Back At It

Ole Turd is back in the saddle with several burrs poking his rear end. More on that as we go through the week. For now, let's just try to get our heads screwed on straight.

There is so much shit going on, it's hard to know where to start. The MOPE and SPIN following the ridiculous BLSBS data from Friday continues and the stock market levitates. The Nikkei continues the "Calvin" bounce I projected three weeks ago but that will likely run its course in another 500-1000 points. The U.S. bond market is in complete disarray and Friday saw the largest jump in mortgage rates in years. And the MENA is on the verge of total chaos. Wow! Again, where to start?

Let's start in the Middle East where, to no surprise, the Brothers ain't taking last week's events too well. Watch this situation very closely as it could very easily spill over into other countries. The Muslim Brotherhood has been around for a long time, they are very well organized and well funded and will not take this major setback quietly. Keep an eye on crude as it will continue to be your tell.

And if the global economy is as strong as CNBS and Bloomberg would have you believe, why is copper looking so terrible? Take a look at the chart below. Does it not resemble the gold chart from earlier this year? So what do you suppose will happen if suddenly copper is trading with a number that starts with "2"? Could we see a 2008-like waterfall? And if so, what else do you recall happening in 2008?

And the bond market is an absolute disaster. However, look what I found when reviewing the weekly charts. Note that, in the months that followed both QE1 and QE2, the Long Bond sold off between 15 and 20 points before turning and resuming the now 30-year rally. Are we at this point again? Probably. As stated here ad nauseam, The Fed cannot allow higher rates and mortgage rates have risen by over 30% in just the past month. http://www.nypost.com/p/news/business/hold_on_mortgage_rates_to_rise_again_7bPZTKa4lsfMY8YuJvU6dK

So, anyway, where does this leave the metals? WTFK? The Cartels are still granting the paper momo-chasing specs complete control and no bottom appears to be in sight. One could appear any day but it will only be visible in hindsight. For now, the proper strategy is continued, regular accumulation of physical. Though the last 9 months have been painful to say the least, none of the underlying fundamentals have changed. The world is still awash in debts that it cannot repay without continued currency devaluation.

Speaking of silver, I was thinking over my vacation about this long-forgotten post from a guy that I used to consider a friend. The topic that day was "commercial signal failure" and that was a term being bandied about quite a bit in the heady days of early 2011. Go back and review this again and then ponder the current chart of silver. Did we, in fact, see a commercial signal failure in March and April of 2011? http://traderdannorcini.blogspot.com/search?q=commercial+signal+failure

Finally, we have to spend a few more minutes discussing the GLD today, which is now down 387.93 metric tonnes year-to-date, from 1,349.92 to Friday's 961.99. That's a staggering 28.74% of "inventory" which has been removed...in just 6 months! We're told that this is due to "investor redemptions as money is allocated away from the precious metals sector". OK. Fine. But if that's true, how do you explain away the fact that the SLV is only down 33.50 metric tonnes year-to-date? The SLV "inventory" was 10,084.96 metric tonnes on 1/2/13 and, as of Friday, it rests at 10,051.46. Hmmmm. Curiouser and curiouser.

To put this into proper perspective, now consider this: 33.50 metric tonnes of silver is 1,077,050 troy ounces which, if cast into the standard 1000-ounce Comex bar, would yield 1,077 bars. If we stacked those bars onto pallets of 192 each, like we do with our gold bars, we'd have about five and a half pallets. If you imagine these pallets as silver instead of gold, it would look like this:

However, the GLD has shed 387.93 metric tonnes. This is 12,472,239 troy ounces. Casting that much gold into the standard 400-ounce, LBMA bar would yield 31,181 gold bars which, if stacked 192 to a pallet, would give us over 162 pallets.

