Comex Deliverable Gold Falls to 658,443 Ounces, Claims Per Deliverable Ounce at 55

There was a change in status of 48,652 ounces of gold bullion in the JPM warehouse which were withdrawn from the registered to the eligible category.  Apparently someone had a change of heart.

Big change of heart.  About one and half tonnes worth.

The claims per ounce of deliverable gold stand at 55.  As I have explained before, this is a metric, a way of measuring inventory against potential ownership.

Like the velocity of money or a speedometer on a car it does not do anything.  But it does provide information that can be quite useful if you are interested in where you are and where you might be going.

But it is a measure of some related things with meaning. And one that apparently annoys some who would rather not notice it now that it is at an extreme reading.  Extremely low readings of deliverable gold relative to demand generally mark a trend change in price within six months.

And that makes sense.  It will take higher prices to move more of that gold out of the eligible to the deliverable category, the antics of JPM notwithstanding.

But in the meanwhile quite a bit of gold has been draining away from the West to chase the premiums for delivery in the East.  The offtake in the Comex and the GLD ETF have been remarkable, not seen in any of the other precious metals.

This does not strike some people as odd.  And that is understandable.  The really big changes, what are called sea changes, always catch most of the people unawares and tosses them for a loss.  And experts are not exempt, not at all, because they often become lost in the familiar.  I think we have seen that most recently in the financial crisis that so many economists failed to see coming even as it rolled over the economy.

And then there is the 'investment' activity of the western Central Banks with their nation's gold reserves.  The obligations must weigh heavily.

I find it quite interesting that there is a new scandal brewing in the FX markets involving price rigging.   It is odd how the Banks have been caught rigging so many markets, but when it comes to precious metals, the apologists find all sorts of odd behaviour to be quite innocent and above reproach.

We are approaching the time when those who have will throw down, and those who have not, will fade away.  I do not see the future as inevitable.  But I do believe that there will be a reckoning of sorts. There always seems to be.

Weighed, and found wanting.

Stand and deliver.

Moyers: The top Secret Trade Deal You Need To Know About

Gold Daily and Silver Weekly Charts - All Saints

"Man has places in his heart which do not yet have life, and into them enters suffering, in order that they may be born...There is only one great sadness in life, at the very last, not to be a saint."

Léon Bloy, The Woman Who Was Poor

There was a fairly blatant hit on the metals for the first day of November.

There was a significant adjustment of gold bullion out of the deliverable category and into eligible storage, in the JPM warehouse of course. I shall post something about that late tonight.

Otherwise it was the same old, same old.  I used this latest smack down to backfill positions I had released on that last stab higher in price.   Now we will have to wait and see.

Can Joan's dad let me know how she is doing?  I remember her daily.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts

Stocks had a drift upwards today.

The bulls smell the end of year now that it is November.

Bloomberg TV was touting industrials as the way to play this into year end, despite a big gain for the year already.

I doubt we will see any substantial QE taper until well into next years, but it is a nice theme to play against the short term 'wash and rinse' that is so popular amongst traders.

I do not now see any significant correction until year end UNLESS there is some 'event' that provokes a sell-off. If there is such an event the market has a thin underpinning and may get some downside traction relative to the size and significance of any event.

But that is a long shot bet.

Have a pleasant weekend.

An Enemy of the State

Redefining 'Imminent Threat'

In early 2013, a Department of Justice white paper surfaced that laid out the Lawfulness of a Lethal Operation Directed Against a U.S. Citizen.

The government lawyers who wrote the 16-page document asserted that the government need not possess specific intelligence indicating that an American citizen is actively engaged in a particular or active terror plot in order to be cleared for targeted killing.

Instead, the paper argued that a determination from a 'well-informed high level administration official' that a target represents an 'imminent threat' to the United States is a sufficient basis to order the killing of an American citizen. But the Justice Department’s lawyers sought to alter the definition of 'imminent,' advocating what they called a 'broader concept of imminence.'

They wrote, 'The condition that an operational leader present an imminent threat of violent attack against the United States does not require the United States to have clear evidence that a specific attack on U.S. persons will take place in the immediate future.'

The government lawyers argued that waiting for a targeted killing of a suspect 'until preparations for an attack are concluded, would not allow the United States sufficient time to defend itself.' They asserted that such an operation constitutes 'a lawful killing in self-defense' and is 'not an assassination.'

Jameel Jaffer of the ACLU called the white paper a 'chilling document,' saying that 'it argues that the government has the right to carry out the extrajudicial killing of an American citizen.'

