http://jessescrossroadscafe.blogspot.com/2013/05/monetary-rapture-incredible.html
Gold is flowing from weaker hands to stronger hands, from speculators to central banks and wealthy investors, the multitudes in China and India, and in general from West to East.
Nick Laird of Sharelynx.com does some incredible work tracking and charting almost every aspect of the gold and silver markets. His site is well worth visiting.
I have included some comments from Nick below that touch on some factors that had not yet occurred to me.
Here is the summation of quite a few repositories/Trusts/ETFs/Funds that list their inventory levels.
Here is a comment on this from Nick:
I tend to agree. I also think that a fear of the 'rehypothecation' of gold, especially in light of the seizure of assets held even with allocated receipts in the failure of MF Global, is driving people to take more care about where they keep their wealth.
As Nick points out, the biggest drawdowns are in gold itself. Ted Butler has recently speculated that some of the bullion banks may be taking inventory on the cheap as GLD disgorges inventory. So something is happening with gold that is not happening in the same way with the other precious metals.
And I am sure that by now you know that I am persuaded that big changes are coming to long standing global currency arrangements.
My first take was that on the whole this remarkable inventory drawdown in public repositories in the West resembles the receding of the ocean after an earthquake. I don't think the bankers realize the signals that they sent to the markets with the manner in which they handled Cyprus. And MF Global and the entire financial crisis for that matter. These things take time to build, and then it seems that suddenly people begin to act.
We will have to wait and see what comes next, and, as Nick points out, what the inventory levels do when the price of gold starts rising again.
http://www.caseyresearch.com/gsd/edition/amphoras-john-butler-currency-market-rigging-likely-would-paint-golds-tape
23 MAY 2013
Monetary Rapture: The Incredible Disappearing Gold Inventories - Ocean Receding
“I am persuaded that big changes are coming to long standing global currency arrangements.“
Jesse
Gold is flowing from weaker hands to stronger hands, from speculators to central banks and wealthy investors, the multitudes in China and India, and in general from West to East.
Nick Laird of Sharelynx.com does some incredible work tracking and charting almost every aspect of the gold and silver markets. His site is well worth visiting.
I have included some comments from Nick below that touch on some factors that had not yet occurred to me.
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| Total Ounces In Warehouse Including Both Registered and Eligible |
Here is the summation of quite a few repositories/Trusts/ETFs/Funds that list their inventory levels.
Here is a comment on this from Nick:
Since Dec 31st
Gold holdings have fallen 17.5 %
Yet;
Silver holdings have risen 2.7%
Platinum holdings have risen 0.1%
Palladium holdings have risen 8.2%
I believe that there's a transfer of gold holdings from the publicly visible sector to the private sector where the numbers cannot be followed. Gold holders are taking possession of physical by removing physical from public places, eg. Comex, and selling them from visible accounts, eg. ETFs.
I do believe that there is a lot more to this than meets the eye and that we're seeing the initial transition stages that in a year or two's time we will look back & say 'Aha!' Gold is flowing not just from West to East but also from public to private places, and this I think is solely related to Cyprus and the future implications of a financial meltdown.
I think we're on the verge of the music stopping and a rush to safety.
All we need do is sit back and watch what happens to these public stocks when gold starts rising again. My bet would be that public stocks will continue to dwindle as more people feel unsafe about where their gold is held."
I tend to agree. I also think that a fear of the 'rehypothecation' of gold, especially in light of the seizure of assets held even with allocated receipts in the failure of MF Global, is driving people to take more care about where they keep their wealth.
As Nick points out, the biggest drawdowns are in gold itself. Ted Butler has recently speculated that some of the bullion banks may be taking inventory on the cheap as GLD disgorges inventory. So something is happening with gold that is not happening in the same way with the other precious metals.
And I am sure that by now you know that I am persuaded that big changes are coming to long standing global currency arrangements.
My first take was that on the whole this remarkable inventory drawdown in public repositories in the West resembles the receding of the ocean after an earthquake. I don't think the bankers realize the signals that they sent to the markets with the manner in which they handled Cyprus. And MF Global and the entire financial crisis for that matter. These things take time to build, and then it seems that suddenly people begin to act.
