Gold Daily and Silver Weekly Charts - What Goes Around

"The people of England have been led in Mesopotamia into a trap from which it will be hard to escape with dignity and honor.  They have been tricked into it by a steady withholding of information."

T. E. Lawrence

A top German regulator, Elke Koenig, said today that the price rigging in currencies and precious metals is 'worse than LIBOR.'  

China has supposedly disclosed that they are now have the third largest gold holdings in the world, having surpassed Italy and France.  This is a subject of controversy because China has been notoriously reluctant to disclose its central bank gold dealings.  

There was no movement of gold bullion in or out of the Comex warehouses yesterday.  Deliverable gold is at lows we have not seen in many years, representing a 112 to 1 ratio compared to open interest, which I suspect is an all time record.   This would indicate higher prices ahead in a normal market.

Change is coming.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wobbles

Equities were a bit wobbly today, pulling back from yesterday's new high, despite the 'better than expected' economic news this morning with a strong Philly Fed.

Let's see if the bulls can dip into their pockets and push the markets a little higher.

Top German Regulator Says Currency and Precious Metal Rigging 'Worse Than LIBOR'

The 'free markets' are permeated by frauds, many of them perpetrated by the Banks, which affect the price of transactions in liquid markets.  

What a surprise.

Did someone forget to offer Frau Koenig a post-government job in Private Equity?

In fairness, I can definitely see this managed as a 'limited hang out' public relations operation with some fines put forward for front running the London fix, but the great bulk of the abusive price rigging in the futures markets left untouched for confidence and the 'good of the system.'

I think the real issue will be the unfolding inventory scandals if they lose control of the great shell game.

Bloomberg
Metals, Currency Rigging Worse Than Libor, Bafin Chief Says
By Karin Matussek and Oliver Suess
Jan 16, 2014 2:04 PM ET

Germany’s top financial regulator said possible manipulation of currency rates and prices for precious metals is worse than the Libor-rigging scandal, which has already led to fines of about $6 billion.

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based -- unlike Libor and Euribor -- typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today.

Koenig is the first global finance regulator to comment publicly on the investigations as probes into the London interbank offered rate, or Libor, expand into other benchmarks. Joaquin Almunia, the European Union’s antitrust chief, said yesterday that its preliminary probe into possible foreign-exchange manipulation covers similar practices as in the regulator’s probe into Libor-rigging...

Bafin interviewed employees of Deutsche Bank AG as part of a probe of potential manipulation of gold and silver prices, a person with knowledge of the matter has said in December. The U.K. finance regulator, the Financial Conduct Authority, is also reviewing gold benchmarks as part of its wider investigation into how rates are set...

Read the original article here.

China Claims To Already Have the Third Largest Gold Reserves in the World

It should be noted that this report is sourced from 'ScrapMonster.' I have found it on the webpage for the Shanghai Metals Market. The numbers in this article do not agree with the latest reported number for China from the World Gold Council, which by the way is hopelessly out of date. 

More importantly, there is no IMF report that I have been independently been able to find that discloses this information.   If this story below is true, then it is quite the news piece, since details on China's gold holdings are of great interest to many. The number in the story below is credible, which first sparked my interest in it.

Let's see if the Chinese confirm or deny this, or more likely, continue to say nothing and buy.

Here is a recent news item about this controversy from Bloomberg:

"After adjusting for net imports from Hong Kong and domestic output, the figure is closer to 5,086 metric tons [central bank holdings plus private gold holdings]. When taking away gold uses for jewelry, industrial and other categories and adding implied bar demand to central bank holdings, the figure is likely closer to 2,710 mt.

"China would need 10 years for its gold holdings to catch up to the U.S., based on adjusted Chinese consumption for jewelry, industrial and other uses and using implied bar demand as the primary driver of incremental central bank additions. Based on run rates during 2013, China may have added 622 metric tons of bars to its central bank holdings, after adding 380 mt in 2012."

This news item below is purportedly what China is willing to 'officially report,'` that they have expanded their official gold reserves by 76%, to 2,710 tonnes.   If this is accurate then China is now just behind the US and Germany, which say that they hold 8,133.5 and 3,391.3 tonness respectively.  China has already surpassed Italy and France. 

Given the 2,710 tonne figure I have to wonder if the author of the Scrapmonster piece picked it up from Bloomberg and then ran with it.  It would make some sense, although Bloomberg does not mention anything about the IMF.

There is some controversy regarding the disposition of Germany's gold, much of which is held outside that country, as you would know if you frequent this café.  More on that later.

