16 October 2013

Gold Daily and Silver Weekly Charts - Bart Takes a Bow - Capital Controls

Cap, cap, cap again today as the antics in Washington had the metals left with a subdued trade while stocks jumped in response to ... a delay in financial Armageddon to the beginning of next year, or not. We'll have to wait for the firm details.

It does not do much for the floundering real economy, but the Street won't think about that until après ski.

We finally saw some meaningful activity in the Comex warehouses. I will write about that later this evening.

Several people have asked me about a letter from JP Morgan Chase about international wire transfers and dollar limitations and if it is related to capital controls.  Capital controls are actions by government to limit the movement of capital across its borders.

Since we do not yet know what prompted this move by JPM, a number of things are *possible.*  However it would be odd to embark on a policy of capital controls by starting at just one bank.

More likely this is related to the 'cease and desist' order presented by the OCC on JPM from earlier this year with regard to holes in their money laundering detection system. 

There could also be some particular problem at JPM that might provoke a number of withdrawals from overseas, a sort of 'run on the bank because of something that happens there.  But that is not likely, but it certainly would not be considered that a more general policy of 'capital controls.' 

But hey, speculation is more fun. Wow, capital controls are here. At only one bank. I wonder how you would get around that? 

Getting back to the metals, I don't know how long they can keep this up, but today I got the sense again that the tape is winding under this very heavy-handed price suppression. When it moves, it could be eventful. But until then we sit patiently, counting blessing and reminding ourselves of what is really important. It is certain that we will not be taking any physical gold and silver into the next world, but perhaps the unpaid debts of fraud may adhere to those who have accumulated them.

Bart Chilton made a surprise visit to Bloomberg television today, taking a bow for obtaining JPM's acceptance of their $100 million fine for the London Whale. It appears that Bart and a skeleton crew are still on active during the shutdown. One might wonder, if they are not watching the markets during this difficult period, what exactly are they doing? Besides the occasional television appearance, because the one riot one Ranger rule applies to that.

Here's a modest suggestion. Pick up the phone and ask the Comex to identify the party who dumped umpty ump tons of paper gold in a quiet market and triggered the stop logic last Friday. That's a start.

The action in the metals markets is almost eerie. The big sells in quiet periods, the growing open interest in the face of paper selling and decline of deliverable inventories seems blatant, brazen, and strange.

Have a pleasant evening.