COMEX Warehouse Gold Bullion: Price Moves Smell of Desperation As Inventory Remains Thin

'O sir, to willful men,
The injuries that they themselves procure
Must be their schoolmasters.”

William Shakespeare, King Lear

There were 3,215 ounces of gold bullion taken out of the HSBC warehouse.

The JPM warehouse had 7,143 ounces changed from deliverable to eligible. 

Perhaps the price action freed up some bullion from the GLD ETF.  They need it badly. The levels of gold bullion backing up the leveraged COMEX paper claims on gold exchange remain remarkably thin and oversubscribed.

The international monetary regime is changing.  Nothing could be more clear if one listens to what is being said, and sees what is being done. 

The European Central Banks have made their intentions quite clear, and the Asian monetary powers are in full preparation for their plans, whatever they may finally be.

The forces driving this change are powerful and founded in time and nature. We are watching history unfolding.

Today we saw the familiar methods of the past in a blatant pricing exercise that smelled of desperation. They can set the price by force in the markets in the short term, but they cannot produce that which they have taken, or fulfill that which is owed.  

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - Pigmen Rampant on a Field of Greed

There was a very obvious hit on the precious metals today. I commented on it with pictures here.

Basically the pros saw the broader population of small specs leaning into protection, and took them for a ride today. As Bart Chilton said, there are no regulators watching these markets because of the government shutdown, so you are on your own.  At least that is what he implied.

I laid out the basic market strategy at work today in the stock market commentary. I am sure the Wall Street financiers think that this shutdown will be temporary, a few fleeting days that will harm no one or nothing about which they care.

The masters of the universe who are a bit closer to the inner circle of Moloch will almost certainly have a word with their servants and retainers in the Congress, and bring them to heel after a few days.  It is all a game after all, isn't it? 

The G20 is having a meeting  of their central bankers and finance ministers in Washington DC on October 10-11.

A man hears of things that might be said at such a gathering.  It certainly caught some people by surprise when the Italian Central Bank came out and endorsed gold as a key reserve asset,  at Monday's LBMA meeting.   France and Germany chimed in, even though they are disingenuously at odds with what they say about never selling compared to what they do with leasing the metal.

An economist disciple of Greenspan unreservedly endorsed the idea of the trillion dollar platinum coin today, or more precisely 1,000 billion dollar coins so everyone important can have one for their very own.   Non-specialists may not understand all that this implies in their political zeal, but surely he must know better.  Well, it is a disgraced profession after all.

Hey why fight it?  Let's go all in for it.  The US should announce that striking piece of "monetary innovation" at the G20 meeting, so all the US' major creditors can see what a cynical act of brazen seigniorage looks like up close.  Why hide it?   After all, the whole of the law for the exceptional is to do what thou wilt.

There was some minor movement of gold out of HSBC today, and a recategorisation of some bullion in the JPM warehouse as well, following their impressive move to bolster confidence in the threadbare COMEX registered inventory yesterday.   I might post something about that later on.

We are now in October delivery.  October is not a big month for the futures, but it is an active delivery month so we will be interested to see what happens.

SP 500 and NDX Futures Daily Charts - If You Don't Know Who the Sucker at the Table Is...

There is an old poker saying that if you don't know who the sucker is at the table, it is probably you.

Quite a few people remarked their puzzlement today about the rally in stocks and the hit on the metals. It seems counterintuitive that 'investors' would embrace risk on a government shutdown and shun risk havens.

You have to understand the nature of the game in order to understand what is going on.

In the short term, this market is about as rational as a crooked roulette wheel. The market insiders can see what the broad public is holding and the numbers in which they are holding it.

Yesterday there was a big spike higher in volatility as shown by the VIX. What that means is that people were seeking safety in puts.

Pros rarely direct their bets in one direction but lean toward spreads and other things that diverge and converge, unless of course they have fixed the results somehow or have access to asymmetric information and then bigger directional bets make sense. This is how big firms achieve 'perfect' trading records, which of course would be impossible in a 'free market,' where freedom implied honesty rather than a lack of rules and oversight.

So, the smaller specs piled into puts and other downside bets ahead of the shutdown, the big insiders saw it, and they bid the markets up today to clean them out of their positions. That is what happened. Note the plunge in VIX today. As I say, 'wax on, wax off.'

Should you start 'thinking like a criminal' as some say? Better than guessing stay the hell out of options and other short term leveraged bets in this market and let the insiders try to cheat each other. Amateurs have no business in the futures or options markets.

I suspect the thinking is that the shutdown will be short lived and that there will be no consequences. That *might* be correct as it is how things often go. But I am not so sure this time will be just like that, for reasons which I will elaborate on in the gold commentary.

Have a pleasant evening.

Excess Reserves: No Government Shutdown There

And besides, the Banks own the Fed which is not a part of the government as you may recall.

And by statute the Congress must not skip a single payday or perk. So no problems there either.

Obama is meeting with the Bankers today, who will be asked to help him out with the Congress.

Is Putin coming for the G20 meeting in Washington on October 10-11? Perhaps he can mediate the deadlock amongst the keepers of the world's reserve currency.

We know he likes Super Bowl rings. Maybe he would like a souvenir billion dollar platinum coin ahead of the holiday rush.

I hear the Chinese like bright shiny things and would gladly trade their nasty Treasuries for newly minted billion dollar coins.

Where is Peter Minuit when you really need him?