Shanghai Gold Exchange Sees 61.8 Tonnes Withdrawn In Eighth Largest Week Ever - Talk To the Hand

"Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."

Bernard M. Baruch

Asia continues to add significant amounts of gold bullion to their wealth reserves.

Wall Street and its sycophants would like us to consider gold to be just 'a pet rock' or 'like trading sardines.'   And yet central banks have turned to be net buyers, and Asia and the Mideast continue to buy bullion in record amounts.   Talk to the Chan.

One of the few coherent things Alan Greenspan said was that statists of all persuasions, both right and left, have 'an almost hysterical antagonism towards gold.' This is because gold resists their will to power over others.

So why isn't gold 'working' at this moment in history?

"We hypothesize that, having learned from the misadventures of the 1960s, the policy elites, well-versed in the practice of financial engineering and market manipulation, would have seen no need to dump stocks of government gold reserves onto the market, 1960s style, to keep the price in check.

Instead, synthetic gold, sourced in pyramids of credit extended to bullion bankers by central banks with little or no claim on physical substance, have provided a more efficient, better-camouflaged form of intervention. COMEX synthetic gold and related over-the-counter derivatives are traded in macro strategies implemented by hedge funds, high-frequency trades, and commodity funds in pair trades with interest-rate, currencies, equity futures, or even more exotic offsets. The volumes traded are huge, and bear little resemblance to actual flows of physical metal.

We suspect that shorting gold has come to seem like a riskless proposition as long as there is confidence in the Fed. Synthetic gold is the perfect substance for a carry trade: an easy borrow with very low carrying cost and little upside basis risk. Such a hypothesis, in our opinion, does much to explain the incongruity of a declining gold price while fundamentals for paper currency, and the U.S. dollar in particular, obviously deteriorate; while demand for physical gold has exceeded new mine supply for several years running; and while above-ground 400-ounce .995-gold bars located in London, New York, and other financial capitals (in cohabitation with speculative trading activity in paper markets) have steadily dwindled and disappeared into Asian financial centers reformulated as .9999 kilo bars."

Tocqueville Gold Newsletter 2Q 2015

The dumping at market of very large amounts of paper assets into quiet market hours has been well documented in many places. It is a well worn market manipulating strategy abused by some very large trading desks, often playing with other people's money. Citi privately called it their 'Dr. Evil Strategy.'

It is funny how the systematic rigging of so many financially related markets has been revealed, but the blatant manipulation of the precious metals market, which is certainly knowable by anyone with a basic knowledge of the markets and a computer terminal, is so willfully ignored. A love of money, lust for power, and a lack of integrity will alloy to make people hypocrites.

When we see such trash articles being written, and passed along mindlessly by those who yearn to warm themselves by the fires of the oligarchs, we know that gold has cast a cold fear into the hearts of those who would be kings, and their privileged servants.

And considering the long, cynical rally in paper assets that culminated in the financial crisis of 2008, when people start believing in the power of fraud and willful distortion of markets, we can only say as we did then, this will end badly.

A man cannot serve two masters. He will love the one and come to hate the other.  You love what you serve.

Gold Daily and Silver Weekly Charts - Hidden Dragon, Crouching Dollar

China made its long awaited restatement of its official gold reserves, and it was widely received as a 'lowball number.' China was under some pressure from official central bankdom to update its numbers, the last time being in 2009. And since they are trying to play nice, and have their yuan including in the SDR basket of currencies, they had to say something. I am not sure how to take it except with some serious skepticism.

I include two new charts below that compare the performance of gold against the euro/dollar cross and the inverse of the dollar DX index. Clearly at this point gold is running inversely against the strong dollar and with the weaker euro.

This situation in the markets has 'extreme' and 'fragile' written all over it. I am not quite sure if we are at the 2007 level yet, but we are closer to that than we are to any sustainable economic recovery by a long shot.

The ratio of paper claims to physical gold continues to creep higher at over 97:1 as shown below. Rather than allow the price to rise to make more physical gold available the bullion banks keep selling their paper gold, raising and reraising the stakes to shake out the gold longs ahead of the throw down for August expiration on July 28th and more importantly the active months of August and December. If you were fearless about losses, you might choose to play their brand of poker the same way.

I hesitate to call any of this 'capitulation' because it is becoming such an obviously artificial situation. But I suppose at some point someone or something has to stop this, as the collapse of the Bear Stearns hedge funds led to the demise of Lehman, and the collapse of the paper credit bubble in 2007-8.

I suspect that the paper bubble in precious metals will have quite a bit of company this next time around, especially in a narrow group of grossly overpriced stocks and distressed debt.

Have a pleasant weekend.

 

 

 

 

 

 

 

SP 500 and NDX Futures Daily Charts - New Era Tech Leads the Way Up Bubble Boulevard

The bubble is here.  Huzzah!

 

Look at the yawning divergence between a narrow group of new era tech companies and the broader market performance.  And forget about the performance of the real economy, which is terrible.  It is a mile wide and one inch deep.  Fragile does not begin to describe it. 

 

Between Fed policy errors and governmental reckless disregard we are seeing a very dangerous bubble having formed right now in a relatively narrow group of US stocks in particular and bonds in general, especially 'distressed debt.'

Every time I think that you can't overestimate the shamelessness of the 'ruling class' in the US I am left open mouthed. They really think that they are above the law and do not seem to care who knows it, because they are winning...

 

There was a big to-do about the housing numbers today, but those numbers were heavily skewed to starts for multi-family dwellings.  The fortunate are setting up their future income streams through rents.

