http://harveyorgan.blogspot.com/2013/08/aug-26.html
In the access market today at 5:15 pm tonight here are the final prices:
gold: $1405.00
Gold started to fly right on the opening gun, Sunday night. Even though, London was on holiday today, the American bankers showed up early to repel gold from advancing past the resistance level of $1400.00 Silver paid no attention to the antics of the bankers and proceeded to a high $24.40 before it too was hit, knocking it below 24.00 dollars. Tomorrow is options expiry for both silver and gold at the Comex and as it their usual custom, the precious metals are whacked to keep investors from exercising these contracts and thus obtain metal. However, late in the day, John Kerry put the USA on alert for war in Syria and that news drove gold to close in the access market at $1405.00 and silver at $24.33.
Tonight, the Comex registered or dealer inventory of gold rose marginally. It is still well below the 1 million oz mark, at 768,797 oz or 23.91 tonnes. This is dangerously low especially when we are closing in on the final few days of the August delivery month. With no gold entering the dealer side it seems almost impossible for the bankers to settle upon longs once the December contract hits. The total of all gold at the comex (dealer and customer) tonight rests just above the 7 million oz barrier resting at 7.002 million oz or 217.81 tonnes.
JPMorgan's customer inventory falls tonight to 167,056.49 oz or 5.196 tonnes. It's dealer inventory remains constant at 286,485.185 oz (8.91 tonnes)
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its Comex gold dealer account remain constant in gold inventory tonight and its resting inventory is 19.14 tonnes of gold. Brinks continues to record a low of only 4.03 tonnes in its dealer account.
The GLD reported no gain in its inventory tonight with a reading of 920.13 tonnes of gold. We had no change in the silver inventory at the SLV and thus the reading of the SLV inventory tonight is 339.373 million oz.
On Friday, we recorded our 35th consecutive trading day for negative GOFO rates. Today is a holiday in the UK and so no GOFO rates. For those that missed Friday's readings, here they are:
i) the one month: -.10833%
ii) the two months: -093333
iii)the three months: -07667
iv) 6 months GOFO:-01000%
Basically it means that gold is dearer in the present than in the future and it also signifies that London has scarce supplies of good delivery bars. No doubt that China, being a huge buyer of physical gold is responsible for this.
On the physical side of things, we have important commentaries from Paul Mylcreest as he discusses the Repo market and the gold market with one central theme...both have lack of good collateral essential for liquidity in our markets. You will enjoy this piece.
We have Henry Bonner of Sprott entertains the idea that central banks colluded to suppress the price of gold.
John Embry discusses the fact that the BIS has been very active these past few weeks intervening in the gold/silver markets.
Eric Sprott talks about shortages in gold and silver and how a panic will cause these metals to skyrocket.
Bill Holter tonight discusses what happened to the financial writers who called for the collapse of gold once it hit $1180?
Monday, August 26, 2013
aug 26/GLD and SLV remain constant/JPMorgan customer gold inventory declines/John Kerry addresses the nation on Syria/
Good evening Ladies and Gentlemen;
Gold closed down $2.70 to $1393.00. (comex closing time ). Silver was up 24 cents to $24.00 (comex closing time).
In the access market today at 5:15 pm tonight here are the final prices:
gold: $1405.00
silver: $24.33
Gold started to fly right on the opening gun, Sunday night. Even though, London was on holiday today, the American bankers showed up early to repel gold from advancing past the resistance level of $1400.00 Silver paid no attention to the antics of the bankers and proceeded to a high $24.40 before it too was hit, knocking it below 24.00 dollars. Tomorrow is options expiry for both silver and gold at the Comex and as it their usual custom, the precious metals are whacked to keep investors from exercising these contracts and thus obtain metal. However, late in the day, John Kerry put the USA on alert for war in Syria and that news drove gold to close in the access market at $1405.00 and silver at $24.33.
At the Comex, the open interest in silver fell by 346 contracts to 131,051 with silver's rise in price by 78 cents (Friday) .
The open interest on the entire gold comex contracts fell by 3071 contracts to 378,710 with gold's rise in price of $24.50 on Friday .
Tonight, the Comex registered or dealer inventory of gold rose marginally. It is still well below the 1 million oz mark, at 768,797 oz or 23.91 tonnes. This is dangerously low especially when we are closing in on the final few days of the August delivery month. With no gold entering the dealer side it seems almost impossible for the bankers to settle upon longs once the December contract hits. The total of all gold at the comex (dealer and customer) tonight rests just above the 7 million oz barrier resting at 7.002 million oz or 217.81 tonnes.
