NAV Premiums of Certain Precious Metal Trusts and Funds - The Odd Situation in Gold Bullion Inventories

NAV premiums remain very thin, with the only real enthusiasm showing up in the Sprott Silver Trust.

The capping on the metals is hard to miss, and the miners are in a ditch.

I picked up some mining positions today for the first time in a while. As you know my major bias is to have a claim on bullion more directly.  And as is shown in the second chart below, the miners have been performing rather poorly to say the least, underperforming bullion for quite some time.

I have been studying the enormous decline in gold bullion from the world's ETFs and funds this year. What is remarkable about it is that there is no decline in silver, platinum or palladium, and in fact they have increased slightly.

It is not clear to anyone I speak with as to the cause of this, except for some off hand speculation along the lines of Ted Butler who thinks that those who like silver are more persistent, and some others thought that funds (John Paulson) were liquidating big positions and that GLD was disgorging in the process. That could be but it does not speak to the COMEX. That would be easier to accept if silver had not declined in price YTD even moreso than gold.

I will continue to look at it. The biggest declines are on just a few vehicles including the COMEX and in GLD, on the order of over 700 tonnes or so. The short interest on GLD is in the 9+ percent of float, if that number is accurate.

If gold does break and run, given the known shortness of available gold bullion supply, I suspect that we might see a wild ride as supply dries up and the ETFs and COMEX have trouble buying back what they have disgorged this year.

If anyone has a nice chart of the units outstanding for GLD and SLV for the year I would not mind seeing them.    Otherwise I am going to have to extrapolate the authorized shares from the GLD spreadsheets and then try and estimate the short interest addition to it.

GLD management seems to have a target amount of gold bullion ounce per unit that they seek to maintain.   That number has declined steadily since inception which I would imagine is how they account for the funds expenses.

I have a number of hypotheses about what could be causing this odd asymmetry in bullion holdings and lease rates and forwards. But I would rather continue to give this some thought and continue to look more deeply into some of the spreadsheets before saying anything more.  I was at the GLD spreadsheet and one that showed the bullion levels for about twenty five major sources for the past year for hours yesterday.  I keep thinking I am missing something.  But I am in good company.

One thing I do know is if gold does break out and runs higher its going to be like the Wild West in the scramble for deliverable supply.  No wonder the wiseguys are capping it so assiduously.

Gold Daily and Silver Weekly Charts - Pop Goes the Weasel

Gold and silver rebounded today from the artificial smackdown yesterday.  It seems likely that this was a raid designed to flush out amateurs who had taken safe haven positions ahead of the government shutdown, both in downside stock protection and precious metals. 

There was intraday commentary on financial journalism and the Banks here.

Someone brought 31,000 or so ounces of bullion into customer storage at HSBC yesterday, otherwise there was no activity for the first day of October.

As I mentioned in the stock commentary, barring a deal, the Street has its eye on the October 17 debt ceiling discussion, moreso that the shutdown which they really don't care about. I suspect that trade will be 'unsettled' until then.

There is an interesting movie on Netflix streaming called Surviving Hitler: A Love Story.  It is fascinating to see a well done documentary of how ordinary human lives separate and come back together again in a time of momentous and dark historical events.  I won't give away the ending, but if this was not a true story it would be hard to believe.

SP 500 and NDX Futures Daily Charts - Wax On, Wax Off

Stocks dropped and VIX spiked as the screw-the-specs trade from yesterday reversed, and then reversed again a bit to trim its losses into the close.

Ok, you were warned.

I think the market keeps oscillating in a highly technical gaming trade until we get closer to a deal or to the debt ceiling deadline of October 17, which as a reminder is a 'soft' deadline given as an estimate by Treasury Secretary Jack Lew.

We will probably not get the Non-Farm Payrolls report on Friday if the government shutdown continues.

Have a pleasant evening.

Seder and Taibbi Discuss JPM and the SpokesModels of the Financial Press

"There's no such thing as good money or bad money. There's just money."

Charles 'Lucky' Luciano

"Why is JP Morgan getting so much heat? Maybe because it is a massive international crime syndicate."

Matt Taibbi

It may be unfair to take the measure of these news channels as journalists.  For the most part they are not journalists, and these are not news channels, although they do sometimes display facts in small boxes on their screens.

In defense of CNBC, Fox and Bloomberg are no better.    I have heard the same meme about money and Wall Street there many, many times. 

There is a mind set that puts the Wall Street and their embedded entourage of enablers apart from the shared reality of the public.  And the same thing is occurring with the press and politicians in Washington.

The financial press are too often spokesmodels acting in extended infomercials, talking about current events with financial graduates of the Charles Luciano School of Economics,  produced and put forward by the corporate interests and billionaires that own them and their careers. 

And this same problem of corporate cronyism is infesting the mainstream news departments as well.

Enjoy.

Here is a link to Taibbi's column on this video in which he makes a few additional comments.