Tulving and Company - one of the largest coin dealers in the country - announced on its website that it had its busiest day ever last Thursday. We bought more gold for our fund this morning after the Comex opening paper raid. I was put on hold twice. Tulving is more sold out of 1 oz. gold bullion products than I can ever recall seeing. Here is what happens now when the big banks drop paper bombs on the Comex:
(click on chart to enlarge)
This too shall pass. In nine years I have never seen the public respond to price hits by buying physical bullion. Ultimately the physical market will blow up this massive paper fraud. Even Ted Bulter - per his King World radio interview - has thrown in the towel on his hopes for CFTC reform and enforcement of the laws with respect to Comex gold and silver positions and trading manipulation. Shockingly, he had some scathing remarks about Gary Gensler and Bart Chilton. I'm glad to see he's finally climbed on board the reality wagon that GATA has been pulling around for several years now.
Congress Has Unwittingly Confirmed That Gold/Silver Is Money
For anyone who is expecting any kind of meaningful reform to come out of the Financial "Reform" Bill making its way throught Congress and on its way to the El Hefe's desk, stick to your medical marijuana habit while you still have a job and can pay for it. This reform bill is turning out to be one big farce. With respect to commodities trading, the Bill requires that Banks move all of their commodities trading to a separate subsidiary which would be remote from the bank holding company. HOWEVER, gold and silver trading will remain at the bank holding company.
"Why" you ask? Aren't gold and silver just commodities? Those of us who understand the Golden Truth know the answer. But this move confirms that the big banks not only manipulate the gold/silver market BUT, ironically, it is an implicit confirmation by the Government THAT GOLD/SILVER ARE MONEY.
With regard to the Fed/Govt manipulation of gold/silver:
"The greatest trick the Devil ever pulled was convincing the world he didn't exist" ("The Usual Suspects").
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Russia's banks beginning to offer deposits in gold. Cash automatically converted into silver/gold.
ReplyDeletehttp://www.telegraph.co.uk/sponsored/russianow/business/7874648/Banking-in-Russia-Cash-no-longer-king-as-gold-price-soars.html
"The greatest trick the Devil ever pulled was convincing the world he didn't exist"
ReplyDeleteC.S. Lewis originally, I believe.
APC Halted As 200 Shares Trade At $100,000
ReplyDeletehttp://www.zerohedge.com/article/apc-halted-200-shares-trade-100000
Sorry Dave but this is getting ridiculous to say the least!
I just added my Gold position as well...Physical that is.
any news from Mr J. WilliamsÉ He was spot on when he called for a slow down from the eco. indicators he monitors back in March.
ReplyDeleteGreat post, captures what I think is going on.
ReplyDeleteI hope you had a nice weekend, I think its gonna be a long summer!
Hey GYC - thanks. I bet the metals rebound sooner than people expect.
ReplyDeleteJim Sinclair today
ReplyDelete"Reports about a large gold swap done by the IMF are being colored by a glib analysis of what a swap is as compared to a lease.
If the IMF was legally able to and leased this gold, I would agree with the fear of market sales as a means of bailing out euro banks or other entities.
Gold swaps are done with monetary authorities. Gold leases are done with "for profit entities" such as gold banks.
All that scary crap written today is just that, crap."
Interesting and very confusing use of language don't you think. The IMF can't lease it's gold because it doesn't own it. The IMF operates a pool of Central Depositories which hold the contributions of the particapting Central Banks. The members can swap their contributions for the reserve currency US dollars. This is what India, Sri Lanka and Mauritius have recently done. Of course having swapped their capital contribution for US dollars they are of course entirely entitled to sell their gold to banks or indeed Indian ladies for jewellery.
Does Jim Sinclair know this? Of course he does. Yet he states that because the IMF does not own the gold they must retain it in a swap transaction. Whereas the Central Bank that does own the gold can not sell the gold because it has been the subject of an IMF swap even though it is of course a unitary asset and the members of the IMF can shoose whether or not to make their capital contributions in either gold or dollars.
What I really find really disgracefull is the total degredation of the English language. Here we have commonly used terms such as swap meaning or implying actual exchange now so mangled in usuage that it now is taken to mean lease. In addition we have the term lease which is now so mangled by an obscure interpretation of credit baille, which wouldn't stand examination in a Napoleonic Code Court yet alone an English Law Court, is taken to mean swap or sale.
