Precious Physical Metal Flows From Trusts and Funds - Managing the Gold Float

"He who sells what isn't his'n, must buy it back or go to prison."

Daniel Drew

Unless you are a Bankster. Then you get to keep your gains, and get backstopped by the Fed for any losses.

Because you are just that systemically important, and politically well-connected.

In our priorities we value corporatist systems and their elite over people.

It looks like they are managing the physical 'gold float' fairly closely, shoving metal around the plate to make the global market seem fully functional.

Silver, not so much.  There does not appear to be much if any shortfalls in physical supply.

Let's see if the outflows continue to pause and reverse this week with the upcoming Non-Farm Payrolls Report.

Relative Scarcity of Physical Gold Prompts Large Drawdowns From Funds and ETFs

"It appears that there is a dwindling and overleveraged supply heading towards an unmanageable and relentless source of demand."

It is interesting to watch the ongoing management of physical gold holdings in the West.

Physical gold has been seeing large drawdowns from inventory during this price decline, but silver does not.

This is not due to some preference or matter of taste.   Physical gold for sale at these prices is in short supply, whereas silver is not.

Both are subject to speculative price manipulation in the paper markets.

The relentless demand from Asia is stressing the highly leveraged claims per physical ounce of gold in London and New York.

It appears that there is a dwindling and overleveraged supply heading towards an unmanageable and relentless source of demand.

The system will be maintained— until it cannot.   Although the game can be extended by a determined effort, no commodity pricing pool can last forever in the face of a stubbornly stable supply and a steady excess of offtake out of the pool, shenanigans and antics notwithstanding.

Physical gold is flowing from West to East, into the markets and strong hands of Asia. 

Bye bye gold.

The eventual resolution may be quite energetic in terms of price.

Weekly Gold and Silver Flows In Funds and ETFs

Recent history suggests that gold and silver are both putting durable bottoms based on the composition of the positions in the futures market and the extreme of the decline in price.

The dichotomy between gold and silver outflows with both metals in price declines is interesting, to say the least. Physical gold is flowing out of the funds and ETFs, while silver is actually increasing.

It is telling us something about how funds and ETFs might add to their gold holdings when the price declines stop and the bull rally begins anew.

One difference is that the central banks do not have large physical holdings of silver that they are prepared to lease out to private concerns.

The use of this extreme leverage in physical gold in the face of steady buying and competing claims is like combining potassium nitrate and concentrated sulfuric acid.

And no one could have seen it coming.

Draining Physical Gold From Funds and Trusts To Supply the Markets of Asia - An Extreme In Speculation

Numbered — God has numbered your reign, and will end it.
Weighed — you are weighed on the scales, and found wanting.
Divided — your power will be divided up and given to others.

Daniel 5:25-28


“QE [quantitative easing] puts beer goggles on investors by creating a line of sight where everything looks good."

Peter Boockvar

It is interesting, but little noted, that during similar price declines, physical gold is removed from the funds and trusts, while silver remains almost untouched.

That is because the 'gold float' of physical gold available to supply the steadily aggressive demand is critically low, whereas silver, while also beaten down by speculators, sees no decline, because there is an adequate supply of physical silver, for now.

Compared to the physical delivery market of Shanghai, the NY Comex looks like a game of Liar's Poker, an exercise in pure speculation, almost like a bucket shop.

The number of 'claims per ounce' in gold has risen once again to 315 claims per ounce offered at these prices.

In the way that the Fed implements it, Quantitative Easing is like beer goggles for financial paper.

A purposely misaligned, an arbitrary valuation and mispricing of risk in any asset class, commodity or currency, can be sustained only by force and fraud. As the fraud becomes weaker and less effective, the force must increase.  Eventually the scheme breaks down, and a more market-based equilibrium will reassert its presence. That is monetary or value theory based on history. 

Gold is moving from West to East, and is unlikely to return anytime soon, and at anything near to these prices.

Our markets will have been weighed, and found wanting.

Gold and Silver Holdings of Trusts and Funds - Price Manipulation: The Thing Speaks For Itself

Dangerous leverage in the gold markets seems to be pressing the ready supply of physical gold, even prompting withdrawals and redemptions from the trust and funds on relatively small price swings, as opposed to the silver market where supply is adequate.

