Koos Jansen
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Koos Jansen
Posted on 14 Mar 2014 by

Week 10, SGE withdrawals 36 MT, 454 MT YTD

The price of gold is rising, but is this purely because of the tensions in the Ukraine? Not entirely, I think it adds fuel to a supply shortage created by enormous Chinese physical demand since April 2013. While paper sentiment might change today or tomorrow, the physical reality will eventually be the main driver to push the pice upwards.

Gold price

Throughout history gold has always been the most constant form of money. In 1900 you could buy roughly the same amount of breads with one gram of gold as two thousand years ago. There has been no other currency that is equally constant. But the value of gold has been in for a ride since 1971, when Nixon ended the gold exchange standard in order to maximize the national benefit of issuing the world reserve currency for the US. US’ policy was to remove gold from the international monetary system, from that moment the international monetary system was debt based. To make believe the dollar was stronger than gold in the foreign exchange markets the price of gold had to be suppressed. Controlling CPI would do the rest.

Alan Greenspan, 1998:  “…where central banks stand ready to lease gold in increasing quantities should the price rise.”

from www.shadowstats.com
from www.shadowstats.com

In 1971 the minimum wage in the US was $1.60 per hour, the price of gold was $40.62 per ounce. This meant it took 25.4 hours of labour to earn 1 ounce of gold. In 2014 the minimum wage is $7.25 and the price of gold is $1350. Now it takes 186 hours to earn 1 ounce of gold. Keynesians would say; so what, gold is useless. I would say it’s not useless, in fact for thousands of years it proved best suitable as stable money (next to its exceptional properties as a metal).

But let’s have a look at something we can eat: a loaf of bread. In 1971 the average price of one loaf of bread was $0.25, or 0.16 hours of labour. In 2014, even with automation and scaling, one loaf of bread costs $2, or 0.28 hours of labour. It now takes more labour to earn a loaf of bread; labour has devalued.

By abandoning the gold standard the debt/inflation spiral has widened the gap between the rich and poor, wiping out the purchasing power of the middle class. Perpetual inflation, caused by printing money, drives all wealth to the top. The ones that can spent newly printed money first, in a market where prices are not yet influenced by the new money, have an advantage over the ones that can spent this money last, in a market where prices have been bid upwards.

30 years ago the income of a Dutch bus driver could buy him a house, let his wife raise two kids and go on a holiday once a year. Those days are long gone…

Just some thoughts, maybe shared by some Chinese as they buy physical gold as much as can be supplied.

Overview Shanghai Gold Exchange data 2014 week 10

– 36 metric tonnes withdrawn in week 9  (03-03-2014/07-03-2014)

– w/w – 26.12 %

– 454 metric tonnes withdrawn year to date

My research indicates that SGE withdrawals equals Chinese wholesale gold demand. For more information read thisthisthis and this.

SGE withdrawals 2014 week 10

This is a screen shot from the weekly Chinese SGE trade report; the second number from the left (blue – 本周交割量) is weekly gold withdrawn from the vaults in Kg, the second number from the right (green – 累计交割量) is the total YTD.

SGE withdrawals week 10 2014

This chart shows SGE gold premiums based on data from the SGE weekly reports (it’s the difference between the SGE gold price in yuan and the international gold price in yuan).

SGE premiums

Below is a screen shot of the premium section of the SGE weekly report; the first column is the date, the third is the international gold price in yuan, the fourth is the SGE price in yuan, and the last is the difference.

SGE premiums

In Gold We Trust


Koos Jansen
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    Two stories

    first story S&P 500 has totally collapsed

    second story The World Gold Council’s comprehensive 2013 data showed that global gold-ETF outflows from epic share selling was actually a third greater than the total worldwide drop in gold demand!

    hahaha have a funny weekedn

    • Kanbudongjin

      China people maybe also stop to buy gold?

      The premiums have backed off and gone negative.
      This is not surprising because the Chinese buy when the price is low,
      and when the price of gold shoots up they back off a bit. They don’t
      sell but they back off on the buy side.



      Mr Barron has lived in 18 countries but China maybe not one of them?

