Physical Gold Buying Soars In Asia

Gold was pushing $1230/oz overnight, as the methodical take-down of gold and silver in the NYC and London paper markets has triggered an avalanche of demand for physical gold in the eastern hemisphere.

Last night ex-duty import premiums in India were $14 over spot gold.  In Shanghai the premium to world gold was $9.76.  Delivery volume into the Shanghai Gold Exchange rocketed to an extraordinary 86.55 tonnes (it was 35.9 tonnes on Wednesday).  The open interest on the SGE was 807 tonnes.  To one observer’s recollection, John Brimelow of John Brimelow’s Gold Jottings, this is the first time the open interest has been over 800 tonnes.

In Viet Nam the premium paid by the public was $90 over world gold.  The spread has been wider over the last 15 years, but not much and only during times when there’s been high “backwardation” between the physical delivery bullion markets in the east vs. the fraudulent paper gold markets in London and NYC.

To reinforce this nebulous idea of gold flowing from west to east, and unusually high amount of gold was shipped out of the Comex kilo bar vaults yesterday.  320,434 ozs left the Comex.  Over 12,000 kilobars have left JP Morgan’s kilobar vault account in the last two days.  This is being attributed as evidence of Asia’s voracious demand right now, as NY and London – when those two conduits actually clear real metal – trade 400oz LBMA grade bars whereas Asia prefers kilobars.

The price of gold is being attacked right now in a manner that is quite reminiscent of the way it was attacked in the summer of 2008, right before the global financial markets collapsed, led by the fall of Lehman.

Something really ugly is coming toward the global economic and financial system.   The dollar index soared from 72 to 86 between June 2008 and October 2008, while gold and silver were systematically taken a lot lower.   We know how that played.

Similarly, the dollar has gone parabolic in the last week without any visible news or events that would have triggered this move.   Too be sure, if Trump implements his borrow and spend program for infrastructure projects, the Fed will have to print a lot of money to monetize the avalanche of Treasury debt issuance, given that the rest of the world is now dumping their Treasuries.

Both of those factors should be dollar-bearish and gold-bullish.  In good time that’s how this will play out.

In the latest episode of the Shadow of Truth, we discuss the extraordinary “backwardation” that has developed in the price of gold between the west and the east.  We also discuss evidence of the ongoing collapse in the U.S. economy.

7 thoughts on “Physical Gold Buying Soars In Asia

  1. It’s a NIGHTMARE that never ends!

    Looks like I may end up utilizing my margin account after all, before the end of this year. Keeping very close tabs on this.

    On the other hand:

    Mitt Romney now being considered for freaking Secretary of State! ARRRRGH!!! All these names like John Bolton, Mitt Romney are monsters we hoped were buried, but are coming back from the dead. It’s all a nightmare that never ends!

    1. Hopefully Trump is interviewing Romney et. al. to find out what makes them tick and what NOT to do.

      As far as this crazy dollar strength, interesting to note that the aussie and canuck dollars are relatively strong (was looking to buy aussie if it gets really weak like it did in the early part of the year, when I took a trip there) while the euro looks to be heading to parity – finally, hopefully. Then I will book a trip there!

  2. Never never buy gold on margin. During the last gold run up in 1980, nobody thought that it would take 20 years before gold would go up again, eventually surpassing the price peak of 1980. As unlikely as it seems, it is possible that the present gold price suppression may continue for another 20 years. Gold will go up eventually, but it may take much much longer than we can imagine. The future is impossible to predict.

    1. Please consider that unlike 1980s suppression, continuing today’s suppression for 20 years would need to defy the laws of physics.


      There were no physical markets in 1980s in China, India (and even Russia, or back in those days Soviet Union) that came anywhere close to today’s physical gold/silver markets. Have you seen the arbitrage inducing spreads between physical exchange & futures paper exchange? It is a totally surreal situation like Alice in Wonderland.

      I have 100% agreed w/ your statement that of “Never ever buy precious metals on margin” for many years. In fact, even @ today’s absurdly depressed prices & absurdly high US Dollar, buying on margin is most likely a very dangerous proposition, it’s like playing with fire.

      Having said that, if US Dollar keeps spiking up like this taking gold into 3 digits & silver into single digits, there may be specific individual cases for which buying on margin may be worth the risk. Everybody’s risk aversion & personal mileage varies. With each passing day, we’re getting closer & closer to a territory I didn’t think was possible in my wildest dreams.

    2. Gold production more than doubled since 1980 . As a matter of fact, gold production is not only rising, but it still exceeds the worldwide demand for physical gold (including China, Russia and India). Indeed, the manipulation of the gold price would be impossible if demand for physical would exceed the supply of physical gold. Not only is the price manipulated, but the demand for gold is also managed.

      The demise of the Dollar was predicted by various experts in the early 1980’s. Many of these experts died of old age since then. The Dollar is still alive and doing well.

  3. Just an armchair observer, but could the USD rally be due to the currency issues going on in India? From what I have read, since the price of gold has gone up and there is extremely high demand to get out of the local currencies, they are turning to other currencies like the USD and others. Thoughts?

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