BIG TROUBLE FOR U.S. GOLD MARKET: No Available Supply When Price Skyrockets

Americans are in big trouble and they don’t even know it.  The financial system in which they are totally invested, is heading towards an epic collapse.  Printing money and increasing debt (exponentially) are not sustainable business practices.  These artificial techniques to prop up a Zombie Economy have a certain lifespan… one that will end much sooner than later.

Unfortunately, the precious metal community had no idea how long the Fiat Monetary Authorities could prop up the Leech & Spend U.S. Economy.  Many now believe this can go on for quite a long time.  However, this is a terrible assumption to make.  Why?  Because the length at which the Fed and member banks were able to keep a Dead Financial System alive and its inevitable collapse, will both come as a surprise.

Many precious metal investors are now under the trance that the Fed and member banks are totally in control of the financial and economic system.  The evidence is perfectly clear when we look at physical gold investment demand.  According to the World Gold Council’s Quarterly Demand Trend Reports, physical coin and bar investment is down significantly compared to 2013, and will be less than half of what it was in 2011.

The data from the World Gold Council shows Americans purchased a paltry 34 metric tons (mt) of physical bar and coin and 79 mt of gold jewelry JAN-SEP 2014:

US Gold Demand JAN-SEP 2014

We can see an interesting trend took place in American gold buying habits as the price of gold declined from a high in March to a low in September (2014)… physical bar and coin demand fell while gold jewelry purchases nearly doubled.  Thus, physical bar and coin demand fell from 14 mt in Q1 to 8 mt in Q3, whereas gold jewelry demand increased from 19 mt in Q1 to 34 mt in Q3.

What do these gold buying trends reveal?  When the price of gold declines, Americans on an increasing basis, (and stupidly so) spend their hard-earned fiat money on gold for adornment purposes, rather than acquiring it as an investment.  Let me tell you, when gold was really cheap back in the early 2000’s, Americans were buying gold jewelry at three times the rate they are presently.  Then of course, they took that gold jewelry and pawned it off into the scrap market after the severe 2008-2009 economic and financial recession for much-needed cash.

Now, you won’t see the Indians being this foolish.  According to the data put out by Thomson Reuters GFMS 2014 Gold Survey, total U.S. gold scrap supply hit a record of 160 metric tons in 2011 compared to 58 mt for India.  So, when the price of gold hit an all time high of $1,900, the Indians were holding onto their precious gold jewelry, while Americans pawned it off as fast as they could.

What is even more interesting, that 58 mt of Indian gold scrap in 2011 was the lowest annual amount during the decade (2004-2013), in contrast… it was the highest for the United States.  Which perfectly describes the mentality of the typical American, they choose gold for adornment only and load up on paper assets for wealth.

NOTE:  Yes, I realize many do not trust the World Gold Council figures, but they are best official source we can go by.  Furthermore, sales of U.S. Gold Eagles and Canadian Gold Maples have been trending lower since 2011.  Even though its impossible to know the actual data, physical gold investment by the west has declined… just as the Fiat Monetary Authorities planned.

U.S. Gold Market:  Supply To Dry Up When Price Skyrockets

If we look at the current supply and demand figures for the U.S. Gold Market, it is experiencing a slight deficit.  According to the figures put out by the USGS Gold Mineral Industry Surveys as well as the World Gold Council Demand Trends, total supply of 509 mt is less than total demand of 515 mt (JAN-OCT 2014):

US Gold Market Supply vs Demand JAN-OCT 2014

The USGS reports total mine supply for JAN-OCT 2014 of 176 mt, imports at 258 mt and (my) estimated scrap at 75 mt for a total of 509 mt.  Total demand comes from adding the USGS total U.S. gold exports of 392 mt and 123 mt of consumption for a total of 515 mt.

The World Gold Council stated total gold demand for JAN-SEP at 113 mt, which I estimated another 10 mt for October to give a total of 123 mt for the period.  Furthermore, my forecasted gold scrap of 75 mt comes from taking the total 107 mt figure for 2013 (GFMS 2014 Gold Survey), and then reducing it by 15% for 2014.  GFMS shows U.S. gold scrap supply declined 28% in 2013… so a 15% decline rate is conservative.

