09 January 2014

Gold Daily and Silver Weekly Charts - Interesting Development at the Comex

I thought it was interesting that 63,877 ounces of gold bullion left the registered inventory from Scotia Mocatta yesterday.  That brings the deliverable category down to a new low of 416,563 ounces for this leg of the bull market. 

In the past these big declines have tended to mark an intermediate price trend change within six months or so.  Let's see if that holds true this time.

As an aside, I wish to remind you again that the registered, or deliverable category, is not the sum total of all bullion at the Comex.  There are 7,711,145 ounces of bullion in storage that can be placed into a deliverable state with a procedural action. 

For my purposes, this is more of a indicator of pricing preferences, or a willingness to sell, rather than some likely default scenario. I know I have said that quite a few times, but I wanted it to sink in, especially for those who choose to misrepresent what this data implies, for whatever reason, bullish or bearish.

And I will probably post the latest chart on this later tonight.  Because one would tend to think that when available supply placed on the market becomes exceptionally low at certain prices, it could likely indicate higher prices will be required to bring additional supply to market. 

Not all supply is equal, in availability and quality, and prices are, after all, set at the margins.  Water water everywhere, but not a drop to drink, and all that. 

When fellows make the case that all the gold in the world is part of the supply in the same way for the purposes of supply and demand calculations I have to chuckle to myself.  Nothing could be further from the truth in almost every commodity I can think of, including gold.  Things are held by different actors for different purposes.

There are also those who will say, 'you cannot trust this data it could be faked or wrong.'  Yes, a lot of things could be this, or could be that.  Life is a school of probabilities.  But I notice these same people do not seem to hesitate to use the data they prefer for their own purposes, which also could be faked or wrong. 

So I think we can stipulate that we have to use any data we have with some reasonable caution and skepticism, especially in markets that are opaque.  There is plenty of gaming and fraud in these markets.

But if someone wishes to start dismissing the meaning of some data because of some degree of doubt, then they may as well apply that same stringent criteria to all the data which they use.  And in many cases if they do this, they would be compelled to shut up, because they will have nothing meaningful to say.  Alas, such integrity is very rare indeed.

So I think I will prefer to look at all the data available and pertinent, and draw reasonable inferences, testing them along the way, always looking at multiple sources and confirmations.  There is nothing wrong with formulating hypotheses.  That is what is known as 'the scientific method.'   It is what you do with them and how you use them that counts. 

And to that end if working with other people to find out what's what proves fruitful, I will do it of course, always and everywhere. That promise is the practical side of working hard on a blog for 'no pay.'  There are some others, but not easily accounted for on worldly ledgers. And it is more useful than watching sports, or reality TV, or whatever people do these days with their leisure hours.

But some sources of information are relatively dry wells, and not worth the time and effort to try and pull out anything, of even marginal value. 

Yes there is the value of educating the stubbornly ignorant, and the hope of mutual benefit, always.  And the mule may need a good washing, but that does not mean that I'm the one who is going to do it.  These days I would rather wait for rain.

Have a pleasant evening.