Gold Premiums Double In India As Demand Outstrips Supply
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
WAR IS PEACE.
FREEDOM IS SLAVERY.
IGNORANCE IS STRENGTH.
From Reuters:
MUMBAI (Reuters) – Gold premiums doubled in India on Wednesday as suppliers struggled to meet surging demand after a ban on consignment imports, but futures prices fell to their lowest in more than a month as international gold prices fell due to a strong dollar.India, the world’s biggest buyer of gold, now requires importers to pay upfront for inventory, making it difficult for smaller jewelers with lower working capital to source supplies. The government also raised the import duty to 8 percent in May to keep a lid on the surging current account deficit.“There may be some demand from jewelers for raw material,” said Bachhraj Bamalwa, former chairman of All India Gems and Jewellery Trade Federation, adding that premiums charged on London prices shot to $20 an ounce on Wednesday from $8-$10 on Tuesday.“We are unable to supply, though there is demand … we give deliveries after 2-3 days,” said Harshad Ajmera, proprietor of wholesaler JJ Gold House in Kolkata.
Enjoy the gold crash comrades.
Full article here.
WEDNESDAY, JUNE 26, 2013
The Precious Metals Sector
It might help to put what's going on right now into context. The entire sector is in a massive price correction that is almost a mirror image of the one in 2008. The percentage drops for gold, silver and the HUI top to bottom are almost identical to the percentage drop of each in 2008.
Whether or not this is the bottom is anyone's best guess. But when this sector turns around, all hell will break loose on the upside. The BIG difference between now and 2008 is that now, individuals are buying aggressively physical gold and silver bullion coins on every price drop. Back then all individual/retail buyers of gold/silver disappeared for quite some time. An even bigger difference is that China is now buying an amount of gold that is equal to the global monthly mining output. Back then China was not really a factor. When this turns, the physical shortages that are developing and will become apparent will shock most people.
What makes this whole a ordeal a complete joke is that the reason given for gold's demise is the end of QE. Well, how come the stock market keeps going higher? QE has created an absolute monster of a bubble in the stock and housing markets. It will end badly.
My colleague, who has about 35 years of experience in the financial markets, commented earlier today that "you can smell desperation in these markets - desperation to beat down the metals and desperation to prop up stocks.." He is correct. One big problem for them is that Treasury bond market is leaking uncontrollably. Bernanke - in a comment that absolutely floored me but received almost no acknowledgement from the spin-meisters on financial tv - admitted that he's "puzzled" by the higher interest rates since QE3 commenced. "Puzzled?" Hmmm - that's not a good admission for this hubristic little troll who crawled out of Princeton's ivory tower to re-write the laws of economics.
They're desperate alright. This is a mirror of 2008, only the hidden catastrophe coming at us in the global financial system is going to be far worse than what hit in 2008. China's financial system is insolvent and Italy is on the verge of a complete derivatives-fueled financial nuclear melt-down. Comically - yes it's funny - the U.S. Too Big To Fail banks are exposed to both of those situations via off-balance-sheet derivatives. They may be short Italy and China via off-balance-sheet OTC derivatives, but try collecting when the other side defaults. AIG/Goldman x 10.
Please read the following commentary from Patrick Heller. I don't often read his commentary because it reiterates a lot of what I already know. But this particular commentary from him does the best job I've seen of summing up the current situation with the precious metals sector: Gold Drop: An Opportunity?
Unfortunately, this cartoon embodies everything about our current state of affairs in this country vs. what it used to be like:
Whether or not this is the bottom is anyone's best guess. But when this sector turns around, all hell will break loose on the upside. The BIG difference between now and 2008 is that now, individuals are buying aggressively physical gold and silver bullion coins on every price drop. Back then all individual/retail buyers of gold/silver disappeared for quite some time. An even bigger difference is that China is now buying an amount of gold that is equal to the global monthly mining output. Back then China was not really a factor. When this turns, the physical shortages that are developing and will become apparent will shock most people.
