tag:blogger.com,1999:blog-60892288518557637742024-03-13T20:43:02.011+08:00Gold ChatBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger555125tag:blogger.com,1999:blog-6089228851855763774.post-12258191465375403402020-08-27T15:24:00.001+08:002020-08-27T15:24:57.613+08:00Webinar for Beginners to Gold <p>If you are new to gold the webinar below I recorded yesterday will be useful. The main presentation goes for about 50 minutes and covers<br /></p><p>
</p><ul style="text-align: left;"><li>The Rational Case for Gold </li><li>The Irrational Nature of Gold </li><li>The Four Types of Gold Investor </li><li>What to Buy </li><li>Who to Buy From </li><li>Where to Store </li><li>Gold or Silver, or Both?
</li></ul><p>Then there was 1 hour of Q&A that cover a lot of questions beginners have.</p><p><a href="https://www.zadelpropertyeducation.com.au/webinar-live-gold-silver-replay/">https://www.zadelpropertyeducation.com.au/webinar-live-gold-silver-replay/</a> <br /></p><p>This blog has been silent for a few years as I have been writing weekly
for ABC Bullion at <a href="https://www.abcbullion.com.au/investor-centre/pdf">https://www.abcbullion.com.au/investor-centre/pdf</a></p><p>I have some topics to write about but trying to find the time in a booming gold market like we have now is proving difficult. A good problem to have.<br /></p>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-41604125264199893532018-10-31T09:36:00.002+08:002018-10-31T09:38:55.052+08:00JP Morgan Chase Bank to tokenize gold barsJP Morgan tokenising gold is big news as they have a dominant position in physical and paper precious metal markets. Digging deeper, however, I found it is more fake news than big news.<br />
<br />
I came across this headline from a user posting <a href="https://www.fxstreet.com/cryptocurrencies/news/jp-morgan-chase-bank-to-tokenize-gold-bars-using-ethereum-eth-201810300906" target="_blank">this link</a> in the <a href="https://www.vaultoro.com/" target="_blank">Vaultoro</a> Discord <a href="https://discordapp.com/channels/470018350173388801/470018350597275660" target="_blank">channel</a> (I spoke with Joshua at the Precious Metals Symposium in Perth recently, Vaultoro has some interesting developments planned, you can check out his presentation at the conference <a href="https://symposium.net.au/wp-content/uploads/2018/10/1400-Vaultoro.pdf" target="_blank">here</a>).<br />
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I first tried to verify the statement by checking the JP Morgan <a href="https://www.jpmorgan.com/global/Quorum" target="_blank">Quorum</a> website, which you would think would mention it, but there is nothing there about gold or indeed any application of the platform.<br />
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A google search shows a lot of republication of the article by various crypto media but the original article appears to be from <a href="https://www.ccn.com/jp-morgans-ethereum-based-quorum-blockchain-will-tokenise-gold-bars/" target="_blank">this CNN</a> post. They don't provide any direct source for their opening statement <i>"US banking giant JPMorgan Chase Bank’s blockchain, <a href="https://www.ccn.com/jpmorgan-reportedly-mulls-spinning-off-quorum-blockchain-project/">Quorum</a>, will be used to “tokenize” gold bars"</i> but following the link they provide to <a href="https://www.afr.com/technology/jp-morgans-quorum-blockchain-opens-new-world-of-trading-opportunities-20181027-h176fs" target="_blank">this AFR article</a>, the quote them picked up on is <i>"A blockchain platform built by global investment bank JP Morgan is being
used to "tokenise" gold bars to allow sustainable miners to earn a
premium on global markets".</i><br />
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There is a very slight difference between CNN's "will be used" and the AFR's "is being used" with the former more likely to be misinterpreted by the crypto media as JP Morgan doing it, rather than someone else using JP Morgan's blockchain platform. The key quote later in the article is:<br />
<br />
<i>There are people outside our firm using Quorum to tokenise gold, for instance," he told The Australian <a href="http://www.afr.com/x/h175pi">Financial Review</a><a href="http://www.afr.com/x/h175pi"> on the sidelines of Sibos</a>. </i><i>"They
wrap a gold bar into a tamper-proof case electronically tagged, and
they can track the gold bar from the mine to end point – with the use
case being, if you know it's a socially responsible mine, someone will
be willing to pay a higher spread on that gold versus if you don't know
where it comes from. Diamonds is another example."</i><br />
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The "he" in this quote is "JP Morgan’s New York-based head of blockchain initiatives, Umar Farooq".<br />
<br />
The reference to tamper-proof case, socially responsible mining and diamonds is a clear reference to Emergent Technology Holdings' <a href="https://www.gcoin.com/" target="_blank">G-Coin</a>, which <a href="https://www.digfingroup.com/emergent-technology/" target="_blank">uses</a> Quorum. I spoke to them at the Singapore Bullion Market Association (SBMA) <a href="http://www.asiapacificpmc.com/" target="_blank">Asia Pacific Precious Metals Conference</a> in June and unlike a lot of gold crypto projects this one is actually credible, addressing a real need by wholesale gold consumers with ESG (Environmental, Social and Governance) requirements. Only question I had was how much premium above spot the kilobars would sell for, as each bar has its own plastic case plus each tracked batch or dore must be refined independently (which breaks the usual refinery economies of scale) but they weren't able to provide an answer.<br />
<br />
