A Freebie from Uncle Ted

Ted Butler's "New Year" newsletter was released to subscriber's on Wednesday. He's made it public today through the SilverSeek site.

Here's the link to the full report at SilverSeek: http://www.silverseek.com/commentary/2013-–-year-jpmorgan-12815

You should be sure to read the entire report but I want to C&P and highlight two paragraphs below. As regular know, I've been tracking JPM's hoarding of Comex gold and silver deliveries since July of last year. Ted has, too, and these two paragraphs get to the crux of the matter:

"Here’s something new I’ve been meaning to mention. The CME Group (owner-operator of the COMEX) lists a spot month position limit and monthly limit on actual deliveries of 7.5 million silver oz and 300,000 gold ounces by any one trader. Yet the CME is reporting that JPMorgan in its house account took delivery of more than double the amount of gold allowed in any one month. Since JPMorgan held the 6254 gold contracts from first delivery day forward, it also means that JPM was in violation of CME rules limiting spot month holdings in gold futures of 3000 contracts for the entire month. The violations in silver were less egregious but were violations nonetheless.

I’m sure if pressed the CME could come up with some cockamamie excuse why JPMorgan was allowed to hold and take delivery of so many gold and silver contracts in one month, but the real reason is that JPMorgan is above all rules and law. The CFTC backed down on policing JPMorgan and it would be foolish to think the CME would restrict its most important client in any way. Far from a band of brothers, this is a brotherhood of criminals. Besides, rules are for the little people, not JPMorgan."

If you're looking for something to do this weekend, perhaps you should C&P these two paragraphs yourself and send them off to the CFTC for an answer...

mwetjen@cftc.gov

Again, to subscribe to Ted's excellent service, simply click here: http://www.butlerresearch.com/subscribe.asp

TF

82 Comments

Turd Ferguson's picture

The full text

MODERATOR

After compiling this post, I emailed Uncle Ted and asked if I could simply reprint the entire thing. He said that that would be fine. Rather than re-write the post, here's Ted's full column:

2013 – The Year of JPMorgan
Theodore Butler | January 1, 2014
Probably owing to the dramatic decline in the price of gold and silver, I’ve read scores of year end metal reviews, more than I have ever read previously. Like most of you, I read in order to learn. Therefore, I approach every year end review and outlook with an eye towards understanding just what caused the prices of silver and gold to decline as much as they have and what that portends for the New Year.

I know I look at silver and gold differently than most commentators and what follows I haven’t seen elsewhere, for better or worse. Let me assure you that I’m not trying to be different for the sake of being different; my objective is to understand what really moves the price of silver and gold - no more, no less. I’m not interested in making up stories that can’t be verified or documented; I would not put my name on anything that I did not believe to be factual and accurate.

As has been the case for the past five years (since it acquired the concentrated short positions of Bear Stearns), 2013 was the year of JPMorgan in silver and gold. Everything important that transpired in silver and gold can be traced to JPMorgan, just as this bank will dictate what happens in the future. I realize I am being overly specific and that many different factors influence the price of any market; but the circumstances surrounding JPMorgan are so overwhelming as to render all those other factors combined moot when it comes to silver and gold.

From the very beginning of the year to the last two days of 2013, JPMorgan has dominated and controlled the price of silver and gold. Here are the documented facts. At the start of 2013, with gold at $1650 and silver at $30, JPMorgan held short market corners in COMEX gold and silver futures. JPM was short 75,000 gold contracts (7.5 million oz) and 35,000 silver contracts (175 million oz). JPMorgan’s short market corners at the start of 2013 amounted to a 21% net share of the entire COMEX gold futures market (minus spreads) and an astounding (but typical) 35% of the entire COMEX silver market. No single entity had ever held such outsized and anti-competitive shares of any important regulated futures market. It is unreasonable not to associate such extreme market corners with what followed in price.

The next standout feature to this year’s historic $450 (28%) decline in the price of gold and the $10.50 (35%) decline in silver is in the specific manner of the decline. The vast majority of the total price decline in gold and silver occurred within several days; two days in April (when gold fell $200 and silver by $5) and a few days in June (when gold fell another $150 and silver another $3). The price record clearly shows that the major damage of the worst year in gold and silver history transpired over a handful of days, something never witnessed before in gold, but occurring before in silver (twice in 2011). It wasn’t just that gold and silver declined dramatically in 2013, but the nature of the decline.

