It is amazing how much complete economic garbage gets posted and retweeted on Twitter. 
Please consider this pair of absurd Tweets.
The first Tweet above had over 120,000 views with 433 likes and 87 Tweets.
It took precisely 5 seconds to debunk the above nonsense with a simple search.
China Resumes Gold Imports
China Resumes Gold Imports Following Renminbi Stabilization
On September 28, the Oxford Gold Group reported China Resumes Gold Imports Following Renminbi Stabilization
The People’s Bank of China recently lifted its temporary restraints on gold imports that were placed on specific lenders in an attempt to protect the renminbi. The action caused local gold prices to rise in China, leading to the central bank lifting the imposed restraints last Thursday.
The difference between the Shanghai and London gold prices reached an astonishing $121 per ounce based on public trading prices last Thursday. By Monday, the spread dropped back down to a more relaxed $76 per ounce, following China’s movement back to more open gold import policies on state and specific commercialized banks.
Back in August, China began reducing the number of quotas it would grant for international gold imports as a way to defend the renminbi and hedge against the rising inflation rates by easing purchases. With this policy, though, in early September, the renminbi plummeted to its lowest level against the U.S. dollar in 16 years, according to recent economic data.
After this disappointing data came out, the People’s Bank of China released a warning against bets regarding renminbi depreciation. The central bank initiated numerous measures to defend the currency’s strength, including lifting foreign reserve requirements and enacting state bank purchasing. Following these actions, the renminbi quickly regained its footing, reaching around Rmb7.286 against the U.S. dollar on late Monday.
China’s central bank directly controls how much gold can enter the nation’s domestic market using a series of quotas provided to commercial banks. The quota system acts as an unofficial tool for controlling precious metal flows and currency market performance rates.
China Is Defending the Yuan
The renminbi fell to the lowest level in 16 years and China reacted by blocking gold imports.
And people actually believe the price in China is the “real” price.
Of course, this fits the general theory that the dollar will go to hell so why bother doing spending 5 seconds to look for an explanation.
Enormous Irony
The amazing thing about these ideas is how easily they are disproved.
The associated irony is what’s really happening is 180 degrees removed from the idea behind the Tweets. The yuan, not the dollar is imploding.
People have been talking about this story for months because it fits their beliefs. But is China that is seriously manipulating it’s currency and gold responded.
One can buy real allocated and audited gold at Goldmoney or Bullion Vault, or via the symbol OUNZ ( VanEck’s Physical Gold ETF) with minimal markup.
Technically Speaking
The lead chart is the prettiest cup-and-handle formation you will ever see.
It’s a bullish chart and I expect the next big move will be up. The fundamentals align as well.
Gold vs the US Dollar
On a short term basis, gold usually moves with the dollar but there are major exceptions. For example in 2005-2006 and 2011-2012 gold and the dollar rose simultaneously.
Importantly, with the US dollar index at 92 gold has been at $500, $1200, and $1900.
So the belief gold tracks the dollar is more myth than reality. If not the dollar, then what?
The Driver for Gold
I need to update that chart but it still properly conveys the idea.
Gold is not correlated to the dollar as most people seem to believe . Rather it’s correlated to faith in central banks.
With massive treasury issuance on the horizon, and with no reason to have any faith in the Fed, Bank of China, or Bank of Japan, the fundamentals and technicals are in alignment.
Still More Gold Silliness
Yeah, just imagine. It’s far more likely all the banks in China close. But don’t expect that either.
People like doom and gloom click-bait articles because it matches their belief the US is going to hell and China is the ascendent power.
Arbitrage Opportunities
If China had a free open market in gold and the yuan floated, the price of gold in China would exactly match the price in the US at any moment.
If it didn’t there would be an arbitrage opportunity and a guaranteed profit.
The Price of Gold?
The best representation of the price of gold is not the current price in China with its huge currency manipulation and capital controls. It’s not the price of coins with their huge markups. It’s the current price in the US on the futures market.
That price is $1990 as I type (roughly 10:14 PM mountain time). Whether or not you think gold is being slammed, the fact of the matter is you can buy physical, audited, allocated gold near that price at the moment.
Past slamming and collusion in the US, although admitted, does not affect my previous statement. You can buy physical gold very close to the spot price. Period. There is no better price because that is the price you pay and receive.
If you can’t buy gold near the spot price in China, chalk it up to blatant currency manipulation in China.
US vs China Capital Markets
The US has the largest, most free capital markets in the world. China has capital controls, resorts to import controls on gold, has no bond market to speak of, and the yuan does not even float.
But hey, let’s praise China for having the true price of gold. What a hoot!
What’s Driving the Rally in Long-Duration US Treasuries? Will it Last?
