Summary
- China resumed adding to its Official Gold Reserves, declaring an addition of five metric tons last Friday, the first since April 2024.
- Earlier this year, China paused its gold reserve purchases in June, leading to a $100/oz gold selloff, but spot gold prices have since climbed.
- China's Politburo announced plans to ramp up economic stimulus for 2025, with expectations of a potential yuan devaluation in response to possible tariffs from the Trump administration.
- The OMFIF released a 24-page report titled Gold and the New Disorder, highlighting a potential short squeeze in the global bullion market, drawing parallels to the palladium market surge in the late 2010s.
- Speculation grows that BRICS nations may "weaponize" gold as part of economic strategies against Western financial systems, increasing volatility in financial markets.
- The current gold bull market, ongoing since late 2015, still has significant room to grow compared to the 2000-2011 gold price surge.
- Australia's gold price hit a nominal record this week, and when measured in gold, Australian housing is now cheaper than its lows in 2011, hinting at broader real value corrections in Western housing markets.
- Silver continues to see strong industrial demand in sectors like solar, automotive, and electronics, creating ongoing supply deficits, while China has imported over 8 million ounces of silver in recent months.
- India has significantly increased its silver ETF holdings, with ETF demand equaling 40% of annual retail silver investment in 2024, compared to just 5% for gold ETFs.
- Spot silver and gold prices diverged this week, with gold outperforming, closing at $2,650/oz and a gold-silver ratio of 86, while another round of interest rate cuts is expected to further influence the markets.
Late last Friday, news broke that China has returned to declaring additions to its Official Gold Reserves declaring an addition of five metric tons, the first addition since April of this year 2024.
You might recall the news that China had paused her gold bullion reserve buying in early June of this year, and the $100 oz intraday sell off that proceeded. The spot gold price has climbed since regardless.
China also made news this week as the nation's Politburo planners announced a vow to ramp up stimulus to spur growth in 2025. Experts are expecting the fiat Chinese yuan to be devalued accordingly to any news tariffs the Trump regime potentially slaps on Chinese imports.
Later in this week's SD Bullion update we will go into details this week about how potential coming Chinese tariffs are creating chaos in the silver and gold price discovery markets.
But first, the OMFIF or Official Monetary and Financial Institutions Forum published a 24 page report this week entitled "Gold And The New Disorder": https://pdf.omfif.org/gold-and-the-new-world-disorder
The most important point made in the report revolves around a coming Short Squeeze in the world's physical bullion market.
Citing recent history in the Palladium market in the late 2010s where palladium shorts experienced massive losses as the spot price ran six fold trough to peak over a five to six year timeframe.
Mentioned was the estimation that unallocated to allocated gold ratios could be as high at 100 to 1 with suspicions rising that some BRICS countries could be considering 'weaponizing' gold against the West. Our fiat financialized markets could be in for a bumpy ride.
The resurgence of this ongoing gold bull market since late 2015 to present, has much further to climb to simply match the percentage gain performance of the 2000 to 2011 run.
Gold has plenty of future fuel coming where short squeeze scenarios could come about considering these kinds of leaders and deficit spending facts.
Government spending is only set to climb as we move forward. Deficit spending for the first two months of this fiscal year are about $200 billion higher than and year prior, even 2020.
Turning to the gold price in Australia, another nominal record price for gold down under was achieved this week.
Interesting to note, even with the biggest housing property bubble of all time still going in Australia. When valued by gold, housing is already now cheaper in gold than the spike lows of 2011.
It is only a matter of time before housing bubbles in the rest of the Western world begin to further melt in real value terms versus gold and then eventually silver too.
The Australian record silver price breakout this year is simply forewarning what is to come here and beyond.
The silver and gold spot prices were mixed this week as gold outperformed silver overall.
The spot silver price climbed to over $32 oz intra-week only to be cut down to close at $30.56 oz bid.
The spot gold price closed flat after a short duration climb to $2,730 oz bid high intra-week, yet closed down at $2,650 oz bid.
The spot gold silver ratio climbed on gold's relative strength to close at 86.
For long time gold bulls, it was no surprise to see gold and silver spot price trimmed on the recent hot CPI report as such market interventions have become commonplace.
One of past month over month consumer price data increases even shocked a few financial propagandist pundits.
Another round of rate cuts are expected this coming week.
Jesse Columbo's 21st Century rate cut cycle versus gold price chart here points out how gold tends to do well both inside and following rate cutting regimes.
Turning finally to the silver market.
Where large increases of industrial silver demand in solar and other industrial uses like cars and electronics continue producing supply deficits year after year.
This week, we saw a near COVID 2020 sized divergence between the spot and futures market price points for both silver and gold. Bloomberg wrote the following on the matter this week.
It is not surprising to see China importing silver aggressively ahead of the incoming Trump administration importing over 8 million ounces of silver over the last four months.
In India in 2024, Metals Focus recently stated that Silver ETF buying is now equal to about 40% of annual retail silver investment demand in 2024. This compares to only about 5 percent for gold ETFs in the Indian market.
Over the last two years, India has reportedly added over 30 million ounces of silver to her growing global silver exchange traded fund market share.
The trend of wealth buying bullion in the east is not abating and will likely only increase as time proceeds. Given that we are indeed in a seemingly growing Disorder Age, coming shortages in global bullion markets is becoming simply a question of time.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