Take away those five trading days of 2013 and it would have been a rather ho-hum year in gold and silver. Of course, we can’t take away those five horrible days, but to ignore them would be a mistake. The degree of the time-compression of this year’s decline in gold and silver, were it to occur in any other market would necessitate historical nomenclature (Black Monday or Friday). Even more than the plunge in price for gold and silver in 2013 was the time-concentrated nature of the decline. Try to imagine the furor that would arise if the stock or bond market were to decline 35% in a matter of days.

Let’s stop for a moment and connect these two dots – JPMorgan’s short market corner in COMEX gold and silver at the start of the year and the historic and concentrated price plunge of 2013, essentially completed for the year by the end of June. Can it be possible that these two facts were not directly related and a case of cause and effect? Let me restate that – is it possible that JPMorgan just happened to be in the right place at the right time and the historic gold and silver price plunge occurred through no input by JPM? Before you answer, let me comment further.

The price plunge through the end of June resulted in JPMorgan making more than $3 billion on their short market corners in COMEX gold and silver. So, to conclude that JPMorgan had nothing to do with the price plunge is the same as concluding that $3 billion in commodity futures trading profits is a normal and regular occurrence. But it wasn’t just that JPMorgan innocently stood by while legitimate market forces bestowed a sudden $3 billion windfall on a financial institution found to have acted improperly in more different circumstances than can be recorded – it’s what JPM did as a result of the gold and silver price plunge.

The facts show that JPMorgan not only took profits on their short market corners in gold and silver (to the tune of $3 billion+), JPM bought so aggressively on the price plunge thru June, that this bank almost eliminated their short market corner in COMEX silver and actually reversed their short market corner in COMEX gold to a long market corner. The facts indicate that JPMorgan was the single most aggressive trader on the extreme price plunge and not a lucky bystander.

It is well-established that a market corner is against commodity law. In fact, this is the most important aspect to commodity law, because market corners are unquestioned proof of manipulation. CFTC data indicate (as I’ve been reporting all year) that JPMorgan held short market corners in COMEX gold and silver at the start of the year and that this crooked bank holds a long market corner currently in COMEX gold. There can be no question that JPMorgan held and holds market corners in COMEX gold and silver based upon market share.

The only question is how the heck did these crooks pull it off? Specifically, how was JPMorgan able to buy so much COMEX gold and silver as prices plunged? Normally, one would think the net purchase of 150,000 COMEX gold contracts (15 million oz) and 23,000 COMEX silver contracts (115 million oz) by the US’s largest bank would cause prices to soar. That would usually be the case, except for one other fact – JPMorgan and other collusive traders have come to control the price mechanism on the COMEX, thru high frequency trading (HFT), spoofing and other illegal computer trading means. The evidence of this is in the otherwise inexplicable daily price volatility on the COMEX and the fact that JPMorgan and other collusive commercials are always on the buy side on big down days with no exceptions.

This HFT daily price control, combined with trading counter parties (technical funds) solely motivated by price signals has created a Frankenstein-market – a monster out of control. Real commodity markets are supposed to have prices dictated and discovered by real world supply and demand forces; the COMEX monster market has computer algorithms dictating prices to real world producers, consumers and investors for the benefit of JPMorgan.

I’ve concentrated on what JPMorgan has done this year on the COMEX because that market determines gold and silver prices throughout the world. But JPMorgan’s influence and activity is not limited to COMEX gold and silver futures. In addition to holding a long market corner in COMEX gold futures, JPM has been extraordinarily active in taking actual delivery of metal recently. For the month of December, JPMorgan has taken delivery of more than 96% of the 6493 gold deliveries issued this month. The 6254 contracts taken by JPMorgan in its house (proprietary) account is equal to 625,400 oz of gold. In addition, JPMorgan also took delivery of 10 million silver oz in December and another 5 million silver oz this week in the new January delivery month. http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

Here’s something new I’ve been meaning to mention. The CME Group (owner-operator of the COMEX) lists a spot month position limit and monthly limit on actual deliveries of 7.5 million silver oz and 300,000 gold ounces by any one trader. Yet the CME is reporting that JPMorgan in its house account took delivery of more than double the amount of gold allowed in any one month. Since JPMorgan held the 6254 gold contracts from first delivery day forward, it also means that JPM was in violation of CME rules limiting spot month holdings in gold futures of 3000 contracts for the entire month. The violations in silver were less egregious but were violations nonetheless.

I’m sure if pressed the CME could come up with some cockamamie excuse why JPMorgan was allowed to hold and take delivery of so many gold and silver contracts in one month, but the real reason is that JPMorgan is above all rules and law. The CFTC backed down on policing JPMorgan and it would be foolish to think the CME would restrict its most important client in any way. Far from a band of brothers, this is a brotherhood of criminals. Besides, rules are for the little people, not JPMorgan.