 Privately there is a great deal of speculation that the heavy flows of gold through Shanghai are not merely going to the public market in China, but are also helping to fill their central bank reserve vaults even further than they will admit. 

As you may recall, China is encouraging its people to place some portion of their personal wealth in precious metals.

It is easy to sneer at goldbugs, those who find a refuge from abusive monetary policy in the traditional safe haven of precious metals, but it quite another thing to tell the 800 pound gorillas in the global market, China and Russia among them, that they do not understand anything about risk and money. 

Agree with them or not, they are making their case for what they think will happen in the future of global money, and are putting some of their own sizable wealth down on the table to back it up.  And if the models of a few academic economists do not agree with them, they really do not care.  They have their own economists, and their own interpretations of history, and their own needs and agendas.

And there are other countries who are now desperately seeking to bring their gold home from the custodial storage in New York, which is an artifact of World War II and the Cold War.  And some of them, like Germany are finding that it is not so easy to persuade the New York Fed to return it.  We can only wonder why.

These are central banks, who seem to be managing their national affairs with quite an informed and determined outlook towards the future. To completely ignore the implications of this, which to me seem quite clear, is nothing short of willful blindness.  If we just shut our eyes and say no, then the change will not affect us.  Except that the smart money is already on the move behind the scenes.

There is an ongoing debate happening now among the nations' bankers about the suitable replacement for the de facto Bretton Woods II arrangement which bases global trade settlements on the fiat dollar, no longer tied to gold since Nixon made a unilateral decision to shut the gold window.   They have made public statements about what they would prefer to see adopted, and Russia made this discussion a formal topic during its G20 chairmanship last year.

It has been a long time coming. But change is going to come. It always does.  And it may wash over those who stubbornly refuse to even admit that it is happening.

Shanghai Metals Market
China Expands Gold Reserves, Surged Past Italy & France in Ranking
By Paul Ploumis
Jan 15, 2014 08:36 GMT

BEIJING (Scrap Monster) : Claiming to have vaulted France and Italy in terms of gold reserves, China has announced that they have expanded their gold reserves by 76 %, thus becoming 3rd largest gold reserves in the world. According to the voluntary reporting system of IMF which monitors international gold reserves, China’s gold reserve have increased from the last reported holdings of 1,054 Tons in 2009, April to 2,710 metric tons currently.

China claims to have surged past Italy which has current holdings of 2,451.8 tons of gold reserves followed by France having 2,435.4 tons. The accurate reports released by the World Gold Council Data has placed US at the first position of world ranking for holding largest gold reserves which is 8,133.5 tons. The percentage of foreign reserve in gold in US is 75.1 %. Germany holds the second position with 3,391.3 tons of gold reserves.

In order to acquire the position, the Central Bank of China had added 622 tons of gold last year which was a massive boosting from the 380 tons of 2012 estimate. China had surged several nations to become the largest producer of gold. It has boosted its gold reserve without purchasing gold from global bullion market. While most of the major gold producing nations are reporting the decline of production, China remains to increase the production.

Comex Warehouse Potential Claims Per Deliverable Ounce Rises to Historical High 112 to 1

"The false man is more false to himself than to any one else.  He may despoil others, but himself is the chief loser. The world's scorn he might sometimes forget, but the knowledge of his own perfidy is undying."

Horace Mann

An almost shocking decline in deliverable (registered) gold has taken the ratio of open interest to deliverable gold to 112 to 1.

This is not a default scenario since the supply of eligible gold in the warehouses remains adequate and at historically manageable levels as shown in the last chart below.

Rather, it suggests that higher prices will be required to persuade more bullion owners to place their inventory up for delivery.

That higher price, of course depends on who those owners are, and how motivated they might be by profits from their metals trades.  For some interested parties it is enough to be the very close friends of the Central Banks, with benefits that make them incredibly rich, self-satisfied, and occasionally audacious to the point of over-reaching.

But of course, it is well to remember that the Comex has become the tail wagging the dog, as the gold bullion markets have shifted to the East.

February may be an interesting month, in an interesting year.

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - JPM Holds the Whip Hand on the Comex - Buy Signal

About 89,757 ounces of gold bullion left the deliverable category at Brinks, and a similar amount showed up in the eligible inventory at JPM yesterday. 

I do not know who owns the registered gold, since title can be transferred fairly easily.  But it remains fairly clear that JPM was in the driver's seat in stopping most of the deliveries, and now likely holds the 'whip hand' on the Comex in terms of gold.

This brings the overall number of deliverable gold ounces down to 370,137 which is a shockingly low number considering that we are coming into the normally heavy delivery month of February in a few weeks. 