Now, there are some lunatic fringe websites out there, run by egomaniacal anonymous bloggers with over-developed messianic complexes, which frequently state that this gold is being used to settle an insatiable demand from China, which plans to one day soon back its currency with gold and offer it to the world as an alternative reserve currency. Again, though, this is just crazy talk. The fact that now even The Bundesbank (The Central Bank of Germany) is mentioning the inevitability of renminbi/yuan superiority is, of course, hardly noteworthy. Just more lunacy from the tinfoil hat crowd. http://www.bundesbank.de/Redaktion/EN/Kurzmeldungen/Current_issues/2013_07_03_nagel

Anyway, as I close, I see that the metals are actually UP today. Wow! Let's see what tomorrow brings. In the meantime, please be sure to check back later as I will have some thoughts and analysis of last week's CoT, once it's finally released this afternoon. Until then, have a great day!

TF

89 Comments

The8thHabit's picture

First!

Yeah!!! Have a great day everyone!

tyberious's picture

Second!

Second!

Turd Ferguson's picture

Could this guy be a bigger

MODERATOR

Could this guy be a bigger douchebag?

For those worried about the impact of tighter financial conditions on keep in mind the is down less than 2% from its peak

meddle magic's picture

turd

comments appreciated on cot, later today.

Dr Jerome's picture

Love your sarcasm, Turd

"Just more lunacy from the tinfoil hat crowd."

tyberious's picture

Welcome Back

to the asylumcheeky!!

achmachat's picture

gold

that's a lot!

SilverSurfers's picture

Ninth

For back to back top tenners, yeah baby!!!

So, they are back at it, and Corzine walks.

That is what they do, they play by the rules, act dumb, cause murder and mayhem, and walk. They all do it, its the standard game.

The problem is that there use to be a thing called Mala en se, ITS JUST PLAIN WRONG, for liability. But the government taught the folks, that if you play by the rules, you are a good guy. And so, Rickards, Corzine, et al, they think they are "good guys" because they play by the rules. I disagree, evil is evil and should be punished notwithstanding literal compliance with the rules.

===

JPM no doubt think they are good guys, and just way starter than others.

Wrong on both counts, they are evil, and are way dumb.

So JPM rigs the bullion space, but asserts that Clients money is "hedged", though that wench did not mention the use of in-house money dump, in the tag team push down of the paper prices, but lets run with that.

So client hedges, to justify naked shorts are:

1) a Fraud, selling something you dont have,

2) robbery from the GLD, a contingent interest in GLD through Melon

3) sourced from other bullion banks, as part of racketeering,

4) sourced from central banks, trying to protect paper currency.

5) source from clients hoards, but client money is pooled and combined for the dump. 

But it dont matter which it is, as all of them are interference of markets, except that, option 4) is the public image so-called out, as the kings can do no wrongs, but even so, to sale massively CB gold, to press down the markets, is interference, rather than selling in step wise lots so as to get maximum price for the CBs. Hence, even with the CB out, its still interference, and it still price rigging. It dont matter if its 1-2-3-4-5, in all cases, you nail them on massive dumps, to drive the price lower, and thats price rigging, and they go pay up, get enjoined, and hopefully, go to jail.

=======

Hatter, I dig your style.  I will be at the meeting in Chicago today with some friends so if you have any questions I can add them to our list and see if I can get someone attractive than I am to ask them. Just a Fan.

========

To Just a Fan, handing out the the script, to all attendants, is the best way to good.

The question has been stated. Why the bullion heavies have not yet funded the proposed 500K take down of JPM so as to end the reign of terror in the bullion markets.

Gold luck, CIGA

===

S Roche's picture

GOFO Negative!

Re-posting in case anyone missed it from the previous comments because I think this is big.

London Gold Forwards (gold lent on swap for USD) median rates have gone negative. 1M -0.065%; 2M -0.043%; 3M -0.030%. This has presaged very volatile rebounds in the gold price in Sep 1999, Mar 2001 and Nov 2008.

http://www.lbma.org.uk/pages/index.cfm?page_id=55&title=gold_forwards&show=2013

If history is a guide, this is huge. GLTA

Turd Ferguson's picture

Breaking my own rule

MODERATOR

There are, of course, exceptions to every rule.