Even if U.S. gold scrap was a bit higher in 2014 than my estimate, it wouldn’t change the overall supply demand situation.  As we can see, the current U.S. Gold market barely has enough supply to meet demand.

So… what happens when we finally get the BIG GOLD PRICE REVALUATION?  Americans purchased 34 mt of gold bar and coin during the first nine months of 2014 and it will be an estimated 42 mt for the entire year.  This isn’t that much gold when we convert it… 1,350,000 troy ounces.

Sure, maybe some of the jewelry demand will fall precipitously as the price of gold rises significantly, but that still doesn’t leave much gold supply.  If half of the gold jewelry demand in 2014 became physical coin and bar demand, it would be an additional 75 mt, or 2.4 million oz of gold.  Adding these two together we arrive at total of 117 mt or 3.75 million oz.

How is 3.75 million oz worth of physical gold bar and coin going to satisfy the demand of the American public?  Some may say, “Well, we could export less gold and use that to supply the increased gold bar and coin demand.”  Unfortunately, when the world finally experiences the GREAT GOLD REVALUATION, everyone will be demanding gold, not just Americans.

Thus, if U.S. gold exports are cut to meet increased domestic investment demand, it’s rather easy to assume, gold imports into the United States will be cut as well.  Moreover, the U.S. continues to ship a great deal of gold East.  In my article, U.S. GOLD EXPORTS TO HONG KONG & CHINA:  Doubled In October, of the total 51 mt of gold exports in October, 52% were shipped to Hong Kong, China and India.  Also, I would imagine the majority of U.S. gold exports to Switzerland (17.6 mt) that month also made its way to Asia.

The writing is on the wall.  When the price of gold rises to its true fundamental value (virtually overnight), Americans will be the BIGGEST PAPER BAG HOLDERS on the planet.  At this point, there will be no physical gold available for Americans to invest in… now long gone, as the majority flowed EAST while the WEST fell asleep.

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49 Comments on "BIG TROUBLE FOR U.S. GOLD MARKET: No Available Supply When Price Skyrockets"

  1. Great stuff. Very enlightening. Explains why the One Bank sits on the prices all day long. Also explains why they will lose control and we see gold go up by 100s per day. while the system melts-down. They can delay the inevitable, but the inevitable will come.

    It is going to be FUN Steve! Thanks for letting me share the ride.

  2. P.S. Being long Seabridge Gold and Nova Gold is a great play on Massive Gold Reserves that are undeveloped especially in light of Peak Gold production and dwindling Western supply.

    • Unless the metal is in your possession, it is worthless.

      • Your talking about a mad-max scenario!

        • Nope. He’s talking about a 2008 scenario. In a Mad Max scenario physical metal will be taken by force.

          • No, in a mad max scenario gold will be worthless. Guns, food, and basic supplies will be the only thing worth having.

          • Ethan,

            I highly doubt we will have a MAD MAX scenario. However, gold and silver will still play a role if the U.S. does collapse into a third world banana republic. Anyhow, one can only buy so much bulk food, guns, bullets and etc. Next best thing to own once those are covered are precious metals.


          • Gold will most likely be criminalized, just like in 1933. It was not confiscated in 1933, it was not taken by force, it was made illegal to hold or use in transactions by citizens of the Land of the Free. If you broke the law and were caught you were subject to punishment and possible forfeiture of your gold. The government did not go door to door searching houses and taking gold in the 1930’s, and it will not do that in the future because less than 1% of the population stacks, so it’s just not worth the trouble it would cause.

            Another option would be confiscatory taxes on gold so high that you would lose money holding it, and if you try to barter on the sly someone will eventually turn you in for a reward, and you are simply a tax cheat subject to punishment and loss of your stack. No door to door theft, that is senseless and completely unnecessary.

          • OldPoop,

            I highly doubt gold will be criminalized or confiscated. By the way, only 25% of the gold was collected by the U.S. Govt during the 1933 Confiscation. It is highly unlikely that gold will be confiscated this time around because most of the gold is in the wealthy hands… those whom the government works for.

            Back in 1933, most of the gold was in the hands of the public.. ordinary Joes. There just isn’t much gold to grab from the public today.