This new speak reduces our communication to the babbling of baboons.
Great comment anonymous! Thanks. Agree on the language thing - reminscient of Orwell's "Animal Farm," huh?
ReplyDeleteHere's what James Turk had to say about the situation - I never doubt his judgement in these matters (from tonight's Midas report):
"Swaps are quick. The BIS just creates a bookkeeping entry for the currency it lends against the gold it now holds as security. If the currency loan does not get repaid, the BIS owns the gold.
"Swaps normally do not result in the sale of physical metal. However, if the BIS did not have sufficient metal on hand for its gold interventions, it could presumably borrow some of the gold left with it as security and sell this gold into the market or lend it to a bullion bank who would then sell the gold."
I went back to James and inquired further whether the BIS had that much cash lying around. James...
"Cash on hand, no. But it has $370 billion of assets, most of which are liquid short-term stuff. Plus it can borrow essentially unlimited amounts from central banks. So it can come up with that much bookkeeping currency quickly."
The real issue for us is whether this physical gold has hit the market or not. The BIS and IMF are all part of The Gold Cartel. They want the price controlled and sent down whenever possible. If the gold was sold in order to keep the prices from exploding, this news would be extraordinarily bullish, as it would mean demand for physical gold is MUCH higher than been officially reported.
Here's something I've never understood with respect to the paper-manipulation assertion:
ReplyDeleteIf the bullion banks are suppressing the paper price of gold with naked shorts unsupported by physical holdings, wouldn't you expect to see a positive divergence vis a vis mining shares? The GATA project might not infiltrate the consciousness of the average person or retail investor, but the thesis is unavoidable to anybody who takes an interest in precious metals, particularly professional money managers.
I would think, if short positions could not be met out of existing supply, mining shares would be heavily bid on the expectation that sooner or later the obligations would have to be satisfied and/or the artificial pressure on demand would be removed. While the gold miners have outperformed the broader market in the second quarter, they have underperformed gold, and it puzzles me that this should be the case if the GATA thesis is correct.
The GATA thesis is correct. I've studied it for 9 years now. Not many people are aware of what's going on and many who are aware simply don't believe it. Time will prove it out. And yes, once the cover of hell is ripped open for all to see, you will see the mining shares take off in price in a manner that will make the internet bubble look mild by comparison.
ReplyDeleteIt still strikes me that, given the market signals already in place (mint shortages, premiums paid in other countries for physical gold, etc.), gold producers should already be showing the divergence those following GATA currently expect if the physical shortages exist to the degree they assert.
ReplyDeletePerhaps, as you say, it simply requires more time. There was a delay between the rollover of the housing market and the failure of FNM/FRE/et al., and it's not like PM shares have been dead money for the past two years.
That said, it seems to me if there were as much to this story as some have suggested, I don't understand why the premier hedgies famously long gold (Paulson, Soros, Jones, etc.) aren't pushing the same case in public. I also wonder why, given their experience and due diligence mandates, Soros and Paulson would buy such enormous positions in GLD if that ETF were as fraudulent asserted.
I'm bullish on the PMs, and I would be only too happy if all that GATA has asserted were true. I have no trouble accepting that market-maker manipulations take place to game OPEX or for other reasons, though I question whether such manipulations can suppress price to the degree and duration sometimes asserted. I hope my skepticism will be swept away by events, but for now it remains in place.
India's PSB to Start Selling Gold, Silver Coins
ReplyDeleteState-run Punjab & Sind Bank is getting into the gold coin sales act. Today the bank said it will start selling gold and silver coins.
"PSB is on the threshold of launching a customer-friendly scheme to sell gold and silver coins and bars of small denominations," PSB Executive Director P K Anand said.
The gold coins will be of 24 carat gold and of 999.99 per cent purity, as per the highest international standards, the bank said in a statement.
"These will be competitively priced on the basis of prices ruling in the international bullion market," Anand said.
"In the present scenario, gold provides an excellent hedge against inflation, a source of liquidity and a form of savings as well," Anand said.
Punjab & Sind Bank is a major bank in Northern India. It has near 900 branches and offices spread throughout India, almost 400 are in Punjab state. The bank's corporate headquarters is in New Delhi.
