SP 500 and NDX Futures Daily Charts

Today was particularly nauseating. No not because of the action on the metals markets.

Hank Paulson was on Bloomberg TV today explaining how everything he did for the Wall Street banks, he was really doing for the common people like you.  He is out touting the movie, Hank.

I would like to see Hank visit a few town meetings in different areas around the country, perhaps some rural areas down South and out West, and lay out that I was really helping you line, so the people could personally thank him for all that he has done.

He *might* actually believe what he is saying. But I would not bet on it. 

Have a pleasant evening.

Gold Chart Intraday - Is the COMEX Still 'The Market' For Anything Except Paper?

There is some talk that JPM has 'cornered' the gold market on the COMEX.

This is based on COMEX released data.

I don't know. That might be technically correct, but it overlooks one important fact.

The 'COMEX' is no longer the 'gold market' or the 'silver market.'

Given that the COMEX could supply the gold markets around the world for about two months before rolling over and shutting down, I think it more of a conceptual market than THE market.

Like some outworn custom, people still pay attention to the paper prices on the COMEX out of force of habit. But the locus of buying and selling of the actual product has been moving elsewhere for some time now. 

The LBMA can make a better claim to the title of 'the market' for precious metals, but even that is slipping away.  It is just harder to see because the association is so opaque with regard to its statistics on sales and inventories.   

But I think this current arrangement is more historical than practical, given the weakness of the regulatory climate in the US and the UK.   Is there any price discovery and market clearing going on in New York, or it is just some big game of Liar's Poker with a vestigial connection to reality?

What good are a set of nice statistics when what they represent is a pretty facade over a hollowed shell?  And given the lack of position limits and basic limitations on price manipulation without consequences in physical delivery it is unfortunately taking on the character of a control fraud.

Given all the scandals that have been surfacing since the market rigging of real goods and services by Enron I don't think that is such an unreasonable point of view.  These jokers are off the hook, and out of control.

If the NYC and London punters keep this up, the price of the metals will diverge from the COMEX paper prices, like the currency markets in the eastern bloc and Russia widely diverged from official exchange rates in the 1990's. 

But, they never listen.  Once confidence is broken, it is very hard to regain.  Even in a culture that holds that there should be no consequences for extra legal actions by wealthy and powerful insiders.

NAV Premiums of Certain Precious Metal Trusts and Funds - Shaking the Bushes, Selling What They Don't Have

In this case the bushes are the GLD and SLV ETFs, which are getting shaken today to try and shake loose some physical bullion for the hard up COMEX pit crawlers.  

It also will probably shake loose the weak hands and toss up some open interest to lessen the pressures on delivery.

The last time they tried this is did not work out well, because they forget that COMEX is a sideshow to the real precious metals markets which have moved offshore.
 
The gold silver ratio is back up to 60 which is on the high side.

So today we are seeing a bear raid in the metals that started last night.

These guys remind me of the little girls, years ago when they used to dress up like ghosts and jump out at us and say 'boo!'  About the third or fourth time it became a little hard to fake a reaction.

But I don't think the little girls took themselves so seriously as these Wall Street scamps.

Voiceover from Aziz Ansari:  Oh no, the COMEX is selling more gold that they don't even have.  I'm so afraid.

Perhaps this price drop will allow JPM to squeeze some additional bullion out of GLD, which they can add to their stash.

"He who sells what isn't his'n,
Must buy it back, or go to prison."

Daniel Drew

Claims Per Ounce of Deliverable Gold at the COMEX Rise to New High of 57.6

Based on yesterday's activity, the claims per deliverable ounce of gold on the COMEX has risen to a new high of 57.6 contracts per ounce.

As you know it is highly unlikely that all contract holders would ever stand for delivery.

But it is a useful indicator of how the open interest is going relative to available inventory. It suggests that higher prices may be in the offing.

The last two times that we saw these extremes there was a meaningful trend change in the price of gold from lower to higher.  This makes sense because it is higher prices that would cause those who are merely using the COMEX warehouses for storage to offer their bullion for potential sale.

The extremes we are seeing now are quite new since the bull market began back in 2003.

Let's see what happens.   But the message appears to be written on the wall.

Weighed, and found wanting.

Stand and deliver.