JPMorgan's customer inventory falls tonight to 167,056.49 oz or 5.196 tonnes. It's dealer inventory remains constant at 286,485.185 oz (8.91 tonnes)
The total of the 3 major gold bullion dealers( Scotia , HSBC and JPMorgan) in its Comex gold dealer account remain constant in gold inventory tonight and its resting inventory is 19.14 tonnes of gold. Brinks continues to record a low of only 4.03 tonnes in its dealer account.
The GLD reported no gain in its inventory tonight with a reading of 920.13 tonnes of gold. We had no change in the silver inventory at the SLV and thus the reading of the SLV inventory tonight is 339.373 million oz.
On Friday, we recorded our 35th consecutive trading day for negative GOFO rates. Today is a holiday in the UK and so no GOFO rates. For those that missed Friday's readings, here they are:
i) the one month: -.10833%
ii) the two months: -093333
iii)the three months: -07667
iv) 6 months GOFO:-01000%
Basically it means that gold is dearer in the present than in the future and it also signifies that London has scarce supplies of good delivery bars. No doubt that China, being a huge buyer of physical gold is responsible for this.
On the physical side of things, we have important commentaries from Paul Mylcreest as he discusses the Repo market and the gold market with one central theme...both have lack of good collateral essential for liquidity in our markets. You will enjoy this piece.
We have Henry Bonner of Sprott entertains the idea that central banks colluded to suppress the price of gold.
John Embry discusses the fact that the BIS has been very active these past few weeks intervening in the gold/silver markets.
Eric Sprott talks about shortages in gold and silver and how a panic will cause these metals to skyrocket.
Bill Holter tonight discusses what happened to the financial writers who called for the collapse of gold once it hit $1180?
*****
Comex gold/August contract month:
August 26.2013
Ounces
| |
Withdrawals from Dealers Inventory in oz
|
nil
|
Withdrawals from Customer Inventory in oz
|
10,539.325oz (JPM)
|
Deposits to the Dealer Inventory in oz
|
nil
|
Deposits to the Customer Inventory, in oz
| nil |
No of oz served (contracts) today
|
72 ( 7200 oz)
|
No of oz to be served (notices)
|
500 (50,000 oz)
|
Total monthly oz gold served (contracts) so far this month
|
3601 (360,100 oz)
|
Total accumulative withdrawal of gold from the Dealers inventory this month
|
58,327.81 oz
|
Total accumulative withdrawal of gold from the Customer inventory this month
| 228,899.32 oz |
****
Thus tonight with respect to JPMorgan gold inventory here is JPMorgan's Monday night inventory :
JPM dealer inventory remains constant tonight to: 286,485.185 oz or 8.91 tonnes (same)
JPM customer inventory falls tonight to: 167,056.491 oz or 5.196 tonnes courtesy of Scotia's SOS .
JPM dealer inventory remains constant tonight to: 286,485.185 oz or 8.91 tonnes (same)
JPM customer inventory falls tonight to: 167,056.491 oz or 5.196 tonnes courtesy of Scotia's SOS .
****
Tonight, we still have the continuing disturbing piece of news concerning the low dealer gold inventory for our 3 major bullion banks(Scotia, HSBC and JPMorgan). These 3 dealer gold inventory remains constant tonight at an extremely low of 19.14 tonnes.
i) Scotia: 183,508.994 oz or 5.707 tonnes
ii) HSBC: 154,555.673 oz or 4.80 tonnes
iii) JPMorgan: 286,485.185 oz or 8.91 tonnes
total: 19.14 tonnes
Brinks dealer account which did have the lions share of the dealer gold saw its inventory level rises tonight to 129,679.910 oz or 4.03 tonnes. A few months ago they had over 13 tonnes of gold at its registered or dealer account.
i) Scotia: 183,508.994 oz or 5.707 tonnes
ii) HSBC: 154,555.673 oz or 4.80 tonnes
iii) JPMorgan: 286,485.185 oz or 8.91 tonnes
total: 19.14 tonnes
Brinks dealer account which did have the lions share of the dealer gold saw its inventory level rises tonight to 129,679.910 oz or 4.03 tonnes. A few months ago they had over 13 tonnes of gold at its registered or dealer account.
****
selected news and views....
where the problem is really lack of good collateral..extremely what Bill Holter has been pounding the table over these past several weeks.
(courtesy zero hedge/Paul Mylcreest)
where the problem is really lack of good collateral..extremely what Bill Holter has been pounding the table over these past several weeks.
