Silver Coin Premiums Continue Running Much Higher Over Spot

Silver Eagles are in the 25+% range, and bags of 90% silver coins are a little over 24%.

These charts are from goldchartsrus.com.

The prices are discovered using actual quotes from the largest internet retail sellers.

Gold Daily and Silver Weekly Charts - Option Expiry On 24th - A 'Bent' Market - Timely Caution

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Alan Greenspan, Testimony Before the Committee on Banking and Financial Services, U.S. House of Representatives July 24, 1998


"Secrecy is completely inadequate for democracy, but totally appropriate for tyranny."

Malcolm Fraser

We are going to have an option expiration on the Comex on this Thursday the 24th.   I am not expecting it to be a big event, since October is a light contract, with the real attention and action being concentrated in December.

However, there are over one thousand puts at the 1125 strike, so the cynical me might call that good support.

If I were trying to skin the specs and holders of options with shallower pockets, I would take gold down to about 1120ish, suck in more puts and scare the calls out, and then take the price up and skin all those put holders at expiry.

But this is a one dimensional view of the market, and does not take into account the trade in London and in the vastly out of control derivatives markets.   Or the side action in the miners and ETFs for that matter.

There were no (zero) deliveries for gold and silver at The Bucket Shop yesterday.

The slow bleed out of the bullion warehouses continues.

I recall some fellow, I think it was from Barclays, saying that the record low plunge in deliverable (registered) gold bullion at the Comex was because those who owned it did not wish to see it stopped out 'in a short squeeze.'

And I remember thinking at the time, what short squeeze is he referring to?  The non-delivery Bucket Shop?

And then the rumours regarding the shortage of delivery ready bullion at the LBMA came out, Peter Hambro said it was 'almost impossible to find,' and a few analysts noticed that the gold is in backwardation, meaning a premium is being paid for real gold in hand.

And then Rickards said that he thought a couple of Banks were in a pinch on delivery in London and were hedging their exposure in the futures in New York.  As he noted, London is a 'fractional reserve' system, as is The Bucket Shop with a stated assumption of 2% redemptions, as are some unallocated depositories.

If this game of musical gold gets dodgy, it could begin to fall apart as fast as MF Global swirled down drain.  I would not wish to see that.  I would greatly prefer honest markets that are not so recklessly fragile, in which the small investors is not exposed to so much unknown counterparty risk.

The Banks participating in the London fix are now Barclays, HSBC, SocGen, Bank of Nova Scotia, UBS, and Goldman Sachs.

The Banks which Rickards said were rumoured to be caught short physical deliveries and had been hedging on the Comex with longs are JPM and Citi.

I should note that Jim, for all his expertise and knowledge which I do not dispute, has been leaning in this direction before but certainly early. He suggested that there might be a run on gold back in 2010.

So here we are.   They will never admit there is a problem with this, never.  They will keep doubling down while the music is playing and if it stops, they will run to the Treasuries and the central banks for a rescue, while keeping their profits and bonuses.

In the absence of enforcement of the rules and effective regulation I am afraid that the only thing that will stop this nonsensical looting is a bullion brick in the face.

The price discovery mechanism in the precious metals market is to hide the true state of the supply behind a wall of secrecy, and to jawbone the demand lower by saying ridiculous things and befuddling the average investors.

But there it is.  The flow of gold and silver, a massive exodus of wealth moving from West to East, covered up by a storm of paper.

And the peoples of Asia are letting the malarkey of the bullion Banks and their apologists just float by on the breeze,  while they keep stacking the only financial asset without counterparty risk.

As a caution, even if it proves that the highly leveraged LBMA in London, being backed up by the incredibly over-leveraged Comex, is indeed in a developing short squeeze, as Greenspan reminded us, the central banks have gold which they can lease out to their friends in the Banks, so it can be sold off in Asia, with a promise to return it at some future date.

As Sir Eddie George said, they were 'staring at the abyss' if a failure to deliver were to occur, and prompt a run on available gold forcing an unwind of the paper house of cards.

That may keep the books balanced, but it really does not solve the problem, the systemic fraud that is going on in this as it has in so many other markets.

I get the impression that Asia is in this for the long haul, and will not be deterred.

Stand and deliver, until you cannot.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Lawless Markets

"There is something profoundly wrong when we are seeing a proliferation of billionaires at the same time as millions of Americans are working longer hours for lower wages and we have the highest rate of childhood poverty of any major country."

Bernie Sanders, Portland, Maine, July 6, 2015

Stocks were flailing today on overnight concerns about China, and angst that the Fed did not raise rates, which everyone now says that 'they knew.'

