21 October 2013

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap Ahead of Non-Farm Payrolls

“The term propaganda rings melodramatic and exaggerated, but a press that, whether from fear, careerism, or conviction, uncritically recites false government claims and reports them as fact, or treats elected officials with a reverence reserved for royalty, cannot be accurately described as engaged in any other function.”

Glenn Greenwald

Silver and gold chopped sideways today with silver a little higher and gold a little lower.

Action was light.

Tomorrow is the Non-Farm Payrolls report from September that was delayed because of the Beltway antics.

There is a definite divergence between paper and physical gold, but the two are still related and influence one another. The notion that they are completely unrelated now is incorrect based on the data which I see. Even with premiums, the spot price of gold and the price you will pay or sell for plain bullion is definitely related.  

I am sure some traders believe that the two are completely unrelated and shorting gold against the dollar is a nice paper trade.  In some ways it is compared to the other vehicles one might trade.  But given the carry trade like returns,  I think that they are chasing nickels on the freeway.

When and if the two do diverge significantly, we will definitely know it.  They will be carrying traders out on stretchers.  When the gold price turns the short squeeze might become epic.  And the privileged will be able to grab the available supply first.

It was JPM to the rescue again with another big chunk of 96,450 ounces of gold bullion for the COMEX warehouse in storage.  I wonder where they are obtaining such large tranches of gold.  Perhaps it has something to do with the price beating and disgorgement of metal by GLD last week.

A transfer of  24,218 gold bullion ounces out of deliverable into storage occurred in the Scotia Mocatta warehouse.

As you may recall Scotiabank cause a bit of a fuss when Harvey Organ and son went there with an auditor to verify the existence of some of their personal holdings for whatever reason.  I believe that this was at the end of 2010 or very early 2011.    The scandal was that when they went to the vault, there was very little actual bullion there, compared to what the total holdings there were reported to be.

And Scotiabank has had one of the better reputations in the industry. 

Well, they repaired that.  But the point that Harvey often makes is that just because you hold a title or a piece of paper for something, does not mean you can obtain it readily when you need it.

Just ask the people of Germany.

Have a pleasant evening.