The demand for gold in India and China so far this year has soared, a
fact which is completely ignored by the western financial media. The
ex-duty Indian gold import premiums (approximately $10 earlier this
week) are quite remarkable, “as the need to import kilo bars only arises
if Indian demand is not satisfied by Dore imports (which had a duty
advantage of $15.52/oz this afternoon) and smuggled gold. Reports of
apprehensions at Indian airports are continuing to appear, indicating
that smuggling has in fact revived” – John Brimelow’s Gold Jottings,
brimelowgoldjottings@gmail.com).
Brimelow also reported that 162 tonnes of gold were delivered into
into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes
on Friday. The Friday delivery is the largest by far that I’ve observed
in watching this statistic over the last several years.
While the eastern hemisphere is busy converting fiat currency into
physically delivered gold, the United States political system is
becoming increasingly unstable and unpredictable, as the Trump White
House, in an effort to repair the frayed relations with Russia, is under
systematic attack from the Deep State. Trump’s erratic leadership
combined with the Deep State’s political terrorism will likely spark
political and social chaos in the U.S.
The relentless buying strength of physical gold in the east along
with the incipient instability of the U.S. are fundamental catalysts to
drive the price of gold and silver a lot higher. Furthermore, the
emergence of accelerating price inflation thrown into the mix has the
potential to create the “perfect storm” for higher precious metals
prices.
In an earlier post I
explain why now is the time to use the manipulated paper gold price
take-downs as buying opportunities. This viewpoint was vindicated
during the two-day Fed Chairman staged Congressional propaganda event,
which historically is a period in which the banks slam the gold market
with tonnes of paper gold in order to prevent the price of gold from
signaling a message that conflicts with the economic and financial
fairytale artfully spun by the Fed-head (or not so artfully, as it were,
in Yellen’s case).
Gold was slammed nearly $20 just prior to and during Yellen’s hot air
exhalation sessions on Capitol Hill on Tuesday and Wednesday. The
catalyst was a series of paper gold volume surges on the Comex in which
the NY Fed and its agent bullion banks drop a payload of gold futures on
both the Comex floor and into the CME Globex trading system, targeting
the stop-losses set by hedge funds that are long gold contracts. This
detonates an avalanche of selling by momentum-chasing hedge fund algos.
Subsequent Yellen’s freak show on Capitol Hill, gold promptly defied
the paper market deviance and shot up $21 to a new year-to-date high.
If the deteriorating economic fundamentals manage to chew through the
safety-net that has been placed beneath the stock market, a real rush
into gold – physical and derivative – will be triggered. In the
meantime, the nature of the precious metals trading has shifted from
shorting rallies and covering those shorts on sell-offs to buying dips
and selling rallies. Eventually the hedge fund algos will be
programmed to buy dips and aggressively buy rallies. That’s when the
real fun begins, especially in the junior mining stocks…
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Dave Kranzler spent many years working in various Wall Street jobs. After business school, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance, and graduated Oberlin College with majors in Economics and English. Dave has nearly thirty years of experience in studying, researching, analyzing and investing in the financial markets. Currently he co-manages a precious metals and mining stock investment fund in Denver and publishes the Mining Stock and Short Seller Journals. Contact Dave at dkranzler62@gmail.com.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
