We know that supply is declining, but we certainly can’t trust the numbers from either the World Gold Council or the Silver Institute as to the precise quantum. Indeed, in the case of the silver market; we’re told that supply magically equals demand every year – and thus any “supply deficit” at all is impossible in this mystical realm.
Of
course more sophisticated readers know that these industry “fronts” are
nothing more than puppet-enclaves of the banking cabal, yet more
tentacles of the One Bank. The World Gold Council, in particular, is blatantly slavish in its servitude of the bankers, from publishing banker “policy papers” on what they
should be allowed to do with the peoples’ gold (if it still exists), to
prostituting itself for the bankers in India, where they tried to dupe
Indian gold-buyers into buying the One Bank’s fraudulent paper-called-gold products.
We
know that bullion inventories are declining, but we have no concrete
data at all on what amount of stockpiles are available to replenish
inventories, when they go to zero. Is it enough to satisfy demand for
two more weeks, or two more years?
We
do, however, have anecdotal evidence of the enormous efforts made by
the One Bank to destroy gold-demand, and thus reduce the gold-deficit.
This alone is proof that we are in the midst of a genuine “inventory
crisis”, and the collapse of Comex gold inventories (in particular) is not merely another paper façade.
Here
the targets of the One Bank have been in Asia, where buying “gold and
silver” means only buying real, physical metal. Thus Asian
bullion-demand cannot be diluted by doing what is done in the West:
selling Chumps paper, but calling it “gold” or “silver”. Instead the bankers operate by pressuring governments into attacking their own, domestic markets.
The
first target was Vietnam. Indeed, ever more extreme restrictions on
gold imports into Vietnam going all the way back to 2008 have created an
acute gold-shortage and price-decoupling in that nation.
Vietnamese people pay the highest prices in the world for gold, assuming
they don’t venture into the thriving blackmarket – an inevitable
consequence of severe import restrictions on any good.
The One Bank’s next Asian target was India,
traditionally the world’s largest gold market, and (until recently) by
far the world’s largest importer of gold. Here the banksters’ efforts
have been chronicled in several previous commentaries.
When their less-drastic measures were totally ineffective; the One Bank
opted for brute-force: a complete ban on all gold imports.
Skeptical readers may be asking themselves how a banking cabal – even one the size of the One Bank, which controls 40% of the global economy
– can “pressure” governments into doing whatever it wants them to do.
Those readers would clearly not have read my past commentaries on the
“economic terrorism” from Wall Street which brought the governments of
Europe to their knees (and destroyed the economy of Greece, entirely).
Primarily through the fraudulent manipulation of the credit-default swap
market; the One Bank can literally manipulate interest rates on the
debt of any nation to any number it desires. With all these Western
governments already on the verge of default due to absurd/extreme
accumulations of debt; this power amounts to an absolute economic
choke-hold over those governments.
In
the case of India; the One Bank’s modus operandi was to destroy the
currency of that nation. This is an
especially sadistic means of control, in a nation filled with
desperately poor people – where any spike in inflation can literally
threaten their survival.
It
also “threatens the survival” of Indian politicians, and being the
cowards that all politicians are; India’s government caved-in to the
demands of the One Bank. Those dubious about the ability of the One Bank
to manipulate India’s currency should note that currency-rigging is merely the latest scandal (i.e. scam) of this Crime Syndicate which has now been exposed.
Just recently, an anecdotal report
came out of yet another Asian government which has been suppressing
gold imports into its own nation: Sri Lanka. That government imposed a
“100 percent surcharge” on all gold imports into the country in the
middle of this year, with (not surprisingly) the effect of eliminating
all official imports into that nation.
Undoubtedly
(with greater resources) it would be possible to uncover further
examples in Asia (and perhaps around the world) where other governments
have been pressured into restricting gold imports into their country.
However, rather than hunt for further anecdotes to bolster this
particular argument, this analysis will go down a different path: the consequences of these efforts to destroy global gold demand.
All actions have consequences. The One Bank suppresses prices, and demand spikes. The One Bank suppresses official
demand (through restricting legitimate imports of bullion), and what
happens? Does that demand simply dissipate/disappear? Hardly.
