Comex Warehouse Potential Claims Per Deliverable Ounce Rises to Historical High 112 to 1

"The false man is more false to himself than to any one else.  He may despoil others, but himself is the chief loser. The world's scorn he might sometimes forget, but the knowledge of his own perfidy is undying."

Horace Mann

An almost shocking decline in deliverable (registered) gold has taken the ratio of open interest to deliverable gold to 112 to 1.

This is not a default scenario since the supply of eligible gold in the warehouses remains adequate and at historically manageable levels as shown in the last chart below.

Rather, it suggests that higher prices will be required to persuade more bullion owners to place their inventory up for delivery.

That higher price, of course depends on who those owners are, and how motivated they might be by profits from their metals trades.  For some interested parties it is enough to be the very close friends of the Central Banks, with benefits that make them incredibly rich, self-satisfied, and occasionally audacious to the point of over-reaching.

But of course, it is well to remember that the Comex has become the tail wagging the dog, as the gold bullion markets have shifted to the East.

February may be an interesting month, in an interesting year.

Weighed, and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - JPM Holds the Whip Hand on the Comex - Buy Signal

About 89,757 ounces of gold bullion left the deliverable category at Brinks, and a similar amount showed up in the eligible inventory at JPM yesterday. 

I do not know who owns the registered gold, since title can be transferred fairly easily.  But it remains fairly clear that JPM was in the driver's seat in stopping most of the deliveries, and now likely holds the 'whip hand' on the Comex in terms of gold.

This brings the overall number of deliverable gold ounces down to 370,137 which is a shockingly low number considering that we are coming into the normally heavy delivery month of February in a few weeks. 

Along with a few other indicators this triggers a 'buy signal' for gold in the intermediate term.  This is the first buy signal that I have issued since gold broke out of its cup and handle and ran to its all time high.  This is a 'structural' buy signal that must be confirmed by price and the chart formation.   The price signal will remain active unless gold sets a lower low on price.

I will post something about potential claims per ounce later tonight. 

There is sufficient gold in the eligible categories at the bullion banks, and while we do not know who actually 'owns it,' there is a high probability that it will take higher prices to pry that gold into the delivery process in February, at least from profit motivated holders. 

Take a look at the distribution of all categories of gold on the Comex.   Brinks and Manfreda have been 'cleaned out,' and the three bullion banks, JPM, HSBC and Scotia Mocatta are the big holders.  This market is now made up of big holders and bag holders.

There is some strong overhead resistance at 1260 which any number of analysts have noted, and there does seem to be an effort to hold the line on price here.

I have marked the most important resistance level, at least from my charting perspective, on the chart in red, just under 1,350 dollars per ounce.  A breakout through 1350 will confirm the buy signal.

February is shaping up to be an interesting month.   The various indicators have come together to signal a buy here but one might wish to wait for confirmation if you wish.  After all, it is a manipulated market.  There might be a rocky road before the precious metals finally break out.

I am now holding a full allocation of trading account gold and am considering adding more on pullbacks.    There are likely to be some vicious pullbacks since the Banks will not wish to have small spec company during the initial leg of this bull market move.  They are just like that. 

If the specs jump on the metals here with leverage they are going to get their teeth knocked out.   I was of two minds in writing this, because I do not wish to see amateur traders throwing themselves to the sharks.  But on the other hand sentiment is so bad that perhaps now they will stand aside and take a more measured approach to investing rather than speculating.

It's been a long time coming.  But change is going to come.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - SP 500 Back to December Record Close - Dog Tease

Stocks continued their move higher today as the SP regained the ground it had given up from the end of year tape painting, closing around the record high it set in December.

VIX has fallen back to relatively complacent levels. The economic news is just peachy.

The Fed is completely culpable for the bubble in financial assets, along with the compliant regulatory climate under Obama and his Wall Street friendly Congress. This will not end well, but there is no telling when it will end, so be careful about fighting the monied interests with money by shorting the market.

I hold no short positions here, except for longs in precious metals, which in some ways are a short on the appearance of recovery versus the reality of financial malpractice and policy errors.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Where Are We Going?

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Whacky Tech-Backy

Stocks rocketed higher, gaining back most of what they gave up yesterday.

Google put a fire under tech stocks by buying smart thermostat maker Nest for $3.2 billion.

Retail sales came in better than expected and that had traders casting off their fears and setting out on the seas of speculation.

A pleasant time will be guaranteed for all by the Fed, until it doesn't. Then they will bail out their friends.

NAV Premiums of Certain Precious Metal Trusts and Funds

“All that is gold does not glitter,
 Not all those who wander are lost;
 The old that is strong does not wither,
 Deep roots are not reached by the frost."