If there is a dislocation in the physical gold market, which some have suggested as a possible outcome, then res ipsa loquitur. 'the thing speaks for itself'. 

There should be little surprise or debate with regard to the negligence of the regulators of the markets and those engaging in price manipulation including the Fed, the SEC, and the CFTC. 

The market price manipulators have been too long free to act with near impunity, much as Bernie Madoff had been able to do before his own price manipulation scheme toppled over, with the regulators and the Banks turning a blind eye to systematic fraud.

Physical Gold Is Moving Steadily From West to East

Physical gold is moving from West to East.

New York has become a highly leveraged, largely 'paper trading' market, whereas 'the New Silk Road' is the center of physical gold accumulation.

This may resolve via a major short squeeze on paper claims unable to be fulfilled by physical gold at anywhere near today's prices.

Stocks and Precious Metals Charts - Scraping By - Every Mother, Every Father

"Every mother, every father
Called to raise up sons or daughters
May your heart be patient
May your mind be clear
May our God be with you
And calm your fears."

Porter's Gate Project, Every Mother Every Father (Assad, Zach, Cunningham)


"In the Incarnation the whole human race recovers the dignity of the image of God.  Thereafter, any attack, even on the least of men, is an attack on Christ, who took on the form of man, and in His own Person restored the image of God in all.

Through our relationship with the Incarnation we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our familiality with all mankind."

Dietrich Bonhoeffer

O Lord, pierce our hardened hearts, enlighten our willful blindness, and break our chains of pride and self-deception, so that we may choose life for ourselves and for our children.

As usual US stock futures plunged overnight on the threats from Trumpolini to ratchet up the stakes in the developing trade war with China.

And as usual, after the market close in Europe, the stock futures were walked up slowly, in relatively quiet summer-like trading, to close far off the lows towards unchanged.

I suspect that one day soon the markets may slip. And all the king's men won't be able to prop it back up and make it look pretty again.

The signature will be a big drop that sticks, and then an attempt to rally out of it that fails, and then a plunge that begins to bite more deeply. This is essentially what happened in 1987 and over a longer period of time in 1929. It is still a low probability event, but things are going along rather riskily with an almost willful indifference to it.

Gold and silver were also hit in the early NY trading hours after moving higher overnight.

Once those two genies pop out of their bottles, there is going to be quite a chore to bottle them back up again.

Physical inventories of gold ready to be delivered are quite low.

One wonders how unsustainable, or perhaps more correctly unstable, the current situation in the markets may be at these valuations and assumptions.

I watched the World Cup games in the afternoon, and missed Trumpolini's far-ranging rant to the Independent Business Group. Darn.

It does seem like the world is holding its breath, to see what happens next.

Need little, want less, love more. For those who abide in love abide in God, and God in them.

And may the peace of the Lord, which surpasses all understanding, guard our hearts and our minds.

Have a pleasant evening.

Don't Believe Your Lying Eyes: Gold Does Not Offer a Safe Harbor Against Financial Crises

"Gold has worked down from Alexander's time... When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."

Bernard Baruch


"After we came out of the church, we stood talking for some time together of Bishop Berkeley's ingenious sophistry to prove the nonexistence of matter, and that every thing in the universe is merely ideal.

I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it.

I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it--

"I refute it, thus!"

Boswell, Life of Samuel Johnson


"For centuries, gold had a profound impact on history, as a symbol and a storehouse of wealth accepted universally around the world. Gold functions as a medium of exchange, particularly in areas where currencies are distrusted.

Yet gold has not been without controversy. The influential economist, John Maynard Keynes, referred to gold as a 'barbarous relic.' Later in the 20th century, former Chairman of the Federal Reserve’s Board of Governors, William McChesney Martin, praised gold as 'a beautiful and noble metal. What is barbarous,' Martin said, 'is man’s enslavement to gold for monetary purposes.' Clearly, this precious metal has aroused great passion. It undoubtedly will continue to do so long into the future."

New York Federal Reserve


"The commerce and industry of the country, however, it must be acknowledged,though they may be somewhat augmented, cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper money, as when they travel about upon the solid ground of gold and silver.

Over and above the accidents to which they are exposed from the unskilfulness of the conductors of this paper money, they are liable to several others, from which no prudence or skill of those conductors can guard them."

