The Trend Change In Central Bank Gold Reserves in 2008 That Few Have Noticed And Fewer Acted Upon

This excerpt below is from a blog which I published in 2013.   It is a theme that I have been striking since 2009 specifically.

The turn in central bank gold buying came in 2008, although the bullish case for gold for other reasons became pretty obvious in 2002.

The bottom in the gold price was marked when England sold its remaining physical gold, in the notorious 'Brown's Bottom.'

By 2009 the data made it completely clear that the world's central banks had turned from net sellers of gold bullion in order to control its price and had become net purchasers of physical gold for their own reserves. 

Demand has been led by 'the New Silk Road.'

I suspect this change was a reaction to the currency crisis in the emerging markets in the 1990s.   It was referred to as 'the Currency Wars' popularized in China and given little coverage here.

And of course there was the failure of the Washington Agreement, struck in 1999 to manage the gold price through planned central bank sales in order to support what some called Bretton Woods II and the exorbitant advantage of the perodollar.

Hardly anyone outside of a small community of analysts had noticed, and even fewer understood what it meant.

I include the older charts, and a recent tweet by analyst Luke Gromen that shows where the central banks are in their purchasing today.

Hint, they are still buying gold, physical gold, and in steady to increasing amounts such that the 'free float' of available physical gold for delivery is strikingly low compared to demand.

I suspect that silver will have a role to play, judging by the enormous silver hoard that JP Morgan has established, for customers unknown.

Nothing to see here. Just a bunch of conspiracy theories.  And dirty little secrets that we prefer to keep hidden.  Move along.

"Few people realize that around 2008 central banks turned from being net sellers of gold to net buyers, and began to accumulate gold reserves in a big way for the first time since the 1970's, when Nixon slammed shut the gold window.

This is based on what they report officially to the IMF. There is strong anecdotal evidence that the actual turn in buying occurred quite a few years earlier, and more in line with the rapid appreciation in price as selling declined.

First the selling slowed and the stealth buying began, particularly in Asia and the Mideast.

There was a sea change in the gold market as central banks scaled back on their strategy of supplying official gold to the bullion banks in order to keep the price down.

The bottom in the gold price occurred when Gordon Brown threw England's gold with a pre-announcement into the market in order to bail out any bullion banks that were caught flatfooted 'in the turn' in May of 1999. This was the first clear sign that change was in the wind.

The Big Turn occurred in 2007 when the western central banks capitulated, and realized that they must allow the price of gold to rise, or exhaust their own gold reserves in the process. The central bank change did not cause this, although it certainly reinforces the trend. It is a symptom of the great change and the first unmistakable manifestation of the currency war. Although astute observers could see this coming in the aftermath of the Asian currency crisis in the 1990's and the Russian default on the rouble.

Gold commentators who do not realize this significant dimension of what has occurred and account for it in their thinking have been simply left behind, lost in an outdated frame of reference. They do not see the forest for the trees."

"Gold is unique among assets, in that it is not issued by any government or central bank, which means that its value is not influenced by political decisions or the solvency of one institution or another."

Salvatore Rossi, Chief of the Central Bank of Italy, 30 Sept 2013

Stocks and Precious Metals Charts - For Whom the Bell Tolls - New Global Financial System That Excludes the US

"I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.

But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs."

Bill Moyer's Journal, Interview with Simon Johnson, February, 2009


“National Socialism brought dream and conformism together into something satanic. Hitlerism was a mass flight to dogma, to the barbaric dogma of the tribe, the dogma that gave every man importance only in so far as the tribe was important and he was a member of the tribe.

I fooled myself.  I had to.  Everybody has to.  If the good had been twice as good and the bad only half as bad, I still ought to have seen it.  But I didn't want to see it, because I would have then had to think about the consequences of seeing it, what followed from seeing it, what I must do to be decent.  I wanted my home and family, my job, my career, a place in the community.”

Milton Mayer, They Thought They Were Free


"The wealth of another region excites their greed; and if it is weak, their lust for power as well.  Nothing from the rising to the setting of the sun is enough for them.  Among all others only they are compelled to attack the poor as well as the rich.  Plunder, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus, Agricola

Gold put in a fourth day of gains, taking the $1200 handle in the futures, from the low last week at $1159.

Silver managed to put in a gain on the dollar weakness as well, just hovering below $12.

