Much Ado About Lease Rates - FOMC and Option Expiration

Here is the update from the LBMA on the Gold Forwards.

It shows little change, and even a slight increase today Monday.

The LBMA do not update LIBOR in real time, but do so with a lag. 

I did not see anything untoward in the LIBOR rates on another site, so I suspect that Kitco will be revising their charts sometime.

The only negative I see for gold is that this is an FOMC week.  And of course today is the February Option Expiration on the Comex.

The expiration date for the February 2013 options contract for Copper Option (HX), Gold Option (OG), and Silver Option (SO) is Monday, January 28, 2013.

I would not mind hearing an explanation for those Kitco gold lease prices chart from either Kitco or Sharefin.

Kitco Shows Recent Plunge to Negative In Gold Lease Rates

Here is what they are showing.

I am wondering if Kitco did not use a bad LIBOR quote in calculating this.

As you may recall the lease rate calculation is LIBOR - GOFO (Gold Forward Offered Rates) = Lease Rate.

A drop in lease rates like this might presage a sell off attempt in gold, or an influx of leased gold to meet some short term delivery pressures or demands for allocation from unallocated sources.

Here is something I wrote about this in the past, when lease rates had dropped.

I suspect Kitco may have miscalculated the data by using a bad LIBOR number, but lets see what happens tomorrow, and I'll do the math myself if they do not correct this.

PS. Later, a reader informs me that he thinks they did miscalculate.  I will give it a day.

When I Despair...

When I despair, I remember that all through history the ways of truth and love have always won. There have been tyrants, and murderers, and for a time they can seem invincible, but in the end they always fall. Think of it. Always.

Mahatma Gandhi

And remember, no matter how bleak things may appear, the Dude abides.

Like the rug, he really does tie the room together.

Bill Moyers: The Senate's $500 Million BiPartisan Corporate Welfare Gift to Amgen

Mitch McConnell Republican from Kentucky, Max Baucus Democrat from Montana, and Orrin Hatch Republican of Utah.

"...we have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men. It is not merely that at present the rule of naked force obtains almost everywhere. Probably that has always been the case.

Where this age differs from those immediately preceding it is that a liberal intelligentsia is lacking. Bully-worship, under various disguises, has become a universal religion..."

George Orwell, Review of Bertrand Russell's Power: a New Social Analysis in Adelphi Magazine, January 1939

Edward R. Murrow: Good Night, And Good Luck

"All I can hope to teach my son is to tell the truth and fear no man...

If none of us ever read a book that was "dangerous," had a friend who was "different," or joined an organization that advocated "change," we would all be just the kind of people Joe McCarthy wants...

The only thing that counts is the right to know, to speak, to think — that, and the sanctity of the courts. Otherwise it's not America.

No one man can terrorize a whole nation unless we are all his accomplices."

Edward R. Murrow, speech to his CBS News staff, 1954


“The term propaganda rings melodramatic and exaggerated, but a press that—whether from fear, careerism, or conviction—uncritically recites false government claims and reports them as fact, or treats elected officials with a reverence reserved for royalty, cannot be accurately described as engaged in any other function.”

Glenn Greenwald

James Turk and Chris Martenson: Central Banks Losing Gold and Silver Price Suppression

Source link here.



Related: World Plunges Into Currency War - BusinessWeek

Gold Daily and Silver Weekly Charts - No Need for Safety Buy Stocks

That seems to be the talking points memo for financial television this week.

Grab a seat on the miracle market before they are all sold out.

The market is utterly overbought and VIX is complacent. But it can stay that way in light volumes. The market can remain irrational longer than you can remain solvent.

I have marked the trendline on the last chart along with the money flows and RSI.

The real economy can no longer afford to tolerate its corruptly inefficient financial system. That is the long and short of it.

And at some point, people will realize this, and something will happen.

SP 500 and NDX Futures Daily Charts - Fraud Will Continue Until Confidence Returns

I would be very careful about getting in front of this market while volumes remain low and the Fed keeps puffing up the banks with easy money.

The fairy tale being told is that the recovery has the market giddy, so it is exiting safe havens (like gold of course) and seeking risk plays for more upside.

Volumes remain thin and there is the tell. There is also a divergence between the SP futures and Tech 100.

Next week there are more Treasuries coming to market so we *might* see a pause, but this will not be safe to short except as a hedge on longs until there is a clear trend break. No need to be greedy. Wait for things to develop.