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Eat Gold

November 29, 2017

Submitted by BullionStar.com
A popular phrase in segments of the mainstream financial media is that “You Can’t Eat Gold”. We don’t know who first uttered this comment, but it was more than likely a talking-head or Wall Street analyst on CNBC or Bloomberg.
The disparaging claim seems to be based on concluding that in a financial or monetary crisis, if you own gold, that “You Can’t Eat It”. And so, according to the logic of whoever came up with the phrase, this would make gold useless during a financial crisis.
In addition to the misleading and irrelevant nature of the comment, which we will discuss below, the claim that “you can’t eat gold” is actually factually wrong. And that is because you can eat gold. And also drink it.
Eating and Drinking Gold
While gold can be eaten, it cannot be

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Did The Dutch Central Bank Lie About Its Gold Bar List?

July 25, 2017

Submitted by Koos Jansen, BullionStar.com
Head of the Financial Markets Division of the Dutch central bank, Aerdt Houben, stated in an interview for newspaper Het Financieele Dagblad published in October 2016 that releasing a bar list of the Dutch official gold reserves “would cost hundreds of thousands of euros”. In this post we’ll expose this is virtually impossible – the costs to publish the bar list should be close to zero – and speculate about the far reaching implications of this falsehood. 
Recap
This story started a couple of years ago. As I am Dutch and concerned not only about my own financial wellbeing but of my country as well, I commenced inquiring my national central bank about the whereabouts and safety of our gold reserves in late 2013. One of my first actions was

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Bank of England Gold Vaults Bled 1500 Tonnes of Gold over 2013-2016 New Data Shows

April 28, 2017

Submitted by Ronan Manly, BullionStar.com
An article in February on BullionStar’s website titled “A Chink of Light into London’s Gold Vaults?” discussed an upcoming development in the London Gold Market, namely that both the Bank of England (BoE) and the commercial gold vault providers in London planned to begin publishing regular data on the quantity of physical gold actually stored in their gold vaults.
Critically, this physical gold stored at both the Bank of England vaults and the commercial London vaults underpins the gargantuan trading volumes of the London Gold Market and the same market’s ‘liquidity’. Therefore, a new vault holdings dataset would be a very useful reference point for relating to London’s ‘gold’ trading volumes as well as relating to data such as the level and direction of the gold price, the volume of gold held in gold-backed Exchange Traded Funds (ETFs), UK gold import and export statistics, and Swiss and Hong Kong gold imports and exports.
The impending publication of this new gold vault data was initially signalled by two sources.

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China Net Imported 1,300t Of Gold In 2016

February 15, 2017

For 2016, international merchandise trade statistics point out China has net imported roughly 1,300 tonnes of gold, down 17 % from 2015. The importance of measuring gold imports into the Chinese domestic gold market – which are prohibited from being exported – is to come to the best understanding on the division of above ground reserves in and outside the Chinese domestic market. 
Kindly be advised to have read my posts the Mechanics Of The Chinese Domestic Gold Market. If segments in this post are unclear please click the links provided.
The last bits of data are coming in from the countries that export gold to China, with which we can compute the total the Chinese have imported in 2016. There are four main gold exporters to China, which are Hong Kong, Switzerland, the UK and Australia (it’s not publicly disclosed how much South Africa exports directly to China ). Let’s start discussing the largest gold exporter to China.
Hong Kong
Since 2011 when the gold price slowly started to decline and China embarked importing gold at large, Hong Kong has been the main conduit to the mainland. According to data by the Hong Kong Census And Statistics Department (HKCSD) the special administrative region net exported 771 tonnes of gold to China in 2016, ranking first once again. Net exports were down 10 % compared to 2015.

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NOVEMBER: Chinese Gold Demand Up 40 % Despite Import Curbs

December 14, 2016

Submitted by Koos Jansen, BullionStar.com.
From the moment Donald J. Trump got elected as the next President of the United States, on November 8, 2016, the price of gold tumbled 8 % in the remainder of the month – from $1,282 USD/oz to $1,178 USD/oz. Usually these cascades in the gold price go hand in hand with physical sell-offs in the West and elevated demand Asia. It appears November has been no exception. The volume of physical gold withdrawn from vaults of the Shanghai Gold Exchange (SGE), a proxy for Chinese wholeslae demand, in November accounted for 215 tonnes, up 40 % from October and the highest amount in ten months. Year to date SGE withdrawals have reached 1,774 tonnes. 
There have been rumours in the gold space about the People’s Bank Of China (the PBOC) curbing gold import into the Chinese domestic market in response to capital flight. Although my sources have confirmed these rumours, Chinese gold import in November was still very strong at an estimated 140 tonnes. I don’t expect the PBOC will halt gold import all together.