Anonymous: please go back and review the intra-day charts for the Dow, gold, HUI and tell me what you find. I know almost to the penny what the action was that day.
ReplyDeleteRE: big pools of money. Have you ever traded/invested in an illiquid market? gold/silver/mining stocks are among the more illiquid. The total capitalization of every single mining stock combined is less than the market cap for each individual top 10 stock in the SPX.
Smart money will accumulated as much as they can at these cheap prices before they really pound the table.
Skepticism is healthy. When people like you turn into perma-bulls and start chasing price, that's when I'll start scaling out and looking for the next game.
Bill, thanks for the India news.
ReplyDeleteAnonymous, let me put this bull market into another context. The stock market bull essentially lasted from 1981 until 2001. If we use that as our ruler, and it's a ruler that pretty much works for several hundred years of bull markets, the gold bull is less than 1/2 way thru.
ReplyDeleteHowever, because of the price suppression, we don't know how powerful the "snapback" effect will have. That's why guys like Jim Dines were forecasting 9 years ago that eventually this bull would bubble up into something that made the internet bull very lame. I agree with him.
You are climbing a wall of worry and skepticism. It is very welcome to see that. I'm neither a perma-bull nor a skeptic. I'm a believer and I've learned to detach my emotions.
RE: the big money: let me say this, and I know because I used to trade against Pimpco in junk bonds back in the 1990's. When Bill Gross gets on CNBC and pounds the table on a trade strategy, he's already loaded up that trade and is getting ready to become a scale seller into the sheeple that follow him.
Big money has not even begun to move into the pm sector. Just because a few large hedge funds are moving in. For big money think: pensions, large mutual funds, insurance money, etc. They don't even know how to spell gold yet.
Go read Atlas Shrugged and when you are done reading that, I bet the metals will be pushing new all time highs.
Gold open interest increased by 3% yesterday even as the drop happened. Amazing. Nobody's closing any positions just yet. We'll have to wait until Friday to find out whether these are new spec shorts, new spec longs, or both.
ReplyDeletehttp://www.cmegroup.com/daily_bulletin/Section62_Metals_Futures_Products_2010128.pdf
I didn't mean to antagonize you, or really to disagree. These are just the questions that occur to me whenever the GATA case is presented. Detaching one's emotions is an objective of skepticism, after all. :-)
ReplyDeleteI appreciate the work you've put into the site, and I've been happily long PMs since a trader friend pounded the table when SLW carried a 3 handle. I've seen the $HUI and gold charts beginning in the '90s. I am in complete agreement that gold and silver are secular bulls with plenty of room and time to run. If the bullion banks are working to suppress the price of gold, thus far they've done a fairly uneven job of it.
I don't dispute that big holders won't make the public rounds until they're ready to off-load (Schiff, Faber, Gartman, etc. haven't been shy about it, tho). I did bring up Soros and Paulson in part to muse at why, if GLD is a fraud, they would have put $4B of their and their clients' money into it as of their last 13f. Perhaps it is, and if it is, they will be on quite a hook if their due diligence is found to be lacking. If they're simply waiting for maximum effect to drop a dime on JPM/HSBC and run the Short Sterling program all over again, fine by me.
No disputing that most of the PM names are relatively small (NEM and ABX aren't exactly pipsqueaks, tho), though GLD, fraud or not, doesn't seem terribly illiquid. $2B of average daily volume isn't SPY, but it's in the ballpark with Blue Chip megacaps like GOOG and XOM.
In any event, I didn't come out to challenge the PM bull, on which I currently ride. There are simply aspects of the GATA thesis that seem to run afoul of Occam's Razor, which doesn't mean they're wrong, hence my questions.
Thanks for the feedback - I do appreciate it.
ReplyDeleteHey you didn't antagonize me. I just sensed a little unhealthy skepticism ;-) Soros has actually dumped his GLD holdings. He is buying into pm's, I know he has a big position in GBG. I don't know why Paulson does what he does. In observing what he IS doing, I believe he doesn't know what he's doing in this sector - YET.
I know from the person who showed him my GLD report from Feb '09 that David Einhorn - who at the time was the largest GLD holder - read my report, did his own due dili and then announced in July '09 that he has sold GLD and moved into privately safekept (probably Delaware Depository) bullion. He never disclosed his reasoning but we know know what it was.
