Zero Hedge published an interesting article (below) that pointed out how the Chinese are able to push the price of gold lower in the futures market, allowing them to buy their physical gold at a lower price. We often discuss JPMorgan’s role in gold’s price suppression, but it makes perfect sense that the largest gold buyer in the world, who also happened to be the shrewdest investors in the world, would also be part of the paper price suppression scheme. Here are excerpts showing how they accomplish it.
Submitted by Tyler Durden on 03/23/2014 21:40 -0400
Goldman concludes that “an unwind of Chinese commodity financing deals would likely result in an increase in availability of physical inventory (physical selling), and an increase in futures buying (buying back the hedge) – thereby resulting in a lower physical price than futures price, as well as resulting in a lower overall price curve (or full carry).” In other words, it would send the price of the underlying commodity lower.
We agree that this may indeed be the case for “simple” commodities like copper and iron ore, however when it comes to gold, we disagree, for the simple reason that it was in 2013, the year when Chinese physical buying hit an all time record, be it for CCFD purposes as suggested here, or otherwise, the price of gold tumbled by some 30%! In other words, it is beyond a doubt that the year in which gold-backed funding deals rose to an all time high, gold tumbled. To be sure this was not due to the surge in demand for Chinese (and global) physical. If anything, it was due to the “hedged” gold selling by China in the “paper”, futures market.
Continue reading on Zerohedge.com.
Below the following links to a video, by Wealth Daily, it is an excellent analysis of how and why the Chinese will dump the U.S. dollar and continue to increase their physical gold holding, ultimately dethroning the dollar as the world’s reserve currency with a gold-backed Renminbi.
This is the third article we have presented in recent days that discuss the dollars loss of either “reserve currency” status or “petro dollar” status. The good news is that either event would be extremely bullish for gold (and silver) or the bad news is that it would be a disaster for life as we know it in America. When (not if) this happens, those of you who have a strong position in bonds or traditional stocks will not be happy campers.
The following Wealth Daily video (A Gold Buying Spree) below is a sales pitch for gold and silver exploration stocks – but that said, it is still factual, well thought out and absolutely worth watching. In 2000-2001 I made a few substantial investment in exploration stocks. Most lost money, and that is the problem with this sector, but two or three increase from 10-30 times. My strategy was to use the profits from these highly speculative stocks (and they can be enormous if you choose wisely) to fund my purchases of physical gold and silver. That is exactly what happened. So, I am not against taking a position in the gold and silver exploration sector, as long as you understand that it is risky, volatile and should at best only occupy a small portion of your precious metals investment portfolio. Western Copper and Avalon made me a fortune and there are more opportunities like these out there – if you can find them. But only after you have taken care of your core-physical portfolio. Then, go ahead and roll the dice.
Video Link: A Gold-Buying Spree: China Ditches U.S. Dollars
The U.S. dollar is depreciating more and more, and that’s putting China’s foreign reserves in jeopardy. But it’s looking to reverse that with a massive gold-buying campaign, and YOU can profit from it…
One of the trends to watch closely is the correlation between the stock market and the price of gold. A rising stock market is a drag on gold and conversely, when the stock market pulls back gold moves up.
Gold also tends to do poorly when bond yields go up, which was the case in 2013. But bond yields have been falling this year, which so far is supportive of gold.
The precious metal also tends to move inversely with the dollar, and the dollar has fallen in 2014. The 80 level on the USDX is the number to watch (currently back above the “line in the sand,” and now sitting at 80.26. Sinclair is confident that 72 is possible by the end of the year. If so, $2,000 gold is also realistic.
Last week, Goldman Sachs published a strongly worded anti-gold article. Yes, that’s the same Goldman Sachs that is known for advising its clients to do one thing and then taking the other side of the trade themselves. Here is what they said per the Zero Hedge article – and a rebuttal by Uncommon Wisdom below…
Goldman Doubles Down Its Hate On The Best Performing Asset Of 2014: Gold – www.zerohedge.com
Submitted by Tyler Durden on 03/21/2014 17:12 -0400
As gold completes its golden cross today and remains by far the best-performing asset of 2014, we thought it intriguing that Goldman Sachs’ commodity group would issue a strong “sell your gold” recommendation… of course, when Goldman’s clients are selling, who is buying? As a reminder, the last time the bank was extremely bearish on gold (about a year ago), our skepticism at the time was well warranted as Goldman was in fact the largest buyer of gold in the following quarter.
Continue reading on Zero Hedge.com.
Here is the article from Uncommon Wisdom Daily:
Goldman Sachs Hates Gold – www.uncommonwisdomdaily.com
Brad Hoppmann | March 21, 2014
Gold is beating almost every other asset class in 2014, even after this week’s pullback. I think this is a sign of huge underlying strength. Not everyone agrees.
The analyst team at Goldman Sachs (GS), for instance, still projects gold bullion to end the year at $1,050. Today I’ll let them make their case, tell you what I think, and then let you decide.
Let’s start by comparing gold’s performance to other asset classes in 2014. The table below shows you the year-to-date percentage change through today for Exchange-Traded Funds representing various market segments. I ranked them from best to worst.
Continue reading on Uncommon Wisdom Daily.com.
The other really significant event on Friday (also covered today by Bill Holter) is
an article published by Zero Hedge titled, Petrodollar Alert: Putin Prepares To Announce “Holy Grail” Gas Deal With China. Here it is, with lead-in comments by Jim Sinclair below. Bill and I believe this could be the first “crack in the dike” that initiates the dollar’s tumble. When countries like Russia and China start trading outside the dollar, especially in gas or oil, it is significant!!!
Going Tit For Tat With Russia – www.jsmineset.com
Posted March 21st, 2014 at 12:39 PM (CST) by Jim Sinclair
My Dear Friends,
Yesterday, Thursday the 20th, the Obama Administration stepped up the sanctions against Russia over Crimea. The sanctions still focus on selected banks and targets in terms of people.
This is a very dangerous “tit for tat” approach. An eye for an eye only ends up with a blind world.
The dollar reacted because that market (dollar) knows Russia has a nuclear economic weapon it can let loose on the West. The US dollar depends on its universal use in settling energy contracts.
This is known as the Petro Dollar and is the true dollar standard. When Nixon came off the gold standard for the dollar he adopted the energy standard for the dollar. Should Russia move away from utilization of the US dollar as the standard, the US dollar will crash into the .71 to .72 level on the USDX.
Western Sanctions against Russia is a game of “Financial Chicken” that the US dollar cannot win.
Here is the article from Zero Hedge:
Petrodollar Alert: Putin Prepares To Announce “Holy Grail” Gas Deal With China – www.zerohedge.com
Submitted by Tyler Durden on 03/21/2014 09:41 -0400
While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the “Holy Grail” energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.
Continue reading on Zero Hedge.com.