I'll continue to ask that "conspiracy theories" and the like be discussed in the forums. However, the owner of this site finds this too interesting to confine there.

This is actual video from an actual mainstream television station in San Diego. In this world, how can you be certain of anything anymore?

 

 

Turd Ferguson's picture

Interesting, indeed.

MODERATOR

Thank you, Roche!

Response to: GOFO Negative!
tyberious's picture

Eat My Shorts! Bullion Banks

Eat My Shorts! Bullion Banks Flipping Long Will Induce Explosive Rallies in the Metals

http://www.silverdoctors.com/eat-my-shorts-bullion-banks-flipping-long-will-induce-explosive-rallies-in-the-metals/

"One thing you all have to understand in the game of slights called the markets Is this. That confidence is everything and suppressing the price of precious metals is imperative to having an image of monetary credibility. Look at the biggest players in the gold market is the Central Banks and the Bullion banks. It is a very dubious and interesting relationship, a Frick to a Frack a Ying to a Wang. Central Banks are not required by the IMF to disclose the Gold Holdings ( of which they have very few) and Bullion Banks are not required to disclose allocations of Gold they have out for loan (except to each other). Now do you see this as a problem? I do. If this is not another empirical evidence of a rigged casino then my friend you have not been paying attention."

Strongsidejedi's picture

Great to have you back TF!

Now, can we put down the tin foil hat!

go back to the Yellow hat!

erewenguy's picture

SLV vs GLD

The difference in redemptions between SLV and GLD is staggering and shouts out all is not right with the narrative.

S Roche's picture

re GOFO

For anyone studying the LBMA figures I think May 22nd -ve number was a typo, the 21st and 23rd don't look right if the 22nd was truly negative. Also, someone sent me a BBG screenshot of GOFO today and I can see that it does not show May 22nd as negative. I will email the elfs at the LBMA and ask them. 

Galearis's picture

How about extrapolating?

We used to take the graph that used to be presented at the LBMA web site and extrapolate the millions of ounces per day graph (this graph went back years) and extrapolate the trend to where it hit near zero...That did not work although for a time it seemed to...Of course we also trusted the data...But if we do the same sort of exercise with GLD to predict when the West runs out of gold to the East or gold to Germany or gold to Turkey (sp?) we might make a case for the rationalization -bullion support - of the COMEX may be over in a year and a half...

Well, the current data for the LBMA is out of date by some three months, the graphs are gone,,,,and we are asked to accept the gold stocks of GLD is accurate...

FWIW,

G.

Turd Ferguson's picture

And this is interesting...

MODERATOR

On Wednesday, before the big BLSBS smackdown on Friday, gold was UP $8.50.

That same day, total gold OI surged by nearly 5,000 contracts, with all of the growth coming in the Dec13, the Feb14 and the Apr14. Buying? Of the outer months? Let's see what today's numbers show for Friday before we draw any preliminary conclusions.

JY896's picture

Buying RE in FL (and elsewhere) + Care We Can Afford

Interesting piece from Josh Salman (via Naked Capitalism) about how banks are bidding on (and bidding UP) properties in foreclosure -- competing with real estate hedge fund speculators to keep the properties on their books (instead of writing down the losses). What could POSSIBLY go wrong?

"But the “paid” is a misnomer unless the bank bid above the mortgage balance to win at the auction, which the article says doesn’t happen that often. So from an accounting standpoint if the mortgage was $160,000 and the highest third party bid was $90,000, the bank could take the offer at $90,000 and recognize a loss of $70,000 plus foreclosure costs. Or it can bid $110,000 and move the property into REO. If I read the OCC guidance correctly, the bank has to value the REO at the lower of the “recorded investment in the loan satisfied” which I assume is the mortgage balance PLUS the foreclosure costs OR fair market value as determined by an appraiser. Gee, we know how independent those appraisers are!

