Monday, January 6, 2014

Gold flash crash ( 30 $ ) on January 6, 2014 ( velocity logic circuit today's excuse to run stops and scalp traders - note the trades were not cancelled ) ..... Once the scalp was over , prices for gold and silver recovered all of the crash losses ! Bill Holter covers the major story of last week ( Bundesbank is holing an empty bag as their gold deposited at the New York Fed is long gone.....Koos Jansen's excellent repor covering China huge appetite for gold in 2013 ! Eric Sprott sees 2014 as the year gold and silver breaks prior nominal highs , believes we could see some sovereign banking systems fail - we shall see what comes to pass !

Gold Flash Crashes, Halts Trading As "Velocity Logic" Circuit Breakers Triggered

Tyler Durden's picture

UPDATE: Gold futures are back in the green for the day...
and Bitcoin is back under $1000...

Rumors of a 'fat finger' abound from the gold futures pits but the precious metals complex just collapsed instantaneously... and the market was halted for the now traditional 10 seconds as circuit breakers were triggered, only this time instead of Stop Logic the event was "Velocity Logic" or lack thereof. Of course, the timing is perfect as it occurs right before the first POMO of the new year.

With massive volume flying though the futures markets...

Taking us back near 2014 lows...

Courtesy of Nanex, the clear gold trading halt shown below:

Some more pretty charts showing the slam:

Meanwhile, silver...
and the ETF:
So... a New York Fed fat finger?

06 JANUARY 2014

NAV Premiums of Precious Metal Trusts and Funds - First Gold Halt of 2014

Nanex documents the first trading halt in gold, and the first smash-and-grab bear raid of 2014, here.
"On January 6, 2014 at 10:14:13, Gold futures plummeted $30 on heavy volume. About 4,200 contracts send gold futures prices tumbling $30 and trigger a 10 second trading halt. "

1. February 2014 Gold (GC) Futures


Monetary metals will take revenge on manipulators, Rosen tells King World News

7:27p ET Tuesday, January 7, 2014
Dear Friend of GATA and Gold:
This will be the year when the monetary metals break free and take revenge on the market manipulators, market letter writer Ron Rosen tells King World News today. "All these Ivy League graduates think they can defeat the natural forces of the markets," Rosen says, "but in the end they will be slaughtered and they will take the entire Western world down with them. The West is simply committing economic suicide." An excerpt from the interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Richard Russell: Is U.S. avoiding gold revaluation because it has lost its gold?

11:49p ET Monday, January 6, 2014
Dear Friend of GATA and Gold:
The dean of the American financial letter writers, Richard Russell, speculates today that the United States has been avoiding a traditional method of reliquefying its government, an upward revaluation of gold, because it no longer really has its gold reserves.
Russell concludes: "If it's true that the United States has gotten rid of a large portion of its gold, this could turn out to be one of the greatest economic scandals in U.S. history. Technically, gold is part of the Treasury holdings and is owned by the citizens of the United States. It's our gold; show it to us. There is something funny about why they won't proceed with an audit. Something strange is going on."
Russell's commentary is reprinted at King World News here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Chinese FX expert says gold is a currency that China must dominate

9:45a ET Tuesday, January 7, 2014
Dear Friend of GATA and Gold:
Gold researcher and GATA consultant Koos Jansen today discloses a speech given to a gold conference in Beijing last year by Tan Ya Ling, president of the China Foreign Exchange Investment Research Institute, arguing that gold is a currency and and potentially the world reserve currency and that China needs to dominate the world gold market. An English translation of the speech is posted at Jansen's Internet site, In Gold We Trust, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Another powerful indicator of central bank intervention against gold

2:20p ET Monday, January 6, 2014
Dear Friend of GATA and Gold:
Interviewed today by King World News, GoldMoney founder and GATA consultant James Turk provides a chart showing that gold's longstanding correlation with the Standard & Poor's 500 stock index and the Federal Reserve's balance sheet broke down last year, a powerful indicator of central bank intervention in the gold market. For the correlation to be restored, Turk writes, gold would have to double in price over the next year. Will central banks be working to restore that correlation or will they continue to strive to break it? Turk's interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