J.R.R. Tolkien, The Fellowship of the Ring

h/t commenter at ZH

Gold Daily and Silver Weekly Charts - Bounce

Gold and silver popped a little today, added to the after hours increase which they enjoyed on Friday.

Stocks are in an asset bubble uptrend, and gold and silver are in a remarkably persistent price decline.

Meanwhile at the Comex warehouses, HSBC, the custodian for GLD, managed to add some gold back to the registered (deliverable) inventory. More will most likely be needed for February.

As I said for stocks this evening, follow through is everything.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - WakuWaku Dokidoki

That's Japanese for the incredible feeling of heart pounding excitement-- as you push that pedal to the metal on a really hot new Toyota. 

For a bearish sort it might be the feel of the air rushing over your body as you fall off a cliff, perhaps.

So the bears got a brief thrill today as stocks 'finally' peeled off a second layer of the year end paintjob from just a few weeks ago, and slipped a bit off their Fed blown asset bubble.

The VIX is a bit more understated, coming as it has from almost still life complacency even after last weeks Jobs miss.

Follow through is everything, and so fare we have not yet broken the uptrend on the March SP 500, which is around the numerically important 1800 level.  So the bearish excitement is probably premature, as it has been since the last meaningful correction in 2011.

This weeks economic calendar is included below. It is packed with facts, but only a few market movers in the bunch.

Chartered offered a figure slightly north of $61 Billion for Time Warner after the close.

Have a pleasant evening.

Real News: Hedges and Binney on NSA Policy Part 2

“One of the greatest advantages of the totalitarian elites of the twenties and thirties was to turn any statement of fact into a question of motive.”

Hannah Arendt, The Origins of Totalitarianism

Credibility Trap: Fatal Web of Lies

From "Bill Moyers World of Ideas" 1994 Interview with ethicist Sissela Bok:

"As a philosopher, Sissela Bok grapples with hard truths – and with hard untruths, as well. Her writings explore the psychology of lying, the consequences of deception, and the perils of keeping secrets. With advanced degrees in both psychology and philosophy, she has taught ethics at Harvard’s Medical School, the Kennedy School of Government, and philosophy at Brandeis University. Her books include Lying: Moral Choice in Public and Private Life and A Strategy for Peace."

Moyers: Can a republic die of too many lies?

Sissela Bok: I think a republic definitely could—especially if the lies are also covered up by various methods of secrecy. If you combine lying and secrecy, and if you also bring in violence so that secrecy covers up for schemes of lying and violence, then I think a republic can die.

I don’t think it’s possible for citizens to have very much of an effect if they literally don’t know what’s going on.

A credibility trap is a condition in which the financial, political and informational functions of a society have been compromised by corruption and fraud. The leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The influential status quo tolerates the corruption and the fraud because they have profited, at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards them.

And so a failed policy and its support system become self-sustaining, long after it can be seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, 'organized hypocrisy.'

Related Reading:

JP Morgan and Madoff: Nesting Dolls of Fraud, Pam Martens

America's Gilded Capital: Losing Democracy to the Predator Class

Chris Hedges: The False Left-Right Paradigm and the Fatal Intransigence of Oligarchies

"In the same way, those who possess wealth and power in poor nations must accept their own responsibilities. They must lead the fight for those basic reforms which alone can preserve the fabric of their societies. Those who make peaceful revolution impossible will make violent revolution inevitable."

John F. Kennedy, First Anniversary of the Alliance For Progress

History Lesson

Tsar Nicholas II:   I know what will make them happy. They're children, and they need a Tsar! They need tradition. Not this! They're the victims of agitators. A Duma would make them bewildered and discontented. And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte:   I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot. Is this God's will? Are these His methods? Make war on your own people? How long do you think they're going to stand there and let you shoot them? YOU ask ME who's responsible? YOU ask?

Tsar Nicholas II:   The English have a parliament. Our British cousins gave their rights away. The Hapsburgs, and the Hoehenzollerns too. The Romanovs will not. What I was given, I will give my son.

Rappaport, Last Days of the Romanovs

Gold Daily and Silver Weekly Charts - Surprise, Surprise, Surprise

The jobs number was SO bad this morning that they had to skip the traditional metals raid, and the bad news bears got stuffed on a quick reversal.

There was intraday commentary regarding a rather large redemption of London Good Delivery Bars from the Sprott Physical Gold Trust here.

Germany's gold, Comex gold, almost half the gold from the western ETFs, seems like quite a bit of gold bullion is making like Jimmy Hoffa, and disappearing these days.  Maybe we should start looking for Jimmy in China.