Exhibit 1. Chart by Nick Laird from Goldchartsrus.com. The international gold price in USD/oz (yellow), the SGE gold price in USD/oz (red), the SGE premium over the international price in percentages (blue, left axis) and the SGE premium over the international price in USD/oz (black, right axis).

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Synthetic Gold Leasing: More Details Regarding The “Precious Metals” On Chinese Commercial Bank Balance Sheets.

November 24, 2016

Submitted by Koos Jansen from BullionStar.com.
More proof the "precious metals assets" on Chinese commercial bank balance sheets have little to do with the “surplus” gold in China’s domestic market.
The "surplus" in the Chinese gold market is the difference between withdrawals from the Shanghai Gold Exchange vaults and gold demand as measured by consultancy firms like the World Gold Council and Thomson Reuters GFMS. The "surplus" accounts for more than 4,000 tonnes. In reality the "surplus" is true gold demand by Chinese individuals and institutional investors directly at the SGE. Some analysts think the huge tonnages in "precious metals assets" on the balance sheets of Chinese commercial banks have anything to do with the "surplus", but this is not true. And I prefer to explain in detail. 
 
One of the topics about the Chinese gold market that has not been fully illuminated is the "gold" on the 16 Chinese commercial banks’ balance sheets. At the end of 2015 the aggregated "precious metals assets" on the bank balance sheets accounted for 598 billion yuan (RMB), which translates into approximately 2,682 tonnes of gold – if all the precious metals were gold related, which is very likely.

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Bullion Banks “pass the parcel” on El Salvador’s Gold Reserves

October 26, 2016

Submitted by Ronan Manly, BullionStar.com
Eighteen months ago I wrote a short synopsis of a gold sales transaction by the central bank of El Salvador wherein it had sold 80% (about 5.5 tonnes) of its official gold reserves. The title of the post was “El Salvador’s gold reserves, the BIS, and the bullion banks“. If you thought, why the focus on the Banco Central de Reserva de El Salvador (BCR), it’s not a major player on the world gold market, you’d be correct, it’s not in its own right that important.
However, the point of the article was not to profile the gold transactions of a relatively obscure central bank in Central America, but to introduce the topic of central bank gold lending to LBMA bullion banks, and the use of short-term ‘gold deposits‘ offered by these bullion banks. The reason being is this is a very under-analysed topic and one which I will be devoting more time to in the future.  Gold loans by central banks to bullion banks are one of the most opaque areas of the global gold market. The fact that I’m using the central bank of El Salvador as the example is immaterial, it’s just convenient since the BCR happens to report the details of its gold lending operations, unlike most central banks.
A Quick Recap
At the end of September 2014, the BCR claimed to hold 223,113 ozs of gold (6.94 tonnes), of which 189,646 ozs (5.

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Chinese Gold Bar Photos – Lost in Translation

September 12, 2016

Submitted by Ronan Manly, BullionStar.com
China is now in pole position as the world's largest gold mining producer. Much if not all of Chinese domestic gold mining output is refined into standard gold by Shanghai Gold Exchange (SGE) approved refiners and then sold through on the SGE.  A lot of recycled gold in China also flows through the same refineries and is sold on the SGE. As of 2013, there were at least 35 refiners across China accredited by the SGE to deliver gold ‘Ingots’ (bars of weights 12.5 kg, 3 kg and 1 kg) on the Exchange. The list is probably longer now, and although the sheer scale of the Chinese gold refining sector is hard to keep track of, you get the picture as to its size.
It was therefore surprising that recently, while working on a particular task that required images of gold bars produced by Chinese refiners, I found that the selection of Chinese branded gold bar images on ‘the web’ (i.e. Google.com) seemed extremely limited. As it turns out, there are a vast number of images of Chinese brand gold bars on the wider web, you just need to know how and where to look. Nearly all of these images have never been picked up before in “Western search engines”.
Who makes the most bars? – The Top Chinese Refiners
Some of the large Chinese gold refineries are owned by, or affiliated with, large Chinese gold mining companies.

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Crowdfunding For FOIA Request Fort Knox Audit Documents Completes Within 24 Hours.

