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.


  1. Great information, Dave. I value your comments and information, and DO wish you would post more often. Thanks


  2. Thanks for the feedback Fred. I'd like to post more often - it's a function of time and content ideas...

  3. I second that Dave. I always look forward to your posts.

  4. 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.

  5. 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.

  6. 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.