Gold Daily and Silver Weekly Charts - The Downward Spiral of Hysterical Dumbness

Gold and silver took their usual price hits this morning in NY, afternoon in London.  Gold managed to climb all the way back to a slight gain while silver remained slightly lower.

It is all about the Federal Reserve and China this week.

The Fed is considering finally getting off the 'zero bound' of interest rates, largely to reload their policy options for the next financial paper asset panic.

China has a real economy that is definitely slowing, and reaping the results of some bad policy decisions of their own.

I hope there is no doubt in your mind that the physical gold market is tight globally, with bullion available for immediate delivery commanding a premium.

We keep hearing different plans being proposed by the Anglo-Americanized government of India to monetize the gold held in their temples, and now, a program to stimulate domestic gold mining.

China, Russia and the Mideast are not relenting in their strong demand for physical gold at these prices, and the Indian officials are doing what they can to please the Western financiers who are struggling to sustain their gold pool.

Even though all the figures I am seeing suggest that this tightness will resolve with a higher market clearing price to increase supply, as you might expect, I would not rule out something incredibly reckless on the part of the Western central bankers, to try and pretend and extend their pointless 'perception management'.

I still have a gut feeling that they have been co-opted and confounded by the bullion banks, that same crews that have been at the center of so many other serial financial criminal actions for the past ten years.

I am studiously avoiding hysterical commentary both pro and con the metals these days.  While it is fun stuff and makes for great headlines, it is not the sort of thing that is constructive to the real objective of protecting our wealth during a time of profound but difficult to predict changes.

I think we will have to watch and see what the facts are, and allow them to lead and modify any of our decisions as best we can, calmly and with a basis in the situation as it is.

Let's see what happens.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - It's All About Monetary Policy In the Financialized Economy

As you may have heard the Fed will decide whether to get off the zero bound this week, or not.

The economy does not call for it. This nonsense about a 'tight labor market' is mainstream media baloney, with the Labor Participation Rate so low, and wage growth stagnant.

No the Fed wants to raise rates as I have said to give themselves some policy room to deal with this latest financial paper assets bubble which they have helped to create, both by commission and omission.

They will most likely raise at either the September meeting this week, or at one of the two occasions they will have before year end.

I suspect strongly that they would like to do two 25 basis points raises before next fall's presidential elections.

The Fed fears the stock and bond markets. That is the only thing that would keep them on the sidelines.

And this is another strong indication of our the financialisation of the economy has co-opted common sense and a regard for the well-being of the public at larger, rather than the financially dependent one percent.

The broader stocks in the SP look like a 50-50 bet, but the NDX is in a formation that is more bullish 'if it works.'

Have a pleasant evening.

Hitting the Wall - Record Low 'Deliverable' Gold At the NY Comex - Unusual Tightness of Supply In London

“The City itself lives on its own myth. Instead of waking up and silently existing, the city people prefer a stubborn and fabricated dream; they do not care to be a part of the night, or to be merely of the world. They have constructed a world outside the world, against the world, a world of mechanical fictions which contemn nature and seek only to use it up, thus preventing it from renewing itself and man.”

Thomas Merton, Raids On The Unspeakable

Here are the current numbers and some recent history on the registered (deliverable) gold bullion inventories held at all of the Comex warehouses in the US.  One must view these number within the context of the greater world market for precious metals.

There is much more gold that is privately held in storage in these warehouses that is of an eligible form to be sold if the owner should choose to do so.

Last month JPM was notable for choosing to sell bullion at current prices in large numbers.  So I would imagine that as we move into active delivery months that JPM may be worth watching.

It is correct to say that very few contracts for gold bullion in NY actually result in anything more than a speculative trade,  some wager.   The last I heard only a very small number of contracts, on the order of a few percent, resulted in 'delivery.'

The current total of all registered gold is 182,611 troy ounces, or roughly 5.68 metric tonnes.

There are a total of almost 8 million ounces of eligible gold in all the US Comex Warehouses.  I have included that chart at the end.   So some will say, 'see, there is more than sufficient gold in the warehouses.  This is all nonsense.'

And to that we may respond, yes, but at what price?  That gold is presumably private property and not for sale at these prices, except for 182,611 ounces of it.

Anyone who discusses the dynamics of supply and demand in a purportedly 'free market' without even a nodding consideration to the notion of price as a factor is making no sense.

Why show you all this?    Some say it means nothing, that I do not understand the markets.  Well, perhaps that is true.  Then what harm is there in allowing people to see what has happened for themselves.

As you may recall, Goldman was seen taking a large delivery of gold for their house accounts in August.  And the amount of gold posted at the Comex 'for sale' at these prices is at historic lows.  How can one not wonder at this?

I am certainly not suggesting that there will be hard default at the Comex.  How could one expect that in a relatively small market that almost always settles in cash and is dominated by a few, very large insiders who are actively working both sides of the trade?    No, if there is a default anywhere, it will precipitate in a physical marketplace where bullion changes hands and form, more likely in London, perhaps even Switzerland.  And then it will cascade to all the other markets quickly.

The portion of the gold in London that is not specifically 'spoken for' and held closely is considered to potentially be part of 'the float.'

There have been recent observations by people such as Peter Hambro that it is becoming almost impossible to obtain physical bullion in London at these prices, only endless promises.  Even the financial media seems to have realized that there is a tightness in the physical supply of gold.

And yet, with all this the price discovery seems to go on as usual undaunted, divergent from the underlying physical supply issues, except for an increasing leverage of claims to ounces, and backwardation in pricing so that a premium must be paid for actual physical delivery.

This is a very dangerously developing situation, the kind that leads to market dislocations.

There are new calls for the increased 'monetization' of gold, by hypothecating existing bullion to satisfy third party collateral shortfalls.  This is a weak form of purchase, a 'rental' that promises to replace what has been further sold, perhaps in  multiples, with the product itself being refined into a different format and purity, and then shipped overseas.

And the supply of readily available gold seems to be quietly withdrawing from the markets.

Comex Potential Claims Per Ounce of Registered (Deliverable) Silver

Although we have been watching the gold potential claims per deliverable ounce quite closely, we have not been reviewing the situation in silver.

As I have mentioned before, the situation with silver on the Comex is quite a bit different than with gold.

Thanks in large part to CNT, a large wholesale of silver bullion to the US Mint among others, the Comex silver warehouses often see large amounts of withdrawals of bullion for use by the buyers.

In the case of gold, the function of the gold in those warehouses seems to perform more of a collateral arrangement, with the physical delivery exchanges being located in London and in Asia.

So it is no surprise that the potential claims per ounce of silver, although a bit elevated of lat at 15 to 1, it is relatively modest compared to the 230 to 1 ratio of gold.