China's making an UNPRECEDENTED move into physical silver, and it's having a SIGNIFICANT impact both the physical and paper markets...
Samuel Briggs via Kinesis
Andrew Maguire explores the marketwide implications of China buying up vast quantities of gold and silver.
Andrew Maguire reveals China's making an unprecedented move into physical silver, while also securing huge quantities of gold dor?(C) bars from the region of Africa. The precious metals expert believes these developments are having a significant impact on physical supply and the paper markets.
China sources African dor?(C) bar supply
Andrew Maguire reveals China is directly obtaining huge quantities of gold dor?(C) bars, circumventing the LBMA bullion banks and refineries. According to industry sources, the People's Bank of China (PBOC) is strategically frontrunning every available ounce of the raw material.
Andrew Magure reports the PBOC has secured thousands of tonnes of raw supply at close to all-in global mine costs. As a result, the LBMA is losing out on the cheap mine supply they have relied on to suppress the gold price in the markets.
However, according to Andrew Maguire, the structural change in bullion flows has gone unreported by mainstream media sources. With most coverage misreading a reduction of flows from the West to China, as a lack of demand for gold.
China's move into the physical silver market
Andrew Maguire has it on reliable information that China has aggressively moved into the physical silver market. According to Andrew Maguire's sources, the nation is buying physical silver mine supply in very large size.
The precious metal expert believes the unprecedented move is already tightening up wholesale supply. Andrew Maguire reports that wholesale dealers are already experiencing the effects. With dealers having their silver allocations cut, in a period of already very tight supply.
Impact on the paper markets
As Andrew Maguire sees it, this shift in bullion flows explains the disconnected margin increase in the paper markets last week.
Andrew Maguire reports never seeing "such a large percentage increase on an overnight increase in borrowing costs" for SI and GC. For example, Andrew Maguire cites a 14 per cent, or $2000, per lot increase in SI Futures margins.
There are only two plausible reasons for a significant margin increase:
Very large price rise Very disruptive volatilityHowever, the Futures markets have remained in the same flat range through the last 4 COT weekly. Following four weeks of flat prices, Andrew Maguire believes the hikes in margins are otherwise unexplainable.
What does this mean for the markets?
In Andrew Maguire's experience, a tiny percentage of supply disruption can alter the paper game. China's aggressive move into physical silver and raw materials is tightening supply, and leading to tighter restrictions. Andrew Maguire believes tighter supply and tighter restrictions exhibit a firmly bullish setup.
Andrew Maguire's parting thought:
"Given what's coming down the pike here I would not be sitting down waiting for a possible price dip, because you could be left on the sidelines here."
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Next Episode: Andrew Maguire carries out another detailed round-up of the gold and silver markets.
The opinions expressed in this publication are those of Andrew Maguire and do not purport to reflect the official policy or position of Kinesis.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.