Comex Claims Per Deliverable Ounce of Gold at 92 to 1 - Let Them Eat Treasuries

Luckily for the Comex most of the gold deliveries this month have been taken by JPM for their 'house account.'

January is not an active month for the precious metals on the Comex, so the wiseguys only need to muddle through the next couple of weeks, and then it should be clear sailing until February.

I hear the bullion banks are putting some heavy pressure on the miners to hedge their forward production, and even on some central banks to lease more gold. I am a little surprised that there have not been more acquisitive moves on the miners at these fire sale prices.

This situation on the Comex is not a default scenario per se. There is plenty of gold available, but it might require higher prices for customers to present their bullion for delivery. Unless of course that customer is a big bullion bank which is playing multiple sides of the same market.

Still, it pays to be prepared I suppose, even for the unlikely. CME Seeks To Broaden Cash Options In Clearinghouse Members Default Rules

Have a great holiday.

Gold Daily and Silver Weekly Charts - Santa Claus Is Coming To Town

A rather tiring week to say the least.

Intraday commentary here.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Holiday Cheer

And the paint is on the tape.  Ho ho ho.

JP Morgan Takes On More Gold, 61,790 Ounces Come Out of Mocatta

The big stopper JPM added about two tonnes of gold, and 61,790 ounces of bullion came out of the Scotia Mocatta registered inventory.

This brings the total deliverable (registered) ounces of gold down to 432,612 which is a number that we have not seen in this inventory category since the early 1990's, well before the gold bull market.

Supposedly Simon Weeks of Scotia Mocatta, who is also the chairman of the LBMA, was encouraging producers to start hedging their production, committing their bullion to the banks before prices fall any further.

Now I don't know if that is true, but if I were a highly leveraged bullion bank or mint, and I had multiple paper claims on each ounce of inventory, I would probably encourage my analysts and other sales associates to talk up the bear case too.  But this is what Andrew Maguire says, and it is only hearsay. 

If I were such a one as Weeks I would come out and deny it, if it was not true.  Either you said something as market guidance to some participants, or you did not.

By the way, I wonder what happened to those two JPM whistleblowers that Andrew knows, who are stashed away in some lawyers' offices somewhere.

What a funny, opaque market.  More like a game of liar's poker than an efficient and transparent clearing mechanism where informed producers and buyers meet to allocate resources.  But economic theory says that fraud is not possible because people are purely rational and act in their long term best interests, always.  And at least on the mythical planet of Vulcan, where many Ivy League economists apparently originate, logic dictates that honesty is the best policy.

Are There No Workhouses? Are There No Prisons?

Don't bother sending news of the cruel propaganda stunt by Peter Schiff saying that if Walmart pays its employees a living wage, then the price of goods at Walmart will have to rise substantially.  That canard has been used to justify every abuse of human beings and their labour since the days of Pharaoh.

Read this instead: Walton Family Earns $29 Billion In Six Months

"Income inequality is continuing to set records, and the Waltons are emblematic of this trend. Just last week it was reported that the top 1% of U.S. earners took home 19.3% of household income last year.

This is the highest proportion in a century; we have officially surpassed Great Depression-era levels of income concentration at the top. For the other 99% of Americans, household income went up a whopping 1% in 2012."

“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

Franklin Roosevelt

Obama's disapproval rating is 53%. The only thing that saves him is that the Congress' disapproval rating is around 74%.

If Obama is a socialist lefty, then Herbert Hoover was Mao Tse Tung. The only thing that Obama has in common with a real progressive politician like Franklin Roosevelt is that they are both 'traitors to their class.' Obama is corporate product, a brand.

Comex Claims Per Deliverable Ounce at 79 to 1

Not to worry, JP Morgan has the situation well in hand.

They are just recycling the deliverable for the next go round in the next active month, February. 

What could go wrong?

Bubble-nomics: The Federal Reserve Balance Sheet and the SP 500

"How could I have done this? I was making a lot of money. I didn’t need the money. Am I a flawed character?

I realized from a very early stage that the financial market is a wholly rigged job. There’s no chance that investors have in this market....It’s unbelievable. Goldman-- no one has any criminal convictions. The whole new regulatory reform is a joke."

Bernie Madoff


"Unfettered capitalism is a revolutionary force that consumes greater and greater numbers of human lives, until it finally consumes itself."

Chris Hedges


"I preyed upon the weak, the harmless and the unsuspecting. This lesson I was taught by others: might makes right."