2013 also highlighted the unintended consequences of JPMorgan’s control on silver and gold prices. By rigging gold and silver prices lower on the COMEX to close out its gold market corner and flip it to long market corner, JPMorgan also caused the extraordinary liquidation of metal from the world’s largest gold ETF, GLD. There can be little argument that the steep plunge in gold prices caused the massive liquidation of almost 18 million ounces (41%) of gold holdings in GLD. Investors dumped $25 billion worth of GLD in reaction to declining gold prices and prices declined because JPMorgan rigged prices lower on the COMEX in order to flip a short market corner into a long market corner. If there’s an alternative plausible explanation, I haven’t heard it.

Earlier in the year, when I first discovered that JPMorgan held a long market corner in COMEX gold, I speculated that JPM was gaining ownership of much of the gold liquidated from GLD. Numerous reports of buying by China and India subsequently persuaded me to think that most of the metal from GLD ended up there. But considering how aggressive JPMorgan has been in acquiring gold and silver metal via COMEX deliveries recently, I now believe JPM got a pretty good chunk of the liquidated GLD gold. I also think that JPMorgan has been getting serious amounts of silver from SLV by buying shares and converting to metal before share holdings require SEC reporting. There are just too many factors pointing to JPMorgan acquiring all forms of gold and silver to not consider this the key factor of 2013.

One of the questions I have been unable to answer to myself over the past several months is why hasn’t JPMorgan let gold and silver prices rip to the upside after establishing a long market corner in COMEX gold and sharply reducing their short market corner in COMEX silver. After having made $3 billion on the short side, JPMorgan has been in position to make that much and more to the upside. I couldn’t quite understand what was holding them back. The recent COMEX delivery data, as well as the continued outflows from GLD (and more recently from SLV), come close to answering my question.

It appears that JPMorgan hasn’t let gold and silver rip to the upside because the bank is still acquiring important quantities of metal in physical form. It does appear that JPMorgan has hit the limit of COMEX gold futures ownership, as the bank’s long market corner is pretty easy to track and, apparently, hard for anyone to deny. Likewise, JPM’s short position in COMEX silver has been hard to reduce significantly for six months or longer.

But the documented data clearly indicate that JPMorgan has been acquiring important amounts of gold and silver thru COMEX deliveries and, most likely, in actual metal from GLD and SLV. Unlike futures contracts which are reported weekly in COT reports, there is no reporting requirement by JPMorgan for physical gold and silver held. Considering that the statistics from the COMEX have shed much light on JPMorgan taking delivery of gold and silver in extraordinary amounts and the knowledge that JPM doesn’t welcome close scrutiny of its trading, I’m inclined to believe we are closer to the end of JPM taking such visible deliveries, rather than this being the start of growing delivery-taking by them. In addition, after the unprecedented bleed of more than 40% of the metal in GLD, further massive liquidations look improbable from that source.

Therefore, I can see what JPMorgan has accomplished in 2013 and why they haven’t pulled the trigger yet to the upside, as they continue to acquire physical gold and silver. But the easy flow of physical gold and silver accumulation by JPMorgan now appears largely over. That’s not to say JPMorgan is done with its dirty tricks to the downside, but it’s important to put things in perspective, which is the main purpose of year end reviews.

As was the case in 2013 and every year since 2008, the next year in gold and silver will be determined by JPMorgan. But considering that JPMorgan now holds a long market corner in COMEX gold for the first time in history, it is hard to see how 2014 doesn’t shape up to be the exact opposite of 2013. Throw in JPM’s sharply reduced short position in COMEX silver and the massive quantities of physical gold and silver acquired by the bank and the start of 2014 couldn’t be more different than the set up of a year ago.

While no one can accurately predict short term pricing or the exact moment the deliberate price beatings of 2013 will end, the facts indicate a remarkable turnabout in JPMorgan’s positioning. We fell sharply in 2013 because of JPMorgan and will likely rise sharply in 2014 for the same reason. From my perspective, that’s all that matters. 2013 – Good riddance. 2014 – Step right in. Happy and Healthy New Year to all.

Ted Butler

Published on January 1, 2014

For subscription info please go to www.butlerresearch.com
 

ivars's picture

I had to pen this to make

I had to pen this to make clear my position for myself. Hope it may encourage more thinking about how competition in capital markets , especially in gold market, is a CARTEL.

Having cartel in capital markets means capital does not have to compete ( its production/release is regulated to regulate everything) hence there are no capital markets . There is international capital that like oil can be priced by producers agreement between themselves.

Not all capital is part of this CARTEL, but income taxes and other transparency policies sees to that that as little as possible escapes attention.  

