THE GREAT 2013 GOLD HEIST : Exploding Demand & Falling Supply

No one was prepared for the orchestrated take-down of the price of gold and silver in the first half of 2013.  Forecasted supply was generously overstated while demand… grossly under-estimated.  Thus, the tremendous imbalance had to be resolved which came to be known as “The Great Gold Heist of 2013.”

Not only were the investors taken by surprise from the huge price declines, but so were the Fed and member bullion banks — one by price movement and the other by huge demand.  To understand why I believe there was a gold heist, we have to dissect through some of the just released official data.

Thomson Reuters GFMS just came out with their 2013 Gold Survey Update by providing interesting data that can finally shed some light on what will become an important pivotal point in history.  While I realize many individuals are quite skeptical of the data coming from the World Gold Council and Thomson Reuters GFMS, at least we can make some key assumptions from these statistics.

If we go back to Thomas Reuters GFMS 2013 Gold Market Outlook from earlier this year (April), here were their supply & demand forecasts.  (NOTE: I will be referring to Thomson Reuters GFMS as just GFMS in the figures and article below).

GFMS Early 2013 Gold Market Outlook (in tonnes):

Mine Supply = 2,877

Gold Scrap = 1,754

Total Supply = 4,631

Fabrication = 2,404

Physical Bar = 902

Net Official Govt Purchases = 490

Implied Net Investment = 825

Total Demand = 4,631

As you can see everything has to match up nicely by the supply and demand figures balancing out in the end.  I omitted the net-producing figure in the demand area of the equation as it was insignificant.  These forecasts were released before the gold market take-down of April & June.

In their most recent Sept. 2013 Gold Survey Update, they released the following:

GFMS Sept 2013 Gold Survey Update:

Mine Supply = 2,917

Gold Scrap = 1,397

Net Disinvestment = 213

Total Supply = 4,527

Fabrication = 2,960

Physical Bar = 1,166

Net Official Govt Purchases = 361

Implied Net Investment = 0

Total Demand = 4,527

The Change in Forecasted Supply

You will notice several alarming changes in the forecasts.  If we focus on the supply portion we can see that mine supply has increased a little, but the real surprise was the decrease in gold scrap.  Earlier in the year, GFMS stated that gold scrap would total 1,754 tonnes in 2013.  However, they revised it down a hefty 357 tonnes to only 1,397 tonnes for the year.

This is indeed a significant 8% decline in total gold supply that was not expected.  More about the “Gold Scrap Situation” later in the article.  In addition, you will notice that a new category has appeared in the update that wasn’t included in the prior supply forecast.

GFMS has now added 213 tonnes of Net Disinvestment as supply.  Basically, net disinvestment is gold that has been withdrawn from institutional holdings and put back on the open market.  Thus, total supply for 2013 is now estimated 4,527 tonnes — 104 tonnes less than the earlier forecast.

If we look at the demand picture, this is where the real damage took place greatly motivating the bullion banks to increase supply.

The Change in Forecasted Demand

First and foremost, total fabrication is estimated to now increase a staggering 550+ t (tonnes) from 2,404 t (forecasted earlier this year) to 2,960 t by the end of 2013.  Total fabrication includes industrial, jewelry & coin.

Furthermore, physical bar investment is now slated to increase from 902 t to 1,166 t for 2013.  This turns out to be a 30% jump of physical bar demand than previously forecasted.  Official Government demand is shown to decline by 129 t from the 490 t early forecast to 361 t now updated for 2013.

Lastly, the big change comes in the “Implied Net Investment” category.  GFMS originally forecasted implied net investment would be 825 t in 2013.  However, they have revised this to be zero.  Implied net investment is the exact opposite of net disinvestment.  Which means, the estimated 825 t of this investment demand has just disappeared… or so it seems.

For GFMS to match their new gold supply and demand forecast of 4,527 t, they had to add 213 t of supply from institutional liquidations from sources such as Gold ETF’s and had to vaporize 825 t of implied net investment.

While the full year forecasted imbalances are significant, they are nothing compared to the huge dislocation in the supply & demand forces that took place in the first half of the year.

The Great Gold Heist:  The Gold ETF Shake-Out

As I mentioned in the beginning of the article, investors were shocked by the huge decline in the price of gold whereas the Fed and member banks were completely surprised by the exploding physical demand.

