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Thieves Substitute $72 M of Hong Kong gold bullion with tungsten
- Thread starter HeadlessRoland
- Start date
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HeadlessRoland
Shooter
On a somewhat related note:
How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring | Zero Hedge
How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring | Zero Hedge
Wow. I know...I am pretty sure they were speaking English but with all the technical speak and jargon in that article, they blew right past my limited education in economics and finance.
hoosierdoc
Freed prisoner
That's the point. "Trust us, we know what we're talking about"
It'd be like one of us reading a medical publication or a none electrical engineer reading an engineering publication.
hoosierdoc
Freed prisoner
I was suggesting that they can't make rational claims as to the sanity of investing in gold using standard ROI terms and historical pricing, so they have had to make up this entire new way of looking at things. Like new math.
"worthless metal" I would disagree with on the tungsten. It's over 18 dollars a pound!
That's $39,000 worth of "worthless" metal. Just enough to get started in Macau and roll it up into $72 million!
Still confused on how they said it was 2200 pounds of gold worth 72,000,000. Given today's price of $1252/oz that's like $44,000,000. Is there some massive inflation over there for physical gold?
"worthless metal" I would disagree with on the tungsten. It's over 18 dollars a pound!
That's $39,000 worth of "worthless" metal. Just enough to get started in Macau and roll it up into $72 million!
Still confused on how they said it was 2200 pounds of gold worth 72,000,000. Given today's price of $1252/oz that's like $44,000,000. Is there some massive inflation over there for physical gold?
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Gold is measured in Troy ounces. Metric ton = 2200lbs = 32083 troy oz x $1252= 40,167,916 dollars. Please show your work on all math problems.
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OP: The article never said that the stolen gold was replaced by tungsten. The metal in the crates which could easily have been lead, iron or something else.
GFGT: I've been a Zero Hedge reader for some time and can interpret that article for you. Sorry for the long post, but it is much shorter than the ZH article and hopefully much easier to understand. The background to the article was that China has been on a buying spree to heavily accumulate gold in the last couple of years. China still has the largest collection of US Treasuries outside the US due to our trade imbalance, but they no longer trust in the value of the dollar long-term, so converting some of those dollars to gold makes perfect sense as a hedge against the decline of the dollar. However, such a large increase in demand of a commodity would normally trigger a very noticeable increase in prices, so the real question is: How are they buying so much gold without driving up prices? The article lays out two main factors:
#1- They do a lot of complex, disguised buying. This same technique is often used by someone that is interested in discretely buying a large amount of stock in a company at the best price. Note that this is not at all the same thing as simply announcing a company buyout where you are "buying X shares at $Y". The discrete buyer wants to buy at a lower price, but needs to avoid giving clues as to what is going on so others don't catch on and bid up the price to get more from the buyer. So, the buyer does many small purchases, via many different channels, over a period of time to hide what they are doing. The Chinese have been doing the same thing. Some strong clues have been found about this bulk buying: imports via Hong Kong and sales via Switzerland which are both reported, but other channels often aren't. So, the exact amount they've been accumulating will likely never be known. China is also the worlds largest gold mining country, but they don't sell and don't provide real stats on that production either.
#2- Understanding that China is accumulating a world-class gold reserve (even without knowing the exact amounts as noted in #1), would normally be enough to drive up the price of gold. However, the second important point to note is that the price of gold is not directly driven by gold sales, but instead by "paper gold". That is buying/selling promises of gold and betting on the price of gold rising/falling without actually moving/storing the metal. There is roughly 100x as much paper gold traded on a daily basis as physical gold. The GLD ETF (exchange traded fund) is a major example of paper gold that you can invest in via your stock trading account. As long as people are happy with dollars and are only interested in buying/selling paper to make a profit, then paper gold can work. However, if the dollar would crash, many people would demand actual gold delivery, but there isn't enough real gold for those demands and most of this paper gold would become worthless. This is why I advise against investing in the GLD ETF. Okay, but how does this hold down the price of gold?
This article talks about the possibility that China is short-selling paper gold as a way to hold down the prices while they buy the real thing. There are many articles on Zero Hedge that point fingers at the US Government and the major bullion-holding banks as doing the short selling which is holding down paper gold prices. Both sides have an incentive to hold down gold prices: China wants to buy real gold cheaply and the US wants to keep gold prices from rising and making the devaluation of the dollar due to QE more visible, resulting in less confidence in the dollar. Either or both may be true, but the evidence of major short selling to depress prices is overwhelming. There are regular huge dumps of paper gold (at least weekly) that drive down gold prices $10-$25 in a few minutes, often at the same time of day just before regular US markets open up when the number of buyers online is at its thinnest. This is not the behavior of someone who wants to sell a lot of gold, but get the best price. Note the time of the "flash crash" below.
