Gold Demand Trends Q2 2019

"Time is coming when markets search frantically for physical collateral to find that paper far exceeds underlying collateral for several metals and other resources. I am warning that when markets fall in sustained negative response to bursting bubbles, widespread deleveraging will reveal insufficient hard collateral underlying traded asset-backed securities.

The words rehypothecation and hyper-rehypothecation may be rediscovered or remembered again, forgotten somehow during much of the decade since the Great Financial Crisis."

Harald Malmgren

You can access the full gold demand report here.

Key highlights

Central banks bought 224.4t of gold in Q2 2019
This took H1 buying to 374.1t – the largest net H1 increase in global gold reserves in our 19-year quarterly data series. Buying was again spread across a diverse range of – largely emerging market – countries.

Holdings of gold-backed ETFs grew 67.2t in Q2 to a six-year high of 2,548t
The main factors driving inflows into the sector were continued geopolitical instability, expectation of lower interest rates, and the rallying gold price in June.

A strong recovery in India’s jewellery market pushed demand in Q2 up 12% to 168.8t
A busy wedding season and healthy festival sales boosted demand, before the June price rise brought it to a virtual standstill. Indian demand drove global jewellery demand 2% higher y-o-y to 531.7t.

Bar and coin investment in Q2 sank 12% to 218.6t
Combined with the soft Q1 number, the H1 total ended at a ten-year low of 476.9t. A 29% y-o-y drop in China accounted for much of the global Q2 decline.

Gold prices shot to multi-year highs
The gold price broke through US$1,400/oz for the first time since 2013. Among the factors driving this rally were expectations of lower interest rates and political uncertainty, with further support coming from strong central bank buying.

Personally I think it is a mistake to merely look at the price of gold in US Dollars.

You may see the price of gold in various currencies here.

Stocks and Precious Metals Charts - Our Pampered Plutocrats - Wall Street Throws a High Fructose Hissy Fit

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right."

John Kenneth Galbraith


"For decades, we have had a trade policy that has been written by giant multi-national corporations to help giant multi-national corporations. They have no loyalty to America. They have no patriotism. If they can save a nickel by moving a job to Mexico, they’ll do it in a heartbeat. If they can continue a polluting plant by moving it to Vietnam, they’ll do it in a heartbeat."

Elizabeth Warren


“At the heart of the TPP were new rights for thousands of corporations to sue the U.S. government before a panel of three corporate lawyers that could award unlimited sums, including for loss of future expected profits, to be paid by American taxpayers when the corporations claim U.S. policies violate the new entitlements the TPP would provide them.

The TPP also included extreme new monopoly protections for pharmaceutical firms that blocked competition and ensure high medicine prices.  The deal’s environmental standards, negotiated by Democratic President Barack Obama’s trade ambassador Mike Froman, were a roll back from those included in the last four agreements negotiated by George W. Bush.”

Public Citizen, More Information on the Trans-Pacific Partnership

There was a wailing and gnashing of glaringly whitened teeth on Wall Street today.

The spokesmodels were distraught with sympathy for the plight of their pampered plutocrats.

The Fed did exactly what was expected.  However...

What sent the Street into a tantrum were statements by Fed Chair Powell that suggested that this was not the beginning of a major easing cycle.

What, no more high fructose hot money with tax cuts for Wall Street, financed by austerity for everyone else?

Inconceivable!

This is late stage financial bubble action, and the financial class is jonesing for more easy money to keep propping up their Ponzi schemes and credit asset cons.

Now the attention will turn to the economic data, and demanding reassurances from the Fed that the flows of hot money into the pockets of the elite will continue unabated.

With tax cuts. And more monopoly power. And even less accountability for crime.

And everyone else be damned.

I came into today short stocks from last night, and to this I added some this morning.  I had trimmed back my short term gold position in my trading account on strenght earlier this week.

Why?  Because while nothing is certain, today's action was fairly probable.  If you are operating from the right set of base assumptions.

I am not too concerned about gold yet, and will be looking to add back to the short term positions.  I may wait for the Non-Farm payrolls report.  But the stock index shorts were a nice hedge.

Depending on what gold does the rest of the week, I may shift to one of the alternate chart scenarios, rather than the symmetrical triangle.

Have a pleasant evening.

Stocks and Precious Metals Charts - Tomorrow, and Tomorrow, and Tomorrow

"Tomorrow, and tomorrow, and tomorrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time..."

William Shakespeare, Macbeth

Another sleepy summer day in the markets.

We wait, with bated breath, for the AAPL results after the close.

Tomorrow we will be getting the FOMC rate decision. They are widely expected to cut their benchmark rate by 25 basis points.

And immediately after that, the markets will begin to focus on what they will do next.

Is this a one and done, the first of a pair, or something even more in the sugary asset bubble category?

The Non-Farm Payrolls Report on Friday may help to prob that thinking.

The only surprising thing about today, at least to me, was the surprising strength in the broader market, the Russell 2000, even while the lead sled dogs in the SP 500 and NDX were faltering.

Gold and silver showed a little strength while the Dollar went sideways.

We are in day three of this latest 'heat wave' and the thunderstorms are on their way, hopefully to clear this miasma of heat and humidity out.

Things are quietly on a low rolling boil overseas, in various places.

Easily ignored by the news it seems, at least for now.

Have a pleasant evening.

Stocks and Precious Metals Charts - Calm Before the Storm

Stocks and the markets in general were in a very sleepy trading session, seasoned a bit with algo shenanigans.

The markets are waiting for the FOMC decision on Wednesday, and the Non-Farm payrolls Report on Friday.

Market indicators are suggesting that stocks are in a bubble, now.

We seem to be back in a 'heat wave' for now, very indicative of late July, punctuated by passing thunderstorms.

Have a pleasant evening.