Does "600" Plus or Minus Matter When We're Talking Tonnes of Gold?

38
Mon, Jun 6, 2016 - 8:22am

Late last year (September 2015) I posted and linked to Ronan Manly's Blog about The LBMA, Thomson/Reuters GFMS, and The 2000 Tonnes of Gold that Just Appeared in 2013.

(Link: https://www.tfmetalsreport.com/blog/7128/lbma-thompsonreuters-and-2000-t... September 8, 2015 )

Now if you, Dear Reader, or I myself ,were to suddenly gain (or lose!) several thousand tonnes of monetary metal - raw material for a Country's National Asset Holdings and it's Central Bank Currency Reserves- we would probably notice this fact pretty fast. And upon completing our tax returns, annual accounts, or just doing monthly management accounts, we would be highly likely to have the quantity and value highlighted clearly and without any doubt, vagueness, or lack of clarity in any way.

But the great and large and trusted institutions that actually do deal with gold, I mean really big gold exchanges, the purveyors of gold markets supply and demand data. Well ... how should I put this? They seem to have certain "tweaks" that come and go in their printed brochures, press releases and so on. And it's amazing how often central bank secretive transactions are never too distant from the errata, vagueness, or whatever adjective you personally prefer to use in describing the lack of precision in such large monetary numbers.

Now when I say the word "tweak" you might be forgiven in assuming some small adjustment, errata, correction upon arrival of more exact statistics and such like.

But this time it's 600 tonnes approximately.

That's 600 tonnes of gold.

Are you sitting up paying attention? That's quite a "tweak", isn't it? A sizeable tweak. A whopper. If we talk US dollar sized tweaks, it's 24 billion and 9 million of them!

This latest episode comes once again from Ronan Manly's latest Blog article at Bullionstar.dot com:

Apples and Oranges: An update on LBMA Refinery Statistics and GFMS

It's well worth a read. Thanks for the research Ronan!

I leave you to follow the links and read Ronan's full article. His final paragraph goes to the heart of the matter. Our respect and tolerance, and whether these are actually warranted in certain high profile institutions:

".... Overall, this series of communications from the LBMA leaves a lot to be desired, and undermines trust in LBMA issued data. It will be interesting to see whether the LBMA will surreptitiously alter its press release and brochure, or issue a correction and clarification, or leave the errors as is in the respective documents. "

That's it for now!

Best of luck to you.

Argentus Maximus

.

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice. The author advises that he trades and holds market positions in accordance with his own opinions.

About the Author

  38 Comments

SS121
Jun 6, 2016 - 1:07pm

AM

is that 600t of fiat gold, or 600t of physical Gold??

jaba
Jun 6, 2016 - 1:57pm

Faulty math

Hmmm I do believe you are correct Jaba!

I wonder how I fat fingered my calculator so thoroughly? Just not in the habit of counting my stash in tonnes I suppose ....

I just rechecked: 015.78 per kg just now

so a tonne is 1000 Kgs and , 015 x 1000 = ,015,000

and since we're talking about 550 - 650 tonnes (I used 600 as a rounded "middle" number)

then 600 x , 015,000 would work out at , 009,000,000.

Twenty four billion sounds so much more impressive for a wonky amount of officialdom's gold!

I'll correct the above text. Thanks Jaba.

Dirt_Reynolds
Jun 6, 2016 - 2:06pm

AM

I thought you might be trying out for the WaPo, ;)

Jun 6, 2016 - 2:44pm

@SS121600 T of fiat or 600t

@SS121

600 T of fiat or 600t of real physical 100% owned deliverable ?

Heh heh! You baaaaad distrusting person , you!

Well let's look at it this way.:

If their leverage is, what, 400:1 at mid month? Then they have deliverables on the road or in the air due for just in time delivery at end of month.

We allow that they are professionals in whatever their trade should be called, fractional bullion is a good name I think. So they will have a good trading pattern based estimate for how many longs actually have the money, will and intent to stand for delivery. And of those who stand, they would also know roughly how many will accept a cheque, wire payment of fiat T-Bond deposits instead of solid heavy yellow shiny stuff.

And on top of those factors, there is the knowledge that they have about how much their central bank (Fed, et al) will stump up to cover short term shortfalls at delivery times to tide them over. Presumably a Fed or CB would want their physical back later, but if it ain't forthcoming two things likely happen: first the taxpayer loses and the players walk, and second they lose the ability to play their nice little earner game in the future. They wouldn't like to lose future earnings. So they are motivated to play it sharp, but not too sharp so as to get caught short easily. Professional fractional bullion bankers and exchanges and their agents would be like all professionals in all business, not easily put in a spot.

Lots of factors that we are not about to be advised upon.....

And I agree totally with the point you made.

It's in the "sealed LBMA vault system" in a world where financial institutions get a govt legal (?) pass on good accounting practice, and practically these institutions are exempt from "acceptable-to-us" standards. It's an attractive area for people of a certain type to twist information about. Ronan Manly is performing a great service for precious metals investors with his spotlight-shining-into-the murky-system research. I sent him a message of appreciation for his work.

The WaPo off the table? Darn!

The WaPo off the table? Darn!

Jun 6, 2016 - 4:21pm

Great stuff, AM

Thanks!!!

amarula4
Jun 6, 2016 - 7:45pm

Brexit note for traders - UK brokers are issuing increased

margin requirements to account holders from now until further notice, until we clear the increased volatility around the 23 June poll day. If you trade EUR or GBP this may affect US brokers and accounts. Just sayin'...

canary
Jun 6, 2016 - 8:20pm

NATO begins the largest war games in Eastern Europe

Here is what I think of that

VS

And this

canary
Jun 6, 2016 - 8:39pm
jaba
Jun 6, 2016 - 9:27pm

Argentus Maximus

You are most welcome. As you say $24 Billion sounds so much more impressive than $29 Million, which in todays crazy financial sector is barely a rounding error!

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