“For where men have made the earth trodden underfoot, and have largely veiled the heavens themselves, it is but natural that they should think that they have made everything, and that it is they who rule it.”
Robert Hugh Benson, Lord of the World
The warning sign of a serious dislocation in the physical gold market may be when the price of physical gold for real delivery goes bid limit up, with none offered. That is one scenario, perhaps not the most probable. Most likely they would close the exchange for 'order imbalances' and to 'protect participants.' And for the bullion bears, it would seem as though they were 'staring into the abyss.'
Probably an effect of some series of financial paper assets somewhere going limit down, with none bid. Couldn't happen, right?
The data from The Bucket Shop is really not very instructive these days, except to paint the broader trends, and now and then let out the little 'tells' of problems behind the curtain, if you are adept enough to watch for them.
Just because you have a lot of detailed reporting does not mean it is useful. Look at the US Labor Market numbers for example. Complexity and detail there was a-plenty in Madoff's reports. What he, like most frauds, were short of was substance underlying the false narrative.
And most of the indicators in the precious metals market that I watch tell of a tightness in the physical supply, and especially for gold.
Corroborative data is there if you look for it, in the huge physical buying in Asia, in the shrinking 'gold float' in London, and in the draining of physical supply from the ETFs and exchanges of the West.
Every so often something happens, like the failure of MF Global, that can be dismissed as a one off but that exposes the rot of leverage and multiple rehypothecation of physcial supply behind the facade of busines as usual by 'highly respected people.'
If things continue as they are now, I suspect that the tide of deceit and manipulation will be going out later this year. And then we will see what has been concealed beneath the water line for so long.
I will be a little surprised if it shows up in this particular active month of February. I am looking towards the latter part of the year. But that story is not being told here in paperland, but in the markets of Asia, and the bullion centers in London and Switzerland.
Have a pleasant evening.