A fellow might start to think that there sure are a lot of meaningless coincidences going around this place.

Have a pleasant weekend.

SP 500 and NDX Futures Daily Charts - Jobs Shock, the Walking Dead

The Jobs number sucked out loud this morning, as the economy added a meager 74,000 jobs, compared to an expected number of 197,000.    That's a swing and a miss.  Both hourly earnings and average workweek missed as well.  Today's box scores are included below.

The good news was that the unemployment percentage dropped hard from 7.0% to 6.7%.   Huzzah!  Stocks rally back, and the VIX plummets.

The fly in that holiday toddy is that they did it by whacking the denominator in the unemployment ratio, declaring about a half million or so able bodied workers to be the new walking dead.  (Hey, I was just kidding about liquidating people as the next move the other day.)

Capping that bit of cheer off, US retailers reported their worst holiday season since 2009.

Let's talk.

Stimulating the economy is not a bad idea when it is in shock from a financial crisis brought on as the result of massive systemic fraud and financial asset bubbles perpetrated by the financial system.   And yes, austerity has been proven wrong, again and again, and is the stuff of puritans and pigmen.

But stimulating the economy by giving more money directly to the same self-serving jokers that caused the problem in the first place, AND failing to correct the massive distortions in the economy that have been growing through horrible policy decisions over a period of years, is not exactly what Lord Keynes might have had in mind, ya think? 

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

Have a pleasant weekend.

Real News: Binney and Hedges On Obama's NSA Guidelines

I know this type of criticism about the current administration upsets a lot of disillusioned (and desperate) liberals who cling to Brand Obama, but at the end of the day, he is no progressive reformer.  He seems more like a moderate Republican, Herbert Hoover, with splash of Nixon.

Yes, he is 'better than' those Luddites and corporate crypto-fascists that scare you, but isn't that really the point? Negotiating away your freedom, bit by bit, out of fear?

NAV Premiums for Precious Metal Trusts and Funds - 83,890 Ounces Redeemed From Sprott Gold

Since the last time I had checked earlier this month there was a redemption of 10,072,357 shares for 83,890 ounces of gold bullion from the Sprott Physical Gold Trust.  That is about 210 London Good Delivery bars.

I have heard some rumours about who has been asking around for delivery, but in checking I do not see anything official from the fund, so why speculate.  But for a redemption of over $103 million, I doubt it is the eBay crowd shuffling up to the window, so it is probably one of the usual suspects, the inside outers, not the big morgue macher. 

But then again, the Morgue has been in an acquisitive mood, and some say it is standing on a corner.

Redemptions at Sprott Gold had been very unusual, until recently it seems. Apparently that is changing, as the scraping of the bottom of the bullion barrel proceeds.  No wonder the fiatscos are getting restless.

Yeah, there is no unusual demand for physical gold bullion in Asia. Nothing to see here, move along. 

At least Sprott runs a fully allocated ship.  If a 'run' on the unallocated pools of gold starts, this could really get interesting.  

Deleveraging in a short squeeze.  Could be some tough love, kitten.

There was no activity in the Sprott Silver Trust.  But the cash levels in the PSLV Trust have gotten back down to the levels where another secondary offering of expansion might be in the offing sometime this year.  That would be a big physical buy in another tight market.  It could help to provide a 'come-to-Jesus' moment, as some have suggested.

But as we know all too well, anything goes in times of general deceit, with frickin' lasers, and the Banks breaking bad.  So let's just see what happens.

From the Sprott website for PHYS.

Unitholders will have the ability, on a monthly basis to redeem their units for physical gold bullion for a redemption price equal to 100% of the NAV of the redeemed units, less redemption and delivery expenses, including:

•the handling of the notice of redemption
•the delivery of the physical bullion for units that are being redeemed (estimated at $5 per troy ounce at the time of the prospectus, Feb. 2010 for delivery anywhere within continental US and Canada)
•and the applicable gold storage in-and-out fees (minimum $50 plus $5 per each additional bar, at the time of the prospectus).

Redemption requests must be for amounts that are at least equivalent to the value of one London Good Delivery bar or an integral multiple thereof, plus applicable expenses. A ''London Good Delivery bar'' weighs between 350 and 430 troy ounces (generally, most bars weigh between 390 and 410 troy ounces).

Comex Warehouse Registered Gold Inventory at 93 to 1

Getting a bit thin.

As a reminder, this is open interest as a ratio to registered (deliverable) gold.

January is not an 'active month.'

Higher prices would likely move gold into that deliverable category, and there is quite a bit in delivery ready form in the eligible category.