India considers easing gold import restrictions

By Manoj Kumar
Monday, January 6, 2014
NEW DELHI -- Indian officials are in discussions to cut a record high import duty on gold and relax rules on exports, government sources said, after the measures helped narrow the country's trade deficit and now threaten to encourage smuggling.
India imposed the curbs last year when overseas gold purchases -- the country's second most expensive import after oil -- pushed its current account deficit to a record and undermined the rupee currency.
With three duty hikes last year to a record 10 percent and onerous restrictions tying purchases to exports, official arrivals shrank almost 90 percent in the six months to November, helping China displace India as the world's top gold buyer.
The decision to cut the import duty is likely to be taken any time this month, said one of the government sources, who has direct knowledge of the deliberations but did not want to be named because of the sensitivity of the issue.
... For the complete story:

The Price Of Gold: The Fed's 60 Seconds Of Desperation

Forget the myths that the media's created about the Fed.  The truth is, these are not very bright guys and things got out of hand. Follow the money...just follow the money.  - My paraphrase of "Deep Throat" from "All The President's Men"

The price of gold was remarkably smashed $35 in the space of 60 seconds at 10:14 a.m. NY time this morning.  12,000 contracts hit the market almost all at once.  To put this size in context, on Friday a little over 107,000 Feb contracts traded during the entire 23 hour Globex system session.  In other words, today at 10:14 a.m., a little over 11% of Friday's total volume traded in the space of  1/1380th of the entire Globex session for a given period.

The hit came from nowhere and halted a strong rally in the price of gold that began last night in Asia.  Concurrently, the dollar was selling off hard, as was the S&P 500.  There was no apparent news or event that would have triggered the price smash:

The price of gold as write this has since recovered about 90% of the price hit.  Silver, which was giving all indications of behaving like a runaway freight train before the hit, has recovered about 2/3 of its price-ambush.

Mere manipulation by desperate criminals?  

This is the unmistakable sign of desperation.  Desperation to keep a lid on the price of gold in an attempt to make the public believe that everything is ok in this country and with the U.S. dollar.  But we all know otherwise...

I have no doubt that the hit was used by JP Morgan to get more long Comex gold futures and to induce a flood of GLD share selling.  The GLD shares will be turned into the GLD Trust either today or tomorrow and used to remove more gold.  I bet within the next couple of days, today inclusive, we'll see a large withdrawal of gold from the GLD Trust.  For the record, selling of GLD shares does not trigger the removal of gold  Gold can only be removed by the banks who exchange shares for gold.

And now Bill Holter on the big Bundesbank story!!

(courtesy Bill Holter/Miles Franklin)

Monkey Business!

Over the weekend GATA reported that Lars Schall has had correspondence with the Bundesbank regarding Germany's planned repatriation of gold.  As you know, Germany has reported that 37.5 tons were delivered last year which is about 50 tons shy of what was the announced plan last January and was expected to be delivered over the course of 2013.  Peter Boehringer (the equivalent of GATA's Chris Powell here in the States) asked many questions of the Bundesbank, the most central being why was this gold "recast" before being returned ?

  As there has not been an audit of Ft. Knox since the 1950's, there has never been an audit nor bar list made public since this German gold was claimed to have been deposited with the NY Fed back in the 1950's and 60's.  This is a can of worms that has already been opened and any "answer" will only lead to more questions.  So why exactly "would" the gold need to be recast before sending it back?  Never mind the obvious question that we've already asked, why will it take up to 8 years to send them their gold?  You see, gold has a "fingerprint".  Once it is refined down to "99.999" pure...the fingerprint is erased.  For example, the "coin melt" that came from the 1934 confiscation has a fingerprint of 90% purity.  The gold that the Soviet Union was selling back in 1990 was 89% and had the Czar's stamp on it which was a dead giveaway that they were out of gold (money), they collapsed within 6 months and it was foretold by this "fingerprinted gold".

