In Case You Were Wondering What Just Moved the Markets...

The Fed released their minutes from their June 19 meeting.

The headlines that flashed indicated that while some on the FOMC feel that taper can begin soon, the consensus seems to be that greater labor gains will have to be seen first before there is any tapering.

Note that 'taper' does not mean 'end.'

Some saw fiscal policy as restraining economic growth. While I imagine they mean the sequester, I would add that the maintaining of a broken and highly corrupt financial system as a tax on the real economy propagates stagnation.

I am still reading them. I did take time out to buy additional volatility off that spike as a hedge to the new silver in my portfolio.

Bernanke speaks in a bit, and market attention will likely fade from the minutes, which really said nothing new, and turn towards that latest shiny thing.

How can even casual comments by the Fed move the markets with such force? Because the Fed has become the market, so great is the confluence of policy errors and crony capitalism in the banking system and the government.

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....