There is a Comex option expiration coming up that is significant to the silver contract, but for gold not so much.

There is an interesting discrepancy between the price of gold being quoted as 'spot' by Kitco and that in the continuous futures contract of about five or six dollars. 

This is because Kitco is keying off the September contract and discounting it in time, while the continuous futures and futures markets in general are looking at the big December contract, which is where all the action is.


It doesn't really matter all that much, but if you see a price discrepancy as there was when Bloomberg quoted the closing price of gold today at 1200, that is the reason for this.

Stocks went for the highs today, with SP 500 leading the way.  The futures came within a cat's whisker of the prior high, and then joined in with tech and gave up a big part of the intraday gain into the close.

It appears that the sanctioned and the marginalized may be getting together.   Germany is proposing a European and Asia financial transaction system that excludes the US.

After the bell it was announced that the jury in the Manafort trial has reached a verdict on eight of the eighteen counts, and declared a mistrial on ten of them.

It also appears that Michael Cohen is copping a plea and entering a guilty to some charge of campaign finance violation, and that he has named Trumpolini as an unindicted co-conspirator.

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

Have a pleasant evening.

Stocks and Precious Metals Charts - Round Up Time - The Fed Returns to Jackson Hole

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.”

John Maynard Keynes


“The job of the Federal Reserve is 'to know when to remove the punch bowl at the party.'   Under Alan Greenspan’s leadership its motto became let’s all get drunk and see what happens."

Said Elias Dawlabani

Truly, we are haunted by policy errors past and present.

And bubble up to the bar, the boom and bust hits just keep on coming.

Yes folks, hide your wealth, your emerging markets, and what remains of your living wage jobs, it's that time of year again, when the great herd of economists and financial news readers follow Cowboy Jay and his hole in their model gang to Jackson Hole.

The inscrutable in pursuit of the unsustainable.

Stocks were largely unchanged today. Tech was the weak link in the chain. Since it is the heart of the latest 'new era' style bubble that bodes ill for this latest pile of paper assets.

Gold rallied again from the deep low it set last week at $1159. It is so deeply oversold for the short term that a rally here is to be expected. We'll have to see what happens next to determine if this is a true trend change or not.

Silver is facing the headwinds of a meaningful option expiration coming on the 28^th. Gold's contract is now further out so it will most likely just be hanging around on the corner for this latest scrap between paper and physical.

It seems to be the fashion for Hollywood celebrities to be 'shaming the voters' for the latest failures of the corporate Democrats in the voting booths.   Of course they are just following the lead of the Democratic leadership and what passes for thought leaders in the liberal establishment.

It's a sure sign of complacency and rot in the management ranks when you start blaming the customers for your own massive failures to construct a workable strategy that appeals to and addresses their needs. 

Of course this is because the DNC has come to consider wealthy donors as their foremost constituency, in the mistaken belief that winning office is just a matter of turning the money crank enough times, buying the right talent, and spinning the reality to fit your own agenda. 

And so 'the most qualified candidate' to be beaten by a vulgar reality star and philandering flimflam man flamed out, spectacularly.  Who could have seen it coming?

Need little, want less, love more.  For if you have no love in your hearts, you will fail to withstand the winds that will be blowing across the lands in the days to come.

Have a pleasant evening.

The Bullish Case For Gold: Indicators Suggest Gold Has Laid the Groundwork for a Substantial Rally

For those who care about gold such as myself, in the just released CFTC data for the week ended Tuesday, speculators went net short for the first time since December 2001 when gold was priced at $275 an ounce. It’s tough to find a more contrarian indicator.

Peter Boockvar


"They run all away, and cry, 'the devil take the hindmost'."

Beaumont and Fletcher, Philaster, or Love Lies a-Bleeding

The one thing that gives me pause is the current interest rate actions by the Fed. They *could* delay the rally until it becomes almost overwhelmingly inevitable.  They do tend to do that sort of thing.

Timing is primarily an issue for those who are trading with leverage and for short term profits.

The Dow/Gold ratio is now back to pre-crisis levels (chart not shown).

As compared to 2002, the 'free float' of gold is tighter now, and central banks are net buyers rather than sellers.  Physical gold may be more of an issue than normal, as opposed to the unwinding of paper positions after a multi-year price manipulation.

At this point one might 'get right and sit tight' in the usual measured way, and wait for the banquet of consequences to be served.