What makes this whole a ordeal a complete joke is that the reason given for gold's demise is the end of QE. Well, how come the stock market keeps going higher? QE has created an absolute monster of a bubble in the stock and housing markets. It will end badly.
My colleague, who has about 35 years of experience in the financial markets, commented earlier today that "you can smell desperation in these markets - desperation to beat down the metals and desperation to prop up stocks.." He is correct. One big problem for them is that Treasury bond market is leaking uncontrollably. Bernanke - in a comment that absolutely floored me but received almost no acknowledgement from the spin-meisters on financial tv - admitted that he's "puzzled" by the higher interest rates since QE3 commenced. "Puzzled?" Hmmm - that's not a good admission for this hubristic little troll who crawled out of Princeton's ivory tower to re-write the laws of economics.
They're desperate alright. This is a mirror of 2008, only the hidden catastrophe coming at us in the global financial system is going to be far worse than what hit in 2008. China's financial system is insolvent and Italy is on the verge of a complete derivatives-fueled financial nuclear melt-down. Comically - yes it's funny - the U.S. Too Big To Fail banks are exposed to both of those situations via off-balance-sheet derivatives. They may be short Italy and China via off-balance-sheet OTC derivatives, but try collecting when the other side defaults. AIG/Goldman x 10.
Please read the following commentary from Patrick Heller. I don't often read his commentary because it reiterates a lot of what I already know. But this particular commentary from him does the best job I've seen of summing up the current situation with the precious metals sector: Gold Drop: An Opportunity?
Unfortunately, this cartoon embodies everything about our current state of affairs in this country vs. what it used to be like:
(sourced from jsmineset.com, click on chart to enlarge)
http://www.caseyresearch.com/gsd/edition/fund-manager-vogelzang-on-cnbc-gold-market-rigging-wouldnt-surprise-me-a-bi
¤ YESTERDAY IN GOLD & SILVER
The pre-planned massacre began at 9:00 a.m. Hong Kong time and lasted until the 10:30 a.m. BST London morning gold fix was in. The subsequent rally got cut off at the knees minutes after 9:00 a.m. in New York...and from there got sold down to its absolute low of the day...$1,221.10 spot...which came at 2:45 p.m. EDT in electronic trading. From that point it only recovered a few bucks into the close.
The high of the day was basically the open in New York on Tuesday evening...$1,277.60 spot.
Gold closed at $1,225.20 spot...down $52.40 on the day. Volume was off the charts at 352,000 contracts...minus the June and July roll-overs.
The story was basically the same in silver as well, except its absolute low tick of the day came just moments after the 10:30 a.m. BST morning gold fix in London...somewhere around $18.30 spot. The subsequent rally got hammered flat at the same time as gold...minutes after 9:00 a.m. EDT...and gold closed close to its New York low, which Kitco recorded as $18.43 spot.
The silver price finished the Wednesday session at $18.52 spot...down $1.12 from Tuesday's close. With yesterday being the day that the big traders had to be out of their July futures contracts, gross volume was pretty decent...but net volume was tiny...only 24,000 contracts.
Ted Butler pointed out that, based on the volume difference between gold and silver yesterday, this engineered price decline in all four precious metals was definitely centered around gold. Silver was just taken along for the ride. I'll have more on this in 'The Wrap' further down.
As the charts below show, JPMorgan et al didn't spare the other two precious metals, as they weren't taking any prisoners yesterday.
The dollar index closed on Tuesday afternoon in New York at 82.68...and once trading began on Wednesday in the Far East, the index chopped a bit lower until about 8:30 a.m. in London. Then it rallied in fits and starts until minutes after 11:00 a.m. EDT...where it hit its high of the day, which was 83.00. It held in there pretty good...and only backed off a hair going into the close. The index closed at 82.95...up 27 basis points on the day.
It nearly goes without saying the what the currencies were doing yesterday was totally irrelevant in the face of the massive bear raid by "da boyz".
