Today was more of the same, with an easy hit on price during the NY trade.
There was some movement into the customer storage (eligible) category on Friday of about 31,000 ounces.
Have a pleasant evening.
18 November 2013
Gold Daily and Silver Weekly Charts
Today was more of the same, with an easy hit on price during the NY trade.
There was some movement into the customer storage (eligible) category on Friday of about 31,000 ounces.
Have a pleasant evening.
SP 500 and NDX Futures Daily Charts - May the Odds Be Ever In Your Favour
The spokesmodels of Bloomberg TV were wondering why Jon Corzine is being annoyed by the little people with these lawsuits. After all, didn't everyone get paid back?
Why are people so 'litigious' these days asks the pampered princess. They just must be bitter for some reason.
Yes, opines the visiting village idiot, people sold at the bottom during the financial crisis, and now they are just envious and angry, and taking their bitterness out on poor Jon Corzine.
You cannot make this stuff up. It is right out of The Hunger Games. And people wonder what the JPM people were thinking when they opened the twitter gates to the barbarian hordes of the disgruntled. They just do not get it.
Have a pleasant evening.
15 November 2013
Gold Daily and Silver Weekly Charts - Claims Per Ounce at 69 to 1
Nothing much of note in the metals today as they continued to bump into overheard resistance.
There was little movement of gold bullion in or out of the Comex warehouses.
I had asked Nick Laird of Sharelynx to check his figures and it turns out that the 'claims per ounce' from yesterday were a bit light at 63. That did seem very little for a 51,000 ounce change in registered inventory.
A corrected chart is shown below.
We are at an all time record of 69 potential claims for each ounce of deliverable gold.
Koosjansen has a new update on 'West To East Gold Distribution'
Have a nice weekend.
SP 500 and NDX Futures Daily Charts - Up Up Up
This was the sixth week of gains on the SP 500 as VIX slumped near the yearly low.
The perception is set that Janet Yellen will maintain an exceptionally accommodative policy at the FOMC.
Have a pleasant weekend.
14 November 2013
Comex Registered Gold Falls To 587,235 Ounces - Claims at 63 to 1 - The Karma of Buddha's Palm
This is not such a big short term issue since November is a' non-active delivery month' for the Comex precious metals futures markets.
But in fact there is so little actual physical delivery activity taking place there anymore, even in an 'active month,' that one might argue that the New York metals market is approaching practical insignificance, long before it can reach the storied permanent backwardation.
However, one must keep up appearances, since the Comex still effectively sets the metals price for much of the free world, if only aspirationally these days for Asia.
More charts will be added as they are updated later this evening.
Earlier today in a piece about price premiums in India I included a link to the online section of Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds.
You might want to have a quick glance over the chapter regarding John Law's highly innovative dalliance into the théorie monétaire moderne that was adopted by the nation of France, almost to the point of its demise. It is a useful reminder that truly, there is nothing new under the sun.
As theoretical as all these pricing antics and market manipulations might seem, exercises in price setting for personal greed or policy considerations have real world consequences, especially when they are applied over long periods of time, and with some resort to coercion.
The longer that valuations are maintained against the market, the stronger the coercion to sutain them must become, to the demise of freedom, and the point of exhaustion and collapse. The Soviet ruble is a possible case study for what happens when the unsustainable meets the inevitable, even with a hairy knuckled police state backing it up.
We might start thinking about 2014 as the year of financial consequences.
Weighed, and found wanting.
Stand and deliver.
Gold Daily and Silver Weekly Charts - 修羅の花 'The Flower of Carnage'
“I recently made fairly detailed presentations to two Asian central banks... I was struck by the fact that one of the central bankers did volunteer to me that most central bankers are aware of the fractional reserve nature of the Western gold banking system, and its vulnerabilities.
He clearly acknowledged their understanding that gold does not back all of the claims to gold that are floating around the world financial system, particularly when it comes to the West. You would probably never get a central banker to acknowledge that publicly, but that is precisely what he said to me off the record.”
Chris Powell, KWN
Intraday commentary touched on the 21% premium being paid for physical gold bullion in India now, and equates it to a US dollar price of $1,565 just to give you an idea of the divergence between paper and physical in the world today.
Someone sent me a rather insipid piece on gold demand in the FT. The only excuse for it is that the author unquestioningly accepts the data and quotes from the World Gold Council at face value.
The reason for this disillusionment and investor bearishness for gold is slack demand from India. This is the same India that is willing to pay a 21% premium for any physical gold they can get through the very obtuse and restrictive government controls. QED, right?
Since the WGC is jointly responsible for setting up GLD, I can see where they might wish to go out of their way to put a dreary, downcast outlook on their own members' products.
The action in the gold market since last October has been nothing short of remarkable. I suspect it was a trading ploy gone badly for the reasons which I have stated before, with semi-official sanctions.
But it takes a special sort of insular arrogance to keep doubling down on a bad trade, and hope that it finally turns your way. If these jokers do not wise up fairly quickly, this one could make the London whale look like the Canary Wharf carp.
