03 October 2016

Gold Daily and Silver Weekly Charts - When the Bubble Bursts

"The hypocrite's crime is that he bears false witness against himself. What makes it so plausible to assume that hypocrisy is the vice of vices is that integrity can indeed exist under the cover of all other vices except this one.

Only crime and the criminal, it is true, confront us with the perplexity of radical evil; but only the hypocrite is really rotten to the core."

Hannah Arendt

Gold and silver showed weakness during the London-New York trading hours today.

I suspect that we *could* see a bit of an overhang on price this week as the punters go for the sure thing of a decline in the metals for the upcoming Non-Farm Payrolls report this week.

Gee, I hope they don't get whipsawed. LOL

There was a remarkable amount of gold deliveries on Friday as you can see below, all things considered for recent history in this metals slump.

As usual we saw JP Morgan, and this time the house at Goldman, snuffling up those claim tickets on gold.

I was out for a while this afternoon, but this spent most of this morning working on an update on the amount of free float of gold in the London vaults.    The real work is being done by the same metals mavens and data wranglers at BullionStar and GoldChartsRUs.  

I am proofreading and trying to make the data easier to comprehend, and maybe a little 'pretty.'   I imagine that if I can understand it, then most others will as well.

I think you all know what I think about this.   There seems to be little doubt that there is a large amount of leverage with paper claims compared to unencumbered physical bullion, both in gold and silver, but especially with gold.

We have seen various estimates and data points in the 100:1 area for London and New York, and I think that there is some merit in those.

And as Kyle Bass was told with regard to gold, the trading system as it is now relies on only a very small percentage, about 2% of contracts held by traders, actually cashing in their gold claims in each contract period.
"The [gold] exchange is a fractional reserve exchange, and they think that price will solve everything."

Kyle Bass
If there is another financial disruption and there is a rush for physical gold for any reason, please be advised that there will be a very unequal distribution of the metal that actually exists.   And they will solve the imbalances by dictating price settlements that will likely not involve any physical assets going forward.

We saw this clearly in the case of MF Global.   And it is likely to happen again, and on a much grander scale.  It would be like having your insurance policy cashed in and settled for cash against your will on the day before the big storm hits and knocks your house down.

'And no one could have seen it coming.'

Could the mainstream corporate media make their biases any more obvious about their election preferences?   The news programs are starting to be more like infomercials.

Non-Farm Payrolls at the end of the week.

Have a pleasant evening.