"I was being called to surrender the very citadel of my self. I was completely in the dark. I did not really know what repentance was or what I was required to repent of. It was indeed the turning point of my life. God had brought me to my knees and made me acknowledge my own nothingness, and out of that knowledge I had been reborn. I was no longer the centre of my life, and therefore I could see God in everything." Bede Griffiths
There were 63.2 tonnes of gold bullion withdrawn from the Shanghai Exchange this week.
As can be seen in the second chart, the gold withdrawals are occurring at a record pace.
This significant demand for physical gold is increasing, with what appear to be artificially low prices, that are doing what prices that are below a fair and efficient market-clearing price are theoretically expected to do,
The market cannot treat gold like one of the paper currencies indefinitely.
They may try to expand their leverage [gold hypothecation, leasing, futures, forwards, derivatives] freely, given the craven silence of the regulators and professional courtesy amongst the looting class.
But they cannot create more physical bullion, and therein lies their limits.
"It was miraculous. It was almost no trick at all, he saw, to turn vice into virtue, and slander into truth, impotence into abstinence, arrogance into humility, plunder into philanthropy, thievery into honor, blasphemy into wisdom, brutality into patriotism, and sadism into justice.
Anybody could do it; it required no brains at all. It merely required no character."
Joseph Heller, Catch 22
"Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy, the moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days, my friends, will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves, to our fellow men.
Recognition of that falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing.
Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, and on unselfish performance; without them it cannot live."
Franklin D. Roosevelt, First Inaugural Address, March 4, 1933
Heller might have been writing about our own day, and much of the analysis and 'expert commentary' on the economy and the markets. This is how it is in times of moral hazard, and general shamelessness among the worst.
Gold and silver drifted slightly lower in a quiet trade today.
The US Speaker of the House, John Boehner, unexpectedly has given up his place and is retiring from the Congress.
And yesterday, while reading off a set piece on the excellent quality of the economy, the chair of the Fed, Janet Yellen, appeared to suffer a bout of paralysis that was sadly disturbing. I was hoping it was just nerves and fatigue and not something more serious like a transient stroke.
I do not wonder why anyone is feeling a little less confident about things these days, perhaps even a little fearful. It seems at times as though the world has been turned upside down, as if the worst have taken over in their madness, and if the many good and innocent are powerless to act in their own defense.
There was intraday commentary taking note of Koos Jansen's latest analysis of Asian demand, and more specifically the buying habits of the People's Bank of China, and the London Gold market which you may read here.
As I have noted several times previously, October is a relative sideshow as compared to both the volume and open interest of the big month of December. But it does offer a chance for the parasitic class to play their paper games. If it had been a more active contract one might have expected a little more of a 'gut check' today for the contract holders. So I am still reluctant to read too much into the big rally yesterday and the slight retrenchment today and into the weekend.
Here are the volume and changes in open interest from yesterday in the first graph below. As you can see from the circled number on the right, the open interest for the coming month of December is 293,901 representing about 29,390,100 ounces of potential paper gold claims.
If one looks at the Comex inventory report on the second graph below you can see that there are currently about 161,937 ounces marked as registered 'up for sale as these prices' and a total of all gold in all the warehouses of 6,856,672 ounces, of which 6,694,735 are not offered for delivery into those contracts at these prices.
But let's be generous, and assume that JPM et al could manage to put another 500,000 up for sale near these prices and not bother about little details like price being a function of supply and demand, making the working total available for delivery at 661,937 ounces, which is a very generous assumption given the most recent levels.
If more than 2.3% of the contract holders stood for delivery, all of that generously assumed deliverable supply would be wiped out.
In fact, to put the question that Kyle Bass put to them, if something happened and only 4% of the contracts stood for delivery, that would require about 1,175,600 ounces of gold, against the 161,937 that they have on hand for sale today.
And even though it sounds like a lot, those 1,175,600 troy ounces of gold are only about 36.6 tonnes, a good week's work of physical delivery leaving the exchanges for other vaults in Asia.
Oh no Jesse you don't understand. NO ONE stands for delivery like that on the Comex, and if they did, 'price would take care of it.' Righto, that is what they said to Kyle Bass, and putting his common sense and fiduciary duty first he said 'just give me the gold now.'
