Another straw for the tinderbox

A few months ago, I played around a bit with the GOFO numbers from our good friends at the LBMA. When looking at the longest timeframe available from the bullion association, the thing that strikes me is that there seem to have been only a few instances of extreme volatility in the GOFO rates – and the recent period (the unprecedented lengths of recent negative GOFO periods notwithstanding) appears almost CALM.

20yr_GOFO_cleaned.jpg



Well, changes in GOFO are closely tied to the cost of holding USD/expected profits from holding USD. The ‘flatline’ from 2008 onwards is a reflection of ZIRP and QE. But if we look at the data from a daily rate of change viewpoint, a substantially different picture emerges.

20yr_GOFO_ROC_cleaned.jpg

If you are interested in reading up on the events of September, 1999, there are a number of easily available sources: 9/26/99 -- Washington Agreement on Gold

Wiki, World Gold Council, European Central Bank,  LBMA

Now, if any readers should know of good research that tells what REALLY took place and what it meant, please share. I really have to get around to reading Ferdinand Lips.

Zooming in on the last five years:

5yr_GOFO_cleaned.jpg

The relative magnitude of GOFO volatility that was happening during the meltdown of 2008 seems to be an almost monthly/weekly occurrence since May 2013.

5yr_GOFO_ROC_cleaned.jpg



The recent bouts of negative GOFO are highlighted below.

6mo_GOFO_cleaned.jpg

6mo_GOFO_ROC_cleaned.jpg

Now, granted – the levels of daily volatility are due to the fact that as the rates are zero-bound, the actual percentage that GOFO represents is very small. If a rate is at two basis points, a hike to 5 basis points represents a 250% jump. And of course any negative GOFO period begins with a sharp drop below 0%, and ends with a rapid spike up above into positive territory.

BUT THEN WHY WAS THIS NEVER THE CASE IN THE LAST 5 YEARS, WHEN GOFO WAS ALREADY HOVERING BETWEEN 0% and 0.5%?

Perhaps negative GOFO has no real significance, and is not a causal factor in the discovery of fair market pricing for gold that we have through the wonderfully efficient and transparent global bullion and bullion derivative markets… Everything is fine and well, please ignore the explicit incentive for a rational market actor to hold gold instead of cash present in the marketplace (with ever increasing frequency). This once-rare event is now a regular daily occurrence, we have all gotten used to it by now, nothing to see here, move along…

As always, there is never a smoking gun, a single absolutely positive indicator that the system is irretrievably broken. But this can perhaps be counted as another bone-dry straw in the tinderbox. A tinderbox that seems to be very intent on finding (or creating) itself a good, solid spark.

PS: For purely entertainment purposes, here is an updated chart of the GOFOAUX (five years earlier) vs. AUX (now). The correlation remains high at 0.85. Bear in mind, there is NO explanation for why the shapes of the charts are or should be similar -- think of it as discerning animal shapes in clouds. GOFOAUX = per-ounce cost of borrowing gold on a swap basis against USD

49 Comments

proformatrillionaire's picture

First again.

Time to buy a sleeve of silver eagles. Seriously. I cannot believe there is no mass acceptance of the fact that financial and commodity markets are nothing more than a shell game. It comes down to the fact that many reasonably intelligent people are just simply too comfortable in their lives and don't want to deal with the thought of that being true. Instead of dealing with the reality of the situation they just stick there head in the sand, leaving their butt exposed, and hope that everything is going to be okay.

Darth's picture

GO FO MO FO

The cracks will begin to show!

Howard Roark's picture

Sorry JY

But I read something this morning that might be interesting to Turdites that have been discussing bit and lite coins.
It´s a smoking gun, or a warning that there will be one.
The EBA (european bank association) issued a statement warning regarding the use of digital coins. And - THIS IS IT - said that it may regulate this type of currencies!
I read the portuguese version of the statement and it´s a perfect piece of MOPE. Alluding to the possibilities of somebody stealing your wallet and that the people that use bitcoins deal drugs etc, etc… I wonder: but the banks do that (steal and deal toxic stuff), right???
A perfect manipulation piece.