Carl Panzram, psychopath, serial killer

Not much is going to the real economy and the 99 percent, so it has to be going somewhere.

The creation of financial asset bubbles using the power of selective monetary inflation is 'trickle down' at its finest.

But certain assets may blurt out unpleasant truths, if they are allowed to speak.

This is not sustainable. What are they thinking?

Entitlement, indeed.

Gold Daily and Silver Weekly Charts - Imbalances Abounding

"Evil is like a shadow, it has no real substance of its own, it is simply a lack of light. You cannot cause a shadow to disappear by trying to fight it, stamp on it, by railing against it, or any other form of emotional or physical resistance.

In order to cause a shadow to disappear, you must shine light on it."

Shakti Gawain

There was intraday commentary on the metals here and here.

Commentary on Bloomberg TV included the rather shocking observation that the gold vaults in London that were so full not long ago now stand 'virtually empty.'

And JP Morgan finally took delivery of some of the bulk of the gold contracts they have been 'stopping' this month, and plunged the level of registered gold on the Comex down to a new multiyear low.

The decline of physical gold in the ETFs of the West continues apace.

What are we to do?

Just like there are too many real people for The Recovery™, compared to just the right amount of virtual corporate people, so there does not seem to be enough physical gold, relative to paper claims on gold.

US Treasury Secretary Jack Lew informed us this afternoon that the 'budget deal' did not address the budget ceiling.  He expects the US to be bumping its political head against it no later than early March, unless another deal is reached, and more hostages are taken.

Damned useless eaters.  Order must be restored.

Not to worry. The Masters of the Universe are working on a fix. 

And having squandered the wealth of the west, and virtually destroyed the real economy of the developed nations in their reckless greed and unrestrained selfishness, the financial class and their scholar-gentry are highly motivated (to do right by themselves.)  

And that is what might well concern us the most.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Gresham's Law of Morality

"Our government... teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy."

Louis D. Brandeis

Stocks paused today as the unemployment claims number came in much higher than expected.

The Recovery™ is doing well for the corporations, the new ubermenchen.

It is all the carbon life forms that are causing the problems for the economy. 

Speaking of setting a bad example, a Microsoft Exec who has been charged with insider trading says he did it, even though he knew it was wrong, because Congress does it.

Have a pleasant evening.

Comex Registered Gold Plummets To New Low of 490,000 As JPM Takes Deliveries

Gold? We don't need no stinkin' gold! Just keep selling!

JPM has managed to control a lot of the December delivery by taking it into their own vaults for their house account.

I don't suppose that anyone from the CFTC has bother to stop by and ask, 'And what are you all up to if we may ask?'

Still, 490,000 of gold remaining deliverable at these prices is a bit thin.

I will print the claims per ounce late tonight or early tomorrow, when we can get the data wrangler away from the barbie. Or is that Sheila? I forget.

Bloomberg: London Gold Vaults 'Virtually Empty' - Shipped to China Not to Return

"Gold? We don't need no stinkin' gold!"

And the natural reaction at this point in what has proven to be a year of a brutal, almost relentless market correction is to say, 'if this is so, how can they keep selling gold down in price?'

How can they indeed. By being audacious. Like this: Secret Traders' Club Rigged Biggest Market's Rates

And they remain arrogantly defiant.

"But there is a sort of 'Ok guys, you're mad, but how are you going to stop me' mentality at the top."

Robert Johnson

This is going to be interesting.

Seymour Hersh: On the Push For War Against Syria

The discussion of this lead up to war certainly came and went quickly.

One thing that comes out in this interview is the determined opposition to the Administration's goals and the power of the Executive Branch that came out of the intelligence community and the Pentagon.  Perhaps there were some lessons learned in the Iraq war after all.

It is too bad that the lessons presented from the financial crisis of 2008 have not had a similar effect.

Hersh's closing remarks on the role of journalism are quite simple and to the point.





Whose Sarin? - Seymour Hersh

Gold Daily and Silver Weekly Charts - FOMC Day in Paperland - The Fed Chairman Wears Nada

Today was pretty much what I had expected. It was Christmas meat on the table from the Fed, mostly roasted jawbone.

The 'taper' was meaningless, except to take the talk about when it would start off the table. The FOMC went out of its way in the verbage to signal accommodative policy and money for nothing for the foreseeable future.

Despite the big rally in stocks, what did the Treasuries market do?  Nada.  I rest my case.

