31 May 2013

A Closer Look At the SP 500 and NDX Futures Daily Charts

While this certainly could turn into something more profound, so far it is well within parameters of a pullback.

Watch the action on Monday and Tuesday in particular. The bulls will be edgy ahead of ADP on Wednesday, the Fed Beige Book, and especially the Non-Farm Payrolls report. But it is a very full week with the national ISM data coming out as well.

If we get a market break you will see it more clearly by looking at the trends on the daily charts.

If we do not, then proceed with caution, and tend to ignore any jawboning.

Gold Daily and Silver Weekly Charts - Same Old - Non-Farm Payrolls Next Week

Intraday commentary here.

Gold and silver were hit by the usual contrived selling today as I suggested they might be, since this is what they do on Fridays.

The total open interest for gold on the Comex is fallen shockingly low.  I am wondering if everyone but the rats are leaving that ship.

And it was the end of month to boot, so the funds and Banks needed to polish up the mark to market on those big short positions.

There is far too much concentration of market power in too few hands.  The regulators are somewhat deficient,  the privileged go along to get along, and the sworn representatives of the public interest are busy gettin' paid.  It's the times.  Hard times for most.

So what next. Since next week is non-farm payrolls, we should hear a bunch of nonsense about the Fed 'tapering' and concerns that the economic news will be 'too good.'

I will like to see what the wiseguys do with stocks on rally Tuesday.

I do not think the metals gimmickry will end until these jokers hit the wall. And that means a serious scandal and/or a failure to deliver in gold and silver.  

They really don't know what else to do, and they are consoling themselves with looting the markets overall in the meanwhile.   Summer homes in the Hamptons are de rigeur, and pricey.

So let's see what happens, and how this plays out.  I suspect 'not well' is in the forecasting range.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - End of Month Profit Taking

There will be quite a bit of economic data coming out next week, including the Non-Farm Payrolls on Friday.

Stocks have had a major run higher, a record 100 days up, without a significant correction.

Today was the end of month. Profit-taking ahead of a big economic news week was probable.

I will like to see what they do on 'rally Tuesday.'

Although it may not mean much I own no stocks at this point.  I am not short.  I am watchful.

Economic Storm Clouds Ahead - Reich

Institutionalized Fraud

As you know I said yesterday that Fridays are the days on which they smack the metals.

And on Tuesdays they ramp stocks.

And so on, and so on.

No wonder the BRICs are so upset. No wonder the rest of the world is appalled.

This is not price discovery.

This is mere anarchy. This is a broad menu of corruption. This is moral hazard.

This is institutionalized fraud.

Overcome by greed, they have no shame. And their pride knows no bounds.

They do not even bother with pretense any more.

I think we all know how this is going to end.

30 May 2013

US Total Public and Private Debt As a Percent of GDP from 1916 to Present

"The bold effort the present bank (Second National Bank of the US) had made to control government, the distress it has wantonly produced...are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."

Andrew Jackson

"What a crazy time we live in. Domestic politics have devolved into an ongoing hostage crisis in which the opposition party threatens to blow up the financial universe every six months or so, and the leading political minds in the country can't figure out how to keep this from being a permanent feature of our budgetary process.

Meanwhile, global monetary policy is drifting in the direction of semi-permanent stimulus, and no one has any idea how it all ends. It's two different runaway-freight-train action movies going on at the same time. God help us."

Matt Taibbi, The Mad Science of the National Debt

Chart courtesy of Ralph Dillon at Global Financial Data.

Gold Daily and Silver Weekly Charts - Coiling, Coiling... - They Shoot Gold On Friday's Don't They?

Gold and silver popped higher this morning as weak to bad economic news persuaded the markets that Zimbabwe Ben will not taper his wick anytime soon.

GDP for Q1 was revised downwards to 2.4% which was a miss.

Unemployment claims came in at a whopping 354,000 and continuing claims remained stubbornly high at 2,986,000.

And finally pending home sales came in very light at 0.3% versus 1.5% expected.

In Ben Bizarro world, bad news is good, because that means the Fed will keep oozing its sweet monetary sugar to the one percent.

And so the metals rallied, because the smart money knows that the jig is up, despite the histrionics that seek to persuade us otherwise.