If you are unallocated or hypothecated, given the numbers that have been estimated for physical demand in Asia against physical supply in London, you just might be walking on the wild side, taking your chances of getting your gold against some heavily lawyered up enterprises.
As I have said the other day, as foolish and greedy these jokers have proven to be, the lies will end when physical delivery fails.
"They can expand leverage [gold hypothecation, leasing, futures, forwards, derivatives] freely given the craven silence of the regulators and professional courtesy amongst the looting class. But they cannot create more physical bullion, and therein lies their limits."
No responsible trader wants to see that sort of stain on the confidence in the markets, but sadly most keep silent about the abuses that they see out of professional courtesy, and most often, out of personal fear of retribution. They only seem to speak up when they are losing money as in the case of the outrageous market manipulation of JPM's London Whale.
This financial system is sick, and is unfortunately and at an increasing pace approaching terminal.
I think the problem is due to a simple failure or 'lack of character.' It is an old story, and a perennial favorite of the madness of the dark powers of this world.
I have listed the traits that denote 'character' in the SP and NDX charts posting below.
Take a quick run through them, and ask yourselves, how many of those traits describe these markets, those in the leadership class, and those qualities which are most highly valued by our current culture? Or if that is too hard, how many of them sound embarrassingly old-fashioned or quaint?
And there you may find some answers to the source of our current difficulties. Be sure to apply them to ourselves, because 'in the end, the only real sadness is not to be a saint.' Or at least a sinner like most of us who is attempting great things, having renounced the spirit of darkness of the world, and received the Spirit of a son or daughter of light, and is therefore able to cry out in both fear and hope, 'Father!'
Traits and tendencies often found in the personality pattern that we call character:
integrity justness
honesty fairness
rectitude diligence
sense of honor carefulness
high moral standards prudence
conscientiousness restraint
trustworthiness tidiness
sense of duty willingness to accept blame
courage principled conduct
intelligence foresight
common sense perseverance
self-discipline stick-to-itiveness
self-control determination
self-denial unselfishness
self-reliance seriousness
self-sacrifice caution
thriftiness chastity
Character provides stability and confidence. When character fails, there is uncertainty and fear.
The estimate of US GDP for the third quarter came in higher than expected at 3.9% vs. 3.7% expected.
And so stocks rallied, for a while. But the enthusiasm for a recovery faded badly into the late afternoon, as people took stocks of the state of the world, and what they can see with their own eyes: a recovery largely restricted to a few in the ruling class and financial interests, and a global slump of demand.
‘I am sure that God did not intend that there be so many poor. The class structure is our making and our consent, not His.'
Dorothy Day
This passive-aggressive posture towards equities in general and risk in particular is because of the lack of reform to create a sustainable, stable recovery fueled by organic demand for growth based across a broader participation amongst the consumers.
You cannot have it both ways. You cannot subject the great part of a people to fear, repression, and enforced deprivation on one hand, and expect them to flourish and consume freely on the other.
“Capitalism is contradictory as soon as it is complete [unfettered]; because it is dealing with the mass of men in two opposite ways at once. When most men are wage-earners, it is more and more difficult for most men to be customers. For the capitalist is always trying to cut down what his servant demands, and in doing so is cutting down what his customer can spend… He is wanting the same man to be rich and poor at the same time.”
G. K. Chesterton
We are not a thing meant for the pleasure of another. We are made for joy, and all the fulfillment that it brings.
Koos Jansen has an interesting piece out this morning, that asks some very insightful questions in the ongoing attempt to connect the dots between the shocking decline in the 'float' of unencumbered gold out of the London Vaults with the tremendous, and not always fully visible, flows of gold into strong hands and Asian Vaults.
As you may recall it was Koos' groundbreaking work in analyzing the Shanghai Gold Exchange that blew the lid off the enormous flows of physical gold into China, despite the stubborn opposition of some well paid establishment analysts.
And all of this is relevant to what some have called 'the currency war,' which is the attempt to forge a new international monetary regime out of the ruins of the Bretton Woods Agreement and the fiat petrodollar.