  For these 37.5 tons to be recast brings up the question of where did it come from.  Was this the original gold that was safe kept?  Or was the German gold leased out 100 times over and is this gold from another source?  Is this like the bank employee or even retail cashier who stole from the register with the intent of replacing it before anyone found out?  This is a very legitimate question because we know for a fact that demand has outstripped supply for 20 years or more...and the supply had to come from somewhere, right ? 

  If the gold was held on an "allocated" basis then the bars should at most need a feather duster to clean them up before shipment...unless they are not the same bars.  There is no other explanation to this, the NY Fed would have absolutely zero incentive to go through the process of recasting (refining?) even 1 ounce if they were shipping what was originally stored.  Germany would not, should not expect their gold back in any form other than how it was originally delivered to the NY Fed in the first place. 

  I call "monkey business" on this one because there are just too many questions.  The questions collectively ALL have the same obvious answers.  All of these obvious answers point to the same conclusion.  The German gold that is being delivered is not the same gold that was supposedly deposited over 50 years ago.  The fact that their 300+ tons (20% of the supposed total) will take over 8 years to deliver means that it's not just sitting in a corner collecting dust and waiting patiently to be has already been mobilized and "used" years ago.  The conspiracy wackos who used to be laughed at with their (our) farfetched questions and claims had merit after all...and all along the way ! 

  Please remember that even though this gold that has been delivered no longer has any fingerprint left to it, foreigners can (will) eventually come to the obvious conclusion.  The process may take longer and be far more complex and obfuscated than the Soviets delivering gold with the Czar's stamp on it...the result will be the same.  We live in an era where everything is supported by confidence, how "confident" will anyone be if (when) it is known that "the gold is long gone"?  This is a very serious question and is the very core reason I have been screaming "buy" gold for over 15 years no matter what the price has been.  Any price between $252 and $1,920 over the last 15 years has been too low by orders of magnitude.  You could in my opinion add a "0" to the price of gold and silver...and still possibly not be the correct price to truly clear the market.

  We will not know exactly how much "monkey business" has already gone on until the music stops.  Whatever levels that gold and silver do finally settle out to when the dust clears will be an indicator as to exactly "how much".  All you need to do is read the questions that are being asked and then use your own common sense.  Any and all questions speak to one thing, there has been fraud.  Gold and silver in their physical forms are "anti fraud" and will be priced accordingly after the revelation.  

Regards,  Bill H.

Koos Jansen gives a terrific report on total Chinese demand for physical gold in 2013:

(courtesy Koos Jansen/GATA)

Unprecedented Total Chinese Gold Demand 2013

Friday the numbers were released on total Chinese gold demand for 2013. Total demand can be measuredby the amount of physical gold that is withdrawn from the vaults of the Shanghai Gold Exchange. In the last full trading week (#52, December 23 – 27) of 2013 there were 53 tons of physical gold withdrawn, which brings the yearly total to 2181 tons. Since November demand for physical gold has surged, weekly withdrawals have been above average, presumably transcending weekly global mine production. Not only did we observe strong demand at the SGE, it was also perceived in an incredible shopping spree at jewelry shops around new year. From Want China Times:
….Many Chinese gold buyers have been happy to see the price drop as this is traditionally peak season for gold purchases before the Lunar New Year holiday and the recent slump will allow them to buy gold at relatively low prices.

“It is a good deal. It can be seen as an investment when gold prices go up in the future,” a customer said. 

The sales had surged by at least 20% in December 2013 from a month earlier and were up by 15%, compared with the same period in 2012.

Of the sold items, products related to the upcoming Year of Horse were the most sought after in stores.