We will have to wait and see what comes next, and, as Nick points out, what the inventory levels do when the price of gold starts rising again.
http://www.caseyresearch.com/gsd/edition/amphoras-john-butler-currency-market-rigging-likely-would-paint-golds-tape
¤ YESTERDAY IN GOLD & SILVER
The gold price hit its low shortly after 9:00 a.m. in Hong Kong on their Thursday morning...and then rallied unsteadily right until the 8:20 a.m. Comex open in New York. But as it was about to break above the $1,400 spot price mark, a seller showed up...and gold got sold down until shortly before noon EDT. The subsequent rally lasted until the 1:30 p.m. Comex close, before selling off a few dollars going into the 5:15 p.m. EDT close.
The Hong Kong low was around the $1,358 spot mark...and the high at 8:30 a.m. in New York, as recorded by Kitco, was $1,399,80 spot. After three days of price activity, it should be obvious to all and sundry that the $1,400 spot price mark is being defended...but for what reason, is unknown.
Gold closed at $1,391.60 spot...up $21.90 on the day. Volume, net of roll-overs, was pretty heavy...around 185,000 contracts.
It was more or less the same chart pattern in silver, except the spike low of the day [around $21.98 spot] came at exactly 10:00 a.m. Hong Kong time. The subsequent rally got turned lower at 8:30 a.m. EDT...and silver's New York low [$22.14 spot] came at 11:30 a.m.. The rally from that point ended a few minutes after the Comex close...and silver traded sideways from that point onward. The high tick came in the New York Access Market sometime...and Kitco recorded that as $22.81 spot.
Silver closed the Thursday session at $22.63 spot...up 36 cents from Wednesday's close. Gross volume was a very healthy 49,000 contracts.
The dollar index closed on Wednesday at 84.28...and rallied to its high of the day of 84.49 at 9:00 a.m. in Hong Kong. It was all down hill from there...and the low of the day [83.65] came at 12:00 o'clock noon right on the button in New York. The index gained back a few basis points going into the close...finishing the Thursday session at 83.75...down 53 basis points from Wednesday's close.
I carefully noted that despite the fact that the dollar index fell 75 basis points from its high to its low, it appears that the precious metal prices fall faster on dollar rallies, than they rise on dollar declines. That phenomenon was very visible in precious metal prices yesterday and Wednesday. And if you examined the New York Spot [Bid] charts for both metal yesterday, it's clear that the silver rally ended at precisely 11:30...and was in rally mode from that point...and gold hit its low about the same time...and traded sideways until shortly after 12 o'clock noon in New York.
* * *
The CME's Daily Delivery Report showed that 25 gold and 10 silver contracts were posted for delivery on Monday.
Once again there was a withdrawal from GLD. This time an authorized participant withdrew 48,340 troy ounces. There were no reported withdrawals from SLV.
There was no sales report from the U.S. Mint.
It was a busy day for silver over at the Comex-approved depositories on Wednesday, as 1,149,707 troy ounces were reported received, but only 60,354 troy ounces of the stuff were shipped out the door. The link to that activity is here.
In gold, these same depositories didn't report receiving any gold, but shipped out 64,136 troy ounces. The link to that activity is here.
selected news and views......
Jim Rickards: We are in a depression
Jim calls it like it is when interviewed by Max Keiser on Russia Today yesterday. The video was posted on the youtube.com Internet site...and is well worth watching. The interview begins at the 12:00 minute mark. I thank reader Harold Jacobsen for today's first story.
BRICS risk 'sudden stop' as dollar rally builds
The stock of capital flowing into emerging markets has doubled from $4 trillion to $8 trillion since the Lehman Crisis, chasing a catch-up growth story that looks tired and has largely sputtered out in Brazil, Russia and South Africa.
Much of the money has gone into debt, with falling economic returns. This is the next shoe to drop in the festering saga of global imbalances. All it will take is a gear-shift by the US Federal Reserve and the inevitable dollar surge that follows. It was the Volcker Fed that set off Latin America's defaults in the early 1980s. It was the mighty dollar that set off Mexico's Tequila crisis, and then the East Asian chain-reaction in the 1990s.
"Every emerging market blow-up that I have seen was preceded by a rise in the dollar," said Albert Edwards for Société Générale .