The hit on gold and silver was consequential only because JPM has locked up most of the registered inventory on the Comex, and after all, today was an FOMC day when monetary inflation was affirmed. Rik Green has some interesting observations about this here.

Goldbroker published an interview with Le Patron on the correction in the Gold Market today here.

The problem these jokers are going to run into is that as they increasingly run policy to form a dual economy, with the wealthiest few taking the majority of the gains, the lack of demand in aggregate is going to continued to pressure the real economy, and eventually stretch the social fabric to the breaking point.

And some may expect this, and look at it as an opportunity. Winning.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Year End Rally as Fed Spreads Holiday Cheer

"I am not alone at all, I thought. I was never alone at all. And that, of course, is the message of Christmas. We are never alone. Not when the night is darkest, the wind coldest, the world seemingly most indifferent. For this is still the time God chooses."

Taylor Caldwell

Today's action was all end of year window dressing and bonus pumping, triggered by the 'tiny taper' from the Fed, in which they pledged to reduce the rate at which they are expanding their balance sheet and handing money over the primary dealers at a slightly slower rate.

Low interest rates were unmistakably pledged for as far as the eye can see. And this is probably why stocks rallied, other than this is the time to boost financial asset prices to maximize those bonuses.

Have a pleasant evening.

FOMC Decision: Token Taper in a Trompe l'œil Recovery

The Fed is not 'unwinding its Balance Sheet' as the spokesmodel said on Bloomberg TV. They have slightly decreased the rate at which they are expanding it in the QE II program, roughly reducing the rate of expansion by about 12%, from $85 billion per month to a mere $75 billion per month.

Stocks rallied as I expected they might, given that this is the time to deck the halls with boughs of folly.  And naturally gold and silver were hit.

Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for the economy and the labor market as having become more nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.

Taking into account the extent of federal fiscal retrenchment since the inception of its current asset purchase program, the Committee sees the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases. Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. The Committee also reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Charles L. Evans; Esther L. George; Jerome H. Powell; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Eric S. Rosengren, who believes that, with the unemployment rate still elevated and the inflation rate well below the federal funds rate target, changes in the purchase program are premature until incoming data more clearly indicate that economic growth is likely to be sustained above its potential rate.

Chris Hedges: This Was The Year That Was

Here is an excerpt from Chris Hedges' talk at the University of Western Ontario.

It is his summary of where we are today, and how we have gotten here.

Gold Daily and Silver Weekly Charts - FOMC Tomorrow

"The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances."

U.S. Supreme Court, Global-Tech Appliances, Inc. v. SEB S.A. (2011)

I spent quite a bit of time looking at the movement of gold and silver bullion in and out of the various funds and ETFs that have sprung up.

I do not have enough facts to be sure, but one might suspect that the bullion banks are using some of the ETFs, as well as leased central bank gold, as their bullion ATMs in support of the great shell game that is the Western pricing of the precious metals.

But why speculate. Let's watch this play out. I am somewhat optimistic that eventually justice will be served, one way or another.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Marking Time Ahead of the Fed

It was a light trade of a technical, rather gamey nature.

Tomorrow is the Federal Reserve policy announcement, the last for 2013.

I suspect it will be much ado about nothing, if at most.

Have a pleasant evening.

Slouching Towards Bethlehem to be Born

"Capitalism is at risk of failing today not because we are running out of innovations, or because markets are failing to inspire private actions, but because we’ve lost sight of the operational failings of unfettered gluttony.

We are neglecting a torrent of market failures in infrastructure, finance, and the environment. We are turning our backs on a grotesque worsening of income inequality and willfully continuing to slash social benefits.

We are destroying the Earth as if we are indeed the last generation."

Jeffrey Sachs, Self-interest, without morals, leads to capitalism’s self-destruction

Self-interest, without morals, leads to capitalism’s self-destruction
By Jeffrey Sachs
Financial Times; January 18, 2012

Capitalism earns its keep through Adam Smith’s famous paradox of the invisible hand: self-interest, operating through markets, leads to the common good. Yet the paradox of self-interest breaks down when stretched too far. This is our global predicament today.

Self-interest promotes competition, the division of labor, and innovation, but fails to support the common good in four ways.

First, it fails when market competition breaks down, whether because of natural monopolies (in infrastructure), externalities (often related to the environment), public goods (such as basic scientific knowledge), or asymmetric information (in financial fraud, for example).