So in summary it seems that the crypto media misread the "will be" that CNN changed from the "is being" in the original AFR article. Just shows how fake news propagates, in this case because there are few websites these days with journalistic standards with most so-called news website not being bothered to do the simple research I just did or simply call the quoted firm to confirm the facts.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-28487047447706157552018-10-19T05:00:00.000+08:002018-10-19T05:00:07.094+08:00Is Australia on a 5.55% gold standard?Delving further into the Reserve Bank of Australia statistics following on from my <a href="https://goldchat.blogspot.com/2018/10/the-mystery-of-missing-australian-gold.html" target="_blank">response</a> to John and Martin in <a href="http://digitalfinanceanalytics.com/blog/the-mystery-of-the-missing-australian-gold/" target="_blank">The Mystery Of The Missing Australian Gold</a> I came across some curious relationships between Australia's gold reserves and its money supply. Before I get to that, there is some additional detail I missed in respect of the RBA's gold management and John and Martin's comment that the 0.15% earned on our gold was non commercial. To recap, the chart below shows the historical gold lease rates the RBA has achieved.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3sXzZiDeY0CBThvCsaXI5rM0rsCPYM-_HVmpz23g1jNmc4NOFZETnm-z-p22YE5pDzDuSd-QU834Fsgz4aPs4q8aa8DRTArSrNxFIi6C8-ypIxFVFatRl2CCdzqPXRxvnbJH_VeCFuyBd/s1600/rbaleasing.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="638" data-original-width="977" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3sXzZiDeY0CBThvCsaXI5rM0rsCPYM-_HVmpz23g1jNmc4NOFZETnm-z-p22YE5pDzDuSd-QU834Fsgz4aPs4q8aa8DRTArSrNxFIi6C8-ypIxFVFatRl2CCdzqPXRxvnbJH_VeCFuyBd/s640/rbaleasing.png" width="640" /></a></div>
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To put that rate in perspective, Nick Laird from <a href="http://www.goldchartsrus.com/gold/GoldLease1.php" target="_blank">Gold Charts 'R' Us</a> helps out with this dervied lease rate chart, which provides more recent figures than the chart in my previous post.<br />
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<a href="https://4.bp.blogspot.com/-05_VzeW6-Kw/W8hQ6DY3AwI/AAAAAAAAArI/IOSI6qZ_EfI_1CBmSK07Z0JDUUcxIZEngCLcBGAs/s1600/glr.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="447" data-original-width="888" height="321" src="https://4.bp.blogspot.com/-05_VzeW6-Kw/W8hQ6DY3AwI/AAAAAAAAArI/IOSI6qZ_EfI_1CBmSK07Z0JDUUcxIZEngCLcBGAs/s640/glr.PNG" width="640" /></a></div>
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The purple arrow indicate the time period related to the RBA annual report where the 0.15% figure was reported. To confirm whether 0.15% is reasonable, we need to know for what durations the gold was leased. While the RBA ceased reporting on the credit limit breakdown of its leases (as I reported on <a href="https://goldchat.blogspot.com/2014/01/central-bank-gold-reserves-transparency.html" target="_blank">here</a>), they still provide a duration breakdown, see the chart below.<br />
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<a href="https://1.bp.blogspot.com/-x2BtNvDHGzI/W8hRw2-H0iI/AAAAAAAAArQ/x35MknGL97YAYAPVKKAFRA1UjoNtHwoJgCLcBGAs/s1600/rbaleaseduration.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="638" data-original-width="977" height="416" src="https://1.bp.blogspot.com/-x2BtNvDHGzI/W8hRw2-H0iI/AAAAAAAAArQ/x35MknGL97YAYAPVKKAFRA1UjoNtHwoJgCLcBGAs/s640/rbaleaseduration.png" width="640" /></a></div>
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The RBA reported average balance was 4 tonnes in less than 3 months and 5.1 tonnes between 3 to 12 months. That works out about 5 months average duration, which is closest to the 6 month green line in Nick's chart. In that case, the 0.15% looks like a fair result from the RBA.<br />
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In the video Martin used the treasury 10 year rate as a comparison but even if cash and gold rates were comparable, this was unlikely to be a fair comparison as the gold market tends to concentrate lending in the shorter end. The chart above from the RBA shows this and if you look at <a href="https://www.cmegroup.com/trading/metals/precious/gold_quotes_volume_voi.html" target="_blank">Comex gold</a> futures open interest or <a href="https://www.lme.com/en-GB/Metals/Precious-metals/LME-Gold#tabIndex=0" target="_blank">LME forwards</a> (which only go out to 5 years), you will see that the liquidity is focused on the short end (note: future and forward prices are related to leasing rates).<br />
<br />
Compared to maturity transformation in dollar banking, where banks lend for durations beyond 20 years (eg your conventional home mortgage), this concentration on the short end is very significant when trying to assess the risks <a href="https://goldchat.blogspot.com/2018/10/fractional-reserve-bullion-banking-and.html" target="_blank">fractional reserve bullion banking</a> poses to the gold market. The lower the maturity transformation the less a bullion bank is likely to get caught in a run on unallocated gold (although this assumes that bullion banks source a lot of funding via unallocated balances, which is not something there is data on).<br />
<br />
The RBA also provides historical statistics on its balance sheet, which enable us to look back to 1969 to see how much of the bank's reserves were in the form of gold (note the changing balance of gold reserves pre 1992 may be more a factor of my estimated exchange and gold prices when trying to convert the RBA's AUD balances into ounces).<br />
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<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-JxrtE9ll1AU/W8iNEJ-fDqI/AAAAAAAAAro/5ie7o3yNhb0ogfuMhqBYIrd7B2IQNF0MwCLcBGAs/s1600/rbagoldshare.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="638" data-original-width="977" height="416" src="https://4.bp.blogspot.com/-JxrtE9ll1AU/W8iNEJ-fDqI/AAAAAAAAAro/5ie7o3yNhb0ogfuMhqBYIrd7B2IQNF0MwCLcBGAs/s640/rbagoldshare.png" width="640" /></a></div>
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The big increase in the 1970s is obviously a function of the bull market in gold but outside of that Australia seems to have been averaging around 20% of its reserves in gold. After the big sale in 1997, it is remarkable that the percentage is relative stable. Interestingly, up until 1931, Australia's gold reserve requirement was 25% in gold coin or bullion on bank notes (<a href="https://eml.berkeley.edu//~eichengr/research/app3.pdf" target="_blank">link</a>), after which there was no requirement. I wonder if the figures from 1931 to 1969 would show a de facto 25% standard being maintained.<br />
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Speaking of bank notes and gold backing, calculating the value of Australia's gold reserves as a percentage of banknotes on issue produces the chart below.<br />
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<a href="https://2.bp.blogspot.com/-KS7Q9ueMigk/W8iQ8ULlHXI/AAAAAAAAAsA/Vq471r5tdsISIxyA72e1vqX850hXSFFUgCLcBGAs/s1600/banknotes.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="638" data-original-width="977" height="416" src="https://2.bp.blogspot.com/-KS7Q9ueMigk/W8iQ8ULlHXI/AAAAAAAAAsA/Vq471r5tdsISIxyA72e1vqX850hXSFFUgCLcBGAs/s640/banknotes.png" width="640" /></a></div>
