Buy Gold While You Still Can!

One of our long-running themes here is that the truly historic and massive flows of gold from West to East is (someday) going to stop, for the simple reason that there will be no more physical bullion left to move.

It’s just a basic supply vs. demand issue. At current rates of flow, sooner or later the West will entirely run out of physical gold to sell to China and India. Although long before that hard limit, we suspect that the remaining holders of gold in the West will cease their willingness to part with their gold.

So the date at which “the West runs out of gold to sell” is somewhere between now and whenever the last willing Western seller parts with their last ounce. As each day passes, we get closer and closer to that fateful moment.

This report centers on preponderance of fascinating data revealing the extent of the West’s massive dis-hoarding of physical gold, for the first time, begins to allow us to start estimating the range of end-dates for the flow to the East.

Here’s the punchline: there’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage.

Stopping the Flows

There are only two outcomes that will stop the process of Western gold flowing East, one illegitimate and the other legitimate.
  1. It becomes illegal to sell gold. This is the favored approach of central planners who prefer to force change by dictate rather than via free markets and free will. Unfortunately, this strain of political intervention is dominant in the West, particularly in the US and EU.
  2. The price of gold dramatically rises. A large increase in the price of gold will (paradoxically) cause greater demand for gold in the West and (sensibly) less demand in the East. This is what should legitimately happen given current supply and demand dynamics. But it may not.
There’s always a 3rd option, we suppose: economically carpet-bombing China and India's financial systems to scare/force some gold back out. Consider such an approach along the ‘economic hitman’ lines of thinking.

This would be done, for example, by having outside interests sell the Rupee furiously, driving down its value and forcing the Indian monetary authorities to defend it by using up foreign reserves to buy the Rupee. Then wait for India to run out of foreign reserves and then casually ‘suggest’ that its government use gold sales to continue defending its currency. India’s leaders would have to find ways to somehow ‘coax’ gold from its citizens. I think we can all imagine the sorts of draconian rules and penalties that desperate governments would deploy in such a situation.

As a side note, I believe this is the same process that was used to ‘coax’ a lot of gold out of the GLD trust since 2012. After enough bear raids on the price of gold, which began somewhat suspiciously almost exactly on the date that QE3 was announced, Western gold ‘investors’ lost interest in the yellow metal, sold their GLD shares in droves, and hundreds of tons of gold were liberated from that stockpile.

What is truly odd from a chart perspective: this hammering down of gold started just after it had broken to the upside out of a textbook perfect triangle, when it looked seemingly ready to head off to higher values:

But in the days immediately following the QE3 announcement, gold shed $100, then barely recovered, and just wandered lower until it was violently slammed from $1550 to $1350 over one night (of course) in April 2013.

Now this was highly fortuitous for the ever-lucky Federal Reseve. After launching the largest money printing campaign in US history, the Fed did not need gold heading any higher, possibly providing a signal that would cast doubt on the wisdom or possible effectiveness of its easy-money policies. Policies, mind you, that the years since have proven to do little more than enrich the banker class and the 0.1%, as well as lard the system with extraordinary levels of new indebtedness and liquidity.

The Fed Indeed Cares About Gold

Gold, when unfettered, has a habit of sending signals that the Fed really doesn’t like. Therefore the Fed is at the top of everyone’s suspect list when it comes to wondering who might be behind the suspicious gold slams. Whether the Fed does it directly is rather doubtful; but they have a lot of useful proxies out there in their cartel network.

To reveal the extent to which gold sits front and center in the Fed’s mind, and how they think of it, here’s an excerpt from a 1993 FOMC meeting’s full transcript. Note that the full meeting notes from Fed meetings are only released years after the fact. The most recent ones available are only from 2009. Listen to what this FOMC voting member had to say about gold:

At the last meeting I was very concerned about what commodity prices were doing. And as you know, they got lucky again and told us that the rate of inflation was higher than we thought it was.