(courtesy zero hedge/Paul Mylcreest)
Why The Post-Lehman Reflation Is Reaching Its Limits
Submitted by Tyler Durden on 08/25/2013 15:03 -0400
- Bear Stearns
- Central Banks
- Counterparties
- ETC
- Futures market
- Lehman
- Market Conditions
- MF Global
- Repo Market
It’s ironic, or it seems that way to us, that two of the least understood financial markets by equity investors are two of the most systemically important – repos and gold. Even more ironic is how so many investors don’t even consider them to be all that important. In our view, stability in both markets is a pre-requisite for maintaining confidence in the financial system and keeping the credit/asset bubble inflated. The significance of these markets is not lost on governments, central banks and regulators, although the definition of “stability” in each of them is slightly different. Looking underneath the bonnet/hood, we are doubtful that either of these markets, repos or gold, can reasonably be described as “stable” right now. There also seems to be a paradox where the current low repo rates and gold prices are, we suspect, fooling people into a false sense of complacency. What’s really piqued our interest, however, is whether there is a similar issue which is increasingly impacting both of these systemically important markets? This issue relates to the availability of sufficient collateral...
Via Paul Mylchreest's Thunder Road Report,
It’s ironic, or it seems that way to us, that two of the least understood financial markets by equity investors are two of the most systemically important – repos and gold. Even more ironic is how so many investors don’t even consider them to be all that important.
In our view, stability in both markets is a pre-requisite for maintaining confidence in the financial system and keeping the credit/asset bubble inflated. The significance of these markets is not lost on governments, central banks and regulators, although the definition of “stability” in each of them is slightly different.
The greatly under-reported repo market sits at the centre of the banking system and the securities markets. It is a primary source of leverage and, therefore, risk. Time after time, the risks remain hidden until events cascade beyond the point of no return. Stability in the repo market depends on confidence in repo counterparties (which can evaporate at near light speed, e.g. Lehman, Bear Stearns, MF Global and Long Term Capital Management), confidence in the valuation of collateral used in repo loans (remember subprime etc) and a sufficient pool of acceptable securities (e.g. Treasuries, MBS, etc) which can be pledged as collateral.
In stressed market conditions, liquidity crunches, declining collateral values and re-hypothecation (i.e. re-use of the same securities as collateral by more than one party) can undermine this market. This results in capital being wiped out, a run on collateral and the telltale sign of spikes in “fails-to-deliver”, when a scramble to post eligible securities ensues. Late 2008 was the example par excellence – here is what happened to fails-to-deliver in Treasuries (data is in US$m).
When stress emerges in the financial system, the problem with the repo market is its tendency to be (very) “pro-cyclical” on the downside. It also operates pro-cyclically in terms of leverage and asset prices on the upside, which always seems to get forgotten.
Stability in the gold market for policymakers and regulators implies a stable gold price, preferably at “low” levels (i.e. well below all-time highs), an efficiently functioning gold futures market, ample liquidity in the gold lending (leasing) market and no heightened desire among gold buyers to take possession of physical
bullion. A surging gold price, backwardations and shortages of physical bullion are proverbial “canaries in the mine” regarding an overstretched system.
It’s belatedly dawning on more and more people that the price of gold on everybody’s Bloomberg screens is in fact a hybrid price of predominantly “paper” and “unallocated” (convention for LBMA settlement unless “allocation” specified) gold claims together with a much smaller pool (collateral) of physical gold.
Looking underneath the bonnet/hood, we are doubtful that either of these markets, repos or gold, can reasonably be described as “stable” right now. There also seems to be a paradox where the current low repo rates and gold prices are, we suspect, fooling people into a false sense of complacency.
What’s really piqued our interest, however, is whether there is a similar issue which is increasingly impacting both of these systemically important markets?
This issue relates to the availability of sufficient collateral...
Complete "must read" Thunder Road Report below:
Did Central Banks Collude to Suppress the Gold Market? – Eric Sprott
Eric Sprott founded Sprott Asset Management in 2001, and has been a steadfast proponent of owning gold and gold equities over the last decade. He recently argued that gold may rally to new highs within the next 12 months[1].
In an interview for Sprott Money News[2], he gave his views on the long-term, fundamental reasons why he still owns gold. Demand for physical metal has greatly increased in India and China, as shown by the import figuresfor gold in 2013 versus previous years, at the same time as the ‘paper’ markets for gold have seen record outflows.
According to Eric, we are in midst of a glaring supply crunch for physical gold, with central banks and institutions with large short books in gold, in his opinion, trying desperately to fight the tide.
Eric believes that western central banks formulated a plan at the onset of the gold supply crisis, and decided to take measures to fight demand for the yellow metal:
“A lot of it started with the Germans saying ‘We want our 330 tons back’ and the Head of the U.S. Treasury saying ‘It’ll take seven years,’ even though it only represents about four percent of the theoretical gold they own.”