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Isn't that a curious stability, averaging 5.55% within a range of 3.7% to 8.6% since the sale - is the RBA surreptitiously maintaining Australia on a 5.55% gold standard? One final observation: if we were to move to 100% gold backed banknotes it would require Australia to hold gold reserves of 1,457 tonnes. At Australia's current rate of gold mine production it would only take us five years to get there. Something to aim for, or are we better off to just keep shipping our gold off to China?Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-12852817950270488532018-10-17T17:38:00.003+08:002020-12-19T06:17:04.564+08:00Fractional reserve bullion banking and gold bank runsBelow is a series of post explaining how I suspect bullion banking operates, which is necessary for a true understanding of how susceptible it is to a gold bank run, as well as understanding how a price suppression (as opposed to manipulation) would work, in respect of what backs paper gold and how much physical is needed to support the system.<br />
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1. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and.html">Fractional reserve bullion banking and gold bank runs - the setup</a><br />
2. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_4.html">Fractional reserve bullion banking and gold bank runs - a bullion bank's "assets"</a><br />
3. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_5.html">Fractional reserve bullion banking and gold bank runs - the model says we are hedged</a><br />
4. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_6.html">Fractional reserve bullion banking and gold bank runs - unallocated as real (gold) bills</a><br />
5. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_7.html">Fractional reserve bullion banking and gold bank runs - how can I default on thee? let me count the ways</a><br />
6. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_10.html">Fractional reserve bullion banking and gold bank runs – inter-bank buddies business</a><br />
7. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_11.html">Fractional reserve bullion banking and gold bank runs – Frankenstein Free Banking</a><br />
8. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_12.html">Fractional reserve bullion banking and gold bank runs: the role of central banks</a> <br />
9. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_13.html">Fractional reserve bullion banking and gold bank runs: bank run theory</a><br />
10. <a href="https://goldchat.blogspot.com/2014/02/fractional-reserve-bullion-banking-and_14.html">Fractional reserve bullion banking and gold bank runs: a run or stroll?</a><br />
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See also:<br />
<br />
<a href="https://goldchat.blogspot.com/2010/07/my-fustration-with-gata.html">Does fractional reserve gold banking = price suppression<br />
</a>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-54452978747605937892018-10-17T16:00:00.001+08:002018-10-17T16:00:14.343+08:00The Mystery Of The Missing Australian Gold?Has the Reserve Bank of Australia lost some of its gold reserves? Martin North of Digital Finance Analytics implies as such in <a href="http://digitalfinanceanalytics.com/blog/the-mystery-of-the-missing-australian-gold/" target="_blank">The Mystery Of The Missing Australian Gold</a> where he "discuss[es] the current state of Australia’s Gold holdings, and where 11 tonnes may have gone" with economist <a href="https://www.adamseconomics.com/copy-of-education" target="_blank">John Adams</a> and then raises questions about the audit of Australia's gold in a follow up <a href="https://youtu.be/6BFj7-eKU9M" target="_blank">YouTube</a>.<br />
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As is the case with most clickbait type headlines, the gold isn't missing nor is it a mystery, but that doesn't mean John hasn't raised valid questions. I will first address some misconceptions raised in the videos then discuss the audit.<br />
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At <a href="https://youtu.be/IlHvCwnvRt8?t=950" target="_blank">15:50</a> John talks about the bars having a serial number and "emblem of the nation" and that the "Australian crest" will be stamped on the bar. This is not the case. The global standard for bullion traded in the professional gold market is detailed <a href="http://www.lbma.org.uk/good-delivery-explained" target="_blank">here</a> and requires that bars are stamped with the brand of the refinery that made the bars, a serial number, purity and year of manufacture. Bars do not have any markings indicating who owns them and indeed anyone asking for physical allocation will usually receive a mix of bars from different refineries, as long as they are on the <a href="http://www.lbma.org.uk/good-delivery-list-refiners-gold-current" target="_blank">accredited list</a>.<br />
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At <a href="https://youtu.be/IlHvCwnvRt8?t=1108" target="_blank">18:28</a> John discusses the interest income of $710,000 the RBA received on leasing out its gold and calculates an effective rate of 0.12%. This calculation is not correct as he is using the 30 June balance when the amount leased during the year may have changed. The RBA annual report does actually provide an accurate "weighted average effective lease rate" on page 177, which for 17/18 was 0.15%.<br />
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John and Martin then go on to discuss how this rate is non-commercial and compare it to the treasury 10 year rate. In the chart below I have graphed in blue the average rate reported by the RBA in its annual reports since 1998.<br />
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<a href="https://1.bp.blogspot.com/-O0EIv_hr8O8/W8LEG8AD8AI/AAAAAAAAAqI/55dpbv6ZxA8XMZeLGm6TImSQpf54AP65QCLcBGAs/s1600/rbaleasing.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="638" data-original-width="977" height="261" src="https://1.bp.blogspot.com/-O0EIv_hr8O8/W8LEG8AD8AI/AAAAAAAAAqI/55dpbv6ZxA8XMZeLGm6TImSQpf54AP65QCLcBGAs/s400/rbaleasing.png" width="400" /></a></div>
