June in Precious Metals by Steven Cochran of Gainesville Coins

Welcome to SurvivalBlog’s Precious Metals Month in Review, by Steven Chochran of Gainesville Coins, where we take a look at “the month that was” in precious metals. Each month, we cover the price action of gold and examine the “what” and “why” behind those numbers.

What Did Gold Do in June?

Gold made another run for the $1300 mark in early June. It closed at $1,294 an ounce on June 6th. This was not acceptable to the market manipulators, so they engineered a “take down” in gold later in the month. By trading 1.8 million ounces of gold (61.7 U.S. tons) in one minute, this “mystery” transaction chopped the gold price to a six-week low.

Gold prices stabilized at the end of the month but still posted the first monthly loss of the year. Even after June’s losses, gold is still 8% higher for the year (chart).

Factors Affecting Gold This Month

TERROR ATTACKS

In what is becoming a deadly “new normal”, several terrorist attacks rocked Europe in June. On June 3rd, three terrorists in a van ran over pedestrians on the London Bridge, then jumped out and chased down fleeing people, slitting their throats from behind. Before they were shot dead by police, seven were killed  and 48 injured (18 of them critically). One of the attackers was known as an extremist in Italy and was under constant surveillance there. Italian authorities and the terrorist’s own mother tried to warn British law enforcement, but no action was taken by UK authorities before the attack.

The bravery of 47 year-old Roy Larner saved many lives. Three terrorists stormed into a market wielding knives and screaming “Allah!” Using the name of his favorite soccer team as a war cry, Larner yelled back at them, “F– you, I’m Millwall!”

Larner stood his ground bare-handed. He took on all three attackers while the rest of the people escaped out the back door. His heroism and hard fighting frightened the three terrorists out of the building, with Larner chasing after him. He was taken to the hospital when police arrived and put into intensive care to treat eight severe knife wounds. The London attack led to a nationwide sweep by British authorities. At least a dozen people were arrested.

Three days later, a hammer-wielding assailant attacked police outside the Louvre museum in Paris. The attacker was called a “lone wolf”. He apparently was untrained as a terrorist and just decided to run amok after being radicalized by ISIS propaganda.

The same day as the Paris attack, Daesh (ISIS) terrorists struck prominent targets in Iran’s capital of Tehran. The tomb of Ayatollah Khomeini and the Iranian Parliament were attacked at the same tim. 17 were killed and 43 were wounded. Iran’s politically powerful Revolutionary Guards blamed Saudi Arabia for the attack. Saudi Arabia has been a financial supporter of ISIS. The world is now waiting for the Iranians to sponsor a terrorist attack on Saudi Arabia in revenge.

These events sent gold to its high for the month, at $1294 an ounce. Gold prices began slipping into the middle of the month to around $1265 an ounce. This changed on June 14th, when a deranged gunman opened fire on the Republican Congressional baseball team at a morning practice.

TRUMP AND RUSSIA

Washington was focused all month on accusations that people in Donald Trump’s campaign colluded with Russian agents to insure Trump would win the Presidency. The testimony before the Senate of fired FBI Director James Comey did not provide the “smoking gun” that Democrats had hoped for, but it has done little to slow down the partisan attacks.

It seems that Washington D.C is the only place where “Russiagate” is causing a stir. Middle America thinks it’s all a witch hunt. Wall St only wants to know when they will get the deregulation and tax cuts they were promised.

BOTCHED BRITISH ELECTION

Uncertainty over the British government’s ability to negotiate a decent Brexit deal took another hit in June. Prime Minister Theresa May called a snap election three years early, believing that her Conservative Party was popular enough to increase their majority in Parliament. What happened was the Conservatives lost their majority and the Labour Party gained a huge 30 more seats. As recently as a month earlier, the press had declared Labour dead and done for. The British pound and stocks tumbled on the results.

Brexit negotiations between the UK and the EU formally began on the 19th. The two-year countdown for an agreement to be reached has started. May and her negotiating team are now widely seen as lacking the authority to forge a deal favorable to Britain.

UNEXPECTEDLY BULLISH FED

Everyone and their dog knew that the Fed was going to raise interest rates at their June meeting, but the uncomfortably bullish attitude of Janet Yellen after the meeting caught many by surprise. The dollar jumped after Yellen’s press conference, and gold dropped to a three-week low.

Many analysts and economists believe that the Fed has too high an opinion of the state of the economy. They worry that the recent economic weakness may be a sign that the recovery has stalled out. If it has, then the Fed would wreck the economy with more rate hikes.

Ordinary Americans will soon feel the pain of the Fed’s rate hikes, if they haven’t already. The interest rates on mortgages and credit cards are already rising. If you have an adjustable rate mortgage and carry credit card ebt, your opinion of the economy will not be as rosy as Yellen’s.

ATTACK ON GOLD

The global gold market was attacked early on the morning of June 26. Some Asian bullion exchanges were closed for a holiday, and British traders had just gotten to their desks at 9am local time. They turned on their computers just in time to see 1.8 million troy ounces of gold get sold in less than sixty seconds.

