24 January 2014

Gold Daily and Silver Weekly Charts - Flight to Safety, Papier-mâché Gold Story Fraying

"The paper gold in the London Bullion Market takes the familiar forms that bankers have turned into profit machines: futures, options, leveraged trades, collateralised obligations, ETFs . . . a storm of exotic instruments...

But one day the ties that bind this pixelated gold may break, with potentially catastrophic results.   So if you fancy gold at today’s depressed price, learn from Buba and demand delivery."

Neil Collins, Financial Times

And if and when this reconvergence of appearance and reality does happen, I would look for the news to break over a weekend, or otherwise suddenly, like a thief in the night. 

There was intraday commentary on this remarkable piece of mainstream paper-physical gold divergence thinking here.

Silver was under pressure, but gold had some follow through from yesterday as stocks sold off hard on expectations for the emerging markets. So what we saw was a continuation of a flight to safety, that saw some currencies falling hard against gold and the US dollar.

This can said to be the start of a trend. Again, I would like to see more follow through in both stocks and precious metals, with the usual reversals, before I get too excited about this. Although gold seems to be putting some interesting ink on the chart formations.

The good news on Bloomberg TV today was that Jamie Dimon, banker extraordinaire, is receiving a 74% pay increase this year, from $11 million to $20 million.   I am sure most Americans will be enjoying The Recovery just as well.

There were some rather large movements in the Comex warehouses yesterday.  A little over 349,000 ounces of gold bullion came out of the eligible category for parts as yet unknown, with most of that coming from JPM, and somewhat less from Scotia.  The details are in the report below.

A little over 5,000 ounces at Brinks were recategorized from eligible to deliverable.  This does not help much as the registered, or deliverable, category remains shockingly low at a bit over 375,000 ounces with the heavy delivery month of February only weeks away. 

But there is plenty of gold in the eligible categary, even with today's withdrawals, and higher prices can certainly tempt profit-motivated holders to sell some of that.

I just noticed the Deutsche Bundesbank put out a self-congratulatory press release on having wrapped up phase one of their repatriation of some portion of their nation's gold. Well done Buba.

I do not want to make too much of this, but I do think it is a matter of time before some of the ongoing charades in the economy and financial system fall apart.  And once they do, it may happen at a much faster pace than we might imagine, or that those masters in the universe at Davos would otherwise allow.

Have a pleasant weekend.