23 September 2015

Gold Daily and Silver Weekly Charts - Blithely Deriding Into The Sunset: Du Calme, Du Calme, Adieu

“We are in a world of irredeemable paper money — a state of affairs unprecedented in history.”

John Exter

It may be unprecedented, but it certainly seems to be comfortable to the one percent and their courtiers, so that they are eager to let it run unfettered, and call it 'the new normal.'

There was significant intraday commentary regarding gold and silver to read if you have not done so already.

And I would especially urge you to have a look at the first of these.  It may seem complex at a glance, but much of that is support for the first few paragraphs.

Surprisingly Tight Supply of Available Gold in London Compared to Ongoing World Demand 
Physical Tightness in the Flow of Gold Is Reflected in the Price 'Not At All'

There was also some overnight commentary Premiums for Silver Coins Continue Running Much Higher than Spot

We might wonder when these fellows will let it go, and no longer attempt to control that intractable store of wealth that bears no counterparty risk.

The effort to quantify the disposition of the gold in the London Vaults was designed to try and calculate the depth of their discretionary supply.  The demand or 'burn rate' is fairly well known although probably a bit light because of the People's Bank of China's propensities to acquire bullion discreetly.

The objective is obviously to determine just how much float they have to support the demands in excess of scrap and mining and leasing.

And then the gold market 'gets real.'  

Nick thinks maybe four to six months.  I give them a sporting chance to make it through year end and then tumble into visible difficulties mid next year unless the market dynamics change dramatically or they relent on their interminable price capping.

Better to let the market clear than carry on with some obtuse extend and pretend program until the gold pool falls apart.  They do tend to do that over time.  Always.

I have little hope that they will do the right thing now, having failed to do what is just in so many other things before.  But perhaps cooler heads will prevail.

There was very little delivery at The Bucket Shop yesterday and only the usual slow bleed of bullion out of silver.   Gold is acting like it is in a lockdown .

Below there is large diagram diagram is John Exter's inverted pyramid of monetary risk.

For a balanced portfolio you may wish to include something from the narrower base of the pyramid.

Have a pleasant evening.

You will find the commentary that supports this next slide in the first link above or here.