Wednesday, August 14, 2013

Update On The Negative GOFO: Gold Has Bottomed - Headed Much Higher

It is important to note that while gold backwardation lasted a few days in 1999 and again in 2008 -- both of which marked major bottoms and key turning points in the price of gold -- we now have 31 trading days of backwardation and a gold price that has already risen $135 from when the backwardation began.  What we are seeing today is truly unprecedented and historic. - James Turk, from King World News interview - LINK
Just for reference, after 13 years of researching, studying, trading and investing in the precious metals markets, James Turk is one of the very few analysts who I still consider worth reading for insight and facts. "Backwardation" is when the spot price of gold is higher than the next month futures' price.  It means that the market is assigning a higher value to physical gold that can be delivered immediately than to cash.

About a month ago I wrote an article that discussed the significance of the negative gold forward interest rate (GOFO) that was being observed in London and is published by the London Bullion Market Association (LBMA).  The GOFO is the interest rate charged for a dollar/gold swap, which is when someone who owns gold needs a short term dollar loan and he collateralizes the loan with his gold.  When the rate is negative, it means that someone wants his gold more than he wants to borrow dollars and it signifies an extreme shortage in physical gold that can be immediately delivered to large buyers who are forcing the issue of delivery and it is another form of "backwardation."

I wrote an update for Seeking Alpha because the GOFO rate has been negative now for a historically unprecedented 28 days.  You can read the article here:  Update On The Negative GOFO: Gold Has Bottomed

The only conclusion that can be drawn from this situation is that the bullion banks in London are scrambling to find physical gold that can be delivered into the massive demand coming from Asia, specifically China.  I also believe that the duration and severity of the negative GOFO will translate directly intoa commensurate move higher in gold that will shock everyone.

Unfortunately, the best we can hope for is that the next move in gold does not culminate with the cataclysmic currency reset that we all know is coming - i.e. the dollar is replaced as the world's reserve currency, which will render the U.S. largely destitute:
I'm not worried about how high in price gold is going, I'm worried about what the world around us will look like when it gets there.


  1. Kaloti Says Dubai Needs More Gold Refining Capacity

  2. Humanity Is Drowning In Washington’s Criminality

    Paul Craig Roberts

    Americans will soon be locked into an unaccountable police state unless US Representatives and Senators find the courage to ask questions and to sanction the executive branch officials who break the law, violate the Constitution, withhold information from Congress, and give false information about their crimes against law, the Constitution, the American people and those in Afghanistan, Pakistan, Yemen, Iraq, Libya, Syria, Somalia, Guantanamo, and elsewhere. Congress needs to use the impeachment power that the Constitution provides and cease being subservient to the lawless executive branch. The US faces no threat that justifies the lawlessness and abuse of police powers that characterize the executive branch in the 21st century.

    National Intelligence Director James R. Clapper blatantly lied to Congress and remains in office. Keith B. Alexander, Director of the National Security Agency, has also misled Congress, and he remains in office. Attorney General Holder avoids telling Congress the truth on just about every subject, and he also remains in office. The same can be said for President Obama, one of the great deceivers of our time, who is so adverse to truth that truth seldom finds its way out of his mouth.

    If an American citizen lies to a federal investigator, even if not under oath, the citizen can be arrested, prosecuted, and sent to prison. Yet, these same federal personnel can lie to Congress and to citizens with impunity. Whatever the American political system is, it has nothing whatsoever to do with accountable government. In Amerika no one is accountable but citizens, who are accountable not only to law but also to unaccountable charges for which no evidence is required.

  3. "The so called "investors" on Wall Street, and, particularly, the get-rich-quick speculators at COMEX, are so trusting and foolish that they are incapable of "weighing" anything in an intelligent way. They act solely from greed and fear, and nothing else.

    These muppets are morons, and perfect dupes for the international banking mafia which, time and time again, uses them to induce false pricing, both up and down, buying and selling to one another, manipulating performance bond levels, and periodically using captive central banks, such as the Federal Reserve and Bank of England, to flood markets with physical gold to back up paper based manipulations. The mass of regular people in India, China, Turkey, Arab countries, Russia, South America, etc., do not frequent Wall Street or the financial district of London, nor do they believe the propaganda distributed by the mass media. They are immune from the stupidity of the muppets, and will steadily drive prices upward.

    The same manipulators and muppets also operate in all stock, bond and commodity markets. They do not merely manipulate in one direction. Manipulators in the gold market intentionally induce volatility in both directions. Mostly, that is because of an overt government guarantee against prosecution and possible losses during downward manipulation. The upside manipulations, therefore, are for the purpose of placing profitable short positions at artificial highs that the metal is not ready to stabilize at. Then, the subsidized downward manipulation begins. The opposite is true in the stock market. There, banksters are guaranteed against prosecution and losses on upward manipulations, and stock prices are pressed downward to allow the banksters to buy low and sell high. I should add that this dynamic may be changing, as the banksters now heavily long on COMEX gold. Perhaps, the US Exchange Stabilization Fund is refusing to guarantee further manipulations? We don't know, but will monitor that...

    Evil, of course, always manages to destroy itself. The current corrupt system will fall apart with time. Gold has been and will be going up in the longer run, because of the great mass of productive non-corrupt normal people of the world, and NOT because of the group of morans and manipulators in Wall Street and in London are pressing prices one way or another. The mass of the world's population wants gold, not paper and/or electrons, and, for this reason, and no other reason, gold will rise."

  4. Michael Hayden, Bob Schieffer and the media's reverence of national security officials The former NSA director is held up by the Face the Nation host as an objective authority when he is everything but that

    As Marcy Wheeler noted: "the 2009 Draft NSA IG Report that Snowden leaked [and the Guardian published] provided new details about how Hayden made the final decision to continue the illegal wiretapping program even after DOJ's top lawyers judged it illegal in 2004. Edward Snowden leaked new details of Michael Hayden's crime." The Twitter commentator sysprog3 put it this way:

    Inviting Hayden to comment on regulation of surveillance is like having Bernie Madoff comment on regulation of Wall Street."

    But inviting Hayden to do exactly that is what establishment media outlets do continually.

    But worse than the omission of Hayden's NSA history is his current - and almost always unmentioned - financial stake in the very policies he is being invited to defend. Hayden is a partner in the Chertoff Group, a private entity that makes more and more money by increasing the fear levels of the US public and engineering massive government security contracts for their clients. Founded by former Homeland Security secretary Michael Chertoff, it's filled with former national security state officials who exploit their connections in and knowledge of Washington to secure hugely profitable government contracts for their clients. As the Huffington Post's Marcus Baram reported:

  5. Illustrative for the impact of the NSA's espionage is the use of anonymous accounts in this comments' section. Anonymous signatures must be preferred as soon as anyone is discussing Washington’s Criminality. After all in the USA you may easily be identified as an unpatriotic enemy and killed on the spot by a remotely operated drone.

  6. Question : Is there a formal list of names being collected which documents every violation committed.
    The reason for such a list would be to hold the perpetrators accountable for their
    actions at a point where recognition is deemed necessary.
    It is almost guaranteed that they will try and blend in with the rest of society
    once the fallout commences.
    Big or small , doesn't matter regarding their title and position. Every traitor should be held accountable for their actions!

    At this stage the time is right for documenting .

    Pick up a pen and paper - it's time to fight back.