            Also, I doubt high confiscatory taxes will be issued on gold because as I said before, the WEALTHY own gold more than the typical public.

            Anyhow, there isn’t anything better to hold on to than gold or silver.


  3. Hi, I think, that the paper price of gold has been “pegged” to the greenback at 1.200 dollars per ounce. On a short term basis they try to “harvest” physical by letting the price rise somewhat, but they cannot afford to let the $POG rise on a longer term basis because of negative interest rates. Above all, they have to keep US and european savers away from acquiring physical and even paper gold. Unfortunately this will be successful as long as the POG “is going nowhere”. Steves post shows, that it is successful in the States.

    Please have a look (and bear in mind, that english is not my mother tongue) Andreas

    • They do HAVE to keep folks away and they ARE in the market all day long trying to keep a lid on G & S prices……..but they will lose the war. Hence the increased trading bands to 400 and why when it revalues it will be practically overnight.

      • I agree, that revaluation will be overnight and huge.But I don’t think, that – apart from a few hundred plutocrats and central bankers – has an idea, how the real supply situation with real gold/silver looks like…..

    • Gold has been a highly successful investment in many currencies in 2014. If you live in Russia or Greece you have little options. The demand for physical gold is underestimated in the US and the US investors are on the short side. They shall loose a lot of money.

  4. Is it possible that Americans are buying jewelry in case bullion coins are confiscated a la 1933? Turning the metal into personal jewelry to prevent government laying claim to it or taxing it was done by Spanish citizens returning from the New World hundreds of years ago. You don’t think they really wanted 6 ft. gold chains?

    • @Jake. Very few Americans turned in there gold coins. Hence
      most of coins from that era are still held by investors.

    • “Is it possible that Americans are buying jewelry in case bullion coins are confiscated a la 1933?”

      No, so few Americans even know anything about that. My estimates: maybe 2% systematically save any silver; and with gold being more expensive far less than 1% systematically save any gold. Even ONE 1/10 ounce coin per month. Out of all gold and silver savers, not all know about the 1933 executive order. Of those that do I suspect the majority would not comply.

  5. The average American cannot afford to buy gold coins & bullion. The middle class has been decimated since the 2008 financial crisis. The majority of Americans who are not unemployed are living paycheck to paycheck. Many work 2-3 part time jobs and earn minimum wage just to scrape by. IMO, they are buying silver instead of gold since it is a lot more affordable. This is why we are seeing record silver demand the last few years.

    • The middle class in America is far wealthier than in India, yet gold ownership in India is much higher. The argument that Americans don’t hold gold because they cannot afford it is propaganda used by the banks. They want you to believe only elitists own gold. In China and India, where the middle class is far poorer than in America, gold ownership is much more prevalent.

      Turn off the CNBC taking heads, study, and it will all make sense. 🙂

      • Americans have a mortgage, car payments, student loans & other debts. We are a debtor nation. My friends, family & even co-workers cannot afford to buy gold. I have at least convinced some to buy a little bit of silver each month. Better that than nothing.

        • If they can afford all that then they can afford to buy gold. Their problem is that they foolishly chose to spend it on other things.

  6. Steve
    These reports seem to treat gold as if it is a static quantity and not continually being mined at the rate 2600 to 3000 tons per year depending on whose numbers are observed. Who buys all that massive yearly production besides the usual suspects in the east?

    • Saxon,

      What do you mean by “These Reports?” Are you referring to GFMS, the World Gold Council or my reports? Anyhow, that 176 mt of U.S. mine supply Jan-Oct was apart of the Global 2,600-3,000 mt you are talking about. Matter-a-fact, the U.S. will produce about 210 mt of gold in 2014.

      The World Gold Council’s 2013 Global gold consumption was as follows:

      Greater China = 1,120 mt
      India = 975 mt
      Thailand = 140 mt
      Vietnam = 92 mt
      Middle East = 232 mt
      Turkey = 175 mt
      Russia = 73 mt
      USA = 190 mt
      Europe = 309 mt

      Now, there is good evidence by the Chinese Gold Organization that actual Chinese gold demand in 2013 was over 2,000 mt and not the 1,120 mt stated by the World Gold Council. So, as you can see, there is a great deal of demand across the world and I didn’t even include all the countries… just the top ones.