Gold prices were absolutely crushed as high-frequency trading robots started dumping gold in the first few seconds after the takedown began. Silver was also hit with a suspicious bout of sell orders. 5,000 ounces of COMEX silver was sold into the market at the same time the gold price was being attacked. Spot gold lost $12 for the day and limped into the end of the month barely above $1241 an ounce.

HOW MUCH IS 1.85 MILLION TROY OUNCES?

1,850,000 troy oz = 63.43 tons = 57.54 metric tons = 57,541.43 kg

So nearly 63 and a half tons of gold was sold at once.

On the Retail Front

It was a “down” month for the U.S. Mint, as both silver and gold bullion coin sales fell by more than half. This may be due in part to the June oil rally and Fed rate hike that had traders thinking inflation will rise.

.9999 fine 1oz Gold Buffaloes sold 2,000 oz in June, compared to 5,000 oz in May. Sales of American Gold Eagles of all sizes in June was 6,000 oz, compared to 14,500 oz in May. Only 986,000 American Silver Eagles were sold by the U.S. Mint in June, compared to 2.455 million in May.

CENTRAL BANK GOLD RESERVES

The Russian Central Bank jumped back into the gold market, buying 21.8 metric tons in May. China is still playing its cards close to its vest, once again refusing to declare any central bank gold purchases.

According to World Gold Council data released on June 5th, Argentina was a big buyer, bringing home 6.8 metric tons of gold. Speaking of Argentina, their government managed to get people lined up to buy 100-year government bonds. Argentina has defaulted on its bonds three times in the last 23 years, and people think that they will honor these 100-year bonds? Dollars to donuts, some of that bond money is being used to buy gold while it’s cheap, to replace the central bank gold sold during their currency crisis.

Kazakhstan extended its gold buying streak for another month, purchasing 3.2 metric tons of the yellow metal. Turkey continues being a buyer, to the tune of 8.2 metric tons. Much like Argentina, they leaned heavily on gold sales to prop up their currency during a recent crisis.

Mexico dipped its toe into the gold market, now that the peso has recovered, but only bought 100,000 kg. Germany showed up as a seller on the central bank gold charts this month, selling 0.6 metric tons.

Market Buzz

A trader at Deutsche Bank has been convicted of precious metals manipulation. He contests the bank’s claim that he was a “lone wolf”, saying he was taught how to manipulate the price of precious metals by senior Deutsche Bank traders.

Gold importers in India are holding back until they get some clarification over the government’s new tax laws on gold. Importers are unsure how and when these new taxes are supposed to be paid.

Here’s an infographic on how the COMEX gold futures market works. Even though the London OTC (over the counter) gold market is 10x larger than the COMEX, it’s the paper speculators on the COMEX that set the daily tone for gold prices. Last month, the COMEX averaged only 26.46 metric gold of Reserved gold (which has a title issued) and 282.38 metric tons of Eligible gold, which is all Good Delivery gold bars that can be used to settle futures contracts. Compare this to the Shanghai Gold Exchange. Physical gold withdrawals totaled 138 metric tons in May, bringing the year-to-date total to 829 metric tons. The way the gold market is set up in China, physical gold withdrawals basically equal domestic gold demand.

Advances in technology are seeing people going back to old mines in Nova Scotia and pulling out more gold.

The Texas Gold Depository is one step closer to reality. The state has chosen the private company that will run the vault.

The demand by wealthy investors for gold storage outside of the banking system has gold vault companies expanding to meet the need. In many cases, you can store large amounts of physical gold in secure and bonded private vaults for less than the fees on holding shares in a gold ETF.

Singapore’s bid to be a major player in the Asian gold market is paying off.

The Perth Mint is trying new methods to reduce employee theft of the mint’s gold. Part of that is to ban any clothes with metal parts that a tiny fleck of gold could be hidden behind. This includes underwire bras. The mint is planning to introduce metal-free bras for female employees to change into before entering secured areas. This of course has brought out the “social justice warriors” who claim the policy unfairly discriminates against women.

FORREST FENN’S TREASURE

A second person died in the Rocky Mountains north of Santa Fe in June while hunting for the Forrest Fenn treasure in places he shouldn’t. This has some people calling for an end to the five-year treasure hunt contest.

These people have been greatly outnumbered by people urging the retired art dealer, and highly-decorated Vietnam War fighter pilot to stand firm. People supporting Fenn include the newspaper in the home town of the deceased, as well as his widow.

The “Thrill of the Chase” treasure hunt is for a 10” x 10” x 6” bronze treasure chest full of giant gold nuggets, jewelry and artifacts. It is hidden somewhere in the Rocky Mountains from the Canadian border to just north of Santa Fe, New Mexico.

Fenn has repeatedly told people to stay away from dangerous areas. “If you’re looking in a place where an 80 year-old man with a full pack couldn’t get to, you’re looking in the wrong place,” he says in every interview he gives.

Falling diamond prices are forcing Rio Tinto to close its Argyle diamond mine in Australia. The locals, who were paid many millions of dollars of royalties by Rio Tinto, have seen their economic development trust funds looted by corrupt officials.