Adam Smith, Wealth of Nations

Gold has moved in price from $250 in the year 2000 to roughly $1,350 today. In other currencies the move has been much more pronounced.

The period of 1996-2000 is a good time to pick a start for this monetary episode, because this is when the global monetary regime, which had been in place since the end of WW II with a significant change made by fiat in 1971, began to change, substantially in the most proper sense of the word. 

Some like to cherry pick a study of recent gold performance from the prior top of $1,900, but that says more about them and their intentions than it does about gold.  They know that all bull markets climb a wall of worry and can offer significant retracements from new highs while remaining intact.

And given the structure of global supply and demand, and the vast movements in the global economy, it is likely to go much higher, unless it becomes a fixed asset in a global monetary system once again and its price becomes set by fiat.

More likely it will become a floating asset with a more 'official' status than it has today when some central bankers will hardly recognize its existence in public, although they own it, and worry over it in private.

As shown in the second last quote above from the NY Fed, which unfortunately is no longer found on their web site, some central bankers find the attractive, and yet restraining, qualities of gold as a standard to be cloying, because it restrains their degrees of freedom to act as they would like.

And even when it is not a standard it does tend to utter some 'unpleasant truths.' But there is no denying its role as a refuge during periods of monetary instability, especially for those who are not currently holding the financial power.

And gold is certainly not the only hedge, and only safe harbor available.  But that is a far cry from saying it has not served many people very well during serious financial crises, and worked exceptionally to retain its value during a currency crisis and reissue/reflation.  Even a cursory look at historical crises show that.   The value is to study the nature of crises, and to understand the situation one has, not the one you wish you had, or even worse, the one that serves your mistaken point of view.

By the way, I am not advocating a gold standard as a cure for our ills. What our financial system requires is genuine reform from top to bottom. It is capable of corrupting, for at least a protracted period of time, virtually any single solution that one can imagine.  Look what they have done to the civic impulse for genuine change that became that industry-born frankenstein, Dodd-Frank.

They create a desert, and whimsically call it the 'new normal.'

So let us then consider this paper below, titled Gold Has Never Been a Great Hedge Against Bad Economic Times.

Not meaning to be rude, but there are some telling flaws in this paper.  But even then I would not have been moved to respond to it, if they had not had the cheek to use the word 'never' in the title, and to employ such sloppy criteria in their hypothesis as 'bad economic times' and 'major macroeconomic declines,' which they tend to confute with stock market performance.

And that is not to say that any very broad sweep of data over time, without sufficient attention to the particular character and context of the various situations described within, can easily be misleading, or be used to 'prove' something else when using it to draw broad and poorly defined conclusions.

What kind of crisis was it?  Was it a crisis period or not?  What caused it, what policy actions helped to precipitate it, if any, and what were the policy responses?  How are you measuring the asset? Was the change uniform, or different across areas and economies, and what were those differences?

In the Weimar inflation, for example, gold among other assets was a spectacular hedge in a financial crisis, but so were some stocks.   So one can see that using the 'stock market' as your defining variable of a macroeconomic disaster might not be effective.  This is not a quibble.  It is calling out some very fuzzy thinking which characterizes this analysis, that does not support such a sweeping hypothesis.

It may surprise you, but not all crises are the same. And I do not hold gold to be a panacea, not at all. Nor do I consider it to be a outlier or aberration, which is the converse of this, that some others seem to do. 'Gold has never been a hedge against bad economic times.' The use of the word 'never' is a deep tell about their mindset and predisposition.

What variables do tend to have a correlation with gold over periods of crisis?  I have found in my own research that they tend to be risk spreads in bonds, the growth in the broadest money supply, other risk factors, and of course the relative strength of the currency in which you are expressing gold's value.   But even this is not uniform over time, especially in non-crisis or managed price periods, such as when gold is fixed as a 'standard.'

Most assets will smooth out over a long period of time, unless they are artificial constructs,like some stock indices, which are altered by throwing losers out and putting winners in to achieve a semblance of growth.

There is an ebb and flow in everything.

It takes someone with the time and ability and most importantly the open, inquisitive mind not bound by some school of thought or orthodoxy to go into the various situations where something has happened, and happened with a particular cause and effect that was widely acknowledged, in order to really understand the mechanisms and nature of a thing.

