This Will Push The Gold Market Over The Edge

This could be the year that the mainstream investor finally pushes the gold market over the edge.  While a fraction of investors continue to acquire a lot of physical gold, the mainstream investor is the key to driving the gold market and price going forward.

Why?  Because the diehard precious metal investors don’t have the sort of leverage as do the mainstream investors, which account for 99% of the market.  I have stated several times in articles and interviews that it will be the surge of gold buying by the mainstream investor that will finally overwhelm the gold market.

This next chart shows just how much leverage the mainstream investor has on the gold market.  When the Dow Jones Index fell a lousy 2,000 points during the first quarter of 2016, mainstream investors flooded into Gold ETF’s & Funds.  This continued into the second quarter, including the surge in buying after the BREXIT “Leave Vote” this past Friday:

Gold-ETF-Fund-Flows-vs-Gold-Production-1H-2016

According to the data put out by Nick Laird at Sharelynx.com, total transparent global gold holdings increased nearly 20 million oz (Moz) since the beginning of 2016.  Nearly half of that figure, 9.7 Moz (supposedly) went into the GLD ETF.  This is an amazing amount of gold as it represents 41% of total global mine supply. 

For those investors who don’t trust the amount of gold backing these Gold ETF’s, I don’t either.  However, I could care less if the GLD has all the gold it reports.  What is more important is the mainstream investor LEVERAGE on the market and price.  This is the Key.

This next chart shows the annual net flows of gold into ETF’s & Funds:

Global-Gold-ETF-Fund-Net-Flows

The record amount of flows into Gold ETF’s & Funds took place in 2009.  The majority of the 645 metric ton (mt) figure took place during the first quarter of 2009 when the broader markets were crashing to their lows.  In Q1 2009, a record 465 mt of gold flooded into Gold ETF’s & Funds that quarter, accounting for 72% of the year’s total.

I explain this phenomenon in more detail in my Bullet Report: The Gold Report: Investment Flows.Gold Report Cover Graphic 3D

Something has seriously changed in the gold market this year and I believe that most investors are unaware of how explosive this shift could impact the price of the yellow metal going forward.

The Gold Report: Investment Flows is a digital report that provides up-to-date information on the gold market that is invaluable for analysts and investors to presently understand.

While many precious metals analysts publish articles that focus on individual aspects of the gold industry, this report combines all of the relevant investment flows to show how significant trend changes are now putting serious strain on global gold supply, elevating gold’s average global value.

CLICK HERE to read more about the GOLD REPORT.

However, the first half of 2016 is turning out to be one hell of a strong start as global gold holdings have already increased 622 mt.  Part of this amount includes an approximate 68 mt build (2.2 Moz) in the Comex Gold Inventories.  As we can see, the mainstream investor Gold ETF & Fund demand has driven flows in the first half of 2016 to 96% of the record 645 mt set in 2009.

And this was on the back of a lousy 15% correction in the broader markets in the first quarter of the year.  What happens as the BREXIT contagion continues to spread pushing the broader stock markets lower?

Again, according to the data at Sharelynx.com, an approximate $25 billion of mainstream funds went into Gold ETF’s, Funds and Exchanges in the first half of the year:

Monthly-Gold-Holdings-1-year

While this is most certainly a large surge of mainstream investor demand in Gold ETF’s & Funds, it’s still only a fraction of the overall market.  Matter-a-fact, the top 400 World’s Richest people lost $127 billion on Friday after the BREXIT vote to leave the European Union.

Now, what’s even more interesting than that tidbit, is that a ONE DAY loss of $127 billion by the wealthiest people could have purchased ALL of the Global Gold & Silver ETFs and Funds in the entire world.

Currently, all the Gold ETF’s & Funds are valued at $108 billion while the Silver ETF’s & Funds represent a mere $16 billion.  Thus, all the Global Gold-Silver ETF’s & Funds equal $124 billion.  Basically, the richest of the rich lost more in one day than the entire Gold & Silver ETF and Fund Market. 

