Monday, April 21, 2014

Gold news and views - April 21 , 2014 -- China Goes Dark: PBOC To Keep Goldbugs Clueless About Its Gold Buying Spree ( Has Koos Jansen been too uncomfortably correct for the PBOC ) ...... Various GATA articles on QE / chinese gold demand / manipulations of different types ..... Gold Daily and Silver Weekly Charts - Lies, Damn Lies, and an Option Expiration

GATA Items......



If QE works so well, von Greyerz asks, why don't they do a lot more?

 Section: 
1:47p ET Monday, April 21, 2014
Dear Friend of GATA and Gold:
In an interview today with King World News, Swiss gold fund manager Egon von Greyerz offers what may be the best mocking yet of "quantitative easing."
"It amuses me," von Greyerz says, "that the Bank of England has just published a paper stating that QE has raised growth in the United Kingdom by 3 percent or 50 billion pounds. Isn't this wonderful? Supposedly money printing raises GDP in real terms. So the U.K. has had QE of 375 billion pounds, which has raised real growth by 50 billion pounds. So why don’t they print 375 trillion instead? This way the U.K. would be the biggest and most prosperous economy in the world."
Von Greyerz's interview is excerpted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



Sprott cites GATA consultant on Chinese demand, notes paper bombing of gold

 Section: 
1:40p ET Monday, April 21, 2014
Dear Friend of GATA and Gold:
Interviewed by Sprott Money News, Sprott Asset Management CEO Eric Sprott cites gold researcher and GATA consultant Koos Jansen and GoldMoney's Alasdair Macleod in support of his belief that the World Gold Council's estimates of China's gold demand are grossly understated. Sprott also discusses last week's manipulation of the gold market via the dumping of a huge amount of paper gold. The interview is 10 minutes long and can be heard at the Sprott Money Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



J.S. Kim: High-frequency trading rigs far more than gold and silver

 Section: 
7:30a ET Monday, April 21, 2014
Dear Friend of GATA and Gold:
Financial letter writer J.S. Kim argues today that investment banks use high-frequency trading not only to suppress the monetary metals markets but to rig all other major markets. Kim's commentary is headlined "Why Bankers Who Use HFT Algorithms Impede Life, Liberty, the Pursuit of Happiness" and it's posted at his Internet site, SmartKnowledgeU.com, here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.




LBMA defense of London gold fixing distracts from central bank 


involvement

 Section: 
10:03p ET Saturday, April 19, 2014
Dear Friend of GATA and Gold:
The March edition of the London Bullion Market Association's magazine, The Alchemist -- presumably named for the ability of LBMA members to turn gold into paper -- carries a long defense of the daily London gold price fixings against complaints that they are likely manipulated by their participating bullion banks.
The defense, written by Peter Fertig, director of QCR Quantitative Commodity Research Ltd., maintains that there are plausible explanations for the aspects of the fixings that have been called suspicious by Professor Rosa Abrantes-Metz of New York University's Stern School of Business. Plausible explanations or not, Fertig declines to explain the necessity of the peculiarly closed and elite mechanism of the London fixes, a mechanism not used and indeed not allowed in any other commodity or currency market.
Fertig acknowledges only briefly that peculiarities in London gold fix prices may have something to do with central banks. "During the period under investigation," Fertig writes, "many central banks had been sellers of gold."



Indeed, probably every bullion bank participating in the London gold fixes is used by various central banks as cover for surreptitious intervention in the gold and currency markets. At least that is the powerful implication of the secret March 1999 report of the staff of the International Monetary Fund, which found that Western central banks are determined to conceal their gold swaps and leases to facilitate their surreptitious interventions:
How much more useful Fertig's research would be if it examined whether the bullion banks in the London fixes get gold or pledges of gold from central banks and function in effect as the agents of central banks in the gold market. But like everyone else connected with the London gold fix, and like all mainstream financial news organizations themselves, Fertig can't put a single critical question to central banks about their participation in the gold market. The first rule of mainstream analysis of the gold market is never to question the market's primary participants. This turns all such analysis into mere distraction, which usually seems to be the objective.
At least Barrick Gold, once the big hedger among gold miners, admitted a decade ago that it had become an agent of central banks when it borrowed their gold and sold it into the market:
Those who advocate free and transparent markets in the monetary metals and limited government rather than totalitarian government may hope that the class-action lawsuits starting to be brought against the London gold-fixing banks eventually will compel them to claim the same immunity Barrick claimed when it was sued for gold market rigging. That is, a claim of immunity as the agent of central banks, a claim that will put responsibility for gold market manipulation where it most belongs.
Fertig's essay is titled "Has There Been a Decade of London PM Gold Fixing Manipulation?" and it's posted in PDF format at the LBMA's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.



