Monday, June 7, 2010

Thoughts On BP And Some Great Quotes On Gold:

BP originally stated that the blown well was releasing 5,000 barrels per day into the Gulf.  Not once did I ever hear them revise that number.  Now all of a sudden they are "capturing" over 10,000 barrels per day?  What's the truth?  I have no idea but I do know that several scientists have published estimates that range anywhere from 20,000/day to 100,000/day. What I also know is that BOTH BP and the Obama Admistration are hiding the truth from us.  Can it get any more Orwellian...?

Here's some great quotes on our favorite topic. The first one is from the highly esteemed, erudite and veteran market analyst Harry Schultz:
Bullion’s capacity to shrug off the shackles of intervention at this crucial chart point suggests that demand for physical metal is overwhelming the anti gold cartel’s capacity to cap & manipulate the gold price, and invites a near term re-test of the May 2010 high -- with a possible overshoot towards the $1345.00 measured target of bullion’s March 2008–Oct 2009 reverse Head and Shoulder… and $1425.00 theoretical upside target. On the downside, a sustained break below bullion’s March uptrend line (now $1178.50) would be necessary to destabilize what appears to be the energetic resumption of gold’s primary uptrend.
There were many great comments to my post from yesterday, on both sides the of the fence.  Here are two samplings: 
Opposition to precious metals, particularly recalcitrance against owning physical gold and silver, is nothing more or less than an example of the triumph of a certain sort of monetary propaganda that has tributaries leading back to pretty much every economic doctrine that has been in vogue in the west for generations.
The only things that are keeping prices from rising nowadays are bankster shenanigans (like the Fed 'holding' over a trillion banksterbucks (2 trillion in excess reserves) and paying interest on it, reducing the velocity of money, etc) and demand destruction (folks who lose their jobs aren't buying discretionary items, just necessities). I see inflation in the things I need, deflation in the things I want...
Great debate yesterday over my post.  I will say that the sentiment toward gold, silver and the mining shares, even in the amateur gold investing community, is probably as negative as I can ever recall seeing it, even after the Governmental mafia hit in July 2008.  This can only mean that we are on the cusp of a really big, exciting move higher. But of course this is a double-edged sword, because it also means that the financial, economic and political conditions in this country are deteriorating beyond the ability of the policy implementers to contain them.  Perhaps the BP disaster is a the perfect metaphor for the much larger economic disaster facing the United States...


  1. "Perhaps the BP disaster is a the perfect metaphor for the much larger economic disaster facing the United States... "

    I think the Gulf Oil Dieoff directly equates to the demise of Western power and both will probably be accepted as fact before the end of this year.

    Joe M.

  2. "Wisconsin Borrows $1.4 Billion from Feds for Unemployment Funds "

    The borrower is slave to the lender. What rights will states have if they owe billions to the Feds?

    What a charade. How can anyone not see the economic warfare going on?

    Its Wall Street, The Feds and The MEdia against the competing currency, the Euro. Meanwhile things are potentially worse in the US, but all we hear is how HUNGARY!!! will bring down the world's economy. What is their economic output compared to California?

    What a joke.

  3. Almost $40 billion has been borrowed by 32 States to fund unemployment. We've turned into one big god damn entitlement/welfare system and it's going to completely destroy the middle class.

    Obama has created a bifurcated system in which 90% of all wealth is being funnelled from the middle class to the upper .5% politically connected elitists and 10% of the middle class wealth is being funnelled to the welfare class.

    The ONLY difference between Bush and Obama is that Obama has added his welfare class supporters to the feeding trough.

  4. Dave,

    Love the blog and your analysis. However I do want to point something out. You are a bit on the extreme end when it comes to GLD & SLV being fake fraudulent funds that don't really have the bullion to back what they say. You may in the end be correct although I say highly unlikely. The likes of John Paulson & (the mad scientist) George Soros are no fools yet they are piling into these funds. Any way to my point is that there has certainly been a disconnect between PHYS & GLD and usually to the benefit of PHYS. However today we are seeing a huge rally in SLV and the GLD fund is up over $2 a share or $20/oz and PHYS is actually in the negative today. Your very quick to point out when PHYS or the physical market was outperforming GLD but what is your explanation for today's out performance in GLD?


  5. Oliver, I think the gold bull will last until everything collapses or Western Governments stop spending and start fixing. I don't ever see the latter happening. Do you?

  6. My view on GLD/SLV is extreme? Have you ever read the Prospectuses for them? I have and so have several others. Some of us have published widely disseminated research analysis on exactly why the legal structure of GLD and SLV allow them to lease out their gold/silver and engage in fractional bullion storage.

    Read my report, which I posted on here in November I believe.

    By the way, word to me was that Greenlight Capital, who was formerly the largest holder of GLD, read my report in March 2009, did their own research and then announced publicly in July 2009 that they had dumped all of their GLD and acquired physical gold bullion that they have privately safekept.

    Soros recently unloaded his GLD. I would bet he's buying physical instead because he's still accumulating mining stocks. Paulson. His knowledge and ability in the PM sector leaves something to be desired. The performance of his gold fund sucked in Q1 and his stock holdings are exceedingly questionable. I doubt he's put much focus into the sector - he's too busing managing his bank positions...

    GLD/SLV are fine to index with on a short term trading basis, but one of these days you will wake up to see gold up $200, silver up $5 and GLD/SLV cut in half...

    If my view is extreme then so is that of James Turk, Reg Howe (who recently wrote a brilliant piece explaining how GLD is fraudulent) and Ellen Brown, who also recently slashed GLD to ribbons.