This analysis ties together with a number of highly significant events, including the backwardation of gold price, the flight of gold from the registered category at Comex, and the tightness of physical supply in London as shown by lease rates and informed observations, despite the usual scoffing from apologists.
I have seen various estimates that the London float is now adequate for about 4 to 12 months at most, given this draining of supply, before the market gets into serious trouble. That is unless a central bank or gold pool friendly semi-official fund undertakes to divest itself of more their nation's gold, as England apparently did by selling their sovereign gold wealth on the cheap near the turn of the century to bail out their banking chums, in the odd case of Brown's Bottom.
The gold in this current instance seems more likely to have been taken out as leases and sales from custodial gold holdings at the Bank of England, and the stores of gold that is backing ETFs and Funds in private vaults, having been disgorged by the actions of their participants and custodians, often the self-dealing bullion banks.
Perhaps this is mistaken. Perhaps there is a reasonable explanation for all this oddness in the gold market. Good then let us hear it, and not these silly scoldings and transparent fabrications of nonsense that seem to be the stock in trade of the bullion bullies and paperati which only serve to fuel more doubt and questions.
And why is it again that the US and UK were unable to return Germany's national gold stores in a reasonable timeframe? And India desperately looks for ways to limit their peoples' appetite for physical bullion of their own? So many questions, so much leverage, secrecy, and stonewalling.
As Koos Jansen observes:
Consider the following:
Good Delivery gold bars can be monetized – in countries like the UK, Hong Kong, Switzerland and Singapore – from where they can be shipped into China while circumventing global trade statistics. This is because monetary Good Delivery gold bars are exempt from global trade statistics (UN, IMTS 2010). Needless to say monetary imports into China are conducted by the PBOC.
Non-monetary Good Delivery gold bars (declared at international customs departments) imported into the Chinese domestic gold market are required to be sold through the SGE. However, trading volume at the SGE in GD bars has been a mere 3 tonnes in all of history.
We can thus conclude that if any Good Delivery gold bars have entered China these did not go through the SGE system where Chinese citizens, banks and institutions buy gold. Instead, it’s likely that the Good Delivery gold bars that crossed the Chinese border went directly to the PBOC vaults...
Nick Laird and I noticed that although the total amount of physical gold in London fell roughly 2,744 tonnes (9,000 – 6,256) over four years (graph 1), only 997 tonnes were net exported as non-monetary gold (graph 4). This makes me wonder where the residual 1,747 tonnes (2,744 – 997) went. Possibly, this gold has been monetized in the UK and covertly shipped to a central bank in Asia, for example China. I don’t have rock hard evidence, but it fits right into the wider analyses.
One thing that is strikingly odd about this is that it is one of the more revelatory accumulations of data on the shadowy corners of the global gold market since Frank Veneroso's seminal study of the flows in the gold market involving central bank gold at the beginning of the great bull market that began at the start of the new century.
And yet so many sites still have not picked up on this sea change and unfolding currency war, despite it tying together so many other observations and data and market tremors. Perhaps it is insufficiently pedigreed. The contrarian perspective says that this may be the hallmark of the real thing.
"The world is ours, we are its lords, and ours it shall remain. As for the host of labor, it has been in the dirt since history began, and I read history aright. And in the dirt it shall remain so long as I and mine and those that come after us have the power.
There is the word. It is the king of words— Power. Not God, not Mammon, but Power. Pour it over your tongue till it tingles with it. Power.”
Jack London, The Iron Heel
The Comex had an options expiration today for the precious metals, and they certainly rose to the occasion.
If you wondered why such an unusual thing happened, it is because the October contract is not all that important in and of itself, but it has some technical attractions given the option 'hook' which is offered. A fine opportunity to skin the common trader if you will, who probably have no business swimming with those sharks.
There was some intraday commentary about why it happened as it did here.
I admit that it went much higher than I thought it would, but it was well worth a bet on the side. Sorry, but even in my old age I cannot resist the occasional wager, the call of the wild. lol.
Much more importantly, the physical bullion supply situation, or what some have been calling 'the float,' seems to be approaching some sort of crossroads, or even the elusive denouement of the gold pool that many of us have been long awaiting.
