Gold. Fateful Weekend June 27, 2015.

Baltic Dry Index. 823 -06    Brent Crude 63.26

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

This weekend as Greece calls a snap referendum, effectively calling Germany’s bluff over the fate of the wealth and jobs destroying, dying euro, we take a look at gold. In this we are helped by the excellent Investorintel.com website, and its top contributor Robin Bromby, plus the always on the money acting-man.com website of Pater Tenebrarum. If I didn’t know better, I might think that China intends the yuan to replace the dollar in international trade sometime this century.  What better way than to have some partial backing by the world’s largest gold reserves.

The timing couldn’t be better, with Greece about to default next week, and the dying euro looking like it’s about to lose the first of many in Club Med as we enter July.

Posted on June 23, 2015 by Robin Bromby

China moves to Stage 2 of its great gold grab

China has a two-stage gold domination plan. Stage 1 is well advanced with the domestic accumulation of gold rising rapidly, both through importing the metal and banning the export of gold mined within China. Stage 2 is to buy as many gold deposits abroad, and this week we saw another move in this direction.

First, where is Stage 1 up to? Does China’s central bank really have gold reserves of between 25,000 and 30,000 tonnes of gold – which, even at the lower figure, would have given Beijing reserves greater than the other seventeen largest reserves holders put together, including the U.S., the IMF, the European Central Bank, France, Italy and Germany? That’s the view of Alasdair Macleod, a member of the London Stock Exchange since 1974 and who is now a frequent writer on the subject of sound money.

Just last month the Russian newspaper Pravda quoted “unconfirmed reports” that China had 30,000 tonnes of gold and added: “If this is true, it means that China will be capable of bringing down the U.S. dollar in an instant”, referring to the oft suggested idea that Beijing is aiming to have the yuan as the world’s prime reserve currency.

That China is buying and hoarding gold seems beyond doubt. Even the Bloomberg news service recently assumed the Chinese central bank has 3,150 tonnes. That’s roughly triple what Beijing admits to: it has never updated its 2009 announcement that it had 1,054 tonnes.

But there is another strand to this story: China not only wants to acquire the largest gold reserve in the world, it also seeks to control the mines that produce the metal, so ensuring future supply. Just as Beijing has maintained dominance in rare earths, antimony, tungsten, molybdenum and other key metals, so it wants to dominate gold. But there is a difference: with all those other metals, China has substantial resources within its borders, but that is not the case with gold. So it has to achieve dominance by acquiring mines overseas.

According to the U.S. Geological Survey, China mines 15% of annual gold output but has only 4% of the world’s known gold still in the ground. Estimates vary as how long it will take, but within the next decade Chinese production is going to plummet.

This explains why Zijin Mining, China’s largest gold producer, has been so acquisitive. The company this week unleashed a takeover bid for Australia’s Phoenix Gold (ASX:PXG). This company has a reserve of about 1 million ounces; more importantly, that gold lies near the Paddington, Western Australian gold plant owned by Norton Gold Fields (ASX:NGF) which is 90% controlled by Zijin (and the other 10 per cent of shareholders are now in the process of being bought out). Last month Zijin bought (from Barrick Gold) a half share in Porgera gold mine in Papua New Guinea.

According to The Wall Street Journal, Zijin owns 49.5% of a gold operation in Democratic Republic of Congo, 21.3% of Canada’s Pinnacle Mines (and 9.% of Ivanhoe Mines and Pretium Resources, the latter operating in British Columbia), and controls mines in Kyrgyzstan and Tajikistan. (That’s in addition to the more than 82 tonnes of gold the company mines in China each year.)

More

http://investorintel.com/gold-precious-metals-intel/china-moves-to-stage-2-of-its-great-gold-grab/

In Gold We Trust 2015

June 25, 2015 | Author Pater Tenebrarum

As every year around this time, our good friends Ronald Stoeferle and Mark Valek, the managers of the Incrementum Fund, have published their annual “In Gold We Trust” report, the extended version of which can be downloaded below.

This year’s report is slightly longer than the 2014 report and discusses practically the entire breadth of gold-related topics, including highly instructive excursions into economic theory, monetary history and an extensive discussion of current political and economic trends.

For the past few years, gold investors certainly had little to write home about. In dollar terms, gold has essentially been going nowhere, with a slight downward bias. Actually, the past three years in the USD gold price look a bit like the past 18 years of “global warming”.

And yet, a lot depends on one’s home currency. Gold’s sideways trend in dollar terms actually represents a small victory, given the strong rally in the dollar in 2014. As a result, gold price charts actually look quite encouraging in terms of most non-dollar currencies. In fact, its performance in euro and yen terms over the past 18 months has been none too shabby.

Moreover, as Ronnie and Mark point out, gold has held up extremely well in a disinflationary environment in which many commodities such as crude oil have been obliterated. As our readers know, we believe that the underlying bid that is supporting gold is from people who are looking at the third huge asset bubble blown by loose monetary policy within the past two decades and are feeling increasingly queasy. It can’t hurt to hold some insurance – and sooner or later it will be essential.

Naturally, while the party in “risk” still rages, it is widely held that this time is somehow different. Actually, every slice of economic history is unique, but as Mark Twain noted, history often does tend to rhyme. There is one thing that unites all credit expansions: they eventually all blow up – as in, no exceptions. In this sense, it is never different.

---- Since the last financial crisis, even more debt has been piled up all over the world. Much of this debt is collateralized by hopelessly overvalued assets, ranging from real estate to securities (it seems unlikely that many art works are bought on credit, but the vast money supply growth of recent years has certainly spilled over into this particular sector as well). More and more debt has come to depend solely on faith: the faith that governments will continue to be able to roll over their debt indefinitely without endangering the value of the currencies they issue.

Ronnie and Mark inter alia discuss Japan, the public debt of which by now amounts to 19 times its tax revenues. It seems obvious that buyers of the government’s debt can no longer merely rely on being made whole by its coercive powers of taxation. That leaves only the central bank’s proverbial printing press as a backstop to this debtberg. Well, we have seen it all before – countless times in fact. Somehow we have yet to see it end happily.

More

http://www.acting-man.com/?p=38127

"When paper money systems begin to crack at the seams, the run to gold could be explosive."

Harry Browne

At the Comex silver depositories Friday final figures were: Registered 57.87 Moz, Eligible 125.00 Moz, Total 182.87 Moz. 

The monthly Coppock Indicators finished May

DJIA: +107 Down. NASDAQ: +195 Down. SP500: +139 Down.