And with appraisers relying on recent sales for valuations….you can see the logic of the bank overbidding on such a grand scale. They can bid up to the mortgage balance and not increase their loss exposure. Overbidding systematically increases the comparable sale prices appraisers will look at to prepare their valuations. And with the banks accounting for 77% of purchases out of foreclosure sales (and foreclosure sales representing 20% to 30% of all sales in these counties), the bank activity can influence appraisals, particularly since one might expect foreclosure sales to be concentrated in certain neighborhoods. And it’s even great enough at 15% to 23% of all sales to move overall price averages and trends.

It’s also important to not to dismiss this as “oh, this is just two counties in Florida.” Large banks are not set up to have local offices operate with discretion and go load up on real estate because the manager thinks it is a hot time to buy. This is clearly a policy decision at work, and the policy decision appears to be to “outbid” the private equity giant Blackstone[...]"

Plus, just in case you want/need more reasons to be upset with PPACA (aka ObamaCare): NINJA health insurance. A bit overly partisan for my taste, but with some interesting details for those interested.

"After encountering “legislative and operational barriers,” [nice...] the federal government will not require the District and the 16 states that are running their own marketplaces to verify a consumer’s statement that they do not receive health insurance from their employer. …

“The exchange may accept the applicant’s attestation regarding enrollment in eligible employer-sponsored plan . . . without further verification,” according to the final rule. …

While initial regulations had proposed an audit of each consumer who reported an income significantly lower than what federal records indicated, the final rule scaled that back to an audit of a statistically significant sample of such cases.

For individuals who are not part of that sample, “the Exchange may accept the attestation of projected annual household income without further verification,” it said."

argent rampant's picture

@Turd

Glad someone else thinks that story is "just a bit odd"!

I never knew that a Mercedes coupe would instantly burst into a ball of fire if you ran it into a tree.

winemaker's picture

Anecdotes from China

My family and I just returned from 10 days in China.  A couple of anecdotes, which are certainly not intended to be cause for any conclusions.  They are just snapshots in time:

1)  My wife is Chinese and her extended family is still in China.  We had a large family banquet (70 relatives!) in her hometown of Nantong (about 2.5 hrs drive from Shanghai).  For most of them, this was the first time to meet our young kids.  The kids received a few gifts, but one of them caught my eye:

50 g. coins issued by the Bank of Jiangsu.  Says on the coins "Ag 999 50g."  In the pic you can see each side.  The coins are actually cut quite roughly in my opinion.  Ignore the scratches--that's from one of my kids.   My oldest kid (7) was already trying to figure out how to convert his coin into fiat and then into some kind of toy.  I told him, "if you do that, Turd will slap you upside the head."  He said, "what?"

2)  While in Beijing we visited the Hongqiao Jewelry Market.  It was about 1 hour after opening in the morning, yet it was deserted:

This is an upscale store that specializes in gold jewelry.  If people in China are buying gold, they ain't doing it here, at least not when we were there.  Now again, I am not encouraging conclusions, just sharing what I observed at one store in Beijing.  Maybe their retail prices sucked?  Not sure, as I was being hurried along to the Starbucks in the next building which, by the way, was doing a very good business!

That's it.  Nothing earth shattering.  It's good to be back in the USA where I don't have to worry about getting run over by taxis and bicycles simultaneously. 

cheers all,

winemaker

emotionallyrational's picture

hastings reporter

IS SHE WEARING A GOLD EAGLE?

S Roche's picture

@erewenguy re GLD & SLV

Institutions have a much higher ownership of GLD than SLV, they are the ones under pressure to show quarterly performance so they have to get exposure to the booming stockmarket...I think that explains it.

Paulson's gold fund (of which his is the biggest shareholding) is down 65% year to date but he has responded today that it will see "outsize returns in the long run". This has been greeted with amusement and pity by the gold hating twitterati...a perfect set-up for the mother of all short-squeezes if GOFO's action today is still the indicator it was in 2001 and 2008.

But, if history is a guide, get ready for volatility over the next two weeks.

argent rampant's picture

From end of last thread...