And finally, the gold/silver ratio is now at a recent high.   It may go a little higher, especially in the event of a currency crisis.

This suggest that IF gold rallies, then eventually silver will kick in with a vengeance and provide some outsized gains.   But if the gold rally is a result of a crisis, silver may lag, and perhaps substantially.  If it is in reaction to inflation, they get ready for a ride on the silver rocket.

I like to read Ted Butler's commentaries on silver, and he is saying much the same thing with regard to the composition of the Comex positions. 

Dave Kranzler at Investment Research Dynamics sees the gold and silver in a similarly bullish setup with some slightly different reasoning.  I like to obtain multiple perspectives from different indicators.

I am waiting for my charts to signal their move, with confirmation, and hopefully to provide a new and workable formation to gauge the extent of any reversal and breakout from this long trading range we have been in since the 'cup and handle' formed and then failed.

Stocks and Precious Metals Charts - Symphony For The Righteous Destruction Of Humanity - Privatizing Afghan War

"What does Dr Copper want to tell us?  The metal with the PhD in economics is now in a bear market, down 21% from recent high in June.  Dr. Copper is signaling us that global contraction is now in motion."

Dr. Harald Malmgren


“'Whoever is naive, let them come here,'
says Wisdom, to those who lack understanding.
'Come and eat my food,
and drink the wine I have prepared.
Forsake your foolish ways, so that you may live,
and progress in the ways of understanding.'”

Proverbs 9:4-6, The Consequences of Accepting Wisdom or Folly

Gold and silver both bounced higher today as the dollar trended lower.

Gold has been trading in the currency crosses, as a currency.

And those who trade in those markets know that they are notorious for overshooting on moves.

The reasons for this have to do with the heavy leveraged used, and the few major players that tend to dominate, and who love to throw their weight around at the expense of the smaller speculators.

It is hard to realize that gold is up almost $25 from the overnight low of $1159 it put in the other day. And silver is up about $.80.

Stocks managed to move a little higher in a relatively quiet stock option expiration.

Trumpolini is considering a plan to 'privatize' the war in Afghanistan, replacing the US military with a private mercenary army under the command of Blackwater's Erik Prince, reporting directly to Il Donny himself.

Perhaps a sticking point with be a golden Trump logo on each mercenary's helmet.   Branding.

And then there is this, from Albert Edwards at Société Générale:

"Make no mistake, whatever the macro-idiosyncrasies of Turkey, the key to the current turmoil that is spreading into EM generally, is Fed tightening and the strong dollar. As we have repeated ad infinitum, since 1950 there have been 13 Fed tightening cycles, 10 of them ended in recession and the others usually saw the EM blow up – such as the 1994 collapse in the Mexican peso. The Fed always tightens until something breaks."

We're not in Kansas anymore, Toto.

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

Have a pleasant weekend.

Stocks and Precious Metal Charts - Slow Down - Lessons Unlearned

“There are two ways to be fooled. One is to believe what isn't true; the other is to refuse to believe what is true.”

Søren Kierkegaard


"Narcissists are unstable and go through repeated cycles of self-destruction, with other people usually paying the heft of the price.   Narcissists tend to be divisive, vindictive, confrontational, aggressive, hate-filled, raging, incoherent, judgment-impaired, and irrational. 

Narcissists are junkies: they are addicted to attention and will go to any extreme to secure it.   Narcissists are liars, confabulators, and miserable failures, although some of them are geniuses at disguising the fact that they are, in fact, losers."

Sam Vaknin

Stocks rallied as Walmart posted 'better than expected' results.

Nordstrom also beat after the bell, further juicing enthusiasm for retail trade.

Gold and silver were bouncing quite a bit from the overnight lows, but ended up with a little more modest gain over the close from yesterday.

The precious metals are utterly oversold. They are setting up for a bottom and a major rally. Timing of these markets is for pros who don't need any help from me, other than prayers.

If you have not seen it, they are industrializing insider trading in Washington.

We are truly in times of increased wickedness, when lying and breaking of oaths becomes a commonplace, almost fashionable.

Like dishonesty and abuse of customers became all the rage on Wall Street not all that long ago, and has come back faster than the economic recovery.

Slow down, and take stock of your life. Most are hurrying towards some ever-retreating future, and become utterly caught up in the fads and enthusiasms of the day.

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

Have a pleasant evening.