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Where is the Gold and Where Did it Go?

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June has come and gone and I have seen no movement from JP Morgan’s gold vaults other than 217,000 ounces withdrawn from the customer (eligible) holdings.  They issued as you know roughly 6,000 (600,000 ounces) contracts for June delivery.  Gold has not entered their vault, very little has been adjusted with other custodians and registered and eligible.  I find it very hard to believe that more than a very small percentage of buyers who would stand for delivery would just take a warehouse receipt and not have the gold moved…somewhere, somehow.  Either move it from the registered vault to the eligible, from JP Morgan to another (their own) custodian or just plain delivered out.

If you look around the globe and outside of the COMEX system you will see that buyers, everywhere, are taking delivery.  They are selling the ETF’s and withdrawing the metals, then they are calling coin dealers and having it delivered.  The gold rush as you know began as the futures markets crashed the price; physical buyers have gone on a rampage.  So if this is true everywhere else in the world, why do we not see movement from JP Morgan’s vaults?

A few months back you will recall that ABN AMRO flat out defaulted on their customers and told them that they will no longer deliver metal out.  While Germany was told by the U.S. Fed that it would take 7 years to ship their “allocated” metal to them.  I don’t get it.  The LME is now telling customers that aluminum and copper  which now take 100 days or more delivery time will be shortened (I have e-mailed the author to find out which metals other than these are affected).

Aluminum?  Copper?  Other than my first thought that 100+ days is actually a default, does anything else strike you as “funny” (well, not really?).  If the LME can deliver 1,000 of tons upon tons upon tons of aluminum and copper “in more than 100 days but we are striving to shorten the delivery time” how hard would it be to ship ALL of Germany’s gold in 100 days?

Aw heck, so you need to line up armed guards…let’s double it and say 200 days!  So…ABN AMRO promises that they have the gold but they won’t deliver it as does the Fed to Germany.  Um, pretty obvious that the German gold is not where it is supposed to be and what eventually (maybe? most likely not) gets delivered is still in the ground today.  The bottom line in my opinion is that if the gold was there it would get delivered promptly, the fact of a delay, any delay tells me that it is gone.

We also had news out yesterday suggesting that China has imported 800 tons of gold already this year, that’s 35% of all the gold mined from the planet in one year…oh wait, no it’s not…the 800 tons was done in 6 months alone!  They are on pace to import 1,600 tons or better than 70% of all gold mined in the world.  India was on pace to import 1,000 tons or so for the year until the government basically banned coin and bullion sales so the population has switched over to silver.  So the first 6 months of the year we saw China and India buy more gold than was even produced globally…which doesn’t include any of the massive demand seen elsewhere in the world…which totally explains why the “price” went down…in a panic fashion. Everyone must have been so scared that they bought gold…which pushed the price down further…and made owners even more scared…because gold might even default and go to zero…oh never mind!

I am sorry, we have shortages around the world, premiums around the world, and “monkey business” where it comes to “custodianship”…we are in the jaws of an outright default.  Default, as in everything, everywhere!  This is not rocket science or brainstorming, just plain common sense.  I don’t give a crap what Armstrong says or anyone else, if you are not turning your financial assets into real assets now, while you have the chance (gold and silver in particular) you are making a huge mistake!  I do not care what the prices of gold or silver are or “what they do.”  All I know is that strange stuff is happening with supply, price and custodians which has caused demand to rise in response.  Knowing that 100 paper ounces actually “exist” for every one single real ounce is enough for me.  Up, down or sideways I don’t care because the music is going to completely stop and you will either have ounces or you won’t.

Do I know where the ounces are or who really has them?  No, not really because you don’t know who or what to trust or believe anymore (especially with public defaults already happening which are not called defaults and disclaimers warning us of the validity of inventory numbers).  I do know something for sure; gold has been and is moving from West to East…real gold, not paper receipts that will end up worthless.

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