The net result is that a lot of physical gold has been moving from the West to the East (primarily China and India) as the westerners are more driven by paper profits and the easterners are looking to hold real gold. Whoever is driving the paper gold price suppression, it can't be sustained forever. Eventually it will break down and gold will likely rise substantially. It is just a question of when.
GFGT: I've been a Zero Hedge reader for some time and can interpret that article for you. Sorry for the long post, but it is much shorter than the ZH article and hopefully much easier to understand. The background to the article was that China has been on a buying spree to heavily accumulate gold in the last couple of years. China still has the largest collection of US Treasuries outside the US due to our trade imbalance, but they no longer trust in the value of the dollar long-term, so converting some of those dollars to gold makes perfect sense as a hedge against the decline of the dollar. However, such a large increase in demand of a commodity would normally trigger a very noticeable increase in prices, so the real question is: How are they buying so much gold without driving up prices? The article lays out two main factors:
#1- They do a lot of complex, disguised buying. This same technique is often used by someone that is interested in discretely buying a large amount of stock in a company at the best price. Note that this is not at all the same thing as simply announcing a company buyout where you are "buying X shares at $Y". The discrete buyer wants to buy at a lower price, but needs to avoid giving clues as to what is going on so others don't catch on and bid up the price to get more from the buyer. So, the buyer does many small purchases, via many different channels, over a period of time to hide what they are doing. The Chinese have been doing the same thing. Some strong clues have been found about this bulk buying: imports via Hong Kong and sales via Switzerland which are both reported, but other channels often aren't. So, the exact amount they've been accumulating will likely never be known. China is also the worlds largest gold mining country, but they don't sell and don't provide real stats on that production either.
#2- Understanding that China is accumulating a world-class gold reserve (even without knowing the exact amounts as noted in #1), would normally be enough to drive up the price of gold. However, the second important point to note is that the price of gold is not directly driven by gold sales, but instead by "paper gold". That is buying/selling promises of gold and betting on the price of gold rising/falling without actually moving/storing the metal. There is roughly 100x as much paper gold traded on a daily basis as physical gold. The GLD ETF (exchange traded fund) is a major example of paper gold that you can invest in via your stock trading account. As long as people are happy with dollars and are only interested in buying/selling paper to make a profit, then paper gold can work. However, if the dollar would crash, many people would demand actual gold delivery, but there isn't enough real gold for those demands and most of this paper gold would become worthless. This is why I advise against investing in the GLD ETF. Okay, but how does this hold down the price of gold?
This article talks about the possibility that China is short-selling paper gold as a way to hold down the prices while they buy the real thing. There are many articles on Zero Hedge that point fingers at the US Government and the major bullion-holding banks as doing the short selling which is holding down paper gold prices. Both sides have an incentive to hold down gold prices: China wants to buy real gold cheaply and the US wants to keep gold prices from rising and making the devaluation of the dollar due to QE more visible, resulting in less confidence in the dollar. Either or both may be true, but the evidence of major short selling to depress prices is overwhelming. There are regular huge dumps of paper gold (at least weekly) that drive down gold prices $10-$25 in a few minutes, often at the same time of day just before regular US markets open up when the number of buyers online is at its thinnest. This is not the behavior of someone who wants to sell a lot of gold, but get the best price. Note the time of the "flash crash" below.
The net result is that a lot of physical gold has been moving from the West to the East (primarily China and India) as the westerners are more driven by paper profits and the easterners are looking to hold real gold. Whoever is driving the paper gold price suppression, it can't be sustained forever. Eventually it will break down and gold will likely rise substantially. It is just a question of when.
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hoosierdoc
Freed prisoner
My math was close enough, show theirs that got to $72m?
hoosierdoc
Freed prisoner
You'll have to discuss that with them. Somebody got lessons in new math somewhere.
Maybe it's like jewelry appraisals. I buy a $4800 ring and the same store appraises it for $9500. He insured it for $72m and it was stolen so he gets $72m?
Maybe he bought the Gold Line price guarantee with his purchase?
HeadlessRoland
Shooter
Sorry, everyone. I just assumed it was tungsten, since that's what the usual fraud schemes lately have been using.
As for math, I was just reporting the numbers, but working out roughly 32.15 troy ounces to the kilogram, times 998 kilos, times $1250/troy oz. gold, I get something around $40 M, give or take. But if he purchased at a substantially higher price, say, $1600/troy oz., then it's closer to $51 M. Still, I wonder how inoperable the thieves' kneecaps will be after this guy finds them. I heard the Irish came up with a really effective anti-theft program along those lines.
As for math, I was just reporting the numbers, but working out roughly 32.15 troy ounces to the kilogram, times 998 kilos, times $1250/troy oz. gold, I get something around $40 M, give or take. But if he purchased at a substantially higher price, say, $1600/troy oz., then it's closer to $51 M. Still, I wonder how inoperable the thieves' kneecaps will be after this guy finds them. I heard the Irish came up with a really effective anti-theft program along those lines.
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