Now, I know there’s nothing to it but they did get lucky. I’ve had plenty of econometric studies tell me how lucky commodity prices can get. I told you at the time that the reason I had not been upset before the March FOMC meeting was that the price of gold was well behaved.

But I said that the price of gold was moving. The price of gold at that time had moved up from 328 to 344, and I don’t know what I was so excited about! I guess it was that I thought the price of gold was going on up. Now, if the price of gold goes up, long bond rates will not be involved.

People can talk about gold’s price being due to what the Chinese are buying; that’s the silliest nonsense that ever was. The price of gold is largely determined by what people who do not have trust in fiat money system want to use for an escape out of any currency, and they want to gain security through owning gold.

A monetary policy step at this time is a win/win. I don’t know what is going to happen for sure. I hope Mike is correct that the rate of inflation will move back down to 2.6 percent for the remaining 8 months of this calendar year. If we make a move and Mike is correct, we could take credit for having accomplished this and the price of gold will soon be down to the 328 level and we can lower the fed funds rate at that point in time and declare victory.

(Source – Fed)

There it is, in black and white from an FOMC member’s own mouth spelling out the primary reason why I hold gold: I lack faith in our fiat money system. He nailed it. Or rather, I have very great faith that the people managing the money system will print too much and ultimately destroy it. Same thing, said differently.

And of course the people at the Fed are acutely aware of gold’s role as a barometer of people’s faith in ‘fiat money.’ Of course they track it very carefully, discuss it, and worry about it when it is sending ‘the wrong signals.’ I would, too, if in their shoes.

The Federal Reserve Note (a.k.a. the US dollar) is literally nothing more than an idea. It has no intrinsic value. America’s money supply is just digital ones and zeros careening about the planet, accompanied by a much smaller amount of actual paper currency. The last thing an idea needs is to be exposed as fraudulent. Trust is everything for a currency – when that dies, the currency dies.

The other thing you can note from these FOMC minutes is that gold pops up 19 times in the conversation. The Fed members are are actively and deliberately discussing its price, role in setting interest rates, and the psychological impact of a rising or falling gold price.

Later in that same meeting Mr. Greenspan says:

My inclination for today--and I'm frankly most curious to get other people's views--would be to go to a tilt toward tightness and to watch the psychology as best we can. By the latter I mean to watch what is happening to the bond market, the exchange markets, and the price of gold…

I have one other issue I’d like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here. If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market.

There’s an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology. Now, we don’t have the legal right to sell gold but I’m just frankly curious about what people’s views are on situations of this nature because something unusual is involved in policy here. We’re not just going through the standard policy where the money supply is expanding, the economy is expanding, and the Fed tightens. This is a wholly different thing.

The recap of all this is that the Fed watches the price of gold carefully, frets over whether the price of gold is ‘sending the right signals’ to market participants, and pays attention to gold’s impact on market psychology (with an eye to controlling it).

In short, the Fed keeps a close eye on the “golden thermometer”.

Back to the supply story for gold. Not long after gold began its downward price movement in 2012, the GLD trust began coughing up a lot of gold, eventually shedding more than 500 tonnes; a truly massive amount.


In my mind, the absolute slamming of gold in 2013 was done by a few select entities and represents one of the clearest cases of price manipulation on the recent record. While we can debate the reasons ‘why’ gold was manipulated lower or ‘who’ did it, to me, there’s no question about how it was done. Or that it was done.

Massive amounts of paper gold were dumped into a thin overnight market with the specific intent of driving down the price of gold.

It’s an open and shut case of price manipulation. Textbook perfect.

Even if these bear raids were performed by self-interested parties that made money while doing it, you can be sure the Fed was smiling thankfully in the background and that the SEC wasn’t going to spend one minute looking into whether any securities laws were broken (especially those related to price manipulation). Gold’s falling “thermometer” was exactly what the central planners wanted the world to see.

Down and Out

The paper markets for gold are centered in the US, while the physical market for gold is centered in London (but increasingly Shanghai). It’s safe to say that the paper markets set the spot price, while the physical movement of gold originates in London.

