Month: December 2014
World Gold Council: Gold Supply and Demand
First of all, the massive 2000 tonne/annum demand from China that started in 2008 and blew off in 2013 doesn’t seem to be incorporated in this chart.
Second, we see that supply has peaked in 2012 and I see this supply going down in 2015. Demand has started to pick up since September 2013.
Third, we see a massive spike in gold demand in 2008 when the crisis started, will we see this again in 2015?
Greece Government Bond Yields Inverting
As you know, 2012 was the year where Greece defaulted on debt as low maturity bonds crashed (yellow chart peaks out).
We might be seeing take two of that crash in 2015 as low maturity bonds are now re-inverting against high yield bonds. For more info, go here.
Largest Decrease in GLD Tonnage Recorded in Over 1 Year
Crude Oil Vs. Junk Bonds
As you can see, the trend is there, but not too pronounced. But lately, after 2008, the energy junk bond market (lead by the oil price) is leading the total junk bond market lower. So plunging oil prices have negative consequences on junk bonds. And lower junk bond prices will eventually lead to a stock market crash.
Conclusion: declining oil prices and higher stock markets are impossible.
For more info, go here.
Sprott Money: Marc Faber
Capacity Utilization Rises Above 80%
SGE Withdrawals – Unilateral SGEI Trading Volume < Chinese Gold Demand < SGE Withdrawals
SGE Withdrawals – Total Unilateral SGEI Trading Volume < Chinese gold demand < SGE Withdrawals
This is because the weekly SGE withdrawal numbers include SGEI withdrawals, which can either be real Chinese gold demand or foreign gold demand. So the Chinese gold demand lies between the SGE number and the SGE – SGEI number.
The reasoning is given here:
Gold bought by domestic banks on the SGEI and withdrawn from the “International Board” Certified Vault in the Shanghai Free Trade Zone (FTZ) to be imported into the mainland is not required to go through the “Main Board”/SGE (click here for an introduction on the SGE, SGEI, IB, MB, FTZ, etc). Meaning: the volume traded on the SGEI can distort Chinese wholesale gold demand measured by SGE withdrawals numbers. This is because we simply don’t know who the SGEI traders are; domestic banks from the mainland that buy and withdrawal gold to import – in this case withdrawals would count as Chinese demand – or for example buyers from Singapore – in this case withdrawals would be exported to Singapore?
That\’s all nice and well, but if something were to happen to Koos someday, how can we calculate it ourselves?
First go to this site, which gives weekly SGE withdrawal numbers and SGEI trading volumes: http://www.sge.com.cn/xqzx/xqzb/
The SGEI trading volume can be found in 3 products. The International Board has launched three new physical products international customers can buy and sell. So you need to make the sum of the trading volume of all three products and make it unilateral:
- iAu100g physical product 100 gram gold bar fineness 999.9
- iAu99.99 physical product 1 kg gold ingot fineness 999.9
- iAu99.5 physical product 12.5 kg gold ingot fineness 995.0
Example: Let\’s calculate Chinese gold demand for week 50.
SGEI Unilateral Trading Volume = (0.1+1.3+12313.4+4.1)/2 kg = 6159 kg.
SGE Withdrawals = 50027.5 kg
50027.5-6159 kg < Chinese Gold Demand < 50027.5 kg
Or
43868.5 kg < Chinese Gold Demand < 50027.5 kg
SGE Withdrawals – Unilateral SGEI Trading Volume < Chinese Gold Demand < SGE Withdrawals
SGE Withdrawals – Total Unilateral SGEI Trading Volume < Chinese gold demand < SGE Withdrawals
This is because the weekly SGE withdrawal numbers include SGEI withdrawals, which can either be real Chinese gold demand or foreign gold demand. So the Chinese gold demand lies between the SGE number and the SGE – SGEI number.
The reasoning is given here:
Gold bought by domestic banks on the SGEI and withdrawn from the “International Board” Certified Vault in the Shanghai Free Trade Zone (FTZ) to be imported into the mainland is not required to go through the “Main Board”/SGE (click here for an introduction on the SGE, SGEI, IB, MB, FTZ, etc). Meaning: the volume traded on the SGEI can distort Chinese wholesale gold demand measured by SGE withdrawals numbers. This is because we simply don’t know who the SGEI traders are; domestic banks from the mainland that buy and withdrawal gold to import – in this case withdrawals would count as Chinese demand – or for example buyers from Singapore – in this case withdrawals would be exported to Singapore?
That’s all nice and well, but if something were to happen to Koos someday, how can we calculate it ourselves?
First go to this site, which gives weekly SGE withdrawal numbers and SGEI trading volumes: http://www.sge.com.cn/xqzx/xqzb/
The SGEI trading volume can be found in 3 products. The International Board has launched three new physical products international customers can buy and sell. So you need to make the sum of the trading volume of all three products and make it unilateral:
- iAu100g physical product 100 gram gold bar fineness 999.9
- iAu99.99 physical product 1 kg gold ingot fineness 999.9
- iAu99.5 physical product 12.5 kg gold ingot fineness 995.0
Example: Let’s calculate Chinese gold demand for week 50.
SGEI Unilateral Trading Volume = (0.1+1.3+12313.4+4.1)/2 kg = 6159 kg.
SGE Withdrawals = 50027.5 kg
50027.5-6159 kg < Chinese Gold Demand < 50027.5 kg
Or
43868.5 kg < Chinese Gold Demand < 50027.5 kg
Junk Bonds Vs. Stock Market
This is why we need to keep an eye on high yield debt (blue chart). Since the second half of 2014, this high yield debt has collapsed. Soon, the stock market (red chart) will follow.