It would not surprise me to discover that this is more of a 'technical trade.' The punters were betting on no change, and were going long stocks and probably overbought a little.

So the pros got the market set up for a smackdown, so they could make some short term cash on their shorts, and then pick some assets back up on the cheap.

For all its headline depths, the descent looked fairly in control to me.  When I was in there today making a few selective purchases the Level II view was showing them gaming the hell out of the stocks, taking they down 100 shares at a time, and then scattering if anyone came in with real decent bid.

Their greed, and the hypocrisy of those who serve them, knows no bounds.

We will know this was the case if the stock market fails to break down from here.  Right now I am thinking it is about 50 - 50 because there is no valid chart formation and too many people are saying the market is going to go lower.  But China is a real wild card.

But it is probably a mistake not to be overly skeptical of anything going on is this lawless markets.

So let's see what happens.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - IMF: 'Gold Only Financial Asset With No Counterparty Liability'

"The IMF has put Monetary gold right at the top of the global reserve assets list – above SDRs. The IMF writes, '…The gold bullion component of monetary gold is the only case of a financial asset with no counterpart liability.'"

Koos Jansen

Gold took a light hit on the London PM fix and the opening of The Bucket Shop this morning. Silver took a hit as well but managed to bounce back up and finish positive on the day, probably because it is in an 'active month' at the betting parlor on the Hudson.

I read an analyst talking about the old 'gold vs. silver' argument over the weekend. In my opinion it is a fruitless argument  to consider in the abstract, and so I don't.

Gold and silver are both precious metals, but have some not so subtle differences. Silver has a much higher beta, meaning it will go up more and down more than gold.

 So if you can handle the volatility then silver is fine. If you would like less volatility and more 'insurance' then gold is more suitable.  Gold has less of a component of industrial use than silver, but there is generally more free floating silver around than gold, and much of it is produced as a byproduct of mining base metals.

There is a place for both in any diversified precious metals portfolio.  Arguing about the merits of one versus the other is like arguing about which is better, a screwdriver or a hammer.   You have to consider the job at hand for yourself.  And you can have a use for both of them.

I am personally persuaded by a growing amount of circumstantial evidence that there is a potential short squeeze developing in physical gold in London and New York, fueled by excessive paper trading and the insatiable demand in Asia.

It was electrifying last week when Jim Rickards said that the gold trade at the LBMA in London is wholly unallocated, and they hedge those positions on the Comex.  I had thought it was a split trade at the least.  If this is indeed the case, the public slipups admitting that the LBMA trade is running at 100:1 leverage implies that there is an enormous exposure to a shortfall of physical bullion for delivery and an unwinding of that leverage.

New York really trades overwhelmingly on a non-physical basis these days, so The Bucket Shop is more likely to be a late stage 'tell' and collateral damage than an actual precipitant of a short squeeze. And as a physical hedge it seems about as useful as fur coat in a flood.

London is the real Occidental bullion hub, and they tend to shroud their leverage and pricing antics behind a curtain of privileged secrecy.  But London and Switzerland are the pivot points where the physical bullion of the West is flowing East.

Let's see how the bullion banks deal with this as we muddle on towards the final months of the year that are historically difficult for the gold pool.

There was intraday commentary about A Currency War That Few Economists and Analysts Notice, Much Less Understand.

Let's keep a close on the gold and silver markets in terms of physical supply, because that is the weak point of all late stage gold pool operations, or any pooling operation that deals in leverage.

Koos Jansen considered an interesting question today about London Bullion Market and the International Gold Trade.

I have kept myself aware as possible of the global gold bullion flows through Nick Laird of goldchartsrus.com. His site is an invaluable source of information.

There is clearly more work to be done as Koos has suggested, and I await Ronan Manly's final analysis.  I hope that he is able to sort through enough of it to provide us some meaningful data.

What sort of efficient market arrives at price discovery by hiding the details of available supply?

In a nutshell there is an enormous demand for physical gold (and silver) in India, China, Russia and the Mideast.  And it appears that, at least in the short term, the physical demand is running close to or even possibly outrunning the short term physical supply AT THESE PRICES.   Should they allow the price to rise and free up more bullion for sale, or just keep increasing the leverage on the supply that they have?

Let's see how this works out.  The central banks apparently bailed the gambling crowd out before from a tight squeeze when Sir Eddie George stared into the abyss, or at least there are indications to that effect.  They may do so again, if they need to, and IF they can.  Even the mighty central banks cannot make real gold out of their folly.