"Investors overlook how vulnerable these countries are to a dollar shock. The whole process of excess liquidity and foreign reserve build-up goes into reverse. It acts like monetary tightening and turns into a vicious circle. Markets look for the weak link with the worst current account deficit, and then the dominoes start to fall," he said.
This must read Ambrose Evans-Pritchard article was posted on thetelegraph.co.uk Internet site late on Wednesday evening BST...and I thank Roy Stephens for bringing it to our attention.
European Leaders Saying No to Austerity...Don't Say Yes to Stimulus
Austerity is out after the euro-area recession extended to a sixth quarter. Stimulus isn’t yet in.That was the something-for-everyone message from European leaders at a summit in Brussels yesterday. All touted a previously announced 6 billion-euro ($7.7 billion), seven-year initiative to fight youth unemployment, now at 24 percent. National governments won’t put up more cash, German Chancellor Angela Merkel said.
“It’s not a matter of money,” Merkel told reporters after the summit. “It’s a matter of looking at how to spend this money most productively.”
The 17-nation euro area’s nonstop contraction since the third quarter of 2011 has left the European Central Bank to try to mitigate the damage by cutting interest rates and exploring unconventional ways of channeling money to needy companies, especially in the south.
This Bloomberg story, filed from Brussels, was posted on their website just before midnight MDT on Wednesday...and it's courtesy of U.A.E. reader Laurent-Patrick Gally.
MEPs vote to protect small bank depositors
Large depositors in the EU will from 2016 be in line to suffer losses if a bank gets into serious trouble, but deposits under €100,000 should be fully protected, MEPs in the economic affairs committee voted late on Monday (20 May).
“The bail-in of any creditors should be done according to a clear hierarchy, with depositors with savings over €100,000 last in line, whilst deposits under €100,000 would be fully protected,” said Green economic and finance spokesperson Philippe Lamberts in a statement.
The votes amended the European Commission’s bank recovery and resolution proposal.
The devil is, as they say, in the details...and there is quite a bit in the fine print...which you'll soon discover if you read this euobserver.com story from yesterday...and I thank Roy Stephens for his second story in today's column.
Veteran fears 'beginning of the end' for Japan as bond market buckles
Yields on 10-year Japanese bonds (JGBs) have doubled in a month and spiked dramatically to 1pc on Thursday, triggering a 7.3pc crash in the Nikkei stock index. It was the biggest one-day fall since the tsunami two years ago, comparable with wild moves seen at the height of the Asian crisis in 1998.
The contagion effect set off a retreat from stocks across the world, though Wall Street later pared losses. The iTraxx Crossover or “fear gauge” for corporate bonds jumped 25 points to 392.
The Bank of Japan (BoJ) intervened with $20bn (£13bn) to drive down yields again but the failure to ensure an orderly debt market has started to rattle investors. Banks, pension funds and insurers appear to be dumping JGBs for fear of being caught on the wrong side of a bond rout.
Richard Koo from Nomura, an expert on Japan’s Lost Decade, said the sell-off in recent days has shown that the BoJ may not be able to hold down yields “no matter how many bonds it buys”. This could lead to a “loss of faith in the Japanese government” and the “beginning of the end” for its economy, if handled badly.
This must read commentary by Ambrose Evans-Pritchard was posted on The Telegraph's website yesterday evening BST...and I thank reader Glenn Jeffs for bringing this very important story to our attention.
Four King World News Blogs/Audio Interviews
1. James Turk: "We Are Witnessing Extraordinary Events in Gold and Silver". 2. Rick Rule: "How Investors Can Make a Fortune in These Markets". 3. Jim Grant: "Gold and the Fed's Ungraceful Attempt to Exit QE". 4. The audio interview is with Michael Pento.
Amphora's John Butler: Currency market rigging likely would paint gold's tape
In his market letter for May, commodities fund manager John Butler of Amphora Capital in London describes the rationales and mechanisms of surreptitious currency market intervention by central banks, rationales and mechanisms that will be familiar to anyone who follows the gold market with even the slightest skepticism.