10-year US Treasury yield courtesy of StockCharts.Com, annotations by Mish
In case you missed it, please see What’s Driving the Rally in Long-Duration US Treasuries? Will it Last?
In a series of six charts, I explain the rally.
Also see A Hawkish Interest Rate Hold by the Fed or Something Else?
“Gold is money. Everything else is credit.” -JP Morgan 1912
With gold performing relatively well recently I would expect the gold mining shares to react stronger then what I’ve seen. If this sector ever catches fire the gains will be incredible.
Gold is an INSURANCE POLICY . . . it tracks the loss of confidence in Governments and Central banks as they debase their money over time which results in the loss of purchasing power . . . It is not an Investment unless you constantly trade it.
You can call ETFs and companies who say they store your gold for you physical.
I call what I hold in my own possession physical.
It’s the same with people who own money made up on computers.
It worth something until it isn’t.
The more gimmicks, the more supply. The less demand for what’s real. When something has a convenience factor, it always comes at a cost.
At some point in time, every currency made by man was worth something. The only currency that has and will always be worth something was made by God.
Mish – this reads like a bitter old man rant. Why waste your time? Gold is heavily manipulated by sovereigns for whatever reasons they have. Only in the long run does gold tell us anything. And the long run is saying hard assets trump fiat.
The pharaoah’s gold held value for thousands of years (if grave robbers didn’t take it). The pharaoh himself did not fare as well
There is no single price for gold in the USA. A quick trip around the gold district in NYC will produce multiple prices, all of which claim to be the “official” price, and then there is the COMEX price, the prices in cities other than NYC. One can easily pay $50-$75 different prices in NJ, PA or CT than in NYC.
Different shops in London have different prices, most of which do not conform to the LME price. The LME price, adjusted for “the” GDPUSD currency exchange rate, often differs from the COMEX price.
Why would anyone expect “the gold price” in China to be different? Even before adjusting for whatever China’s government is reportedly doing?
The price for spot gold is the price.
Do not confuse the price of coins, bullion in small quantities etc, for THE price of gold. There are only tiny differences between futures and bullion vaults. The spot price IS the price.
The posted gold prices in shops are starting points for negotiating. Few pay the posted price; not in NYC, not in London and not in China. The LME and COMEX futures prices are generally for hedging (most participants do not take actual delivery).
Most of those small shops sell bars, half bars, quarter bars, etc in addition to jewelry and coins. You have to ask, and you probably need an appointment.
If you walk in off the street and just ask to buy a gold bar spot, the owner probably won’t do business with you. Maybe you are a money launderer or counterfeiter. Maybe you are an idiot who doesn’t know how much a gold bar weighs. Probably you are a credit and a security risk.
If you are a serious buyer, you make an appointment in advance and you come with security. The store will run an official credit check and an official law enforcement check. Most will check your reputation in the industry, if they don’t know your name already.
Then they start negotiations. Whether its a local gold dealer or online Amazon, customers pay continuously changing “dynamic prices”.
Want to signal you are an amateur? Tell them about the “law of one price”.
“The LME price, adjusted for “the” GDPUSD currency exchange rate, often differs from the COMEX price.”
Apples and oranges. London is dealing in London Good Delivery bars (nominally 400 ounces). COMEX contracts are for 100 ounce bars. But the two should track very closely. It would be a problem for the big London traders, who use COMEX to hedge, if they did not.
The gold spot price also assumes the quote is for 1 LGD bar . It is not possible to buy right at spot as a retail buyer. But BullionVault will buy at close to spot for you on your behalf for much small quantities.
“…the two should track very closely…”
“…for much small quantities”
You are saying the same thing as I did, just in more detail
“…the two should track very closely…”
“…for much small quantities”
You are saying the same thing as I did, just in more detail
Except that his predictions on Ukraine have always been very wrong. That hurts his credibility when he misses the big important predictions.
This was meant for Frederick.
If you’re referring to MacGregor, he has been 100% correct. This is an existential threat to Russia and it will be resolved to Russia’s liking. The outcome was never in question. The question is how much will Ukraine suffer and how much territory will they lose. The longer it goes, on the worse the outcome. So far 3 providences lost and 500,000 dead Ukranians. Victoria Nuland and the neocons must be very proud of their handiwork.
You seem to be watching LCI far too often …. so do I actually , one or two hours a day, if only to polish up my french and to get my blood pressure up with all their blatant mendacious anti Russia propaganda ….
Silly question. If the yuan doesn’t float, how does it fall to the lowest level?
Does this mean I should buy my gold from a Chinese company over the internet?
Mish,
You shouldn’t post a picture of Col. MacGregor with a tweet where someone implies he said something. Most certainly what he said is taken out of context. If you ever listen to MacGregor he makes a lot of sense. He’s one of the few out there wanting to stop these endless senseless wars.
