Gold Daily and Silver Weekly Charts - Heart of Gold

"Capable of giving alms, perhaps, but incapable of stripping themselves bare, the comfortable will be moved to the sound of beautiful music, at the thought of Jesus’s sufferings, but His Cross, the reality of His Cross, will horrify them.

They want it all out of gold, bathed in light, costly and of little weight; pleasant to see, and hanging from a beautiful woman’s throat."

Léon Bloy


"Beware the leaven of the Pharisees, which is hollow hypocrisy. There is nothing covered that shall not be revealed, and hidden, that shall not be made known. Whatever has been said in the darkness shall be heard in the light: and what has been whispered behind closed doors shall be shouted from the roof tops."

Luke 12:1-3

There will be quite a bit more economic data released next week compared to this holiday shortened trading week we have just seen.

The big event will be the FOMC rate decision on Thursday the 17th.

This has become more of a psychological issue than a substantial policy action.  25 basis points will not be making or breaking anything, but it does signal a 'change' in the long period of easy money, policy errors, and financial bubbles which we have seen since the big bailouts of the one percent and Wall Street since 2008.

Can you believe that this was over seven years ago, and here we still are, muddling along?

The draining of gold from West to the markets of the East continues, and physical bullion is becoming remarkably 'tight' particularly in that bastion of bullion, the storied vaults of London.

'Free gold' is unemcumbered physical bullion that can be utilized for immediate physical delivery.  It is more commonly called 'the float.'  And there is just not enough of it to go around, to cover the growing demand of Asia, much less the multiplicity of claims.

Rather than suggest higher prices, it is surprising how many supposed marketeers are calling on governments and NGOs to start 'monetizing their bullion' more aggressively.  As you may recall this is how these fellows got into their current problems in the first place, after the Banks showed them how easy it was to hypothecate their bullion, to increase it on paper for short term returns but longer term losses.

Now isn't that something.

The financial system is sick, and incapable of repairing or reforming itself.   The problem is that it has also badly infected the political and professional classes.

These things happen from time to time.  It seems almost common when one glosses over history, ignoring the dull periods of honest families and their progress, skipping along from crisis to cataclysm, most oftenly fomented by the folly of proud and selfish men.

Please remember the poor, and those who have no one to care for them.

People can too often fall in love with an almost paganistic fascination with the words, the ritual, the glamour and the shine of the outward trappings and the gleam of the gold on their altars. But in their misapprehension they do not want anything to do with the message which they can for a time ignore, but without which what they do has no meaning, no significance, no substance, nothing. Without love it is all just a vanity.  This is 'the leaven of the Pharisees,' which is hypocrisy.

The Lord calls to us, not in the palaces and halls of power, but in the markets, on the streets, in the news of the day, across the noise and bustle of the crowds, as He also called us, with a look or a motion of His hand, when He walked among us on the earth.   He is to be found, not reposing in the glory and grandeur of great wealth, but among His saints, the poor in spirit, the least of these.

There is no Christmas without the acceptance of His will and the journey to Bethlehem, no joyous Easter without the agony in the garden and the Cross.

Rather than for a vault filled with riches, let us strive then for a 'heart of gold' of our own.  The former is subject to decay, diffusion, and loss;  but the latter is with us, and will be ours, forever.

I may have a few updates to post later about the events in the markets of Asia, and the general decline of the 'float' of deliverable bullion in the West.

Otherwise, have a pleasant weekend.  See you Sunday evening.

SP 500 and NDX Futures Daily Charts - For the Times, They Are A-Changin'

FOMC Meeting next week on the 16th and 17th.

The Fed wants to get off the zero bound, but needs to do it in such a way that they are not blamed for the next financial crisis, while ironically preparing to fight it.

They will most likely raise 25 to 50 basis points this year, or 25 this year and 25 next year.

Since next year is a presidential election year the politics of that will inhibit any policy actions after June or perhaps a bit earlier, unless some exogenous event compels them.

I have lightly sketched the symmetrical triangle on the SP futures chart for your ease of viewing.  The markets will likely go with whatever direction they can break out and confirm from this.  There already has been one false breakout that retraced intraday.

I see so much impetus in the polls that the voters are rejecting the status quo, particularly those icons of privilege Bush and Clinton.

Let's see if this becomes a trend that the political establishment and their mainstream media cannot control.

As for now, winter is coming, if we can but feel it in the cooling of the evenings. The season, and the times, are changing.