      Also, as the article states, the United States imported 258 mt of gold JAN-OCT. Of that amount, 153 mt was Dore’ & Precipitates. Basically, that was gold bars from the mines in Central and South America. So, in all reality, the U.S. controlled 176 mt (mine supply) plus 153 mt of Dore Bars = 329 mt of gold from JAN-OCT 2014. This will likely be 375 for the year… which is something like 12% of total global mine supply.

      The world is absorbing ALL MINE SUPPLY plus SCRAP. Global Scrap supply in 2013 was 1,280 mt. So, the world has no problem absorbing all world mine supply… as it is also consuming all the scrap supply as well.


      • They are also buying Central bank stockpiles as well according to the opinions of several PM businessmen. Eric Sprott is one of those. The math doesn’t work out without some surreptitious supply entering the market.

        The Fed Reserve and U.S. government are vehemently opposed to auditing the gold they supposedly hold that supposedly is owned by American citizens.

        • Speaking of a surreptitious supply, World Bank Whistleblower Karen Hudes makes frequent reference to Hugh caches of gold in various locations around the world. She states that there is 10 times the amount of above ground gold that we have been lead to believe. Instead of 170,000 tons of gold, she says that 1,700,000 tons actually exist. This includes gold that was mined during the last 2 ice ages and stashed away in secret. She speaks of the Solomen Mine Gold, the Hashimoto Gold, the Dragon Family Gold, etc. There is a lot of history we just don’t know about, perhaps.

        • Speaking of a surreptitious supply, World Bank Whistleblower Karen Hudes makes frequent reference to Hugh caches of gold in various locations around the world. She states that there is 10 times the amount of above ground gold that we have been lead to believe. Instead of 170,000 tons of gold, she says that 1,700,000 tons actually exist. This includes gold that was mined during the last 2 ice ages and stashed away in secret. She speaks of the Solomen Mine Gold, the Hashimoto Gold, the Dragon Family Gold, etc. There is a lot of history we just don’t know about, perhaps. She has lots of interviews on YouTube, you should check them out.

          • TheHolyCrow,

            I have seen a few videos with Karen Hudes. She spoke about this when she was doing an interview with Antal Fekete. However, Karen Hudes estimate is so far off base, I don’t know what to say. I will write an article on this. Actually, the 170,000 metric tons is a great deal closer than Hudes realizes.


      • What I mean by “these reports” is there does not seem to be an accurate accounting of the multiyears of accumulation by any reports I have seen. If the production rates are consistent for several decades there would be millions of tons in storage somewhere, but the nations with published amounts are only in the few hundred thousands.
        This is not a criticism of you because your reports are some of the clearest and best on the internet.

      • By definition, all gold produced is sold to somebody : it is very rare that gold mines stockpile gold ?

  7. I’d like to see the same report,but with silver instead of gold.Are Americans really opting for AG,or is it paucity of purchases all round.Roll on the GGR.

    • yuan abet,

      A new specialist took over the USGS Silver analyst job and has been very tardy in publishing the monthly Silver Mineral Industry Surveys. I have spoke to several of the USGS folks. Anyhow, silver is a bit different because the United States imports a lot of silver for industrial applications. Gold is mainly purchased as an investment or jewelry. Very little goes into industry.


  8. very good work continuously steve is a French supporting you present …. and as we said Marc Faber bought at any price while supplies for sale;)

  9. Rumplestiltskin | January 31, 2015 at 6:21 am |

    I disagree with their assessment that gold is a good investment. That is the wrong wording. Gold should never be thought of as an investment. Gold and Silver are no more than a “Hedge” against inflation or an economic collapse. Investments pay a dividend or make the investor a profit. Rarely does trading in gold or silver make a profit except when the CME and the Gold banks purposefully control the price by their actions of shorting and dumping, then repurchasing at the lower price.

    Unless you are using one of those computerized trading platforms where trades are made in micro seconds, trading in Gold ETFs is a loosing proposition for the small investor.

    If you purchase Gold or Silver, make sure you have the physical metal in your possession, otherwise you don’t own squat. It can only be a hedge when it cannot be robbed from you by a controlled market.

