am as reluctant as you are. ... These guys have just turned around and said just do it."

    In January the TF Metals Report discovered in the Wikileaks archive of State Department diplomatic cables a cable sent in December 1974 from the U.S. embassy in London to the State Department in Washington. The cable shows that the U.S. government had just gotten assurances from London bullion banks that the imminent creation of a gold futures market in the United States would cause so much volatility in the gold price that ordinary investors would be driven out of gold:

    http://www.gata.org/node/17081

    The gold price has always been of great interest here at the New Orleans Investment Conference. In GATA's view there are four crucial questions about the gold price, questions that are essentially prohibited elsewhere. I encourage you to put these questions to those who speak about gold here.

    1) Are governments and central banks active in the monetary metals markets or not?

    2) Are the documents compiled by GATA from government archives and other official sources asserting such activity genuine or forgeries?

    3) If governments and central banks are active in the monetary metals markets, is it just for fun or is it for policy purposes?

    4) If such activity by governments and central banks is for policy purposes, do those purposes involve the traditional objectives of defeating an independent world currency that competes with government currencies and interferes with government control of interest rates and, indeed, interferes with control of the entire economy and society itself?

    In GATA's view there are good arguments for investing in the monetary metals and the companies that mine them. But investors need to know what they're getting into, what they're up against, and what they can do to improve the prospects for their investments and for the restoration of free markets.

    Remember, as author and fund manager Jim Rickards said on CNBC a few years ago: "When you own gold you're fighting every central bank in the world."

    So we just have to beat the bastards.

    You can find GATA on the internet at GATA.org, where you can sign up for our daily e-mail dispatches and, if you're inclined to help us, make contributions that are tax-deductible. We really could use your help. Of course I'll be glad to hear from you by e-mail at http://london.minesandmoney.com/

    * * *

    Help keep GATA going:

    GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

    http://www.gata.org

    To contribute to GATA, please visit:

    http://www.gata.org/node/16

    http://news.goldseek.com/GATA/1509042012.php
     
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    Russia Buys 34 Tonnes Of Gold In September


    -- Published: Friday, 27 October 2017

    – Russia adds 1.1 million ounces to reserves in ongoing diversification from USD
    – 34 ton addition brings Russia’s Central Bank holdings to 1,779t; 6th highest
    – Russia’s gold reserves are at highest point in Putin’s 17-year reign
    – Russia’s central bank will buy gold for its reserves on the Moscow Exchange
    – Russia recognises gold’s role as independent currency and safe haven


    Editor: Mark O’Byrne

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    Prior to World War I Russia held the world’s third largest gold reserves, behind America and France. In the subsequent Russian Revolution, civil war and the rise of communism, they dropped down the table of nations with large gold reserves and the U.S. became the largest holder of national gold reserves.

    In recent years, since 2007, an increasingly powerful and assertive Russia has worked hard to reprise its place in the world’s top gold reserve rankings, quadrupling its purchases in the period to June this year.

    A 34 ton purchase of gold (1.1 million ounce) in September has put Russia firmly back in the golden spotlight. The country now holds 1,779 tons of gold, placing it sixth in the world and just behind China.

    In the first two quarters of the year the CBR purchased 129 tons, making the late-summer purchase the best since October 2016. Taking into account the September purchase, Russia needs to buy just another 37t in order to purchase 200t by the end of the year – the amount it has done each year, for the last two years running.

    In order to support gold purchases, the CBR announced this week that it would start purchasing gold on the Moscow Exchange.

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    Why the obsession with buying up gold and increasing their gold reserves? It is primarily about protecting the ruble and combating US petrodollar hegemony.

    Not just about gold purchases

    Today, Russia is a prominent player in the global gold market, both on the supply and demand side. It is the world’s third-largest producer, with a 200-year history of gold mining, and the most significant official purchaser of gold.”
    World Gold Council

    Russia isn’t just making headlines for the amount of gold it is buying, but also for the amount it is producing.

    The country is the world’s third largest gold producer, snapping at the heels of Australia in second. The most recently available figures from Metals Focus show Russia produced 274 tonnes of gold in 2016. The majority of which appears to have been bought by the Russian Central Bank.

    Polyus, Polymetall, Kinross, Petropavlovsk, and Nordgold are the country’s top gold producers. Between them they produce more than 120 tons of gold a year, just under 50 percent of Russia’s total production, last year.

    In the last decade the country has mined over 2,000t. According to Sergey Kashuba, Chairman of Russian Gold Producers Union this year’s production is expected to exceed 300t, and increase very significantly to 400t by the end of 2018.

