NAV Premiums of Certain Precious Metal Trusts and Funds - Oh, Snap!

The ratio of gold/silver remains rather high at 60.

Gold and silver are up today pretty much in lockstep. Silver may make up some ground if the afterburners kick in.

The premiums are holding well, but hardly exuberant to say the least.

COMEX Gold Warehouses Continue to Bleed Out As 'Owners Per Ounce' Climbs Back Over 53

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake.   Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, reported in private conversation, September 1999

We saw more significant action in the Comex warehouse complex yesterday. 

A total of almost 4,000 ounces left the greatly diminished deliverable category, bringing it down to 717,666 ounces.    The ownership per ounce for each of those deliverable ounces is back up to 53.

Over 50,000 ounces left the Comex complex overall, taking the total amount of gold bullion there to 6,859,476 ounces.

As you know the gold bullion has been coming out of the ETFs in particular, and it is not showing up in the Comex warehouses.  There is widespread speculation and anecdotal evidence that this gold is being used to fulfill deliveries in Asia, after being refined into 400 ounce bars.  I do not think that it is likely to come back anytime soon.

There was a great deal made today of a letter that was sent out by JPM, limiting cash withdrawals by customers significantly and eliminating overseas wire transfers completely.  I have heard from some well-heeled individuals who are pulling their cash out in response to this.

I do not think this is a sign of government capital controls.  It is more likely involved with the trouble that JPM had gotten into with the OCC over their lack of compliance with regard to anti-money laundering measures.  As you may recall they received a 'cease and desist' order in January over this and have been under stricter surveillance since then.

Sometimes Banks engage in campaigns to migrate customers out of old platforms and less desirable accounts into more profitable account programs.  I did not see a message in their indicating that, but it is a possibility.  

It could also be a short term cash problem at the bank.   Perhaps there is some perceived risk there that the general public is not yet aware.  I find that a little hard to believe, but it seems more likely than a move to more general capital controls by the government.  If another big bank or two institute similar rules then maybe there is a little heat there worth our notice.

When it comes to metals, this market is just a mess.  I am appalled at the manner in which the CFTC and the CME have been conducting their roles as overseers.  These big market sells in quiet periods are almost unbelievable in their frequency and brazen effect on price.  

Are some bullion banks in trouble with their positions again?   It seems like something very odd is going on, and we know that when the banks get too badly offsides the market, the central banks are often willing to extend themselves to help them 'for the sake of the system.'

Gold forwards have gone negative again.  This represents tightness in the short term supply of physical bullion.   There have been massive drawdowns in Comex deliverable gold and the ETFs this year, without anything at all like it in silver, platinum, or palladium which have held steady or gained over the same time period. And no one seems to notice.  Le monde autour est sourd, bien entendu!

I suspect that those who see nothing unusual at all in this, and are seasoned watchers and traders in precious metals, are probably whistling past the graveyard.  It will take higher prices to free up more gold to be available for delivery, and that will make it harder to keep tapping the ETFs to obtain physical supply with which to satisfy Asia.  It is quite the predicament.

And there remains the fact that the Fed told the Bundesbank that they may have the return of the German people's gold, but not for seven years.  This obviously suggests that the gold might otherwise be occupied, spoken for, and encumbered.

There may be a reckoning when the smoke clears, and the quantities actually available to buyers readily on the shelves are revealed at last.

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - Bart Takes a Bow - Capital Controls

Cap, cap, cap again today as the antics in Washington had the metals left with a subdued trade while stocks jumped in response to ... a delay in financial Armageddon to the beginning of next year, or not. We'll have to wait for the firm details.

It does not do much for the floundering real economy, but the Street won't think about that until après ski.

We finally saw some meaningful activity in the Comex warehouses. I will write about that later this evening.

Several people have asked me about a letter from JP Morgan Chase about international wire transfers and dollar limitations and if it is related to capital controls.  Capital controls are actions by government to limit the movement of capital across its borders.

Since we do not yet know what prompted this move by JPM, a number of things are *possible.*  However it would be odd to embark on a policy of capital controls by starting at just one bank.

More likely this is related to the 'cease and desist' order presented by the OCC on JPM from earlier this year with regard to holes in their money laundering detection system. 

There could also be some particular problem at JPM that might provoke a number of withdrawals from overseas, a sort of 'run on the bank because of something that happens there.  But that is not likely, but it certainly would not be considered that a more general policy of 'capital controls.' 

But hey, speculation is more fun. Wow, capital controls are here. At only one bank. I wonder how you would get around that? 

Getting back to the metals, I don't know how long they can keep this up, but today I got the sense again that the tape is winding under this very heavy-handed price suppression. When it moves, it could be eventful. But until then we sit patiently, counting blessing and reminding ourselves of what is really important. It is certain that we will not be taking any physical gold and silver into the next world, but perhaps the unpaid debts of fraud may adhere to those who have accumulated them.

Bart Chilton made a surprise visit to Bloomberg television today, taking a bow for obtaining JPM's acceptance of their $100 million fine for the London Whale. It appears that Bart and a skeleton crew are still on active during the shutdown. One might wonder, if they are not watching the markets during this difficult period, what exactly are they doing? Besides the occasional television appearance, because the one riot one Ranger rule applies to that.

Here's a modest suggestion. Pick up the phone and ask the Comex to identify the party who dumped umpty ump tons of paper gold in a quiet market and triggered the stop logic last Friday. That's a start.

The action in the metals markets is almost eerie. The big sells in quiet periods, the growing open interest in the face of paper selling and decline of deliverable inventories seems blatant, brazen, and strange.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Fabulous Fab and the Mavens of Despair

This is funny on so many levels, and so rich a field for pithy remarks, that I don't quite have the energy left today to fully do it justice.

"Mr. Tourre no longer works at Goldman, and is enrolled in the economics doctoral program at the University of Chicago."

Dealbook, Fabrice Tourre Seeks a New Trial

It does offer some prospective ad slogans for University of Chicago's Economics program.

'When your white collar criminality lacks that competitive edge.'

If he was a politician he would just wait a few months and join a Beltway lobbying firm where results are all that matter.  As a financier you have to go upscale when things don't go your way. Why trade when you can make public policy statements and economic forecasts?

Mark Cuban was found not guilty by a jury this afternoon, and can skip grad school and go back to Shark Tank.

Stocks had the expected rally ahead of expectations of a last minute deal ahead of the debt ceiling. We will have to wait for the final details which *should* be released tonight or early tomorrow, but from what has been said so far it looks like a can kick down the road, but mostly past the holidays.

Have a pleasant evening.