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While 0.15% or even 0.40% may seem low to those outside of the bullion markets, they are reflective of gold lease rates in general, which are available <a href="http://www.lbma.org.uk/precious-metal-prices" target="_blank">here</a>. The chart below is from that link and shows the derived (ie LIBOR - GOFO) gold lease rate for a lease of 6 months duration (note that the chart stops in 2015 as GOFO benchmarks ceased that year and full lease rate data is only available on paid subscription sites with some derived data being produced by <a href="https://monetary-metals.com/data-science-charts/gold-lease-rates/" target="_blank">Monetary Metals</a> for free if you sign up).<br />
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<a href="https://3.bp.blogspot.com/-I56TrULE3SY/W8bNMTfjC3I/AAAAAAAAAqs/2Uf3S0xybPsWgRCclFvryFY9-wW_3uNmwCLcBGAs/s1600/lbma6mglr.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="609" data-original-width="873" height="278" src="https://3.bp.blogspot.com/-I56TrULE3SY/W8bNMTfjC3I/AAAAAAAAAqs/2Uf3S0xybPsWgRCclFvryFY9-wW_3uNmwCLcBGAs/s400/lbma6mglr.PNG" width="400" /></a></div>
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Having said that, the 0.15% in my opinion is too low notwithstanding the RBA is lending on a collaterised basis or to entities with "government support". The red line on the previous chart shows that the RBA was pretty much lending out all of Australia's gold reserves prior to 2005 but sharply pulled out of the market as its longer term (1-5yr duration) leases matured (see <a href="https://goldchat.blogspot.com/2014/01/central-bank-gold-reserves-transparency.html" target="_blank">this post</a> for charts on the RBA's gold lease duration mix) into a market where lease rates were sub 0.40%. It clearly didn't think the risk/return tradeoff was right at the time and that was prescient considering the GFC hit in 2008. If the RBA is willing to increase its gold leases at 0.15% it must now consider everything has been fixed and financial risks are low!<br />
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At <a href="https://youtu.be/IlHvCwnvRt8?t=1310" target="_blank">21:50</a> John talks about what he calls the linchpin question, which is whether the RBA will accept repayment of the lease in non-physical form. If yes, then he believes this means that Australia's 11 tonnes of leased gold has been melted down and this I think is where he gets the idea the gold is "missing". I was intially puzzled at John's logic until I realised that he is probably being confused by the gold industry's use of the term "lease" and naturally would assume a common meaning, that is, that leased goods shoud be returned after use.<br />
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When one sees "lease" in terms of gold that really just means "loan" and as with money (assuming someone loaned a person physical cash) the borrower does not keep the physical money but uses it for whatever purpose they sought the loan. In the case of the gold market, central banks generally do get back physical when a gold lease matures, but it isn't the same bars they lent - just as a borrower doesn't (can't) return banknotes with the same serial numbers. As discussed in <a href="https://goldchat.blogspot.com/2010/08/gld-leasing-and-encumbrances.html" target="_blank">this post</a>:<br />
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<i>"In the case of lenders supplying actual physical bars (usually only be Central Banks) because it is understood that leased metal will be "used" (be that in a physical operation like a jeweller or mint, or for sale to create a short position), the contract cannot practically require the return of the same physical bars that were lent (ie the same bar numbers). If the lease contract was worded on a secured basis (most likely where the borrower is a jeweller or mint) the security would have to be against the general gold stocks of the borrower rather than the bars originally supplied as it is understood that the original bars are melted or sold."</i><br />
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On this point, I think John and a lot of people leaving comments about the RBA leasing gold are like the crowd in the Simpson's take on It's a Wonderful Life.<br />
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<iframe allow="autoplay; encrypted-media" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/Ovfap2VtpHM?start=29" width="560"></iframe><br />
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In John's second YouTube he gets stuck into the RBA's audit of Australia's gold reserves at the Bank of England, tipped off by the work and FOIs of Bullion Baron (see <a href="http://www.bullionbaron.com/2014/12/reserve-bank-of-australia-audits-our.html" target="_blank">this</a> and <a href="http://www.bullionbaron.com/2015/02/reserve-bank-of-australia-missing-bar.html" target="_blank">this</a> post for the background). John makes a number of valid points, the primary one being that it is not a real audit if the RBA is not able to randomly sample from its bar list without direction/limitations by the Bank of England.<br />
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John's issue with the Bank of England limiting the scope of the sample is that it enables them, given the 6 weeks notice the RBA gives, for the Bank to get bars manufactured with the required serial numbers (which it would only have to do if the Bank has been leasing/selling the RBA's gold without its permission).<br />
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This scenario is actually close to impossible given how the global refinery accreditation and manufacturing process works. Refineries number bars sequentially, with some numbering since they started refining while others restarting numbering each year (which is why the standard quoted earlier requires year of manufacture on the bar). The entire industry relies upon (and <a href="http://www.lbma.org.uk/proactive-monitoring-programme" target="_blank">continually</a> audits) refineries to ensure the integrity of the "good delivery" system, as without it global gold trade would break down. Sequential numbering is also a key internal control within a refinery.<br />
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It is impossible for the Bank of England to call up more than one refinery (as given the way vaults operate and bars allocated, bar lists usually contain bars made by many refineries) and ask for bars to be fabricated with retrospective numbers. The number of people involved in each refiner from the lowest levels plus internal audit/control to perpetuate this level of fraud makes it unlikely to occur, let alone remain a secret.<br />
<br />
