1,000 Ton Swing In Gold, Russians & Chinese Buying

Today John Embry told King World News that the Russian and Chinese purchases have led to a massive 1,000 ton swing in the physical gold market, and despite the pullback, gold will trade many multiples higher than current levels.  Here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say:  “I’m focused on the preposterous action in the gold and silver market.  This is being done by all of the usual suspects in the paper market, and it bears zero resemblance to the real status of both the gold and silver markets.”
“The Chinese announced they had record gold imports in the month of December, and for 2013.  For the year they imported 834 tons.  Then, it came out today that Mr. Putin has been turning his black gold, which is oil, into as much gold as he can get his hands on.  

So the two, I would say avowed enemies of the United States, China and Russia, are just taking advantage of this opportunity to pile up all of the physical gold they can....

“I will tell you something else, both of these countries are aware of everything that GATA has alleged for the past 14 years.  I went to a conference in the Yukon back in 2005, and one of the guys attending was Putin’s right hand man, Andrey Bykov.  Bykov was fascinated at what was being presented.  Not surprisingly, the gold price went up about 60% over the next six months.  I believe it was the Russians buying, and we are continuing to see them acquiring gold.

The Russians are one of the largest buyers of central bank gold, and they are aware of the true nature of the gold market.  Mr. Putin and his associates are saying that if the US dollar gets into a difficult position, those countries which have a lot of gold to back their currencies are going to be in an infinitely better position than those that don’t.

This is why the Western gold is headed East and the Western hoards are being hollowed out.  I just think the Westerners are making a catastrophic error here, and I hate to see what’s happening as a committed Westerner.”

Embry also added: “I’ve always been sort of a maverick in the sense that I didn’t think the gold production would go up irrespective of what the gold price did.  All of the real easy, low hanging fruit has already been mined or is currently being depleted.

At the same time, anything new that’s of any significance tends to be in third world countries.  One of the finest discoveries which has been made in the last couple of decades was the one in Ecuador which was found by Keith Barron’s group.

That discovery still isn’t in production.  I had always agreed with a number of mining executives that believed we were at peak gold production.  But now I take it one step further.  The juniors that do the exploration in the mining sector have been literally devastated, and half to a third of them will go totally out of business in the next 12 months.

In that instance I don’t think we’re going to be finding much new gold at all.  So consequently, as these existing mines get depleted and all mined out, I think production will fall dramatically, irrespective of what the gold price does.  When you put that in the perspective of central banks, which have gone from being large suppliers of gold for years and years and now they are taking gold out of the market, you’ve had a swing of at least 1,000 tons per year in central bank activity. 

When you put this into the context of a market that’s only about 4,000 tons per annum, and then you add to this the fact that future gold production is literally set to plunge, I think there is no choice but for the price of gold to go ballistic on the upside.  It’s just a matter of how long these paper shenanigans can continue.  Once these (paper shenanigans) are over, and they will certainly be over at some point, the price will go up by multiples of the current level.”