Gold Daily and Silver Weekly Charts - Waiting

"Our progress in degeneracy appears to me to be pretty rapid. As a nation, we began by declaring that 'all men are created equal.' We now practically read it 'all men are created equal, except negroes.' When the Know-Nothings get control, it will read 'all men are created equal, except negroes, and foreigners, and Catholics.'

When it comes to this I should prefer emigrating to some country where they make no pretence of loving liberty -- to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocrisy."

Abraham Lincoln, Letter to Joshua Speed, 1855


"Indeed I tremble for my country when I reflect that God is just: that his justice cannot sleep for ever."

Thomas Jefferson


"When he says peace, he means war, and when he blasphemously uses the name of the Almighty, he means the power of evil, the fallen angel, Satan. His mouth is the foul maw of Hell, and his power is at bottom accursed. True, we must conduct a struggle against the Nazi terrorist state with rational means; but whoever today still doubts the reality, the existence of demonic powers, has failed by a wide margin to understand the metaphysical background of this struggle."

The White Rose, Fourth Leaflet, Munich 1942

Hysteria, like drugs and alcohol, is a way to escape the pain of thought.   Extremism and hatred have their attractions, as they carry the heady scent of power, especially in times of change and trouble.

And for some simple and innocent ones who may fall prey to sick and unscrupulous people, that attraction may prove to be fatally irresistible.   Because all too often, the attraction is to follow them into the abyss.

Gold and silver gave back a little of their gains from last week in lethargic trade.

There was very little delivery activity at The Bucket Shop.

Nova Scotia delivered 4,300 ounces of gold from their house account to the house of JP Morgan.  This brings the monthly gold total to an underwhelming 9,100 ounces.

A pittance of silver was tossed about.

The dollar gained back a little more of what it lost last week.

Let's see if gold and silver can do something more interesting than just roll over in the face of synthetic paper selling amongst the punters in London and New York.

Next week will be much more interesting with the FOMC meeting followed by the December stock option expiration.

I think the Fed is going to raise 50 basis points in two steps and then wait to see how the real economic numbers are coming in next year.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Eyes Forward

US equities were lackluster in light trading.

Eye are focused largely to the near future, with the FOMC meeting December 15-16, the significant stock options expiration on December 18th, and of course, the traditional 'Santa Claus' rally into year end.

Consumer Credit came in light today.

Have a pleasant evening.

China Understands the Gold Bullion Game - Lars Schall and Koos Jansen

Here is a new interview from Zurich's Lars Schall with Koos Jansen, discussing the Chinese gold market and the patterns of People's Bank of China purchasing for their reserves, both disclosed and otherwise.

You may find a complete transcript of this interview from Lars Schall's site at China Playing the Gold Game Carefully.

The gold bullion game is much broader and more politically charged than most commodity markets, since it cuts into the push and pull between nations and groups of nations and very powerful private groups that seek to use money for their own purposes of power.

Contrary to the very clumsy public relations campaign, gold is hardly a 'pet rock' or something about which the central banks never think.

Related:
Silk Road Gold Demand Taking All New Mine Production and More - A Game of Consquences
Koos Jansen: Renminbi Internationalization and China's Gold Strategy

Silk Road Gold Demand Taking All New Mine Production and More - A Game of Consequences

'Books were the proper remedy: books of vivid human import, forcing upon their minds the issues, pleasures, busyness, importance and immediacy of that life in which they stand; books of smiling or heroic temper, to excite or to console; books of a large design, shadowing the complexity of that game of consequences to which we all sit down, the hanger-back not least.'

Robert Louis Stevenson, Old Mortality


"When an official market or cartel overvalues one type of money or asset and undervalues another with respect to its fair market value and risks, the undervalued money or asset will leave the country as best it can, or will disappear from circulation into hoards, while the overvalued money or assets will flood into circulation."

Murray Rothbard, Gresham's Law


"There is not a crime, there is not a dodge, there is not a trick, there is not a swindle, there is not a vice, that does not live by secrecy."

Joseph Pulitzer

Nick Laird of goldchartsrus.com has provided the latest statistics on the consumption of gold by the 'Silk Road' countries.

The monthly demand from these nations as shown below has grown five-fold compared what it was prior to 2008.

In the latest month their total consumption, that is private purchasing in addition to publicly disclosed official reserves, was 365 tonnes.

Nick has estimated global production as averaging about 260 tonnes per month.

This represents a shortfall of about 105 tonnes per month to be drawn from existing supplies.  This shortfall appears to be growing proportionately with increasing demand, visible on the first chart below.

So this is one reason why we have been seeing the existing stocks of gold around the world drawn down to cover the steadily growing demand from these countries.  And as you may recall, the central banks of the world became net buyers of gold around 2008.

Comex has little available stocks in its domestic warehouses compared to this demand, All of the gold in all the warehouses, whether it is for sale or not, if taken and liquidated is just over 200 tonnes as is shown on the report below.

London is a more substantial source of bullion, but is running down it's supply as we have seen in the 'gold float' analysis also included below.