Along with a few other indicators this triggers a 'buy signal' for gold in the intermediate term.  This is the first buy signal that I have issued since gold broke out of its cup and handle and ran to its all time high.  This is a 'structural' buy signal that must be confirmed by price and the chart formation.   The price signal will remain active unless gold sets a lower low on price.

I will post something about potential claims per ounce later tonight. 

There is sufficient gold in the eligible categories at the bullion banks, and while we do not know who actually 'owns it,' there is a high probability that it will take higher prices to pry that gold into the delivery process in February, at least from profit motivated holders. 

Take a look at the distribution of all categories of gold on the Comex.   Brinks and Manfreda have been 'cleaned out,' and the three bullion banks, JPM, HSBC and Scotia Mocatta are the big holders.  This market is now made up of big holders and bag holders.

There is some strong overhead resistance at 1260 which any number of analysts have noted, and there does seem to be an effort to hold the line on price here.

I have marked the most important resistance level, at least from my charting perspective, on the chart in red, just under 1,350 dollars per ounce.  A breakout through 1350 will confirm the buy signal.

February is shaping up to be an interesting month.   The various indicators have come together to signal a buy here but one might wish to wait for confirmation if you wish.  After all, it is a manipulated market.  There might be a rocky road before the precious metals finally break out.

I am now holding a full allocation of trading account gold and am considering adding more on pullbacks.    There are likely to be some vicious pullbacks since the Banks will not wish to have small spec company during the initial leg of this bull market move.  They are just like that. 

If the specs jump on the metals here with leverage they are going to get their teeth knocked out.   I was of two minds in writing this, because I do not wish to see amateur traders throwing themselves to the sharks.  But on the other hand sentiment is so bad that perhaps now they will stand aside and take a more measured approach to investing rather than speculating.

It's been a long time coming.  But change is going to come.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - SP 500 Back to December Record Close - Dog Tease

Stocks continued their move higher today as the SP regained the ground it had given up from the end of year tape painting, closing around the record high it set in December.

VIX has fallen back to relatively complacent levels. The economic news is just peachy.

The Fed is completely culpable for the bubble in financial assets, along with the compliant regulatory climate under Obama and his Wall Street friendly Congress. This will not end well, but there is no telling when it will end, so be careful about fighting the monied interests with money by shorting the market.

I hold no short positions here, except for longs in precious metals, which in some ways are a short on the appearance of recovery versus the reality of financial malpractice and policy errors.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Where Are We Going?

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Whacky Tech-Backy

Stocks rocketed higher, gaining back most of what they gave up yesterday.

Google put a fire under tech stocks by buying smart thermostat maker Nest for $3.2 billion.

Retail sales came in better than expected and that had traders casting off their fears and setting out on the seas of speculation.

A pleasant time will be guaranteed for all by the Fed, until it doesn't. Then they will bail out their friends.

NAV Premiums of Certain Precious Metal Trusts and Funds

“All that is gold does not glitter,
 Not all those who wander are lost;
 The old that is strong does not wither,
 Deep roots are not reached by the frost."

J.R.R. Tolkien, The Fellowship of the Ring

h/t commenter at ZH

Gold Daily and Silver Weekly Charts - Bounce

Gold and silver popped a little today, added to the after hours increase which they enjoyed on Friday.

Stocks are in an asset bubble uptrend, and gold and silver are in a remarkably persistent price decline.

Meanwhile at the Comex warehouses, HSBC, the custodian for GLD, managed to add some gold back to the registered (deliverable) inventory. More will most likely be needed for February.

As I said for stocks this evening, follow through is everything.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - WakuWaku Dokidoki

That's Japanese for the incredible feeling of heart pounding excitement-- as you push that pedal to the metal on a really hot new Toyota. 

For a bearish sort it might be the feel of the air rushing over your body as you fall off a cliff, perhaps.

So the bears got a brief thrill today as stocks 'finally' peeled off a second layer of the year end paintjob from just a few weeks ago, and slipped a bit off their Fed blown asset bubble.

The VIX is a bit more understated, coming as it has from almost still life complacency even after last weeks Jobs miss.

Follow through is everything, and so fare we have not yet broken the uptrend on the March SP 500, which is around the numerically important 1800 level.  So the bearish excitement is probably premature, as it has been since the last meaningful correction in 2011.

This weeks economic calendar is included below. It is packed with facts, but only a few market movers in the bunch.

Chartered offered a figure slightly north of $61 Billion for Time Warner after the close.

Have a pleasant evening.