When I first began studying money as a practical consequence of my international business dealings, and later with first hand experience to the Russian currency crisis, I could have given two hoots about gold or silver.  They were never even mentioned in any of my business or economic courses.  But later as I continued to study this as an avocation, their role in the history of money and current events could not be ignored.

But never mind what is happening all around you.  Don't buy any gold, and don't like it. Laugh at the rest of the world which is buying it.  Tell them to eat trillion dollar platinum coins because you say so.  It doesn't matter. Keep believing, believe in memes and quaint canards and slogans like the 'efficient market theory' and 'printing money endlessly doesn't matter.' Keep applying top down monetary stimulus and ignoring the results of your serial policy errors and asset bubbles.

So called experts have their noses stuck so deeply into 'what everyone in their profession knows' as an accepted orthodoxy that they can understandably fail to see the forest for the trees. They miss the big changes, the 'sea-changes.'  They are well trained for a world that is changing all around them, using inflexible models too often based on deeply flawed assumptions.

In 2006, the central banks of the world became net buyers of gold bullion for the first time in 30 years, and are continuing to do so in a very big way. Gold has been moving en masse to the emerging economies of Asia, the biggest beneficiaries of 'globalisation.'

And there is a reason for this, that is not based in some quirk or personal idiosyncrasy.

But arguments based on faulty hypotheses such as this paper, or even worse, on almost nonsensical or ad hominem arguments, seem to poke their heads up every so often, either when the banks, or some other major players, get their panties in a bunch because of their exposure to bad bets in the metals markets, or when some central banks start to feel nervous about their ability to manage the markets in their currencies to achieve their financial engineering goals.

Those economic policy goals get in trouble, by the way, because the policy itself is quite possibly running against the markets, and is also misdirected in addition to being ineffective.  We have certainly had enough first hand experience in this for the the past twenty years or so.

But at the end of the day, people may say what they will, but money talks. The real economy has a message to tell for those who will listen to it.   Or not.

There will be those who will continue to say, 'this is not happening' even while a tsunami of change rolls over them.   That is their prerogative.

The time for warnings was then.  This is now.

And events are underway that will have something like the character of a force of nature.

GOLD HAS NEVER BEEN A GREAT HEDGE AGAINST BAD ECONOMIC TIMES: Evidence from decades of US and global data

Gold has not served very well as a hedge against bad macroeconomic and stock market outcomes. That is the central conclusion of research by Professors Robert Barro and Sanjay Misra, published in the August 2016 issue of the Economic Journal. Their study draws on evidence from long-term US data on gold returns, as well as gold returns during some of the worst macroeconomic disasters experienced across the world.

Gold has historically played a prominent role in transactions among financial institutions even in modern systems that rely on paper money. What’s more, many observers think that gold provides a hedge against major macroeconomic declines. But after assessing long-term US data on gold returns, the new research finds that gold has not served consistently as a hedge against large declines in real GDP or real stock prices.

From 1836 to 2011, gold delivered low average real price appreciation and experienced high average volatility. The mean real rate of price change was 1.1% per year, close to the 1% average real rate of return on three-month US Treasury Bills and comparable assets. The standard deviation of annual gold returns was 13.7%, almost as high as the 16.7% on the US stock market...

Royal Economic Society, Gold Has Never Been a Great Hedge Against Bad Economic Times

Gold Registered for Delivery at the CME Warehouses Plunges To a New Low

Over 200,000 ounces of gold bullion were withdrawn from the registered (deliverable) category in the Comex licensed warehouses at the least.

That takes the new total down to a little under 74,000 ounces of actual physical bullion registered for delivery at these prices.  I will check later but I do believe this is a new low for this century.

Since January is pretty much a non-delivery month for an increasingly non-delivering exchange, it may not mean all that much, but it is interesting to watch for all the reasons we have discussed previously.

And it is a fairly recent phenomenon with no other good explanation that those holding their gold at CME licensed warehouse do not with to hold their gold in a deliverable category at these prices.

Or they enjoy doing useless and pointless paperwork, as some would have you believe.

One should keep an open mind about things.  But some reasonably persuasive data to back up the theories from the perennial apologists for the bullion banks would be more persuasive.

When something has not happened before, and other evidence suggests that something has radically changed, I do not think that it is wise to just dismiss it.

This should send the 'potential claims per ounce' back towards those highs from the end of last year.