But you know what?  I have come to believe that I can write about the market data all day long, and give people 'timely cautions,' and just a few will really notice or do anything.  And the paperati apologists will keep spouting their nonsense, until the price of gold jumps $100 overnight and starts running to $2,000, and silver takes out $20.  And then the markets and the greater mass of traders will begin to wake up.

Until then.  lol.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Déjà Vu All Over Again - Renters and Rentiers

Can you believe that the big tickle for stocks on financial television today was whether or not the Fed would raise rates at the next meeting?

OMG these jokers are so infantile I could just throw up.

Supposedly the Fed 'shocked' the market by doing nothing last week and so now traders are jittery that the economy is so bad that it cannot take a 25 basis point rate increase.

US equities were selling off today.  The Fed's Bullard, a lone dissenter and a hawk, was telling everyone who asked for the Fed to restrain themselves to 'shut up' from the IMF to Larry Summers.

Dennis Lockhart, also of the Fed, came out and suggested that traders ought not to worry because the Fed will be raising rates sometime this year and so stocks took back some of their losses.

I cannot believe these idiots.  This market is nuts, and the ruling class is gulping down their own Kool-Aid.

Yes, I believe that the economy is weak, and could be heading into a recession.  And yes, I think the Fed can raise 25 basis points because their 'QE' is a trickle down policy error subsidizing asset bubbles and not improving much for the real economy, so they can rates just to quiet down the insatiable crying babies of Wall Street.

The real problem the US faces is an individual balance sheet recession, and the Fed and the government are doing almost NOTHING, not one thing, to help the individual person get back up on their feet.  They are too busy enabled new ways for their wealthy friends and donors to cheat the public and skin them with fees, hidden expenses, growing monopolies, and substandard healthcare plans.  And this is killing aggregate demand.

But the moneyed interests are getting their way..  winning.   They have destroyed the middle class and created a nation of renters.  And the rents are going to be squeezed.

And the people are getting sick of it.  

Have a pleasant evening.

A Currency War That Few Economists and Analysts Notice, Much Less Understand

"The enormous gap between what US leaders do in the world and what Americans think their leaders are doing is one of the great propaganda accomplishments of the dominant political mythology."

Michael Parenti

Most economists and financial analysts think that 'currency war' merely refers to the competitive devaluations that nations sometimes engage in to help boost their domestic economies, as they had done in the 1930's for example.

This time the currency war is a much more profound confrontation of differing agendas revolving around the historically unusual role of the US dollar, based on nothing more than the will of the Federal Reserve and the 'full faith and credit' of the US, as the reserve currency for global central banks and international trade.

When a single nation begins to wield such an 'exorbitant privilege' to underwrite the speculative excesses of a crony capitalist banking system, and perhaps even more importantly, as an instrument in support of their international policy, one ought not be surprised that the rest of the world will begin to resist it.

A currency must be policy neutral, without regard to any party if it is to be a true medium of exchange.  Can this still be said of the US Dollar as it has been managed, especially since 1990?

As Alan Greenspan once correctly pointed out, but certainly did not heed when he was at the Fed, if a fiat dollar is managed by monetary policy such that it emulates gold, then it will be perceived as fair, and will certainly be above the particular domestic issues or international policy biases of a single nation that de facto wields the reserve currency status.

"And so it is an odd situation where all the central bankers -- while none of them are advocating a return to the gold standard -- nonetheless try to replicate the various types of interest rate policies that the gold standard would have created. And it is an interesting question whether you call that regulation, or basically functioning of a central bank in stabilizing the economy."

Greenspan: Role of Central Bankers Is To Emulate the Gold Standard

It might help one to understand this if they were to imagine a world in which Russia, for example, in a quirk of history had established the ruble as the benchmark currency for the world.  The ruble was recommended for use by all nations as the means of paying for oil,  and for settling international trade even when Russia is not involved in the transaction.  Each country was thereby compelled to hold a substantial portion of its international reserves in rubles.

And how would one be likely to react if the Russian Central Bank started using the ruble as an instrument of their international policy and extension of their quest for imperial power?  What if they began creating more rubles to underwrite the domestic bubbles which were created in their own corrupted financial system to bail out their banks and oligarchs?

And let's be serious and think 'like the other guys' for a moment.  What if some other nation that held the enormous power of the world's reserve currency was exhibiting a crop of candidates for their leader like the current choices for the US Presidency?   I would expect that some of the rhetoric being tossed about in these debates would send a chill to the very bottom of our toes.  Who could place their confident trust in their good and selflessly wise judgement to do the right things for other nations around the world, even if it might not favor the powerful special interests that give them so many millions in campaign donations?