      • 冰淇淋


        • In Gold We Trust

          Why don’t you tell us what you know?

          • 冰淇淋


          • Troll Finder General

            Why can’t these Commie faggots learn to speak English like normal Godfearing American folk? It just don’t seem to make a whole lotta sense to me.

            Just sayin’

          • In Gold We Trust

            Why don’t you speak Chinese?

          • DameEdnasPossum

            Wow! Racist, homophobic, ignorant, derogatory, hate-filled and with a bible in your hand. You’re like the human version of a pizza supreme – one with the lot.

            It probabaly don’t seem to make a whole lotta sense to you…coz’ you is dumb. You and your breed will be surprised to learn that the universe does not revolve around you…and the rest of us are tired of you lot from the JewSA holding the rest of the world hostage and taking a free ride in the process.

            Cue xenophobic, hate-filled rant in response…

          • Troll Finder General

            typical paid-for Commie sympathizer!

            Who needs your permission to hold an opinion?

          • DameEdnasPossum

            Benjamin Franklin said: all people are born ignorant, but one must work hard to remain stupid.

            Clearly you’re putting in overtime dumbass.

            And at last count how many of your compatriots have been sacrificed on the altar of the military industrial complex? Wake up you deluded sheeple, America is crumbling around you. Your empire is in its death throes.

            And remind me…when is the last time your USSA ‘won’ a military engagement because all the ones you listed you have a big L beside your name. Typical actions of imbeciles – reach for a gun to solve problems. You are the armed madman loose in the school.

            Losers like you deserve everything you’ll get. It’s just unfortunate that so many innoncents are forced to suffer along the way.

          • Troll Finder General

            Kerching! Chalk up another 5 Mao to the Useful Idiot account

            You would all be speaking German and eating bratwurst by now if it weren’t for Uncle Sam. Boy how your girlfriends and sisters all seemed to LOVE those Yankee dollars while their menfolk were getting their manhood handed back to them by the Nazis!

            Man up and admit it – we are just plain BETTER than you!

            Just sayin’ – why are you gettin’ so defensive?

          • DameEdnasPossum

            Know i know you’re just trolling – as nobody could possibly be as stupid as you…natural selection should have culled you decades ago.

            Hey brainiac – did you ever consider that the propaganda dished out by the military industrial complex and zionists running Hollywood might be making some of it up?

            I guess Ben Afleck’s version of Pearl Harbour is the way it really happened too huh?

            And i suppose Star Wars is real too?

            I know I’m wasting my breath as you’re just too dumb to know just how dumb you are.

            Go take your meds and fall back into your semiconscious slumber.

          • Troll Finder General

            I maybe dont got one of them fancy colledge educations, but at least I know how to spell Pearl HARBOR and I sure as heck know whats good and righteous in this world and I love my country – America, the greatest country in the world! Whats wrong with that?

            If the rest of the World is so great, how come wetback hispanics and corrupt Communists are begging for a US Green Card? Answer that Mr Commie shill!

          • DameEdnasPossum

            An education is not a prerequiste to intelligence.

            Clearly you have neither.

            But i guess a monkey can’t fathom higher order intelligence…so why should you.

            I thought you were just joking before…but i now realise that you really are that stupid.

            Do yourself a favour and stay away from sharp objects, electrical appliances and don’t climb step ladders. And please get an adult to help you cross the road.

          • In Gold We Trust

            Maybe it’s time you two exchange phone numbers and continue your debate someplace else. This blog is meant to exchange ideas about economics in civilized way.

          • DameEdnasPossum

            No need. I’m done.

            If only you could install an imbecile filter to your comments so dumbass was left to play with his crayons and blocks instead.

          • Troll Finder General

            I agree. Lets end it there. I won

          • DameEdnasPossum

            maaaaa mumma always says…stoopid is as stoopid does.

          • DameEdnasPossum

            Harbour is spelled harbour in the English language…American’s choose to spell it the dumbed-down way ‘harbor’, just like many other words e.g. colour/ color because the majority of you can’t cope with the extra letter.

            I hope that helps dumbass, but i doubt there is much hope for you.