Have a pleasant evening.
India Paying an Equivalent $1,565 Per Ounce For Physical Gold Bullion
“Let us not, in the pride of our superior knowledge, turn with contempt from the follies of our predecessors. The study of the errors into which great minds have fallen in the pursuit of truth can never be uninstructive...
Hitherto no difficulty had been experienced by any class in procuring specie for their wants. But this system could not long be carried on without causing a scarcity. The voice of complaint was heard on every side, and inquiries being instituted, the cause was soon discovered. The council debated long on the remedies to be taken, and [John] Law, being called on for his advice, was of the opinion, that an edict should be published, depreciating the value of coin five per cent below that of paper.
The edict was published accordingly; but, failing of its intended effect, was followed by another, in which the depreciation was increased to ten per cent. The payments of the bank were at the same time restricted to one hundred livres in gold, and ten in silver. All these measures were nugatory [pointless] to restore confidence in the paper, though the restriction of cash payments within limits so extremely narrow kept up the credit of the Bank.
In February 1720 an edict was published, which, instead of restoring the credit of the paper, as was intended, destroyed it irrecoverably, and drove the country to the very brink of revolution...”
Charles MacKay, Extraordinary Popular Delusions and The Madness of Crowds
When the Reserve Bank of India and the government tried to staunch gold imports by increasing duties and limiting supply in order to help their western central bank counterparts, who were deeply embarrassed by their inability to return Germany's gold, the experiment in currency controls had the effect of making the premiums paid for actual gold jump to 21.6% over western paper 'spot' prices.
What good is a 'spot price' for gold if it is just a construct derived from the paper gold price on the increasingly gold deficient Comex, and not from a physically transacting market? And what good is a price set on a so-called physically transacting market like the LBMA if it is done in secret, with leverages said to be approaching 100 to 1?
Recent revelations about the manipulation of price benchmarks, from LIBOR to derivatives to basic commodities, seem to have knocked the efficient market hypothesis into a cocked hat, which is where it always belonged, if the dustbin was full. Markets are naturally efficient to the extent that men act naturally like angels.
Here is an interview that Tekoa da Silva recently conducted with an Indian gold dealer about the future of demand for physical gold in India, which he believes will be strong, and more importantly, why.
Let's see, if one region of the world is willing to pay, for substantial amounts, a 21% premium for a physical commodity that is easily transportable, what might an astute economist predict would happen?
The 'average person' might expect them to predict a substantial flow of that commodity from west to east. And that does seem to be the case if one looks at the data which is available. Gold Seen Flowing East As Refiners Recast Bars For Asia.
These days, however, far too many economists, analysts and pundits see what they have been told to see, by whomever is paying them. Academia, politics, and the media are not naturally efficient, for the same reasons as markets.
Is it any surprise that in a culture that glorifies personal greed and the arrogance of power, virtue is in scarcity and deceit becomes routine? Bad behaviour can drive out the good, until a system or culture can become a festival of shamelessness, and a feast for predators.
India is not an isolated example. The situation is simply worse there for the moment because some Indian officials are historically compliant to Anglo-American interests. But China, Russia, Latin America, and the Mideast are increasingly less complacent to be so ill-used these days.
Change is happening. And there may be some significant volatility associated with this historic difference of objectives and opinions about what value is, and how and by whom it is set.
Registered Gold By Individual Comex Warehouse
"Bright star, would I were steadfast as thou art..."
John Keats
Despite the price takedown yesterday, the open interest drifted higher, taking the claims per ounce of deliverable gold to 62.9 to 1.
13 November 2013
Gold Daily and Silver Weekly Charts - Cap, Cap, Cap
There was no movement in or out of the Comex gold bullion warehouses.
There will be more economic news later this week. For now it is primarily earnings and the occasional speech by a central banker that are moving markets.
Intraday commentary here shows how the 'claims per ounce' for deliverable gold at the Comex have risen to a new all time record high of 62 to 1.
Have a pleasant evening.
SP 500 and NDX Futures Daily Charts - Another Day, Another New High For Equities
The unstoppable Wall Street money machine keeps rolling on the QE express.
What could possibly go wrong?
Have a pleasant evening.
Comex Claims Per Deliverable Ounce Up Again To 62
The setup for this year end looks interesting. Open interest for December itself has declined somewhat from last year, but the availability of gold for delivery at these prices has fallen quite precipitously. Rik Green has some things to say about this here.
The standard manipulation play has been to hit the prices hard, and hope to shake out weak hands as well as pry more bullion from the ETFs which the bullion banks manage. This was done in early December 2011, and prices recovered their level by the end of January. In December 2012 the great price decline of 2013 was already underway, in a reaction to the denial of Germany's request for the return of their nation's gold.
A conventional pricing action this December would set up a potential short squeeze into the new year that could prove to be impressive once it got going. And it might become uncontrollable should a run develop since it would also presumably increase the physical offtake in the broader markets. Wiser therefore to take some of the dirtier money off the table now, and let the market regain some of its equilibrium before the end of year.
