Costs To Borrow Physical Gold Rise Sharply Across All Timeframes

Squeez-alicious.

I thought this quote from a recent report by Ned Naylor-Leyland was quite to the point.

"...I find it extraordinary that investors do not notice that the Gold price is presently defined by a market which operates using around a 90:1 leverage ratio. This cannot, and will not, end well for holders of synthetic Gold, or the banking system overall.

Indeed, the recent raids on the spot price have just brought forward the day of reckoning for the present price discovery mechanism by stimulating yet further drawdowns on physical inventories."

Ned Naylor-Leyland, Cheviot Management

How can this be true? Is the market not efficient?

How do the journalists remain so indifferent? How can the vigilant economists miss something so obvious? And where are the regulators in all this? Tut tut, looks like rain.

So many questions, and so few answers. lol

As I write this, the talking heads on financial TV are touting the COMEX as a great place to go and short gold in the futures market in anticipation for further declines to $1,000. Get some. Get some.

Dave from Denver informs us in an email that in his recent search back to 1999 "there were only 4 instances when GOFO went negative: Sept 1999, March 2001, Nov 2008 and now. In all previous cases, the negative rates lasted two days AND coincided with market bottoms forming."

Thanks very much to Mr. T Ferguson for making this report from Cheviot available.  His site is a trove of information.

Chart from Sharelynx.com, the place for precious metals charts.  Also found as goldchartsrus.com

COMEX Gold Inventories - A Towering Citadel of Paper

Lower and lower, to new record lows.

Weighed, and found wanting.

Who is running this sideshow?

And where will it end?

Let's take a closer look at today's gold market action on the COMEX...

Gold Market Structure - Little Red Riding Hood

We have not seen a market structure like this since the beginning of 2009.  It appears to be tilted towards a significant trend change.

Although we have to remember that this structure is on the COMEX, which is becoming a market involved largely in the movement of paper, rather than a mechanism for the efficient discovery of price and the allocation of capital to resources.

These charts are all from Sharelynx.com, the precious metals information place.

Hey there Little Red Riding Hood....

Gold Daily and Silver Weekly Charts - The Dog That Didn't Bark

Gold and silver were rallying in the evening last night, but met some resistance today.

They are being pushed lower as usual in the off hours.

There was intraday commentary here that references some secondary information that seems to support the theory that it is the demand for German gold, rebuffed by the Fed, that is at the heart of this current market operation to loosen bullion from the ETFs.  The gold has been leased to the banks and been sold, and the physical market is so highly leveraged that it cannot be retrieved except through extraordinary market antics.

It certainly is the oddest thing that I have seen in some time, and the lack of serious coverage of this is remarkable in itself.  How can a custodian tell a sovereign people that they may not have their own property back for seven years, too bad, and that's that?   

Is this some new standard for custodial management that has been aped from the likes of MF Global, to be followed now even by the central banks whose most vital asset is an unshakable confidence in their integrity?

Have the expectations of the financial sector been dragged down to the general conduct of conmen and gangsters, so that one expects them to use other people's property as their own, and then brazenly defy the rightful owners to attempt to get it back? And this is not extraordinary or notable?

This whole affair seems so straightforwardly odd that one must return to the same conclusion, over and over, that something has gone terribly, terribly wrong with the financial system.

And no one seems to raise any fuss about it, or even seriously question it?  Indeed, it almost seems to be cloaked in an unusual silence, like the dog that didn't bark.

Stand and deliver.  Either the bullion, or the truth.