Interestingly enough, the year over year drawdown in the London free float is about 100 tonnes per month.

There is also supply in ETFs and Trusts.  This too has been drawn down steadily, particularly since 2013.

These are not precise figures, but estimates gleaning from public sources.  I suspect the supply numbers are 'generous' with regard to the free float and the unencumbered nature of gold through multiple claims and leasing, but that is conjecture.

But no wonder the Indian government is so anxious to persuade their people to turn their gold into synthetic paper gold, and allow it to be hypothecated into the markets.  And no wonder that the Fed told the German government that their gold was temporarily inconvenienced until 2019.  And no wonder Venezuela is being leaned on heavily to give back the gold that it so recently repatriated so it may be sold.

I wonder what it would take to increase mine production and bring more gold in as scrap and private sales to meet this growing demand.  Higher prices perhaps?

And if so, then perhaps knocking the price down so aggressively, crippling the precious metals mining industry, is not a fruitful idea for the longer term.  Gold supply is not so easily manageable as a fiat currency's may be.

Given the current rate of growth in demand and the current state of supply, next year could be interesting.  Still, I never like to underestimate the 'resourcefulness' of the central banks, especially when they are operating in relative secrecy. And it never fails to surprise me at how reluctant the various groups of the status quo are to discuss these things except on their own terms, and within their own narrative.

And so such great events can happen slowly, and largely hidden and unremarked, until they seemingly burst upon the scene, speaking unpleasant truths.

Shanghai Gold Exchange Has 49 Tonnes of Gold Withdrawn the Week Ending 27 November

There were 48.86 tonnes of gold withdrawn from the Shanghai Gold Exchange for the week ending 27 November.

Year to date, there have been a record 2,362 tonnes of gold withdrawn, far in excess of any other year at this time.

What is the reason for this?  Why is there such a strong movement in the 'Silk Road' countries to continue to buy gold in large volumes?  What can the central banks of the West do about this?

Gresham's Law informs us of the why's and the what's of this phenomenon.

"When an official market or cartel overvalues one type of money or asset and undervalues another with respect to its fair market value and risks, the undervalued money or asset will leave the country as best it can, or will disappear from circulation into hoards, while the overvalued money or assets will flood into circulation."

And so it is that gold is flowing from West to East.

More of the same sort of pricing games with 'synthetic' paper gold will only increase the flood of bullion into Asia.  The price must be allowed to float according to the market.

Gold Daily and Silver Weekly Charts - Short Squeeze - Silver Bells

Gold and silver had a nice rally today, that was fairly obviously the snapping shut of the jaws on a metals bear trap.

There was intraday commentary about this here.

There were no deliveries of gold at The Bucket Shop, and no movement of gold in their domestic warehouses. There was the usual chunk of bullion delivered out of the Brink's warehouse in Hong Kong, more than all the registered for delivery gold in New York in a single day.

Do you get the feeling that gold bullion is under a kind of informal lockdown in the New York market?  I can see why one might think so.

There was a bit more action in silver deliveries this month, thanks in most part to CNT which is using their warehouse to handle their wholesale business.  However, yesterday there was only the usual slow leakage of silver bullion out of the other warehouses.  JPM is still sitting on a sizable hoard.

The dollar gained back a little bit of the enormous hit it took yesterday in the DX index.   That seemed counter-intuitive to some, since it was on the day when the Lady Yellen indicated the strong bias to raising interest rates, as opposed to Draghi and the ECB who cut, and are pledged to do 'whatever it takes.'

Let's see if gold and silver can turn this thing around and follow through next week.

And for everyone, have a wonderful weekend.  Winter is coming, but with it the holidays of light to the world, and a hope that we will be sustained beyond our expectations, and that all things will be made new.

And in proper respect for the holidays, and for all the tender mercies which we have received and perhaps already forgotten, please remember the poor and the unfortunate, who may rarely take a holiday from the hardness and desperation of their lives.  Be a light to them, as you would have the Lord be a hope and a light to you.

See you Sunday evening.

SP 500 and NDX Futures Daily Charts - Up, Up and Away

Now I am really glad that I shed all my index shorts and VIX longs yesterday.

Santa Claus will not be denied, and will be visiting bonuses on all the little girls and boys on Wall Street.

As by now I am sure you have heard, we had a 'goldilocks' jobs number today, good enough to ensure a Fed rate increase in December, or week after next to be more precise, but not so hot that the carefully set expectations of about 50 basis points, probably in a two step and then a pause, would be set aside.

This is likely to be a very slow, and very shallow rate hiking cycle. Why?

Because it is being done largely for policy purposes, a point which I have been nagging about for too long now. Unless something really changes, this is the worst excuse for a recovery one can imagine, if you are looking at the broad swath of the consuming public, and not the top five percent.

The geopolitical and exogenous risks remain elevated.

Let's see if they can break this sucker out, up and away, which is what they would like to do, in a kind of a last hurrah. And the devil take the consequences, and the hindmost.

The SP 500 MUST set a higher high, then stick it and break out to activate the big double bottom or 'W' formation on the charts.

Have a pleasant weekend.