More About 'Potential Claims Per Ounce' Or 'Owners Per Ounce' Charts

Note: I have edited this exchange a bit and added much more detail to the answer for the sake of completeness and coherence.

I thought it might serve a more general interest.


From: xxxxxxxxxxx
To: "arthurcutten'at'yahoo.com"
Sent: Tuesday, March 8, 2016 11:05 AM
Subject: comex owners per oz.

"Number Of Owners Per Ounce Of Registered Gold Goes Exponential"

Hi, can u maybe comment on the latest ratio of owners per oz, my concern is in a controlled paper price PM market does it even matter? will it only matter when the chickens come home to roost on their golden eggs only to find out they arent there.....

thanks,
xxxxx

==========Reply to Mr. xxxxxx======


Dear xxxxxx,

I have spoken about this quite a bit, but I am afraid some do not quite get it even yet, on both sides of the issue. Critics often willfully so, and others I am afraid for the sake of headlines.

The 'owners per ounce' is an indicator of the price relative to the strength of hands holding supply at a given price.

I do not expect this 'exponential claims per ounce' to result in anything like a default since, as others have pointed out as well as myself, the ability to convert eligible gold to delivery is very quick.

So really it comes down to a matter of price. And this is in fact what the Comex told Kyle Bass about holding gold at an exchange licensed warehouse in something other than strictly allocated form.

Now if the price and supply continue to be in imbalance globally, which I think that they seem to be, then we might very well see a market dislocation, most likely coming out of one of the physical markets like London or Asia and spreading to other markets.

And that sort of thing can be resolved in a price jump, which may be substantial, but nevertheless is doable.  This is what I call a 'market dislocation.  It involves that hardly unlikely market phenomenon, at least these days, of a mispricing of risks.

And it would most likely work, unless the exchange does something silly to bail out some wrong-footed insiders. That would be more similar to a de facto default, ie a pre-ordained settlement to 'maintain order in the markets' because of some cited force majeure that really does little more than expose the reckless use of leverage and overly accommodative regulating of trading activity.

This is not likely but it is certainly a possibility, and more likely now that I might have otherwise thought.   I am afraid to say that my opinion on the likelihood of voluntary reform initiated by the actors and regulators is much more unlikely than one might have thought, given all that we have seen in the past fifteen years.   What else would one expects when disreputable behaviour pays so well with so few serious, personal consequences?

I hope this helps to at least clarify what I am saying.

Jesse

Strong Growth Recently In Gold and Silver 'Published' Holdings

As you know Nick Laird of goldchartsrus.com tracks and charts quite a few of the more interesting aspects of the precious metals markets.

One thing he does track is the amount of gold and silver held in funds and trusts that publicly disclose the amount of bullion that they are holding.

Nick calls this 'transparent' holdings, which some have rightly contended that they are not all that transparent, because you are taking them at their unaudited word.    Comex, for example, releases its bullion numbers with a strong disclosure as to their accuracy.

And as we have seen in some unfortunate circumstances, even allocated bullion can be subject to multiple, competing claims.

So I am calling this the 'published' holdings.  For that is what they are.

And they have been rising sharply, led initially by gold but with some recent activity by silver.

Gold Daily and Silver Weekly Charts - Déjà Vu

I imagine that this very clumsy market manipulation will continue until market participants regain their confidence in the ever-blundering central bankers, crooked financiers, and time-serving politicians.

Or until these fellows completely run the economy off the rails.

Apparently the sophisticates at the ECB are expected to deepen their negative interest rates and war on cash and savings as a cure for the looming Depression in Europe when they meet later this week.

To paraphrase Charles Dickens, if their model supposes that, then their model is an ass.

‘That is no excuse,’ replied Mr. Brownlow. ‘You were present on the occasion of the destruction of these trinkets, and indeed are the more guilty of the two, in the eye of the law; for the law supposes that your wife acts under your direction.’

‘If the law supposes that,’ said Mr. Bumble, squeezing his hat emphatically in both hands, ‘the law is a ass."

Charles Dickens, Oliver Twist

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Seriously?

"After dinner, Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want.  But people on the inside don’t listen to them.

Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders."

Elizabeth Warren


"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

And at what point will that brave individual, who begins to see things as they are, dare to call the madness of doing the same ineffective things, over and over, as the form of madness that they are?

The stock markets slumped a little today when Fed Vice-President Stanley Fischer said at an NABE conference that he is 'starting to see signs of inflation in the data.'

Oh really, is that data related to the US economy?   Because if so, no one else seems to be seeing it, except for those whose positions demand it.

They are not seeing it in the Consumer Credit numbers from this morning, with the rather big downward revision from the month before. And certainly not in the Payrolls number from last week, which was jam packed with low paying, part time jobs, declining hourly wages, increasing costs of healthcare and rent, and further erosion in the middle class.  Only someone insulated or detached from the reality of the day to day economy could have seen those numbers as 'good.'

Is it really so hard to understand that the point of stimulus is to stimulate aggregate demand from the bottom up, organically, by creating decently paying jobs and enabling the broadly based purchasing of essential goods?   Would J. M. Keynes be able to stop throwing up if he came back and saw what these purblind bean counters call 'stimulus?'

The purpose of stimulus is not to prop up an oversized and corrupt financial system that has already laid waste to the economies of the developed world.   It is not to further cripple the long suffering labor market that is being forced to compete with sweatshops and rigged currencies from regions that do not subscribe to that same social compact that defines the very fabric of America. It is not to further enrich a very small percentage of already very wealthy people, allowing their greed and short sighted stupidity to imperil the future well-being of entire nations.

These are simple truths.   And they are being led down blind alleys by careerism, self-interest, and vain and self-deludingly complacent bureaucrats, and strangled.

Have a pleasant evening.