Record request for phyical gold delivery on the COMEX

Die Hard GoldCOMEX is normally a “paper gold” market in which investors rarely convert their contracts to physical gold. But in February, requests for physical delivery of gold on the COMEX set a record, reaching 43.26 tons (1,391,000 ounces).  By comparison, previous records were around 10 tons. Have recent requests by Germany, Switzerland and Venezuela to return gold home sparked concern for safety?  As I’ve mentioned before, many experts estimate there is as much as  200 ounces of paper gold for every ounce of physical gold.  So how many physical deliveries does it take before the paper market is broken?

This is the first time that there is such a request for physical gold delivery from the COMEX since the 70s.


US Mint Sold Out of Silver Coins

Empty VaultAnd so it has begun: the divergence of physical and paper precious metals. The US Mint has sold out of American Eagle silver coins and will not restart sales until “on or about” January 28th.

Authorized Purchasers,

The United States Mint has temporarily sold out of 2013 American Eagle Silver Bullion coins.  As a result, sales are suspended until we can build up an inventory of these coins.  Sales will resume on or about the week of January 28, 2013, via the allocation process.

Please feel free to call us if you have any questions.

Jack A. Szczerban
Branch Chief, Precious Metals Group
Department of the Treasury
United States Mint

How could there be a shortage of silver when only one day ago iShares Silver Trust, a large silver exchange traded fund (ETF), added 572 tons of silver in one day? The answer is simple: ETFs trade in paper. The physical silver simply isn’t there. Of course the US Mint could be playing some kind of trick to boost demand or curb demand (Who knows what they’re really up to? After all, the government always lies, even when it’s in their best interest to tell the truth.). Regardless, this is another crack in the system and bullish for physical silver, as premiums at many dealers have already jumped 3-7% today.

German Bundesbank Wants Its Gold Back Again

Stacked Gold BullionCurrently, the Federal Reserve Bank of New York holds 45% (1,536 metric tons) of Germany’s gold reserves. The remainder is held in London (13%), Paris (11%) and Frankfurt (31%).  In the past, The Fed has denied German requests to audit their own gold “in the interest of security.”  In 2007, German representatives were allowed to see the storage facility, but were not allowed to see the gold.  In 2011, German representatives were allowed to view a few bars from one of the nine compartments that supposedly hold Germany’s gold.  Again in 2012 there were discussions of German gold repatriation. And now, according to Handelsblatt yesterday, the German Bundesbank is developing a new approach as to where its gold will be stored. In the future, the bank will hold less gold in the New York Fed, and no gold in Paris.  A full announcement is expected Wednesday.


January 16, 2013

Here is the official statement from the Bundesbank:

By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.

The following table shows the current and the envisaged future allocation of Germany’s gold reserves across the various storage locations:

  31 December 2012 31 December 2020
Frankfurt 31 % 50 %
New York 45 % 37 %
London 13 % 13 %
Paris 11 % 0 %

Billionaire Eric Sprott Predicts Shortage in Physical Gold

Eric Sprott
Eric Sprott

On Christmas Eve 2012, billionaire investor Eric Sprott spoke with SeekingAlpha and discussed the current gold-buying sprees of the central banks of the world.

Sprott pointed out that central banks continue to buy gold in developed and emerging countries. He does not believe western banks hold the amount of physical gold they claim to possess, and he criticized the never-ending money printing (quantitative easing) by western central banks. He continued to hypothesize that central banks have leased out much of the gold in their possession, which inflates the amounts of physical gold actually available in the market.

“I think we are in for a shortage of physical gold,” said Sprott. “I mean the data I look at, one just wonders how long can these western central banks keep doing this. Sooner or later you run out of gold. They only have so much gold, and it was estimated they had as little as 18,000 tons back in 2000, I would think they might be running on fumes these days.”

Sprott pointed to the central bank buying patterns of the emerging countries, and used the example of the estimated 500-ton increase in gold bought by central banks in Latin America in 2012. He argued that the amount of gold available to change hands has not increased as dramatically its demand by central banks.

“I’m pretty sure the number will be at least 500 tons of [Latin American] central bank buying,” commented Sprott, “and interestingly that contrasts with – they used to sell 400 tons a year. [Together, this is] a 900-ton change in what central banks are doing per year in a 4,000-ton market. Who is not buying the gold that’s been buying it all along? Because the supply has never increased in the past 12 years.

“I’ve argued that there’s at least a 2,400 ton shortage a year of physical gold and that the Western central banks have to be supplying that gold,” continued Sprott, “because the physical things you can count, the paper stuff… who knows what is going on in the paper markets?”

Sprott also referenced the ongoing economic crisis, and the inability of global markets to adequately recover from the crisis of 2008.

“I don’t think the world will countenance printing money ad nauseum, which has been going on in the western central banks,” said Sprott. “…It’s going to end badly.”

IKEA to Lease Kitchens

Fight Club IkeaWe can’t own a home because we forever pay property taxes to our feudal lords, and soon you won’t even own your kitchen. Under the guise of sustainability, Ikea has announced it is considering leasing kitchens.

“Maybe we could rent out kitchens at low cost, thus making a product offering a range of services,” said Steve Howard, sustainability manager at Ikea. “We want a smarter consumer, and perhaps people today less attached to the property,” he continues.

So if a DIY, made-in-China, particle-board kitchen is beyond your budget, don’t worry; soon you’ll be able to pay for your kitchen forever. Lobbyists are probably already writing legislation to criminalize kitchen ownership for great profit on behalf of mother earth.

Original source in Swedish:

The Gold War: Physical vs Paper

There are two types of gold: physical and paper.  Everyone knows what physical gold is; it’s the shiny stuff you hold in your hands.  Paper gold, refers to a piece of paper (or digits in a computer) acting as a substitute for the physical gold.  With paper gold, you don’t own the gold. Many experts claim that there are at least 200 “paper” ounces for every ounce of physical gold.

As I mentioned in another post, the paper market is where all the price manipulation occurs, and currently there is a war between paper gold traders and physical gold holders.  If fact, according to John Embry:

“We are literally witnessing a war between the physical buyers (Eastern central banks), and the paper manipulators (commercials or bullion banks), and that is why there is such a fierce battle being waged in gold between $1,735 and $1,800.”

“If the commercials run into trouble (with their massive short positions), KWN readers will see a move in gold that will leave them breathless.”

The paper manipulators (commercials) are massively short gold, and every time they try to drive the price of gold lower to close their positions, they are blocked by a wall of physical buying.  Meanwhile, physical buyers, such as China, are happy to pick up physical gold at discounted prices.

Plastic Coin Capsules for Silver Canadian Maples: A Lesson Learned

A 1 oz silver Canadian Maple is 38 mm in diameter, so you might think that a plastic coin capsule with an inner diameter of 38 mm would be the perfect fit.  Right?  Wrong.  It might work for other coins, but for the 1 oz Canadian Maple, the fit is so tight that the case cracks when you put the lid on.

So I got a 39 mm capsule and it works, though there is a little space around the sides of the coin.

It Only Takes 10% to Change Society

If you’re interested in precious metals, your eyes are probably aware of the economic troubles of the world. You’re probably also aware of our diminishing freedoms and and ever-expanding, invasive government, which affects almost every aspect of our lives. Sometimes it’s suffocating and overwhelming to be awake.  But today I found hope.

Scientists have discovered that when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society.

I hope that brightened your day and lifted your spirits.  Keep spreading the word about sound money and Liberty.