Gold Survival Gold Article Updates
Oct. 24, 2013
- Rick Rule at the Sydney Gold Symposium 2013
- John Butler: Game Theory, China and the end game
- Gold Market Prognostications from PAMP’s Head of Sales
Gold and silver both jumped higher on Tuesday night supposedly due to weak US jobs numbers – who knows why exactly? Last night they dropped back in US trade. However the NZ dollar pulled back sharply overnight to .8382 from the 5 month high on Tuesday of .8508, so the local prices of both precious metals are up again today.
Both metals are well up since last weeks (late) email on Friday from Sydney.
NZ gold is up $31.94 per ounce since then or 2.05% to $1590.60. You can see in the chart below that the reverse head and shoulders pattern failed as NZ gold dropped below the $1575 level and has made a lower low.
Interestingly the price now is quite similar to what it was in April, while premiums are lower so gold can be bought for less than it was back then. However we are not seeing anything close to the level of demand that there was in April. So to repeat what we said back then and again more recently “our hunch is that the bottom will arrive when there is very little buying interest (in the western hemisphere at least!)”
So who knows if the latest low in gold is that bottom or not. But the negative sentiment points to the fact that we must be close.
Meanwhile NZ silver has jumped sharply from last Friday – up 1.08 per oz or 4.17% to be at $26.96 today. Silver does appear to be holding up a little better than gold at present. Evidenced by the fact that the reverse head and shoulders pattern is still in play for silver, which would indicate higher prices ahead if it proves correct.
Rick Rule at the Sydney Gold Symposium 2013
In case you didn’t read last weeks email we were in Sydney last week for the annual Gold Symposium. I think we mentioned the turnout was down massively on last year (contrarian indicator perhaps?), even though there was a pretty decent line up of speakers again.
Rick Rule of Sprott Global Resource Investments Ltd was the first of these and – as to be expected – was very entertaining with many a sharp quip.
Rule was also a speaker at the recent Casey Research Summit. From the brief extract we read in one of this weeks articles covering the speakers at the Casey Summit, (see here: The Situation Is Hopeless, But Not Serious) it seems his speech there was very similar to that given in Sydney. (See the end of this email for a full list of this weeks articles – there are a couple of good ones featuring Doug Casey).
Anyway we made some decent notes so you get a free (albeit second hand) account of what Rick Rule had to say in this weeks feature article linked below:
John Butler: Game Theory, China and the End Game
We’re in the process of writing up notes from various other speakers in Sydney. One of which was John Butler of Amphora Capital. As we had mentioned in recent weeks, John was also here in Auckland on Monday and in Wellington on Tuesday. He delivered a similar presentation on Monday to that which he made in Sydney, although it was a slightly simplified version – (possibly because it was aimed at the institutional investment area – our guess only!).
He was superb to listen to and given how accessible his message is it was only a shame more people weren’t there to see him on Monday. And even more of a shame that of the audience members only 2 were from investment institutions! – the vast majority being just private individuals. As mentioned already, what he has to say is very accessible and unlike some in the precious metals space is put across in a way the mainstream should be able to get their head around. Needless to say a few investment “professionals” could do with getting their paradigm a little shaken up. But alas virtually none were there in Auckland on Monday to hear what he had to say and by the sounds of it Wellington was not too different.
Anyway we will report back in more detail on what John had to say in the next week or so. However given the title to his book is “The Golden Revolution: How to Prepare for the Coming Global Gold Standard”, it’s not really a spoiler to say that he foresees the authorities globally being forced into a return to gold linked money within the next decade. He uses mathematician John Nash’s game theory (of the Russell Crowe – A Beautiful Mind movie fame) to explain how an equilibrium will likely be reached with gold at the centre. John mentioned a number of key articles and speeches given in the past decade that point to this outcome being underway.
Well, just over the past few days we’ve noticed a few more that could be added to the list that show a number of countries are quietly preparing for a return of some kind to gold linked/backed monetary regime.
Firstly is a piece by Alistair Macleod which while headed China and Gold, actually looks at the block of countries who are likely loosely working together on a new monetary system. An excerpt:
“So why is the Chinese Government so keen on gold? The answer most likely involves geo-politics. And here it is worth noting that through the SCO [Shanghai Cooperation Organisation], China and Russia with the support of most of the countries in between them are building an economic bloc with a common feature: gold. It is noticeable that while the West’s financial system has been bad-mouthing gold, all the members of the SCO, including most of its prospective members, have been accumulating it. The result is a strong vein of gold throughout Asia while the West has left itself dangerously exposed.