Would you be content if your own government went quietly along with this abusive sort of monetary system?  Is this not indeed taxation without representation when the money supply is expanded and handed over directly to the hands of a few Bankers?

The intransigence of the Anglo-American financial establishment to recognize the legitimate issues of the rest of the world with regards to the manner in which they have conducted their control of the IMF, the World Bank, and the international reserve currency has ignited a currency war that is now becoming increasing visible, to just about everyone it seems except for those sequestered in their ivory towers at the heart of the Empire.  Or perhaps they think it too dangerous to even acknowledge that it exists, because then they might be compelled to render an opinion on it.

This is a 'big event' and it is all the more remarkable because the policy makers in the US act as though it is not even happening, or is not happening for any of the reasons for which it is.  They prefer to view it as a challenge to their authority, and to react uncompromisingly and with force.

I think that historians will find the start of the currency war in the Asian currency crises and the fall of the Russian ruble in the 1990's, with the roots of it in the closing of the gold window by Nixon in 1971.    But from the following essay it seems that China and a few astute Western observers have marked it as being visible from March 2015.

But whatever the date of its commencement, this dispute over the international monetary regime is the basis for the ongoing currency war that seeks to rebalance the terms of international trade and finance.

It is the old story of the very powerful resisting change that benefits the few of them inordinately. And as in so many wars of the past, those few who benefit from it do not include the bottom 90% of their own people at the least.

Most economists and analysts are ignoring this, or are unaware of it.  When they do finally wake up they will likely get busy finding ways to justify it, or dismiss it as an issue, and 'prove' that there is nothing wrong with it.  And very few will acknowledge the price of it in terms of economic stagnation and human misery.  All is well.

Here is an excerpt of a recent article that was published in Chinese and then translated into English in the journal of the International Monetary Institute in Beijing.  (It is a little funny that they published his last name as Widdlekoop, but if you were writing in hanzi would you know if a similar looking character is upside down?)

Has the US Lost its Role as the Underwriter of the Economic System?
By Willem Middlekoop

The recent news that Britain aspires to become one of the founding members of the new Asian Infrastructure Investment Bank (AIIB), has shocked many. Larry Summers, who served as a Secretary of the US Treasury between 1999 and 2001, immediately understood the significance of these developments, and wrote in an op-ed for the Washington Post:   'March 2015 may be remembered as the moment the United States lost its role as the underwriter of the global economic system. I can think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.‘

This British announcement was highly criticized by the US. The Financial Times quoted an unnamed US official:  'We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power. This decision was taken after no consultation with the US.‘

Summers was also highly critical of the US‘ strategy toward the newly founded AIIB: 'The U.S. misjudged the situation tremendously, put pressure on allies and developing countries to under no circumstances be part of AIIB. Largely because of resistance from the right (neo-conservatives more precisely), the United States stands alone in the world in failing to approve International Monetary Fund governance reforms that Washington itself pushed for in 2009. By supplementing IMF resources, this change would have bolstered confidence in the global economy. More important, it would come closer to giving countries such as China and India a share of IMF votes commensurate with their increased economic heft.‘

With Britain and many more major European countries signing up as founding members of the AIIB, the US economic hegemony has been dealt an enormous blow. For the first time since the end of the Second World War, the US is not in the driving seat during the foundation of a highly significant global institution. Of course, this will not change the world economic system overnight, but when we look back in five, ten or even fifteen years‘ time, March 2015 may be remembered as a turning point in economic history...

Another criticism is that the US move to more neoliberalism and global capitalism since the 1980‘s, has led to a change in the functions of the IMF. Critics claim allies of the US receive 'bigger loans with fewer conditions‘. Foreign governments who are non-allies have to sacrifice their political autonomy in exchange for IMF-funds and often have to sell assets crucial for their economy to foreign (often US) companies.

The former Tanzanian President Julius Nyerere, who was angered that debt-ridden African states were forced to hand over their sovereignty to the IMF (and World Bank), once asked:  'Who elected the IMF to be the ministry of finance for every country in the world?‘ And now the Chinese have openly asked for a 'new world wide central bank‘.

Joseph Stiglitz, a former chief economist at the World Bank, has also agreed that the IMF 'was reflecting the interests and ideology of the Western financial community‘. The 'helpful hand‘ by the IMF and World Bank towards military dictatorships friendly to the West‘ has been criticized as well.

It might be remembered as the start of an openly Chinese confrontation with the US over the world‘s economic leadership. As Summers points out, all of this has taken place because the Chinese leadership has had to wait a full five years for a change in the IMF-voting structure...

Willem Middlekoop, International Monetary Review, International Monetary Institute, Beijing July 2015, page 32