Still the small specs are staying out.  I was speaking to some traders today and they think silver is going lower to test 18 and won't step in until then. 

When and if gold breaks the downtrend, they will become frantic and start bidding up gold and silver, after they cover their shorts.  But let us rather wait for this.

When will it break the downtrend? A major failure to deliver would certainly do it. lol.

When it is perceived to have done so on the charts, we will know.  I am not so sure even moving back into the long sideways consolidation is going to do it.  We need a higher high and higher low on the intermediate chart quite badly to turn the sentiment around. 

For now, even after this little bounce of the last two days, all is still gloom.

Singapore Gold Premiums Hit Record High on Tight Supply - Reuters

SP 500 and NDX Futures Daily Charts - Mr. Bubble Goes Sideways

The economic news was rather poor this morning.

Stocks remained resilient, although they are largely moving sideways form the past five days.

Are equities getting ahead of themselves?  This chart below suggests that this may be the case.

Don't Be Fooled, Economic Recovery Is Not Real - Guardian UK

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Brown's Bottom

The prices are higher, sans exubérance.

I have not seen the gold and silver crowd so gloomy since about 2000-2001 when the consensus was that gold was 'dead money.'

And of course we know that this marked the bottom of around $250 per ounce. 

I was not watching gold at the time. I was watching the big triple top in the dollar, and the antics in the equity markets, and wondering what was going on.

That time was marked by the selling of Britain's gold reserves allegedly to bail out the bullion banks it is said, which has since become known as Brown's Bottom.

The disconnect between reality and the financial markets seems quite vividly to resemble the tech and housing bubbles, when the markets were marked by a pronounced mispricing of risk, and rampant bad behavior and white collar theft of assets.  These things can go on for some time.

What does one call a negative bubble, a time when prices are pushed artificially lower, in order to use overvalued paper to pick up productive real assets on the cheap?

I thought Russia's proposal to the G20 for more transparency in the global raw materials markets was interesting, although the G20 have pulled the original press release from its web site.  Are we seeing some discord in the emerging global oligarchy?  One can only hope.

I could not help but notice that there was no press release, and not even one word, that came out of the meeting of the G20 in Istanbul over the 'reinventing of Bretton Woods.'    The principals who are in charge of communication will not even acknowledge emails.  But the G7 finance ministers called an emergency meeting for the following weekend, which also released very little news except that they were exploring ways to mitigate the corruption in the financial industry.
You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.
And some of those people have enough power to resist you when you inevitably resort to more than persuasive means. And this is the great flaw in Modern Monetary Theory, whether it is debt based or Treasury based.  People rarely govern themselves wisely, much less oversee the wealth of others when it can be so easily taken, especially when there is a lack of transparency and accountability.  It matter little how one rolls when the system itself is corrupt.

The banal chatter and triumphalism of the economists is quite discouraging, as once again they willfully miss what is happening all around them.   A few are raising their voices, somewhat timidly, but the most of them are all too willing to go along to get along, or to safely lose themselves in triviata of their fallen profession.

BBC: Bankers Payback Time Episode 3

29 May 2013

Gold Daily and Silver Weekly Charts - Coiling, Coiling...

“Asked to do too much, for instance to accommodate misguided fiscal policies, to deal with structural imbalances, to square continuously the hypothetical circles of stability, growth and full employment, then it will inevitably fall short." Those efforts cause it to lose “sight of its basic responsibility for price stability, a matter that is within the range of its influence.”

Paul Volcker, Fed May Fall Short

Stocks are starting to look 'toppy.'

Things around the world are 'shaky.'

The setup for a major short squeeze in the metals is in place.

So let's see what happens.

Russia is drafting proposals with the G20 on 'transparency in the raw material markets.'

Matt Taibbi has a new critique of the kleptocrats and their enablers titled 'Mad Science of the National Debt' that is worth reading.
"Guaranteeing that Chinese bondholders would get paid off before veterans or elderly citizens waiting for medical care is politically a weird enough idea to begin with, but for the House speaker to think that getting Congress to prepare the government to behave like a bankrupt business would reassure the markets about the stability of U.S. sovereign debt is pure lunacy...

