As the U.S. economic and financial system continue down the road of self-destruction, there is an increasing amount of evidence that suggests the day of reckoning is fast approaching
One such indicator is the amount of U.S. gold export scrap. At one point in time, the United States was exporting a great deal of gold scrap and waste, however it looks like its citizens are now…. tapped out.
In a previous article, “U.S. Total Gold Exports Up 31% in Oct 2013”, I discussed the record amount of gold bullion being exported from the United States. The table below shows just how much gold is leaving the country:
In the first ten months of the year, 449 metric tons (mt) of gold bullion were exported from the U.S. with the majority going to Hong Kong (193.6 mt) and Switzerland (143.5 mt).
While the U.S. is sending a record amount of gold bullion to foreign countries, gold scrap supply has fallen off a cliff in 2013. If we look at the chart below, we can see just how much gold scrap exports have declined in the past year.
According to the USGS Gold Mineral Industry Surveys, the United States exported a record 886 mt (gross weight) in 2008. Gold scrap exports declined to 728 mt in 2009 and then stayed basically flat for the next two years at 630 mt and 633 mt respectively.
However, in the past two years, gold scrap exports have declined substantially. Here we can see that in 2012, gold scrap supply declined more than 50% to 266 mt compared to the previous year. And in the first 10 months of 2013, U.S. gold scrap exports have fallen another 50% to only 121 mt.
The World Gold Council (statistics from Thomson Reuters GFMS) states that global gold scrap for recycling declined in 2013 due to the huge fall in the price of gold. According to their statistics, total global scrap declined to 662 metric tons 1H of 2013:
Furthermore, GFMS believes global gold scrap will increase to 736 mt in the second half of 2013. I don’t see how this is possible as the price of gold was still quite low during this time period. Also, U.S. gold scrap exports continue to decline in 2013.
I estimate that total global gold scrap supply will be 650 mt in 2H of 2013 which would end up being a little more than 1,300 mt for the year. GFMS is forecasting almost 1,400 mt for total global gold scrap supply in 2014.
Of course these are official figures, and we really don’t know what is the true amount, but we can certainly see that the U.S. is running out of gold scrap supply to the international market.
I would imagine when the markets crashed in 2008, U.S. citizens were turning in their gold for much-needed cash. That is why we had a record amount of gold scrap exports of 886 mt (gross weight) in 2008.
The notion that price dictates the amount of gold scrap entering the market fails to address the huge drop in U.S. gold scrap exports in 2012. The average price of gold was higher in 2012 than it was in 2011. So, why did the amount of gold scrap exports fall to only 266 mt?
This is indeed a good question, and I believe the answer is quite simple. Americans are just tapped out of gold scrap they can sell into the market… regardless of the price. Even if the price of gold increased substantially from here, I don’t believe we are going to see much more gold scrap supply coming from the United States.
This is just another indicator that spells big trouble for the future of the U.S. financial system. As the Indian government cracks down on gold smuggling into their country, U.S. citizens continue to purchase cars and homes with no money down and with very little credit verification.
Instead of fixing the problem, we have created an even worse financial nightmare than what took place in 2007-2008. Unless you have protected your wealth with gold and silver… time is not on your side.
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