The Golden Truth: With Gold And Silver, Forget The Charts - You Have To Watch Physical "Off-take"

Tuesday, January 18, 2011

With Gold And Silver, Forget The Charts - You Have To Watch Physical "Off-take"

First, having made that headline assertion, the daily chart on gold is starting to look neutral/bullish and the daily chart on silver - if you are a chart-jockey - suggests a bit more downside.

Now, having said that, I believe - as do several others, so my view is far from unique - that we have seen a transition in the dynamic of the precious metals market in which the sheer global demand for physical gold/silver has largely taken over the ability of U.S.-Anglo banks to manipulate prices lower using paper gold (Comex/LBMA futures/forwards). See this essay for clarification on Comex manipulation: LINK

The original thesis for this idea, at least of which I am aware, was put forth by GATA over 10 years ago. One of the best datapoints for monitoring global physical "off-take" is to watch the very visible import premiums being paid in the eastern markets (India, China, Viet Nam). The easiest way to keep track of this is to subscribe to the Midas report at http://www.lemetropolecafe.com/ to access "JB's" global market commentary. This is from his report that will be in tonight's Midas:

AM $3.83, PM $6.53, with world gold at $1,364.14 and $1,358.16. Ample, and lavish, for legal imports...local Shanghai gold closed at a premium of $16.55 to world gold of $1,361.95...local Vietnam gold stood at a premium of $40.35 to world gold of $1,362.57

These observed premiums are very high right now, especially for China and Viet Nam, indicating the high probability that these markets are voraciously buying physical gold (and silver).

This is not to say that we won't experience manipulated market corrections, like the one underway in which the gold cartel has engaged in massive short-covering at the expense of "hot money" speculators who piled into the paper market recently. But in general I think we can expect to see the illegal manipulative activities of the western bullion banks - aided and abetted by the regulators who look the other way (CFTC/Gensler) - sharply curtailed by the power of eastern market forces...got gold? Better get some while you can.

7 comments:

AnonymousTuesday, 18 January, 2011
Great information, Dave. I value your comments and information, and DO wish you would post more often. Thanks

Fred
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Dave in DenverTuesday, 18 January, 2011
Thanks for the feedback Fred. I'd like to post more often - it's a function of time and content ideas...
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EconomicDisconnectTuesday, 18 January, 2011
Great post.
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AnonymousTuesday, 18 January, 2011
I second that Dave. I always look forward to your posts.
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AnonymousTuesday, 18 January, 2011
I appreciate that Dave bothers to post AT ALL. His expertise and insights add value for me. I don't look at the price every day, as its not really a big deal. I just ask: is the government any more clever today than it was yesterday? No? BTFD and hold.

If you need a daily fix, check Dan Norcini, a good professional gold trader, posts daily at jsmineset.
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Joe KernanWednesday, 19 January, 2011
Keep up the good work Dave. Tons of disinformation and idiocy out there that needs a good, solid counterbalance.

Plus, everyone, remember to be charitable. Tons of gold bashers will be filling the corridors of Salvation Army, etc. in the coming years, so donate as you can.
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Dave in DenverWednesday, 19 January, 2011
Thanks for feedback everyone - I really do appreciate it! I originally started doing this blog as an "outlet" for frustration and to present my views on the lies being told by the Govt/Corporations/Media. I originally used to write up analysis that was published in Midas and distrubuted to some email friends, but I figured I may as well put this stuff out there for a potentially wider audience - for better or for worse lol.
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Add comment

Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.