Essentially, all of these central banks are creating vast sums of money and thrusting themselves into the world economy as gigantic buyers of stuff, be they mortgages or treasury bonds. In theory, the banks will eventually "sterilize" or reverse the process by selling off all this stuff they've bought and draining the economy of its "excess liquidity," but no one knows when that will be, and for the time being, QE is pure financial steroids.

It's stimulus on a much bigger scale than Obama's recovery program, it's open-ended, and it's not voted upon. In fact, apart from the fact that the Fed chairman is nominated by the president, the actions of the central bank are not merely undemocratic but intensely secret, with minutes of its Federal Open Markets Committee (which debates decisions like the raising of interest rates or QE) only released three weeks after decisions are made. The Fed therefore never has to engage the public in real time about its decisions. Instead, it hands down edicts, and Wall Street watches for clues into its mysterious behind-closed-doors deliberations..."

SP 500 and NDX Futures Daily Charts

US 10 Year Note Yield Very Long Term Chart

One picture is worth 1000 words.

This puts some teeth in the concept of 'historic lows.'

Ten Year Note Yield with SP 500

Charts courtesy of Ralph Dillon at Global Financial Data

28 May 2013

Gold Daily and Silver Weekly Charts - Cap, Cap, Cap - Bullion Banks Go Long?

Intraday commentary on the stock market here.

And on the coming collateral crisis here.

Central Banks Act With 'New Boldness'

Gold Sees Bullion Banks Go Long - Macleod

Fuel In Place for Rally in the Gold Futures

SP 500 and NDX Futures Daily Charts - Rally Tuesday, But With a Late Day Fizzle

Amount of Dollar GDP Added For Each Additional Dollar of US Federal Debt

The line represents each dollar of GDP added for each incremental dollar of Federal Debt.

I would suggest that someone look into why the velocity of debt is now running into the law of diminishing returns.  The big slide started with Reagonomics and the 'supply side' theory based on the second chart.

It might have something to do with a corrupt financial system, the myth of efficient markets and globalization,  tax cuts for the wealthy and unfunded wars, and the largely stagnating median wage.

However one wishes to slice it, it might be difficult to make up in volume what is taken away by a crippled financial system that keeps sweeping the productivity gains and national wealth up to the one percent where it is used for largely non-productive monopolization of resources, political corruption, unfunded endless wars, and fraud.

Coming Collateral Crisis: Re-Hypothecation To the Point of Exhaustion or Destruction

If you think that the global banking system has somehow been 'cleaned up' and made more stable since the financial collapse precipitated by the mispricing of Collateralized Debt Obligations and the fraud of the housing bubble you may be mistaken. 

The next financial crisis will most likely expose an even greater Ponzi scheme of leveraged ownership of mispriced collateral in general, that has been 'rehypothecated' many times over, to the point of worthlessness.

Miles Franklin
If I May...
By Bill Holter
May 28, 2013

"I’d like to connect a few dots for you. We had a couple of pieces of news come out on Friday that were strange. One piece did not even seem credible because of size and the other one seemed odd because of the lack of size. Here is what we learned and if this is true THE biggest financial news of the 21st century. Europe announced that they may crack down on the Shadow Banking System. Basically, assets of all sorts that are “deposited” within the system are routinely “re” lent out by the custodian. This “re lending” of assets is called rehypothecation. The scheme has gone on for years and has been abused to the tune of the same asset being lent out 10 times, 50 times or even 100 times over. Legal? Well no, but everyone does it and “it’s the way business gets done all the time”…plus the regulators turn a blind eye to …party on dudes!

Before I talk about the ramifications of the above, another, seemingly unimportant/unconnected piece of news hit the tape. 3 men were arrested in Hong Kong and in their possession were $500 million worth of “fraudulent” letters of credit, letters of guarantee and proof of funds; these were supposedly issued by HSBC and Standard Charter. A 4th man arrested was not named, only that he is 55 years old. Which coincidentally is the same age as Barry Cheung who sits (sat until his resignations this past week) on the boards of several government agencies, he was chairman of HKMEX and has very close ties to the CEO of Hong Kong, Mr. CY Leung. The investigation and arrests are tied to the HKMEX (metals exchange) that closed a week ago Friday and claimed that all open contracts would be settled in cash…not metal.