          • DameEdnasPossum

            Bow to your masters dumbass.

          • Zhanglan

            “Land of the Free”

            “None are more hopelessly enslaved than those who falsely believe they are free.” – Johann Wolfgang von Goethe

            Americans sometimes struggle with the English language, but should take particular care not to confuse being Free with merely being Cheap

  • In Gold We Trust

    The premium was also negative in October 2013. Did it stop China from buying physical gold?

    • rowingboat

      I view the 0% premium as healthy, that import reforms are doing their job. I would like to see the premium flat-line near zero without the volatility of last year. It will indicate that China’s market is in tune with the rest of the world and bullion is flowing to where it’s most wanted for any given price. Hopefully Indian premiums fall to zero this year as well…

  • In Gold We Trust

    From a friend in the mainland: retail gold investors in china are chasing gains. when the price drops, they buy jewelry. when the price rises, they buy bullion.

  • rowingboat

    “Alan Greenspan, 1998: …where central banks stand ready to lease gold in increasing quantities should the price rise.”

    And hence was born the Great Conspiracy that central banks were needed to fill a ‘supply gap’ by surreptitiously leasing gold, dominating gold websites for years to come. What actually happened is similar to China-West today, except it was Indian imports that exploded higher in the second half of the 1990s. When Western investors started buying again in the early 2000s and the gold price rose, Indian imports backed off. I expect to see similar in this cycle as the W-E relationship evolves. As to why Westerners were dumping physical in the 1990s there were probably 101 reasons, culminating in Clinton’s budget surpluses, King Dollar and the Economist stating US debt could be repaid in a few years! The perfect storm for capitulation at the end of a long bear market.

  • Zhanglan


    but food has FALLEN in price



    House Prices have risen 43x since 1971


    but house prices have FALLEN in price http://pricedingold.com/charts/Homes-1890.png


    1971 vs 2011: what you get for your money

    Mars bar: 1971: 2p 2011: 60p

    First class stamp: 1971: 3p 2011: 44p

    Pint of milk: 1971: 6p 2011: 49p

    Loaf of bread: 1971: 9½p 2011: £1.10

    Pint of bitter: 1971: 11p 2011: £3.05

    Bunch of bananas: 1971: 18p 2011: 65p

    Packet of cigarettes: 1971: 27p 2011: £7

    Gallon of petrol: 1971: 33p 2011: £6

    Ticket to Wembley Cup Final: 1971: £2 2011: £115


    but at least (due to increased productivity through technology and advances in science) we are earning much more these days


    and our Net Worth has increased immensely


    As ever, form your own opinions (and if you don’t like what you see, you can always blame Chjina)

  • judejin

    the recent volatility of RMB/USD rates could partially explain the negative premium. but don’t forget this wholesale premium has nothing to do with retail premium. i read reports that the retail investors are chasing gains by buying more bullions now instead of bargain hunting the jewelry.

  • judejin

    retail bullion premium is around 5-10% while jewelry premium is 20-30%

  • youricarma

    Indeed: Greenspan in 1998, before Congress: “Central banks stand ready to LEASE GOLD in increasing quantities, should its price rise.” http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

    William S. White June stipulated in 2005 ( head of the Monetary and Economic Department of the Bank of International Settlements in Basel ): “One
    of the five main purposes of central bank cooperation is the provision
    of international credits and joint efforts to influence asset prices –
    especially gold and foreign exchange – in circumstances where this might
    be thoughtful.”

    Australian Central Bank 2003: “Foreign currency reserves and gold are held primarily to support intervention in the foreign exchange markets!”

    Dutch central bankster Nout Wellink (CFR member and Bilderberger) always said to his colleagues: “There are two thing you can lie about as central banker, gold and interest rates.”

    Jim Rickards about Gold Manipulation: “We call it market manipulation the central banks simply call it policy”

  • Zhanglan


    Just over a week after I called him out, Fabrice Drouin Ristori has rather belatedly responded to my Comments on his interview with Koos – http://www.ingoldwetrust.ch/interview-fabrice-drouin-ristori-goldbroker-com#comment-1283277282

    I will leave you to form your own opinions

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