The Gold Story; Alt. Data in Lieu of Price

Jim H
By Jim H on Sun, Sep 25, 2016 - 10:59am

You gotta love SRSRocco... aka Steve St. Angelo.  His commentary is data driven.  This particular chart shows that something has changed... and while we can argue about what underlies the trend change, we don't need to argue about what it means.  It means that people, investors, or entities in the West want the Gold.  The physical Gold.. and they want it here, in the US.  They want it here, or they need it here.  

With the complete corruption of the price discovery mechanism in the paper markets.. you will not necessarily get price signals that tell of the impending Gold price reset.. driven by the corresponding collapse of paper leverage and promises.  The truth is out there if you are willing to see it.... 

 

us-gold-imports-from-switzerland-jul-2016-annuallynew

1 Comment

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
paper gold

With the complete corruption of the price discovery mechanism in the paper markets.. you will not necessarily get price signals that tell of the impending Gold price reset.. driven by the corresponding collapse of paper leverage and promises.  The truth is out there if you are willing to see it....

If we say that 60 tons imported during 2016 represents a fraction of the increase in US gold demand, the amount of paper gold created during that time by the commercials represents the rest: about 275k contracts, or about 855 tons of paper gold.  I think you could definitely argue the price has been suppressed by the creation of those 855 paper gold tons, especially when you compare it against the 60 tons imported.

Presumably, if that paper demand had to be met with actual gold, imports would be perhaps 15x higher.

But I do question your logic.  If people continue to accept paper gold as a substitute (and evidence says they do: 855:60), there is no real progress towards a reset.  Certainly the price jump if/when the reset occurs will be 855 tons larger now, but the additional paper brings that day no closer.

The aggregate increase in demand for gold (even paper gold) is a signal of sorts, as is the $300 jump in price.  But before we can get a repudiation of paper, I think it will take some governments imposing capital controls, outlawing cash, some actual bail-ins of major financial institutions, or other acts of severe financial repression.  Something has to drive the public to start specifically distrusting the easy access banks and governments have to the gold holdings of the ETFs and the COMEX, and to start wanting to keep the gold in their hot little hands instead.  Increase of cash in circulation would also be another signal.

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