OK, so these guys got arrested and had in their possession $500 million fraudulent “collateral.” Is this ALL of the fraudulent collateral? Did they have more Do others possess or have pledged fraudulent collateral? How much? Where and to whom has it been pledged? How many times over has it been pledged? …And then out of nowhere, Europe decides to rein in the Shadow Banking System that is purported to be $80 TRILLION (with a capital “T”)! Do you see any connection here? I’ll make it easy for you, “collateral” is the common denominator.

I also want to mention that “collateral” is what makes the financial world turn. Everything runs on “credit,” if you have “collateral” then you can obtain credit. The problem now, that is being exposed, is that no one knows anymore if collateral is real or even “who’s” collateral it is anymore since it has been lent out so many times. Now, to add even more fuel to the fire, it turns out that some of the so called “collateral” is not and was not even real to begin with! Funds in the trillions of dollars have been lent and now it seems as if the collateral backing many loans may not be real. …And Europe is now considering pulling the plug on shadow banking? How many “assets” will banks and brokers have to sell to keep their capital ratios adequate? Do they even have enough real assets to sell to cover the collateral that turns out to be fake or has been lent out 10 times over (not to mention 100 times over). I might also ask the question, “What happens to the markets?” What will happen to the stock markets, bond markets, and real estate markets, ALL MARKETS if banks are forced into liquidation to cover for fraudulent or many times pledged collateral...

My point is this, the tide is going out and it looks like EVERYONE is naked and no one has drawers on. Margin debt for stocks are at an all-time high, shorts by hedge funds in gold are at an all-time high, printing by central banks are at an all-time high, yields on sovereign bonds (even the deadbeats like Spain and Italy) were recently compressed to all-time lows and are now rising…and the real economies across the globe are beginning to contract again. The “inflection point” has apparently arrived and fraud everywhere you look is being uncovered. In a system that runs on debt, “collateral” is the foundation. What are the ramifications when “collateral” is questioned and turns out to be nothing more than a piece of paper with no value whatsoever? Everything that has derived value from this initial capital …is worth nothing...

Read the entire article here.

Rising Margin, Negative Guidance, Madness of Crowds

Early this morning one of my compadre's asked me, 'Is there some reason for this rally?'

And I answered, somewhat glibly, 'Yes, it's rally Tuesday.'

Stocks will have rallied 20 Tuesdays in a row in the US if they rally again today.

And that is as good an answer as any, although the already rallying market 'got some jets' when the Consumer Confidence number came out better than expected at 10 AM.

The Conference Board confidence number is highly correlated, as a lagging variable, to the stock market price. In other words, consumer confidence follows the market, and not the other way around.  It is less a reason for a stock rally than an excuse.   Rising stocks tend to give some people a good feeling about the economic outlook.  And don't think for a minute that the financial planners do not know this.

The underpinnings of this marvelous rally are not substantial to say the least, despite the usual assurances of economists that this is not a stock bubble. Or that there is no bond bubble which is a real howler given the Fed's steady non-market-priced buying of billions of bonds each month.   I suppose that is why the Primary Dealers had to take down 65% of today's two year auction.  Let's not notice the man behind the curtain so we can feel 'confident.'

Bubble or not, new era or not, QE or not, at some point price reverts to the mean, to the fundamental and sustainable market equilibrium, every time.  And it will do so despite the hubris of the modern monetary theorists, from Bernanke to Krugman to Mosler.   Reality is not whatever we say it is, even if one is able to persuade a large number of people to believe it, for a time.

If this falsehood is held in place long enough, even by force, the reversion will occur in extremis through a collapse of the currency.  This is what we saw in the fall of the old Soviet Union.

Here is an interview with Jim Grant that I found to be interesting.   I do find his belief in the efficiency of markets to be curious, if not obtuse, when he says that there can be no manipulation in gold because otherwise everyone would know it.

People have a remarkable ability not to see things when their paycheck depends on their not seeing it.  And a belief in the system remains stubborn amongst those who have basically honest hearts.  They cannot believe in a perfidy so great amongst people sworn to uphold the public interest. 