As with oil, the key are swing capital holders who , although they  hold may be only 10-40% of worldwide capital, their supply decisions decide capital ( especially  gold)  price in the world since , if they contract supply, the whole world is short of capital.

Its essential for CARTEL to have hold on most liquid capital that can flow or not to the needed spots very fast, and to have globalization so that there is not place nor industry which can survive on its own capital without a threat of drain. 

OPEC in general or Saudis in particular in oil are similar to this CARTEL in capital. 

It is this capital Armstrong is speaking of and its flows, and its effects are , as with Saudi oil, unproportionally big. 

If Chinese would create own capital  ( which they have been doing by hard working its populace for last 40 years) and close their financial market to globalization as they had them closed in e.g prior to 16th century, they would be unmanageable and prosper. If they collect too much gold without debt they can pull it off. 

For capitalism to work, there needs to be TRUE competition in capital. No cartels, no swing capital holder control of world capital prices. Saudis are called swing oil producers as their own production costs are very low plus they can vary the supply in great magnitude and fast. Someone may be called swing capital holders on similar grounds. Swing capital that is not tied to physical assets, and has low cost to produce-meaning has small fixed costs ( very liquid.. like Saudi oil), and is big enough part of world capital supply and is controlled by one group that acts in concert.  

Otherwise, with a cartel instead of market, like expensive oil, swing capital flows only enrich its holders (cash,  gold holders), and drains the economies like expensive oil drains economies- like a tax.  This tax is collected by CARTEL ( like  OPEC and especially Saudis collects tax from all world by being SWING producer.). 

ivars's picture

Repeat can someone explain HOW COMEX can

Influence physical gold prices if contracts can be settled in cash. If only 1-3% of contracts are delivered. Its not a market or even manipulated market. Futures may be a reflection of manipulated markets but not the market in commodities.

Physical sales determine the price. London fix fixes it. Gold flows. Demand is manipulated politically. Supply is arranged even if bleeding throuh the nose.  GOFO rates are set by CBs supply of gold for lending . They are akin to FED rates..they are set to regulate supply demand of gold , encourage lending or suppress it, not to reflect it. Negative GOFO obviously makes holding of loaned gold more costly compared to lending it out, so it speeds up lending it out from CBs as GLR increases at given LIBOR the more negative GOFO is.  So to encourage lending, GOFO is set to be negative. The international GOFO committee in London decides if they wish more gold to be lent or less from world  CBs or any other gold owner. The world most liquid, gold capital opportunity cost in USD is set in London, where both LIBOR and GOFO is fixed. Negative GOFO is like an order to world big gold holders to loan more gold. The more negative it is, the more gold shall be loaned. It is a strategic decision  not haphazard event. Yes it shows that there is demand and price needs to be suppressed now ..or not. Even if demand does not change, GOFO may be varied and that in turn is reflected in gold London Fix price. Even if demand is high GOFO may be high and prices will go up as much as loaned gold share of physical market is. The more hedging there is from Miners, the bigger this share is, and GOFO is more effective in price regulation. Hence demand from LBMA for miners to HEDGE as much as possible. Demand that can turn into order. 

COMEX: JPM clients buy into e.g. GLD ( are long gold as commodity, physical)  , JPM shorts gold in COMEX ( same for SLV and silver). When JPM clients sell from GLD physical ( are short commodity) , JPM goes long in COMEX ( same for SLV and silver) . And nets the commission/spread. 

I understand analyzing COMEX is nice, one can build theories  as there are data available which are not available at all from physical market, but that does not mean COMEX has any chance to affect physical  price. It is but a 2D shadow of  a 3D world of physical market. 

COMEX is a game .  LBMA is reality.  

TreeTop Dweller's picture

2014

2014 is going to be a good year for metals, not sure about anything else. Hold on to your hats this year.

Beware when the elite worry about feeding the masses;

Prince William Going Back to School in 2014, Studying Agricultural Management at Cambridge University

http://omg.yahoo.com/news/prince-william-going-back-school-2014-studying-agricultural-152000656-us-weekly.html

It is a 10 week course but he is Prepping himself, wants to insure a future for George!

ivars's picture

E.g COMEX deliveries to JPM

E.g COMEX deliveries to JPM was -true? 640 000 Oz/month?

What is 640 000 Oz of gold per month? Peanuts, about 20 tons. That is less than daily London turnover in physical trade. By physical trade in London I mean any transaction where the title of physical gold changes, without gold necessarily being moved physically. Same about silver.

Like in real estate, where most of physical trade happens without moving houses to new locations, nevertheless, it is real physical trade since houses change OWNERS.  