First
of all, we must look at the immediate consequence of limiting the
supply of anything to any market: it drives up the price. Thus in India
at the present time “premiums” on gold purchases have permanently(?)
spiked to what are unprecedented levels in that gigantic gold market.
In turn; this has caused some of India’s gold-holders to sell their gold onto the market, foolishly attracted by a “high premium” on a dirt-cheap price, when a year earlier they could have sold the same gold at a much lower premium – but have received 25% more for each ounce.
From
the One Bank’s perspective, this is “problem solved”. India’s gold
imports have been coercively dragged to near-zero, with the immediate
consequence that the market is cannibalizing its own stockpiles to meet
short-term demand. But does this really solve the One Bank’s
supply/demand crisis in the gold market?
As
is typical of human behavior in any sphere, when demand (i.e. desire)
in one form is restricted or prohibited, it morphs into a new form. In
the case of Indian demand for bullion, as has been well-documented, some
of that demand has moved into the exploding Indian blackmarket for
gold. Gold-smuggling into India has now regressed to the same levels
which existed before India “liberalized” its market – precisely to
eliminate the scourge of gold-smuggling.
But
much of this demand also simply morphs into “frustrated demand”,
pent-up demand; the economic equivalent of a spring being even
more-tightly coiled. The desire for the good (in this case gold) remains, and (as with any un-met desire) if anything it increases with the passage of time.
The
obvious example here is China. Until the middle of last decade;
purchasing gold in any form other than jewelry was tightly-restricted
(and nearly prohibited) in China. What happened when China liberalized
its domestic gold market?
Despite
being the world’s largest producer of gold; gold imports into China
have steadily risen, and now will easily exceed 1,000 tons this year.
That is double the amount of gold which the central banks used
to dump onto the market each year, which by itself was enough to
permanently stifle the global gold market. Clearly after being deprived
of gold bullion products for many years, the Chinese people are now
buying with both hands.
Meanwhile,
with central banks themselves now buying (on a net basis) more than 500
tons per year; this alone amounts to nearly a 2,500 ton/year swing in
the supply/demand equation – in a world which mines less than 3,000 tons
per year (in total), and that number is now in decline.
Now we have pent-up demand being built-up in other traditional gold markets in Asia. Sooner or later the internal problems
caused by the brute-force suppression of gold demand will be worse than
the threats/coercion of the One Bank, and these gold markets will be
liberalized – as is now taking place in Sri Lanka. Then, like the
explosion of gold-demand in China, we will see similar (proportional)
tidal waves of demand hit the market when these temporarily suppressed
markets are liberalized.
But I’ve left the most-important consequence of this demand-suppression for last: the decoupling of prices
in these markets. What was previously described as simply higher and
higher “premiums” for the purchase of real bullion (but with one price)
is now being simply described as two prices for gold.
This is far more significant than mere semantics, and there could be no better illustration of this important concept than a recent headline:
Smuggled gold has its own price in India
As
the “premiums” have gotten higher and higher and higher in this
artificially distorted market; people now simply talk of “two prices”
for gold in India: the increasingly irrelevant “official” price, and the
steadily more important blackmarket price for gold.
This is precisely the evolution I predicted in my previous commentary (Decoupling In Precious Metals Markets) back in April:
…decoupling
must begin as an unofficial event. It will be a steady drip, drip,
drip. Anecdotal reports of large/growing and persistent “premiums” being
paid by any Buyers who actually want to end up with real metal in their
hands.
At
some point those “premiums” become so large and/or so persistent that
Buyers simply abandon that semantic fiction altogether, and embrace the
more-realistic paradigm of two prices for gold (and/or silver).
Clearly
with India having the world’s largest gold market, seeing this
unofficial decoupling of prices is of great significance. At the very
least it will immediately influence gold pricing with India’s
neighbours, from where all the gold smuggled into India must originate.
Soon those gold markets will also have two prices for gold: their own,
“official” (phony) domestic price, and the “Indian price.”
Such
an evolution cannot be halted, except by liberalizing these gold
markets again – and fully unleashing the tidal wave of pent-up demand.
Today we have the “official price” for gold and the “Indian price”. One
day soon; it will simply be the official price for gold and the real price, and then this “secret decoupling” will no longer be a secret.
http://www.bullionbullscanada.com/index.php/commentary/gold-commentary/26454-gold-market-secretly-decoupling