    • Rumplestiltskin,

      Normally I would agree with you that GOLD IS NOT AN INVESTMENT. However, the funneling of the worlds funds into the biggest paper Ponzi scheme in history changes the definition of gold ownership a bit… silver included.

      If the world had ample oil and energy supplies, gold of course would be a HEDGE against inflation or the collapse of fiat currency. However, gold and silver are now EXCELLENT INVESTMENTS because the world (95-97%) is invested in a highly-leveraged Financial System that can only survive on a growing global energy (oil) supply.

      It actually looks like 2015 will be the peak in Global Oil Production. Owning gold or silver today is much more than a hedge against inflation or the collapse of the fiat currency system.

      GOLD & SILVER will become the GO TO ASSETS when the value of most paper assets implode due to the peak and decline of global oil production. It will not be safe to own most Real Estate or other physical assets.

      This is why Gold & Silver are the best investments as their value will rise above and beyond the forces of INFLATION or CURRENCY COLLAPSE.


      • Indeed. “Investments” are old fashioned. A paper promise dies by that same promise; watch how the world scrambles for real assets, addicted they are to paper promises, the difference between those two acknowledged only by 0,2 percent of world population. Wonder what comes first; paper ‘investment’ meltdown through peak oil, or through the masses’s unrest? Peak cheap growth rears it’s ugly head as we speak; it’s frontrunning oil shortage, as we see now….

        Burning politics, burning currencies, it’s already happening.

        Hedge accordingly…

        And thanks Steve…. Better a year too early than a day too late. 😉

      • Steve,

        “GOLD & SILVER will become the GO TO ASSETS when the value of most paper assets implode due to the peak and decline of global oil production. It will not be safe to own most Real Estate or other physical assets.”

        Please further explain what you mean when you say “it will not be safe to own most Real Estate or other physical assets”.

        Can you expound on this some more; further explain what you mean?

        I get it that some physical assets will have little value; the resale on expensive furniture for example. I get it that a non-modest home, particularly in an inner city turmoil area, could tumble in appraised value, but at least a home is something one lives in. I understand gold, silver, firearms, long-storage food, quality shoes & clothing, and liquor would be valued.

        Would like to hear you expound on this a bit.

        • David,

          No one has a clue how Peak Oil will impact assets going forward. A typical suburban home will come under severe stress after peak oil. You just have to think about this factor: How do you run Manhattan, Chicago, Dallas or any city on say 50-70% of the oil??

          What does that do to home values, commercial or industrial real estate?? What do you do with all of these new SUPER WAREHOUSES that are built all over the country when we lose oil supply? What happens to their value?

          Sure, some real estate will hold up better than most, such as small modest homes in rural areas, but most physical assets will lose value due to less energy to run them.


    • The gold bullion coins I bought in 2002 for $300 each sure do seem like a good “investment” to me. I just wish I had sold them for $1,900 a while ago. Unfortunately, I broke my crystal ball some years ago.

  10. Whadya mean not enough gold! 3.75 million oz. is .38 GRAM per aMerkan. That’s plenty right?

  11. When discussing the concern of a future metals confiscation it is important to understand why the metal was “confiscated” in 1933. At that time all dollars were redeemable for gold. The banks were failing and the Federal Reserve needed to create a lot of currency units. It would not have been possible to do this while dollars were redeemable for gold. They did not go door to door seizing metal and only one person out of millions even went to jail. The primary goal was to permanently default on the federal reserve notes that people held.

    The Federal Reserve does not have this problem today. They can print all the money they need without concern for the gold coins in your sock drawer. And the value of gold and silver bullion in America is absolutely minuscule. Stocks and real estate compromise the majority of private assets. So if their concern is to create a tool to more easily transfer wealth, then confiscating gold and silver bullion is laughable. It would not get the job done.

    • Problem is…… Stocks and real estate are part and parcel of the Ponzi.
      PMs are anti Ponzi.
      And if PMs are so miniscule, why all the hub bub?

    • “Stocks and real estate compromise the majority of private assets.”

      Many owe more than they have in equity on their home or land.