Jaffer added, 'This power is going to be available to the next administration and the one after that, and it’s going to be available in every future conflict, not just the conflict against al-Qaeda.

And according to the [Obama] administration, the power is available all over the world, not just on geographically cabined battlefields. So it really is a sweeping proposition...'

Today, decisions on who should live or die in the name of protecting America’s national security are made in secret, laws are interpreted by the president and his advisers behind closed doors, and no target is off-limits, including U.S. citizens. But the decisions made in Washington have implications far beyond their impact on the democratic system of checks and balances in the United States.

Jeremy Scahill, Perpetual War

Gold Daily and Silver Weekly Charts - Late FOMC/Expiration Hit For End of Month

"Mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which are employed altogether for their benefit."

Andrew Jackson

We finally saw the inevitable bear raid show up for an option expiration/FOMC week on the Comex.

There was concern in some circles, mostly among the denizens of the Beltway and the City, that the big desk traders were becoming too lazy to steal. That would almost certainly rob the Banks, not to mention the financial interests in New York and London, of much of their remaining competitive advantage.

And where would that leave our political class, as comfortable as they have become to their pandered, primped and pampered situations, sucking in the bounty of contributions and financial largesse from the elite as a reward for doing nothing?

There was no movement in or out of the COMEX gold warehouses yesterday.  As  reminder, I do not think that the Comex is going to default, unless they do something extraordinarily stupid, which does place it in the realm of possibility, but not probability.  They would slither out of a hard default in some way most likely.

Rather, I think we are going to need to see much higher prices to move gold bullion out of storage and into the deliverable category where it remains in rather light supply, with over 56 claims per deliverable ounce.  The Comex is becoming increasingly less relevant to the global precious metal markets.  It is becoming increasingly fictional. 

It has some resonance with Gary Gensler's comments about LIBOR.  It is a shame he could not bring himself to do something about the abuses in price manipulation while it was his duty and responsibility over the metals markets.

This is an interesting read. China's Gold Coup d'Etat

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The One Percent's Lament: Poor Poor Pitiful Me

"The press is the hired agent of a monied system, and set up for no other purpose than to tell lies where their interests are involved."

Henry Adams


"For the game had never been fair, the dice were loaded. They were swindlers and thieves of pennies and dimes, and they had been trapped and put out of the way by the swindlers and thieves of millions of dollars."

Upton Sinclair

NAV Premiums of Certain Precious Metal Trusts and Funds

End of month gut check for the precious metals.

 

Gold Daily and Silver Weekly Charts - Metals Pelted with Puff Balls on FOMC/Expiration

"Precious metals are financial assets like currencies, T-Bills and T-bonds.  They trade in the multiples of a hundred times the underlying physical, and so people buying them are voting and giving an economic view of the world or a view of the economic world..."

Jeff Christian in testimony to the CFTC


"It's [price manipulation] because gold is a powerful competitive international currency that, if allowed to function in a free market, will determine the value of other currencies, the level of interest rates, and the value of government bonds.

Gold's performance is usually the opposite of the performance of government currencies and bonds. Hence central banks fight gold to defend their currencies and bonds.

The problem is that central bank tactics in this fight affect more than gold; they affect markets generally and eventually destroy markets generally. This destruction of markets now has a name, a name used even by former members of the Federal Reserve Board. That name is 'financial repression.'"

Chris Powell

It was capping time, but no real serious hit on the metals on an FOMC day.

Equities maintain an upward bias as it looks like QE as far as the eye can see, at least into next year, lol.

There was no movement in or out of the Comex warehouses, highlighting the ephemeral paper nature of the US exchange.

God's judgement will fall heavily on the self-proclaimed exceptional.  Guarding against this is at least, if not more, important than protecting your savings.   For what does it profit a man...

Let us all keep this in mind even as the hysteria of the one percent grows, and the lies pile higher, driven by the cold winds of selfishness and self-destructive greed.

Have a pleasant evening. And try to remember those who will not.

Austerity, so the innocent may die, to salve the Banks' and fortunate ones' false pride.

SP 500 and NDX Futures Daily Charts - FOMC

The Fed basically said and did nothing new today. The economic news is weak.

Stocks sold off a bit on the news after the FOMC announcement.

Otherwise it is just business as usual.

After the bell Facebook beat revenue and earnings estimates.

Starbucks gave a cautionary outlook but boosted its dividend.

NAV Premiums of Certain Precious Metal Trusts and Funds

The metals are a bit quiet considering the circumstances of post-option expiration and FOMC day.

War of the Worlds: 30 October 1938

Remembering the 84th Anniversary of Black Tuesday, 29 October 1929

"The truly savage and frenetic part of New York, the terrible, cold, cruel part, is Wall Street.

