Gold Daily and Silver Weekly Charts - FOMC Week Shenanigans

Gold spiked higher in the morning on a pure flight to safety, but was pushed lower as stocks attempted to rally. Reality versus liquidity?

The FOMC will meet this week, so we might expect the usual FOMC shenanigans, but bear in mind that the big traders are squaring off against the upcoming February delivery.

I do not expect any curve balls from the Fed which is now locked into its mild tapering. Their monetization has clearly failed, being a 'top down' approach to The Recovery, which has exacerbated the strains in the real economy versus the financialized, paper economy.

The gold/silver ratio seems rather high at 63 to 1, and that reflects the fact that gold has led silver up this month in the precious metals rally.  Once silver gets started higher, it may kick in some serious jets and catch up rather quickly.  But one step at a time.  

As solid and well-informed the Bloomberg print reporting may be, their television counterparts all too often have the depth of cackling chuckleheads, with a few notable exceptions.  Well, they do have nice smiles, and so forth.

It really is annoying, but alas, Fox and CNBC are little better.  I have never understood why the US treats visual financial reporting as light entertainment, as compared to Europe and Asia which have a more journalistic approach. 

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Big Tech Week: AAPL, AMZN, FB, GOOG

Stocks had a bit of a wild ride today, as emerging market jitters had them moving solidly lower, with a rising VIX, but the dip buying liquidity crowds tried to bid them up in the afternoon. They finished a bit off.

The FOMC will meet this week, and it is expected to do its normal taper once again.

The big tickle is big tech, as the titans Apple, Amazon, Facebook and Google will be reporting earnings this week.

AAPL reports around 4:30 PM this evening.

Note:  AAPL missed on iPhone sales and warned on the conference call.  Stock is down about 8+% after hours.

Have a pleasant evening.

NAV Premiums of Certain Precious Metal Trusts and Funds

The gold/silver ratio is historically high, as gold leads silver higher so far this year.

I am looking for a return back to the 50's IF the precious metal rally continues, except perhaps if it is driven by a pure flight to safety.

Silver is a wild ride, once it gets its engine started.

Comex Potential Claims Per Deliverable Ounce 112 to 1 As Their Warehouses Show Thin Inventories

As you know January is a non-active month for gold on the Comex, but February tends to be quite lively.   The structure of the gold market flashed a 'buy signal' here on 15 January.  We have yet to see a confirmation by price on the gold daily chart.

Here is the warehouse inventory picture for registered (deliverable) gold ounces. As you can see without exception the levels of bullion ready to be sold is quite low.

As a reminder, that is only one side of the picture. There is an additional category of gold held in these warehouses in 'eligible' bullion form that can be transferred to deliverable with the issuance of some fairly simple paperwork.

So I think that those who talk about a default on the Comex are probably missing the bigger picture.  Supply and demand suggests that higher prices might be required to persuade profit maximizing bullion holders to make the switch from storage to sale.

But then again it is not bad to recall that not everyone who is trading bullion is making their profits on the Comex, especially by actual bullion sales. The great bulk of trading traffic is what the FT calls 'pixelated' or paper gold, claims upon rehypothecated claims. 

Therefore I have suggested that if there is a break in the gold market, it will not be likely to originate on the Comex, but rather in some physical delivery market in Asia, and even perhaps at the LBMA in London.   Any failure at the Comex would most likely be collateral damage to a panic run on bullion, either in a fail to deliver from a bullion bank or exchange, resulting in a massive up limits short squeeze deleveraging.

The current structure of the market looks a bit dodgy.  JPM has the clear whip hand on the paper markets.  But Asia and the Mideast are dominating the physical delivery markets. 

India demand is being throttled by the government sahibs that seem quite eager to accommodate the Anglo-American Banks, which is too bad for their people.   I doubt that posture will be sustainable for long.

So let's see what happens.  But it looks as though February could be interesting.  And if not, then the next active month is not far away.  

At the end of the day the market structure must be allowed to reach its clearing prices, and that does not seem to be the current case judging by the relationship of paper to physical.

As always, a special thanks to chartsmaster and data wrangler Nick Laird of sharelynx.com.