consider a well publicized recent sale of Russian gold bullion to itself:
sells gold to itself
December 14, 2009
The Russian central bank will spend $1bn next week, buying 30 metric tons of gold from Gokhran, the state
repository. Gokhran had planned to sell 20-50 MT on the open market, but
cancelled after news of the sale leaked. The sale would have helped plug Russia’s
budget deficit, and, apparently, purchase some diamonds from state-run miner
this not strike you as being odd?
case you missed it, Russia
announced that they are selling gold to THEMSELVES!?!?
source of the gold data table appended below is
the World Gold Council. It
states that Russia
possesses 607 [actually, now officially 640 tonnes with the addition of the
recent 30-ish tonne purchase from itself] metric tonnes of gold bullion.
revelation that Russia
is “selling gold to itself” and lack of acknowledgment that Gokhran
exists - is a MAJOR omission by the World Gold Council in their aggregate
gold bullion data.
the World Gold Council also reports that as of October
2009, gold exchange-traded funds held 1,750 tonnes of gold for private and
The World Gold
Council’s data keeper is GFMS Ltd.
The GFMS web site makes the following claim:
GFMS is the world's foremost
precious metals consultancy, specializing in research into the global gold,
silver, platinum and palladium markets.
GFMS is based in London,
UK, but has
representation in Australia,
Spain and Russia,
and a vast range of contacts and associates across the world.
research team of fifteen full-time analysts comprises qualified and
experienced economists and geologists; while two consultants contribute
insights on important regional markets.
Philip Klapwijk and CEO Paul Walker appear regularly at international
conferences and seminars, and their articles have been widely published. All
analysts travel regularly and extensively to stay in touch with GFMS'
unrivalled network of contacts and sources of information around the world.
15 full-time analysts, two consultants and “representation” in Russia
– how is that GFMS [and by extension the World Gold Council] can omit
such a large hoard as stored at Gokhran and
materially misreport the nature of Russian gold reserves? They
didn’t even mention the existence of Gokhran in a footnote.
professionals who have been inside Gokhran [Russian] State bullion
depositories have provided me with personal accounts of this bullion
depository. They report scenes reminiscent of the movie Gold Finger -
on steroids – literally countless metric tonnes of neatly stacked gold
better question might be, what else – regarding GOLD - has GFMS and the
World Gold Council not reported or omitted?
A Beat On Where the World’s Physical Gold Is Stored
generally accepted that for the entirety of mankind’s existence on this
planet – the earth’s crust has yielded roughly 160 thousand metric
tonnes of gold. The World Gold Council / GFMS
identifies where roughly 32 thousand tonnes of that total are located.
We might add to
what’s listed above, the
“No one knows
exactly how much gold has been passed from generation to generation and is
now stashed in safe deposit boxes across India.
But bullion analysts estimate Indian families are sitting on about 15,000
tonnes of gold worth more than $US550 billion ($A600 billion).”
Then, if we
conservatively assume that the rest of the world has as much as India
stored away in safe deposit boxes – that’s another 15,000 metric
using reported World Gold Council / GFMS data plus some very conservative
assumptions, we can approximately account for 62,000 metric tonnes of the
world’s roughly 160,000 metric tonnes ever mined.
By the process of
elimination and adjusting for the 62 thousand metric tonnes referenced above,
there is a residual 98 thousand metric tonnes of physical gold bullion; the
location of which cannot be readily identified.
The very nature
of World Gold Council / GFMS data may be characterized as being static and
don’t tend to change much year-over-year. This demonstrates that
the owners of gold bullion DO NOT GENERALLY TRADE THEIR
PHYSICAL STASHES – they sit on them!
Conundrum That “IS” the London
Bullion Market Association [LBMA]
The LBMA is
considered to be the world’s foremost physical gold market. Here
data on the number of ounces of gold “transferred” DAILY
– by month, year-over-year – from Nov. 08 – Nov. 09:
22 business days per month, so the LBMA claims to have traded 151,046 metric
tonnes of gold in the most recent 12 month period.
242.2 x 22 = 5,328
million physical ozs or 151,046 metric tonnes
The LBMA reports
that they have “transferred” or traded 151,046 metric tonnes of
gold – a commodity that when folks possess it, they are demonstrably
inclined NOT TO trade it. Using another bench mark, annual global
mine production is in the neighborhood of 2,500 metric tonnes. The LBMA
claims to have sold last year’s global mine supply over 60 times in 12
The LBMA claims
to do this year-in, year-out.
This implies that
ANY LBMA physical gold stocks are HIGHLY LEVERAGED through
trade in paper gold
is but one exchange where gold trades. Others include N.Y., Tokyo,
and different points in China.
Don’t forget, physical ounces traded on ANY of these exchanges are
additional ounces that London
cannot be trading.
The reality is
that every physical ounce of gold reported to be in the vaults of the LBMA
and exchanges in general, is sold tens and perhaps more than a hundred times
over in paper form. This paper selling suppresses what would otherwise
be the freemarket gold price.
The Russians are
known to be very shrewd and calculating. It makes one wonder whether
the Russian announcement of a sale of gold bullion – TO THEMSELVES
– might not have been a “tell” signaling their intention to
not only withhold physical metal from the market and ensure that paper
promises of delivery of real metal are honored.
Could it be that
the Russians are really signaling that the assignment of false, arbitrary
values [using futures / derivatives] to finite resources will no longer be
If so, the real
leverage is in owning physical gold bullion – not the paper promises.
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