However, participating in a house futures market where people bet on house prices but neither own any nor intend to own and are happy if 97% of their deals are settled in money instead of getting ownership of houses has no chance to impact house prices. Does there exist futures market in real estate? Must be a betting company, pure and simple. 

As in gold, house (real estate)  stock to flow ( net new houses) ratio is big. 

I will let the topic die but no one will ever persuade me that pure dealings (without dealing in parallel in physical in a certain way ) in COMEX may influence physical PM price more than fractions of %, which are seen as deviations from London fix when they happen. Silver is more susceptible to some fraction of %  influence  as market is smaller and stock to flow ratio a bit  smaller, but nevertheless. 

ancientmoney's picture

@ivars re: paper sets price of gold . . .

You seem not to be able to see the forest for the trees.  If physical gold was really setting the price, the price would be 50 to 100x the current price.  Because that is how much paper gold is masquerading as physical. 

The market currently sees no difference between physical and paper gold.  That is how the 50-100x the amount of physical (paper) is controlling price.

-------------------------------------------------------------------------------------I reposted this from previous thread, since you reposted the same question from there.

ivars's picture

Quote:You seem not to be able

Quote:
You seem not to be able to see the forest for the trees.  If physical gold was really setting the price, the price would be 50 to 100x the current price.  Because that is how much paper gold is masquerading as physical.

The market currently sees no difference between physical and paper gold.  That is how the 50-100x the amount of physical (paper) is controlling price.

You must be kidding. They are all idiots, really? Paper gold that can be settled in cash has no difference from physical gold in the minds of contracting parties???

ancientmoney's picture

@ivars re: paper gold . . .

"They are all idiots, really? Paper gold that can be settled in cash has no difference from physical gold in the minds of contracting parties???"

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

The COMEX PM trade is primarily a bunch of bankers playing with other bankers, so as to fleece anyone who attempts to trade against them.

LBMA is also primarily a paper-trade as well, as admitted by Jeff Christian.  Certainly, physical trades there, but overwhelmingly the fractionalized ownership via rehypothecation of the same physical, allowed via paper trading mechanisms like futures, unfortunately still controls pricing.

Not all are idiots, however.  most of us here are stackers, who take advantage of the paper-created price, and use fiat to buy phyzz at those faux prices.

ivars's picture

Quote:LBMA is also primarily

Quote:
LBMA is also primarily a paper-trade as well, as admitted by Jeff Christian.  Certainly, physical trades there, but overwhelmingly the fractionalized ownership via rehypothecation of the same physical

Fractionality and rehypothecation of LBMA gold market participant stocks of gold ( deposits) is of course true and leverage is high  but has nothing to do with COMEX or futures. 

If there is trust in the system still, the leverage can be as high as possible as long as everyone who wants his gold registered can get it registered , and everyone who does not trust this and wants his gold delivered can get it delivered.

That is what is happening so far. Even more so, likely hood of the run on bank in LBMA has been reduced apparently since 2011  by whatever means as gold price has reduced. That would not have happened in fractional system if it was struggling to keep depositors happy?  

In any case, it has no inverse relation to COMEX futures game, i.e. what happens in COMEX will not initiate/calm bank run and related price changes.

If there is run on physical, prices will shoot up and then LBMA will close for a holiday. Black market will take over if all exchanges collapse like this. Price will be very high. Are we waiting for this day? Fine, but what has it to do with COMEX?

JPM may hold whatever futures it wishes to fleece other bettors as JPM probably has more knowledge about physical, and to hedge. Hedging may tell something about its clients positions in physical gold, as they have to be paired . Speculation only tells that there are others in futures who speculate in opposite direction to both JPM hedging and speculative positions.

ivars's picture

Quote:Swing producer is a

Quote:
Swing producer is a supplier or a close oligopolistic group of suppliers of any commodity, controlling its global deposits and possessing large spare production capacity. A swing producer is able to increase or decrease commodity supply at minimal additional internal cost, and thus able to influence prices and balance the markets, providing downside protection in the short to middle term. Examples of swing producers include Saudi Arabia[1] in oil, Russia in potash fertilizers,[2] and, historically, the De Beers Company in diamonds.[3]

Now imagine this commodity is capital and think.

AlienEyes's picture

It it just me....

or do the two paragraphs Turd mentioned really look like just one paragraph?

Maybe it's the Jose Swervo Oro.

¤'s picture

"the rip-cord"

I think the reason why JPM hasn't pulled the rip-cord yet is....

1.) They'll let someone else do it (China) or some market event (Yen collapse) do it for them while they sit back and benefit from it.

or...