February is shaping up to be an interesting month.

Bill Moyers: Moral Mondays, North Carolina State of Conflict

Gold Daily and Silver Weekly Charts - Interesting Development at the Comex

I thought it was interesting that 63,877 ounces of gold bullion left the registered inventory from Scotia Mocatta yesterday.  That brings the deliverable category down to a new low of 416,563 ounces for this leg of the bull market. 

In the past these big declines have tended to mark an intermediate price trend change within six months or so.  Let's see if that holds true this time.

As an aside, I wish to remind you again that the registered, or deliverable category, is not the sum total of all bullion at the Comex.  There are 7,711,145 ounces of bullion in storage that can be placed into a deliverable state with a procedural action. 

For my purposes, this is more of a indicator of pricing preferences, or a willingness to sell, rather than some likely default scenario. I know I have said that quite a few times, but I wanted it to sink in, especially for those who choose to misrepresent what this data implies, for whatever reason, bullish or bearish.

And I will probably post the latest chart on this later tonight.  Because one would tend to think that when available supply placed on the market becomes exceptionally low at certain prices, it could likely indicate higher prices will be required to bring additional supply to market. 

Not all supply is equal, in availability and quality, and prices are, after all, set at the margins.  Water water everywhere, but not a drop to drink, and all that. 

When fellows make the case that all the gold in the world is part of the supply in the same way for the purposes of supply and demand calculations I have to chuckle to myself.  Nothing could be further from the truth in almost every commodity I can think of, including gold.  Things are held by different actors for different purposes.

There are also those who will say, 'you cannot trust this data it could be faked or wrong.'  Yes, a lot of things could be this, or could be that.  Life is a school of probabilities.  But I notice these same people do not seem to hesitate to use the data they prefer for their own purposes, which also could be faked or wrong. 

So I think we can stipulate that we have to use any data we have with some reasonable caution and skepticism, especially in markets that are opaque.  There is plenty of gaming and fraud in these markets.

But if someone wishes to start dismissing the meaning of some data because of some degree of doubt, then they may as well apply that same stringent criteria to all the data which they use.  And in many cases if they do this, they would be compelled to shut up, because they will have nothing meaningful to say.  Alas, such integrity is very rare indeed.

So I think I will prefer to look at all the data available and pertinent, and draw reasonable inferences, testing them along the way, always looking at multiple sources and confirmations.  There is nothing wrong with formulating hypotheses.  That is what is known as 'the scientific method.'   It is what you do with them and how you use them that counts. 

And to that end if working with other people to find out what's what proves fruitful, I will do it of course, always and everywhere. That promise is the practical side of working hard on a blog for 'no pay.'  There are some others, but not easily accounted for on worldly ledgers. And it is more useful than watching sports, or reality TV, or whatever people do these days with their leisure hours.

But some sources of information are relatively dry wells, and not worth the time and effort to try and pull out anything, of even marginal value. 

Yes there is the value of educating the stubbornly ignorant, and the hope of mutual benefit, always.  And the mule may need a good washing, but that does not mean that I'm the one who is going to do it.  These days I would rather wait for rain.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - The Year of Divergences

Non-Farm Payrolls on Friday remains the 'big tickle' for Wall Street.

Stocks were largely flat ahead of the big event.

Sears was hammered after hours as the reality of the failing consumer continues to leak out from behind the stage props.

Obama made a speech today about rescuing beleaguered cities with 'promise zones.'  Who thought up that name?   I suppose it is better than Hoovervilles..

The Republicans continue to delight in needlessly tormenting the unfortunate on behalf of their paymasters.

And the band played on.

Have a pleasant evening.

The Roots of the Next Crisis, and the Dark Hallway Beyond

“Those who fail to exhibit positive attitudes, no matter the external reality, are seen as maladjusted and in need of assistance. Their attitudes need correction...

Suddenly, abused and battered wives or children, the unemployed, the depressed and mentally ill, the illiterate, the lonely, those grieving for lost loved ones, those crushed by poverty, the terminally ill, those fighting with addictions, those suffering from trauma, those trapped in menial and poorly paid jobs, those whose homes are in foreclosure or who are filing for bankruptcy because they cannot pay their medical bills, are to blame for their negativity.

The ideology justifies the cruelty of unfettered capitalism, shifting the blame from the power elite to those they oppress."

Chris Hedges

Here is a recent conversation I had with a friend about the current state of the US recovery.  As an accountant with a wide range of exposures, I enjoy hearing his perspective since I no longer have that sort of current insight into the corporate culture in America.  I have years of background running large businesses in corporations, and some forays into large scale M&A work, so I have seen quite a bit of it. The methods rarely change, merely the guises and degrees.

