Correlation Economics Backup

The latest update on gold at the FRBNY tells us that gold is still being repatriated, but at a slower pace (10 tonnes/month).

After 6 years, China still hasn't disclosed its gold reserves. They just confirmed that today. This is a complete disappointment. On the chart below from Bullionstar.com you can see that China disclosed its gold reserves in 2003 and 2009, which is a time interval of 6 years. So I hoped that they would disclose it in April 2015, just before the IMF review of the SDR in May (which is done every 5 years). Gold (GLD) didn't react and here is why. The consensus estimate reported by Bloomberg was 3510 tonnes of Chinese gold reserves, based on import data. If we do the math, this is about 409 tonnes a year or 8 tonnes a week, which is an acceptable estimate as global mine supply is about 50-60 tonnes a week. However, China just disclosed it hasn't accumulated any gold at all. It now still possesses 1054 tonnes of gold reserves. That result can be found here on PBOC website under the statistics and analysis department page: http://www.pbc.gov.cn/publish/diaochatongjisi/126/inde...

China is still slowing down. March power consumption fell 2.2% yoy, which validates a lower GDP growth. I guess China is growing at maximum 5%.

We're in April 2015, exactly 6 years after China disclosed its gold reserves in 2009, which was exactly 6 years after China disclosed its gold reserves in 2003. So we expect China to disclose its gold reserves soon. The consensus is 4000-5000 tonnes of Chinese gold holdings. This is about 600 tonnes a year or 12 tonnes per week, which is acceptable as mine supply is about 50 tonnes a week. On the other hand, if China were to disclose it had 8000 or 10000 tonnes of gold reserves, it would paint an entirely different picture. Where would the gold come from? Not mine supply, but from the vaults of the West. This would completely disrupt confidence in the paper gold market and the U.S dollar. So I'm eagerly awaiting the result. That result can be found here on PBOC website. Under the statistics and analysis department page: http://www.pbc.gov.cn/diaochatongjisi/116219/index.html Under 2015 money and banking statistics (updated each month): http://www.pbc.gov.cn/diaochatongjisi/1162...

Managed money shorters have been short squeezed in the past weeks, against a rising gold price as I predicted , the outlook for precious metals is going to be a little bit muted now, especially for silver. Although I don't expect any short squeezes going into next week I need to point out something interesting. GLD has seen small outflows, which means hedge funds are again selling their physical gold into the market. Also the total gold ETF's backed by physical gold saw outflows of about 20 tonnes a month. This has put pressure on the gold price. But I don't believe we will see further significant outflows as the COMEX gives us a clue on this. Registered gold at the COMEX is hitting record lows again (blue chart below is plunging). And paper gold leverage (see below) is clearly hitting a one year high, indicating a definitive bottom in the gold price. January 2014 (the spike in the chart below) is happening all over again, so I expect gold to go back to $1300/ounce again ...