Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 10 Sep 2015 by

It’s virtually impossible to get physical gold in London

Just after my colleague Ronan Manly wrote a very extensive article on how much gold is left in London (not much), Petropavlovsk Chairman and Co-Founder Peter Hambro discusses gold at Bloomberg Television. He, like Manly, concludes there is very little physical gold left in London. From Mr Hambro:

My baseline is they [the Chinese] have been buying and the Indian have been buying in enormous quantities. It’s virtually impossible to get physical gold in London to ship to those countries. We get permanent requests from Russia, would we please sell our physical gold to India and China. Because there is no physical, only endless promises. And I really worry that the market, that paper market, could be stamped on and people will say “sorry we’ll have a financial close out”, and it’s all over.

Perhaps this quote explains why UK gold export directly to China in June was not a net outflow from the UK – because there is little gold left in London (Manly, Hambro) and thus the UK had to ramp up import from the US in June to send forward to China.

Screen Shot 2015-09-10 at 9.46.56 am

Click here to watch the full interview with Mr Hambro.

The Financial Times reported on similar gold shortages in London. From the FT (2 September):

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.

I’ve also asked BullionStar CEO Torgny Persson in Singapore what he’s currently seeing in the precious metals markets. He replied there are shortages in both the gold and silver market. From Mr Persson:

Several refineries, mints and wholesalers are reporting that they have no gold and silver at all live available, that they have stopped taking orders for many different products. 

We still have most products in stock because we stocked up as massively as we could in the last weeks but for many products, we are unable to replenish as of now when we run out.

Big squeeze with shortages starting now both on the wholesale/retail level and at the bulk level… Unless the paper price is reverting up, it may not subside this time around and then the paper fiat mess (including paper prices of gold and silver) is in trouble. If it goes to the point of shortages at the bulk level like 1kg gold bars and 1000 oz silver bars, the emperor will stand without clothes.

To be continued…

Koos Jansen
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  • James Cheung

    Last week I watch a video on internet about fake silver and gold. Its quality is very good and almost impossible to check detect by human eyes! Although it is fake, the cost of producing it will not low! I think the intention of producing them are not for retail purpose because the amount can sell will not be large. Then what are they making for? I think they are making to replace the real gold store by GLD, SLV and other gold fund. Remember the story about and audit of GLD find and gold bar with wrong SN number! It was purely my guess and have not evidence. But what I belief is that you cannot print gold or silver.

    • Coonhound

      That was w/the German gold from The NY Fed right? And let’s not forget the old tungsten for gold trick either. Tungsten bars covered in a thin layer of gold. Jewish central bankers didn’t get to printing money from thin air by being generous or offering “good deals”. They need to hang.

  • Au_Nuts

    Rampant shortages…and the price of PM’s falls!

    Natural free market forces? I think not.

    The criminal manipulation of Precious Metals by way of naked short selling paper contracts is unsustainable. The COMEX (CRIMEX) is now at a an all time low ratio of 208 ‘paper’ ounces for every 1 physical ounce.

    It is a house of cards.

    Just keep stacking.

  • sb

    UK import/export data for July are already available. They show 30 mt of net exports, 30 mt imported by China.

  • losermagnet

    I notice coins you buy for a little over melt(gold pesos), you pay premiums like you would for eagles. I’m going to see what the local guy has in about an hour. Haven’t been there in a few weeks.

  • Doolie

    There is a conundrum that puzzles me.

    Above a reference to a distributor A-Mark ( USA & Austria based [not London as per article ] ) anyway…

    It says ” they stocked up massively ” Holding stock MUST be a double
    edged sword in PM distribution, the cartel smacks the market price of
    Gold and all of the sudden your stock is worth less than you paid for
    it. Would a distributor sell stock at a loss I ask you ? unlikely !

    Or there must be a very fat margin in gold distribution to make market fluctuations irrelevant ?

    I have always expect a gold distributor to play ” market tightness” ie
    sit on my stock and not sell at a loss. So is this tightness possibly
    the scenario I describe ?

    Koos – What about Singapore Gold are you seeing tightness there ?

    Have asked previously – Is there any data on gold import / export to Singapore, not sure if even Sing keeps this information hush or not.

    • bullionstar

      A-Mark is distributing world wide and is one of the largest global wholesalers.