Second, it can easily turn into unacceptable inequality. The reasons are legion: luck; aptitude; inheritance; winner-takes-all-markets; fraud; and perhaps most insidiously, the conversion of wealth into power, in order to gain even greater wealth.

Third, self-interest leaves future generations at the mercy of today’s generation. Environmental unsustainability is a gross inequality of wellbeing across generations rather than across social classes.

Fourth, self-interest leaves our fragile mental apparatus, evolved for the African savannah, at the mercy of Madison Avenue. To put it more bluntly, our sense of self-interest, unless part of a large value system, is easily transmuted into a hopelessly addictive form of consumerism.

For these reasons, successful capitalism has never rested on a moral base of self-interest, but rather on the practice of self-interest embedded in a larger set of values. Max Weber explained that Europe’s original modern capitalists, the Calvinists, pursued profits in the search for proof of salvation. They saved ascetically to accumulate wealth to prove God’s grace, not to sate their consumer appetites.

Keynes noted the same regarding the mechanisms underpinning Pax Britannica at the end of the 19th Century. As he put it, the economic machine held together because those who ostensibly owned the cake only pretended to consume it. American capitalism, more secular and less patriotic, created its own vintage of social restraint. The greatest capitalist of the second half of the 19th century, Andrew Carnegie developed his Gospel of Wealth, according to which the great wealth of the entrepreneur was not personal property but a trust for society.

Our 21st century predicament is that these moral strictures have mostly vanished. On the one hand, the power of self-interest is alive and well and is delivering much that is good, indeed utterly remarkable, at a global scale. Former colonies and laggard regions are bounding forward as technologies diffuse and incomes surge through global trade and investment.

Yet global capitalism has mostly shed its moral constraints. Self-interest is no longer embedded in higher values. Consumerism is the world’s secular religion, more than science, humanism, or any other -ism. “Greed is good” is not only the mantra of a 1980s Hollywood moral fable: it is the operating principle of the top tiers of world society.

Capitalism is at risk of failing today not because we are running out of innovations, or because markets are failing to inspire private actions, but because we’ve lost sight of the operational failings of unfettered gluttony. We are neglecting a torrent of market failures in infrastructure, finance, and the environment. We are turning our backs on a grotesque worsening of income inequality and willfully continuing to slash social benefits. We are destroying the Earth as if we are indeed the last generation. We are poisoning our own appetites through addictions to luxury goods, cosmetic surgery, fats and sugar, TV watching, and other self-medications of choice or persuasion. And our politics are increasingly pernicious, as we turn political decisions over to the highest-bidding lobby, and allow big money to bypass regulatory controls.

Unless we regain our moral bearings our scope for collective action will be lost. The day may soon arrive when money fully owns our politics, markets have utterly devastated the environment, and gluttony relentlessly commands our personal choices. Then we will have arrived at the ultimate paradox: the self-destruction of prosperity at the very moment when technological knowhow enables sustainable prosperity for all.

Those who make peaceful revolution impossible will make violent revolution inevitable.

John F. Kennedy

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Silver Inventory Changes Since the Beginning of the Year

The changes in the silver ETFs and funds were a little more in keeping with recent price weakness, even though for the most part they are well up on the year as shown below.

What surprised me was the loss of about 320 tonnes of silver from SLV from Nov 1 until last Friday.

I downloaded the inventory history of SLV and verified Nick's numbers. And in doing so I realized that just looking at tonnes is not adequate, because the huge size of SLV exaggerates the nominal changes.  A 300 tonnes move in SLV inventory seems to be more 'normal' than one might expect.

I have included a third chart that shows the fluctuations in the SLV inventory. I think it is in keeping with the high beta in the price of silver. You have to wonder though, if there really is that much physical silver moving around the markets, or if there might not be some other factors in play that 'smooth' that high silver volatility in the inventory levels out.

YTD 856 Tonnes of Gold Bullion Leave the Comex and 10 Major Western ETFs and Funds

About 856 tonnes of gold bullion have left the Comex and the ten major western ETFs and funds that I have been tracking in calendar year 2013.

For comparison I include the same chart with the levels shown on 1 Novemember 2013.

I wonder where all this gold bullion is going?   We can see that twelve tonnes were transferred to the Comex, most likely to meet December delivery requirements. 

As for the rest, who can say where it has gone, and when and under conditions it might be coming back.

I wonder how much of that gold was leased out from Western central banks?

Data is from Nick Laird at Sharelynx.com