The British citizens voting to leave the European Union is the straw that finally breaks the CAMEL’s BACK.  It doesn’t matter if the politicians force England to stay in the EU, because the MINDSET of the public has been changed.  It’s just a matter of time before the inertia grows to a level that finally overwhelms the establishment.

I got a kick out of Zerohedge’s article today, President Of The European Parliament: “It Is Not The EU Philosophy That The Crowd Can Decide Its Fate”.  This is the epitome of FASCIST 101, where an UNELECTED Parliament can decide the fate of the British or any other European country.

We are experiencing the same thing in the United States as Donald Trump goes against the DEMO-PUBLICAN Establishment Cronies.

At some point in time, the DEBT & LEVERAGE in the system will take down the markets in a serious way, quite quickly.  If you are the 99% of Americans who believe, “You need to stay in your 401K for the long-term”, you can’t blame Wall Street when you lose it all as you had plenty of chances to WAKE UP.

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21 Comments on "This Will Push The Gold Market Over The Edge"

  1. 400 richest people in the woirld made a killing with their bond holdings possibly even exceeding their losses en stocks.

    • Maybe, but that is pure conjecture on your part. You don’t know that.

      • David,

        You are correct. RD’s conjecture is inaccurate.

        According to the article: The billionaires lost 3.2 percent of their total net worth, bringing the combined sum to $3.9 trillion, according to the Bloomberg Billionaires Index.

        steve

      • It is not really conjecture, what is conjecture is that it is the same people who were the stocks lossers and bond winners. What is real is bond market new rises to all time high.
        Globally, it is even possible that the numerical paper assets values have been rising for the last couple of days as bond assets are greater than stock ones.

    • Bond rates can’t go up, countries are broke already. Rates have to go down further, that makes the yield on those bonds more negative. At a certain point the bond selling has to start, and equities won’t be there to save the day at that moment. Bonds are the backbone of the derivatives markets, the whole system. What’s the point of holding bonds that won’t appreciate in ‘price’ with negative yield attached to it? The bond market is a big fat black swan.

      • Whatever the reasons (numerous by the way), the fundamentals to ever lower bond yields and here to stay for much longer. This bond market supernova could be between few months and a few decades imo !

  2. Silver Monkey | June 27, 2016 at 5:40 pm | Reply

    Could you please explain this more SRS Rocco? Thanks!

    For those investors who don’t trust the amount of gold backing these Gold ETF’s, I don’t either. However, I could care less if the GLD has all the gold it reports. What is more important is the mainstream investor LEVERAGE on the market and price. This is the Key.

    • Silver Monkey,

      While most precious metals investors continue to BELLY ACHE that the GOLD ETF’s such as the GLD do not have all the gold they report, it doesn’t matter to me because its the LEVERAGE THAT COUNTS.
      When the price of gold hit a record $1,900 in 2011 and reached an annual high of $1670, total Global Gold ETF’s & Funds reached 105 Moz. Right now we are at nearly 82 Moz.

      To me, it doesn’t matter if all the gold is there. What matters is the MOVEMENT, FLOWS and LEVERAGE. Those are the real drivers of the gold price.

      Sure, at some point we will find out the huge PAPER GOLD LEVERAGE, but when just 2% of the 99% move into Gold, it will be a GAME CHANGER… regardless if the GLD has all the gold.

      steve

  3. The mainstream investor is going to be getting margin calls not buying PM’s.

    • Ret,

      I am not talking about the MOM & POP Retail Mainstream Investor, I am talking about the INSTITUTIONS, HEDGE FUND & WEALTHY Investors. They have $TRILLIONS on the sideline waiting to come in.

      steve

      • Unfortunately, Comex is showing how unbreakable the major players are : a new 50 000 rise in open interest which means 50 000 more shorts for a fistful of major commercials category players : real gold breakout and silver breakout aborted.
        Frankly, I could not imagine what the comex have done since the brexit, they are the real masters of gold market, nobody has anything to do except the 3/5 western bank players : china role is 0 and will remain for the eternal financial eunuchs…

        • You talk about short term control, while Steve talks about medium and longer term facts and fundamentals. Steve knows they will bomb, or try to bomb the paper/COMEX price today, in July, etc. There will be no cessation of what the COMEX and powers that be are doing or trying to do, until it becomes clear it is utter BS and they can no longer control or profit from their games.. They can set the COXEX price of silver at $17.50, but if the cheapest one can buy physical for is $30 [after a long wait], then their game won’t be taken seriously.