    Why the gold diversification?

    Whilst the Russian Central Bank has been stocking up on gold reserves it has noticeably not been increasing its foreign exchange reserves, especially the US dollar.

    This is a similar approach to fellow-gold buyers China who have also been reducing their holdings of and dependence on the dollar. Both Russia and China have created mechanisms for trading nations to use gold rather than the US dollar in bilateral trade arrangements.

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    US dollar hegemony has given the United States unparalleled strategic advantage, notably preventing Russia and China from creating an economic area of integration. For years this has worked in the United States’ favour, however when Putin came on the scene Russia almost immediately began to gradual move away from US dollar dependency.

    Today the country has one of the lowest levels of dollar-denominated private and public debt, in the world. The country has also decreased the share of euro in its foreign reserves from 40% to 26%.

    The danger with holding lots of dollars is if the US wanted to damage Russia’s finances, this would be possible through currency manipulations and sanctions. Iran is an example of country holding gold is insurance against such an event. There is also the very real risk that the U.S. with sharply devalue the dollar in the coming months and years. This would result in Russia’s dollar reserves becoming worth a lot less and in a worst case scenario become worthless.

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    China and Russia’s frustration at the over reaching of the United States and the power it yields with the US dollar has seen both countries accelerate both gold mining and purchases in recent years. Note the contrast with the United States which is not topping up (or even auditing) its own gold reserves.

    Often the argument for holding foreign currency in reserve is to provide liquidity in time of need. Most analysts forget that in this day and age one of the most liquid currencies remains gold. Therefore, it cannot be argued that Russia and China are not stocking up their reserves adequately.

    Independent of any government and arguably more liquid than any other sovereign currency, gold is the ultimate currency for countries such as Russia, especially in the face of sanctions.

    Dmitry Tulin, the First Deputy Governor, has also stated that the Bank of Russia increased gold purchases because only this reserve asset provides total protection against legal and political risks – “100% guarantee from legal and political risks.”

    Learn to invest like the Russians

    When asked about the central bank’s gold purchases Elvira Nabiullina, Governor of the Bank of Russia said

    “We are adhering to the principle of reserve diversification. This principle remains unchanged. From this perspective, our reserves do include gold.”

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    Savers should take note, diversification should be the number one priority when it comes to protecting and growing your wealth in these uncertain times. This is for precisely the same reasons the Russian Central Bank is doing so – in order to protect against legal and political risks (Brexit, Trump etc) , but also economic and financial risks.

    The risks to a saver may seem vastly different to those of a central bank but really they are quite similar. Both are exposed to the decisions made by politicians around the world. Like Russia, we too are awaiting with baited breath what President Trump will do next or what the EU will soon decide is the best way to ‘protect’ the Super state bloc. We are exposed, as are our savings and investments.

    Gold cannot be devalued as fiat currencies can, allocated and segregated gold cannot be confiscated thanks to the irresponsible actions of a counterparty. It is a borderless, free currency that acts as the ultimate reserve in a diversified portfolio.

    Russia and China have a plan to take charge of their financial future and gold is at the heart of that plan.

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    Gold Prices (LBMA AM)

    27 Oct: USD 1,267.80, GBP 968.35 & EUR 1,090.18 per ounce
    26 Oct: USD 1,278.00, GBP 968.34 & EUR 1,082.34 per ounce
    25 Oct: USD 1,273.00, GBP 964.81 & EUR 1,081.67 per ounce
    24 Oct: USD 1,278.30, GBP 970.36 & EUR 1,087.32 per ounce
    23 Oct: USD 1,275.25, GBP 967.79 & EUR 1,085.62 per ounce
    20 Oct: USD 1,280.25, GBP 974.27 & EUR 1,084.76 per ounce
    20 Oct: USD 1,280.25, GBP 974.27 & EUR 1,084.76 per ounce

    Silver Prices (LBMA)

    27 Oct: USD 16.72, GBP 12.76 & EUR 14.38 per ounce
    26 Oct: USD 16.97, GBP 12.84 & EUR 14.37 per ounce
    25 Oct: USD 16.89, GBP 12.75 & EUR 14.34 per ounce
    24 Oct: USD 17.04, GBP 12.92 & EUR 14.49 per ounce
    23 Oct: USD 17.00, GBP 12.90 & EUR 14.47 per ounce
    20 Oct: USD 17.08, GBP 12.96 & EUR 14.46 per ounce
    20 Oct: USD 17.08, GBP 12.96 & EUR 14.46 per ounce

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