August 19, 2016

Since 2014 I’ve been investigating the alleged audits of the US official gold reserves. Of course my goal is to figure out if these audits are credible, or if they’re invented by the US government to silence the people that think gold has any value and forms the very material basis for a well-functioning monetary system.
My first post on this subject, A First Glance At US Official Gold Reserves Audits, published on March 27, 2014, was purely based on publicly available reports. Not surprisingly, all those reports together compounded to a logical story. The US government wouldn’t present anything that’s implausible at the surface. That first post was more or less a summary of the official narrative. After that post I decided to dig a little deeper.
According to the Department of the Treasury's Office of Inspector General (OIG), which is responsible for the audits, the vast majority of the US monetary stock stored at the US Mint had been audited by 1986, 241,247,820.61 fine troy ounces to be precise, as was said by Inspector General Eric M. Thorson during his Statement to the House Financial Services Committee on June 23, 2011:
… the Committee for Continuing Audit of the U.S. Government-owned Gold performed annual audits of Treasury’s gold reserves from 1975 to 1986.

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SPDR Gold Trust gold bars at the Bank of England

July 11, 2016

By Ronan Manly, BullionStar
One of the most notable developments accompanying the gold price rally of 2016 has been the very large additions to the gold bar holdings of the major physically backed gold Exchange Traded Funds (ETFs). This is especially true of the SPDR Gold Trust (ticker GLD).
The gold bar holdings of the SPDR Gold Trust peaked at 1353 tonnes on 7 December 2012 before experiencing a precipitous fall in 2013, and additional and continued shrinkage throughout 2014 and 2015. On 17 December 2015, the gold holdings of the SPDR Gold Trust hit a multi-year low of 630 tonnes, a holdings level that had not been seen since September 2008.

SPDR Gold Trust – 5 year chart of gold holdings and gold price. Black line – gold holdings in tonnes. Source: http://www.goldchartsrus.com
By 31 December 2015, GLD 'only' held 642 tonnes of gold bars. See above chart. Then as the New Year kicked off in January 2016, something dramatic happened. The SPDR Gold Trust began expanding its gold holdings again, and noticeably so. By 31 March 2016, the Trust held 819 tonnes of gold bars, and by 30 June 2016, it held 950 tonnes of gold bars. The latest figure at time of writing is 981 tonnes of gold bars as of 8 July 2016. (Source: GLD Gold holdings spreadsheet). 
This is a year-to-date net change of 338.89 extra tonnes of gold bars being held within the SPDR Gold Trust. See chart below.

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Central Banks & Governments and their gold coin holdings

June 13, 2016

Within the world of central bank and government gold reserves, there is often an assumption that these gold holdings consist entirely of gold bullion bars. While this is true in some cases, it is not the fully story because many central banks and governments, such as the US, France, Italy, Switzerland, the UK and Venezuela, all hold an element of gold bullion coins as part of their official monetary gold reserves.
These gold coin holdings are a legitimate part of gold reserves since under International Monetary Fund (IMF) definitions, “monetary gold consists of gold coins, ingots, and bars”. In central banking parlance, monetary gold is simply gold that is held by a central bank or government as a reserve asset. Other central bank reserve assets include foreign exchange holdings and holdings of IMF Special Drawing rights.
Elsewhere in IMF definitions, it is stated that “monetary gold is generally construed to be at least 995/1000 pure.” Many government and central bank gold coin holdings consist of previously circulated gold coinage. Since gold coins often had  – and still have – a purity of less than 99.5% gold due to the addition of metals for added durability, this ‘generally construed’ leeway in the IMF definition is undoubtedly a practical consideration that allows gold coins to be classified as monetary gold.

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US Gold Market Infographic

May 31, 2016

The US Gold Market is best known as the home of gold futures
trading on the COMEX in New York. The COMEX has a literal monopoly on gold
futures trading volumes worldwide, but very little physical gold is actually
exchanged between COMEX trading participants, and gold inventories maintained
in COMEX vaults in New York are extremely low. This COMEX Gold Futures Market
infographic guides you through the largest gold futures market in the world,
COMEX.
New York is also storage location for nearly 6000 tonnes of
central bank gold stored in the vaults beneath the New York Federal Reserve on
behalf of customers such as the International Monetary Fund, the central Bank
of Italy, Germany’s Bundesbank, and over 30 other countries. The infographic
visually profiles these gold vaults and their operators. Finally, the
infographic provides a snapshot of the US gold mining industry, centered in
Nevada.
Did you, for example, know that only 1 in 2500 contracts on
COMEX goes to physical delivery whereas the other 2499 contracts are
cash-settled? This corresponds to a delivery percentage of 0.04% of all gold
contracts.

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