“To put it into reference, China imported 100 tons last month. So, moving 300 tons doesn’t take seven years. It’s preposterous that it would take that long.”
The Fed hasn’t been the only one concerned with the demand for physical gold, says Eric: “All the commercial banks that were short gold and silver have now covered their shorts. While they advised their customers to sell, they were buying.”
Paired with the Fed’s inexplicable reluctance to return Germany’s gold, Eric believes that central banks also did what they could to stop citizens in India from obtaining gold:
“I suspect the [central banks] went to India and said ‘You’ve got to get your people to stop buying gold,’ and they said ‘Yes sir, yes sir.’” He believes the central banks are really behind the drastic increases in import taxes on gold, which went from 2% initially, to a newly announced 10%. They’ve also banned imports of gold coins and medallions and prohibited banks from lending for the purpose of buying gold[3].
Eric continues: “They got agreement from the jewelers that beginning on July 1st, they wouldn’t sell bars and coins through the jewelry stores. They issued some other arcane rule just recently, where if you are importing gold it has to be held in customs until you could prove that you are exporting 20 percent of it –which has almost frozen the Indian gold demand through normal channels.”[4]
“Every week, there’s some new measure in India to keep people from buying, because if they ever came back into the market here, it would be unbelievable now that we know what the Chinese are doing every month. The Chinese have gone from buying 200 tons a year ago, to 1,200 tons a year. That’s 1,000 tons extra.”
Eric believes that the state of the financial world has been seriously disfigured by governments’ misuse of “printing presses” and poor management of their debts and obligations:
“It’s all just one big Ponzi scheme. We all just print money as all these major capitalist countries are doing and there’s an unintended consequence of doing it. I don’t know whether it’s going to be inflation or massive deflation, but there will be something coming out of it, because the life we’re living today isn’t normal.”
So where are gold and silver headed now?
“I think we saw the bottom on June 28th. My way of defining a bull market in a commodity is I say if a product can go up 20 percent in a reasonably short time from a declining trend, you’re in a new bull market. And silver probably has to go, I think, another 20 cents from where it is at the moment, and we’re in a new bull market. It will have risen 20 percent. We’ve had the silver stocks go up 37 percent. They’re already in a bull market.”
Eric concludes: “The fact is that demand surged for gold and silver when the price got knocked down. I personally believe we are going to see a very dramatic increase in the price of gold and silver. And when I mean dramatic, I mean they could double in a year.”
Eric Sprott founded Sprott Asset Management in 2001 and has over 40 years of experience in the investment industry. He is Chairman of Sprott Inc., which is based in Toronto, Canada.
[1] The Globe and Mail: http://www.theglobeandmail.
What happened to those guys who thought that gold will plummet once gold hit rock bottom?
Where are they now?
(courtesy Bill Holter)
Where are we (they) now?
Gold traded back up to $1,400 on Friday, this is an eyelash away from a 20% rise off of the papered lows of late June. This level also puts us $250 or so away from being positive for the year which would make the 13th straight. Will this happen? I firmly believe it will and I don't think it will be a "year end squeaker" either. As for Silver, it has now moved 30% off of its lows, can it cross $32 before year end? Maybe easier than Gold going positive for the year in my opinion. Yes I know, just my opinion and "talking my book" again right?
I wanted to write a follow up piece to "Service or Disservice" which I wrote on June 26th (sent the 27th) because that was the exact low AND the height of "bashers" coming out of the woodwork. On that day Larry Edelson, Martin Armstrong and Harry Dent were "guru's" who were "right". "Right" for the right reasons, wrong reasons or just lucky? We have since then seen massive drawdowns of metal inventories and shortages hand in hand with big premiums for Gold and Silver all over the world. To now, and after the fact believe that real Gold and Silver were sold to create the waterfall in prices (April-June) is to believe that the Easter Bunny will lead Santa's sled this coming Christmas! The "operation" clearly backfired and it is now only a matter of time before we see the failure of one (or all) paper exchanges for metal. As Jim Sinclair has said, Gold will become a 100% cash market with real and full settlement.
So, where are they now? Larry Edelson says that we are "getting close" to the all clear signal but we could still trade to new lows on Gold. Armstrong as I understand talked about 3 or 4 days up in early July and then down to test $1,000 or below and Harry Dent is talking about $750 Gold or less. Still...a "scary" market and one that should be avoided? Are they correct? Time will tell but I personally believe that they are wrong now, were "lucky" to have "timed" the sale of tons upon tons of paper contracts that "made" price action.