China allows gold imports via Beijing, sources say, amid reserves buying talk

 Section: 
By A. Ananthalakshmi
Reuters
Monday, April 21, 2014
SINGAPORE -- China has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, in a move that would help keep purchases by the world's top bullion buyer discreet at a time when it might be boosting official reserves.
The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong's pole position in China's gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.
China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong, which last year supplied $53 billion worth of gold to the mainland.
One of the reasons why China could be encouraging more direct imports was because it wanted to avoid taking the Hong Kong-to-Shenzhen route that makes its gold purchases public, while China wants to keep the trade a secret, sources said.
"There is a view that why should people know how much China is buying," said one of the sources at a bullion banking operation in China. "With the Hong Kong route, there is a lot of transparency and people can easily monitor what is going in and out." ...
... For the full story:




TF Metals Report: The empty vaults of London

 Section: 
8:15p ET Sunday, April 20, 2014
Dear Friend of GATA and Gold:
JPMorganChase traded its short position in gold for a long corner not to profit by squeezing the market but to keep unloading metal to manage the price, the TF Metals Report's Turd Ferguson writes today. The exchange-traded fund GLD is still being drained to supply Asia with metal, Ferguson adds, but the supply seems tighter than ever. Ferguson's commentary is headlined "The Empty Vaults of London" and it's posted at the TF Metals Report's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.




http://www.zerohedge.com/news/2014-04-21/china-goes-dark-pboc-keep-goldbugs-confused-about-its-gold-buying-spree



China Goes Dark: PBOC To Keep Goldbugs Clueless About Its Gold Buying Spree

Tyler Durden's picture





 
One of the more perplexing divergences that have plagued precious metal watchers and goldbugs when it comes to the great "black box" that is the world's biggest buyer of gold in recent years - China(which overtook India after that particular country established unprecedented capital controls to block the import of gold) is that on one hand China has been allowing the outside world to glimpse its ravenous buying of gold through the Hong Kong-Shenzhen corridor (where nearly 70% of the Chinese gold jewellery business is located) since Hong Kong customs provides a full breakdown of how much gold it exports into China, yet on the other the PBOC has refused to update its official gold holdings in exactly five years.
Recall that it was Zero Hedge who before anyone else in September 2011 disclosed not only what the reasons were for China's historic, and largely under the radar, gold buying spree - namely that while consumer demand for gold would rise, it was mostly the Chinese central bank that was the origin of China's seemingly endless demand. We got tangential confirmation as much when in January Shanghai Daily reported the PBOC was expected to announce its gold holdings have "more than doubled." Of course considering China's official gold inventory is a paltry 1054 tons, this would hardly surprise anyone at this point.
So now that everyone is breathing down the PBOC's neck to finally reveal - with a five year delay - just how much gold it does hold, the Chinese central bank has done a U-turn on its indirect transparency and, as Reuters reports, has begun allowing gold imports through its capital Beijing, sources familiar with the matter said, "in a move that would help keep purchases by the world's top bullion buyer discreet at a time when it might be boosting official reserves."
"We have already started shipping material in directly to Beijing," said an industry source, who did not want to be named because he was not authorised to speak to the media. The quantities brought in so far are small, as imports via Beijing have only been allowed since the first quarter of this year, sources said.
But are about to get much, much bigger.
In a nutshell, going forward China can continue importing hundreds of tons monthly, but without Hong Kong being the main transit route and without its monthly export updates, nobody will have a concrete number of just how much gold China is importing.
The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong's pole position in China's gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.
China does not release any trade data on gold. The only way bullion markets can get a sense of Chinese purchases is from the monthly release of export data by Hong Kong, which last year supplied $53 billion (31 billion pounds) worth of gold to the mainland.
Finally, with a five year delay, the PBOC has finally woken up not only to the data disclosure...
One of the reasons why China could be encouraging more direct imports was because it wanted to avoid taking the Hong Kong-to-Shenzhen route that makes its gold purchases public, while China wants to keep the trade a secret, sources said.

"There is a view that why should people know how much China is buying," said one of the sources at a bullion banking operation in China. "With the Hong Kong route, there is a lot of transparency and people can easily monitor what is going in and out."

