Metals Action Leaves The Ignorant Scratching Their Head...

Someone sent me an email mentioning that Dennis Gartman may have finally re-entered gold (later denied by Gartman).  My response was "who gives a shit what Gartman does?  He's irrelevant, especially when it comes to gold - and he can't even spell 'silver.'"

The key to the kingdom is to understand what is happening in the physical market.  GATA layed out the trail map over 10 years ago when Bill Murphy presciently declared that eventually the demand for actual physical gold would completely overwhelm the ability of the bullion banks/Central Banks to manipulate the price using paper. 

Are we there now?  I don't know.  But the character of the current market certainly reflects the obvious inability of the manipulators to keep a lid on the metals at key price points.  If you read the invaluable report produced daily by "JB" (and accessible at http://www.lemetropolecafe.com/) on the condition of the global physical market, you will understand that the eastern hemisphere central banks and population are buying physical gold and silver much more aggressively than in the past. Here's an excerpt from today:

UBS has an important comment: “When gold pulled back to $1270.75 on Tuesday, Indian buying interest returned: flows noted by our Swiss sales desk were the strongest since late July, and twice the year-to-date average. Given current lofty prices, demand is understandably inconsistent - but the Indian market has sent a clear signal that it is prepared to raise its price threshold…Importantly for gold, scrap supply has not risen to significant levels, ensuring that this potential rally dampener is not playing a major role right now.”

That tells a big part of the story.  India has become a lot less price sensitive than in the past and is aggressively buying gold on every pullback.  That we know of, and the caveat is that we have no idea what China is really doing other than buying hand-over-fist, India is the largest importer/consumer of gold in the world.  Turkey has resumed its importing in the last several months.  Russia accumulates several tonnes every month. And the southeast Asian countries are voraciously accumulating (Bangladesh just bought 10 tonnes from the IMF). 

JB's report also references that India's second largest gold importer sees the Oct-Dec imports potentially being 37% above that of last year's levels.  Not only are the Indians hoovering up gold, they have acquired an avaricious desire for silver.  Here's the article, worth reading  India's Gold/Silver Vaccum

Also note that another aspect that distinguishes this year's market from the past is the dearth of scrap gold/silver flowing into the market as the price rises.  JB has reported on this several times over the course of the last 6 months.

Another indicator which is followed closely by my friend and colleague, "Ranting" Andy, is the premiums being paid on Ebay for rolls of 1 oz silver eagles.  Yesterday he commented on the fact that there are very few sell listings on Ebay right now compared to the past.  And just today he reported that silver eagle rolls were being sold for $25-28/oz.  That's a $4-7 premium over spot.  Premiums like this on Ebay are indicative of growing scarcity of supply in the small-lot/retail market and the coin dealer network.  This market is defined as the buyers who can only afford to buy silver in small amounts.

The point of all of this is that it would appear that the demand globally for physical gold and silver is such that, at this current moment, the price manipulators are struggling to keep the metals from grinding higher.  Technically this is readily apparent in the action on the "tape."  Every sell-off is met with buying and a subsequent high-volumn move higher.  Higher lows and higher highs.  Classic indication of a market that wants to go higher. 

I don't know if we're at Bill "Midas" Murphy's point-of-no-return in which the bullion banks are carted off the Comex floor on stretchers, but I do know that this market wants to go higher for now.  And this is being supported by the easy money banking policy that has been implemented by the global Central Banks (some of you might refer to this as "the global race to devalue fiat currencies").

Since it's my birthday today, I'm cutting the day a bit short.  I'd like to sign off with the lyrics of the Grateful Dead's "Deal" in tribute to all those who have no fucking clue what is going (we all know who they are):

Since it cost a lot to win
and even more to lose
You and me bound to spend some time
wondring what to choose
Goes to show you don't ever know
Watch each card you play
and play it slow
Wait until your deal come round
Don't you let that deal go down

I been gambling here abouts
for ten good solid years
If I told you all that went down
it would burn off both your ears
It goes to show you don't ever know
Watch each card you play
and play it slow
Wait until your deal come round
Don't you let that deal go down

Since you poured the wine for me
and tightend up my shoes
I hate to leave you sittin there
composin lonesome blues
It goes to show you don't ever know
Watch each card you play
and play it slow
Wait until your deal come round
Don't you let that deal go down

Dennis, CNBC et al:  Thanks for pouring my wine and tightening up my shoes!