Perhaps it went out for some dim sum.
Roughly 21 tonnes, or 685,652 troy ounces of gold in .999 fine kilo bars, was withdrawn, net of a small deposit of 27,328 ounces, from the Brinks warehouse in Hong Kong yesterday.
To put that into some perspective, that is the same amount of all gold in the entire JPM warehouse in the US.
Now compared to the Comex US, in which very little gold bullion actually changes hands or goes anywhere, that is a huge number. But Hong Kong is typically seeing large inflows and outflows of gold. Because that is how the precious metals market has been manifesting in Asia since about 2007: not with endless chains of paper just changing hands in a grand game of liar's poker, but with the physical exchange of bullion.
The point of this is that the price discovery in New York is becoming increasingly divergent from the actual physical supply and demand flows of bullion which are taking place in Asia.
And that is a potentially dangerous development, especially with respect to a commodity that is being traded at a leverage in excess of 200:1. And in the face of shrinking inventories of gold available for delivery at current prices in both New York and London.
I have put the most recent report for all the US warehouses registered with Comex below that of Hong Kong.
As the Comex told Kyle Bass, 'price' will take care of any imbalances. Yes, just as smoothly as it did when the price of highly levered and risky paper corrected back to reality in 2008.
Are you kidding me? I didn't say that. That is what Kyle Bass said.
And if people should choose to stand for physical delivery given the relative scarcity, how much of a price adjustment might be required if they could even find any to be had without an onerous delay and in sufficient numbers?
At the A&P?
Do, say and think what you want. But when push comes to shove, accept the responsibility, fiduciary or otherwise, for your decisions.