GFMS originally forecasted for the first half of 2013 to be 1,501 t of mine supply and 736 t of gold scrap to equal a total of 2,237 t.  Demand would mainly be 1,369 t of total fabrication, 170 t net Govt purchases, 441 t physical bar and 243 t of implied net investment to equal 2,237 t.

However, the huge decline in the price of gold had a serious impact on physical demand.  Moreover, the falling gold price affected the gold scrap market as well.

The actual figures for the 1H 2013 were, mine supply of 1,416 t and gold scrap at 662 t for a total of 2,078 t supply (not including net disinvestment which was a staggering 456 t).   Fabrication demand was 1,591 t, 191 t net govt purchases, 725 t of physical bar, and a zero implied net investment for a total of 2,533 t for 1H 2013.  Again, I have left out a few tonnes associated with net hedging.

To get a better understanding of just how much more physical gold was purchased in the 1H 2013 than forecasted, lets focus on the main three categories.  Net increases from fabrication were 222t, physical bar were 284 t and net govt purchases were 21 t which came to a grand total of 527 tonnes.

On top of that, actual mine supply fell 85 t and gold scrap declined 74 t for a total of 159 tonnes.  Thus, the net change from supply and actual demand was 686 tonnes (527 demand + 159 loss of supply).

Where was the market going to find an extra 686 tonnes of gold lying around to meet this insatiable demand if available forecasted supply would fall short?  In comes Gold ETF liquidations — in mass.

According to the World Gold Council’s Q2 2013 Demand Trends Update, liquidations from “ETF’s and Similar Products” were 177 t in Q1 2013 and 402 t in Q2 2013 for a total of 579 tonnes.  Of course this isn’t the full 686 t shortfall, but its a good place to start.

Looking at the chart below, we can see the change in average quarterly price of gold compared to the change in net gold ETF flows:

Quarterly Average Gold Price vs ETF Demand

In order for the bullion banks (custodians of many of the Gold ETF’s) to get additional supply to meet the huge demand coming mainly from China & India, the market scare tactic of announcing a “SELL RECOMMENDATION”, while covering record shorts was utilized.

As individual and institutional investors saw the price of gold getting relentlessly hammered, they sold out of their positions which allowed the bullion banks to cover their shorts and to liquidate much-needed physical bullion from the GLD & other ETFs.

However, a price decline of the magnitude witnessed during the first half of 2013 did not have the same market reaction of huge ETF withdrawals during 2008.  If we look at the chart above, we can see the average change in price of gold compared to the net change in Gold ETF flows.

In 2008, gold hit an average high of $927 during the first quarter, while flows into the gold ETFs were 73 tonnes.  But, by the end of 2008, the average price of gold had fallen 14% to $795 whereas the total gold ETF levels actually increased 95 tonnes.

On the other hand, things were much different in 2013 when the average price of gold only declined 3% more than it did in 2008 at 17% from an average of $1,719 Q4 2012 to $1,414 in Q2 2013.  In 2008 a 14% decline in the price of gold resulted in a positive flow of gold to the ETFS, while in 2013 a 17% change culminated a staggering 579 tonne outflow.

Of course the Banks and official Gold sources stated that the reasons for the huge liquidations of gold from the ETFs were due to the “End of the Gold Bull Market” or the threat that the Fed would start pulling back on the “Infamous Tapering.”  While this rhetoric makes sense to the uneducated investors who are not privy to the fine art of precious metal manipulation, the end result was the same.

Again, the price decline in 2008 ($1,011 – $712) was about 30% from high to low, exactly the same percent change as in 1H of to 2013 ($1,694 – $1,192).  So, how do you motivate investors to sell their gold positions… YOU PUT THE FEAR OF GOD IN THEM — or should I say, the Devil.

Without the huge 579 tonne liquidations of the gold ETFs, the market would have not been able to satisfy the massive physical demand.  Moreover, the Comex gold inventories declined approximately 3.5 million ounces since the beginning of the year which added another 100+ tonnes of needed supply.  With the added liquidation of the Comex Gold inventories we are now getting closer to 686 tonne shortfall in supply.

The Paper Gold Cartel was able to orchestrate the liquidation of the gold ETFs to satisfy the huge physical demand, but this was a one time event.  Furthermore, there is another aspect of the gold market that will put more pressure on the supply-demand equation going forward.

