Gold & Precious Metals

U.S. GOLD MARKET 2012-2014: Suffers Massive Deficits

Posted by Steve St. Angelo - SRSrocco Report

on Wednesday, 8 April 2015 13:27

With all the data finally out, the United States gold market suffered a massive deficit over the past three years.  How large was this deficit?  Actually, large enough to supply all the gold for the U.S. Mint’s production of its Gold Eagles for the past twenty years… a huge amount indeed.

While the U.S. gold market enjoyed some annual surpluses in previous years, the amount of the gold that left the country since 2012 was quite remarkable.  In order to calculate a surplus or deficit in the U.S. gold market, we have to include the following data:

Total Supply = Imports + Mine Supply + Recycled Scrap

Total Demand = Exports + Consumption

By inputting this data over the past three years, we have the following chart:

U.S.-Gold-Market-Supply-vs-Demand-2012-2014

From 2012 to 2014 the U.S. imported 955 metric tons (mt) of gold, had mine production of 677 mt, and recycled 335 of scrap for a total of 1,967 mt of supply.  In contrast, total demand was significantly higher including 1,883 mt of gold exports and 530 mt of consumption for a grand total of 2,413 mt.

Here is the breakdown of the annual U.S. gold market deficits:

2012 = 139 mt

2013 = 228 mt

2014 = 79 mt

Total = 446 mt

As we can see, the U.S. gold market suffered a huge 446 mt deficit since 2012.  The annual gold deficit was the highest in 2013 due to record exports and consumption of 880 mt compared to lower imports, mine supply and scrap of 652 mt.

By converting this 446 mt figure to troy ounces we get a massive 14.3 million ounces (Moz) of gold.  As I mentioned in the beginning of the article, this deficit was large enough to supply all the gold for twenty years worth of U.S. Mint Gold Eagle sales.  Since 1995, the U.S. Mint produced and sold 14.6 Moz of Gold Eagles.  Yeah, I realize it’s a tad bit more than the 14.3 Moz U.S. gold market deficit (2012-2014), but it’s close enough.

So, where did all this gold come from?  That’s a good question.  Probably some of it came from the U.S. Comex gold inventories which declined from 11.5 Moz in 2012 to 7.8 Moz currently.  However, the decline of gold inventories at the Comex was less than 3 Moz, so this wasn’t enough to supplement the 14.3 Moz deficit.

It’s really impossible to know which public or private stocks were drained to fill this huge U.S. gold market deficit, but we can certainly guarantee for sure… it did happen.

I highly doubt the Fed would want to see the price of gold (in U.S. Dollars) falling below $1,100, as some major bank forecasts have stated will occur in the next several years.  I would imagine the Fed has a pretty good idea of the amount of gold fleeing the U.S. to countries abroad.  If the paper Dollar price of gold were to fall below $1,100, this would be another huge buying opportunity for the EAST.

At some point, the Greatest Financial Ponzi Scheme in history will unravel just like the Bernie Madoff scam.  Unfortunately, this will impact the majority of U.S. citizens who have no idea that the Great American Dream will turn into a horrible nightmare.

Richard Russell – The “Bear Market In Gold Is Over!” As Desperate Fed May Usher In QE4 And A World Of Hyperinflation

Posted by Richard Russell via King World News

on Tuesday, 7 April 2015 18:42

King-World-News-Are-We-About-To-See-A-Historic-Melt-Up-In-Gold-Silver-1244x500 cAs people continue to digest breaking news out of Greece and around the world, the Godfather of newsletter writers, 90-year-old Richard Russell, announced that the “bear market in gold is over!”  Russell also covered everything from a desperate Fed ushering in QE4, to global hyperinflation, the California drought and coming Great Depression-style work programs.

….read it all HERE

US Dollar Higher as NFP Wound Heals

Posted by Andrew McGuire - Agility Forex

on Tuesday, 7 April 2015 16:06

This is the first day of the FX week for many markets. The US dollar has recouped all of its post-NFP losses against EUR and JPY but still has a ways to go against CAD. The weak NFP report (Actual 126k vs. Forecast 245K) is being dismissed as a weather-influenced blip and nothing to sway the FOMC from their rate hike path.

AUDUSD was the big story in Asia. The RBA left rates unchanged, catching many traders by surprise and AUDUSD soared. The question is whether the RBA is merely delaying the inevitable until the next meeting or will it be a more protracted pause. The BoJ monetary policy meeting has started and is expected to be a non-event for FX. In Europe, traders ignored PMI data from the Eurozone, Germany and the UK.

The Canadian dollar traded in a narrow range ignoring chatter of oil price downside risks on Iran/China discussions and yesterday’s BoC Business Outlook survey. That changed in the early NY session will USDCAD buyers testing resistance at 1.2520, which has held. The lack of both US and Canadian data suggests further range trading today.

USDCAD technical outlook

The intraday USDCAD technicals are bullish while trading above 1.2440 with the break above 1.2470 suggesting further gains to 1.2550. A move below 1.2440 will lead to another test of support in the 1.2380-1.2410 area.

The short term 1.2350-1.2820 range since mid-January remains intact.

Today’s Range 1.2450-1.2520

usdcad0704-1024x376

 

Is This The First Resource Opportunity From the Iran Deal?

Posted by Pierce Points

on Tuesday, 7 April 2015 16:02

UnknownWe’re just days past a tentative nuclear agreement with Iran. And already signs are emerging that projects opportunities that could be coming here. 

Such as in the oil and sector. Where Iranian officials said this week they are already eying Western involvement in the domestic sector. 

The head of Iran’s committee to review oil contracts, Mehdi Hosseini, announced Sunday that the government will unveil a new array of contracts in the petroleum sector this September. Hosseini added that the government is specifically looking to investment from U.S. and European firms.

