Gold Daily and Silver Weekly Charts - Appearance Versus Reality

As you know I have commented previously about the large drawdowns in gold bullion inventory from the COMEX and GLD among other things. And there is no similar decrease in silver bullion despite an even greater price decline YTD. There is intraday commentary on this here.

I have not yet figured out what is causing this, and I may never find it out. But it does seem to suggest that if gold should break out and run higher there is going to be a grabasstic rush to stake out all the deliverable and allocated bullion that you can find. YTD the gold bullion inventories are down in excess of 700 tonnes, but we see no decline in silver, platinum or palladium inventories across a broad spectrum of publicly disclosing entities.

So capping gold and silver makes a lot of sense here. Let's see how this impasse between supply and demand of real goods plays out into the end of December.

As you may recall we saw big takedowns in the price of gold and silver the past two Decembers. You can click on the two December Manipulation labels at the bottom of this post to see prior comments from last year.

So, one cannot predict what will happen again, but it will most likely be interesting.

Have a pleasant evening.

Monetary Rapture: The Incredible Disappearing Gold Inventories - Ocean Receding

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

Jesse

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 %

Yet;
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.