The West selling its stocks of gold has become the biggest strategic gamble in financial history. We are committing ourselves entirely to fiat currencies, which our central banks are now having to issue in accelerating quantities. In the process China and Russia have been handed ultimate economic power on a plate.”
Then is the fact that Fosun International, China’s largest private-owned conglomerate has purchased the building housing the JP Morgan gold vault – the largest in the world.
Zerohedge has a guess as to why:
“China has decided it has its fill of domestically held gold and is starting to acquire gold warehouses in the banking capitals of the world.
For now the reason why is unclear but we are confident the answer will present itself shortly.”
We wouldn’t have thought China would want to keep too much gold offshore in this day and age. Although as John Butler did say on Monday China has been, and will continue, building their military so as to “encourage” countries around to the world, where they are buying up resources and companies, to maintain their property rights. So perhaps they will need a few vaults dotted across the globe?
Then finally is a piece by Michael Kosares with the title China’s London-Zurich-Hong Kong gold conduit — a major financial coup d’etat. This article shows why China may well be running out of space in gold vaults domestically!
“The United Kingdom’s gold exports to Switzerland jumped from 85 tonnes to 1,016 tonnes in the first eight months of 2013 — a twelve times increase….
Switzerland, according to the Koos Jansen website, has exported nearly 500 tonnes of gold to Hong Kong through July, 2013. Hong Kong, in turn, has exported over 1200 tonnes of gold to the Chinese mainland over the same period. Now, with this report of ramped-up exports from the United Kingdom, another piece of the puzzle falls into place and we begin to get a fairly clear picture what these gold mobilizations entail. Switzerland and Hong Kong are acting as a conduit of western gold on its way to China — and probably Chinese central bank reserves.”
He finishes up with the comment:
“Up until today, we were unaware of the degree to which those doubts [about the US currency] had manifested themselves in the hidden corridors of the world gold market. . . .Now we know. In the first eight months of 2013 China produced 270 tonnes of gold from its mines, and theoretically almost four times that amount through its London – Zurich – Hong Kong gold conduit. In future years, this will likely be considered a major financial coup d’etat.”
Gold Market Prognostications from PAMP’s Head of Sales
As noted in the article above “Switzerland, according to the Koos Jansen website, has exported nearly 500 tonnes of gold to Hong Kong through July, 2013”.
Swiss refiner MKS (parent of well known bullion brand PAMP) is likely responsible for a large chunk of these exports to China being one of the biggest refiners globally. At the Gold Symposium we heard first hand from Frederic Panizzutti, their Global Head of Marketing and Sales, just how tremendous the demand for kilo gold bars has been from China and the Far East this year. In fact he said MKS/PAMP were at one stage having trouble sourcing 400oz good delivery bars to melt down into kilo bars to keep up with the demand. The ETF liquidations gave some initial supply but then the market “dried up”. They struggled to get these large bars out of Zurich, London, Comex, meanwhile the price kept dropping in the paper markets. So there were a couple of large speculators selling but physical buyers.
The other interesting comment Frederic made was that we “may see more selling in the next couple of months” as Paulson and other large GLD ETF holders liquidate positions as the negative sentiment around gold will pressure their investors to exit gold positions before end of year. He thought this:
”might affect the gold price but then we will go into a real physical bull market. Might take more time for the gold price to recover because the physical market is having a long term impact on the gold price, but not a short term. Speculators are having a short term impact. What we might see is premiums getting much higher for gold. Because if demand picks up again we will need to get bars again from the market and convert them and there might be certain time lags to get them transformed. Might have a bottleneck again. So we’re very bullish for physical market next year. We believe a bit more washout before the end of the year but a physical economy for next year most probably.”
So according to PAMP and Mr Panizzutti there could still be more weakness in gold before years end but then the bull market should resume. If you want to be on board before it does then get in touch. Prices are currently near multi-year lows – so should be good in the long run.
1. Email: firstname.lastname@example.org
2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
3. or Online order form with indicative pricing
Have a golden week!
Glenn (and David)
Ph: 0800 888 465
From outside NZ: +64 9 281 3898
This Weeks Articles:
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