What’s increasingly obvious is the growing disconnect between the paper and physical markets. This is exactly what we’d expect to see if the paper markets were pushing in one direction (down) while physical gold was heading in a different direction (out).

The tension between these ‘down and out’ movements is building and, according to a senior manager of one of the largest gold refineries in the world located in Switzerland, the current price of gold “has no correlation to the physical market.”

He notes a lot of on-going tightness in the physical market. Unsurprisingly, gold is moving from West to East with vaults in London supplying much of the physical metal that’s being refined into fresh kilo bars and sent off to China and India.

But given the astonishing amount of physical demand, why has the price of gold been heading steadily lower over the past several years?

The aforementioned Swiss refiner is equally perplexed:

If I am honest, the only thing I could share now with you would be that I’m perplexed about the discrepancy between the prices and the situation of the physical market. This is something I still do not understand and is a riddle for me every day. For all people who are interested in precious metals, the physical side of this business should be given more emphasis.

(Source – Transcript)

There’s no mystery as to demand going up in China and India as the price went down. Interested buyers will buy more at a lower price.

But its a big mystery as to why Western “investors” seem more interested in selling gold than buying it right now.

Evidence of Physical Tightness

Besides the first-hand experience of the Swiss refiner, there have been numerous stories in the main stream press also pointing to tightness in the London physical gold market as well as relentless demand from China and India being the driver of that condition:
Gold demand from China and India picks up

Sep 2, 2015

London’s gold market is showing tentative signs of increased demand for bullion from consumers in emerging markets, after the price of the precious metal fell to its lowest level in five years in July.

The cost of borrowing physical gold in London has risen sharply in recent weeks. That has been driven by dealers needing gold to deliver to refineries in Switzerland before it is melted down and sent to places such as India, according to market participants

“[The rise] does indicate there is physical tightness in the market for gold for immediate delivery,” said Jon Butler, analyst at Mitsubishi.

The move comes as Indian gold demand picked up in July, with shipments of gold from Switzerland to India more than trebling. Most of that gold is likely to originally come from London before it is melted down into kilobars by Swiss refineries, according to analysts.

In the first half of this year, total recorded exports of gold from the UK were 50 per cent higher than the first half of 2014, on a monthly average basis, according to Rhona O’Connell, head of metals for GFMS at Thomson Reuters. More than 90 per cent was headed for a combination of China, Hong Kong and Switzerland.

London remains the world’s biggest centre for trading and storing gold.


Shipments and exports are up very strongly and nearly all of that gold is headed to just two countries; China and India.

India Precious Metals Import Explosive – August Gold 126t, Silver 1,400t

Sept 10, 2015

In the month of August 2015, India imported 126 tonnes of gold and 1,400 tonnes of silver, according to data from Infodrive India. Gold import into India is rising after a steep fall due to government import restrictions implemented in 2013.

Year-to-date India has imported 654 tonnes of gold, which is 66 % up year on year. 6,782 tonnes in silver bars have crossed the Indian border so far this year, up 96 % y/y.

Gold import is set to reach an annualized 980 tonnes, which would be up 26 % relative to 2014 and would be the second highest figure on (my) record – my record goes back to 2008.

Silver import is on track to reach an annualized 10,172 tonnes, up 44 % y/y! This would be a staggering 37 % of world mining.


With China and India’s combined appetite for gold being higher than total world mining output, it only stands to reason that somebody has to be parting with their physical gold and those entities appear to be substantially located in the US and UK.

When There's No More To Sell, There's No More To Buy

All the above evidence of a tightening physical market for gold is just the tip of the iceberg.

In Part 2: Why Gold Is Headed Higher & May Be Unavailable At Any Price we look at the frightening inventory declines in bullion storage that the LBMA and the COMEX have experienced over the past year.