2.) They have no real intention or desire ( or ability) to run the price up. Doing so would be a 180 degree turn away from decades old US/Fed/Treasury monetary policy.

Is this time different? I have no idea but I'd like to see the price of gold/silver go up significantly just like everyone else.

My guess would be that China doesn't cause the price to go up significantly in a pro-active pre-emptive anti-USD move.

Doing so would be perceived as an economic declaration of war against the US. (But in the event of a war...Japan/China/US etc....a Chinese USD counterattack of sorts would make sense.)

I think it more likely that the Chinese will wait for the right moment to reactively respond to a significantly weakened USD event and then dramatically respond because of it. Big difference.

Maybe that's the exact same reason JPM is waiting...and watching.

While 20 tonnes of gold (JPM's approx. holdings....supposedly) is a lot of gold, it pales in comparison to what China has been hoarding and I don't see JPM being able to jack up the gold market based on 20 tonnes with China being the kingfish.

If anything, I see JPM acquiring metal at these cheap prices so they can further short the heck out of it while they have the phyz to do so.

That's been their MO for awhile not to mention it's what the Treasury/Fed has wanted to see happen for decades. Lets hope not.

I could clearly be wrong and I'm not emotionally invested in being right. Just as long as gold/silver eventually go up is where I'm at regardless of the reason why.

ancientmoney's picture

Who knows?

We know China bought JPM's headquarters and the gold vault connected to the Fed's vault.

Maybe they own JPM and the Fed, too. 
We just don't know it yet.

I Run Bartertown's picture

ancientmoney

I think it's much more likely that the OneBank owns JPM, the Fed, and China.

Although I'd love to think that the Chinese had somehow turned the tables on the people who own almost every other nation on Earth (the exceptions being 'rogue states' and 'Axis of Evil' nations).

buzlightening's picture

With old yellen in the wind,

taking up the 1st of many FOMC meetings, you can be assured a fabricated crisis is not far from the horizon. FOMC 1/28-29! I have no doubt the way is prepared for her to uncork QEternity and leave the bentrod taper tantrum for the history books. It's all rigged pig men crony capitalist BS propaganda streaming like sewage from diseased anal orifices. Just look at the rising reverse repos in the fed fuds temp operation. These vermin are sucking liquidity out very quickly to drop these markets for the upcoming fabricated crisis. http://www.newyorkfed.org/markets/omo/dmm/temp.cfm
.............................................................
That's a 57 billion reverse repo folks. Remember numerous ones in the fall of '08 before and after crisis mode where hanky panky poulson shook down our wooden headed CONgress & SINate to TARP out failing institutions. It was 25 billion in reverse repos every other day relentlessly for 90 to 120 days to the tune of some 3 trillion sucked out. The sucking of liquidity now at regular intervals of 50 plus in reverse repos has got to be the biggest warning flag we're coming to a fabricated crisis for ole yellen to step in and save us. Wonder how much we the people will need pony up to save failing institutions this time? Don't be fooled this time around turdites. Uncle Ted knows the score on price fixing from silver to all other commodities but most importantly silver. When the wolves start crying crisis this time around, shove the rat bastards back into the insanity debt bottle, the pit vipers have been having us drink from for decades and let every last bankster entity which has blowing up derivatives; implode to hell. Then let's, we the people, get back to freedom and our republic and show the world we're not a nation of suckers to be completely bled financially dry by some freak show lil scamBO administration. All great pretenders of representative gov but by their fruits we know them. Liars all and we need vote every inscumbant out; demoncrap or repungnicon this Nov. All elections rigged as well but let us move peacefully 1st and thereafter whatever necessary to send tyrants bank to hell from whence the vermin came. 2014 let us step out from being one nation under fraud and return to our being one nation under God.

ag1969's picture

Senator Rand Paul Suing Obama Administration

United States Senator Rand Paul (R-Ky.) is leading a class action lawsuit against the the Obama administration’s National Security Agency (NSA) spying program. Paul has actually been collecting signatures for petitioners for months now.

Paul will appear on Fox News with Eric Bolling at 10 PM ET on Friday to discuss the lawsuit. So far more than 300k people have signed Paul’s class action lawsuit, which will focus on the NSA’s violation of the Fourth Amendment.

wildstylechef's picture

Primed and ready to self destruct

The Chinese and the Russians are both smarter than everyone and they are now primed and ready to take control as masters of the policy makers for world currency settlement.

They will not trigger the US default that will coincide the Euro default, but they will benifit and stimulate the escalation of decline by dumping any US then Euro based finances, with France leading the Euro decline. Any gold left will be swiftly scooped up as anyone left with gold will be selling it to cover debt that no one wishes to buy their bonds. Inflation will be back to the 70's 20% plus and we as gold investors will rule.