Having said that, John misses the key control breakdown <a href="http://www.bullionbaron.com/2015/02/reserve-bank-of-australia-missing-bar.html" target="_blank">identified</a> by Bullion Baron which is that the Bank of England has it own numbering system and it is an open question from the FOI documents whether the RBA was just given this number or the actual serial number on the bar, as the RBA refused to provide this information. If the former, then this mean the Bank could just find a bar of similar weight (difficult but not impossible given the Bank stores 416,000 400 ounce bars) and say this matches their internal number. It is only the actual serial number stamped on the bar, in conjunction with year and refinery, that uniquely identifies a bar.<br />
<br />
While the RBA is one of the <a href="https://goldchat.blogspot.com/2014/01/central-bank-gold-reserves-transparency.html" target="_blank">most transparent</a> central banks in respect of reporting on its gold reserves, Bullion Baron's FOIs reveal that they dropped (still drop?) the ball in respect of managing Australia's gold reserves. A case of 1900s "Mother Country" deference-type attitudes or maybe just because Bank of England is seen as one of the "central bank club" and so you can trust your "mates" to do the right thing?Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com1tag:blogger.com,1999:blog-6089228851855763774.post-36230099016496225712018-04-03T07:36:00.000+08:002018-04-03T07:37:11.341+08:00Backwardation, the Bank of England, and Falling PricesI have a post up on Monetary Metals commenting on Jeffrey Snider's observation of the anomalous situation in the gold market between 2013 and 2016 where negative gold forward rates (GOFO) indicated backwardation while the gold price was falling. I expand on Jeffery’s chart which shows periods where the LBMA GOFO rate was below zero, along with the Bank of England’s custody holdings (gold held on behalf of central banks and bullion banks) with Monetary Metal's MM GOFO figures. Read more <a href="https://monetary-metals.com/backwardation-the-bank-of-england-and-falling-prices/">here</a>.<br />
<br />
I also addressed comments on the article at <a href="https://www.zerohedge.com/news/2018-03-28/backwardation-bank-england-and-falling-prices">Zero Hedge</a> and <a href="https://www.silverstackers.com/forums/index.php?threads/backwardation-the-bank-of-england-and-falling-prices-bron-suchecki.88482/">Silver Stackers</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-39257517184098417432018-03-17T22:53:00.001+08:002018-03-17T22:56:07.876+08:00Once in GolcondaOnce in Golconda: A True Drama of Wall Street 1920-1938<br />
John Brooks<br />
Allworth Press, 1969<br />
<br />
p150: "Its [Wall Street] fixed star-money-had left its regular place in the heavens and begun to wander and dance and lurch. For generations the dollar had been held firmly fixed by a force that was accepted in banking circles as being equivalent to a natural law of astronomy, the gold standard-specifically, by the Treasury's pledge to redeem dollars with gold in any quantity for all comers at $20.67 per fine ounce. Now, with that pledge temporarily abrogated in the emergency, the dollar was free to fluctuate in the world markets at the whim of speculators, just like come humbler currency, or indeed, like some untrustworthy common stock. The [first] hundred days [of Roosevelt's presidency] marked the beginning of a unique, and for many people hair-raising, period of almost a year during which the secure wealth for Americans consistend not of gold, which they were now forbidden to possess except for industrial use or in the form of jewelry, and not in money, every possessor of which found himself involved intentionally or not in a game of chance, but in land or goods."<br />
<br />
p155: "Next day [<span class="st">April 19, 1933] came the public announcement that the country was off the gold standard, and, from Wall Street, some astonishing reactions. ... What was most astonishing of all, though, was the swift and decisive approval of Roosevelt's move by the greatest banker of them all. From 23 Wall came a public message signed by J.P. Morgan-apparently the only formal statement of his career, apart from one that had followed British devaluation in 1931: 'I welcome the reported action of the President ... It seems to me clear that the way out of the depression is to combat and overcome the deflationary forces.'"</span><br />
<span class="st"><br /></span>
<span class="st">p162: "But no nation had ever mounted a systematic and concerted attack on its currency, in a time when its gold stocks were ample, for the sole purpose of creating domestic inflation and thus helping debtors. They had not done so because the idea was so outlandish it had never occurred to them. If it had, it would have appeared to their economic ministers as about as sensible as repeatedly hitting oneself on the head with a hammer so it would feel good when one stopped."</span>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-38349805165479895682016-12-15T17:19:00.000+08:002016-12-15T17:19:22.671+08:00Silver Smoking Gun to Stop Dishonest DealingI have an article up on Monetary Metals' website with some thoughts on the amended London Silver Fixing Antitrust Litigation which included damaging chat logs provided by Deutsche Bank that revealed collusion between bullion bank traders to “shade”, “blade”, “muscle”, “job”, “spoof” and “snipe” the silver market. Read more <a href="https://monetary-metals.com/silver-smoking-gun-to-stop-dishonest-dealing/">here</a>.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://monetary-metals.com/wp-content/uploads/2016/12/FixPlayers.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://monetary-metals.com/wp-content/uploads/2016/12/FixPlayers.png" height="192" width="320" /></a></div>
<br />Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-22664433179342129082016-08-29T19:19:00.003+08:002016-08-29T19:19:40.737+08:00Central Bank Non-TransparencyJust a quick post on Jan Nieuwenhuijs/Koos Jansen's <a href="https://www.bullionstar.com/blogs/koos-jansen/dutch-central-bank-refuses-to-publish-gold-bar-list-for-dubious-reasons/">article</a> on the refusal of the Dutch Central Bank to publish a bar list. The reason given was that <i>"the conversion of internal lists to documents for publication would create too many administrative burdens."</i><br />
<br />