So JY896, there will be more smoking guns.
Nice post.
Keep strong. Good to read DPH comments again!
HR

oneagleswings's picture

north korea anyone

When we look at all the manipulation and thievery going on by the banks at least we are not Little Kim's uncle in N Korea.  In looking at what we may not have,  i.e.  integrity in financial markets,  at least we don't live in N Korea.  I enjoy looking at what we do have from time to time to retain some sense of normalcy and gratitude.  One thing I am thankful for is this site and a few others.  Carry on,

turnoffthewater's picture

AM good post!

Fifth or what ever.

Having lived in many countries, I see the tension building amongst the little people. When they rush for PM's, after they found out their govts have lied to them, the movement will be epic, just like the movie.

ag1969's picture

Genetically Modified Society -- Full Movie (1080p HD)

Published on Sep 28, 2013

A documentary covering the topics of Genetically Modified food (GMO's) , and Weather Modification.

__________

Featuring interviews with:

Dr. Louis Uccellini - Director of the National Weather Service (NWS)

Dr. Russell Schneider - Director of the Storm Prediction Center (SPC / NOAA)

Tom Vilsack - US Secretary of Agriculture (USDA)

Michael Levi - Spokesperson for the Council on Foreign Relations

Dr. Rosalind Peterson - ADC President

Dr. Joel Gruver - Professor of Agriculture WIU

Dr. Kent Bradford - Professor of plant sciences UC Davis

Hon. Luc Gnacadja - Secretary of United Nations Convention to Combat Desertification

Senator Sheldon Whitehouse - Rhode Island (D)

Also interviews with Representatives of Cargill / Monsanto, multiple Non-GMO activists, and entrepreneur / startup food co-ops.

ag1969's picture

5 oz ATB adds another 1.296 million ounces to US Mint

So not only did we set a record with ASE sales, currently listed at 42,648,000, but we also pick up another 1,296,665 from ATB sales:

2013 White Mountain National Forest 35,000 20,530
2013 Perry’s Victory and International Peace Memorial 30,000 17,716
2013 Great Basin National Park 30,000 17,802
2013 Fort McHenry National Monument and Historic Shrine 30,000 19,808
2013 Mount Rushmore National Memorial 35,000 23,477

The left column is bullion sales and the right column is collector coins with the "P" mint mark.

2013 America the Beautiful 5 Oz Silver Coins Sell Out

http://www.coinnews.net/2013/12/13/2013-america-the-beautiful-5-oz-silver-coins-sell-out/

DeaconBenjamin's picture

Gold halts slide but US Federal Reserve speculation weighs

LONDON: Gold was flat on Friday after a sharp plunge during the previous session drew out some buyers but remained pinned down by rising expectations of an early end to US monetary stimulus after a slew of upbeat economic news.

Stronger-than-expected US retail sales data on Thursday, coming after last week's forecast-beating jobs report, has increased speculation the Federal Reserve could start winding down its bond purchases at its Dec. 17-18 meeting, although the market consensus is still for March.

"I don't think there'll be any substantial changes to the (Fed) policy or any big surprises," said Andrey Kryuchenkov, analyst at VTB Capital.

"It will probably be a slightly hawkish statement preparing the market for the initial tapering in the first quarter of next year."

Spot gold edged up 0.2 per cent to $1,225.20 an ounce by 1108 GMT after slipping to $1,220.10, its lowest in a week and below the level reached on Thursday, when it dropped 2.2 per cent, the biggest fall in ten days.

US gold futures for February delivery were down $1.50 at $1,223.50.

The Fed's massive bond-buying programme has supported bullion by pinning down interest rates and stoking inflation fears by flooding the markets with cheap dollars.

http://economictimes.indiatimes.com/markets/commodities/gold-halts-slide-but-us-federal-reserve-speculation-weighs/articleshow/27303235.cms

DeaconBenjamin's picture

Chinese Warship Tries to Force U.S. Warship to Stop

BY: Bill Gertz Follow @BillGertz
December 13, 2013 5:00 am

A Chinese naval vessel tried to force a U.S. guided missile warship to stop in international waters recently, causing a tense military standoff in the latest case of Chinese maritime harassment, according to defense officials.

The guided missile cruiser USS Cowpens, which recently took part in disaster relief operations in the Philippines, was confronted by Chinese warships in the South China Sea near Beijing’s new aircraft carrier Liaoning, according to officials familiar with the incident.

“On December 5th, while lawfully operating in international waters in the South China Sea, USS Cowpens and a PLA Navy vessel had an encounter that required maneuvering to avoid a collision,” a Navy official said.