Here are excerpts from his side of the conversation with only one parenthetical comment of my own.

"I don’t think we’re seeing profits in a traditional sense. Instead, it appears to me that we’re watching a long, drawn out LBO’ing of America. It appears that companies are liquidating capital and returning it as opposed to earnings spreads on revenue.

It seems like we’re seeing the final blow-off phase that started with the stock option becoming the primary form of compensation for corporate talent. By drawing out the LBO, they re-stock their options each year with a guaranteed return thanks to the Fed and their own Treasury Departments.

The problem is that you can’t have systematic corporate buybacks with employment/economic growth as they create diametrically opposite outcomes. The more work I do, the more I conclude that the US economy has not expanded since 2006.

I was looking at mutual fund data the other day and it showed that people moved their fixed income money into domestic equity - $185 billion in liquidated bond funds to buy $175 billion in equity funds. This happened after the Fed announced tapering was on the table. Just like the gold market, I suspect that “someone” forced the liquidation of bond funds and herded the money into equity funds to keep the rally going.  (I think it is perfectly reasonable to flee bond funds at any time that interest rates are turning higher.  Bond funds often take it on the chin in such a deleveraging of a long term interest rate trend.   However, I think the whole taper thing was hyped and used by the wiseguys, as are most things these days by our financial masters of the universe. - Jesse)

Coincidentally, corporations used half a trillion in cash flow on buybacks. It’s a liquidity game but with limitations. What’s the next asset that can be liquidated or levered? They’re still working on gold but sometime soon, the price of gold will be set in the East, where the gold resides. Agricultural commodities are being liquidated but that ensures a drop in planting next year. Oil is too valuable on the geopolitical front to liquidate.

There are certainly winners in this economy but far more losers. At some point, the weight of the losers acts against the winners, many of whom are levered up with confidence. Corporations can liquidate equity capital but we all know how the LBO’d companies operated in the 1990’s. In many ways, they’ve gotten corporations to behave like consumers did in the 2000’s, only this time they’re trained to buy back their own stock. Every cycle has natural limits.

We know that corporate cash flow is no longer growing and we know that it’s more expensive to sell debt today than a year ago. We also know that the Fed sees the stock market as their proof of success. So how does this shakeout? If corporations are a lemon, how much juice can you squeeze out of the lemon?"

Although I do not wish to be an alarmist, I have to say that this trend of attempting to sustain the unsustainable has gone on longer than I had previously thought possible.

I am fairly sure that the next crisis will bring these things to a head and some sort of resolution. But therein also lies great danger. Philosophies that have grown time can have deep roots, and when faced with what to them is an intolerable change, can react somewhat excessively. They may even welcome the opportunity to act excessively and decisively, at least in their own minds, as the path to winning.

When a ruling subculture that has become accustomed to crushing and liquidating things for its own power and pleasure, whether it is natural resources, the environment, crops, animals, land, or social organizations, eventually runs out of things, it can become frustrated and angry in its seeming impotence to continue on, to keep expanding.

Indirectly and somewhat benignly at first, but with a growing efficiency and determination over time, it will begin with the weak and the defenseless, attacking and objectifying them, even in the most petty of ways and impositions. It will turn to its critics, and then everyone who is defined by them as 'the other.'

That is when a predatory social and economic philosophy can turn into pure fascism, and start liquidating people.  And finally it liquidates and consumes itself.

But really, no one wakes up one morning and suddenly decides, 'Today I will become a monster, and wantonly kill innocent women and children.'

Otherwise ordinary people get to that point slowly, one convenient rationalization for their 'necessary and expedient' behavior at a time. After all, they are the good people, they are the strong, they are the most successful and the favored.

 They are the entitled, and not these others who would seek to drain them, drag them back down. They are the champions of progress and achievement and civilisation, the hardest working, and the epitome of mankind.  

What could possibly go wrong? 

"He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J. H. Newman, The AntiChrist

If you are one who thinks that the above 'could not possibly happen here,' and I am sure that there are many, you may wish to read the following vignette from modern US history. Alan Nasser, FDR's Response to the Plot to Overthrow Him

The Recovery™ In One Chart

"A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules...

Such an economy kills. "

Jorge Mario Bergoglio, Francis I


"When you won, you divided the profits amongst you, and when you lost, you charged it to the Bank [of the United States]...

You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table), I will rout you out."

Andrew Jackson

Corporatism by any other name, or brand...

h/t for the chart to those wild and crazy guys at GMU.