* * *
You have to ask yourself this question one more time, dear reader...if everyone is selling in a panic, who is buying? It's not the general public, that's for sure...and my answer to this question is the same now as it was the last time I asked it...it's the bullion banks and their financial friends with deep pockets. I'm only speculating at this point, but I'd guess that controlling interest [well hidden...and widely dispersed] in most precious metal mining companies now resides in the strongest of hands. So does a lot of physical metal.
The CME's Daily Delivery Report was not updated until after midnight EDT...and what it showed was quite interesting. In gold, there was a surprisingly large 1,015 contracts posted for delivery tomorrow...along with 45 silver contracts. In gold it was "all the usual suspects"...as JPMorgan [out of its client account] was the short/issuer on 900 contracts...and Barclays issued 92 contracts out of its client account as well. The big long/stoppers were HSBC USA with 357 contracts...JPMorgan Chase with 259 contracts in its in-house [proprietary] trading account...Canada's Bank of Nova Scotia with 184 contracts...Barclays with 142 in it's in-house [proprietary] trading account. And lastly was JPM with 68 contracts in its client account.
I would guess that this activity pretty much wraps up the June delivery month in both metals. Yesterday's Issuers and Stoppers Report is definitely worth a look...and the link is here.
I was expecting the worst when I checked GLD and SLV yesterday...and what I found was a big surprise. There were no reported changes in GLD...and an authorized participant added 289,506 troy ounces to SLV. It wouldn't surprise me if metal was withdrawn both today and Friday...but I was still somewhat taken aback by yesterday's data.
There were no reported sales by the U.S. Mint.
There wasn't much activity in silver over at the Comex-approved depositories on Tuesday...as nothing was reported received...and only 1,986 troy ounces were shipped out. Here's the link to that 'action'.
In gold...64,177 troy ounces was reported shipped in...and nothing was shipped out. Almost all the activity was at Canada's Bank of Nova Scotia depository. Here's the link.
It was another big day at the bullion store yesterday. We sold the same amount of silver as we did on Tuesday...a lot. But we sold six times as much gold as we did then. It was more than busy all day long...and the phones were very steady as well.
Here's a chart the Nick Laird slid into my in-box late last night...and it requires no further embellishment from me.
selected news and views.....
Dollars Vanish as Tourists Grab Argentine Bondholder Cash
Argentina's supply of dollars it needs to pay bondholders is dwindling at the fastest pace since the depths of the nation’s economic crisis 11 years ago.
Foreign reserves have plunged 12.2 percent this year to $38 billion, the biggest decrease since 2002. The holdings are now at a six-year low and will equal just 25 percent of Argentina’s $142 billion of foreign debt by the end of 2013, according to Credit Suisse Group AG. The financial strain is adding to the nation’s borrowing costs as the extra interest investors demand to hold Argentina bonds over Treasuries rose 2.3 percentage points this year, the most in emerging markets after Venezuela, to 12.21 percentage points, according to JPMorgan Chase & Co.
Since Fernandez banned buying dollars for everything but travel since July, the nation has posted a deficit from tourism revenue of $223 million this year through April, a 10-fold increase from a year ago, as more Argentines went abroad to buy dollars at a cheaper exchange rate and the nation attracted fewer visitors.
This interesting news item was posted on the Bloomberg website during the Denver lunch hour yesterday...and I thank Marshall Angeles for sending it.
Irish 'rage' after bank cheated on multi-billion bailout
Irish leader Enda Kenny has said he understands "the rage and the anger" of Irish people on Monday (24 June) following a leak of taped conversations by two Anglo-Irish bank bosses which indicate the Irish government was conned into propping up the bankrupt lender.
The taped conversations, obtained by the Irish Independent newspaper, between John Bowe and Peter Fitzgerald, who led Anglo-Irish's capital markets and retail banking arms, respectively, indicate the Irish government was duped into pumping €7 billion of emergency cash into the bank on the assumption that it would plug the lender's funding crisis.
But the €7 billion figure was just a ruse to get the government to put "some skin in the game," with the bankers assuming that politicians would have no choice but to provide further emergency funding once they had been "pulled in".