My own theory as you know is that traders who are holding gold in these warehouses do not wish to take the risk of losing it in a physical short squeeze, or have otherwise encumbered the gold and do not wish to risk a delivery and loss of the physical bullion.

There could be another reason for this.  I have surely not heard anything remotely plausible yet, just the usual tortured rationales from the perennial bullion bank apologists and creatures of a failing bullion hypothecation system.

Shrinking Supply of Available Gold In London For World Demand - Timely Caution

It is reasonable to estimate that London, in all the vaults, has only about 900 to 250 tonnes of gold available for physical delivery, which is a shockingly low figure given the current demand from 'The Silk Road' nations alone that is running about 1,700 tonnes per year.  And even that 250 number is questionably high, depending on the status of the gold in the Bank of England.

The objective is to attempt to determine how much available physical gold for delivery can be wrung out of London and New York, in excess of what can be had from scrap, minining and leasing. We are calling that 'the gold float,' and it is feeding the demand for bullion in Asia.  At that point we might estimate when the pressure on price becomes irresistible.

We are thinking months, not years, at least with things as they are.

I wish to acknowledge up front the debt that is owed to Ronan Manly and Nick Laird especially for the data contained herein, as well as Koos Jansen for his ground breaking work in estimating Asian gold demand, and Bron Sucheki for his participation..  I have listed some of the pertinent published articles below.

It is regretful that one can only provide estimates.  But that is the nature of this beast that operates with secrecy of supply and distortion of actual demand.

What manner of business is this to enable price discovery in a public market, by covering so many fundamentals with secrecy?  Where is the mining community in all this?

The LBMA is said by those who are in a position to know these things to be running 90:1 or more leverage to each of its unallocated ounces of gold, which according to Jim Rickards is all of them.

The potential claims per deliverable ounce at the Comex right now is at an historic nosebleed high by of about 255:1, supposedly because the owners which to avoid a 'short squeeze' in bullion, although the party who said this did not say 'where.'  London probably, maybe Switzerland.

Peter Hambro says that "there is not enough physical about. There are endless promises."

In a nutshell, we now know that physical gold for global delivery, of which the London vaults are a major supplier, are rather tight, especially given the increasing demand for physical bullion in the East.

There is plenty of room for questioning the numbers and casting doubt on them, while hiding behind a curtain of exchange secrecy.  One might suppose that the gold bullion bank apologists will be hard at it soon enough again.

They too often do not help to advance the understanding of the public,  preferring to selectively twist the data to say 'all is well.'   They deride the supply problems that people in the industry are encountering, always saying they are not real.  And they like to include all the gold that exists in the warehouses for their calculations, whether someone else already owns it and is clearly not interested in selling at these prices.

More details would be useful, because if we could obtain a better idea on the extent of central bank leasing, we would be better able to estimate the risks and the relative fragility in the highly leveraged and hypothecated supply of gold in New York and London.

One would think from the known data that the unallocated gold in London is counter-claimed many times, and even the allocated and custodial gold is likely to have multiple claims upon it.   So the actual 'gold float' is probably quite a bit less than 1,361 tonnes.  Each of us has our own favorite ballpark number ranging from 900 to 250 tonnes and less, not fully accounting for leases and leverage on the remaining stock.

Nick Laird had a secondary outlier estimate which he expressed in colloquial Australian, which I dare not repeat here.  But it was quite low.  lol. Maybe four months worth of float left.

And it would certainly be nice to have more information about silver, especially since to my knowledge the central banks have dealt their own supply away some years ago and there are quite a few indications of tightness of supply, although not in the Comex yet.

I do consider this analysis to be a work in progress,    Nick Laird and Ronan Manly are the key data organizers I believe, with help from Koos Jansen and Bron Suchecki, and the odd bit from Jesse the consulting detective.    So I would look to their sites for explication of their methods and sources. Ronan Manly in particular is a public source and he goes into quite a bit of detail.

Given the struggle it has been to obtain the data, and the refusal of central bank personnel to discuss their own supplies on orders from above, there may surely be gaps and errors in this, but not for lack of effort.

If I have any major concern it is that the management, the exchanges and the regulators, will allow the traders to sleep walk themselves into a rather serious situation.  And don't we know how little self-restraint these traders have been showing.

The remedy for this situation is not even more leverage, or more hypothecation of the unallocated stock, or even more leasing by the central banks, or more programs in India to dampen demand.