Beijing gold rush, Chinese gold demand 2013
January 1, 2014 Beijing

Beijing gold rush 3, Chinese gold demand 2013
January 1, 2014 Ningbo, Zhejiang

Beijing gold rush january 2014, Chinese gold demand 2013
January 1, 2014 Beijing

The Real Asset Co. Buy Gold Online

Throughout week 52 GOFO has remained negative in London, GLD lost 4.5 tons and on the Shanghai Gold Exchange premiums increased to 2 %.

GOFO july december 2013

Overview Shanghai Gold Exchange data week 52

- 53 metric tonnes withdrawn from the SGE vaults in week 52 (23-12-2013/27-12-2013)
- w/w  - 3.95 %
- 2181 metric tonnes withdrawn in 2013
- weekly average 41.94 tonnes in 2013


For more information on SGE withdrawals read thisthisthis and this.

SGE weekly gold withdrawals week 52 2013, Chinese gold demand 2013

This is a screen dump from Chinese SGE trade report; the second number from the left (本周交割量) is weekly gold withdrawn from the vault, the second number from the right (累计交割量) is the total YTD.

Shanghai Gold Exchange gold withdrawals week 52 2013, Chinese gold demand 2013

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE premiums week 52

Below is a screen dump of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

Shanghai Gold Exchange gold premiums week 52 2013

Overview Chinese Gold Demand 2013

2013 has been a spectacular year wherein the pice of gold fell 29 %, but Chinese gold demand has been unprecedented and may have reached, PBOC purchases included, over 2500 tons. Exposing a disparity between the gold price set by derivatives and supply and demand for the underlying good. The divergence strongly hints at price manipulation, of which the Chinese would have been the largest beneficiaries. China has $3.5 trillion in foreign exchange (of which at least 1.7 trillion denominated in USD) and is aware the US is forced to devalue their currency; evaporating China’s reserves. For this reason China has a strong incentive to diversify away from the USD into gold. Hence the enormous physical gold purchases in 2013.

SGE yearly vs COMEX 2006 2013

In January 2013 USGS forecasted global mining production would be 2700 tons for the year, but due to the drop in the gold price this may turn out significantly lower as mines were forced to shut down.

A lot of the gold sold on the SGE was sourced via Hong Kong and Switzerland from the UK. The trade numbers from these countries from the last months haven’t been published yet, though in the first ten months of 2013 the UK has net exported 1199 tons (annualized 1439 tons) to Switzerland, Switzerland has net exported 779 tons (annualized 935 tons) to Hong Kong, and Hong Kong has net exported 957 tons (annualized 1148 tons) to the mainland. Hong Kong itself net imported 510 tons of gold over this period, annualized 612 tons. The UK’s primary seller was the world’s largest ETF holding GLD, whose inventory dropped by 551,7 tons.

GLD 12 2013, Chinese gold demand 2013

UK Gold Trade 2008-2013 10-13

Switzerland Gold Trade 2013-Q3

HK Swiss gold trade 10-2013, Chinese gold demand 2013

Hong Kong - China gold trade 10-2013, Chinese gold demand 2013

HK + China net inflow 10-2013, Chinese gold demand 2013

2014 will be an exciting year; Chinese gold demand is not likely to slow down but supply is running dry. By the way, the rest of the world will also demand gold as all developed economies in recent years have been kept alive by the printing press, whereby the price mechanism is completely destroyed, a path of no return nor good outcome. Stretching the end of the global fiat experiment.

The Real Asset Co. Buy Gold Online

Gold’s direction will turn in 2014 resuming its bull-market (drive a new monetary order). It will be fascinating to see how this will play out as the floating supply is virtually gone.

Our friend Eric Sprott, the man who nailed silver’s move from $18 to $49.73 in late 2010 (when he predicted silver would rise to $50 in the next 6 months) has made another bold prediction for gold and silver for 2014: Gold will break $2,000, and silver will surpass its previous all-time nominal high of $50.
The price of gold and silver will both hit new highs in 2014. The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy.  They know a day of reckoning is coming, and they are setting up for it. . . . I am convinced some sovereign banking systems fail in 2014.
Eric Sprott’s full interview with Greg Hunter is below: