NAV Premiums of Certain Precious Metal Trusts and Funds - Breaking Bad

There is a blizzard moving into the northeastern US this evening.

It may affect tomorrow's trade in equities.

I had put a decent short position on in the closing minutes of 31 December.  I have taken most of that off the table here and now.

I am long gold and silver bullion.

To my mind, prices were pushed to some short term extremes for the year end tape painting.

I tend to agree with much of Ted Butler's recent analysis titled 2013: The Year of JP Morgan.   If it becomes publicly available I will link to it.  For now it is by subscription only.

Ted thinks that JP Morgan is the major mover in the Comex gold market, executing market corners first to the short and then to the long side over the course of 2013.

They most likely have some privileged knowledge of the market structure and official policy, and perhaps even semi-official support in this, if nothing else than by indirect acquiescence, or turning a blind eye if you will.

Below is a recent video about gold buying in India.  China, southeast Asia, and the Mideast offer similar stories, except that the governments there are not trying to restrict purchasing to please the Western bankers.

Hubris Is the Basis of Tragedy

To the extent that any very serious people take note of this, it is to ignore it, and then deride it. History shows that those who represent fading and unsustainable regimes tend to ignore what is happening, then turn stridently against any opposition to their will by both words and actions. And finally, they lose.

There are some very good reasons why China and India and quite a few of the new emerging economies are seeking safe havens from the dollar. It is not because 'they hate our freedom.' It is not because 'they are ignorant of modern economics.' It is not because 'they are a bunch of gold bugs.'

It is because the Western financial system is a shell game of frauds, and remains largely unreformed, run by and for insiders. Recognition of a fraud first arises at the periphery.

And the dollar has become a major vehicle for exporting these frauds to the rest of the world through the mispricing of risk and the brazen manipulation of price discovery, in many financially related markets. How can anyone continue to ignore and even deny this pervasive and ongoing corruption in the markets?

If you do not understand this, you will probably be able to understand little of what is going on now, and will understand little of what may likely happen over the next few years. I would expect there to be quite a bit of disinformation put forward about it.

To paraphrase Upton Sinclair, sometimes it is difficult to get a man to understand what his career path and his wallet encourages him not to see.

Sometimes, but thank God not always, when flawed characters face a crisis they start breaking bad.  And overcome thereafter by greed, pride, and the will to power, they do not know when  to stop. 

And so they hurl themselves over into the abyss, and take a number of good people with them.

"Who are you talking to right now? Who is it you think you see? Do you know how much I make a year? I mean, even if I told you, you wouldn’t believe it.

Do you know what would happen if I suddenly decided to stop going into work? A business big enough that it could be listed on the NASDAQ goes belly up. Disappears! It ceases to exist without me...

You clearly don’t know who you’re talking to, so let me clue you in. I am not in danger. I am the danger. A guy opens his door and gets shot, and you think that of me? No! I am the one who knocks."

Walter White, Breaking Bad

Gold Daily and Silver Weekly Charts - 2013

And it is.

The Lord bless you and keep you.

May the Lord let his face shine upon you, and be gracious to you.

And may the Lord look upon you kindly, and grant you peace.


See you next year.

SP 500 and NDX Futures Daily Charts - The Men Who Sold the World

"Whoever wishes to come with me, let them put aside their own selfish interests, and take up their cross, and follow me.

For whosoever wills to keep their life for themselves shall lose it; but whosoever puts aside their life for My sake, and that of the Gospel, shall save it.

What therefore is the profit in it, if you gain the whole world, but lose your self?"

Mark 8:34-36

Gold and Silver ETF Inventory Changes For 2013 - 942 Tonnes of Western Gold Gone

The drain of gold from the Western ETFs and Funds is apparent.  About 942 net tonnes have been removed.  This compares to the 856 tonnes that had been removed as of mid-December.   That is quite a bit of bullion moving out in just a few weeks.

But even more notably, this is in sharp contrast to silver, which has had about 992 net tonnes added.   On a percentage basis silver has had a worse price performance this year compared to gold, so ascribing this to investor preference seems a bit thin. 

This is certainly an interesting phenomenon.  It will be worth remembering I suspect.

There seems to be little question that the gold market is being manipulated by some big players.   And there is certainly quite a bit of precedent for this manipulation.  The bigger questions are the motives, and the course of the endgame, this time.   All manipulations end, eventually. 

As an aside, I would like to address a recurring pet peeve of mine.  The financial spokesmodels will often look at the drawdowns in the GLD inventory and say, 'investors were dumping gold today.'  

Where were they dumping it, into the ocean? 

All this gold, that no one seemingly wants, and yet the New York Fed cannot find enough bullion to return Germany's gold, and for seven years.  What about the gold they hold that no one has yet asked about?

No, the gold has been moving from the custody of GLD as Authorized Participants, aka the usual suspects, redeem bullion from the ETF, and send it elsewhere. 

Where does this all lead?  Follow the yellow brick road, or more appropriately, the river of gold.  Judging from the overall import and export numbers, it is quite the golden river, flowing from west to east. 

It is caught in the tide of history, as are we all. 

These figures are from 12/31/2012 through 12/30/2013 and are courtesy of Nick Laird at Sharelynx.com.