“This incident underscores the need to ensure the highest standards of professional seamanship, including communications between vessels, to mitigate the risk of an unintended incident or mishap.”

A State Department official said the U.S. government issued protests to China in both Washington and Beijing in both diplomatic and military channels.

The Cowpens was conducting surveillance of the Liaoning at the time. The carrier had recently sailed from the port of Qingdao on the northern Chinese coast into the South China Sea.

According to the officials, the run-in began after a Chinese navy vessel sent a hailing warning and ordered the Cowpens to stop. The cruiser continued on its course and refused the order because it was operating in international waters.

Then a Chinese tank landing ship sailed in front of the Cowpens and stopped, forcing the Cowpens to abruptly change course in what the officials said was a dangerous maneuver.

http://freebeacon.com/chinese-naval-vessel-tries-to-force-u-s-warship-to-stop-in-international-waters/

Cleburne61's picture

Repost on GLD & SLV

GLD lost another 6 tonnes yesterday, making its year-long decline 522 tonnes to date.

The SLV lost another 1,444,191 ounces yesterday, making an enormous loss of 4.5 million ounces in 2 business days.  This brings their "inventory" down to 326.8 million oz.

Btw, if anyone thinks the "inventory" at the SLV is any less contrived, double-counted, or rehypothecated than GLD's....I have a nifty sweater made from Jamie Dimon's nosehairs that I'm willing to part with for a few silver ounces...

tyberious's picture

Should have bought copper

tyberious's picture

Fukushima News: USS Ronald

Fukushima News: USS Ronald Reagan Crew Suffering Cancers, Leukemia, Brain Tumors, Blindness

from MissingSky101:

Another 20 Navy Sailors: USS Ronald Reagan crew with thyroid cancers, leukemia, brain tumors, bleeding, blindness after Fukushima disaster — Young kids developing problems — Gov’t and Tepco involved in major conspiracy (AUDIO)

ag1969's picture

More US Mint Silver

I just did some maths from here:

http://www.usmint.gov/about_the_mint/cumulativeSalesStatistics/

Sloppy, but here it is:

Product                                             Weight Silver                     Number Sold                         Total Oz

2013 Silver Proof set                         2.323 oz                               389,857                                  905,637

2013 ATB Silver QTR PROOF SET          .9 oz                                 124,014                                 111,612

2013 AM EAGLE SILVER PROOF 1 OZ                                            868,512                                 868,512

2013 AM EAGLE SILVER UNC 1 OZ                                                 175,817                                175,817

2013 AM EAGLE SILVER 2-COIN SET (WP) 2oz.                            281,310                                562,620

2013 5-STAR GENERALS SILVER PROOF .715                               57,778                                     41,311

2013 5-STAR GENERALS SILVER UNC      .715                               23,153                                    16,554

2013 GIRL SCOUTS SILVER PROOF          .715                                84,765                                    60,607

2013 GIRL SCOUTS SILVER UNC              .715                                31,173                                    22,289

                                                                                                                                                          __________

                                                                                                                                                          2,764,959

Combined with figures in ATB post above

ASE Bullion                         42,648,000

5oz ATB                                  1,296,665

Commemorative                  2,764,959

Total                                     46,709,624

Marblesonac's picture

What is the time frame on the new gold and silver charts?

What time of day does it start and end? These are the charts on the homepage.

thanks

ag4me's picture

starts at midnight

New York time across the bottom (2am, 6am, 10, 2, 6...)

Marblesonac's picture

Thanks, but

Today is up since midnight, and the charts show a big loss!

AlienEyes's picture

China & Obama

The Chinese know that "Dear Leader USA" is a Marxist and also that he is gutless and about as bright as a fern. They are making several invalid assumptions. One is that financial power = military power. The other is that America is losing the will to live.

Even after the gutting the US military is taking to fund welfare at the expense of national defense, our military is still many times more than a match for China's.

In the short term, they are right about America's will to live. This could change suddenly. If Obama tries to declare martial law, there will be war and it will distract the USA from foreign events. Even more so than the Hillary as sec. of state debacle. What Obama and the Chinese are overlooking is the first rule of history : "The Pendulum". Public sentiment is never "right" except for a brief second. The rest of the time, it is swinging wide to the right or wide to the left. The next swing will be to the right. There could well be a French revolution style price to pay for the US Constitution's greatest enemies. Whether it takes the form of treason trials with hangings thereafter or Ceausescu style "up against the wall" justice", underestimating the punishment dealt to those that tried to destroy America should not be taken lightly. 