      Don’t forget the very large $ amount in pension plans, IRS’s, 401k’s, etc., which may of course be in stocks/equities, but not necessarily. Someone in the Clinton Admin proposed a “one time tax” on these assets. Don’t think that idea has gone away. Or outright control of them by an ever-more-nanny state. Government central control or redistribution mindsets can’t stand to see wealth they can’t get at.

  12. interesting to add that Americans buy rubbish 14 karat gold jewelry while the Indians and all Asian in general do not buy below 21 karat…

  13. People shouldn’t buy jewellery for investment purpose. It’s a rip off.

  14. Peak Oil, humbug ! Australia has a Hugh oil discovery that is just beginning to be explored. Prooven reserves so far is over 150 Billion barrell’s, and inferred total is already over 250 Billion barrels. It is in the Officer Basin and surrounding areas. Check it out. Goodby OPEC ! F.U. Saudi Arabia ! And the M.E.G. Has been all patented and ready for mass production since 2003. And Stanley Meyers hydrogen on demand technology has not been totally trashed, despite their best attacks ! Someday you may see $5 oil. The Stone Age wasn’t ended because they ran out of rocks, you know.

    • SlipperySlope,

      Ah… the 150 billion in proven reserves in Australia. Well, let me tell you a little something. The majority of that crap expensive high-cost oil will never be produced. The only reason the U.S. Shale Oil and Tar sands were produced was due to the Fed & Central Banks flooding the world with liquidity.

      80-90% of the Shale Oil companies made no real money producing Bakken & Eagle Ford. Nearly 95% of companies producing Shale Gas made no money. Now, the U.S. has all the infrastructure to do shale, Australia does not.

      Here is how I will end this…. people will continue to believe in ENERGY FOREVER right up until the time we peak. A few years later when we realize global oil production continues to head south, then the SKEPTICS will wake up and smell the coffee.

      …. But not a minute sooner.


  15. SlipperySlope | February 12, 2015 at 2:35 pm |

    Yes, the Australian oil is expensive to produce, and you are right that the infrastructure is not there, yet. But the fact of the matter is that the oil is there, and when Saudi Arabia drains her measly 260 Billion barrels, then they will move on to Australia. There is undiscovered oil in many places, they just have to drill, drill, drill. And the planet keeps making more, more, more. Oil does not come from dead dinosaurs. There are no fossils below 16,000 feet any where in the world, but they hit oil at 30,000 feet. In Russia, old capped wells that dried up, filled up again after years of being capped. Oil is made by the earth from heat and pressure, not dead plant and animal life. It is an Abiotic process. Besides, the oil for fuel standard will become obsolete as new technology is developed, and ALLOWED to be brought forth, without the inventors being murdered.

    • SlipperySlope,

      Several of Russia’s top energy organizations state that their production will decline this year or next. The only place they see additional supply is from the Arctic or their Shale. No real geologist Russian or whatever believes in the Abiotic theory of oil production. Even if we did get some oil from abiotic means, it would never amount to much in a human lifespan.

      Furthermore, several top rated geologists disproved the notion of Abiotic oil stated in the (lousy excuse of a) book titled BlackGold StrangleHold, by that nitwit Jerome Corsi. Corsi is like many today, they mislead the public with shoddy and incomplete scientific data.

      The Falling EROI proves the Aboitic Oil theory is nothing but complete Horse-Sh*t. Anyhow, we have run out the clock on cheap oil and the world can’t afford expensive oil.


  16. SlipperySlope | February 13, 2015 at 1:01 am |

    Don’t you worry about a thing, Steve. There is still more oil to be discovered, and we have hundreds of years of coal, and thousands of atom bombs that can be disassembled and used fore nuke power. And sitting on the shelves are Beardens MEG, and Meyers Hydrogen-On-Demand, and a host of other suppressed technology. Even solar is getting more efficient. We aren’t going to freeze to death anytime soon. I recently heard that a city in Vermont is being run entirely on renewable energy, so there is hope for us yet. I can’t wait to see what you will be writing about Karen Hudes proposition that there is much more gold around than we have been lead to believe.

    • SlipperySlope,

      All I can say is…LOL. Don’t mean to be sarcastic, but the energy situation is much more dire than what you assume. Anyhow, we can agree to disagree until the time Peak Oil is in the rear view mirror.


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