Perception Deception

A couple of remarkable items hit the wires late last week. I thought we should begin this week with a recap.

Late Friday, this story appeared at ZeroHedge: http://www.zerohedge.com/news/2013-11-22/where-did-all-gold-go

The ZH article included this chart by Goldman Sachs, sourced from Bloomberg, who themselves sourced it from the IMF:

On the surface, we have a neat little chart. It purports to show that some countries are selling gold and some countries are acquiring it, all in a zero-sum vacuum. For example, where Turkey has acquired 250 metric tonnes, Austria as sold 250 metric tonnes. OK, fine. You can just stop there if you want...but...does anything else stand out to you? We'll get back to that in a moment but, first, let's look at the other interesting story from last week.

The link to this Reuters story is here: http://in.reuters.com/article/2013/11/20/china-gold-imports-idINL4N0J410Y20131120

With jaw agape, I read this story on Wednesday, literally stunned that it had seen the light of day. A few of the highlights:

  • Gold shipped from Hong Kong to the mainland, used as a proxy for Chinese demand as bullion imports are a state secret, nearly tripled to 855 tonnes in the year to September. But a surge in China's gold purchases as prices slumped by a quarter this year has also seen at least 133 tonnes shipped directly, according to Reuters calculations based on data from Global Trade Information Services (GTIS).
  • The 133 tonnes does not include gold bought by China's central bank. China said in 2009 that its official reserves of gold stood at 1,054 tonnes but it does not publish regular updates. Industry watchers estimate Chinese reserves may range from 4,000 to 5,000 tonnes by next year.
  • Increasing flows through Shanghai - which are legal but only a fraction of the total because gold is mostly shipped from trading hub Hong Kong - underscore a government push to make it easier for its citizens to buy and trade gold.
  • Redemptions from gold-backed exchange-traded funds (ETFs) have jumped as the price of bullion has fallen - 650 tonnes from the top eight funds so far this year - and much of that may have headed to China from Europe. Refiners say they have been converting 400 ounce bars typically bought by ETFs into 1 kg bars (kilobars) to be shipped to China. Kilobars are used for making jewellery and are also popular as an investment product. "We see huge flows of gold in and out of Switzerland, an inflow of large bars, which we convert to smaller bars," Scott Morrison, chairman of gold refiner Metalor, said from Neuchatel. "From April to August, we saw very large volumes from all our refineries headed to Asia," he said, adding that the bulk of the company's production in Hong Kong went to China.

(As an aside, I might remind you that Turdites were the first to learn of this massive Swiss refinery backlog of 1-kg bars heading to China. I wrote about this in June of 2012: http://www.tfmetalsreport.com/blog/3924/gonefor-good)

Anyway, please be sure to read the entire Reuters story as it confirms many of the things that I and other precious metals analysts have been telling you for months.

But here's the thing...and the point of this post. This paragraph of the Reuters story is the one I want to focus on:

"The 133 tonnes does not include gold bought by China's central bank. China said in 2009 that its official reserves of gold stood at 1,054 tonnes but it does not publish regular updates. Industry watchers estimate Chinese reserves may range from 4,000 to 5,000 tonnes by next year."

You, me and everyone else knows that the "official" Chinese reserve numbers are bogus. As noted above by Reuters, China has chosen to not release and officially update their gold reserve totals. The last update was in 2009 when they publicly confirmed that they had a stockpile of 1,054 metric tonnes. They've been quiet on the subject since.

Fortunately, however, the amount of gold flowing from Hong Kong into the mainland is chronicled and logged each month. Once again, Zerohedge provides some excellent material and below are just a few of the charts I've saved recently:

Want even more info? Koos Jansen does a terrific job monitoring the Chinese import numbers. Within this article of his posted two weeks ago (http://koosjansen.blogspot.com/2013/11/greater-china-net-import-1316-tons-ytd.html), I found these two charts:

So...

Rather than source the abundance of information currently available regarding Chinese demand, Goldman chooses instead to use the Bloomberg/IMF data for their chart and research report. This is the same GoldmanSachs, mind you, that tells their clients that gold is heading to $1050 (http://www.cnbc.com/id/101220299), all the while accumulating shares in the GLD at a rate four times faster than anyone else on the planet. (http://www.zerohedge.com/news/2013-08-30/guess-which-bearish-bank-bought-record-amount-gld-q2)

This got me wondering: What if Goldman chose to present the same information....in the same zero-sum, bar graph structure...only instead used the more accurate, unofficial Chinese reserve numbers? How would the chart look if, instead of 700 metric tonnes, the Chinese reserves were listed at 4,000 metric tonnes?

