Considering Chinese Demand

541
Thu, Jun 13, 2013 - 1:36pm

It's one of those things. You hear about it every day but never stop to really think about it.

This began as an email discussion with my friend, Ned, yesterday. All of us in Turdville are aware that the Shanghai Gold Exchange has physically delivered something like 1200 metric tonnes of gold, year to date. That's a staggering number and it far exceeds the amount delivered through London and dwarfs the level delivered through the Comex. Prior to yesterday, I looked at that number and thought, "Wow. That's a lot.", but I never stopped to ask the follow-up questions:

  1. To whom is this being delivered? AND
  2. Once it's delivered, where does it go next?

Let's start by looking at this handy chart. Note that, at this current pace of delivery, Shanghai is currently delivering each month the entire global mine supply. No wonder they were temporarily "out of stock" back in May! How long can this continue?

OK, now for some additional background. Recall that, since about 2006, the Chinese government has been aggressively promoting gold buying by its citizens. This campaign really began to pick up steam in 2009 following The Great Western Financial Crisis. A quick Google search returns all sorts of articles which describe this policy. Here are just a few examples: https://www.mineweb.co.za/mineweb/content/en/mineweb- gold-analysis?oid=88452&sn=Detail & https://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=2545:china-urges-citizens-to-buy-gold-silver&catid=48:gold-commentary&Itemid=131 & https://news.goldseek.com/GoldSeek/1267715760.php & https://www.forbes.com/sites/gordonchang/2012/01/29/why-are-the-chinese-buying-record-quantities-of-gold/

We also know that officially reported Chinese imports are soaring. In just the first four months of this year, China has imported through Hong Kong nearly 500 metric tonnes of gold. This adds to the 834 metric tonnes that they imported in calendar year 2012. https://www.bloomberg.com/news/2013-02-05/china-gold-imports-from-hong-kong-gain-to-all-time-high-in-12.html

(Charts courtesy of ZH)

So where is all this gold going? I first wrote about it nearly a year ago. Much of it is being recast into kilo bars that, I believe, will ultimately be used to provide a hard asset backing to a future Yuan. https://www.tfmetalsreport.com/blog/3924/gonefor-good

But that still doesn't explain the almost-daily, 15-25 metric tonnes of physical delivery in Shanghai. This is why Ned and I were so perplexed.

So, next, I did what any sensible person would do, I rang up Andrew Maguire. His decades of experience in working the international wholesale market makes him the best source I have for answers to these questions. The conversation went something like this:

Me: "Andy, where the heck is all this gold going?"

Andy: "It's not going anywhere."

Me: "What do you mean?"

Andy: "I mean exactly that. Shanghai settles all that bullion each day to domestic wholesalers. That metal is then shipped off to Chinese dealers and refiners for domestic consumption."

Me: "So wait a minute. You're telling me that public demand in China is currently soaking up 250 metric tonnes per month or nearly ALL of the publicly-reported global mine supply?"

Andy: "Exactly."

And then I started thinking...Well how hard would that be to do? 250 metric tonnes is about 8,000,000 troy ounces. The current population of China is 1.344 billion. If only 25% of the population is taking their government up on the idea of gold ownership, that's 336,000,000 people or, roughly, an amount equivalent to the entire population of the United States!

So now let's say that these 336,000,000 people buy, on average, 1/40th of an ounce every month. That works out to be about 3/4 of a gram or about $35 worth at $1400/ounce. Working the math backward we get: 336,000,000 people buying .75 grams = 252,000,000 grams and 252,000,000 grams = 252 metric tonnes.

Hmmm. Well how about that? Makes you look at stories like this in a different light, doesn't it? https://usa.chinadaily.com.cn/china/2013-06/12/content_16611576.htm

A crowd of customers waits in front of a gold store to shop during a promotion, in Jinan city, East China’s Shandong province on June 11, 2013.

People crowding around a gold products counter jockey for position to pick up something in a gold store which sold its products at a price of 299 yuan per gram in a promotion – about 50 to 70 yuan lower than the normal level, in Jinan city, East China's Shandong province on June 11, 2013. The promotion attracted nearly 10,000 people who rushed to the store despite restricting each customer's shopping time to 15 minutes. While gold markets in the US and Europe saw panic selling, China has just seen a surge in gold sales in the past few months. Chinese households came under the spotlight with their generous purchase of the gold products amid a global fall of the gold price.

OK, then. So, do you still think that the Spec Shorts are on the right side of the trade, that price is going lower and that the "bull market" in gold is over???

Hmmmm. Chew in that over the weekend and then come back for more on Monday. It's going to be another interesting week.

TF

About the Author

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  541 Comments

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TD
Jun 15, 2013 - 3:53pm

Not Bob Greene

Nope, not Bob Greene, nor Colonel Mustard. I recieved this in a mass email from a historical society focused on aviation that I am a member of... it was not sourced but it did request that members...

PLEASE SEND THIS ON TO EVERYONE IN YOUR ADDRESS BOOK, ESPECIALLY
TO THOSE WHO WERE TOO YOUNG TO KNOW ABOUT THESE GUYS. THIS SHOULD
BE READ BY EVERY KID IN GRADE AND HIGH SCHOOL SO THEY KNOW WHAT
HAPPENED.

