20 September 2011

Catch up

Record prices spawn new wave of China gold bugs: "More investors are moving into paper gold because of the lower capital costs. The prospect of making big and quick bucks by betting on gold's ascent is beginning to look like a fairly easy way to make money." Keep this in mind to temper they hype the next time you hear how China is going to be a huge physical market. One could argue that the gambling like nature of Leverage would have more appeal in the East than the West.

More than 2.8m tonnes of hidden copper stocks: "...how much copper is being stored ‘off market’ in private inventories..." Guess what, there is a lot of off market (in that we don't know who and where) gold and silver. At least we know the overall stock figure is circa 160,000t. When you have that much overhang relative to new mine flow, "...sudden and violent liquidation could pose a major threat to market fundamentals..." Of course a sudden and violent flow of dollars into gold could cause the same problem.

Another Lawsuit Filed Against JP Morgan For Silver Price Manipulation: I nearly fell off my chair reading this from Zero Hedge - "a lot of the content in the filing is regurgitated filler" and "at time reads like a diary of a conspiracy nutjob, and unfortunately that is how the conflicted legal system will see it". What happened to their usual goldbug ra ra ra? BTW, not much in the 100+ page filing and it wasn't very convincing for me.

Dutch Socialist Party puts gold questions to treasury secretary: Note that the Reserve Bank of Australia, in contrast to most central banks, answers these two questions in its past annual reports -

"2) Why are gold and gold loans stated as one line item in the annual report 2010 instead of mentioned as two separate items?
3) Can you give an overview of the yearly yields of the gold loans during the past years?"

If the RBA can disclose this information, why not the other central banks? Interestingly, the RBA has wound back all of its gold leasing. Would you take counterparty exposure to a bullion bank for 10 or 20 basis points return?


  1. Hi Bron,
    I'm curious how you define 'off market', to my naive mind 'off market' would include all investor bought bullion, as higher prices could coax it back on to the market?

  2. In this sense by "off market" i mean not visible, which would include privately held metal and also metal in bullion bank vaults. On market is what is publically reported, being futures warehouse stocks and ETF bar lists.

  3. Hello Bron,

    Could you please comment on the new ABX, "Australian Bullion Exchange Ltd". www.abx.com.au

    What do they offer that is more advantageous than buying gold from the Perth Mint?

    NB: I am aware that Bullion dealers do offer discounts on Perth Mint products (eg. 1 oz coins), meaning that it can be a few $ cheaper to buy from the dealer than the Perth Mint.

    The ABX is a different entity it seems. But if the ABX could not source gold from the Perth Mint, they would not even exist? The Perth Mint already sells most of the 300 tonnes in the OTC market, so where are the differences??

    Please comment. Thank you.

  4. Because the ABX is a wholesale only market, what is means for retail investors can't be determined at this time and we will have to wait until it is up and running and we can see what prices its brokers/members are selling at.

  5. Hi Bron,

    You might appreciate this:



    - Pete