We then lay out how this deliberate suppression of gold prices by the central planners is destined to end: with MUCH higher prices for gold, and much less availability. In fact, there is high likelihood we will experience a point at which it may be nearly impossible for the average investor to acquire physical gold, as there will be no sellers willing to part with it.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

This is a companion discussion topic for the original entry at

So is the idea is that gold will not track to the general commodity deflation because it has been manipulated down in price leaving us with a short physical supply despite falling prices? 
For me personally I'm wouldn't be likely to sell any that I had at lower prices and I certainly wouldn't dump in a rising price environment unless it was a strategic decision. (e.g. value of owned gold allows me to pay off all debt - not likely that a couple of wedding rings will ever get me there, but one can wish).

How will macros effect this?  Although I agree that gold has been manipulated and that the physical supply should at some point drive the price up, I'm curious how it will behave in relation to the broader economy that appears to be contracting.  Should we be watching for an absolute change in ounces per dollar or should we be watching the relative price movement against some other indicator like the dow or oil price? If so, which indicators are going to give the most honest analysis?

When I say there's a deflationary event coming, I mean that the various mountains and piles of debt begin entering various stages of default.
Our monetary system has two gears; Forwards and Collapse.

With collapse, there's a vicious circle in play where the more debts become encumbered, the more things spiral downwards.  

Like in the shale business…lots of debts there are about to go bad.  There will be people laid off and the usual misery, but the banks holding the debts will also get in trouble, forcing them to either limit loans or sell off other assets (loans) to cover the shortfalls.  This will lead to less lending and less economic activity which will lower the price of oil driving more drillers out of business and into bankruptcy.

And so on and so on, until everything hits some sort of wash-out bottom.

But if this is happening across an entire global economy instead of just one sector, things can get fugly in a hurry.

In the first phase of the deflation that hits the US' shores, we can expect the paper price of gold to set the tenor and it's entirely likely that paper gold (including GLD, etc) gets sold as people clear out their holdings to free up cash.  So the first move is down.

A little later, when  the crisis is going all "Lehman" on everyone, and nobody knows who to trust, who's busted, and who's solvent, then cash (physical cash) and gold should be preferred means of having assets safely out of the banking system until people can sort out the winners from the losers.

For now, just avoid any large bank on this list:



in case anyone is looking to buy gold at spot price (zero premium), apmex has a deal on ebay, 1oz valcambi bars at spot:

(i'm not affiliated with ampex or ebay, just a happy apmex customer and passing along info on the deal)

it looks like there's still some left, as of friday night.

The Australian solution to Too much debt. Baby boomers will have to sell their houses.
The Liberal party just cannot stomach the thought of a debt jubilee. So they want the Baby boomers to all dump their houses on the market at the same time. 

Can anyone think what this will do to the world's greatest real estate bubble?

Note: no non recourse loans in Australia. What's on the contract is what you owe.

Another thing for us to consider when looking at PM's is the hidden environmental cost.  It is too easy to ignore when holding your stacks and feeling secure and wise.  It might still be the prudent decision to hold PM's, but let us not forget they are an industrial product with all the trappings that come with it.  The only investment I know of that appreciates over time to care for it's investors, that is beneficial to the environment, and provides a surplus to share with others is well cared for land.  We should all be prudent with finances and PM's are an important place to invest, but for the cost of one ounce of gold you can easily start a orchard with 25+ fruit and nut trees that will yield for a lifetime or more.  I love that PP recognizes the value of this strategy alongside other investments.  Consider diversifying into living capital if you haven't already.

From ZH:
It appears there is one 'currency' worth holding on to when a nation's fiat fraud is exposed…

I guess that it all depends on how "money-ish" one's money is currently.


If paper wealth takes a major hit, will there be enough true wealth left to drive the price of gold higher?
Thinking the majority of people will have difficulty affording basic necessities  (food, shelter, health, transportation), leaving nothing left for investments of any kind…


This is a major theme explored here, and is one of the many reasons many of us are trying to get in front of the rush.  Society doesn't have to totally crumble for their to be an awful lot of pain experienced by a good amount of the population.  A lot of people will still have jobs.  People will still find work. But…

The idea of being ahead of the curve…of having a little food stored up just in case.  How much of a benefit would it be, even if only for a while, for someone to be able to use already purchased, stored food to live on, while a good number of people are struggling to buy food in the stores?  Chris and others have stated on numerous times, it actually isn't their intent to have food available just for themselves, but for others who need help when times get tough.  None of us will ever be totally prepared, but being a little bit ahead is so much safer than the alternative.

