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Something Strange: Gold Goes Down, And Yet India Blames Trade Deficit On Gold Imports

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Something strange here. Gold had a big drop over the last month or so (admittedly followed by a bit of a bounce back), and is again failing as of today.

Conversely the Times of India blames an increased trade deficit on gold imports

http://timesofindia.indiatimes.com/business/india-business/Trade-deficit-widens-on-jump-in-gold-imports-low-export-growth/articleshow/20027153.cms

Key point: Gold imports more than doubled to $7.5 billion in April from $3.1 billion in the corresponding period.

This is not a small figure! I would have thought this sort of importing would have more of an impact on the gold price. Am I wrong to think this?

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No you're not wrong.

The price went down recently because 500 tonnes of paper gold was illegally dumped on the market. The rest of the world went "thanks very much" and are buying the stuff hands over fist.

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At the end of last year the Fed needed some of its leased out gold back from the bullion banks to meet the repatriation demands made by Germany and others. The bullion banks did what banks always do when pressed: squeezed the margin speculators and hedge-funds into selling. The bullion banks are still in the process of unwinding the short positions they took up at the end of last year so even in the face of prodigious Asian physical demand prices may still be soft for a while.

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Edited by zugzwang

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This is not a small figure! I would have thought this sort of importing would have more of an impact on the gold price. Am I wrong to think this?

The Paper market will rule until the day it doesn't. At which point everything will blow up.

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At the moment, the paper market is being manipulated heavily to the downside.

Despite this, the fundamentals say (and have said for some time) that Silver & Gold (and to a lesser extent Palladium and Platinum - these are more heavily dependent on industrial use) are both very under-priced and scarce in the physical form. Waiting times and premiums are long, and supply is diminishing due to energy and union issues in RSA, particularly where Palladium and Platinum are concerned.

The weak hands, especially in the paper market, are being forced out, but there's not many of them left, now.

The strong hands (and the Indians and Chinese especially) are buying more, because they can see the day of reckoning coming within the next three years, and they know a suppressed-price bargain when they see one. One Indian buyer said "I could see the price was low, and so decided to buy 200 grams instead of the lesser amount I was intending to buy". 200 gm equates to about £6000, even without the import taxes levied by the Indian government, so this buyer is clearly not willing to believe the remarks of western commentators, and I would venture to suggest that she clearly knew the value and worth of what she was buying.

What the final figures will be, I do not know, and I am sure there will be an over-correction to the upside before settling down, but I'm still holding.

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At the end of last year the Fed needed some of its leased out gold back from the bullion banks.....

What nonsense is this? the Federal Reserve doesn't own any gold, and hasn't done since the 1930's.

..._

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  • 243 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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