The fact is, since the all time highs back in 2011 there is now more debt outstanding, more money supply outstanding, more derivatives and less equity. Put simply, the system is far riskier today to a complete and total crack up than where we were then and the reasons to own Gold and Silver are stronger today than they were then. "Fundamentally", Gold and Silver are more valuable and more "necessary" to own now than then...than EVER! We in the United States have a Treasury and a central bank that is insolvent. Argue that they are not if you wish, you are only fooling yourself. And "yourself" is what is important here because no one is going to protect you other than "yourself".
THIS is what I tried to impress upon people at the time, the "emotional fortitude" to get back in would be hard, very hard. If you did sell, where would you get back in? Could you pull the trigger to rebuy during free fall? Could you make yourself buy after a 20 or 30% run up? After taxes has the $250 lower today even paid your capital gain tax bill? If you were "smart enough" to have sold was it worth not having the insurance? Have you repurchased yet or are you still waiting for better prices? How long will you wait? I am not smart enough to know when "the day" will arrive that the global Ponzi charade will come down...I am however smart enough to know that it is all a Ponzi, it is all a charade and it is not "if" at this point...it is only "when". Each day that you "wait" brings us closer and closer to the day that we go "no offer".
I have said for many years now "do not trade" because if the music stops and you do not have your position...you will be out of position for the remainder of your life with no chance of repair. That said, it is important to understand that us "permabulls" will one day and ONLY one day issue a sell recommendation. This will only come AFTER new currencies are introduced. You cannot (you can but it doesn't make sense to) sit an entire lifetime on top of a pot of Gold. After the "reset" you will want to have your capital in "productive" assets whether that means real estate, stocks or whatever. Dollar cost average and keep on stacking because those who arrive in the coming "reset" with wealth intact will be few and far between.
Trying to call a top ANY time before this system resets itself is in my opinion reckless, foolish and can only be dangerous because you have to be correct twice. You have to be correct that a reaction is in fact going to happen AND you must get back in. If you are wrong on either of these...you lose...and in real life there are no "do over's" or mulligans.
Regards, Bill H.
Submitted by Tyler Durden on 08/25/2013 15:03 -0400
- Bear Stearns
- Central Banks
- Counterparties
- ETC
- Futures market
- Lehman
- Market Conditions
- MF Global
- Repo Market
It’s ironic, or it seems that way to us, that two of the least understood financial markets by equity investors are two of the most systemically important – repos and gold. Even more ironic is how so many investors don’t even consider them to be all that important. In our view, stability in both markets is a pre-requisite for maintaining confidence in the financial system and keeping the credit/asset bubble inflated. The significance of these markets is not lost on governments, central banks and regulators, although the definition of “stability” in each of them is slightly different. Looking underneath the bonnet/hood, we are doubtful that either of these markets, repos or gold, can reasonably be described as “stable” right now. There also seems to be a paradox where the current low repo rates and gold prices are, we suspect, fooling people into a false sense of complacency. What’s really piqued our interest, however, is whether there is a similar issue which is increasingly impacting both of these systemically important markets? This issue relates to the availability of sufficient collateral...
Via Paul Mylchreest's Thunder Road Report,
It’s ironic, or it seems that way to us, that two of the least understood financial markets by equity investors are two of the most systemically important – repos and gold. Even more ironic is how so many investors don’t even consider them to be all that important.
In our view, stability in both markets is a pre-requisite for maintaining confidence in the financial system and keeping the credit/asset bubble inflated. The significance of these markets is not lost on governments, central banks and regulators, although the definition of “stability” in each of them is slightly different.
The greatly under-reported repo market sits at the centre of the banking system and the securities markets. It is a primary source of leverage and, therefore, risk. Time after time, the risks remain hidden until events cascade beyond the point of no return. Stability in the repo market depends on confidence in repo counterparties (which can evaporate at near light speed, e.g. Lehman, Bear Stearns, MF Global and Long Term Capital Management), confidence in the valuation of collateral used in repo loans (remember subprime etc) and a sufficient pool of acceptable securities (e.g. Treasuries, MBS, etc) which can be pledged as collateral.
In stressed market conditions, liquidity crunches, declining collateral values and re-hypothecation (i.e. re-use of the same securities as collateral by more than one party) can undermine this market. This results in capital being wiped out, a run on collateral and the telltale sign of spikes in “fails-to-deliver”, when a scramble to post eligible securities ensues. Late 2008 was the example par excellence – here is what happened to fails-to-deliver in Treasuries (data is in US$m).
