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“The Largest Ever Physical Transfer Of Gold”

May 30, 2020

“The Largest Ever Physical Transfer Of Gold”

Two months ago, when the market was in a state of near-total chaos as a result of a sudden collapse in global supply chains due to the hasty coronavirus lockdowns, one market that saw unprecedented turmoil was that of physical gold.

As we pointed out in late March, due to a sudden breakdown in physical gold supply as the world’s top gold refiners, those located in the southern Swiss town of Ticino, namely Valcambi, Pamp and Argor-Heraeus, suddenly stopped producing gold, the  result was a record divergence in the price of spot gold vs gold futures contracts…

… with gold futures decoupling and trading far above spot prices.

The resulting record divergence in gold futures vs spot (in some way analogous to what happened to the price of the prompt WTI contract in April, when the May WTI contract traded as low as ($40) as traders were willing to pay buyers to store oil in a world where there was suddenly no space for the physical commodity), unleashed a flood of physical gold into the US as a record scramble by traders rushing to take advantage of this arbitrage opportunity by shipping bullion to New York sparked what Bloomberg said “may be one of the largest ever physical transfers of the metal.“

“The flows into New York are unprecedented,” Allan Finn, the global commodities director at logistics and security provider Malca-Amit told Bloomberg as his company’s teams in New York have been working 24 hours a day to cope with unprecedented demand for physical gold while navigating lockdowns, flight disruptions and social distancing.

…click on the above link to read the rest of the article…

Yet another MAJOR reason to buy gold

January 14, 2019

Yet another MAJOR reason to buy gold

For almost a year now, I’ve been advising you that gold production is plunging…

By itself, declining gold production isn’t a huge deal.

It takes hundreds of millions of years for minerals to form deep in the earth’s crust… but humans only need a few decades to extract it.

That’s why mining companies need to constantly explore for new deposits.

And that’s where the problem comes in… mining companies haven’t been exploring.

Large mining companies have been cutting their exploration budgets for years. By the end of 2016, exploration budgets hit an 11-year low.

Part of the reason for the decline in exploration has been the stagnant gold price and general, investor disinterest toward the gold mining sector.

If you look at a chart of the Gold Miners ETF (GDX), the price hasn’t gone anywhere for five years.

And gold prices have likewise languished; today’s price of $1,290 per ounce is down 30% from the 2011.

To fight the tough times, miners slashed their exploration budgets.

That means, when the demand for gold picks up again (which I think we’re starting to see now), there won’t be enough gold supply.

You don’t have to just take my word for it…

Pierre Lassonde, the billionaire founder of gold royalty giant Franco-Nevada and former head of Newmont Mining –

If you look back to the 70s, 80s and 90s, in every one of those decades, the industry found at least one 50+ million-ounce gold deposit, at least ten 30+ million ounce deposits, and countless 5 to 10 million ounce deposits.

But if you look at the last 15 years, we found no 50-million-ounce deposit, no 30 million ounce deposit and only very few 15 million ounce deposits.

So where are those great big deposits we found in the past? How are they going to be replaced? We don’t know.

…click on the above link to read the rest of the article…

ANALYSTS TOTALLY WRONG ABOUT GOLD: Top Gold Miners Production Cost Still Provides Floor In The Market Price

November 26, 2018

ANALYSTS TOTALLY WRONG ABOUT GOLD: Top Gold Miners Production Cost Still Provides Floor In The Market Price

While the debate on the dynamics of the gold market continues, at least the top gold miners production cost provides us with a floor price.  Or rather, a basic minimum price level.  I get a good laugh when I read analysts suggesting that the gold price will fall back to $450-$700.  For the gold price to fall back to $450, then we would need to lose 95+% of global gold mine supply.

Due to two factors of rising energy prices and falling ore grades in the gold mining industry, COSTS WILL NEVER go back to where they were a decade ago.  Again, the only way for that to happen is if a large percentage of gold mine production was shut down.