A quick email to our resident Photoshop expert, Pining4TheFjords, and I got my answer:

WHOA!! That changes things a little, doesn't it? I guess now we know why Goldman chose to use the bogus IMF numbers....This chart wouldn't have fit on the page!

And just as significant as the tall, Chinese import bar...Who the heck is the "mystery seller" with the other massive red bar??? Hmmmm???? Any guesses????

So, anyway, just another case of the truth being kept from the light. So Goldman misleads their clients...what else is new? So the IMF and Bloomberg don't bother to do their own homework on Chinese demand....and this surprises anyone? Whatever. Almost everyone stuck in yesterday's paradigm does so willingly anyway. At least YOU know The Truth. YOU know that Chinese and other "BRIC" nation demand is steadily breaking the current, fractional reserve bullion banking system. And YOU know to accumulate physical metal, just like The Chinese and while you still can, in preparation for The End of The Great Keynesian Experiment.

TF
 

57 Comments

Turd Ferguson's picture

From Sunday

MODERATOR

I was on with Dr. Janda again yesterday. As always, it was a lot of fun.

http://www.davejanda.com/guests/turd-ferguson/sunday-november-24-2013

Turd Ferguson's picture

And this should be VERY interesting

MODERATOR

Lars Schall with Dmitri Speck:

 

Mr. Fix's picture

1st

Thank you for shining a bright light on the truth,    it is such a rare commodity these days.smiley

treefrog's picture

furth

further!

lamare's picture

Note: Switzerland had the biggest decrease of -1550.1 tonnes

Why just add this note to the picture, but not include Switzerland in the graph???

Just A Regular Guy's picture

The Matterhorn Interviews

There's a two part interview with John Butler (Golden Revolution author), it's fantastic!

Turd Ferguson's picture

That's an excellent point

MODERATOR

The good folks at Goldman could have just as easily made a -1550 ton bar for Switzerland but then they would have had to use the "unofficial" Chinese numbers, which they clearly didn't want to do.

Excellent point.

Turd Ferguson's picture

When I woke up this morning

MODERATOR

When I woke up this morning and saw the pounding overnight, I wondered if they'd broken the Globex again. Yep!

http://www.zerohedge.com/news/2013-11-25/gold-hammering-leads-another-overnight-gold-market-halt

"Shortly after 1amET this morning, someone with no apparent fiduciary duty to their clients for best execution or any apparent trade allocation expertise decided it was time to dump 1500 contracts into an entirely illiquid gold futures market. The 150,000 ounce notional sell order ($184.5 million), captured graphically by Nanex, sent the price down $10 instantaneously, tripped the exchange's circuit breakers and halted the market's trading for 20 seconds (once again). This is now the 5th market halt in the past 3 months (and this time on no news whatsoever), as the manipulative monkey-hammerings from who knows whom (BIS?) is becoming increasingly obvious."

And 1500 contracts again. Exactly the same as last week! 

Pining 4 the Fjords's picture

Turd

Just got in and saw that I not only screwed up the image, I ruined the hosted picture as well.... Sorry.  Try this one instead:

http://i1178.photobucket.com/albums/x380/timtruss11/adjustedgoldimportsexports_zps753ed50d.jpg

Groaner's picture

golmans S&P predictions for 2014

http://www.zerohedge.com/news/2013-11-25/goldman-reveals-its-first-two-top-trades-2014-says-buy-sp-2250-target-short-aud

IF that is true, money will be going into stocks and not the metals with non stop FED QE.

However if QE does slow or stop, Markets will tank, and so will the metals and miners even more like 2008/9?

I tried posting a comment on Trader Dans website asking him about the off hours massive selling of contracts into the low volume times. He does not believe the FED and the BIS manipulate the markets. So I asked who would do this in their right mind that is maximizing a profit and get the worse fills?

He will not post it.. Censorship, don't ya love it?

After seeing and reading lots of info lately on the JFK, 9/11, Obamacare, conspiracy theories, I am convinced that this is the most Evil government in all of human history. But it's obvious to me there is a higher power behind the scenes who is pulling the strings with the power, "Money"..?

It's amazing the power they have to cover up their deeds, but whats even sadder is that the info is out there but the sheeple are powerless to do anything about it. This makes them even more brazen. This will not end well.  You know where I stand, put my trust in God's word, He will step in at the right time to end it, making a point and that His rightful sovereignty will never be questioned forever again.

Turd Ferguson's picture

Pining

MODERATOR

You're right about the sizing. This looks just fine, though. Thank you very, very much for your efforts!