I find this excuse weak when gold ETFs can produce bar list in the thousands of pages, and do so without creating any security issue. Even if the custodians where they have the gold have given them a pdf bar list that for some reason contains information that could be a security risk, it should not be a problem to ask that custodian to modify the report/query on their inventory database to exclude such information, or output only the relevant fields of data as a csv file or spreadsheet. If the problem with doing that is that the custodian does not operate an electronic inventory system then we have some serious questions about the control and safety of that custodian's operations.<br />
<br />
I think the real reason for not wanting to disclose the bar list is as some have noted in the comments to the article - when a central bank leases gold out, they get different bars back (see <a href="http://goldchat.blogspot.com.au/2010/08/gld-leasing-and-encumbrances.html">here</a> on why this is case) and thus the changing bar numbers on the list would reveal what percentage of the central bank's gold was lent to bullion banks during the year.<br />
<br />
For a central bank who follows correct accounting rules and show leases separately to physical gold (see <a href="http://goldchat.blogspot.com.au/2014/01/central-bank-gold-reserves-transparency.html">here</a> regarding Reserve Bank of Australia) a bar list should not be an issue (although see <a href="http://www.bullionbaron.com/2015/02/reserve-bank-of-australia-missing-bar.html">here</a> for blogger Bullion Baron's problems getting a bar list out of the RBA, which it seems was more of a case of interference from the BoE and a lack of courage by the RBA to stand up to them) but for a central bank who reports physical gold and leased gold as "gold" the bar list would raise questions like "why didn't you disclose the difference, how can you pretend that leased and physical are the same" or questions about the risk the central bank is taking and whether the return they got was worth the risk. Whilst I haven't met central bankers personally, I'm guessing they don't take too kindly to having their actions or judgements questioned. Hence the stonewalling.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com2tag:blogger.com,1999:blog-6089228851855763774.post-74509418029350702042016-07-15T22:04:00.000+08:002016-07-15T22:04:06.529+08:00Monetary Metals Closes First Gold Fixed-Income Deal at 5%What was that about gold being a sterile asset? <br />
<br />
FREEDOMFEST LAS VEGAS, Nev., July 15, 2016—At FreedomFest, Monetary
Metals announces that it has closed its first gold fixed-income deal, to
finance the gold working inventory of Valaurum. The initial amount of
gold meets Valaurum’s current needs, with room for expansion driven by
its growth. The interest rate is 5 percent of the gold, paid in gold.<br />
<br />
Read more <a href="https://monetary-metals.com/monetary-metals-closes-first-gold-fixed-income-deal-at-5/" target="_blank">here</a> and check out the revamped Monetary Metals website.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-1793077629411917542016-07-13T14:02:00.000+08:002016-07-13T14:02:06.021+08:00Yin and YangDuring gold’s bear market from 2011, the flow of gold out of ETFs drove
the popularity of the West to East narrative not just among goldbugs but
also bullion market professionals. It was a life raft I suppose that
many clung to, to find hope as the price relentlessly fell,
notwithstanding how much gold was flowing into “the East”. Today,
investors have abandoned the raft as they step out on to the terra firma
of $1050 and stagger about basking in the lush tropical greenery of a
rising gold price. <a href="https://monetary-metals.com/yin-and-yang/" target="_blank">Read more here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-42558493795314813762016-04-01T15:30:00.000+08:002016-04-01T15:30:10.013+08:00The Voldemort Effect in the Gold MarketGold market analysts have for many years puzzled over the unusual behaviour of the gold market during the 1990s, specifically the bizarrely flat gold price from 1993 to 1996 in the face of sustained selling pressure from central banks and gold miners hedging their production. To-date no one has been able to identify the hidden source of demand that was obviously supporting the gold market during that period. <a href="https://monetary-metals.com/the-voldemort-effect-in-the-gold-market/" target="_blank">Read more here</a>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-45259320587624131892016-02-12T16:56:00.000+08:002016-02-12T16:56:01.325+08:00On the absurdity of buying goldIzabella Kaminska <a href="http://ftalphaville.ft.com/2016/02/11/2152799/the-securityaccess-paradox-and-digital-lenders/" target="_blank">Feb 11 11:18am</a>: "all evidence points to a serious network-wide issue that’s spiralling out of control ... the root cause of the insecurity is the increased pressure on banks to make their systems as user friendly as the systems of non-bank challengers ... even if the latter don’t necessarily have the same quality of checks and balances in place ... the real cost for banks might not even be associated with the rise of successful fraud attacks on the network but rather the missed business opportunities associated with contaminated data profiles"<br />
<br /><br />
Izabella Kaminska <span class="entry-date"><a href="http://ftalphaville.ft.com/2016/02/11/2153080/on-the-absurdity-of-todays-safe-haven-flows/" target="_blank">Feb 11 1:33pm</a>: "the absurdity of allocating capital to gold markets in a <em>par value</em> crisis, all that really does is encourage more resources to be spent on gold production, which only adds more unproductive claims over the underlying productive economy. This only encourages further predation, all the while drawing resources away from more useful investments elsewhere"</span><br />
<span class="entry-date"><br /></span><br />
<span class="entry-date">I'd say the first article has something to do with the second. The assumption is that there are "more useful" "truly productive investments based on improving the base standard of living in an inequality busting manner" elsewhere. If there aren't, and people are worried about the "assets" the banks hold, then is buying gold really absurd?</span>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com1tag:blogger.com,1999:blog-6089228851855763774.post-12995203443023519472016-02-12T14:40:00.004+08:002016-02-12T14:40:52.375+08:00Monetary Metals Hires Bron SucheckiYep, you read right, I have resigned from the Perth Mint, see announcement below. Looking forward to being able to do some innovative stuff in the gold "space". Will be based in Perth but will get to enjoy the TSA experience a few times a year.<br />