Have a pleasant weekend.

Comex Hong Kong Sees Biggest Daily Gold Withdrawal at 19.17 Tonnes - Mr. Float Goes to Asia

In Hong Kong when you buy gold and take it out of the exchange warehouses it is called a withdrawal.

In other words, you do something with your bullion besides letting it sit around in some exchange warehouse to be passed around and hypothecated 230 times.

The other day at the Hong Kong Comex Metals Exchange 19.17 tonnes of .999 gold kilobars were taken out.

That is about 616,329 troy ounces.  Taken out by buyers in a single day.  That is a new record for the young exchange.

I hear they have quite a few over-the-counter dealers now, whose mission it is to faciliate the offtake of physical bullion.

Maybe that is why the Comex Hong Kong exchange trading volumes are so low, but the physical offtake levels are so high.  They are serious about their business.

Not bad but still not as much as Shanghai does, overall.  See the second chart.

It is almost like the New York - London float of unencumbered gold bullion available for delivery is— melting away.

Gold Daily and Silver Weekly Charts - Tightening - Can't Touch This

"Big squeeze with shortages starting now both on the wholesale/retail level and at the bulk level. Unless the paper price is reverting up, it may not subside this time around and then the paper fiat mess (including paper prices of gold and silver) is in trouble.

If it goes to the point of shortages at the bulk level like 1kg gold bars and 1000 oz silver bars, the emperor will stand without clothes."

Torgny Persson, BullionStar CEO

Now is the time to get your own house in order, and to make the arrangements to protect any bullion you own as wealth insurance.

This means holding that bullion in private vaults to which you have personal access or subject to regular public audits.  It means owning your 'insurance' without leverage, sharing,  and without intervening parties who may use the bullion for hypothecation as collateral for third party obligations.

Insurance is for those instances when times get tough, and a deleveraging under duress is occurring.

While this is not a likely scenario normally, now it seems to be more possible than one might expect.

There was intraday commentary about NAV Premiums and the Paper to Bullion ratio on the Comex here.

Ring the bell; school's back in.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - All Eyes On the Fed - Let It Whip

Stocks tried to rally today, but just managed a little bounce.

If you take a look it is clear that stocks are 'coiling' within fairly tight symmetrical triangles ahead of next week's FOMC meeting.

Fundamentally the economy is weak, and financial assets are overpriced.

They could get more overpriced here for the short term, but the risks still seem elevated.

The primary weakness in the economy is the lack of wage growth providing the disposable income that consumers need to repair their domestic balance sheets and to do the kind of broad and steady buying that will be a stimulus to GDP and aggregate demand.

The difficulty is that the one percent is keeping a huge portion of the domestic public down financially, the better to shift their wealth through political policy, tax loopholes, and wage suppression.

It is not a good longer term situation but the ruling classes and their courtiers are traveling in rarefied realms of their own construction.

Have a pleasant evening.

NAV Premiums - Comex Paper Ratio Rises to 228:1 - Sprott Gold Reports More Redemptions

"It is virtually impossible to get physical gold in London to ship to those countries now. We get permanent requests in Russia now. Would we please sell our physical gold to India and to China?

Because there is not enough physical about.  There are endless promises. And I worry that the market, the paper market, could be stamped on and people say 'sorry we're going to have a financial closeout' and it's all over. If you want to be in the gold business, you ought to be in the physical business."

 Peter Hambro


"I just got off the phone with A-Mark which is one of the world’s largest wholesalers. They are reporting that they have no gold and silver at all live available, that they have stopped taking orders for Silver Maples and Silver Philharmonics altogether and that Silver Eagles are available first in the end of November. For Pamp, there is similarly long delivery times for all minted gold bars.

We still have most products in stock because we stocked up as massively as we could in the last weeks but for many products, we are unable to replenish as of now when we run out."

Torgny Persson, BullionStar CEO

The ratio of potential claims per deliverable (registered) ounce of gold bullion has soared to 228:1.

How fortunate that September is not an 'active month' for gold at The Bucket Shop.

Sprott Gold trust lost another 34,356 ounces of gold bullion since the last time we checked their numbers on August 24th.  This is just over one metric ton, or tonne.

Gold Daily and Silver Weekly Charts - When the Unsustainable No Longer Sustains

“Benign remedies are for the innocent.  Misdeeds, once exposed, have no refuge but in audacity.  And they had accomplices in all those who feared the same fate.”