Gold is a bit easier to understand for me. The underpricing of gold and the stubbornly high demand from Asia is sucking the paper markets dry of their underlying bullion.
Stated a bit flippantly but generally correctly, if you underprice something that people want, and they ignore your clumsy PR campaigns and assorted devices to convince them that they do not want it, they may empty your shelves of it.
I keep wondering why so many people are missing this, even among the 'pros.' Many listen to 'experts' who are parroting whatever they are instructed. That is how it too often is.
But I do think that that quite a few are being misguided by what they think that they know well. These are the ones who were deeply into the paper trade, and proudly knowing all its jargon, its nooks and crannies. They see the same old rubbish system they know so well still spinning along, but cannot begin to imagine that incredible changes are taking place in other parts of the world of which they know relatively little, and care very little as well.
So ignoring or deriding the great sea change in global monetary exchange that some call the currency war, they are fooled by the familiar.
"In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists."
Eric Hoffer
Silver has a tightness of its own, but it is manifesting differently. The Bucket Shop is well supplied of silver, but that refuge for the bullion bullies, the central banks, are out of silver inventory altogether. Judging from the Comex they do have JPM as their proxy, sitting on a silver hoard. But after that bulwark, there is little more behind it. And the consumption is strong for silver in Asia.
The first chart below is one of the most important I can imagine for you to understand. What it is basically telling us is that the demand for physical bullion from Asia has been overrunning the highly leveraged paper markets of NY and London, having taken all that the scrap and new mining outputs can produce. And importantly the central banks themselves have turned to net buyers, and are attempting to secure their own sovereign supplies from the whirlpool of hypothecation.
This is resulting in abnormally high leverage in paper claims and a relative scarcity of gold for immediate delivery, as common sense would seem to suggest if we understand what is happening. And it is.
Speaking of The Bucket Shop, there were very few deliveries tallied yesterday, and a slow bleed of bullion from the warehouses continues. It looks like JPM is the dominant bullion player in physical silver. Gold is piling up a bit in Comex Hong Kong. Marshaling their forces for a big withdrawal most likely.
I am sometimes stunned by how many other sites refuse to even link to this sort of thing, even consider it, even mention it, and by how many are made so insecure at the thought of something different. This information has been shut out of some of the finest venues, although they usually make up some lame excuse for it. Or just ridicule it.
Most people do not want to leave their comfortable harbors of the familiar, and put out upon the troubled seas of thought. That is what these kinds of generational change, the big turnings if you will, are all about.
So the option expiration is over. Let's see what the follow through, if any, looks like into the weekend and next week. I am not confident that the field is won, so let's play it a bit tightly for now.
Slowly, but surely, the times, they are a-changin'.
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason.
But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich."
John Kenneth Galbraith
Stocks came in much lower this morning, roiled by the markets in Asia and Europe overnight.
And Wall Street is still throwing a hissy fit because Janet did not raise interest rates, and I think more importantly because so many other central banks are now cutting rates.
Contrary to popular beliefs promoted by your favorite mainstream media outlet, there is no sustainable economic recovery.
The oligarchs are taking the greatest share of income growth and Fed monetary stimulus for themselves, and their spending patterns tend to be focused in certain high end areas of consumption, and their investment patterns are often predominantly monopolistic and predatory.
And so we have broad wages stagnant, aggregate demand sluggish, but rents outpacing wages, and housing bubbles in the haunts of the moneyed.
This is not a sustainable situation, but I do not yet see what will change our path from it to something more beneficial and just and advantageous for the nation and the people as a whole.
The very rich and the privileged think that they are winning the race with their cleverness and hearts hardened by custom, but in reality they are running away from the fullness of life. They are empty souls who seek to plug their emptiness with warehouses of material things, acolytes of the abyss, the walking dead.
And what is worse, the only real sadness, it that they are willfully blind, blinded to that love which is moving, even now, among us. And that is their best and perhaps only hope.
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
It is available for your use at no cost, but with attribution and a link to the original posting.
I make every attempt to respect the rights of others. If you feel that something here has infringed your work please let me know and I will correct it immediately. It is not always easy to determine the status of material posted to the Internet with regard to fair use and public domain.
