India has imported over 900 tons of gold so far this year while China has imported just shy of 1,100 tons. To put these amounts into perspective, the world (ex. China) produces 2,200 tons per year. As an aside, with prices where they are right now, production will decrease in the future as some mines are not profitable at these levels. My question is this. With China and India buying almost every ounce that comes out of the ground “how much is too much?”
“Too much” as in what level is THE level where existing inventories cannot absorb the demand from “the rest of the world” as India and China are speaking for the current production. Where is the gold going to come from? It is already clear that existing inventories are being squeezed as evidence by the backwardated GOFO rates 8 days running. I would like to point out that this is not only the longest streak, but more days total than ALL of the last 20 years combined!
Also lurking in the shadows is allegedly a second Dutch bank to call a halt to delivering out gold. Why would this be? Why would any of this be? Why is the gold market so tight after so much “selling?” Shouldn’t inventories be not only flush with product but simply overflowing with so much metal that they don’t know what to do with it? Where did all of this “metal” that was sold, in a panicked, fast and furious fashion go? Did it evaporate? Is it being held in some alien, invisible vault system that we don’t know about?
Of course not…because it was not GOLD in the first place. We are now more than 90 days past the April “fool’s” selling of supposed gold. This is enough time to look back and see for sure what happened. At the time “we” said that the selling was not physical gold and in fact was merely paper contracts without any real metal backing. “We” said that only those who wanted a lower price would ever sell futures in the fashion that they were sold. Well guess what, WE were right. If we were wrong then gold would be plentiful right now…it is not. Not only is the gold market “tight,” it is tighter than it has ever been over the last 20 years.
I took some serious flack back in April when I said that “the plan” all along was to default. I said this because I knew that there was no way 1,000+++ tons of real metal could, or ever would in that fashion hit the market over less than 12 trading hours. So here we are, 90 days later and inventories have done nothing but bleed everywhere you look. Not only that but as I see it, some deliveries have not even been made. Unless someone can show me where JP Morgan has concluded their May deliveries or delivered anything at all on their June deliveries I will assume that I have read their reports correctly and are in serious arrears. Please, send me data that illustrates the movement of gold from JP Morgan to those contractually entitled to receive it.
That said, I will again state what I wrote back in April. We are facing a major default in both the gold and silver markets on COMEX, which has a whopping 29 tons of registered gold inventory available for delivery. I also believe we will see the LBMA in the same boat though they do not publish inventory numbers. All that is needed is to look at the inventory drain coupled with the explosion in demand caused by fraudulent prices to see that this will come to a head shortly. August COMEX deliveries of gold should be at least 30 tons which would take care of all existing registered for delivery inventory…and then what? What happens after August? Like I said “How much is too much?” …Demand that is.