Gold Is Flooding Out Of London To Switzerland At An Alarming Rate
This is one of those stories about the gold market that
almost seems too wild to be true since the numbers are so extraordinary.
According to a Reuters article from earlier today, Australian bank Macquarie has
reported that gold is flooding out of London and into Switzerland at a
mind-boggling rate. Specifically, 240 tons were exported in May alone and 797
tons during the first half of 2013. That means gold is being exported at
a annualized run rate of 17 TIMES the 92 tons exported for all of 2012.
That’s insane.
Moreover, it seems a lot of that gold is being sent to
Switzerland so that the 400 oz. bars can be melted down into different
sizes that are more amenable to Asian sensibilities. So, as many of us
suspected all along, what has happened is lobotomized Westerners have sent much of their gold to
Asia just as the financial
system prepares to melt down again. The fact that
the market has absorbed all of this and yet we still have
a backwardated market is extremely bullish.
From Reuters:
Aug 19 (Reuters) – Britain’s gold exports to Switzerland surged in the first half of this year, Australian bank Macquarie said on Monday, suggesting bullion being sold out of exchange-traded funds may be heading for Swiss refineries before being sold on in Asia.The UK exported 240 tonnes of gold to Switzerland in May alone, while its exports over the first half of this year totalled 797 tonnes, Macquarie said in a note.In contrast, Britain exported just 92 tonnes of bullion to Switzerland in the whole of last year, it said.
“The UK does not have gold mines, so where has it all come from? The obvious source is the gold exchange-traded funds (ETFs), most of which hold their gold holdings in London vaults, and which saw huge outflows in 1H 2013,” Macquarie said.It added: “But a bigger factor, we think, is that the gold bars from ETFs have gone to Switzerland, where most of the world's gold refining capacity is, to be remelted into different size bars and coins and then sold on end consumers, predominantly in Asia, specifically China and India.”Gold ETFs - popular investment vehicles which issue securities backed by physical gold - posted their biggest outflows of metal on record in the second quarter. Data from the World Gold Council showed outflows of 402.2 tonnes of bullion between April and June.Holdings of the largest gold ETF, New York's SPDR Gold Shares, are held in allocated 400-ounce bars in the London vaults of HSBC, according to the fund's website.
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