Yes indeed He was interviewed by Tucker Carlson and he seemed pretty level headed and decent
MacGregor always says he know little about economy, and he refers to his son who is into it.
He might express his feelings about the financial house, which is shared by many of us, with the exception of certified economists and elected representatives of the people.
I’ve heard him refer to Nassim Taleb. But what I’ve heard him say on the economic front makes a lot of sense.
“The amazing thing about these ideas is how easily they are disproved.”
There is a large contingent of folks that are not seeking facts/truth or that want to employ critical thinking or challenge anything in the arena of ideas. Echoing confirmation bias is too much of an easy self gratifying endorphin rush.
“This new learning amazes me Sir Bedevere. Explain to me again how sheep’s bladders may be employed to prevent earthquakes.”
Sure the Chinese gold market is manipulated. But so is the US gold market. JPM and numerous other institutions have been fined for manipulating the gold market. They got little slaps on the wrist which guarantee it continues. Also there are numerous shenanigans where large dumps occur in the middle of the night on thinly traded markets. Then there is the whole derivatives thing. But these are just temporary price changes. Ultimately, gold is the place to be in a world with massive debt, fiat currency and corrupt, self serving politicians.
Agree as usual
Stay far away from Goldmoney. I opened an account with them, storing gold and platinum in Geneva. Then they closed access to my account and I can’t get it back.
I have supplied them with documentation for both my wife and myself : Passports, billing addresses, then they would re-request more documents. I satisfied these requirements then they demanded Vimeo proof of our documents. I called and
talked to an associate and was blown off. BUT they would take more deposits for
PM purchases. My basic info hasn’t changed for 20 years, E-mail address, phone number, home address, etc. ATM, I consider Goldmoney a fraudulent business and your money and PM are not safe with them
OK John – Send me an email with details. I will look into this for you.
Goldmoney has an excellent reputation so I am interested in this.
OK John, I emailed James Turk – Let’s see what happens.
I had the same problem with Treasury Direct for bond purchases. However the Treasury still takes my ACH transfers for taxes and direct deposits into my account for refunds. So I buy my bonds through my broker.
1) Col MickyG and Scott Ritter crocodile tears dimmed Xmas sales. They will blame
the Jews for the next recession.
2) David Exelrod begs Biden to drop out of the 2024 presidential race, b/c of his age.
3) It might be Michelle Obama vs Donald Trump. If elected Michelle will rule this country for 12 years along with Talib, Omar, BLM and Antifa strike forces.
4) SPX, NDX and gold are testing the previous highs. They might popup, or sink after Nasrallah speech ext Sat.
Crazy pronostications! I don’t think Scott Ritter of Col. MacGregor are the kind of men who cry. They leave that to the big pussy Admiral Kirby. I bet he has Hamas and Hezbollah quaking in the boots. 🤣
https://youtu.be/LocO2C13x14?si=u79cNomNL0wACTFf
I think it’s Axelrod
Thinking the value of the dollar is measured by DXY is flawed, a strong us dollar by that index of fiat currencies is only determining the least dirty shirt in the laundry as they are all losing value.
Exactly You have to compare it to the Gold price
I like Luke Gromen but he is definitely wrong on this one. I guess that his biases had him overlook the true reasons this time. He understands arbitrage and basically everyone who follows the gold market closely knew that China was restricting imports.
I am also a believer in owning some gold but I don’t put everything (or even most) I have into gold. It has basically no intrinsic value and something else can come along to displace it. It is a hedge against currency collapse.
Gromen is a babbler, just like that Ben Shapiro. They rely on machine gun talking to cover up their errors.
I had a very polite conversation with Luke about my post. I expected him to be annoyed at me but he wasn’t.
Re “something else can come along to displace it” … No, the entirety of human history says (a) gold is always valued, and (b) nothing has ever displaced it for very long.
Gold has unique physical properties which are the basis for both its monetary, jewelry, and industrial value.
Natural diamonds can be, and are being displaced by synthetic diamonds. But there is no such thing as synthetic gold.
When the BRICS have most of the Gold then the Chinese will set the price That day isn’t here yet but it’s coming
You don’t actually know that.
For gold in China to be actually worth anything, it has to be tradable; what makes you think that the CCP will allow gold to leave China?!
How about all the Chinese home purchases in Southern California and in Vancouver?
At that point will gold be priceless or worthless?
After all, other than for Jewelry purposes, there is next to no practical value for gold. So the rest of the world could do without it entirely.
On the other hand, controlling rare earths would have a LOT more value because those are used and required.
Gold IS money so your arguement holds no water
I’m getting sick of this bot-comment.
You have no idea what gold is used for, nor why.