Just a week ago, I wrote that gold attacks only serve to accelerate the transfer from West to East of the remaining physical metal. I thought that an attack (as opposed to mere suppression) would be particularly stupid in front of India’s end to restrictions on purchases of gold, but I guess I didn’t get the memo. Last week we saw the biggest price attack in eight months. While supply and demand data is of utmost importance in the real world, the real world is not where banker-gambler types dwell. Therefore, this attack is very poorly conceived.
One can argue that every time there is negative news or derivative pressure, the Fed comes in via the banks and manipulates the markets to keep the appearance of strength. The U.S. economy must be in grave danger of collapsing. But in some aspects, since a collapse is inevitable, it smells like internal traitorous sabotage to set the conditions for their inside criminal kleptocrats to capitalize. And don’t rule out a Cloward Piven at this stage [see the real Obama].
The gorilla in the room for the gold market right now has to be India. If gold imports normalize, there will be 1,000 tonnes annually added to the demand side from the East. From where does this gold originate?
What if import demand normalizes to 70 to 90 tonnes a month? What if there is catching up to do to make up for lost time?
Refining Activity Illustrates Gold in Motion:
You can tell that gold from the UK’s storage vaults is on the move when gold from London is recast in Switzerland, from 400-ounce (12.5 kg) bars to 1,000-grams and 3 kg bars prior to delivery in Asia. Indian consumers and investors favors a 1-kg (32-troy-oz) bar. The smoking gun, therefore, is gold refining activity.
Few deny that substantial amounts of gold have left London vaults for the East. Even back in December 2013, Ken Hoffman, the head of metals and mining reporting for Bloomberg Research, remarked in a Bloomberg broadcast:
