Gold Update from Ned Naylor-Leyland of Cheviot Asset Management

Our pal, Ned, cranks out these updates several times per year. Here's his latest.

In this July 2013 update, Ned covers many of the topics we regularly discuss here. He's also included some very interesting charts with his terrific analysis so I'm quite confident that you'll find this an excellent use of your time.

Enjoy.

TF

Gold Update_July 2013

 

179 Comments

SilverTree's picture

1st

1Champagne.jpg

Wallace Hartley's picture

Two for Tuesday!

So close...

Ned closes his report with "It is always darkest just before dawn."  I always preferred, "It is always darkest right before it goes completely black."  And that has been pm investors experience since October...hopefully, dawn is finally on the Horizon.

Keep Stackin'!!!

Nose's picture

second - finally

Going to be very interesting going forward, right?

Louie's picture

Two #2s make me FOURTH!

Top 10!

Louie Contrary Price Indicator chart is in play today. 

Just back from the coin shop.  Gold can be expected to drop to $1,145 by this afternoon. 

Feed the Turd!

tyberious's picture

fif

fif

AlienEyes's picture

top 5 ?

top 5 ?

nope. #6

Xty's picture

Excellent synopsis

Very clearly written, about a deliberately murky topic. Many thanks.

edit to add: and I thought worth a hat-tip.  Perhaps before posting first, one could at least hat-tip such an effort.

Urban Roman's picture

@Wallace Hartley,

I think I can see the light at the end of the tunnel now. 

Or is it the headlight of the oncoming train?

sierra skier's picture

Eight?,,,, nope 9th

Cool, I made into the top 10 again. Now for the read, with silver up slightly again this morning. Wow maybe a pattern developing here.

Edit in: A light at the end of the tunnel would surly be a welcome sign.

codesurfer's picture

Top Ten?

May the phyz be with you

Swift Boat Vet's picture

Things ARE Different Now!

Went to my LCS on saturday, as he received a new shipment of 500 rounds on wednesday.   I asked how many he had left and found just 54 remaining.  I took 2 sleeves and one other guy took one round.  "They're selling like hotcakes!"

The big difference now?   Instead of the price dropping the day or two following my purchase, it actually rose!!!!  Something different is truly happening youngsters.

Swifty

tyberious's picture

The 67% Stock Market Crash

The 67% Stock Market Crash Nobody Wants to Talk About

by John Galt
July 9, 2013 05:00 ET

Psst. Not every market in the world has Helicopter Ben to pump and dump bonds and equities on the American public, er, suckers.

What would one say if one of the largest economies in the world has experienced a 67% top to this week’s price decline in their primary stock market?

The Irish?

The French?

The Venezuelans?

Nah, keep guessing after reviewing this chart:SSE_CHICOM_LECRASH_jgfla

What does this mean for us? Liquidity we are pumping into our system that is being used to keep our banks alive is no longer sufficient to keep Europe and Asia from declining into a corrective deflationary depression to remove speculative excesses. As long as the central banks in those regions continues to depend on the U.S. Dollar as the world reserve currency they will suffer from an economic contraction created by American financial irregularities that prevent their business cycles from operating independent of Federal Reserve policy decisions. When the Chinese Communists realize that Bernanke’s policies are his failing and no longer willing or able to protect their long term bond investments in the United States it will be game over for America also. Our equity charts will quickly duplicate theirs unless the Fed and Congress elect to coordinate a hyperinflationary policy destined to wipe out the viability of the US Dollar as the world reserve currency.

Welcome to Chinese Checkmate gang. Coming our shores in a brutal manner soon.

http://johngaltfla.com/wordpress/2013/07/09/the-67-stock-market-crash-nobody-wants-to-talk-about/

Cleburne61's picture

NNL breaking it down!

That's the sort of report I've been waiting for.  Forget specs driving the market.....specs haven't been able to drive the market since mid 2011 despite endlessly great fundos, because at that time something titanic occurred: the world's reserve currency government had its sovereign credit rating downgraded below AAA. This was so severe, you'll remember that Obama thanked S&P for their honesty by investigating them for "insider trading".  Ahh yes, insider trading....the crime that must be punished only when the players doing so are fighting the Anglo-American bankers' plans for full-spectrum dominance, instead of advancing them.

Suppressing gold since then in a tightening range seems to have been "The Mission".  

Now, good ole Neyland breaks down what's really happened since QE3 was announced.  I'd almost forgotten about the banks in London stopping what little reporting they were providing for the metals.  I can see now why the urgency brought out redoubling their efforts.

Some commentators, who will remain nameless, are wrong about one thing: it's no longer specs who drive gold and silver futures markets, because at long last, the Entity taking the other side of the paper trade had its very existence threatened by a bullish breakout, and was always a stronger force than they.  It is the liberation of silver and gold from fake Western OTC metals exchanges that will drive this market now.  The banks know this too, else they'd not have been covering 90% of 2012's short positions since October.

Thanks for posting this Turd!

Pining 4 the Fjords's picture

Really fine article

Thanks for posting this TF!  Among many fine points, what stood out to me particularly is NNL's statement that the Reserve Bank of India (an LMBA member) has stated that the OTC gold market is 92x larger than the underlying physical market...  I have never heard this stated with such specificity before, and I had no idea that India's CB had said this publicly.  We always "hear" that the OTC market is big, but not this specifically from a mainstream, seemingly trustworthy source. 

This explains a great deal about how price can drop so heavily in the face of such huge demand... 92 paper ounces swamping every 1 physical ounce in the "marketplace".  The crack-up of this system is going to be spectacular when it finally snaps. Either they cease suppressing PM price or their means for controlling those markets will go away as the paper market explodes.

argentus maximus's picture

... the OTC gold market is

... the OTC gold market is 92x larger than the underlying physical market... 

Only a disadvantage while there are weak hands present.

The assymetric paper:physical ratio means that refusal to supply makes the 8% the controller of the situation.

After the heavily indebted (mines who must sell forward to make loan repayments) have closed, and only the stronger remain, the management of which have their heads properly screwed on and know what banks can and can not do, we will watch the supply tighten, and late shorts filleted.

Cononish1314's picture

Coup in Turdistan -- your new President speaks

James Howard Kunstler July 8, 2013 at 9:00 am #

There will be no more “firsting” on this blog.
The next “firster” will be banned.

Also unwelcomed: stupid political puns, e.g. “Repugnicans.”
I hate that stuff.

Use of the word “fucktard” gets you banned automatically. I just don’t like the tone of it.

Profane language is allowed, but must be used politely.

–JHK

Silverdutch's picture

@argentus,

I think that it makes the 1,1% the controller of the situation (1 divided by 92).

thesandbox's picture

but.....what if I am

firsty? ;)

The article also mentioned a great point that was quickly forgotten about I think and that is #5 when the 15 banks met at the White House and then look at the drop after that one.  That still seems like a pretty big meeting about something!

Louie's picture

@ Pining 4 the Fjords--92X

I like to think about the fact that my stack might be worth 92X today's spot price. 

For the math challenged $1,250 X 92 = $115,000.00

Louie's picture

Coup?

What about the word douchebag?  

How about we do this to add some fun to the blog?  Whoever claims "First" has to send Turd 1 oz of silver (Or a donation equal to the days spot price).  No donation, not allowed to call first. 

Willy's picture

NUGT

The frustrating thing is all the evidence is there, yet the price drifts lower.  I guess all us bulls can do is wait for the breaking point.

On another note NUGT hit $200 back in September 2011.  I just checked and it's currently at $5.00.  When do the pigs(bears) get slaughtererd?  Gotta be a ribfest soon no?

Pining 4 the Fjords's picture

@ Louis- The weird thing is

The weird thing is, if you take that 92x number and figure roughly half shorts and half longs (for every seller, a buyer) then you get 46x... and 46 x current spot price of 1248 gives you $57,400 / oz.

That is surprisingly close to FOFOA's 55k / oz call

It is also surprisingly close to the 58,100 / oz figure you would get by taking the 17T US national debt and dividing it by the number of oz supposedly held by the US treasury (if we were to actually back our debt with our gold).

All roads lead to 55-58 k / ounce...   it's scientific!

november4's picture

NUGT

Question:  Does NUGT suffer decay if held over time?  Or is is just for day trading only?

dropout's picture

The Great Re-Balancing

OTC gold derivatives via the FX market at 92:1 paper, versus the real thing!

This gives credence to those who espouse an ultimate gold price of $10,000.00 per ounce or more.

We may see the US dollar re-evaluated at 10,000 old dollars for 1 new one. That would take care of the massive debt overhang, in one foul swoop! Foul, in that those holding wealth in US dollars, or US dollar backed assets, get wiped out. While those holding physical gold or silver, will be more than okay.

One thing is absolutely certain - the global system will re-balance, from this grotesquely unbalanced current monstrosity, that is called a market in name only.      

Planters's picture

dbag

I think Turd is the only one who should be allowed to use the word douchebag. Seriously he does it the best . No one else comes close. I have never seen anyone describe ThunderLips more accurately. There is historical reference for this.  

NNL does write up a believable article. Question is , is he right?

More Opinions, less facts not enough to draw a conclusion or collusion.

we are all screwed either way.

Willy's picture

NUGT

I'm pretty sure it suffers great decay since it's a 3 times leveraged ETF.  The more intraday volatility the more it decays I believe.

dannyhaha's picture

I am First!

I am First!

tyberious's picture

I Support Gold/Silver Mine Nationalization 100%...and YOU Should

Like many in our camp I used to be heavily invested in mining company stocks. I wanted to get the leverage that these companies promised from the metal they held in the ground. I rode the tumultuous wave of mining stock investment from 2000 to 2007 wining and losing fortunes (at least to me) in the process. It was a wild ride and I was not properly strapped in with the knowledge I have today but I survived it pretty much in tact because I got out at a good time.
 
Today I have a much different view of mining stocks and I've written an article about this position here:
 
I Support Gold/Silver Mine Nationalization 100%...and YOU Should Too!
 
Whatever your understanding level may be of the games and battles that are raging around the gold/silver world know this...hold on to your physical metal with both hands as the rides about to get bumpy!
 
May the Road you choose be the Right Road.
 
Bix Weir
 
Louie's picture

NUGT

Look at the bright side, it can only drop $5 more!

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