One thing Obozo IS well aware of is "the worse things get, the easier it is for an extremist government to take power." However, he seems unaware that there are extremist on both the left and the right. He might want to take a good long look at Benito Mussolini and his "ho", just after their "trial" as they practice Italian style "inversion therapy". 

Bugzy's picture

Authenticity

Remember Cellente, a few years ago, saying that there will be a push for quality.

Well... Mrs Bugzy was showing me airbrush photoshop stuff on Yahoo, girls get limbs lengthened by 50% and sculpped and well pretty much everything! There was some before and after pics and the difference was amazing.

Then Max Kieser had on yesterday, miming on stage and electronic voice boxes. They removed the electronic tricks from some well known singers and boy did they sound bad. then "live" singers dropping microphones and NOTHING changing. Madonna does not sing live either apparently. The sounds on recordings are nothing like their real voices.

Food, is no longer real, GMO this, cornstarch that, processed this - apparently burgers in fast food contain lips and ass and only 2% actual meet.

The figures out of government are all lies. BLBS, inflation, GDP, libor, MF global etc atc. Bail ins.....Money is nothing but debt, conjured via a signature.

Religions bastardizing the message of spirit for their own control ends.

Adverts bombarding us everyday, telling us we are "poor sinners" and need to attend the nearest worshipping centre/mall to have our next religious shopping experience.

Reminds me a lot of the Capitol from the hunger games. The new version of bread and circuses.

Time to get back to basics. This world has no clothes.

At least my Gold and Silver is the real old fashioned deal. Maybe the time is coming for good old fashioned REAL stuff.

Turd Ferguson's picture

This is worth watching

MODERATOR

pm_newbie's picture

great vid Turd!  Still can't

great vid Turd!  Still can't help but wonder what they could have up their sleeve.  Only time can tell.  Until then seems to make sense to stack.  

Turd Ferguson's picture

Thanks. Now chew on this...

MODERATOR

Given the obvious correlation of these charts...through the late-June lows and late-August highs...should silver be $25 or should copper be 3.00?

why do I even bother's picture

@ Bill Gertz (comment above)

of course, the US Navy would never do such a thing

http://www.reuters.com/article/2012/07/16/us-usa-uae-ship-idUSBRE86F0S620120716

the days when Uncle Sam could do whatever it damn well wanted on the High Seas ended several years ago - http://www.dailymail.co.uk/news/article-492804/The-uninvited-guest-Chinese-sub-pops-middle-U-S-Navy-exercise-leaving-military-chiefs-red-faced.html and if you go snooping around other peoples naval assets, they ain't simply gonna roll over and let you tickle their tummy any more

how many dumped T Bonds add up to one sunk Chinese missile destroyer?

treefrog's picture

bright omen for monday

metals and miners both rising into the close.  fireworks at the open monday?  we can hope.

RockerBoxer's picture

24/7 refiners fire

swissinfo.ch and agencies

December 13, 2013 - 16:38

The origin of Switzerland’ gold imports and exports will be more transparent as of 2014 when foreign trade statistics will include a country by country breakdown for the first time since 1981.

The change means Switzerland will be meeting international statistical standards and contributing towards transparency in the industry overall, according to a statement released by the government on Friday.

The government has not taken a decision on releasing retrospective data, but has tasked the finance and the foreign ministries to submit a proposal on the publication of historical data.
 
The Swiss Society for Threatened Peoples welcomed the announcement as a “small step in the direction of transparency”, but added that their own research has shown Swiss refineries have imported gold in 2013 from producers who are involved in social conflict and environmental damage and called on the government to oblige gold importers to exercise due diligence and to reveal who their suppliers are.
 
According to the Swiss News Agency, in the first six months of 2013 between 75 and 80 per cent of the total world gold trade passed through Switzerland.

http://www.swissinfo.ch/eng/swiss_news/Swiss_gold_trade_to_be_more_transparent.html?cid=37537118

Why bother with transparency when we pretty much know where the physical is going?

And please someone tell who's got the monopoly on the mercury market?