          • These premiums stories are bullshit except for retail investors for buying a couple of silver eagles. Regarding gold, you can buy as many as gold bars you about for the spot (plus 1 or 2% due to intermediaries fees and bid/ask spread).
            Regarding china it has been 5 years we are told you are going to see china with something between legs but we have only seen 21th centrury uncle scrooge now purchasing properties in the US ! Now the shanghai gold exchange has made all the upgrading and nothing, NOTHING happened.

            BRICS are just years if not decades away to take power from the east.
            Without the west, they would be destroyed within 48 hours as China for example will implode and that the chinese trilliniares WDS, the savior of the world and of the planet, of the wildlife and the widow and orphans (provided they will work for 1000 USD a month until the day they die) are too afraid to lose the control of the slaves.
            Disgusting…

          • RD,

            What do you mean these “PREMIUM STORIES ARE BULLSHIT?” I gather you have no idea about the RETAIL MARKET. Again, you made another assumption based on INFERIOR DATA.

            LOTS OF PEOPLE continue to pay 20-25% commissions on gold products.

            steve

          • On gold premiums, I monitor public auctions of gold coins and bars (usually 1 kilobar of 60’s to 80’s vintages ie only 995/1000 purity).
            In these auctions premiums is about 0, you can buy for more than 100 000 USD gold without any premiums in 5 minutes.
            The only exception is some 19th vintage coins and some 20th namely the 10 USD and especially the 5 USD (indian head) for example.
            Scrap silver (950/1000 standard) is selling for a 10/15% discount to spot.
            Europe is awash of gold and silver, tons and tons of it. No premiums. ZERO.

        • “Regarding gold, you can buy as many as gold bars you about for the spot (plus 1 or 2% due to intermediaries fees and bid/ask spread).”

          AGAIN you focus on RIGHT NOW, and not medium to long term fundamentals, likelihood, and probability.

          • 2/3 years ago, the same was said on medium to long term but the medium has now passed away without any change.
            5/10 years from now, quite possibly but in the meantime who knows where gold and especially silver will be in 6, 12, 18 or 24 months ?
            The issue we have is despite better physical sales than 5 years ago, it is not enough to put some pressure on paper commercials.
            With now 10 trillions bonds in negative yields we could have hoped much higher physical purchases (and paper ones with ETF or comex contracts).
            Please, if 10 years ago some would have tell you that all AA and AAA bonds would carry negative yields and that gold and silver would languish so much, you would have stated it as a dysmal performance.

        • I agree with RD that Comex is showing clearly that the major players, presumably system cartel members, have bottomless pockets and do not mind how much they loose by these massive shorts. This has to go on so it has to be accepted as a long-term, quasi-permanent state-of-affairs. The moment they let up, the legitimate market players will establish a true price that could be much higher than 1300 USD and all hell will break loose, because dumb fund managers will start trying to chase the trend (upwards).
          There is NO WAY the global establishment is going to let this happen, and if it costs them a 1 trillion of so of confetti to keep a lid on the bullion kettle, so be it.
          The ONLY thing they have got going for them at this point is (some) remaining confidence in their fiat frauds, and they are not going to give up now when they are so close to complete control of the entire political and financial system.
          It is paradoxical really, how the globalists are at one and the same time both extremely powerful and extremely weak.

  4. Haha, got your metaphors mixed up there: “It’s the final nail in the coffin” & “It’s the straw that breaks the camel’s back”, but all in all your point’s made, thanks! 😉

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