The longer they allow this price rigging and leveraging up, the slower productive mines will come on line, and the worse the tightness on the remaining physical supply will become.  But as they say in New York and London, 'nothing is broken yet.'

The market solution for this tightness of supply is HIGHER PRICES and not increasingly ludicrous jawboning, spin, and bear raids.

And if higher prices might inconvenience the policy and perception management aspirations of the Wall Street financiers, their enablers and associated hirelings, well then too bad. Try to behave more responsibly, and stop attempting to make the rest of the world pay for your excessive gambling losses and poor judgement.


Related:
On the LBMA and Their Unallocated Holdings
Lions and Tigers and Deriding the Tightness of Gold Supply
How Many Good Delivery Bars Are In the London Vaults - Ronan Manly
Central Bank Gold at the Bank of England - Ronan Manly* (detailed sourcing of this data)
The London Bullion Market and International Gold Trade - Koos Jansen
Detailed London Charts and much data gathering - Nick Laird (available to the public)

Here are a few additional charts from Nick Laird's site at goldchartsrus.com to break out a bit more detail and to provide some context for the estimated physical supply compared to physical demand.

Swiss Refiner: Physical Tightness in the Flow of Gold Is 'Reflected in the Price Not at All

"No correlation to the physical market.

On-going tightness in the physical gold markets.

physical tightness of flow is reflected in the price not at all.

Gold is moving in one direction from west to east with small exceptions over the last year.

The danger of less supply moving forward is more likely than the comfort of more supply."

I found this discussion between John Ward of Physical Gold Fund SP and an executive at one of the top Swiss Refiners highly informative, and suggest that you give it a listen.

The most difficult part I have found in presenting information is that once a group has amassed a great deal of data and putting it into some organized form of information, an arduous task indeed,  the next step of taking that information and putting it into a relatively simple and easier to understand format is a very important task and none too easy in itself.

I certainly learned that lesson through years of making presentations to the principal executives of Fortune 100 companies.  Most of the time they wish to have everything on one sheet or slide, with backup optional for their staffs or key questions they may ask in 'drilling down.' If you have ever worked at a large company I am sure you know the feeling.

I hope to have something out on this issue later day.

But this is quite interesting and stands alone.  We have been hearing about this 'tightness' from quite a few quarters recently including some bank analysts and Peter Hambro.


You may read about this and listen to the actual podcast at Physical Gold Fund.

The gentleman we are interviewing is part of senior management of one of the largest Swiss refineries. His refinery is one of only 5 global LBMA referees, which takes samples from other refineries around the world and certifies them to produce gold meeting the purity and form factor of the LBMA good delivery standard, which makes it part of the very core of the industry globally.

He has over 30 years experience in the gold markets and has in our view one of the most authoritative perspectives into global physical gold flows in the world. His unique outlook, formed from internal data on gold flows through the refinery, combined with colleagues throughout the industry including the largest bullion banks (versus news outlets) is an invaluable source of information and paints an important picture for the gold markets moving forward.


Topics include:

*Why trying to correlate physical flows with the price can be misleading;

*On-going tightness in the physical gold markets;

*There is less liquidity in the physical market;

*The physical tightness of flow is reflected in the price “not at all”;

*As long as the spot market is settled with cash settlement, the physical flows are not determining price;

*If investors dealing in cash markets begin to take delivery, the physical is just not around;

*The current pricing mechanism can continue indefinitely unless investor behavior changes to taking delivery versus cash settlement;

*The gold price has “no correlation to the physical market”;

*If this behavior changes (to taking physical delivery) it could become dramatically dangerous;

*Gold is moving in one direction from west to east with small exceptions over the last year;

*90% of the refinery’s business is currently supplying demand from the east (India, China) and 10% to western markets;

*China has imposed a new standard on the LBMA good delivery system of 1 kilo, 999.9 fineness;

*400oz bars being melted and refined to 1 kilo 999.9 fine bars and shipped into China are coming out of London and particularly the ETF’s such as GLD;

*In the next gold upleg, scrap may not be readily available – overall scrap has decreased remarkably;

*Declining investment in the mining sector and geo-political issues affecting mining viability will unavoidably reduce gold supply moving forward;

*The danger of less supply moving forward is more likely than the comfort of more supply.