RockerBoxer

oneagleswings's picture

to bugzy

cow lips in hamburger isnt right I say,  we use them for crab bait when crabbing in the Cheasapeake Bay.  If using those lips in hamburger catches on our bait will get way more expensive.  

Clarki Stomias's picture

Unbelievable MOPE

Looks like they are "getting us ready" for no taper.  Front page of Marketwatch right now is this story:

http://www.marketwatch.com/story/fed-wants-to-exit-qe-but-keep-long-term-rates-low-2013-12-13?dist=afterbell

At least they admit to the self inflicted catch-22.  

treefrog's picture

now, from granolistan - the land of flakes, nuts, and fruits...

clipped from another board...

**********************************************************

Dianne Feinstein: “All vets are mentally ill in some way and government should prevent them from owning firearms”

Yep, – she really said it on Thursday in a meeting in front of the Senate Judiciary Committee. And the quote below from the LA Times is priceless. Sometimes even the L.A. Times gets it right.

Kurt Nimmo: “Senator Feinstein insults all U.S. Veterans as she flays about in a vain attempt to save her anti-firearms bill.”

Quote of the Day from the Los Angeles Times:

“Frankly, I don’t know what it is about California, but we seem to have a strange urge to elect really obnoxious women to high office.
I’m not bragging, you understand, but no other state, including Maine, even comes close. When it comes to sending left-wing dingbats to Washington, we’re Number One. There’s no getting around the fact that the last time anyone saw the likes of Barbara Boxer, Dianne Feinstein, Maxine Waters, and Nancy Pelosi, they were stirring a cauldron when the curtain went up on ‘Macbeth’.

The four of them are like jackasses who happen to possess the gift of blab. You don’t know if you should condemn them for their stupidity or simply marvel at their ability to form words.”

– Columnist Burt Prelutsky,
Los Angeles Times

******************************************************************

from the l.a. times, no less!

philipat's picture

Comex Inventory

I still don't understand, perhaps someone can elucidate?

Prior to the current delivery cycle, Comex had enough registered inventory to deliver about 3,300 contracts. However, according to published data, JPM alone has taken physical delivery of almost 4,500 contracts. It is unlikely that JPM itself would have put more registered Gold into play and, knowing that JPM has a corner, it also seems unlikely that the other BB's would do so either.

So the question remains, where did Comex get the physical Gold to satisfy all the December deliveries?

So It Goes's picture

@ treefrog - Dianne Feinstein

Your post just is not true - please fact check before you post:

http://www.factcheck.org/2013/04/twisting-feinsteins-words-on-military-vets/

Let's not blur the picture with falsehoods.  The stuff she does for real is the true story.

I don't like Feinstein - I think she is a devil.  For instance, she was one the Senators who wanted to go to war in Syria.  I wrote to her stating that there was no evidence that Assad was responsible for the chemical attack.  She wrote back a form letter saying that Assad was responsible for the deaths of children and that she was monitoring the situation closely. 

It has become even more clear that the chemical atrocities in Syria were carried out by militant Islamic rebels - who we armed.  Feinstein should have known - she is Senate Intelligence Comittee chair.

Thanks Dianne, now I can rest comfortably that you nearly started WWIII for a good cause.  She is a total lackey paid to play hypocrite.  Queen of the "Free Shit" army.  So let's hate her for the right reasons.

So it goes.

Karankawa's picture

Hey Turd. Just a thought, but one you might want to consider.

The http://www.corbettreport.com/ is my most respected news site.

It seems that he is respected my MANY as he doesn't hold his information hostage but he gives it all out. And he asks for 100 yen/month for those that like his work.

It works out to about 5 bucks.

You do incredible work, but understand your competition.

I've studied what you are studying and I concluded that I don't know if the data is real.

I appreciate what you are doing and would like to know what is going on behind your Valted wall, but truth is spilling out everywhere for those that search for it.Wa

I will not likely subscribe to you even though I'll support your message and your site. To people I think would USE your message. The Choir already gets it.

Think about lowering your price to $3, that is what those people that appreciate Corbett are paying, of their own free will.

It's a business decision. I come here mainly for the people that post, want to charge me 3 bucks a month?

I think DailyPaul is going to die and I think this site will as well. Both for good reason. The people that have spent a great deal to keep the idea alive are braking.

Good bye,

Karankawa

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