The Continued Decline in the World Gold Scrap Supply

Many thought as the price of gold increased, we would see more in the way of gold scrap to come on the market.  Unfortunately for those who were counting on this to occur, it has not been true.  The chart below shows the decrease of gold scrap since 2009.

World Gold Scrap & Recycling.png 2

Here we can see World Gold Scrap has declined from 1,735 tonnes in 2009 to only 1,591 tonnes in 2012.  Thus, total scrap supply actually declined 8% as the price of gold increased 72% from 2009 to 2012.

Adding insult to injury, first-half 2013 gold scrap supply declined 110 tonnes (14%) to 662 tonnes compared to the same period last year.  GFMS forecasts that total gold scrap will reach 1,397 tonnes in 2013.  Which means they expect gold scrap to increase to 735 tonnes in the second half of 2013.  What happens if they are incorrect and the actual figure turns out to be about the same or less than the first half?

If the market didn’t show an increase in total scrap when the price of gold increased 72% in three years, why would it expect it to increase on a 17% average price decline?  The very real problem the world is now facing is that it’s running low on supplies of available gold scrap.

I believe gold scrap for the second half will be closer to 650-675 tonnes which would put the total for 2013 to be approximately 1,337 tonnes, or 60 t less than forecasted.  Either way, if GFMS is correct and the market does supply 1,397 tonnes of gold scrap in 2013, it’s still nearly 200 tonnes (12%) less than it was in 2012.

The Gold Cartel’s Days are Numbered

The proof is in the pudding, without the huge liquidations of the gold ETFs along with additional supply from warehouse stocks, there wouldn’t have been the available supply to meet the massive physical demand coming mainly from the EAST.  The huge take-down in the price of gold directly impacted demand — it exploded.

While the MSM still regurgitates that the gold bull market is over and much lower prices are on the horizon, the global economic and financial system continues to disintegrate.  The only thing keeping the fiat monetary system afloat is Faith, BS and more Faith.

The rhetoric that the Fed might taper, won’t taper or will taper is totally meaningless in the end.  It really doesn’t matter what the Fed does to be honest, the seeds of the destruction of the fiat monetary system have been sown years ago.  While it becomes extremely frustrating to watch and listen to grown adults continue to lie as well as fabricate economic data, no one can hold back fundamentals forever.

The world is waking up to the fact that fragile financial system can not be trusted to continue as it has in the past.  There are way too many debts and worthless pieces of paper garbage floating around that have no real backing.  Even though the Paper Gold Cartel has been able to PULL ONE OVER on the public this time, it’s a trick that can not be repeated.

The days of the Paper Gold Cartel are numbered.

ADDITIONAL NOTE:  Energy is the major factor that will impact the economy and financial system going forward.  Shale Oil and Gas are only temporary fix to keep the world believing business as usual will continue.  I will be publishing updates on how energy will impact the precious metals, mining and overall economy at the SRSrocco Report.

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32 Comments on "THE GREAT 2013 GOLD HEIST : Exploding Demand & Falling Supply"

  1. The best way to protect yourself in a financial crisis is NOT gold but guns. I have bought a lot of guns and ammo. I can get anybody’s gold for free including Steve’s.

  2. Hey Steve,

    Great article. It reminded me of a past Eric Sprott video talking about silver and how all the “official” numbers were a lot different from the ones his team came up with.

    He did some basic math in the video and concluded actual physical demand for silver may have been multiples higher than what was being reported.

    I believe these numbers are also rigged. We probably will never know the real numbers. I have been waiting a long time now for the real exponential move in precious metals to happen, but like you mention in your article the cartel still has tricks up its sleeve to induce the public into selling its holdings into the market when “they” take the price down.

    I keep thinking one day supply will be so tight that a demand tsunami will overwhelm the lazy fat bankers lying on the beach and put end to this fiat charade. I guess we can all dream. These price swings from the banker take down to the upswing in PM buying are on shorter time horizons, so maybe in the near future the “real bull” market in PM will begin, but I don’t think it will happen this year.


    • what exactly is the problem with low prices? I kind of wonder if the price of gasoline is supressed as well. Pretty amazing stuff and we are still able to just blow it driving millions of fat slobs from the suburbs to their cubicles, then to the big box stores and do it all again the next day..

      • lastmanstanding | September 17, 2013 at 7:07 am |

        Well said Web…with the world takeover behind schedule, keeping non-contributors and the sheep of society mobile is a given.

      • Well maybe they will lose weight when the price of gas hits $10/gallon and they have to start walking to work. I heard growing your own food is also labor intensive.