Thank you for linking this, and keeping Turd out of trouble... that was not my intention.

abguy4
Jun 15, 2013 - 3:47pm

It's the weekend so............................................

US Air Force Academy Chemtrail Manual

The word "chemtrails" was not
invented by a conspiracy theorist,
it was invented by the US Air Force.

A microfiche has been found in the
Oklahoma Library system of an Air
Force manual dating back to 1990,
which uses the word "Chemtrails" in
its title and describes the various
experiments pilots will be conducting
with the aerosol release of various
noxious substances, some relating to
cloud-seeding and weather modification
such as silver iodide and others, in
conjunction with the HAARP project,
such as barium-fluoride.

The spraying of toxic barium salts in
the atmosphere relates to scalar
weapons systems (HAARP), which
behave like targeted gravitational
fields and act as anti-ballistic shields and other effects which can be found in the literature.

Click the link below for a more
comprehensive list of toxic chemicals
that have been released by the USAF
since at least 1990.
Video (about 8 mins):

US Air Force Academy Chemtrail Manual

https://www.ForbiddenKnowledgeTV.com/page/22957.html
Silver Alert
Jun 15, 2013 - 3:43pm

TD, is your real name

TD, is your real name Bob Greene? Because if it isn't, you're plagiarizing his material and probably violating CNN copyright which could get Turd into trouble.

Link to original article:

https://edition.cnn.com/2013/04/14/opinion/greene-doolittle-raiders/index.html

Excalibur
Jun 15, 2013 - 3:22pm

David Icke at Bilderberg

Bravo David. The Bilderberg festival was a wonderful counterpoint to the Bilderberg Conference.

Video unavailable
Urban Roman
Jun 15, 2013 - 2:41pm

More Sound and More Fury

@SSJ,

Yesterday you were comparing UDMH and LH2. Today, you're saying that the wings would shake off the orbiter without the rainbirds. Who said that? That's not really correct. Without going into detail which would help other nations replicate the technology, the orbiter had many single points of failure where the usual engineering redundancy could not be in place for technical reasons. Some of these single points of failure created near-miss situations on some missions that only the engineering types followed. The trade-offs in the engineering and the flight profile is complex.

...

I would like to encourage your reading on the technology. But, please read the public info critically and refrain from simplifications and generalizations. Spaceflight is a technically demanding business because the margins of error between life and death are extremely narrow, especially when flying on parts made by the lowest bidder.

As I was saying, there's no need to pass insults. I did not say the wings would shake off without the rainbirds. By the way, the color commentators on that video you posted verified what Wikipedia said -- the water is for sound deadening. Apparently the flame trenches become giant 0.5 Hz calliope whistles without it. So the answer to your question is "NASA said that". It was a bit surprising. With the sort of power levels you've got in a launch, that acoustic energy would be enough to dislodge tiles and whatnot. And as the whole world learned in one of the later flights, the heat-resistant stuff on the leading wing edges can be damaged, and the tiniest amount of damage there is fatal. You can rest assured, I am not planning to build a rocket in my garage and then ride on it. Nor am I advising the Chinese space program, they seem to be doing just fine, TYVM. I just find all this engineering interesting. As for making generalizations, do Newton's Laws of Motion not still apply? They do, for the most part -- relativity enters into the picture, but its effects are subtle at this scale. And I'm almost as angry as you that our political leadership has chosen to piss it all away for their fascist political ideology, or more precisely, for their narcissistic ignorant little selves and the drug of being HNIC.
TD
Jun 15, 2013 - 2:37pm

US space program

I've had the privilege of meeting 7 out of the 12 men who have walked on the Moon. Anyone who thinks we haven't walked on the Moon needs to take their meds and stop hoarding cats.

Bush Jr ended the shuttle program, which was too expensive and aged. He put into place Project Constellation which would have carried the US manned space program into the future. Obama killed it.

jaw777
Jun 15, 2013 - 2:28pm

Damn Spartacus

That just isn't right!

SaratogaPrepper
Jun 15, 2013 - 2:23pm

Just had to

Elton John - Rocket Man

Had a free day in Houston last year and took a trip to the Johnson Space Center.

Looking at the Mercury, Gemini and Apollo spacecraft makes you wonder just how big were those gentlemen's cajones.

Strapped into something not much bigger than a VW Beetle on top of the largest rocket ever.

Spartacus Rex
Jun 15, 2013 - 2:20pm
Sad-descent
Jun 15, 2013 - 2:13pm

Brazil losing currency reserves

I found this article interesting. Brazil is trying to protect currency with derivatives.

"Brazil, fast transforming from powerhouse to crisis economy, is relying on derivatives contracts to stem the slide of the real and camouflage capital flight. The central bank spent $5.7bn (£3.6bn) defending the currency this month, though just half has shown up in reserve data. "

https://www.telegraph.co.uk/finance/financialcrisis/10119591/Brazil-losing-reserves-fast-as-it-comes-under-speculative-attack.html

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