Furthermore, analysts continue to wrongly forecast the gold price based mainly on gold supply and demand forces.  This is a NO-NO.  The overriding factor that has determined the gold market price has been the gold mining industry cost of production.  I proved this point by showing the increase in the gold production cost at Homestake Mining (the United States largest gold mine 1970’s) from 1971-1979:

Homestake Mining was producing gold at the cost of $42 an ounce in 1971 when the average price was $40.80.  Thus, Homestake Mining lost money producing gold in 1971.  However, as energy-driven inflation ravaged throughout the economy as the price of a barrel of oil increased from $2.24 in 1971 to $31 in 1979, this impacted the cost to produce gold significantly.  By 1979, Homestake Mining’s gold production cost jumped to $247 an ounce.

While it is true that the tremendous demand for gold by investors also drove the gold price to new highs in the 1970s, we can see that at least 80+% of the increase in the gold price from 1971-1979, in the case of Homestake Mining, was due to higher production costs.

…click on the above link to read the rest of the article…

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

November 23, 2018

GLOBAL DEBT INCREASE 2018 vs. GOLD INVESTMENT: Must See Charts

Global debt increased at the fastest rate at the beginning of 2018.  In just one quarter, total global debt jumped by more than $8 trillion.  That is quite surprising as total world debt rose by $22 trillion for the full year in 2017.  Thus, the increase in global debt last year averaged $5.5 trillion each quarter.

However, global debt according to the Institute of International Finance dropped by $1.5 trillion in the second quarter of 2018.  While mature markets saw their debt decline in Q2 2018, emerging market debt increased by $1 trillion lead by China.  In looking at the data from the Institute of International Finance (IIF), they stated that global debt jumped by over $8 trillion in the first quarter of 2018 to $247 trillion, but then declined $1.5 trillion to $247 trillion in Q2 2018.

So, the global debt must have jumped by $9.5 trillion to $248.5 trillion during the first quarter of 2018 and then dropped $1.5 trillion in Q2.  Thus, the IIF must be revising their figures each quarter.  Either way, the net increase in global debt in the first half of 2018 was $8 trillion.

If we look at the following chart below, we can see how the increase in global debt compares to the value of the total global gold investment as well as the value of world gold supply:

From my research, total world gold investment, Central bank and private investment total approximately $3 trillion.  This is based on the data from the next chart that estimates global gold investment of 2.25 billion oz valued at a $3 trillion:

Interestingly, when I did the chart above earlier this year, the market price of gold was trading at $1,330.  Today, it is $100 less.  So, if I want to be totally accurate, total Central bank and private gold holdings are presently valued at $2.8 trillion.  Regardless, global debt increased $8 trillion in the first half of 2018, more than 2.5 times than the value of all world investment gold holdings.

…click on the above link to read the rest of the article…

Peak Gold? No: Peak Gold Production? Perhaps

March 21, 2018

Some claim we have reached peak gold. It depends on what one means by the term. Perhaps we have reached peak production.

Last September, Bloomberg reported We’re Reaching Peak Gold.

The world may have already produced the most gold in a year it ever will, according to the chairman of the World Gold Council.

Production is likely to plateau at best, before slowly declining as demand rises, especially given global political risks and robust purchases by consumers in India and China, Randall Oliphant said in an interview Monday.

“It’s not clear how the whole U.S. political system will play out,” said Oliphant, an industry veteran who’s been an executive at some of the world’s biggest gold miners. “All this uncertainty seems very fertile ground for people to get into gold.”

“We’re not going to fall off a cliff in the near term, but in the same time it’s really hard to see how we’re going to produce enough gold to meet all this demand,” Oliphant said.

Meeting Demand

The last statement by Oliphant, the chairman of the World Gold Conference is absurd.

There is ample gold to meet demand. Unlike energy or silver, gold is not used up.

Nearly every ounce of gold ever mined is still in existence. The exchanges would not run out of gold even if production fell to zero tomorrow and stayed that way for the next decade.

What’s the Real Long-Term Driver for Gold?

Most analysts are totally clueless about gold and gold markets. They cite jewelry, mining production, central bank sales, and all sorts of other irrelevant factors in their analysis.

If you really want to understand what gold is all about, I suggest you read an interview on Gold Switzerland with Robert Blumen: “What’s really key for the price formation of gold?”

Blumen discusses assets vs. consumption, mine supply, jewelry, marginal demand, the alleged (and nonexistent “gold deficit”), and sentiment.