How else would you explain the fact that so few saw the housing bubble, the widespread fraud in the credit markets, and the mispriced risks and co-dependencies of the insolvent in the financial system that so recently caused world markets to collapse?

The release of gold into the markets by western central banks, through both overt sales and leasing to bullion banks, is beyond all doubt, except for the opaquely hidden details and the refusal to admit them to audit.  And the odd positions in the futures markets are knowable, but also shrouded behind a stonewall of regulatory intransigence. But otherwise he raises a number of excellent things to think about.

All things will be revealed with time.

And here below are two charts that someone sent my way which I found to be disconcerting.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.   Until this is done, neither stimulus nor austerity will have any lasting, meaningful, and positive effect.

25 May 2013

Currency Wars Part II: Jim Rickards and Max Keiser

Source: Keiser Report

Weekend Reading: John Henry Newman On Pride and 'Cheap Grace'

"Cheap grace is the grace we bestow on ourselves. Cheap grace is the preaching of forgiveness without requiring repentance, baptism without church discipline, Communion without confession....

Cheap grace is grace without discipleship, grace without the cross.”

Dietrich Bonhoeffer

"Yet such in one shape or other is the way with the multitude of men everywhere and at all times; they do not see the image of Almighty God before them, and ask themselves what He wishes: if once they did this they would begin to see how much He requires, and they would earnestly come to Him, both to be pardoned for what they do wrong, and for the power to do better.

And, for the same reason that they do not please Him, they succeed in pleasing themselves. For that contracted, defective range of duties, which falls so short of God’s law, is just what they can fulfill; or rather they choose it, and keep to it, because they can fulfill it.

Hence, they become both self-satisfied and self-sufficient; – they think they know just what they ought to do, and that they do it all; and in consequence they are very well content with themselves, and rate their merit very high, and have no fear at all of any future scrutiny into their conduct, which may befall them...

And such, I say, is the religion of the natural man in every age and place; – often very beautiful on the surface, but worthless in God’s sight; good, as far as it goes, but worthless and hopeless, because it does not go further, because it is based on self-sufficiency, and results in self-satisfaction.

I grant, it may be beautiful to look at, as in the instance of the young ruler whom our Lord looked at and loved, yet sent away sad; it may have all the delicacy, the amiableness, the tenderness, the religious sentiment, the kindness, which is actually seen in many a father of a family, many a mother, many a daughter, in the length and breadth of these kingdoms, in a refined and polished age like this; but still it is rejected by the heart-searching God, because all such persons walk by their own light, not by he True Light of men, because self is their supreme teacher, and because they pace round and round in the small circle of their own thoughts and of their own judgments, careless to know what God says to them, and fearless of being condemned by Him, if only they stand approved in their own sight...

Yes, it is the ignorance of our understanding, it is our spiritual blindness, it is our banishment from the presence of Him, who is the source and the standard of all Truth, which is the cause of this meagre, heartless religion of which men are commonly so proud..."

John Henry Newman

The prayer of children is full of needs, and sometimes ostentatious thanks and requests aloud to impress others.   As we grow older, our needs are supplemented by requests for strength, and for the knowledge of God's part for us, His will.

If we wish to grow, we pray that God will show us our shortcomings, the ways in which we have neglected to do His will.  The times and places in which we turned aside from His call, not because we were defiant, but because we were blinded with distractions, and negligent in our own self-satisfaction and illusions of self-sufficiency.

If done well, we can find this examination to be an experience in growth, bearing in mind that growth is almost always a long process that is, at times, uncomfortable, and rarely cheap.  But to take up that burden with His support is the only path to life.

Ted Butler: Busting the Perfect Crime

Obviously I do not know if the CFTC is going a good job of regulating the metals markets or not.

And that is a big part of the problem. I have little confidence that they are doing a good job of maintaining honest and efficient markets based on what I am seeing in the futures markets almost every day.

For an agency to have an ongoing investigation of manipulation in a global market like silver, with NO offical report having been issued after almost five years, is not up to the expectations that the American people have for its government.

Indeed the silence of the Agency borders on arrogant disregard, given the many, many complaints of the appearance of irregularities it has received.