The money that was supposed to pay for modernizing the towns and creating new jobs is gone. Soon, the million dollar payments will stop. The jobs at the diamond mine will also be gone. The region will sink into abject poverty.

In South Africa, violence against platinum mining companies by people living in shantytowns around the mine is hurting production. The global price crash in platinum means that half of South Africa’s mines are losing money. This means no community projects. By resorting to violence that forces temporary shutdowns at the mine, the villagers are only making thing worse for themselves.

BITCOIN

The Mainstream Press seems to have a love affair with Bitcoin. Maybe it’s because they think it is cool and hip. The reality of Bitcoin isn’t quite like the fanboys would like you to believe:

Cameron Oatley, a freshman college student in England, was charged $6 to obtain $30 worth of bitcoin to someone in the U.S. This experience led him to say, “Any currency where you have to pay a huge portion of the transaction just for the privilege of using that currency is no currency.”

One of bitcoin’s most famous hacks was the February 2014 attack on the Mt. Gox bitcoin exchange. At the time, it was the world’s largest exchange and bitcoin “vault”. Mt. Gox declared bankruptcy after hackers stole 850,000 bitcoins, worth $450 million. Although 200,000 bitcoins were recovered, 650,000 bitcoins, worth nearly two bilion dollars, have never been found.

Since there is no such thing as depositor’s insurance for bitcoin, those tens of thousands of investors lost everything.

This foolishness is spreading to gold, where someone had the bright idea of implanting RFID chips into gold bars and tracking them with a bitcoin-like “blockchain”. This means the government and hackers will know you ownone of these gold bars. This also takes away more of the privacies that American citizens are losing every day.

Stefan Gleason at Minyanville reminds us of the proper use of gold: unhackable wealth stored safely outside of the banking system.

I think that everyone aside from some corrupt cops agrees that civil asset forfeiture is one of the worst assaults on the liberty of American citizens. Even if you are innocent of any crime, police can target you and seize your bank account, your car, and even your home. Now the U.S. Senate is giving even more power to law enforcement to play Sheriff of Nottingham and take what they want from whoever they want, including your precious metals. It’s one more reaston to let no one know you even have any gold or silver.

PUNDIT ROUNDUP

Michael Lombardi lists seven reasons his forecast for $2,500 gold is still in play.

Frank Holmes, CEO of US Global Investors, sees a very real possibility of $1,500 gold by the end of the year.

SRSrocco writes a lengthy article on how the stock market bubble is way overdue for a big correction. When the bubble pops, precious metals will skyrocket. He warns that it is impossible to time the gold market. Waiting until after gold starts its next big rally means you will miss out on the best gains.

Marc Faber agrees that the stock market is setting itself up for a big fall, warning of a 40% drop in stock prices.

Jim Rogers adds his voice to the growing number of warnings about the stock market, saying we will see the worst crash in our lifetimes either later this year or next year.

Also from SRSrocco, gold exports from the U.S. are up by 45% compared to last year, mostly to China and India. He reveals another fact that most people don’t know. The U.S. is exporting more gold than it is producing and importing. That’s gold from someone’s U.S. vault being sold to overseas buyers.

China’s gold imports rose by 50% during the same period. Nothing to see here, move along citizen.

Ron Paul gives his recipe for Making Our Money Great Again. As always, one of his big points is making gold and silver legal currency, immune from taxation.

David Stockman calls Donald Trump the “Orange Swan”, and says the Deep State is mobilizing against the President (a “Black Swan” is an unforeseen event that disrupts the financial system).

A Trump impeachment? Musa al-Gharbi says, “Forget about it.” In fact, he gives Four Reasons Trump Will Be Re-elected in 2020.

Looking Ahead

The Fed has raised rates three times in seven months, dating back to December 2016. No one in their right mind expects another rate hike in July, but Janet Yellen and the other Fed Heads will be trying to move markets with their Jedi mind tricks. A lot depends on whether recent soft economic data continues.

Higher interest rates means higher Treasury yields, which means the government has to spend more money to meet its debt payments. This could drag on the economy, forcing Yellen to cut rates back down. If this happens, the dollar will fall drastically, and gold will shoot for the moon.

The war in Syria almost turned into the first direct combat between Russia and the U.S. last month. Both sides seem to have stepped back a bit, but Assad has been shown that Russia cannot protect him from being punished. The question is: Will Assad do something on purpose to provoke a Coalition response, in hopes that Russia will impose a no-fly zone over Syria?

We end June with the story of the little old lady in China who threw coins into a jet’s engine. The 80-year old granny, a practicing Buddhist, stopped on the entry stairs and tossed nine coins at one of the jet’s engines. When confronted, she said she was giving an offering for good luck on her journey. One coin was found on the lip of one engine. This resulted in mechanics having to disassemble the engine on the tarmac to search for any coins that might have made it deeper into the engine. After five hours, the flight was finally cleared to take off.

Authorities said that Grandma will not be charged, but warned family members to keep a closer eye on her.