I'm not calling a bottom yet to this pullback, but we reloaded a lot of positions over the last 3 days and have bought bullion every day for the last 4 days.
Try not to "over think" this whole thing. Buy fishing lines, sell rhino horns until you start seeing the kind of public signals we saw in the tech sector in 1999-2000 and housing 2006-2007. This bull has a long way to go and the best returns are yet come!
By the way if you need any proof of GATA's claims I suggest you look up and study the meaning of the term gold lease. This is an education in itself because a gold lease is like no other lease. Firstly in the case of project finance gold leases there is no exchange of physical real property a condition precedent for all other types of leasing. The term merely means a series of periodic payments in gold with the drawdown being money.
ReplyDeleteWhy are these arrangements called leases you may well ask instead of swaps which is what they are. The answer is that a gold lease contains a trust document and consequently has to executed under seal. Why does the gold lease contain a trust document? Well when you wind up a bank the third party accounts held in trust are paid out before the general depositors and creditors and treated as secured debtors.
The reason for name lease rather than swap with a trust document is to cver the nature of the security. If it was revealed than Central Banks lend mainly against security above the depositors it tends to undermine the system. Clearly Central Banks and the IMF would not lend to each other under these conditons unless an emergency had been called in the credit of one of the Central Banks. This is the reason for swaps vs leases.
Bear in mind that I went to Bank of England courses explaining gold leasing in the late 1970's and these people were putting in place security documentation to cover what is about to happen now then.
Think forty year planning cycle.
Anonymous. Wow. Thank you for that. That's an awesome piece of enlightenment. I may turn that into a post if you don't mind.
ReplyDeletehttp://www.zerohedge.com/article/china-promises-not-use-nuclear-option-buy-gold-dump-us-assets
ReplyDeleteBy the way people have complained that gold and silver will not be included in the new security regulations but will stay with the bank holding company. They claim that this is because of some conspiracy to treat the PM's differently. I have no evidence to back this up but I think it is because the central banks would never give up the security of all the depositors for their loans. Gold is real money and the central banks have always lent it with real security.
ReplyDeleteAnonymous,
ReplyDeleteMany thanks for that information.
Reference the forty years planning cycle, I wonder if you would care to comment on the following.
Jim Rickards in his recent PDF on the "National Security Issues" set up the scenario of Russia creating a gold backed currency that would be required for purchasing oil, and purchases of that currency would require gold..(if memory serves). This would be administered under English contract laws.
There is also much discussion of Germany, Finland, Denmark, (Norway - if she would join)leaving the EU, and creating a common currency block with Russia, (possibly with a few ex-USSR satellite nations..commodity rich).
This currency block would join with the Gulf States and Saudi (on the point of creating their own currency) in demanding the use of this new currency for oil purchase purposes.
Given that the original planners that you refer to would be aware that gold prices, and the use of a gold backed currency for oil purchase purposes would undermine US global hegemony exercised via their insistence on paper subject to debasement, surely they would have had the vision to create counter measures, or at least various scenarios that would tend to neuter the effects of such a currency developement.
Was there any hint of this on the courses you attended, or, with your knowledge, would you care to speculate on how such developements may play out. After all, if I were an oil exporting nation with dwindling supplies, I would be loath to sell what are national assets in return for pieces of paper that were being deliberately depreciated by the buyer.
Given Rickards presentation is over a year ago, do you see any counter measures in evidence?
Anonymous 2
I think there's no question that Russia/China/Middle East - probably actually spearheaded by China - are heading toward an eventual gold-backed currency that will be used as the new reserve currency. I actually have felt for about a year now that the scenario Rickards lays out for Russia will actually entail China executing that actual implementation of the plan. I also believe it will be accompanied by China's concomitant revaluation of the price of gold higher by many multiples in order to create a market value for the price of gold that reflects general global economic GDP output.
ReplyDeleteDid you notice that, yesterday I believe, Saudi Arabia announced that they were going to drastically reduce exploration in order to preserve their oil assets?
Dave, re Germany
ReplyDeletehttp://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006843/legal-noose-tightens-on-europes-monetary-union/
Anonymous 2
Note the Anonymous comments on leasing just refer to central banks. Commerical leasing with bullion banks done under ISDA for unallocated account debits/credits, so pure counterparty exposure.
ReplyDelete