Drawing on a long conversation he had years ago with his professor of international economics in graduate school, a professor who was a former high U.S. Treasury Department official, Butler writes that supporting the U.S. dollar amid suppression of interest rates well may involve surreptitious suppression of the price of gold:
"The United States may have little in the way of foreign exchange reserves but it has a huge pile of gold reserves -- the world's largest, in fact. If the U.S. were to set about covertly intervening to support the dollar amid artificially low interest rates, therefore, it would make far more sense to do so through covert intervention in the gold market. Should they follow my former professor's advice, they would sell gold into the market at relatively illiquid times for maximum price effect. They would do so repeatedly until certain technical chart patterns turned in favor of the dollar and against gold, establishing a new trend. And if they succeeded, no one need ever know."
Central bankers, Butler notes, are very skilled tape painters.
With Butler's kind permission, the May edition of his letter, the Amphora Report, is posted at GATA's Internet site. It's a must read for sure...and I thank Chris Powell for wordsmithing the above introduction.
Gold Advances as Signs of China Slowdown Fuel Demand for Hedge
Gold capped the biggest gain in almost a month on signs that Chinese manufacturing will slow in May for the first time in seven months, sparking a drop in global equities and increased demand for bullion as a protection of wealth.
The preliminary reading for a Chinese purchasing managers’ index missed analysts’ estimates and came in below the level of 50, indicating a contraction. Commodities and stocks retreated, with Japanese equities falling the most since the aftermath of the Fukushima disaster two years ago. Bullion also gained as the dollar declined the most in more than a month against a basket of currencies.
“Nervous investors are turning to gold as everything else looks very bleak today,” Carlos Perez-Santalla, a broker at Marex North America LLC, said in a telephone interview from New York. “The weakness in the dollar is supportive for gold.”
This Bloomberg story was posted on their website during the Denver lunch hour yesterday...and I thank West Virginia reader Elliot Simon for finding it for us.
Bron Suchecki: Time to give up on the CFTC
Bron Suchecki of the Perth Mint reviews U.S. commodity trading regulations and concludes that they're too complicated and full of loopholes to result in any sensible interpretation that might be applied against market manipulation by the Commodity Futures Trading Commission.
"What the market needs," Suchecki writes, "is straightforward, common-sense rules that everyone knows in advance. ... Or just drop the pretense and go free-for-all law of the jungle. Having interest rates this low doesn't help, as speculators have minimal cost in holding a position for a long time (until it blows up) or taking on large positions. This just adds to the volatility. Time to give up on the CFTC being able to control this."
Suchecki's commentary is headlined "Time to Give Up on the CFTC" and it's posted at the 24hGold.com Internet site. I found this commentary in a GATA release from yesterday evening Vancouver time.
¤ THE WRAP
There are no markets anymore...only interventions. - Chris Powell, GATA
It was another day where gold wasn't allowed to close over the $1,400 price mark...and silver wasn't allowed a sniff of the $23 price level. We've seen these sort of 'holding patterns' before...and one has to wonder how long this particular one will last...and how it will end. There certainly was a lot of volume...and I would expect that the lion's share of it would have been of the HFT variety.
Today, at 3:30 p.m. EDT, we get the new Commitment of Traders Report for positions held at the close of Comex trading on Tuesday...and as I opined earlier this week, I will be very interested in seeing whether or not the volume numbers from the big price decline on Monday will be included. That is the first thing that I'll be looking for when I check the report. Ted figures that, all things being equal, there could have been as much as a 20,000 contract improvement in gold...and around 5,000 contract change in silver. That would be wonderful...but whatever the numbers are, I'll have them for you in tomorrow's column.
Not much happened during the Friday trading session in the Far East on their Friday...and the same thing can be said for the first hour of trading in London. Net volume in gold is about average for this time of day...and silver's volume is on the lighter side. The dollar index, as of 4:06 a.m., is basically flat.
And as I hit the 'send' button on today's column at 5:05 a.m. Eastern Daylight Time, gold is trading down a couple of bucks from Thursday's close...and silver is down about 15 cents. Volumes are slightly higher in gold...and still very light in silver. The dollar index is now down about 21 basis points.
Since this is the last trading day of the week, it's normally a day when we have great price 'volatility'...and it remains to be seen if that pans out today with the long weekend coming up in the U.S.A. I'll be watching the goings-on in New York with great interest when I get up later this morning.
I wish all my American readers a safe and happy Memorial Day long weekend...and I'll see you here tomorrow.
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