This story, filed from Brussels, was posted on the euobserver.com Internet site early yesterday morning Europe time...and it's another offering courtesy of Roy Stephens.
Italy Denies Risk to Public Finances From Debt Derivative Deals
Italy's treasury denied on Wednesday its use of derivatives as a hedge on its huge debt pile posed any risk to public finances, following reports the country faced billions of euros in potential losses from one set of contracts.
The Financial Times and La Repubblica said the eight contracts, restructured at the height of the euro zone crisis in 2012, could result in combined losses of around 8 billion euros ($10.5 billion) based on market prices on June 20.
This Reuters story was picked up by CNBC early yesterday morning...and I thank U.A.E. reader Laurent Patrick Gally for finding it for us.
PBOC Says It Will Ensure Stability of China Money Market
China’s central bank said it will use tools to safeguard stability in money markets and tight liquidity is set to ease, giving the first official signs of relief for a cash squeeze in the world’s second-largest economy.
The People’s Bank of China has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets, according to a statement posted to its website yesterday. It also called on commercial banks to improve their liquidity management.
The statement is the first public confirmation of central bank action to ease a crunch that sent China’s overnight repurchase rate to a record last week and came hours after Ling Tao, deputy head of the PBOC’s Shanghai branch, said liquidity risks were controllable. Premier Li Keqiang is seeking to wring speculative lending out of the nation’s banking system after credit expansion outpaced economic growth.
This Bloomberg news item, filed from Beijing, was posted on their Internet site early on Tuesday evening...and I found it embedded in yesterday's edition of theKing Report.
Three King World News Blogs
1. John Hathaway: "Physical Gold Market in Disconnect as Premiums Hit Record". 2. Hong Kong fund manger William Kaye: "The Price Damage is Almost Beyond Belief at This Point". 3. Pierre Lassonde: "A Legend Speaks Out About the Gold and Silver Takedown".
The interview with William Kaye is the most important of the three.
Peter Grandich: Gold [$1,225] Bottom in Sight
To anyone still favoring gold you may feel as I do; totally beaten up, defeated and like 12 years went out the window. Congratulations!!!
The parties who were behind what will go down in history as one of the greatest take downs of any market that began in earnest back in April, have pretty much now achieved everything they wanted. Gold and silver are bruised, battered and in shambles. One either feels its a loss cause and/or will not see the highs of 2011 again in their lifetime. The bandwagon calling gold dead, a relic and never to shine again is overloaded and busting at the seams (even though most on that bandwagon missed most if not all the ride up and will miss the next leg as well).
GATA supporter Peter Grandich tells it like it is in this short commentary that was posted on his Internet site yesterday.
Gold Drops Below Its Average Cash Cost
As shown two months ago, the marginal cost of production of gold (90% percentile) in 2013 was estimated at $1300 including capex. Which means that as of a few days ago, gold is now trading well below not only the cash cost, but is rapidly approaching the marginal cash cost of $1104.
This short and must read article...with a couple of excellent charts embedded...was posted on the Zero Hedge Internet site yesterday. I thank reader Matthew Nel for bringing it to my attention...and now to yours.
India's RBI Restricts Lending Against Gold, Gold linked ETFs, Mutual Funds By Rural Banks To Curb Heavy Imports
The Reserve Bank of India's, or RBI, offensive against gold continued Tuesday when it imposed restrictions on the country's regional rural banks, or RRBs, for lending money against gold, in an attempt to discourage demand for the precious metal and reduce its imports.
“It is advised that while granting advance against the security of specially minted gold coins sold by banks, RRBs should ensure that the weight of the coin(s) does not exceed 50 grams per customer,” RBI said in a statement.
The rule also applies to advances against units of gold ETFs and mutual funds, the central bank said. The bank also restricted the loan amount to within the limit approved by a rural bank's board, for loans against gold ornaments, gold jewelry and gold coins weighing up to 50 grams.