    • Official numbers match whatever propaganda campaign is being pitched. As far as the public panic selling on price drop, that’s a what they say but it’s a flat out lie. Very few are selling which is why the “scrap gold” is dropping. The demand for silver bullion and collector coins is at record level, not only in China and India, but in the US. And, more people in numbers are buying. Everything on EBay is going for record premiums versus spot. Pre-1933 US gold coins used to go for 8-12% above spot. Now 28-33% on every one. Any silver coin back to the Roman Empire has dozens of bidders. Older people have hoards of silver coins they’ve kept since the US went on the “paper standard” back in 1964. All of you know that what we see in spot price is manipulation in paper trades backed by government collusion. The issue is how long can they get away with it. With the credibility of government and media disintegrating at an exponential rate it won’t be much longer.

      • Michael... when I say SELLING, I meant the institutions selling paper gold…. not retail investors. Most Institutional managers are very fickle. If they see blood in the streets, they are going to liquidate their positions. This is what allowed the Bullion Banks to empty a great deal of the GLD. Why investors put money in that worthless stock, is beyond me.

        I agree with you… I am a big believer in owning physical. Furthermore,
        the whole RETIREMENT MARKET will change here in the next several years. It will transition from a fixed income generating system to one that is like a squirrel saving acorns for the winter. Retirement will become how many physical assets you have acquired, not paper or digits.

        This will be the GREAT TRANSFORMATION.


    • Aaron… I agree with you as well as what Sprott has been saying. I take these figures from the World Gold Council & GFMS with a grain of salt. However, at least we can see from these so-called official figures that there was indeed a huge imbalance in supply and demand during the first half of 2013.

      Now, the actual physical demand could be even greater than is being published by these sources, but at least using their data, we can see just how desperate they were.


  3. Steve- The information posted on your site is so essential to understanding the big picture. I now look to you site even before reading my paid subscriptions. I prefer to make my own assumptions based on good relevant data. I look forward to your timely research reports. Thank you!


    • Robin…. thanks a million for the KUDOS. I have received many emails and replies stating how unhappy many investors have been with their subscription services. Some have told me that they listened to Doug Casey’s service to keep buying mining stocks as their prices went into the toilet. I believe Casey Research Subscription Service is now down 80% from where it was back in 2011-2012.

      Furthermore, Casey and his bunch are on the SHALE ENERGY BANDWAGON. They are constantly pushing the NEXT BIG ENERGY STOCK. While some of these companies will make money and investors can make gains on the stock price, many of them are FREE CASH FLOW NEGATIVE.

      I wouldn’t touch anyone of these shale energy companies. That being said, I remain optimistic for the primary silver miners even though sentiment (even by those in the BIZ) is very low. I actually believe the primary silver miners will be the TALK OF THE TOWN when the fiat monetary system hits the crapper.

      Of course, we don’t know if foreign countries will nationalize their mines, but there are several companies that are in safer countries.


  4. Hi,

    William Kaye in one of his interviews with either Eric King or Lars Schall, indicated that after the Central Bank Gold Agreement expired on 26th September 2009 and official Central Bank gold selling stopped, there was all of a sudden a large increase in the amount of gold supply categorised as scrap gold supply. He suggested that he thought that Western Central Banks were still secretly selling their gold holdings but this was now included in the “scrap gold supply figures.

    If this is in fact the case, the large drop in gold scrap supply could mean that Western Central Banks have basically run out of gold to dump on the market. This may also explain why the Reserve Bank of India is so interested all of a sudden in the large gold holdings of Religious Temples in India.

  5. what coincided with this most recent top on aug. 28 and subsequent correction so far is india’s government’s rejection to sell its 200 tons of gold bought from IMF sale. but i suspect that they agreed to lease it behind closed doors to save rupee! ruppee rebounded and gold/silver was taken down.

    basically, they’re going thru every last drawer to cap the price from exploding upwards for one more day, one more week or month.

    the trading action/pattern so far since June 28. highly resembles the bottom in oct. 2008!

    we could have very quick recovery after the FOMC meeting and going into oct.-dec.

    • the vatican needs to take one for the team and lease their gold into the market

    • Judejin… agreed. Funny, the Indians never got delivery of their gold….LOL. Yeah, they are thinking about leasing paper gold they don’t even have in their possession. What a disaster is coming.