What will the black swan event? Who knows, who cares, but with the US stock markets at their ridiculous levels and US fundamental indexes of financial health manipulated to equally ridiculous levels VERY LITTLE WILL BE NEEDED.

Mantis's picture

tail wagging the dog

ivars I dont know answer to that question how can betting on future price move physical market. hope someone can shed more light on the question as I would like to see the debate. however if it wasnt naked short selling which provoked the huge price declines on those 5 days what was it that drove price down then?

happy new year to all

Gold Dog's picture

Mantis

It started with shorting that tripped sell stops. The reason the moves were so large is every time the price appeared to be stabilizing the Morgue would short more so more stops and panicked sellers would add to the waterfall.

The same action can be initiated to the upside.

YF,

D

Cleburne61's picture

Fantastic Silver Documentary

On......the History Channel of all places!  Found it on Chris Duane's site.  Gives its history as money, explains the prevailing theory on where silver comes from, and explains how it saved western democratic ideals.  I highly recommend it!

http://www.history.com/shows/big-history/videos/big-history-silver-supernova?m=5189717d404fa&s=All&f=1&free=false

treefrog's picture

adam hamilton piece on silver short squeeze

hamilton anticipates a silver squeeze in the next few months.

http://www.321gold.com/editorials/hamilton/hamilton010314.html

the_circle's picture

Brilliant

... and very reassuring. Thanks Ted! (and Turd)

Gold Dog's picture

Options Trade

This morning I bought quite a few SPXU JAN 2015 calls with a strike of $16.00 a share.

In mid 2010 when the S+P was at 1250, 32% lower than today SPXU was at $200.00 a share.

The calls last print was 2.75.

The shares closed at $15.54 today.....almost any pullback in the equities market and these things will be bottle rockets!

Don't forget, GOTS and DYODD.

Your friend,

Dog

I also bought calls in NUGT and the GDXJ, but after doing some additional research the SPXU's jumped off the screen at me.

¤'s picture

The Gold-Bug

gold bug

The Gold-Bug

poegoldbug.GIF

by Arthur Paul Patterson 

Edgar Allan Poe's >>>The Gold-Bug<<< emphasizes the chasm between our perceptions and reality. Poe's ghoulish tone is not merely horror for the "gross out", as Stephen King calls it. The gothic elements in Poe serve the higher purpose of transforming our consciousness. One of the tell-tale signs of a Poe story is that truth is not easily accessible. When we confront reality it does not conform to our expectations. A metamorphosis, in the normal way of seeing things, takes place when we learn to question not only our general perceptions of subject but our own cherished convictions. Poe's horror supplies a tool for transformation. 

At first it may seem cynical or cruel to laugh at the dim-wittedness of ourselves and others. Poe's use of irony and humor is intended to create a disinterested or objective stance toward subjectively experienced events. His tales are like horrific versions of Zen koans, whose role is merely to shake us loose from habitual ruts in our thinking. This strategy was rarely understood or appreciated by Poe's publishers. 

Poe often asked the reader/publisher to assume a context in which the tales would be read. It is significant that a reading group in some ways fits the bill for Poe's hypothetical gathering of readers. "[The Tales] are supposed to be read at table by the eleven members of a literary club, and are followed by the remarks of the company upon each. These remarks are intended as a burlesque upon criticism." The name of Poe's imagined Reading Group was The Folio Club - a subversive, counter-cultural group of literary transcendentalists whose intention was to "abolish Literature, subvert the Press, and overturn the Government of Nouns and Pronouns." (Thompson, p. 41)



It is in this spirit that we approach The Gold-Bug. 

A DREAM WITHIN A DREAM


by Edgar Allan Poe
(1827) 
Take this kiss upon the brow! 
And, in parting from you now, 
Thus much let me avow- 
You are not wrong, who deem 
That my days have been a dream; 
Yet if hope has flown away 
In a night, or in a day, 
In a vision, or in none, 
Is it, therefore, the less gone? 
All that we see or seem 
Is but a dream within a dream. 
I stand amid the roar 
Of a surf-tormented shore, 
And I hold within my hand 
Grains of the golden sand- 
How few! yet how they creep 
Through my fingers to the deep, 
While I weep- while I weep...(cont.)

http://www.watershedonline.ca/poe/essays/goldbug.html

unwired's picture

What wags what

On the huge take downs in price... where the 'equivalent' of hundreds of tons of gold in the form of 100oz paper contracts were dumped unto the Comex market in minutes.... all you have to do is look at deliveries. The deliveries off the Comex were a tiny fraction of the 'tons' that were dumped in order to break the market. Most of what was dumped in paper... was closed out or covered in paper. It certainly created demand... the dump in price.....so JPM closed out its large Comex paper shorts... by delivering metal to those holding the other side...longs.... rather than closing out the shorts by buying them back themselves. Had they bought on the Comex.... they would have been negating the price collapse.