Tacitus, Annals

Gold and silver were hit early on today, and knocked lower on high volume in relatively quiet trade, while the stock market was being pumped higher.

The Fed would like to set the stage for their FOMC meeting next week, and rather badly so.   They are afraid to do it with these unstable equity and bond markets, because if they raise and the market breaks, they will be blamed for it.  You can see that the IMF and the World Bank have already covered their posteriors by warning.  And Larry Summers has also chimed in.

It is not a 25 basis point increase that will break these markets. They are already broken, an accident waiting to happen.  The trail of policy errors goes back to the Greenspan chairmanship of the FOMC.

The Comex continues to bleed out, with additional gold and silver leaving their warehouses yesterday.

Registered (deliverable) gold has fallen to 185,314 troy ounces, a low we have not seen since before the year 2000.   On a quick calculation pending the final numbers early tomorrow, I would think that the ratio of paper claim to actual deliverable gold at price is now at an unprecedented level of 226:1.

Say what you will, this is not 'normal.'

Unless something changes, you can stick a fork in the NY version of 'price discovery', it is done.

Who is going to keep honoring a price set by a bunch of jokers playing liar's poker with a stack of paper claims?

The largest gold bullion exchange in the world outside of Asia, the LBMA in London, is scraping the bottom of the barrel trying to find enough bullion to keep satisfying delivery requests for Asia at these prices.

The indications are that the costs to borrow physical for immediate delivery, which means refining into kilobars and shipment to Asia never to return, are soaring. That is worth watching closely, although the clubby London exchange has always been light on disclosure.

There are increasing signs of desperation.   Once again they look to India to cut imports and start 'utilizing' the gold held privately in that country.  That means to hypothecate those long term gold holdings as collateral for other peoples' obligations, and into the bullion float, never to return.

From what I have been reading, it seems as though JPM introduced quite the scheme to do just that with unallocated gold, ETFs, and a number of private sources around 2011 in London.  And that kettle seems to have reached a full boil.

I suppose that the mining companies, having been obliterated by forward hedging in the first leg of this bull market, the best example being Barrick, have failed to rise to the occasion.  So they must keep looking elsewhere for bullion.   And the CEOs of the big firms always seem to want to go along to get along, even to the disadvantage of their shareholders.

The gold pool in London and NY shows every indication of a late stage Ponzi scheme.  If it was not operating under the 'thin cover' of some unwitting, bureaucratic boobs, it would probably have toppled over already.  The regulators have failed in their sworn duties, and wantonly so.

Wall Street and the City have skated through so many lawsuits and criminal cases that they have fallen into a recidivistic spiral of white collar crime.  They think that they are teflon dons.

Listen to what Peter Hambro has to say in the first half of this recent interview, here.   He is making his Bloomberg interviewers very uneasy it appears.

What I don't quite understand, and I admit it, is why the gold pool keeps pressing prices lower in what is clearly an unsustainable and highly corrosive gambit?   Where do they think they are going with this, or have they extinguished all impulse to conscience and caution?

Ok, Jesse, but the price just went lower, and I'm confused, angry, and depressed (head hits table, clunk).

When the going gets tough, these jokers keep doubling down, almost every time, with a false bravura. But they are breaking the cardinal rule of never adding new money, even when you are winning, to a proposition that is steadily becoming mathematically unsustainable.   That is how almost every major secular financial failure, from LTCM to MFGlobal to the London Whale, went wrong.

This gold manipulation pool, durable as it might seem, is no different from any of the others, such as the infamous London Gold Pool.   And the countdown to its end is underway.

Money, except during the relatively short life of a totalitarian state, is a function of market acceptance and global valuation.

Private individuals and governments have always intervened in the valuation of many markets including money.

I watched the ruble burn in the 1990's.  I watched the currencies of the former Soviet bloc pass from an Orwellian fixed value system to free exchange.   No currency has ever been held its value against the market forces outside their own borders, and inside, never for longer than the power of the State to control nearly everything, every facet and thought of peoples' lives.

Given time, the markets have always won. Always.

I am concerned that if these folks do not wise up soon, we will not see an orderly rise in the price of the underlying commodity, but a series of dislocations and breaks sharply high as Jim Rickards appears to now think.  That will not be constructive.   They forget that it is never the act, but always the extended coverup, that brings even the most powerful down to disrepute and failure.

Storm warnings are out.  Time to get our own houses in order.

Have a pleasant evening.