Real News: Hedges and Binney on NSA Policy Part 2

“One of the greatest advantages of the totalitarian elites of the twenties and thirties was to turn any statement of fact into a question of motive.”

Hannah Arendt, The Origins of Totalitarianism

Credibility Trap: Fatal Web of Lies

From "Bill Moyers World of Ideas" 1994 Interview with ethicist Sissela Bok:

"As a philosopher, Sissela Bok grapples with hard truths – and with hard untruths, as well. Her writings explore the psychology of lying, the consequences of deception, and the perils of keeping secrets. With advanced degrees in both psychology and philosophy, she has taught ethics at Harvard’s Medical School, the Kennedy School of Government, and philosophy at Brandeis University. Her books include Lying: Moral Choice in Public and Private Life and A Strategy for Peace."

Moyers: Can a republic die of too many lies?

Sissela Bok: I think a republic definitely could—especially if the lies are also covered up by various methods of secrecy. If you combine lying and secrecy, and if you also bring in violence so that secrecy covers up for schemes of lying and violence, then I think a republic can die.

I don’t think it’s possible for citizens to have very much of an effect if they literally don’t know what’s going on.

A credibility trap is a condition in which the financial, political and informational functions of a society have been compromised by corruption and fraud. The leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The influential status quo tolerates the corruption and the fraud because they have profited, at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards them.

And so a failed policy and its support system become self-sustaining, long after it can be seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, 'organized hypocrisy.'

Related Reading:

JP Morgan and Madoff: Nesting Dolls of Fraud, Pam Martens

America's Gilded Capital: Losing Democracy to the Predator Class

Chris Hedges: The False Left-Right Paradigm and the Fatal Intransigence of Oligarchies

"In the same way, those who possess wealth and power in poor nations must accept their own responsibilities. They must lead the fight for those basic reforms which alone can preserve the fabric of their societies. Those who make peaceful revolution impossible will make violent revolution inevitable."

John F. Kennedy, First Anniversary of the Alliance For Progress

History Lesson

Tsar Nicholas II:   I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte:   I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot. Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?

Tsar Nicholas II:   The English have a parliament. Our British cousins gave their rights away. The Hapsburgs, and the Hoehenzollerns too. The Romanovs will not. What I was given, I will give my son.

Rappaport, Last Days of the Romanovs

Gold Daily and Silver Weekly Charts - Surprise, Surprise, Surprise

The jobs number was SO bad this morning that they had to skip the traditional metals raid, and the bad news bears got stuffed on a quick reversal.

There was intraday commentary regarding a rather large redemption of London Good Delivery Bars from the Sprott Physical Gold Trust here.

Germany's gold, Comex gold, almost half the gold from the western ETFs, seems like quite a bit of gold bullion is making like Jimmy Hoffa, and disappearing these days.  Maybe we should start looking for Jimmy in China.

A fellow might start to think that there sure are a lot of meaningless coincidences going around this place.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Jobs Shock, the Walking Dead

The Jobs number sucked out loud this morning, as the economy added a meager 74,000 jobs, compared to an expected number of 197,000.    That's a swing and a miss.  Both hourly earnings and average workweek missed as well.  Today's box scores are included below.

The good news was that the unemployment percentage dropped hard from 7.0% to 6.7%.   Huzzah!  Stocks rally back, and the VIX plummets.

The fly in that holiday toddy is that they did it by whacking the denominator in the unemployment ratio, declaring about a half million or so able bodied workers to be the new walking dead.  (Hey, I was just kidding about liquidating people as the next move the other day.)

Capping that bit of cheer off, US retailers reported their worst holiday season since 2009.

Let's talk.

Stimulating the economy is not a bad idea when it is in shock from a financial crisis brought on as the result of massive systemic fraud and financial asset bubbles perpetrated by the financial system.   And yes, austerity has been proven wrong, again and again, and is the stuff of puritans and pigmen.

But stimulating the economy by giving more money directly to the same self-serving jokers that caused the problem in the first place, AND failing to correct the massive distortions in the economy that have been growing through horrible policy decisions over a period of years, is not exactly what Lord Keynes might have had in mind, ya think? 

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Have a pleasant weekend.

Real News: Binney and Hedges On Obama's NSA Guidelines

I know this type of criticism about the current administration upsets a lot of disillusioned (and desperate) liberals who cling to Brand Obama, but at the end of the day, he is no progressive reformer.  He seems more like a moderate Republican, Herbert Hoover, with splash of Nixon.

Yes, he is 'better than' those Luddites and corporate crypto-fascists that scare you, but isn't that really the point? Negotiating away your freedom, bit by bit, out of fear?