NAV Premiums Of Certain Precious Metal Trusts and Funds - Physical Gold Demand Provokes Another Bullion Redemption - A Murder of Black Swans

The woods decay, the woods decay and fall,
The vapours weep their burthen to the ground,
Man comes and tills the field and lies beneath,
And after many a summer dies the swan.

Alfred Lord Tennyson, Tithonus


N’en déplaise à ces fous nommés sages de Grèce,
En ce monde il n’est point de parfaite sagesse;
Tous les hommes sont fous, et malgré tous leurs soîns
Ne diffèrent entre eux que du plus ou du moins.

Nicolas Boileau-Despréaux, from the frontspiece of Mackay's Madness of Crowds

The short term demand for gold bullion provoked another exchange of units for bullion from the Sprott Physical Gold Trust.

The fund saw 1,500,000 units exchanged for 12,460 ounces of gold bullion at the rate of .008 ounces per unit.   That is about a $17,000,000 transaction.

I believe that this redemption feature is one of the reasons why the Sprott funds tend to hold their premiums a little better than others, although in the longer term that makes little difference. I use it to measure the overall tenor of the market, and also to help pick certain entry and exit points.

Since there is no real financial advantage in the exchange, one would tend to attribute this to the huge short term demand for physical gold bullion that makes the forward rates negative and drives other behaviours not ordinarily seen.  All things considered where else is one going to obtain a large amount of high quality physical gold at these prices?

Grant Williams says in a recent interview that he has heard of requests for GLD bullion redemptions in excess of the $14,000,000 minimum that have been recently denied.   If this is in fact the case, it is a sign of tremendous short term pressure in the bullion market that could be a sign of the failure to reach a genuine market clearing price.   I find it hard to believe that GLD could refuse such a transaction given the terms and condition of their fund. 

Normally I would discount such speculative things, but given the astonishing fact that the Fed literally denied the legitimate request of the Bundesbank for the repatriation of their national gold is a clear sign that something seems to have gone terribly wrong.   And the other inventory measures I regularly show are out at the tails of probability and sustainability.

This type of protracted market distortion can create some very difficult conditions that may place the integrity of the markets at risk.   It reminds one of the late stage MF Global situation, but on a significantly larger scale.  These jokers are so leveraged that they seem to be robbing Peter to pay Paul, and everything is flowing until the music stops, and then ba-boom.  Who could have seen that coming?

Thus a single trigger event can set off a cascade of nearly catastrophic events in a system that has been allowed to become overly fragile.  And that fragility is very often directly tied to interconnected rehypothecation of assets, a mispricing of risk, and excessive leverage.  That is the story of the most recent financial crisis, and why there will likely be more.  They ignore the lessons of history in their arrogance and their greed.  Being a sociopath or narcissist means never having to feel that you're sorry, much less say it.

I don't see any other way to explain this, what I see happening.  And the consequences could be quite dramatic.  

This could make for a scandal of memorable proportion, even for this time of financial scandals.  Is there any market that is not being rigged and manipulated by the financiers and their friends?   Their hypocrisy seems to know no bounds. 

COMEX Deliverable Gold Bullion Continues to Slowly Bleed Out

"Though justice often moves slowly, it seldom fails to overtake the unjust."

Horace, Odes

There were no deposits into the COMEX warehouses yesterday.  Apparently GLD was not able to squeeze out any bars for the banks.

Someone transferred 4,946 ounces of their gold bullion out of the deliverable category at the Brink's warehouse, and out of the COMEX storage complex altogether it seems.

This leaves 664,664 ounces of gold bullion in the deliverable category.

There are a quite a few delivery days left this year. 

And there is a shrinking supply of gold available for sale, especially at these artificially low paper prices.  And the claims keep piling up, higher and higher.

What happens when some nation less compliant than the Germans asks for the return of its sovereign gold?

Pricing antics and bluff moves aside, I think that the writing is on the wall. 

"Mene, Mene, Tekel, Upharsin"

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - Antics Will Continue Until Confidence Returns

"Exploitation and manipulation produce boredom and triviality; they cripple man, and all factors that make a man into a psychic cripple turn him also into a sadist and a destroyer."

Erich Fromm

The bear raid started last night, and pushed the metals down to support today.

I am not overly concerned since we seem to be setting a right shoulder.

I would be more concerned if I were at the head of one of the exchanges where these jokers are driving drunk with power. I doubt this will end well.

Welcome to The Hunger Games.  And may the odds be ever in your favor.

I will look at the statistics on bullion and see if there is anything interesting to report.

There is intraday commentary here.

I wish to remind you that there are Google blogger problems that are causing my site's header, title area with the logo name and daily quotation, to be format oddly, through no changes I have made. It keeps wishing to stack every word on top of one another for some reason. I have looked at the specific html code and it seems as though the problem is in some macros that Google alone maintains.

So please bear with my stitched together logo for now. I will look for some alternative method of providing daily quotations which seem to be a favorite feature for may of our patrons. Google is a joy to work with compared to Yahoo, I'll give them that.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Are Expectations of a September Taper Fading

Another glorious rally as the Pax Americana proves to be irresistible.

Stocks are getting a bit stretched, and the volumes are almost a joke. So this has the appearance of puffery.

But even puffery has its day, as the illuminaries and solons of Washington can attest.

Someone asked if I am hedging precious metals by shorting stocks and the answer is 'absolutely not.'

There is no need to hedge at this point, and stocks are in an almost pure technical trade.

And as Jesse Livermore once said, 'Never short a dull market.' The volume here is very conducive to batting the prices around.

I wanted to go to a room and quietly weep for the pitiable demise of the Dow Theory today. With the inclusion of Goldman and Visa in the Dow Jones Industrial Average, it can be considered officially gone, death by cynicism. Even Nike, which makes things, makes little of them anywhere in the US, preferring the heat of foreign sweat to mold their products.

But I do suppose that this confirms that the major growth of the US is in the rentier sector, including the production of financial instruments of dubious quality, usury, and various forms of white collar managerial abuses of ordinary people. If they could add the Congress to the DJIA it would be a coup de grâce for the real economy.

Have a pleasant evening.