    THanks for the feedback otherwise, and if we differ on GLD/SLV, that's cool - it takes two views to make a market.

  7. I agree on the Gold bull Dave, but he's not talking about gold but stocks in that article.

  8. Catherine Austin Fitts and Carolyn Betts also produced a recent in-depth look at GLD and SLV:

  9. Question re: Paulson and/or Soros in GLD:

    Could they become large enough shareholders to become an "authorized participant" and assert a redemption claim for bullion?

  10. Alien Child Molesters are DIS-hoarding precious metals, swearing off GOLD & SILVER for the "comfort" of Dollars.

    Place your bets, GoldBugs are "Ra-Tards".

  11. What about CEF? Six months before it gets it's silver from hell's supply pipeline?

  12. re: CEF - yup

    I know someone who does intense research on this stuff who is beginning to suspect a possible delivery default OR change of settlement rules on either Comex or LBMA - hopefully I'll get some more color tonight.

    LOL Ben_Carlos - maybe the goldbugs are hungover

  13. Hi Dave,

    One more question - do you know of a primer or a basic resource for one to learn about COMEX gold futures and things like understanding the distinction between delivery and non-delivery months. I've played around on the COMEX site and have a feel for it but don't completely get it.

    Many thanks again for a great site

  14. Narb, the thing about Mish is his analysis and commentary is unoriginal, uninspiring and rather pedestrian. As I said earlier, he looks for answers under the street light like the drunk looking for his lost wallet because that's where the light is shining.

    He is completely missing the boat on why deflation will not happen. And nor will the K-winter. When the K-winter theory was forumulated, the world was on a strict gold standard. Printing money was not an option. In that scenario, we would have a deflationary depression. You really believe that the Fed and all the other global CB's ain't gonna print? ROFLMAO.

    Track down Ed Bugos' latest research piece. He does a great job succinctly summarizing why the deflationists are wrong.

  15. Hey JR, thanks for the feedback. If YOU happen to come across a good primer on how the Comex works, let me know LOL. They purposely make it difficult to put everything together. I've even had to resort to sifting thru some of their legal documentation on contracts in order to understand how things work.

    Your best bet is to fight thru the CME website - go the site map - and pull up as much as you can. The CME/Comex is great at opacity and disinformation.

  16. Hey, have another fan!
    "His site is called the Golden Truth and it is in the clear."
    Mr. Harvey Organ really liked Sunday's post. (Just like me! Am I as smart as Harvey and Dave? LOL!)

  17. The problem isn't solvable by a default or a rule change (which will actually the same thing by the time the lawyers get in to litigate the COMEX and the LBMA on price rigging). The big problem is the insane position of the physical supply pipe line. Six month deliveries on 24 hr contracts and the world's refining chain will literally come apart.

    You need only ask how many of the brokers in the cue are acting as jiltney's for producers and producer countries. They can change the rules on the exchanges so that physical delivery doesn't take place and the exchanges only show a paper delivery chain. Fine no problem. The Chinese, and I pick on them only because of their size in the market, will deliver paper instead of ingots to the exchanges and physical settlement will take place in China. It they try to enforce physical delivery the exchanges will be met with a counter suit. The Mexicans and the South Americans will all do the same.

    Literally the supply pipeline will cease for at least six months. This is not like Rhodium this like buying the last consignment of radio crystals leaving Norway before the onset of the Second World War.

    You could have always dealt with the cabbage on the traded markets as this is a paper game between long term players who have no real motivation to upset the crooked three card trick "if you can't see who the mark is you are the mark". The hedge funds and JPM work together to work over the naive small players with the help of a lot of people on the internet and the locals to pull in pigeons.

    This is different, this is the price having to rise to the level that people cash in their teapots to keep the factories going because there is no delivery from the mines or the refiners. The silver is going to go directly to speculators or governments in China and Mexico et al who are getting out of $'s and have no desire to sell physical for $'s.

    This is the problem.

  18. anonymous: that's great commentary. thanks for posting that.

  19. Hey Red: thanks for the heads up - Harvey and I know of each other thru Bill Murphy and He's a good man. Thanks for posting his blog link - I always forget to check it on a daily basis. He's the guy who has exposed Scotia Mocatta's fractional bullion storage scheme.

  20. Right on cue the Chinese begin to paint the backdrop for the crisis

    Goldman stung by backlash in China
    By Jamil Anderlini in Beijing

    Published: June 6 2010 20:29 | Last updated: June 6 2010 20:29

    Public criticism of Goldman Sachs has come to China, where the investment bank has been lambasted in articles in state-controlled media.

    Parts of the media, apparently emboldened by congressional inquiries and public anger in the west, have openly slated Goldman, arguably the most successful foreign investment bank in China.

    “Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.

    The article was widely distributed through commercial news portals and the websites of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.

    Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.

  21. Things are shaping up for the Metal Express.

  22. Gold hit $1,255 a few hours ago - new all time high in $.
    And it sits at highs in every currency you can name.

    Everything is well under control. Move along. LOL.

  23. Austerirty = Contract Ecomony(ies)

    Central Banks one trick pony of Monetize debt.

    Cotracting Economy = Less ability to service debt.

  24. Dave,

    In Midas last night, Nick Laird talked about the Gold/Silver ratio going to 100:1. I was thinking it would do the opposite and revert to its natural mean. Your thoughts?

    Joe M.

  25. I think Nick Laird makes really pretty charts. I think there is general ignorance out there about the monetary role of silver, even among gold bulls.

    If you look at Tulving's offerings, he is sold out of a lot more silver products than gold. Silver is and always will be poor man's gold.