I can not agree with you more.  I have never seen as any of the precious metals I have (nor should others) as the magic item which will deliver comfort when things go down hill.   I have some because I want to diversify and it does make sense that if the currency is ill, holding real things that used to be currency at one point in time would be helpful.  That said, having productive land available, where people could live, gather fire wood, plant a garden, get an orchard going…gold and silver are great, but I also applaud PP for trying to stress other real assets.  Maybe silver would be great in a barter situation.  Gold too.  Land and productive trees, they can put you at a point where you don't have to barter for much at all.

Not to be callous, but this is already true for a very large number of people…a crowd that's sure to grow.

The main driver of everything that will transpire in the financial sphere - including the prices for stocks, bonds, gold, art, small islands, etc - will be the pools of concentrated wealth.

The bottom 150 million Americans cannot begin to match the 'market moving power' of a single large sovereign wealth fund.  At least not on the basis of net worth…perhaps if they all whipped out a credit card and bought silver at the same time they could move the needle.

But think of where a large pool of money would go if/once it loses faith in tertiary (paper) assets.  Land?  Art?  Real estate?  Gold?  None of those markets are even remotely large enough to absorb even a small percentage of the big pools of wealth without exploding in price.

The question is, will this next crisis be large enough to get the big pools to see things my/our way, which is that the main defect lies at the foundation, with the thing we call "money" and that holding primary or secondary wealth is the key?

"Not to be callous, but this is already true for a very large number of people…a crowd that's sure to grow."
Not callous at all.  I'd argue it's a crowd that will eventually include up to 90% of the population,  everyone who's income comes mostly from their labor  (paycheck opposed to investment income).   Flat/declining wages + increasing expenses + maximized standard of living = disappearance of discretionary income and high vulnerability to insolvency from a health issue, pay cut, or weather disaster.  These days that applies to pretty much everyone not making big bucks off their even bigger bucks.

But by "if paper wealth takes a major hit" I wasn't referring to currency, but the value of assets  (real estate, collectibles, pm, and especially financial investments) as listed on balance sheets.  Isn't that where the majority of wealth lies?

I can see gold taking off if our currency drops, but how likely is a currency crisis in the dollar when all other currencies are unsound?  And short of a currency crisis (and gold becoming money), would the shrinking pool of those able to afford gold want to tie up that much more of their wealth in something most others can't afford or have little interest in  (they'll be pre-occupied w necessities) ?  

Keep in mind the uber-rich would experience a big decline in wealth from a financial crisis and the resulting accelerated asset deflation.  Even some billionaires could find themselves in financial dire straits due to exorbitantly high fixed expenses  (mega-yachts, multiple expensive-to-maintain residences, etc) which they can no longer afford and have trouble selling.

Seems food  (or calories) is the currency of life in the natural world.  Aren't we at some point going to have to abide by the laws of nature?  Pollution, climate disruption, and oceans in decline are a few factors pointing towards a shrinking supply of food.  Would that, especially in the face of a growing population, render all non-necessities worthless?  Less food + more people = less wealth per capita.  Maybe that's decades in the future and it's a mute point here, good for academic discussion only.



My thought on gold and silver is that the only time it will be truly useful might be if the currency and banks both implode. At that point, using gold to import necessities for just a little longer – or to set up an import-export cycle might be quite useful.
On a more local scale, the gold and silver might make for tradable currency in markets. But for that, I’d think marked jewelry might be better.

Good article, but nothing new.  GATA has been reporting all of this and much more for years.