When stress emerges in the financial system, the problem with the repo market is its tendency to be (very) “pro-cyclical” on the downside. It also operates pro-cyclically in terms of leverage and asset prices on the upside, which always seems to get forgotten.
Stability in the gold market for policymakers and regulators implies a stable gold price, preferably at “low” levels (i.e. well below all-time highs), an efficiently functioning gold futures market, ample liquidity in the gold lending (leasing) market and no heightened desire among gold buyers to take possession of physical
bullion. A surging gold price, backwardations and shortages of physical bullion are proverbial “canaries in the mine” regarding an overstretched system.
bullion. A surging gold price, backwardations and shortages of physical bullion are proverbial “canaries in the mine” regarding an overstretched system.
It’s belatedly dawning on more and more people that the price of gold on everybody’s Bloomberg screens is in fact a hybrid price of predominantly “paper” and “unallocated” (convention for LBMA settlement unless “allocation” specified) gold claims together with a much smaller pool (collateral) of physical gold.
Looking underneath the bonnet/hood, we are doubtful that either of these markets, repos or gold, can reasonably be described as “stable” right now. There also seems to be a paradox where the current low repo rates and gold prices are, we suspect, fooling people into a false sense of complacency.
What’s really piqued our interest, however, is whether there is a similar issue which is increasingly impacting both of these systemically important markets?
This issue relates to the availability of sufficient collateral...
Complete "must read" Thunder Road Report below:
Did Central Banks Collude to Suppress the Gold Market? – Eric Sprott
Eric Sprott founded Sprott Asset Management in 2001, and has been a steadfast proponent of owning gold and gold equities over the last decade. He recently argued that gold may rally to new highs within the next 12 months[1].
In an interview for Sprott Money News[2], he gave his views on the long-term, fundamental reasons why he still owns gold. Demand for physical metal has greatly increased in India and China, as shown by the import figuresfor gold in 2013 versus previous years, at the same time as the ‘paper’ markets for gold have seen record outflows.
According to Eric, we are in midst of a glaring supply crunch for physical gold, with central banks and institutions with large short books in gold, in his opinion, trying desperately to fight the tide.
Eric believes that western central banks formulated a plan at the onset of the gold supply crisis, and decided to take measures to fight demand for the yellow metal:
“A lot of it started with the Germans saying ‘We want our 330 tons back’ and the Head of the U.S. Treasury saying ‘It’ll take seven years,’ even though it only represents about four percent of the theoretical gold they own.”
“To put it into reference, China imported 100 tons last month. So, moving 300 tons doesn’t take seven years. It’s preposterous that it would take that long.”
The Fed hasn’t been the only one concerned with the demand for physical gold, says Eric: “All the commercial banks that were short gold and silver have now covered their shorts. While they advised their customers to sell, they were buying.”
Paired with the Fed’s inexplicable reluctance to return Germany’s gold, Eric believes that central banks also did what they could to stop citizens in India from obtaining gold:
“I suspect the [central banks] went to India and said ‘You’ve got to get your people to stop buying gold,’ and they said ‘Yes sir, yes sir.’” He believes the central banks are really behind the drastic increases in import taxes on gold, which went from 2% initially, to a newly announced 10%. They’ve also banned imports of gold coins and medallions and prohibited banks from lending for the purpose of buying gold[3].
Eric continues: “They got agreement from the jewelers that beginning on July 1st, they wouldn’t sell bars and coins through the jewelry stores. They issued some other arcane rule just recently, where if you are importing gold it has to be held in customs until you could prove that you are exporting 20 percent of it –which has almost frozen the Indian gold demand through normal channels.”[4]
“Every week, there’s some new measure in India to keep people from buying, because if they ever came back into the market here, it would be unbelievable now that we know what the Chinese are doing every month. The Chinese have gone from buying 200 tons a year ago, to 1,200 tons a year. That’s 1,000 tons extra.”
Eric believes that the state of the financial world has been seriously disfigured by governments’ misuse of “printing presses” and poor management of their debts and obligations:
“It’s all just one big Ponzi scheme. We all just print money as all these major capitalist countries are doing and there’s an unintended consequence of doing it. I don’t know whether it’s going to be inflation or massive deflation, but there will be something coming out of it, because the life we’re living today isn’t normal.”
So where are gold and silver headed now?
“I think we saw the bottom on June 28th. My way of defining a bull market in a commodity is I say if a product can go up 20 percent in a reasonably short time from a declining trend, you’re in a new bull market. And silver probably has to go, I think, another 20 cents from where it is at the moment, and we’re in a new bull market. It will have risen 20 percent. We’ve had the silver stocks go up 37 percent. They’re already in a bull market.”