This is of interest only for those who look at markets in greater than two week increments, which is not one of Wall Street's stronger suits. One should not underestimate the brazen audacity of the TBTF gang. They have been said to sell their customers very bad advice and deadly poisoned deals with near impunity, or haven't you heard?
So it is hard to say exactly how these things will be resolved since the greater physical market, the dog that is being wagged by the Comex tail, is still too opaque for reliable forecasting. But I do not see how this can end any way but messily, unless cooler heads prevail fairly soon.
Let's see what happens.
12 November 2013
Gold Daily and Silver Weekly Chart - Bear Raid on 'Taper Talk'
The 'Claims Per Ounce' of deliverable gold climbed to a new all time high of 61 yesterday.
This was covered in intraday commentary here.
There was very little movement in the Comex warehouse with just a few bars leaving storage.
There was a bear raid today, supposedly based on 'taper talk.' Well, tapering might not be all that bad, for all the good which it is doing.
QE and fiscal policy is primarily targeted to line the pockets of the wealthiest few by inflating certain classes of asset prices, and sustain an unsustainable and unreformed financial system dominated by crony capitalism.
This may not end well, but it will end.
Have a pleasant evening.
SP 500 and NDX Futures Daily Charts
There was a slight downward pressure today as it was a bit of risk off, with some commodities, bonds, and stocks trading weakly because of 'taper talk.'
As if.
There should be no doubt in anyone's mind that the Fed and the government of the US (and UK for that matter) are pursuing policy designed to enhance the well-being of the wealthiest few, and doing very little for the public at large, except perhaps just enough to keep them confusedly apathetic.
Have a pleasant evening.
Claims Per Ounce of Deliverable Gold Rises to Record High 61
"So you are lean and mean and resourceful, and you continue to walk on the edge of the precipice, because over the years you have become fascinated by how close you can walk without losing your balance."
Richard Nixon
The point of this 'claims per ounce' measure is not 'how high is too high.'
The real significance is how out of bounds is the market, so that when the market turns, how high must prices go to clear supply against demand, to revert to the mean.
There is 'plenty' of gold at the Comex and in the world. Unfortunately not much of it is for sale at these prices. And what is sold tends to be rehypothecated. The only question seems to be 'how many times?'
If prices were falling in an environment of ample supply and slack demand, then it would be a different story. But they are not. Demand worldwide for physical bullion is high historically, and supply is thin. And yet prices have decreased. And there is plenty of evidence of market manipulation. How hard is this to understand?
As I have said any number of times, the Comex is not where the market is going to break. The physical market is not centered on the Comex, which is the locus of paper price fixing.
If and when the Comex breaks it will be because there is a general default in the physical market, most likely in Asia and the LBMA that triggers a run on the bullion banks, and then on the Comex.
Like the dollar, the Comex will not default in the technical sense because like US bonds they can force a settlement in their paper at a price they dictate. The problem with that, of course, is that while it is technically not a default, it is a very real blow to confidence that is not easily undone. It is a de facto default.
I am concerned that these jokers will go too far. And the further they go, the less force is required for a 'trigger event' to create a break in confidence. Those who place their hopes in the players to avoid that regrettable outcome are probably engaging in wishful thinking. Tell it to the London Whale.
I do have some hope that the Exchange and/or the regulators will act, but typically they are lulled into the complacency of continuity and political pressure until things begin to get very unstable. For now the bigger players will just reassure them that there is plenty of gold at the warehouse that can be moved quickly to meet deliveries if required.
So to summarize, as leverage becomes outsized, any reversion to the mean, also known as unwinding, becomes more difficult.
Every time the registered gold inventory has reached these extreme lows there was an intermediate price trend change within six months. This time it could be six months, or nine, or twelve. The longer a divergence from natural market dynamics continues, the harder it will be for players to unwind their short positions and obtain real bullion to cover. And in a market break, inventory will evaporate almost overnight. Those who are slow to act will be bailed-in.
It is all about the pricing and managing of risk. And I think deep down that it is about financially breaking the miners and taking advantageous positions in them ahead of the next leg up for gold in this currency war.
It's an old story. I hope that the compliance guys are considering the counterparty risk in metals derivatives when they do their worst case scenarios.
I hope that the regulators and policy makers understand what a 'break in confidence' in the gold market could trigger beyond itself. My own outlook remains for stagflation, with hyperinflation being unlikely except in the event of a major policy error and unfortunate series of follow-on decisions. But this current crop of crony capitalists are just the gang of blindly arrogant knuckleheads to do the improbable.
This is what I think based on what I can see, and I could be wrong. But the facts seem fairly clear and sound, as it seems to happen in every Ponzi scheme or market instability before things break and start moving on their own momentum. People suspend their disbelief because things seem to keep moving against reason, until they don't. And then the experts say, 'who could have seen this coming?'
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