This short, but very interesting read, was posted on the International Business Times website very early yesterday morning India Standard Time...and my thanks go out to reader Mark Hagen for bringing this article to our attention. There's a more extensive story on this posted at the bullionvault.comInternet site. It's courtesy of Elliot Simon...and the link to that is here.
Fund manager Vogelzang on CNBC: Gold market rigging 'wouldn't surprise me a bit'
Gold market manipulation got a minute of credibility yesterday afternoon onCNBC's "Hard Money" program with the comments of Boston Advisors CEO Michael J. Vogelzang, who said:
"The big elephant in the room is the central governments that own gold, and they can jerk this thing around any way they want. So is it beyond reason to think that they are manipulating the price of gold to keep people in the equity markets? Wouldn't surprise me a bit. ...
"Why would it surprise you that they manipulate the price of gold when they clearly manipulate the price of the bond market every day, right? It doesn't take a huge leap of logic to say that.
There's much more in this GATA release than the link to the above video clip...and this dispatch is a must read.
¤ THE WRAP
The pattern so far [yesterday] fits the profile that features disproportionate price drops on very light volume at the thinnest of times of market liquidity. Then trading volume increases following the price drop – the clearest current sign of price manipulation. It would be one thing if prices declined because of sudden widespread investor selling, but quite another that the investor selling only comes after prices have been rigged lower. This smash started at around 9 PM NY Time when little real trading occurs and few markets are even open. In a relatively short period of time, both gold and silver prices were put down substantially. The only twist to this intentional price smash so far is that the volume is proportionately much heavier in gold than in silver from what usually occurs. - Silver analyst Ted Butler...26 June 2013
So...are we done yet?
Beats me. I thought that we were all finished as of last Friday morning in Hong Kong...but JPMorgan et al had other ideas. Let's see what happens once the new month and new quarter begins on Monday.
As Ted Butler pointed out in his quote from his mid-week commentary to his paying subscribers, yesterday's price action in all four precious metals was all about gold for a change...and the other three precious metals [particularly silver] had to be smashed as well, or the bear raid on gold would have stood out like the proverbial sore thumb that it already was. Net Comex trading volume in gold was fifteen times heavier the net trading volume in silver. That sort of ratio has never occurred before in a bear raid of this size...ever.
I'd be prepared to bet serious coin that the most power financial entities in the world have been involved in this orchestrated take-down that started in mid April...the Fed, the ECB, the BIS, JPMorgan Chase and the other New York Bullion banks. They were buying everything that fell off the precious metals table during that time period.
I agree with what Hong Kong fund manger William Kaye had to say in the KWN interview further up in today's column...and that is "that a “criminal” syndicate of banks has now positioned themselves for a massive and spectacular rise in the price of gold and silver." As I keep saying, it's only the timing of this event that is in question. Mr. Kay thinks that "it's coming very soon."
So do I.
Here are the 1-year charts for both gold and silver. The platinum and palladium charts are similar.
(Click on image to enlarge)
(Click on image to enlarge)
It's too bad that this all this price action took place on a Wednesday, as it won't be in tomorrow's COT Report...and I'm sure that didn't happen by accident, either.
In overnight trading in the Far East on their Thursday, a decent rally in all four precious metals got cut short around 11:00 a.m. Hong Kong time...and nothing much has happened since, including early trading in London. Gold volume is already very chunky as I hit the 'send' button on today's column at 5:15 a.m. EDT...just over 49,000 contracts...and I can tell that most of it is of the high-frequency trading variety. Silver's net volume is about average, with the majority of it now trading in the new front month, which is September. The dollar index isn't doing much.
Today is the last day for traders to switch out of the July contract...and the CFTC will post First Day Notice numbers for silver on their website late this evening EDT...and I'll have that for you in this space tomorrow.
I'm only speculating at this point, but I'll be surprised if much price excitement is allowed [at least to the upside] between now and the close of trading on Friday...but I've been wrong before.
That's more than enough for today...and I'll see you here tomorrow.
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