<br /><br />
<a href="https://monetary-metals.com/monetary-metals-hires-bron-suchecki/">https://monetary-metals.com/monetary-metals-hires-bron-suchecki/</a><br />
<br /><br />
Scottsdale, AZ—Monetary Metals is pleased to announce that it has hired Bron Suchecki as Vice President, Operations. Bron will help the company develop new products and processes.<br />
<br /><br />
“We are excited to be able to attract someone of Bron’s caliber. We are growing to serve many customer opportunities, and Bron is a key part of our team,” said Keith Weiner, the CEO.<br />
<br /><br />
Bron leaves a management position at the Perth Mint, where he has become widely known over 20 years there. His areas of expertise include the physical side of the bullion business, risk management, and market analysis.<br />
<br /><br />
Bron will help the company grow its fund and market letter business, and develop additional products as part of the Monetary Metals vision.<br />
<br />
About Monetary Metals<br /> Monetary Metals is the leading company in gold investments, offering investors a gold yield on their gold. The company also publishes much of its groundbreaking proprietary research, to help the investment community better understand gold and its emerging role.<br />
<br /><br />
Contact:<br /> Keith Weiner, CEO<br /> keith _at_ monetary _dash_ metals _dot_ comBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com6tag:blogger.com,1999:blog-6089228851855763774.post-42847308210404063842016-02-04T12:40:00.001+08:002016-02-04T12:40:11.622+08:00Ethics and the inner ringC. S. Lewis is one of my favourite writers so it was good to be reminded of his work by blogger mickeyman in a post I strongly recommend <a href="http://worldcomplex.blogspot.com.au/2016/02/ethics-and-inner-ring.html">http://worldcomplex.blogspot.com.au/2016/02/ethics-and-inner-ring.html</a><br />
<br /><br />
Highly relevant to our times and also relevant to the gold blogosphere. "Lewis tells us that there are many inner rings in society--and rather than entering the inner ring of financial chicanery, there is the possibility of entering a ring composed of those of good will--the sound craftsmen."Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-71078256502010129862016-02-03T15:40:00.002+08:002016-02-03T15:40:22.856+08:00LBMA 2016 Precious Metal Forecast<div class="first-para">
At the beginning of each year the London Bullion Market Association (LBMA) polls a range of respected precious metals analysts in the large banks and independent consultancies for their forecasts for metal prices for the coming year. This year contributors are <em>“predicting price increases across the board for all four metals”</em>. Their forecasts for the average price during 2016 are:</div>
<div class="first-para">
<br /></div>
Gold – $1,103, ranging from $978 to $1,231<br /> Silver – $14.74, ranging from $12.63 to $16.78<br /> Platinum – $911, ranging from $748 to $1,076<br /> Palladium – $568, ranging from $413 to $674<br />
<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/02/03/lbma-2016-precious-metal-forecast/" target="_blank">here</a><br />
<br />Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-23419694598056969422016-02-02T21:09:00.002+08:002016-02-02T21:09:59.515+08:00Would You Risk Going to Jail to Fix the Fix?To fix the Fix, bullion bank traders (whether they are direct participants or not of the fix process) have to be able to “<em>buy the fix and sell the futures”</em>
when the fix gets swamped by sell orders (or vice versa). The problem
is that banks have a wide range of clients who hold positions with them
across spot, forwards, futures, options, ETFs and so on. It is therefore
highly like that one of those clients would be the loser of any such
activity (and others winners) and complain (as <a href="http://www.ft.com/intl/cms/s/0/7fd97990-eb08-11e3-9c8b-00144feabdc0.html" target="_blank">did</a>
the client Barclays’ trader Daniel Plunkett traded against) about it.
Alternatively, the regulator may decide to investigate markets from time
to time.<br />
<br />
The problem is that when a regulator comes looking at trades after
the fact they could construe manipulative intent when no such thought
was going through the trader’s mind – who was just arbitraging a market
imbalance – and the trader finds themselves fined £95,600 and banned
from trading, as Plunkett <a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10851259/Barclays-fined-26m-over-gold-price-failings.html" target="_blank">was</a>.<br />
<br />
If you think that traders would not be worried about such an unfair
claim against them happening, or that client complaints or random
regulatory investigations it would be unlikely, you haven’t been reading
enough Matt Levine<br />
<br />
Read more <a href="http://research.perthmint.com.au/2016/02/02/would-you-risk-going-to-jail-to-fix-the-fix/" target="_blank">here </a>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-35008098668406010622016-02-01T15:35:00.003+08:002016-02-01T15:35:26.819+08:00Mystery Federal Reserve Bank NY Gold DepositorThe release of Federal Reserve Bank of New York’s December gold stocks report provides and opportunity to analyse the progress of this current phase of withdrawals from its custodial stocks. I say “phase” because in recent times there have been periods of concentrated withdrawal activity in between periods of little or no activity, as the chart below from Nick Laird at <a href="http://www.sharelynx.com/" target="_blank">Sharelynx</a> shows.<br />
<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/02/01/mystery-federal-reserve-bank-ny-gold-depositor/" target="_blank">here</a>Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-18718494168440284082016-01-29T20:03:00.001+08:002016-01-29T20:03:08.889+08:00LBMA Silver “Price”: A Perfect Storm of Stupidity<span class="post-format-icon"></span> <br />
<div class="entry-container fix">
<div class="entry entry-content fix">
<div class="first-para">
Since I’m partial to a bit of alliteration in my
post titles, it is just as well that the Fix had a name change because
there is a word beginning with F that describes what happened midday
London yesterday (and that word is Farce – go wash your mind out with
soap). Anyway, “storm of stupidity” is probably a better fit because it
looks like a combination of price insensitive sellers using what now
appears to be a closed-end fund.</div>
<div class="first-para">
<br /></div>
<div class="first-para">