Rivers of gold flow there from all over the earth, and death comes with it. There, as nowhere else, you feel a total absence of the spirit: herds of men who cannot count past three, herds more who cannot get past six, scorn for pure science and demoniacal respect for the present.

And the terrible thing is that the crowd that fills this street believes that the world will always be the same, that it is their duty to keep that huge machine running, day and night, forever...

I was lucky enough to see with my own eyes the recent stock-market crash, where they lost several billion dollars, a rabble of dead money that went sliding off into the sea. Never as then, amid suicides, hysteria, and groups of fainting people, have I felt the sensation of real death, death without hope, death that is nothing but rottenness, for the spectacle was terrifying but devoid of greatness.

And I, who come from a country where, as the great father Unamuno said, “at night the earth climbs to the sky,” I felt something like a divine urge to bombard that whole canyon of shadow, where ambulances collected suicides whose hands were full of rings."

Federico Garcia Lorca, A Poet In New York, October 1929

Gold Daily and Silver Weekly Charts - Day After Option Expiry and FOMC Tomorrow

Gold was hit for a pullback today, which was no surprise since it was the day after an option expiration and tomorrow is an FOMC day.

Silver was a bit more resilient but both metals are stalling here a bit below the important breakout levels that will validate an intermediate bottom.

There was no action in or out of the COMEX warehouses yesterday.

As shown in the article below, the Wall Street Journal said that Central Banks are cutting purchases and that gold is fading from the investment picture.  

You will forgive me if I doubt this.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - IBM to the Rescue On October 29

Weak economic news was a drag on stocks for most of the day.

During the trading day IBM announced a big addition to their stock buyback program.

IBM helped to push the Dow and the SP higher, and turned a poor day into another drift higher.

Tomorrow we will get the FOMC rate decision.

Nothing new is expected.

Today was the 84th anniversary of Black Tuesday, 29 October 1929.

Paper Gold Versus Physical Gold

Thanks for this from a tweet by KoosJansen and a stalwart Floridian reader.

What leverage?  Who said anything about leverage?

Lars Schall's Matterhorn Interview with John Butler On Gold

This is Part 2 of his interview. Part I can be seen here.

This is speculative of course, but I found it to be very interesting. Lars does a good job of drawing out the thoughts of his interviewee, and stepping out of the way and allowing them to expand on their thoughts.  

I had not been familiar with John Butler and while I may not agree with the likelihoods of some of the outcomes I respect his thinking very much.  He puts a bit more flesh on the theory of a hyperinflationary crisis.

I do not agree with his analysis of the euro breakdown.  I think it was inherently unsustainable for the reasons I have outlined in the past.  A currency that spans a broad area of varying economic needs must include a political union with 'transfer payments' to allow for the loss of monetary policy.

I do agree that the euro must evolve.

Gold Daily and Silver Weekly Charts - Quiet Comex Option Expiration

The metals were quietly today, as the early overnight rally in gold was leaned on most of the afternoon.

Let's see if they get hit tomorrow on the day after option expiration or on an FOMC day on Wednesday when nothing is expected to happen.

Prices in the metals are set at the margins. Prices in most markets are set at the margins.

I say this because some people have questioned why the relatively small amount of gold available for delivery on the Comex can matter to price.  They say that because it is such a small percentage of all the gold that has ever been mined, and in their model gold never gets used and is always there.

Well, its a two edged sword. How can dumping in a quiet market what is a relatively small percentage of all the gold that has ever been mined knock the price down? And conversely how can a spot shortage of gold on the same market cause the price to rise?  There might be a clue in there somewhere.

It is because all the gold that has ever been mined is never up for sale at one time and at the current price. Supply and demand work on what has been offered (supply) against the current desire for acquisition (demand). All the gold, silver, diamonds, water and anything else that might exist does not matter if you are trying to buy at a certain time and place at a certain price.  A higher price tends to make more supply available, all other things being equal.  Is that so hard to understand?

I think people get somewhat stuck on the idea that there is an offtake of silver for industrial use, but not so much for gold. That is awkward thinking based on a false assumption.

Silver is more actively brought to market through mining and recycling than gold.   Silver is often a byproduct of base metal mining.   And while silver has a heavier industrial component, gold has a heavier monetary component.

You may not believe that gold is monetary, but for about the past four or five thousand years enough people have thought so to have set a fairly reliable trend in that direction. 

Gold is a monetary metal, the premiere monetary metal. And it is obviously coming back into its own after a long bear market and a regime in which gold was out of favor by a group, the Anglo-American banking cartel, that was promoting other alternatives.  As I have shown several times that has changed.  