      I believe you are right about the 2008 bottom. Whatever the Fed decides about the stupid TAPER subject really doesn’t matter in the end.


  6. not only official CPIs are faked, but foodstuffs are watered down and faked very rampantly in china.

    high-level communist officials don’t eat anything sold in common supermarket, they’re purveyed by special organic farms.

    still, pork’s price has quardubled in the last 10 years in china. a lot of food items like pork is as expensive as in USA. but average income is 1/4.

  7. Outstanding piece of work!

    Note that there is still suppression pressure and the paper gold price decline was a long term waterfall that could have been arrested at any time (and our bullish pundits assume prices will go the other way). The usual culprits WANT gold (and silver) to go down and a discounted paper price is, IMO, part of the planned consequences and fundamental consequence of rising risk and undeliverable metal. This is the same process (perversity) as we see with printed dollars and QE.

    WE understand the demand from the East. The continuing manipulations of the paper markets suggest to me that the FED and banksters do too…But like the definition of stupidity (or insanity) -continuing an action while expecting (or hoping for) a different result -only seems to be the witless policy for the FED and the bullion banks… But this policy could well be the banking Syndicate/US government’s choice to go with continuing the protection of the apparent value of the dollar by lowering the gold (and silver) prices and they accept the cost in bullion for doing this…If this wasn’t so, we would not see a continuing effort to suppress the price of spot gold. (And our bullish pundits should not be so excited about JPMs corner on paper gold long position.)

    The FED knows the USD is going to decline more and therefore they have no choice but to continue with this until “something breaks”. It seems to me that this policy is now founded on seeing themselves slowly backed over a cliff.

    I note that you have wisely not included a timeline for future events even as the past is well and graphically well shown…I suspect that 2014 will not be as kind to these criminals (and system) as was 2013. As you conclude, they won’t be able to pull this trick again. The metal won’t be there. This is what the draw downs of the COMEX and GLD are suggesting most strongly.

    Any ideas what they could do next to delay matters that would not involve dropping a nuke on someone?

  8. One more thing.

    It is a common misconception that central banks (in a credit money system) sell their gold assets for profit. They don’t operate that way at all. They hold gold as ammunition against a rising gold price which they dump on the market if there are problems with the value of fiat currencies.

    So why are central banks net buyers and not sellers of bullion? Are they stocking up for the next round of dumping?

    Not this time. If more central banks are buying than selling and THAT process is making it difficult to control the price in the face of manipulated paper and selling by other banks, it implies a change in the monetary system…

    That’s where we are…

    Hope this helps.

  9. Thanks for the work and info SRSrocco. I have a couple of questions. Can you give a detailed breakout of the ‘Fabrication’ number? I’m curious how much is coin(investment grade).

    With the significant beat down in price and subsequent effect on mining operations, I’m surprised the ‘Mine Supply’ forecast increased. Any reasons for that?

    • @ torn, from the silver institute for 2012. Coin and investment demand accounted for about 92 million ounces. As the American Eagle and Canadian maple include about 50 million of that, that figure can be assumed to be limited to government bullion only as perth, britannias, philaharmonics, etc could easily fill the gap.

      Therefore. all private bullion is likely included in the “net silver investment demand” (basically unaccounted for silver) which was around 160 million ounces. Total physical investment demand could be even larger as the recycling data is kind of questionable in my opinion which could skew demand lower.

    • TORNasunder… thiese are the figures for Gold Fabrication:

      1H 2013 Forecasted:

      Total Fabrication = 1,369 t
      Jewellery = 1,000 t
      Other = 369 t

      1H 2013 Actual

      Total Fabrication = 1,591 t
      Jewellery = 1,137 t
      Other = 454

      The Other category includes Official Coins which were forecasted to be 127 t, but turned out to be 179 t… 52 tonnes more.

      Physical Bar investment was forecasted to be 441 t, but was actually 725 t.

      As for the Gold Mining Supply, I wasn’t surprised that production did not decline as many had been warning. I looked at the top 5 and their production actually increased Q2 over Q1 2013. Here are some to the top losers and gainers in gold production in 1H 2013 compared to the same period last year:


      Tanzania = -14%
      Peru = -9%
      Argentina = -8%
      Indonesia = -7%


      Canada = +19%
      Kazakhstan = +14%
      Brazil = +13%
      Chile = +10%
      China = +9%
      Russia = +8%

      I believe gold production will be even higher in the second half of 2013. Even though the price of gold is much lower than it was in the beginning of the year, most primary gold miners are still making money — adjusted income.