Response to: Turd
Urban Roman's picture

A little music

Mantis's picture

You got me

I've been selling my gold to china blush

lamare's picture

Some info on Switzerland

http://www.ibtimes.com/golds-journey-west-east-switzerland-1393831

In fact, the flow of gold from London to Switzerland, at 798 metric tons in the first half of 2013, is apparently the highest on record since 1988 and is already 44 percent higher than the full year movement in 2011.

There were also strong links between Hong Kong imports of Swiss gold and China’s imports of gold from Hong Kong.

Switzerland is a global hub for gold refining, with more than two-thirds of global gold transiting through the country, according to a top Swiss news broadcaster.

http://www.swissinfo.ch/eng/business/Switzerland:_the_world_s_gold_hub.html?cid=33706126

It is difficult to visualise the enormous quantity of gold that arrives in Switzerland every year. In 2011, over 2,600 metric tons of raw gold were imported into the country, to a total value of SFr96 billion ($103 billion). This was a record, the quantity having more than doubled over the last ten years, not including the gold that transits through Swiss free ports.

To get an idea of Switzerland’s profile in the sector of gold refining and trading, consider another figure: the production of gold from all the mines in the world in 2011 amounted to 2,700 metric tons, according to data from the US Geological Survey.
 
If to this figure you add the gold coming from small businesses all over the world, which say “we buy gold,” and from illegal mines – a figure not considered in official statistics, – it would appear that two thirds of the world’s gold transits through Switzerland.
 
“In an average year, Switzerland refines about 70 per cent of world gold,” according to Frédéric Panizzutti, spokesman of MKS (Switzerland) SA, a Geneva-based company, which specialises in gold trading and which owns the Pamp refinery in Castel San Pietro, Ticino

[...]

“If you look at the refineries on the Good Delivery List, six have 90 per cent of the volume. Four of them are based in Switzerland,” he adds, backing up his statement: The Good Delivery List is a quality certification of the London Bullion Market Association, LBMA, the trade association for the gold market.

This Good Delivery List can be found here:

http://www.lbma.org.uk/pages/index.cfm?page_id=147

At ZeroHedge, an image with the total Swiss Gold Trade, also from Koos Jansen:

http://www.zerohedge.com/contributed/2013-10-24/switzerland%E2%80%99s-gold-exports-go-through-roof

In it he notes that Switzerland holds four of the largest gold refineries on the planet - Metalor, Pamp, Argor-Heraeus and Valcambi. These refineries are estimated to be responsible for 70% of the world's refining nestled in the Swiss Alps, and therefore a major amount of the world's gold is distributed there.

If you look at 3Q, Switzerland has imported 808 tons of gold in 2013, and exported 680 tons.  Year to date the country has imported 2,420 tons and exported 2,184 tons.

Jansen notes that this is a new record for exports for the small country with a yearly estimate of 2,912 tons for exports.  It is surmised that 1,100 tons of the gold bullion is set to flow East to China or Hong Kong.

And this is the latest update from Koos Jansen on the Swiss - China route:

http://www.ingoldwetrust.ch/west-to-east-gold-distribution-update

Remelting The Gold Bars In Switzerland 

 
Although the Swiss, discreet as they are, do not publish country specific with whom they trade gold, nevertheless, their total trade numbers are very clear. Being one of the biggest trading, refining and storage centers in the world, vast amounts of gold cross their borders. In 2012 they have imported 2267 tons of gold and exported 1550 tons. On average import has transcended export by 25 % in recent years, which emphasizes Switzerland’s storage function over this period. This has changed as the Swiss have imported 2420 tons and exported 2184 tons in the first three quarters of this year. Meaning not only trade is surging, but also that the gap between import and export is tightening. As was confirmed by Switzerland’s biggest refinery, all gold coming in from London is being remelted into kilobars and sent forward to China.
 
If we annualize gold export for 2013 the outcome is 2912 tons, 1362 tons more than in 2012. Gold that partially is shipped to Hong Kong, partially directly to Shanghai.
[same image as just above]

This confirmation article in the link just above states:

http://www.ingoldwetrust.ch/alex-stanczyk-there-is-way-more-gold-going-into-china-than-is-reported

We talked to the head of the largest refinery in Switzerland and he told us directly that all that metal that’s coming out of London (904 tons YTD) is being refined into kilo bars and send to China, as well as metal that’s coming in from other areas in the world, that’s all going to China. It’s way more than is being reported or moved through the exchanges. All the kilo bars go to the Chinese people but the PBOC is likely only buying good delivery.

Cononish1314's picture

Great gold stocks chart

Seems to suggest that the boundary between East and West could run along the Rhine, the Euphrates, or both.

flyinkel's picture

Perception deception, awesome topic

Topic was ponzi schemes on 60 minutes last night 

1)  Re-roll out the Bernie Madoff  fiasco covering the massive customer losses, make sure to talk about folks that lost their entire retirement savings.