      Most precious metals retailers would hedge and thus it doesn’t matter to them that much how spot moves. We don’t hedge, have never hedged and will never hedge because I don’t believe in the paper markets. Yes, we sell stock at a loss if spot turns down. We have never held any stocks in any anticipation of spot or premium moving in any certain way.

      No, the margins are extremely low in this industry.

      Yes, there’s some tightness for gold in Singapore, especially pamp products. Demand is about 2-3x normal average.

      • Doolie

        I understand the mechanics of gold miners hedging their future sales, but would like to know about retailers hedging, I hope you have a link or can produce an article explaining this.

        It sounds to me risky to hedge prices in a rigged casino.

        Thanks

        • JanNieuwenhuijs

          If you have an inventory as a dealer of 100 ounces you are long gold 100 ounces, to offset this it requires to sell short a futures contract of 100 ounces.

  • rowingboat

    Peter Hambro runs a gold mining company that borrowed heavily to develop a refractory (high cost) gold mine in Siberia. He is talking his book obviously after nearly losing control of the company.

    Koos, do you remember so-called experts telling you about imminent (3-6 month) price explosion due to gold shortages in London? That was a couple of years ago and counting.

  • lifeofliberty

    “It’s virtually impossible to get physical gold in London”.

    Hah! Not true. PLENTY of gold still in London. I fact-checked this article with a friend who lives there – he called several shops and they had this available right now. So either this article is lying or they are just too ignorant to check.

    It’s another commodity nobody really needs.

    http://survivalacres.com/blog/better-than-gold/

  • rowingboat

    “Perhaps this quote explains why UK gold export directly to China in June was not a net outflow from the UK – because there is little gold left in London”

    The UK was a net importer in June because global demand (exports) out of Switzerland were very weak in June (98mt). The UK therefore didn’t need to export much gold to Switzerland in June (13mt).

    In July and August global demand/exports out of Switzerland increased significantly (161mt and 174mt). Therefore the UK needed to export much more gold to Switzerland (44mt and 85mt). There was a net outflow from the UK in July and most certainly in August as well when the data is available.

    Therefore the thesis that there was NOT a net outflow from the UK due to little gold left in London has already been disproved.

    Also note the inverse correlation between US gold exports to UK and Hong Kong. When US exports to HK fell to ZERO tonnes in May and June, exports to the UK increased dramatically. In July when US exports to HK rose again, exports to the UK fell again.

    • Coonhound

      reshuffling the deck. they’ve taken everything in the West that isn’t nailed down and sent it East, they’ll take what’s nailed down after the bail-ins/haircuts I’d say. Austria was a test run no? http://www.zerohedge.com/news/2016-04-11/bank-bail-ins-begin-eu-bank-%E2%80%9Cbailed-in%E2%80%9D-austria

      • rowingboat

        The gold flow from West to East and East to West is reversible. See my recent comments on the latest trade data from Switzerland (one can hear a pin drop).

        If you are interested in the truth I can provide links so you are able to plot the data yourself. One simply cannot rely on most gold commentators to provide honest analysis because they are trying to sell you something or keep you in the game.

        The global market must absorb the size of Germany’s gold reserves each year. Western mining companies produce most of this gold, which mainly flows through Western hubs (UK, Switzerland, America, Canada, Australia, and South Africa). When the West hoards gold we have a bull market and when it dishoards we have a bear, but gold cannot “run out” because gold flows through the West.

        To understand the reasons behind the demand/supply dynamic, please read Pater Tanebrarum (he’s one of the good guys). As Pater explains, one of the most important drivers for gold has turned bullish again in 2016 (falling real interest rates, link below). This helps explain why the West has started to hoard gold again and why the East has helped supply it to them given the rising price (Swiss trade data in February).

        http://www.acting-man.com/?p=44206

        • JanNieuwenhuijs

          Thanks. If I get healthy again I will report “accordingly”.

          • rowingboat

            Seriously mate, get healthy again. We need to be discussing developments because so much is happening.
            All the best and I will post my observations regarding today’s Swiss data, probably tomorrow.
            Just quickly however, perhaps we should introduce the phrase “Asian gold float” to counterbalance the phrase “London gold float” :-)
            In effect London’s imports from Switzerland were sourced from UAE’s exports to Switzerland in March.

          • Koos Jansen

            You have a blog? (I also found a tonne of interesting data)

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