Another source said the move to open up Beijing "is partly driven by the fact that Hong Kong is perhaps a little too transparent", but it is also to accommodate upcoming free-trade zones and non-jewellery demand.
... but the discrepancies:
Besides the 1,160 tonnes of gold imported from Hong Kong last year, China had about 428 tonnes of local production. The WGC has said Chinese demand in 2013 was 1,066 tonnes, leaving industry guessing about the "surplus" of around 522 tonnes, not including the amount of direct imports.

The central bank last disclosed its gold reserves in 2009, when it announced that its bullion holdings had risen to 1,054 tonnes from 600 tonnes in 2003.
Which goes back to the original question: just how much gold does the PBOC own, and what other catalyst is it waiting for before it provides the much anticipated update:
Central banks tend to be very secretive about their gold purchases and sales because prices are extremely sensitive to their trades. Rumours last year of Cyprus selling its gold reserves to prop up finances sent the metal down more than 10 percent over two days - its biggest such decline in 30 years.

...

"The major increase in gold supply to the Chinese market in 2012 and especially 2013 could be partly related to large-scale official purchases," according to a Klapwijk-led survey for the WGC that was released last week.

The report said while a part of the surplus was being used for commodity financing deals, some of it could be for the PBOC as well.

Rumours on PBOC's gold reserves range from 3,000 tonnes to 5,000 tonnes. The United States is the biggest holder of gold reserves with over 8,000 tonnes.

Even a 1,000 tonne increase from last announced levels could prompt a jump in gold prices, which would make the PBOC very cautious about the timing of any announcement, said two China gold market analysts, who didn't want to be named due to the sensitivity of the issue.
One thing is certain: it is only a matter of time before China does reveal how much additional gold its has bought since April 2009, the date of its last official update. One other thing that is certain: the PBOC (and everyone else who has been piggybacking on this trade) has been able to buy up thousands of tons of physical gold at cheap prices not only due to the relentless manipulation of paper gold prices by central banks and their market proxies, but also by China itself: recall that it was Zero Hedge that first explained "How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring." In short, it had to do with gold's domiannt role (more so than copper) in Chinese financing deals, in which physical is bought in the spot market while gold futures are sold at the same time.
And since the physical gold would likely remain in China no matter what (likely transferred over to satisfy consumer demand), we suggested that the imminent unwind of various Chinese gold-backed funding deals, in addition to any reports out of the PBOC, would further add to the upward pressure on gold once financing deal intermediaries, were forced to cover their forward market shorts.
In either case, what the latest news out of China means is that what happens to gold once it enters the Chinese economy, where it is used not only as a simple commodity store of value, and money (much to the chagrin of the Chairmanwoman) but also as a major component of the carry-trade enabled gold financing deals, will be even more nebulous and an even bigger mystery than ever before. Just as the gold accumulating central bank wants it.
Still, if there is one thing that gives us comfort, it is that as we reported over the weekend, when it comes to the ordinary person on the street, the demand for physical, not paper, gold is higher than ever.



http://jessescrossroadscafe.blogspot.com/2014/04/gold-daily-and-silver-weekly-charts_21.html


21 APRIL 2014

Gold Daily and Silver Weekly Charts - Lies, Damn Lies, and an Option Expiration



“A true opium of the people is a belief in nothingness after death - the huge solace of thinking that for our betrayals, greed, cowardice, and murders that we are not going to be judged.”

Czesław Miłosz

The action for the precious metals did not bode well, when late last night as gold drifted higher and crept over 1300 it was smacked down by some heavy dumping of contracts in quiet trade in the Globex market.

And we saw that classic back and forth sea saw today around the level targeted by that late night selling at 1290. Its a little thing after all, but it is discouraging to those who watch these daily antics too closely.

As a reminder, there is an option expiration on the Comex this week, on Thurday the 24th. Since May is an 'off month' I would not expect it to be all that significant.

More notable is the interesting delivery month we are seeing, with plenty of warrants for the April contracts changing hands, but little to no gold showing any visible movement in the warehouses.

As you may have read, China has opened Beijing as a third point of imports of gold, in addition to Shanghai and Hong Kong.  One might suspect that the numbers so closely watched by some in Hong Kong will continue to become increasingly less relevant to that actual world trade in gold.  Much like the Comex.

Big things are happening behind the scenes.  But you will see only traces of their footprints in the news of the day. 

Have a pleasant evening.