And I think for several reasons the structure of the gold market looks like an accident waiting to happen, with a significant price dislocation to the upside. And not so much for silver, although I like both, because no central banks are accumulating silver for monetary purposes as far as I am aware. So, it may not make sense to you in particular, but history does not seem to be leaning in your favor.

Speaking of the Comex, there was almost no movement in or out of the warehouses on Friday.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Drift Higher Ahead of Fed

Today was a very quiet day in the markets with light volumes and a slight upward bias as markets toddle along on earnings results and expectations of no changes from the Fed on Wednesday.

This is a 'dull market.' It looks a bit toppy but I think it might take something to shake the bulls out of their sleepwalking the indices higher.

 

Moyers and Morgenson: JP Morgan May Have Gotten Off Easy - Other's People Money

Matt Taibbi had some similar things to say about this same topic, Nobody Should Shed a Tear For JPM.

And of course, Jon Stewart had a classic takedown of the apologists and spokesmodels for the Wall Street Banks on CNBC and Fox, among others.

Predatory and crony capitalism, as opposed to constructive and transparent capitalism, is a recurrent problem as described in Other People's Moneyby Louis D. Brandeis written in 1913. 

Claims Per Deliverable Ounce Rises Above 55 at These Prices - JPM's Odd Warehouse Deliveries

There was nothing in or out of the Comex warehouses yesterday with regard to gold bullion.

TFMetals had some very interesting observations on recent actions in the Comex, in which JPM brought in two tranches of perfectly even metric tonnes to their warehouse.

Anyone who knows the nature of actual gold bars in use understands that they are never crafted even to the ounce, and certainly not to the tonne.

And one has to wonder where such a large amount of gold was found outside the Comex in 100 oz bars and/or from what refinery it has recently been certified Comex good.  Or were the customary requirements waived for some reason on introducing new bullion bars into the Comex complex for them?  Are they self-certifying now? 

They are on the quantities.  As you know, the CME has added a specific disclaimer to their warehouse report that say they perform no audit or inspection whatsoever on what the Banks might report in bullion, and assume no responsibility.

Be all this as it may, the number of claims per ounce of registered metal continues to climb with expanding open interest, and now stands at around 55, which is very high.    And about 40 percent of that deliverable gold sits in the JPM managed warehouse.

Given the potential for a dislocation to the exchange, and the widespread gimmickry that has been uncovered with the Banks and their commodity activity, I would like to think that the CME and CFTC might rouse themselves to have a look.

As I recall, someone who is a hero to the markets said, 'trust, but verify.' And the grounds for trust these days are stretched exceptionally thin.

Weighed and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - FOMC and Option Expiration Next Week

As a reminder Monday, 28 October is the November options expiration on the Comex.

November is not a particularly significant month for the futures in precious metals, but relative to supply the open interest is rising, so we *might* see a gut check some day, perhaps Tuesday or Wednesday.

This would also cover the traditional whacking on the metals around an FOMC meeting announcement on Wednesday. I doubt very much we will see anything new out of the Bernanke Fed as he winds down his tenure. We may see some acknowledgement of the damage which the government shutdown has done to the real economy.

I have linked to two pieces on it in the sidebar news, the charge and the denial,  but have not commented on the allegations made by Mr. Jeffrey Christian at the Silver Summit this week that whistleblower Andrew Maguire is 'a fake.' Maguire has denied it in a statement at TFMetals, but has not yet made a more expansive and complete response.

Since none of my thinking depends on anything that Maguire has said, and I do not know him or the validity of what he says, it does not concern me overmuch.  I said as much the last time I spoke on this topic here.   But I have some friends who have confidence in him, and I would hate to see them disappointed and badly played. 

I am expecting something like an interview in KingWorldNews, and I would hope they don't beat the teasers on this to death for drama's sake.  A whistleblower must present their bona fides since it is a portion of their claim to credibility.  I look forward to clearing the air on this before it becomes even more nonsensical with ex-wives and he said, he said.   A frank and undeniable rebuttal is what is owed to their audience, and the mystery has become a bit much. 

And it is good to remember that the reason we must tolerate all this nonsense is because of the appalling lack of transparency in the positions and transactions in the gold and silver markets, and the uneven performance of the regulators who put forward five year investigations into verifiably odd actions in markets, and then shut them down without any report whatsoever. It hardly inspires confidence, and I think people around the world are viewing these antics with increasing disdain.

In the meanwhile, the markets go forward, and whatever has been hidden will be revealed. Eventually.

Have a pleasant weekend.