2) Bunch of folks that invested in Pigeons as the next "chicken" and lost their entire retirement savings.

Theme, "losing your entire retirement savings", happens to lots of folks, right?  You just watched it on the MSM.

Think, think, think.  Why is this on the news now, why is it attempting to shape our thought process of the new abnormal "normal"?  Beware.

dgstage's picture

The Sides Are Forming for the Coming Civil War

Turd Ferguson's picture

fwiw

MODERATOR

IF we can extend this bounce and IF we can rally and CLOSE above $1250, we'd have a very nice ORD (reversal) on the daily chart.

SilverSurfers's picture

ORD

hit 20.04 and close above 19.88?

M Pento, KWN

If the Fed goes ahead and tapers, interest rates go to 4% on the 10-Year (Note), and all of the things I just mentioned occur, and we’re back into a deflationary depression.  I believe that would cause them to institute a permanent state of QE.  That’s where we’re headed, Eric.  That’s what 2014 has in store for you.”

===

Pento has been consistent over the last year or so, 4% Fed Fund in 2014, and turn out the lights.

The Green Manalishi's picture

Interesting chart

Pitchfork using the low of 2001 to the high of 2011 and the low of 2013. 

tmosley's picture

Cross post from ZH on the

Cross post from ZH on the topic of the 1500 contract dump:

Well, they've got to do SOMETHING with all that gold they just got from Iran.  The last few smashes were from the gold they got from Venezuela.

Funny that the central banks of "our" enemies are weaker hands than so many of us.

To me this implies a new tactic--beggar thy enemy then approach with a "deal" that only costs them some "worthless" gold in exchange for at least temporarily relieving some of the financial and monetary terrorism.  Soon I expect that we will run out of enemies with any gold left, and will start going after neutrals or "friends" or maybe even doing something stupid like going after China, though I suspect China has been the primary beneficiary of all these gold grabs.

___

I think this blends nicely with Turd's comments about the larger than reported inflows into China.  I think they are coming from a number of sources, and the US.gov is struggling to keep up, going so far as to actually start talking to Iran.  Abandoning SA and Israel as allies to try to keep China from smashing the dollar.

One suddenly wonders if all this isn't leading to a new relationship between the US and China, with the US being a VASSAL STATE to China.  The .gov has been a "good boy" for them lately.  Maybe they finally recognized that the tides are shifting, and are aligning themselves with the next great power, similar to the relationship between the US and Britain for the last hundred years?  Need to think about the implications for such a shift.

Turd Ferguson's picture

That's a VERY interesting chart

MODERATOR

Thank you. I'm going to send that one over to Paul Coghlan to see what he thinks. He's ForkDaddy!

Response to: Interesting chart
J.P. Cubish's picture

When the ship goes down

you better be ready.  YOU BETTER BE READY!

Gold, silver, bitcoin, food, arms.....

Prepper spirit!!!

http://www.youtube.com/watch?feature=player_detailpage&v=MBEoosjgqmM

Fatso's picture

Scotiamocatta estore has stopped listing 100 oz silver bars

For the last several weeks, Scotia has listed 100 oz silver bars as sold out, today they are not listed at all.

Turd Ferguson's picture

That's interesting, too

MODERATOR

Thank you.

proformatrillionaire's picture

Question of the year:

Where is the United States on that chart? Oh, that's right. Our government is so much more superior and above the governments of those rogue countries listed on the chart. They don't have time to mess around trading a barbarian relic. Either that or they have none to trade.

I know that they are the mystery seller but do they have to make it that obvious?

dgstage's picture

More on the Nuclear Option

Cononish1314's picture

Hatter

Do you have a video of Blythe performing "Bad Girls"? If so, I'll be most impressed.

I seem to remember an album cover with Ms Summer on one side of a lamp-post and a cop / member of regulatory authority on the other looking the other way.

Mickey's picture

Can't see 1250 before thanksgiving

only because Wednesday is futures expiry and there must be a lot of iceberg offers out there. Could see tick up but expect slams. Unless of course comex gets busted this week.

still, nobody I personally know who disagrees with me can tell me how we pay off obligations like public pensions,  Social Security and Medicare and prescription drugs and now Obamacare. and by payoff, how do we meet obligations over the  next 5-6 years. Disability is up for discussion probably next year.

Just do not have the money or tax revenues.

and at ~19% of gdp healthcare is too much and actually driving GDP.

Obama and Dems can spin over the promises made and reneged on re Obamacare. What happens when the prime entitlements are cut.

The Green Manalishi's picture

Another one, this time Gold

From low of 1999

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