Read more <a href="http://research.perthmint.com.au/2016/01/29/lbma-silver-price-a-perfect-storm-of-stupidity/" target="_blank">here</a> </div>
</div>
</div>
Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-16651588939792687642016-01-15T17:09:00.000+08:002016-01-15T17:09:21.777+08:00German gold repatriation updateThree years ago tomorrow (16 January 2013), Deutsche Bundesbank <a href="http://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2013/2013_01_16_storage_plan_gold_reserve.html" target="_blank">announced</a> that they would be repatriating 300 tonnes of gold from New York and 374 tonnes from Paris by 2020, which was a revision of their October 2012 promise they would transfer 150 tonnes from New York by 2015. So how have they progressed and are they meeting their schedule?<br />
<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/01/15/german-gold-repatriation-update/" target="_blank">here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com4tag:blogger.com,1999:blog-6089228851855763774.post-7225717575933269642016-01-14T18:12:00.003+08:002016-01-14T18:12:41.360+08:00The two ways gold could repeat the 1970s<div class="first-para">
Even though investors are constantly told in disclaimer boilerplate that “past performance is no guarantee of future performance” the siren call of historical price charts is hard to resist. In the case of gold and silver, it is impossible to avoid projecting the 1970s bull market on today’s price action due to its epic nature and perfect representation of Dr. Jean-Paul Rodrigue’s <a href="https://people.hofstra.edu/geotrans/eng/ch7en/conc7en/stages_in_a_bubble.html" target="_blank">bubble behaviour</a>.</div>
<br /><br />
Gold bulls would argue that economies and financial systems have not been healed and accordingly the gold price top in 2011 was only a mid-cycle peak similar to the peak of $197.50 in December 1974. In chart form this claim manifests as per below.<br />
<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/01/14/the-two-ways-gold-could-repeat-the-1970s/" target="_blank">here</a>.<br />
<br />Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com2tag:blogger.com,1999:blog-6089228851855763774.post-40248485999040752142016-01-13T17:10:00.003+08:002016-01-13T17:10:23.657+08:00Is gold stretched?<span class="updated" title="2016-01-13T17:00:29+00:00"></span> <div class="entry-container fix">
<div class="entry entry-content fix">
<div class="first-para">
Last week I <a href="http://research.perthmint.com.au/2016/01/04/ratio-trading-gold-and-silver/" target="_blank">wrote</a> about the gold silver ratio as a way of determining which represents better value. Since then the ratio has moved higher, with gold outperforming silver on its move above $1,100. This has brought with it a number of bullish articles and while the move is encouraging and supports the idea that gold may have bottomed, in relative terms gold looks stretched to me at this time if we take a step back and look at the bigger picture.</div>
</div>
</div>
<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/01/13/is-gold-stretched/" target="_blank">here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-79754095757623391202016-01-06T16:39:00.000+08:002016-01-06T16:39:15.419+08:00Issuers can make deliveries using eligibleFocusing on registered stocks versus open interest is a favourite of many bloggers because it produces dramatic “Comex is about to fail” figures. I have <a href="http://research.perthmint.com.au/2015/07/06/historic-comex-stocks-open-interest-and-delivery-figures/" target="_blank">written</a> many times that one also needs to consider eligible stocks as eligible inventory can be converted to registered relatively quickly. Blogger <a href="http://kiddynamitesworld.com/the-worst-precious-metals-meme-of-2015/" target="_blank">Kid Dynamite</a> noted in passing in an email that December was a textbook example of eligible being used by issuers to make deliveries to stoppers. Not one to take the words of a cartel apologist at face value, I contacted data wrangler <a href="http://www.sharelynx.com/" target="_blank">Nick Laird</a> for detailed Comex warehouse movements and issuer/stopper figures, to check the facts for myself (and you).<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/01/06/issuers-can-make-deliveries-using-eligible/" target="_blank">here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-58502663484794151652016-01-04T16:40:00.000+08:002016-01-04T16:40:00.253+08:00In August I did an <a data-mce-href="http://research.perthmint.com.au/2015/08/25/the-ideal-percentage-allocation-between-gold-silver/" href="http://research.perthmint.com.au/2015/08/25/the-ideal-percentage-allocation-between-gold-silver/" target="_blank">analysis</a> of the ideal percentage allocation between gold & silver. This assumed one picks a percentage allocation and sticks with it. Another investing approach is to switch between gold and silver based on one's view of which metal will outperform the other in the future. One way to determine the point at which to switch is to use the gold/silver ratio.<br /><br />
Read more <a href="http://research.perthmint.com.au/2016/01/04/ratio-trading-gold-and-silver/" target="_blank">here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com0tag:blogger.com,1999:blog-6089228851855763774.post-87895753402070837212015-12-18T16:44:00.002+08:002015-12-18T16:44:10.847+08:00A way around FBAR/8938 reporting using LockSmart?<span class="updated" title="2015-12-18T16:33:36+00:00"></span> <div class="entry-container fix">
<div class="entry fix">
<div class="first-para">
I am often asked by US residents whether precious metals are reportable under IRS and FinCEN foreign asset/account reporting obligations:</div>
<ul>
<li>Form 8938, Statement of Specified Foreign Financial Assets</li>
<li>FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)</li>
</ul>
According to the IRS <a href="https://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements" target="_blank">comparison</a> of these requirements, <em>“precious metals held directly”</em> is not reportable. So what does “held directly” mean? The IRS’ own <a href="https://www.irs.gov/Businesses/Corporations/Basic-Questions-and-Answers-on-Form-8938" target="_blank">Q&A</a> confirms that safe deposit boxes are not reportable but otherwise provides no explanation of the term.</div>
</div>
<br /><br />
Read more <a href="http://research.perthmint.com.au/2015/12/18/a-way-around-fbar8938-reporting-using-locksmart/" target="_blank">here</a>.Bron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.com1