      However, the primary silver miners are taking a beating. 9 of my top 12 primary silver miners lost money Q2 2013.


  10. God damn. Nice work. Many of us in the tin-foil hat gang halfway expected GLD to fly apart like a safe exploding as the last tumbler fell. Yet in the end, the ETF did what exactly what it was designed to do. No immediate destruction – just an open door, an empty vault, and a burning fuse…

    Reminds me of the last scene in The Mechanic.

    “End of game. Bang, you’re dead.” The dollar explodes

  11. no one is honest about gold, including china!

    shanghai gold exchange’s weekly report shows silver inventory but not gold inventory.

    china’s biggest bank ICBC has a physical gold deposit investment scheme for its customers, advised by world gold council. i’m wondering how physical it is and how fractional reverse based it is.

  12. Steve:

    Got any idea where all this recycled gold comes from? 2nd qtr. 2013 stats per world gold council shows that recycled gold in india is only 10 tons. My guess is that scrap gold in China is negligible. USA and Europe jewellery consumption in recent years has been dismal. Even in peak years usa and european jewellery consumption was only a small fraction of worldwide reported scrap.

    My guess is the bulk of recycled gold comes from western central bank leased gold programs. It’s been going on for decades to help finance deficits. We’ll lease you our gold if you buy our bonds.

    Barrick Gold /JPM lawsuit in 2003 had leased gold by central banks at 4600 tons. My guess is that it’s doubled or tripled in size. The NYFed vault is running dry. Why does it take 7 years for Fed to return 300 tons of gold to Germany? What about the balance due Germany held by the Fed in safekeeping – 1300 tons?

    Any comment appreciated. Thanks


    • Norm.… according to GFMS, this was the break-down for 1H 2013 Gold Scrap (in tonnes):

      Europe = 173 t (-10%)
      North America = 60 t (-5%)
      Latin America = 57 t (-4%)
      Middle East = 137 t (-18%)
      India S-C = 53 t (-16%)
      East Asia = 146 t (-12%)
      Other = 36 t (-14%)

      TOTAL = 662 t (-12%)

      So, it looks like the majority of Gold Scrap is coming from Europe followed by East Asia and the Middle East. Now, whether or not a good portion of this gold scrap is disguised gold leasing, at least we know its declining overall.

      What I find interesting is the percentage of gold scrap to mine supply. Gold Scrap has been running over 50% of total mine supply since 2009. However, the first 6 months of 2013 it fell down to 47%. Interestingly, Silver Scrap in 2012 was only 32% of mine production.

      Norm, I am actually working on a report that on U.S. gold and silver imports-exports of gold and silver as well as the scrap market. I have spoken with Micheal George at the USGS on the gold and silver scrap market and he tells me that the U.S Govt is trying to curtail the export of gold and silver scrap.

      I believe that the Central Banks have leased into the market a great deal of their gold and its no longer sitting in their vaults. This could be part of gold scrap as many have rumored about.

      It will be interesting to see what happens here in the next year or two as gold scrap continues to decline.


  13. Thanks Steve for the information.

    Unlike silver, gold industrialized usage is very small so it’s not a big driver of scrap. Markups on gold jewellery are perhaps 3 to 5 times the market value of the gold content. Seems to me most used jewellery would be remarketed – pawn, estate sales, ebay etc. – instead of being scrapped for a relatively small fraction of the purchase price.

    I’m guessing that the gold scrap data is generated from info provided by the gold refiners. It would be interesting to know how much of the gold scrap processed by the refiners are big bars with the stamp of a sovereign?

    Going to be interesting to see how supply shakes out. The GLD is down to 910 tons, down about 440 tons since the start of the year. Registered comex gold is only about 20 tons, or near 60 times open interest. Gold production undoubtedly will drop off. Much of the western banks gold is on lease so they have increasingly limited ability to drive gold prices down. Bank of England has only about 300 tons of gold – reported – perhaps nothing in their vault.

    If the Federal Reserve were required by Congress to provide full disclosure of their gold leasing activities, the paper gold game would be over. Also, I think many of the bullion banks would be bk if they had to disclose amount of gold they owed the New York Fed.

    Perhaps if the gold comex defaulted, it would put the tiffany spotlight on the Fed and their gold leasing program.

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