Gold Leasing Rates Suggest Tightness in the New York Physical Markets

Gold rarely sees a pronounced backwardation in the futures markets, as we have seen in other commodities.   Even a slight backwardation over a period of time is unusual.

This might be related to the lack of heavy physical delivery coming out (being withdrawn)  from the Comex complex, especially in recent times where the number of potential claims are much greater than the ounces of physical bullion actually available for delivery.

Why would you pay a premium for physical within a system that deals in physical at ratios of 120 to 1?   It would seem to be a 'sink' for physical supply, rather than a source.  And the more I look at it the more that The Bucket Shop appears to be a clubby little arrangement amongst cronies.

Does this seem all that hard to believe?  Eric Hunsader says he can now prove that the US Stock Exchanges favor of class of trader over all others.  And the tighter world of NY and London commodity dealing dominated by a few big trading houses is different?

The higher rates to lease gold suggest a tightness in supply to satisfy short term demand.  We saw something like this in December 2013 when gold put in a short term bottom.

The gold is used to satisfy commitments in the market, and then replaced at a later date if the lease is not renewed and rolled over.

I do not know of a reliable source to show how much gold is actuall being leased to satisfy market demands.   But price is at least some indication of the upward pressure that implies some scarcity.

Thanks to the data wrangler Nick Laird at sharelynx.com.

Gold Daily and Silver Weekly Charts - Zombie-nomics and Corporate Welfare - Gettin' Paid

There was intraday commentary here about a large number of ounces of gold taken in delivery yesterday, and JP Morgan's heroic attempt to fill the gap between paper and physical bullion at the last minute.

And yet these numbers are barely rounding errors compared to the global physical markets centered in Europe, the Mideast and Asia.  That is what seems so insane about this 'pricing discovery.'

The US financial system looks like an accident waiting to happen--  again

We bailed out the perpetrators who crashed the financial system, quickly made them even larger, and then stood by while they continued to commit serial financial frauds and  market manipulation, politely referred to as 'rigging,' in most of the global markets. 

See: Citigroup's Unchecked Crime Wave

How nuts is that?  How would you explain the reason for something like this?

Eric Hunsader of Nanex says that he can now prove that the US exchanges favor one class of trader over the others.  Why would the stock market be any different than all the other arrangments we see in our crony capitalist society amongst the pigmen.

Speaking of favoring a special class, want to end a corporate welfare tax loophole and subsidies that would save the US billions and help rebuild the national infrastructure?  Read this.

Have a pleasant evening.

Time for a demagogue break?  Too bad this time we do not have a chance for a 'New Deal.' 

SP 500 and NDX Futures Daily Charts - Breakout Attempt Fails

Stocks made an heroic attempt to break out this morning.

VIX plummeted to below 11.

And yet it failed in the afternoon.

This market looks tired, and very, very fully priced.

Have a pleasant evening.

 

 

 

JP Morgan Saves the Day With a 275,000 Ounce Gold Fill On the Comex

When I saw the CME gold report from yesterday I was a little surprised to see that over 300,000 ounces of gold in futures contracts were stopped, or taken for delivery, so far in August.  And there was a total request for 282,000 ounces just yesterday.

Since there were only 362,000 ounces offered, I was wondering how they would manage this.  Claims to deliverable ounces were still running over 120:1.

 

And just for grins, where were the biggest requests for gold coming from?  None other than the house accounts of Goldman and HSBC.  What's up with that?

Have no fear, JP Morgan stepped up and moved 276,000 ounces into the 'deliverable' category as show in the second chart. 

 

And they filled 275,000 ounces of that futures delivery request out of their 'house account' as shown in the first.

 

Just in the nick of time!

 

The dirty little secret is that this market is a tiny tail wagging an elephant of global physical demand.   And the tail waggers seem to be slowly, but surely, losing their grip.

 

Gold Daily and Silver Weekly Charts - Meh

 

Gold and silver were drifting higher most of the day.

 

Dennis Lockhart of the Atlanta Fed felt the urge to declare that barring the wheels falling off the economy, he was inclined to raise rates at the September meeting.

 

That sounds familiar.  Oh, this is what I have been saying for most of the year.

 

Wow, what a revelation.

 

Traders in stocks and short term rates, and their associated algos, bounced their pricing to generate some activity, and more 'vig' for the HFT programs and the brokers.

 

Other than that this was a nothing day. 

 

The most important development I am watching, besides the stagnant economy and the kabuki theater of the Fed-centered propeller heads, is the decline in AAPL.

 

This is a danger, very narrow market that has been driven to an extreme based on a handful of 'new era stocks.'

 

Where have we seen this scenario before?

 

Nothing much happened in The Bucket Shop. 

 

Someone at Scotia decided to move 10,000 ounces from eligible to deliverable which will give the guys who track these things breathlessly the change to recalculate that 124:1 ratio of paper to bullion a bit lower.

 

I'll keep an eye on it, but it does not matter much if it is 116:1, or 120:1, or even 130:1.   If you don't have it, you don't have it.  And so they go to plan B, the artful dodge, which they have been hitting like a crack pipe in the VIP room at a 10th avenue 'nightclub' on a Friday night.

 

Have a pleasant evening.

 

 

 

 

 

 

 

 

SP 500 and NDX Futures Daily Charts - Janet Jett and the Blackhearts

"I think there is a high bar right now to not acting, speaking for myself. It will take a significant deterioration in the economic picture for me to be disinclined to move ahead."

Dennis Lockhart, Atlanta Fed President, 4 August 2015

This statement and the continuing decline in AAPL today were the primary movers in the market.

Apple cracked its 200 DMA and closed below it, for the first time in a very long while. This has technical market watchers spooked.

And in this highly narrowed market with just a few of the big tech fliers pulling the rally behind them, the potential for further declines in a behemoth like Apple has traders a little worried.

Let's see if Apple confirms this by continuing to close below the 200 DMA and can go out on the week, and then it might be a serious decline underway.

As for Lockhart, he is Yellen's buddy, and is continuing to give her cover for a rate increase that has nothing to do with the real economy, as I have said here many times. The Fed wants to pull the trigger before we get closer to the election because they do not want to provide a topic for the debates.

This market is dodgy.

Have a pleasant evening.