…click on the above link to read the rest of the article…

Peak Gold Has Arrived

March 15, 2018

Peak Gold Has Arrived

Following the recent market crash, investors lost $5.2 trillion worldwide before the market managed to recover most of the losses. There are hints that certain bubbles are ready to burst as the worlds biggest hedge fund positions accordingly.

In addition to the stock market, the global gold supply is weakening, leaving investors anticipating higher prices. In 2017, the gold supply plummeted the most since any year since 2008. If the supply of gold is really plateauing, experts are predicting a “peak gold” period.

China, the world larger miner of gold, produced 453 tons of the metal in 2016. In 2017, China’s production fell by 9 percent. If production of gold continues to fall, a rise in global demand is a certainty. The demand will come from investors and centrals banks unwilling to rely on the dubious strength of the US dollar.

Chinese is enjoying a boon economy, and the newly rich who can afford it are looking to buy physical gold in an effort to protect their wealth. China supplies its gold only domestically and does not export the metal. If China’s domestic gold supply is depleting, it will certain seek to buy gold elsewhere. Part of Chinese economic plan is to potentially reduce the global dominance of the dollar with the yuan.

The US dollar has dominated the global currency market for over 40 years. China, and Russia are actively increasing their gold reserves, which could lead to both economic and political uncertainties as more countries begin to dump US Treasuries. Both Russia and China are planning to use gold-backed currency as payment when trading with each other. This makes gold a critical commodity for both countries.

China might import gold to meet its own demand. But the available supply of gold is finite. During the past 15 years, global gold deposits have become depleted, and replacement deposits are becoming rarer each year.

…click on the above link to read the rest of the article…

BREAKING: China – World’s Largest Gold Producer Mine Supply Plummets 10%

October 30, 2017

BREAKING: China – World’s Largest Gold Producer Mine Supply Plummets 10%

The world’s top gold producer saw its mine supply plummet by 10% in the first half of 2017.  According to the GFMS World Gold Survey newest update, China’s gold production in 1H 2017 fell the most in over a decade.  The fall in Chinese gold production is quite significant as the country will have to increase its imports to make up the shortfall in its mine supply

The data in the GFMS 2017 Q3 Gold Survey Update & Outlook reported that Chinese gold mine supply declined 23 metric tons to 207 metric tons in the 1H 2017 versus the 230 metric tons during the same period last year:

The report stated the reason for the decline in Chinese gold production was due to the government’s increased efforts to curb pollution as well as heightened awareness of environmental protection.  Furthermore, GFMS analysts forecast that Chinese gold production will continue to deteriorate for the remainder of the year as production is scaled down.

This is undoubtedly bad news for a country that is not only the world’s largest gold producer but also because China consumes all of its domestic mine supply.  To get an idea just how far China is ahead of the rest of the pack, take a look at the following chart:

Last year, Chinese gold mine supply of 454 metric tons (mt), was 56% higher than second-ranked Austraila at 291 mt.  These eight top gold mining countries produced 56% of the total world’s supply of 3,222 mt in 2016.  Lastly, you will notice that South Africa came in last place at 150 mt.  However, South Africa was the leading gold supplier in the world in 1970, when it produced a staggering 1,000 mt:

…click on the above link to read the rest of the article…

US: Five Must Gold See Charts – Gold Miners Are “Running Out” of Gold

December 24, 2016

US: Five Must Gold See Charts – Gold Miners Are “Running Out” of Gold

Gold Mining Companies Are Running Out of Gold: Five Must See Charts

  • ‘Peak gold’ – World’s gold production to peak in 2019 and decline
  • Gold found by miners has plunged 85% over past decade
  • Gold mining CEOs turning to deals to combat dwindling reserves
  • Exploration more difficult and firms have cut capex

The reality of peak gold production has recently been acknowledged by Bloomberg and some of the financial media. Yet the mainstream, non specialist financial media has yet to cover this important topic with obvious ramifications for the gold market and the gold price in the medium and long term.

Peak gold production is happening globally which is very positive for gold and gold mining shares. Bloomberg have again covered this important fundamental factor in the market and have done so with an article and five must see gold charts:

“Gold’s had a roller-coaster year, surging as much as 30 percent before giving up the bulk of those gains. But one trend has been consistent: mining companies are finding it harder to dig up more of the precious metal.

The following charts show why, and what that means for the industry:”


…click on the above link to read the rest of the article…

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