Eric concludes: “The fact is that demand surged for gold and silver when the price got knocked down. I personally believe we are going to see a very dramatic increase in the price of gold and silver. And when I mean dramatic, I mean they could double in a year.”
Eric Sprott founded Sprott Asset Management in 2001 and has over 40 years of experience in the investment industry. He is Chairman of Sprott Inc., which is based in Toronto, Canada.
[1] The Globe and Mail: http://www.theglobeandmail.
[2] Sprott Money is not affiliated with Sprott Inc.
What happened to those guys who thought that gold will plummet once gold hit rock bottom?
Where are they now?
(courtesy Bill Holter)
What happened to those guys who thought that gold will plummet once gold hit rock bottom?
Where are they now?
(courtesy Bill Holter)
Where are we (they) now?
Gold traded back up to $1,400 on Friday, this is an eyelash away from a 20% rise off of the papered lows of late June. This level also puts us $250 or so away from being positive for the year which would make the 13th straight. Will this happen? I firmly believe it will and I don't think it will be a "year end squeaker" either. As for Silver, it has now moved 30% off of its lows, can it cross $32 before year end? Maybe easier than Gold going positive for the year in my opinion. Yes I know, just my opinion and "talking my book" again right?
I wanted to write a follow up piece to "Service or Disservice" which I wrote on June 26th (sent the 27th) because that was the exact low AND the height of "bashers" coming out of the woodwork. On that day Larry Edelson, Martin Armstrong and Harry Dent were "guru's" who were "right". "Right" for the right reasons, wrong reasons or just lucky? We have since then seen massive drawdowns of metal inventories and shortages hand in hand with big premiums for Gold and Silver all over the world. To now, and after the fact believe that real Gold and Silver were sold to create the waterfall in prices (April-June) is to believe that the Easter Bunny will lead Santa's sled this coming Christmas! The "operation" clearly backfired and it is now only a matter of time before we see the failure of one (or all) paper exchanges for metal. As Jim Sinclair has said, Gold will become a 100% cash market with real and full settlement.
So, where are they now? Larry Edelson says that we are "getting close" to the all clear signal but we could still trade to new lows on Gold. Armstrong as I understand talked about 3 or 4 days up in early July and then down to test $1,000 or below and Harry Dent is talking about $750 Gold or less. Still...a "scary" market and one that should be avoided? Are they correct? Time will tell but I personally believe that they are wrong now, were "lucky" to have "timed" the sale of tons upon tons of paper contracts that "made" price action.
The fact is, since the all time highs back in 2011 there is now more debt outstanding, more money supply outstanding, more derivatives and less equity. Put simply, the system is far riskier today to a complete and total crack up than where we were then and the reasons to own Gold and Silver are stronger today than they were then. "Fundamentally", Gold and Silver are more valuable and more "necessary" to own now than then...than EVER! We in the United States have a Treasury and a central bank that is insolvent. Argue that they are not if you wish, you are only fooling yourself. And "yourself" is what is important here because no one is going to protect you other than "yourself".
THIS is what I tried to impress upon people at the time, the "emotional fortitude" to get back in would be hard, very hard. If you did sell, where would you get back in? Could you pull the trigger to rebuy during free fall? Could you make yourself buy after a 20 or 30% run up? After taxes has the $250 lower today even paid your capital gain tax bill? If you were "smart enough" to have sold was it worth not having the insurance? Have you repurchased yet or are you still waiting for better prices? How long will you wait? I am not smart enough to know when "the day" will arrive that the global Ponzi charade will come down...I am however smart enough to know that it is all a Ponzi, it is all a charade and it is not "if" at this point...it is only "when". Each day that you "wait" brings us closer and closer to the day that we go "no offer".
I have said for many years now "do not trade" because if the music stops and you do not have your position...you will be out of position for the remainder of your life with no chance of repair. That said, it is important to understand that us "permabulls" will one day and ONLY one day issue a sell recommendation. This will only come AFTER new currencies are introduced. You cannot (you can but it doesn't make sense to) sit an entire lifetime on top of a pot of Gold. After the "reset" you will want to have your capital in "productive" assets whether that means real estate, stocks or whatever. Dollar cost average and keep on stacking because those who arrive in the coming "reset" with wealth intact will be few and far between.
Trying to call a top ANY time before this system resets itself is in my opinion reckless, foolish and can only be dangerous because you have to be correct twice. You have to be correct that a reaction is in fact going to happen AND you must get back in. If you are wrong on either of these...you lose...and in real life there are no "do over's" or mulligans.
Regards, Bill H.