@thecoloredsky:

An interesting concept (ditching our govt ID's). The problem as I see it is that many things which are in theory voluntary, are in practice mandatory. You cannot use the public roads unless you have a DL.  That may be okay if you live in NYC, but most places you simply can't function without driving. You  cannot be hired as an employee, or join the military, or do any number of other things like open a bank account or apply for credit, unless you have a SS number.  From what I have read, the new immigration bill also contains a provision for making that flimsy piece of paper into a laminated, holographic, electronically scanable proof of citizenship (or "national ID card). ("Your identity papers, please!") Looks like the trend is not our friend.

ancientmoney's picture

@argent rampant re: Mercedes explosion . . .

"I never knew that a Mercedes coupe would instantly burst into a ball of fire if you ran it into a tree."

---------------------------------------------------------------------------------

According to Mercedes, they don't.

This one was very special, though.  The centripetal force of the car moving forward should have caused anything breaking loose upon impact to fly FORWARD.

In this special case, the engine and tranny flew BACKWARD 150 feet upon impact.

I guess Mercedes has figured out a whole new set of physics rules . . .

Patrancus's picture

Gamal Nasser

on the Muslim Brotherhood. Why do most things never change because most sheeple could care less about history.

tyberious's picture

From Bix

Those who are thinking that the banking cabal will NEVER die are listening too closely to the Mainstream Media (the band playing) and not looking at the reality... the Big Banks are hemorrhaging badly just under the surface on their leveraged interest rate bets (the Titanic Sinking).
 
Chart of the Day: Taper Fears Lead to Biggest Monthly Loss in Bank Securities Portfolios Since Lehman
 
"Wondering how the blow out in interest rates is impacting commercial banks, which just happen to have substantial duration exposure in the form of various Treasury and MBS securities, not to mention loans, structured products and of course, trillions in IR swap, derivatives and futures? Wonder no more: the Fed's weekly H.8 statement, and specifically the "Net unrealized gains (losses) on available-for-sale securities" of commercial banks in the US gives a glimpse into the pounding that banks are currently experiencing. In short: a bloodbath."
 
"In other words, the shorthand is to look at the massacre that is going on in the AFS line and extrapolate it to all other levered commercial bank (and hedge fund) rate exposure. Expect math PhD-programmed GETCO algos that determine the marginal momentum of the S&P to figure this out some time over the next 2-3 weeks once banks begin reporting results that are not quite in line with expectations."
 
Basically, the MOTHER of all bubbles is exploding as we speak!
 
 
The biggest gamble by far in interest rate derivatives is JP Morgan at $45 TRILLION. Nothing is done by accident in our markets these days. On the Road to Roota it seems the Good Guys' final attempt to save some portion of the system by surgically extracting the bad players from the global monetary system is being abandoned and they are going to blow the derivative world to kingdom come!
 
I have one thing to say to all those still listening to the beautiful deck music...
 
MAN THE LIFE BOATS...
 
EVERYTHING GOING DOWN!!!
 
May the Road you choose be the Right Road.
 
Bix Weir
 
PS - Where gold and silver prices will go over the next few months is anybody's guess but if you can wait out the chaos you will be richly rewarded. :-)
 
Byzantium's picture

Today's price action

Who said there was a 1% cap on any daily up-move in both metals?

Nah, just a myth.

Amberjack's picture

Welcome Back TF...

...you were missed.  Hope the vacation was a well-deserved break from the insanity. I know mine was.

Amazing what a little perspective can do for you when you're allowed to climb out of the foxhole and get 100yds back from the line.

Hastings death is certainly suspicious and I'm hopeful an actual investigation will take place instead of the whitewash we're usually treated to in cases like this.  Unfortunately, as we've seen all too often lately, there are ranks upon ranks of minions willing to fall on their swords for Big O and his lieutenants when a scandal erupts.  At this point I'm convinced the denizens of the White House could sacrifice puppies in the Rose Garden and suffer no ill effects in the polls.

All of which brings me to how well I slept having turned off the news for a few days, ignored the paper gold price, sat on the deck and just enjoyed the beauty of God's creation.  I highly recommend it.

All the best and thanks for what you do.

AJ

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