 

People tend to pile hyperbole on hyperbole of dire warnings these days, and I don't want to get in the game of 'top this.'  I think we will see a market dislocation. Oh I see a crash.  Nope you are all wrong we are going to be reduced to small groups of survivors like 'The Walking Dead.'  I mean come on.

But we have now baked another financial crisis into the numbers, and it is just a matter of time before it arrives.

 

I don't know if they can keep muddling through this failure of public stewardship until Barack Obubble and friends can take their retirement and start cashing in, handing off the moneymachine over to the next representative of the oligarchs and perhaps some other crime family or not.  What a bunch of fakes and frauds.

They will never learn, and they will never be able to reform themselves or this rotten system. Someone has to take the car keys away from these serial bubbleholics.

Have a pleasant weekend.

 

 

 

Gold Daily and Silver Weekly Charts - An Extreme In Sentiment Ahead of Key Month

"Such is the rule of our warfare. We advance by yielding; we rise by falling; we conquer by suffering; we persuade by silence; we become rich by bountifulness; we inherit the earth through meekness; we gain comfort through mourning; we earn glory by penitence and prayer. Heaven and earth shall sooner fall than this rule be reversed."

John Henry Newman

Someone passed along some comments found on the web, that Bill Fleckenstein characterized as demonstrating 'an epic extreme in [negative] sentiment' for the precious metals, or something to that effect.

And those of us who watch these things are scratching our heads, because as we see this extreme negativity in sentiment, with the 'open interest' for gold on the Comex rising at the same time to very high levels, ahead of the active month of August. I have included the latest 'claims per ounce' chart below.

Things do make sense. There is a reason why the price of gold and silver are getting pounded against strong buying in paper here, and especially in physical bullion overseas.

But it does take some willingness to look at the facts of the whole matter, rather than failing theories that lead us from bubble to crisis, one after another, or the group think of the thug class.  That is worth shining all the light on it that is possible because frauds and deceptions love darkness and secrecy.

 

There is always the schadenfreude of the internet and those who cannot resist the temptation of a cheap remark to make themselves seem more serious.  Those things are not worth bothering about.

 

I hope that both those who yearn for meaningful financial reform and those who seek an end to the manipulation of precious metal markets have no illusions about how formidable a power is allied against them.  If they wish to see their future if things are allowed to progress as they are, look to Greece.

 

It is a shame that these different reform groups cannot see how much they have in common cause, despite their ideological and political differences.

This is the nature of our warfare.  Nec laudibus, nec timor.

Have a pleasant evening.

 

 

 

 

SP 500 and NDX Futures Daily Charts - No Fear, Little Shame, Lousy Pay 'With Benefits'

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

A quick peek at the VIX chart below really tells the whole story of this market: no fear.   These sorts of extremes in manipulation and perception management to the point of delusion rarely last long.

We are in a financial asset bubble that is diverging from reality. The economic number from this morning's Philly Fed was abysmal. But the Fed just keeps on keeping on, with compounding policy errors and elite friendly bubbles.

This is going to end, and badly.

By mid-next week I think we will have a better idea of where we are in the wash-rinse-repeat cycle of the mispricing of risks.

 

There should be no doubt that this creation and management of another financial asset bubble is intentional at least in its effects, if not in its consequences.  

 

It is doing a very good job of channeling the vast majority of new money created by the Fed almost directly into the hands of the 'audacious oligarchy'.

Apparently Chairwoman Yellen likes the Employment Cost Index number which is increasing. Right below here is a comparison of the Employment Cost Index and the growth of wages.

 

As you can see, the employee cost index rose sharply while actual wages are flat to declining. What's up with that, besides seasonal adjustments and any other bureaucratic tinkering and the usual statistical suspects?

The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits.

The benefits covered by the ECI include the following:

• Paid leave—vacations, holidays, sick leave, and other leave;

• Other supplemental cash payments—premium pay for work in addition to the regular work schedule (for example, overtime pay and pay for working weekends and holidays),

• Insurance benefits—life, health, short-term disability, and long-term disability insurance;

• Retirement and savings benefits—employers’ payments into defined-benefit and defined-contribution plans, including Employee Stock Ownership Plans (ESOP’s);

• Legally required benefits—Social Security, Federal and State unemployment insurance, workers’ compensation insurance, and Medicare;

• Other benefits—severance pay and payment into supplemental unemployment plans.

The grift is certainly working, and there is a recovery for some. 

But not for the 'working classes'.  That much is painfully obvious.  Let us not forget that most of the poor are the 'working poor.'  And there is a long line of unproductive drains on them from the FIRE sector, like a plump tick on their necks.

Have a pleasant evening.

 

 

 

 

'Owners Per Ounce' For All Precious Metals At the Comex

"He who sells what isn't his'n, must buy it back or go to prison."

Daniel Drew

Daniel Drew's famous maxim about naked short selling appears quaint now in these days of no fault market rigging, at least for the well-connected insiders and the too big to fail institutions.

For platinum and palladium Nick at Sharelynx.com spreads the open interest over all the stocks, and not with a split between 'eligible' and 'deliverable' as in the case of gold and silver, in case you were wondering.

Although paper claims vs. deliverable gold is by far the highest at 94:1, the trend recently on the Comex has been for more paper trading and less bullion available to cover at current prices.  Silver is at about 16:1,  palladium at 26:1, and platinum at 31:1.

This creates a condition of potential volatility at the Comex, although I do not think that a 'default' is on the table, but perhaps a short squeeze, that could be dramatic given a certain set of global events.

And of course, no one could have ever seen anything like this coming.