I see GATA like to give you a hard time for not mentioning them but they have still NEVER explained this:

So until they do one should be careful citing ANY of GATA's work.

We are still waiting 2 years on…

With such a disconnect between paper and physical gold, why hasn't there been a split into 2 markets? It seems like with the difference being 100s of dollars, the physical sellers would wise up and sell at a higher price.
Also, why is there not more of a shortage of physical PMs? It's difficult to buy physical gold and silver in brick & mortar stores to be sure (I'm in CA), but online it's usually not too bad.

I could not agree more that a few acres of arable land, properly managed, is the wealth anyone really needs.  However to reap the benefits of land ownership one needs some skills and knowledge on how to sustainably exploit it.  Most average folks don't have the interest or work ethic to hold such primary wealth. I have forested land outside the city and absolutely cherish it for its beauty and life supporting potential.  To me it is priceless and useful.  When I look up into the canopy of massive hickory and beech trees I truly appreciate them and happiness overcomes me. 

"…why hasn't there been a split into 2 markets?"
The hundredth monkey hasn't caught the sent yet…

Aloha! I used to write for GATA many years ago and I know Bill Murphy, but I left as I did not feel they were open to criticism or other theories on money and debt and most important the pricing of gold. They also did not consider all aspects of the historical flow of money. As long as the price of gold was rising they were "right and righteous". When the gold price failed it was some government and bank entity either directly or indirectly conspiring. While I did agree with much of the basics that GATA writes I felt there was an overall rigidity and a prevailing tunnelvision about the gold market. I think Chris and Adam here have the most diverse blog and offers a more realistic overall outlook on investing and lifestyle. Many mahalos guys!
I am more the type who is like an AA meeting motto … "take what you want and leave the rest"! To me there is no one person or blog that has all the answers and nor can there be any one guru who predicts all. The error most make is that long running meme good ole Keynes spoke of way back in the 1930s about how the markets can remain irrational longer than many investors can remain solvent. That is key to everything in life. In one word it is "timing"! If you know the system is corrupt act accordingly, but above all take as many precautions to stay solvent first and foremost. Never marry yourself to one concept, one belief or one trade. Remain diversified in trades and life.

I whole-heartedly approve of diversifying yourself into year round sustainability as some here are commenting. Do not discount the concept of "labor" in your decisions as the best sustainable land is land that requires the least effort to produce food. There is no place on Earth as productive per labor unit basis than tropical regions like Hawaii. Also consider the aspect of safety as there are many tropical regions, but few have no predators or poisonous reptiles and insects like Hawaii. Captain Cook called it Paradise for all those reasons and it still is as close as humans can get some 300 years later, especially the lesser populated regions of the Big Island.

I guess that is a good segue into asking if there are adventurous ones here willing to work their way to developing a sustainable lifestyle on the Big Island. We are looking for preferably a couple who would want to manage our producing farm in Kalapana, Hawaii for a couple years while I take care of my aging mother in Texas. I would love to have this adventure turn into a partnership in the long term. It would be best to have some ag experience, but not critical and we would prefer ages be less than 40,but we are flexible. Anyone interested so far send me an email. Mahalo nui loa …


That's something I have though a lot about, especially since I have always been really interested in aquatic biology and if you look at these coordinates in Google Earth you will see a lot of river destruction from that gold mining: 13°00’46.08″ S 70°32’32.15″ W

But I see it the other way now, that we are actually helping to alleviate demand on the natural world for PM mining. It is the bankers that are responsible for sending gold and silver prices to the moon with their corrupt monetary system, not us looking for an escape from their slavery.

What are we doing? Buying low and selling high, so that when price goes insane and every unemployed person is turning a creekbed upside down, we will sell into the market to buy real tings like productive land, and in doing so we will in our own small way be helping to keep PM prices down a little bit, thereby lessening mining demand. If it were not for silver stackers, silver would basically go extinct in the western world. Also, we are retaining some PM's in the western countries, helping to retain some real wealth that can be traded in the markets and in a small way enrich the future people you will trade them with.