This is especially true in light of the several recent revelations of egregious market manipulation by the Banks in LIBOR, energy, and derivatives markets. And these are some of the same actors in the alleged silver manipulation.

Here is what Ted Butler has to say about it. And it makes sense to have the GAO review the Agency to reassure people that they are doing their jobs properly, and if there is a problem with oversight from within the Administration itself, whether through aloof indifference, or the undue influence of outside parties.

And if there is some manner of funding problems and manpower, I am sure that the CFTC would like to take its priorities from the people whom it serves and whose confidence is its highest mission, and not the Banks and Exchanges whom they are expected to regulate.

Busting the Perfect Crime
Theodore Butler
May 24, 2013 - 12:23pm

A subscriber recently commented that the Oligarchs who rule Russia only wish they got to run things as efficiently as how JPMorgan and the big banks control our financial markets, particularly in the trading of precious metals. Based upon the last few days, it’s hard to argue with that. On Sunday evening shortly after 6 PM, the price of silver was taken down 10% within a few minutes on an insignificant number of contracts (1600), evoking memories of the infamous 13% ($6) decline on the May 1 Sunday evening of 2011. If the Russian criminals oversaw silver trading and not the CME Group and the CFTC they could not possibly have rigged prices more corruptly.

What makes the silver (and gold) manipulation the perfect crime are a number of elements; short term price control through High Frequency Trading, compliant regulators and the fact that most victims don’t even realize they are being had, as the sellers are mostly just reacting to the deliberately-set lower prices. It’s hard to end an ongoing crime in progress when so many don’t realize it is in progress. Worse, there are still some who profess that there is no manipulation underway. And for the few who do realize what’s really going on, what can you do about it when the regulators are in bed with the manipulators? Perhaps the options are limited, but that’s not the same as non-existent.

In the last paragraph of the January 5 Weekly Review; I made reference to something I was working on that I preferred not to disclose at that time. I’d like to do so now and ask for your assistance. A little over a year ago, a subscriber sent me a constructive suggestion for how to force the CFTC to do their job and end the silver manipulation. Since I had promised myself that I would never leave any stone unturned in the attempt to end the manipulation, I followed Jeff’s suggestion, although I admit to doing so with as close to zero expectation for success as was possible. The suggestion was to complain to the Government Accountability Office (GAO) about the CFTC. I filed a complaint on their web site hotline www.gao.gov and promptly forgot about the matter. After all, over the years I had complained to every government agency possible and never heard back from anyone.

In December, I got a follow up call from the GAO that caught me so much by surprise that I didn’t know why they were calling me at first. They requested additional information (which I provided) and I have had several conference calls with the agency concerning my allegations of malfeasance by the CFTC in matters related to the silver manipulation. It was only after the first phone call from the agency that I took the time to find out what this agency was all about and I suggest you do the same.

I thought I knew it as the General Accounting Office, but the name was changed in 2004. What I also learned was that this was a unique government agency, separate and distinct from all the other federal agencies, including the CFTC. The GAO reports only to Congress and exists to ensure that all the other federal agencies stay on the up and up. In a practical sense, the GAO is the Inspector General of all the federal agencies. As such (and you can verify this on your own), this agency seems tailor-made to investigate why the CFTC won’t do its job when it comes to the silver manipulation...

Read the entire piece, including what you can do today to support the effort to encourage the GAO
in its Congressional oversight of the CFTC here.

Comex Gold Short Increases Dramatically

"One of these days we will...find ourselves staring right into God's eyes.

 And the first one who blinks is going to lose his testicles."

 Peter O'Toole (Dr. Harry Wolper), Creator

So guys, how good do you think that trading idea that Goldman gave you is going to get resolved?

Last one out of the pool picks up the tab.

Short positions in gold have risen 25% in the last 3 weeks.

Source: Bloomberg, h/t Tyler

24 May 2013

Gold Daily and Silver Weekly Charts

Gold and silver were capped in light pre-holiday trading in the US.

There is some intraday commentary worth reading here and from late last night here.

Have a pleasant weekend. 

See you on Monday.

SP 500 and NDX Futures Daily Charts

Once again the market opened lower, and the dip was bought, in light pre-holiday trading.

