Is a Big Oil Producer in the Middle East Hoovering Gold?

Yesterday, The Gartman Letter contained a comment from a Canadian "friend" who stated that according to his sources:

...an oil producer in [the Middle East] is converting about 200,000 BPD of oil sales into gold bullion - this offtake would equal about 6% of annual gold production...the quiet flight from dollars is accelerating… [and further] Russia bought 25 metric tonnes of gold in January, so 300 T per annum rate which is 45% more than the run rate of Russian gold production. A senior gold mining company operating in China informs us that China is buying all domestic gold production that is not consumed locally.

I can't speak as to the veracity of the report about the ME oil producer, but it's no secret that the Chinese are not exporting any of their gold - the Chinese Government has stated that publicly.  And my chart from yesterday is based on data pulled directly from the website of the Russian Central Bank.  I would argue that it is highly likely that some portion the report about the ME oil producer is true.  I also find it interesting that all is quiet on the IMF gold sale front.  My bet would be that several large "official" buyers are negotiating behind the scenes to purchase that chunk of gold.  As Jim Sinclair has stated many times, usually when an official (i.e. large Central Bank of Govt body like the IMF) entity sells a big chunk of gold, we don't hear about it until after the transaction has already occurred. The last IMF sale to India/Sri Lanka/Mauritius is a perfect example of the golden truth of Sinclair's statement.

Last night I spent over an hour chatting with a long-time precious metals market professional.  This person has been involved in this sector going back to the mid-70's and is very well connected.  I thought that I knew a lot about the world of precious metals but this person's knowledge was quite humbling.  He told me he has several colleagues who travel to Europe almost weekly.  Lately they have been coming back and reporting that the Europeans have become extremely fearful of a global systemic collapse and many wealthy people there are buying as much gold/silver as they can and taking direct possession in order to avoid depository fraud.

Stephen Roach, Chairman of Morgan Stanley Asia, recently remarked that "It is well-documented by economists at SocGen and elsewhere, that the world has now entered a race to the currency bottom." I believe that the accelerating movement wealth out of fiat currencies, and especially out of U.S. dollars, into gold by large buyers is an acknowledgement that a currency crisis involving dollars/euros/yen is right around the corner.  Have a great weekend with that in mind.