As proof, the government said it will hold an international conference in London to unveil the September oil contracts. Demonstrating exactly who the target audience is for this bid round. 

This obviously signals a major potential opportunity for E&P players. Iran’s oil and gas fields have proven, high-potential geology, and a lack of modern exploration — with foreign-backed investment in the sector having been limited over past decades to “risk service contracts”, where companies aided in development but were prohibited from owning reserves.

That hang-up — along with recent sanctions — led most big firms to pass by Iran’s fields. But the Iranian government has indicated that could all change this year. Suggesting that petroleum contracts will be reworked to offer attractive terms — including ownership of in-ground oil and gas reserves. 

This week’s pro-West announcement from Iran also suggests opportunities could be coming in other resource sectors here. Mining, for example, where Iran holds world-class potential for copper porphyries, lead-zinc deposits and even gold mines. (Just last month, the scholarly journal Ore Geology Reviews dedicated a full volume to new research on Iran’s mineral potential.)

Of course, all of this is contingent on a final deal with the West going through (and holding up). Watch for developments on the political front — if peace looks to be sticking, it may be time to think about adding this nation to our watch list. 

Here’s to going un-rogue,

Dave Forest

  1. The latest US jobs report has stunned most analysts, with its dramatic weakness. Most investors in the Western gold community are nervous about rate hikes, and this report supposedly gives the average gold investor a little breathing room.
  2. I beg to differ. In the current situation, rate hikes are not bearish for gold prices. They’re bullish, and here’s why: 
  3. The Western commercial banks are sitting on huge reserves of cash. They built those during the Fed’s QE program. Money supply increased, but velocity decreased, because low rates hinder bank profits. That created deflation.
  4. Deflation has continued, because the banks have no incentive to loan out their enormous cash reserves, but I think Janet Yellen plans to change that situation.
  5. Many economists think potential rate hikes are a result of the Fed responding to “strong US growth”. There’s no question that the US is in an upcycle, but productivity is at 1930s levels in the private sector, and much lower in the huge government sector. It’s important to understand the difference between economic recovery, and a simple upcycle. The US is experiencing the latter. 
  6. Some analysts think rates will rise simply because the Fed needs the ability to cut rates in the next down turn. 
  7. I think both of these rate hike views are 100% wrong. Janet Yellen is not a hawk. She’s a dove, and doves seek higher inflation. The only sure way to create higher inflation is to increase the velocity of the money supply. 
  8. That velocity can only be achieved, realistically, through an increase in bank loan activity. Bank loans will only increase if the banks can make large profits from them. The bottom line: Rate hikes are coming, but the main purpose of them is to increase money supply velocity.
  9. During a system risk event, money managers rush to T-bonds and gold bullion, as they did when the Fed implemented QE1 during the 2008 meltdown. 
  10. In contrast, when inflation is created without system risk, money managers tend to focus on….gold stocks.
  11. Please  click here now. Analysts at CNBC have a slightly different view of rate hikes than I do, but they are correctly focused on wage price inflation. 
  12. Unknown to these mainstream analysts, the elephant in the inflationary room, is the giant “QE money ball” that the banks are sitting on. When rates rise, the banks will likely begin a gargantuan lending spree. Rather than tempering inflation, Janet’s rate hikes should exponentially accelerate it.
  13. As that happens, I expect institutional money managers to reduce US stock and bond market positions, and purchase gold stocks.
  14. On that note, please  click here now. Double-click to enlarge. That’s the daily chart for Barrick Gold, and it looks superb.
  15. Most investors are focused on the $1220 area for bullion, but I think the Barrick chart is now the lead indicator for the entire precious metals market. 
  16. Newmont lead the first rally of 2015 for gold stocks, but Barrick is now poised to take the leadership baton, and lead most gold stocks and bullion, to higher prices.
  17. Watch the $13.30 area on that Barrick chart very carefully. A move above that level could ignite a powerful rally in ETFs like GDX-N, SIL-N, and GDXJ-N. 
  18. Gold stock enthusiasts should book light profits in Barrick at $13, $14, $15, $16, and $17. They can use my unique pyramid generator to do that systematically.
  19. Please  click here now. That’s the daily gold chart. If Barrick can surge above $13.30, I think gold will quickly rise to $1255, and maybe to $1300.
  20. For a closer look at gold, please  click here now. That’s the hourly bars chart. A hedge in the yard needs to be pruned. Likewise, some gold market profits need to be booked on rallies. So, I sold a bit of gold at $1217, as it rallied towards overhead HSR (horizontal support and resistance) in the $1220 area. 
  21. Gold’s short term softness could continue today. It may trade down to about $1203, and perhaps to $1195. Regardless, as the rally in gold stocks accelerates, I expect gold to successfully move above $1223, and rise to my next profit booking targets at $1240 and $1255.
  22. Silver tends to outperform gold during rallies. Do silver stocks tend to outperform gold stocks? I don’t think so. In my experience, silver stocks tend to perform about as well as gold stocks do during metals sector rallies.
  23. Simply put, investors who like gold should own gold stocks. Investors who like silver should own silver stocks. It’s not a question of one asset outperforming another, so much as it is about personal feelings for gold or silver.
  24. Please  click here now. That’s the daily chart for SIL-N, the silver stocks ETF. The blue downtrend line is now support. My suggestion is to book light profits on trading positions at $9.27, $9.67, $10.33, and $10.82. Use Barrick’s price action as a key lead indicator for silver stocks, and be prepared for rate hikes to create a shocking rise in money velocity, and inflation!

Apr 7, 2015
Stewart Thomson
Graceland Updates
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Tuesday Apr 7, 2015
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an invetor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:

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