Have a pleasant weekend.

Citi's Tom Fitzpatrick: Gold and the US Debt Limit Correlation

According to Citi's analyst Tom Fitzpatrick in his interview at King World News:
"As can be seen from the chart, Gold has never stayed below that “stairway to hell” for very long. Given that the debt limit number is going to continue higher, a re-emergence of Gold strength looks inevitable.

A lot of 'considered opinion' suggests that by the end of the present electoral term (the end of 2016 when new presidential elections take place), that the US debt limit will be at around $22 trillion USD."

Tom has a number of interesting charts which you can see at his KWN interview here.

23 May 2013

Monetary Rapture: The Incredible Disappearing Gold Inventories - Ocean Receding

“I am persuaded that big changes are coming to long standing global currency arrangements.“


Gold is flowing from weaker hands to stronger hands, from speculators to central banks and wealthy investors, the multitudes in China and India, and in general from West to East.

Nick Laird of Sharelynx.com does some incredible work tracking and charting almost every aspect of the gold and silver markets. His site is well worth visiting.

I have included some comments from Nick below that touch on some factors that had not yet occurred to me.

Total Ounces In Warehouse Including Both Registered and Eligible

Here is the summation of quite a few repositories/Trusts/ETFs/Funds that list their inventory levels.  

Here is a comment on this from Nick:
Since Dec 31st
Gold holdings have fallen 17.5 %

Silver holdings have risen 2.7%
Platinum holdings have risen 0.1%
Palladium holdings have risen 8.2%

I believe that there's a transfer of gold holdings from the publicly visible sector to the private sector where the numbers cannot be followed. Gold holders are taking possession of physical by removing physical from public places, eg. Comex, and selling them from visible accounts, eg. ETFs.

I do believe that there is a lot more to this than meets the eye and that we're seeing the initial transition stages that in a year or two's time we will look back & say 'Aha!' Gold is flowing not just from West to East but also from public to private places, and this I think is solely related to Cyprus and the future implications of a financial meltdown.

I think we're on the verge of the music stopping and a rush to safety.

All we need do is sit back and watch what happens to these public stocks when gold starts rising again. My bet would be that public stocks will continue to dwindle as more people feel unsafe about where their gold is held."

I tend to agree.  I also think that a fear of the 'rehypothecation' of gold, especially in light of the seizure of assets held even with allocated receipts in the failure of MF Global, is driving people to take more care about where they keep their wealth.

As Nick points out, the biggest drawdowns are in gold itself. Ted Butler has recently speculated that some of the bullion banks may be taking inventory on the cheap as GLD disgorges inventory. So something is happening with gold that is not happening in the same way with the other precious metals.

And I am sure that by now you know that I am persuaded that big changes are coming to long standing global currency arrangements.

My first take was that on the whole this remarkable inventory drawdown in public repositories in the West resembles the receding of the ocean after an earthquake. I don't think the bankers realize the signals that they sent to the markets with the manner in which they handled Cyprus. And MF Global and the entire financial crisis for that matter. These things take time to build, and then it seems that suddenly people begin to act.

We will have to wait and see what comes next, and, as Nick points out, what the inventory levels do when the price of gold starts rising again.

Jim Rickards and Max Keiser On Currency Wars and the Late Great Depression

I think you will find this to be thought provoking, even though you may not agree with all which they say.

Keep in mind that in the US currently there is a record disparity between the haves and the 'have enough to just get by.' 

So when one talks about economic states and statistics, and they are naturally referring to the familiar averages and norms, in fact there may be much fewer people there at the average than usual. 


Gold Daily and Silver Weekly Charts

Intraday commentary on the rehypothecation Ponzi scheme in the metals here.
Tomorrow will be a quiet trading day in the afternoon as the US heads into a three day weekend.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Buy the Dip, Skip

World markets sold off hard overnight, but the irrepressible center of the empire managed to rally off the stock lows today on 'better than expected new home sales, and other economic indicators in line.

VIX ticked up a bit, but all is well in a market marked to fantasy.

The US has a three day weekend, so tomorrow is expected to be quiet, particularly in the afternoon when the adults head out early to their shore homes leaving junior and the algos in charge of the world.