Gold traded back up to $1,400 on Friday, this is an eyelash away from a 20% rise off of the papered lows of late June. This level also puts us $250 or so away from being positive for the year which would make the 13th straight. Will this happen? I firmly believe it will and I don't think it will be a "year end squeaker" either. As for Silver, it has now moved 30% off of its lows, can it cross $32 before year end? Maybe easier than Gold going positive for the year in my opinion. Yes I know, just my opinion and "talking my book" again right?
I wanted to write a follow up piece to "Service or Disservice" which I wrote on June 26th (sent the 27th) because that was the exact low AND the height of "bashers" coming out of the woodwork. On that day Larry Edelson, Martin Armstrong and Harry Dent were "guru's" who were "right". "Right" for the right reasons, wrong reasons or just lucky? We have since then seen massive drawdowns of metal inventories and shortages hand in hand with big premiums for Gold and Silver all over the world. To now, and after the fact believe that real Gold and Silver were sold to create the waterfall in prices (April-June) is to believe that the Easter Bunny will lead Santa's sled this coming Christmas! The "operation" clearly backfired and it is now only a matter of time before we see the failure of one (or all) paper exchanges for metal. As Jim Sinclair has said, Gold will become a 100% cash market with real and full settlement.
So, where are they now? Larry Edelson says that we are "getting close" to the all clear signal but we could still trade to new lows on Gold. Armstrong as I understand talked about 3 or 4 days up in early July and then down to test $1,000 or below and Harry Dent is talking about $750 Gold or less. Still...a "scary" market and one that should be avoided? Are they correct? Time will tell but I personally believe that they are wrong now, were "lucky" to have "timed" the sale of tons upon tons of paper contracts that "made" price action.
The fact is, since the all time highs back in 2011 there is now more debt outstanding, more money supply outstanding, more derivatives and less equity. Put simply, the system is far riskier today to a complete and total crack up than where we were then and the reasons to own Gold and Silver are stronger today than they were then. "Fundamentally", Gold and Silver are more valuable and more "necessary" to own now than then...than EVER! We in the United States have a Treasury and a central bank that is insolvent. Argue that they are not if you wish, you are only fooling yourself. And "yourself" is what is important here because no one is going to protect you other than "yourself".
THIS is what I tried to impress upon people at the time, the "emotional fortitude" to get back in would be hard, very hard. If you did sell, where would you get back in? Could you pull the trigger to rebuy during free fall? Could you make yourself buy after a 20 or 30% run up? After taxes has the $250 lower today even paid your capital gain tax bill? If you were "smart enough" to have sold was it worth not having the insurance? Have you repurchased yet or are you still waiting for better prices? How long will you wait? I am not smart enough to know when "the day" will arrive that the global Ponzi charade will come down...I am however smart enough to know that it is all a Ponzi, it is all a charade and it is not "if" at this point...it is only "when". Each day that you "wait" brings us closer and closer to the day that we go "no offer".
I have said for many years now "do not trade" because if the music stops and you do not have your position...you will be out of position for the remainder of your life with no chance of repair. That said, it is important to understand that us "permabulls" will one day and ONLY one day issue a sell recommendation. This will only come AFTER new currencies are introduced. You cannot (you can but it doesn't make sense to) sit an entire lifetime on top of a pot of Gold. After the "reset" you will want to have your capital in "productive" assets whether that means real estate, stocks or whatever. Dollar cost average and keep on stacking because those who arrive in the coming "reset" with wealth intact will be few and far between.
Trying to call a top ANY time before this system resets itself is in my opinion reckless, foolish and can only be dangerous because you have to be correct twice. You have to be correct that a reaction is in fact going to happen AND you must get back in. If you are wrong on either of these...you lose...and in real life there are no "do over's" or mulligans.
Regards, Bill H.
We have a very interesting setup occurring right now when it comes to Silver and the September Options Expiration day which is Tuesday August 27th
I like the economic stuff today ,the Syria news has me pissed off though. I really don't like Kerry or a lot of politicians.
ReplyDeleteHey Kev - interesting that despite all of the war mongering , we didn't see a flight to safety ( no huge move into gold , oil was a nothing burger , treasuries really didn't catch a bid either. ) Guess with all of the bad news out of Japan and the never mentioned but ever-growing Louisiana sinkhole ( that swallows trees ) , the sense that Europe is about to circle the drain ( check my post on europe , especially state of debt growth in Greece ) , let along the five major Obama scandals / clusterfucks festering ( IRS Gate / Snowwden NSA Gate / AP Spygate / Benghazi Gate / Obamacare Gate ) , it's time to change the subject for the sheeple who just might be starting to pay attention !
ReplyDelete