On the two markets... physical and paper.... it used to be mostly physical only. The London Gold Pool failed as a result of running out of physical to dump on the market. Gov'ts and CB's gave up supplying the market because they decided they did not want to lose any more.... and there was no paper market to fall back on. When Nixon defaulted on the Bretton Woods monetary agreement... total chaos ensued as the link between all the currencies fixed in relation to gold... and therefore each other.... was broken. For example...IBM used to be able to calculate sales prices and profits for selling a Mainframe computer to say Japan. They sold it.... built it...delivered it and got paid over a period of months. Yen converted into dollars at a fixed exchange rate...and they made their profit. After Bretton Woods was busted... that same transaction could easily have resulted in a loss for IBM... as over the course of time from sale to finally getting paid... the floating exchange rates could result in the Yen not converting into enough dollars to even cover the cost of building the Mainframe... let alone a profit. The breaking of Bretton Woods was the biggest windfall to the banking cartel in history... as it instantly created a need for financial products... paper contracts.... and were used to hedge... and thereby locking in currency relationships etc. Today this 'derivative' industry is TOTALLY out of control... and what was originally designed for legitimate business need...restoring and duplicating some of the function of the defunct gold system....has morphed into into myriad products used and abused in wild speculation, price distortion and market manipulation.... and all being encouraged and supplied with fiat fuel by corrupt gov'ts and CB's.

Today... in so many markets.... the actual transactions are indistinguishable from the paper contracts. In gold for instance... there is not a pricing mechanism to distinguish an actual transfer of gold between parties and a transfer of paper contract said to represent an amount of gold. In affect...there's only one price. A party that's buying 100oz of gold needs a full $124k... and a seller needs 100oz of actual 99.9xx gold to give away. They compete in price discovery... and are vastly overwhelmed in number by individuals and entities that can trade the same 100oz.... that doesn't actually exist.... for only $8k in futures margin. The $8k margined 'bets' vastly outnumber the real transactions... but they both operate off the same price because....by design... there is no mechanism to distinguish the two.

This what is so significant about a return to some kind of gold standard. It will lead to a vast reduction in the need for banker financial products.... and why the banks are fighting to the death to keep gold out.... while ironically... at the same time...drowning in insolvency with the gross abuse and market distortions caused by their own financial derivative products.

The East.... I think its safe to say... has had enough of this bullshit and are systematically dismantling the system of current western banking control...by bringing the nemesis back in.... physical gold. The 2008 financial crisis was the last straw. The first step in the process is the move to stockpile all the freely available gold so it can no longer be dumped on the market to control the price. This includes the fractional reserve bullion systems as well... where receipts are issued for, and storage and insurance is charged for physical gold that doesn't actually exist. Simultaneously... exchanges are being set up to create a division in the pricing mechanism that does not exist today. Price discovery will take place on these exchanges.... and prices published that indicate agreed to amounts being transferred between parties that have the full amount of currency to buy a kilo gold bar.... and those with kilo gold bars to sell. No margined 'buyers' or 'sellers' will be allowed. Once these exchanges are online and operating... the market will have a new price that has not existed....for a long long time. Once that happens.... the price for gold based on paper contracts has a competitor...and as theory goes... should pretty quickly begin to lose its potency in setting the price.

Sorry to be long winded.... but its therapeutic to go over this stuff again and again. Its the big picture.... its the bottom line for why we are rooting for this sector. It means that things are moving in the direction of honest money and therefore honest dealing. It's being pushed by those who are tired of the abuse by a few in the west against the rest of the world. Hopefully it turns out well and brings about a renewed vitality to a deteriorating world situation. Those of us with children would like to know there is a possibility that the future could be brighter.

I'm sure if gold makes this expected comeback... we could have a few decades where things go well. But inevitably, the bankers will figure out a way to start corrupting the whole thing....and gold will eventually lose its monetary status once again. But that's getting too far ahead in the saga...we've enough to think about and to navigate through now.

CrimsonAvenger's picture

The Chinese - when?

"I think it more likely that the Chinese will wait for the right moment to reactively respond to a significantly weakened USD event and then dramatically respond because of it."

I've been thinking about this a lot. The Chinese are famous for looking at things through a long-term lens, and I can appreciate their patience in sitting back and building up their PM stockpile. But if they want to jockey for position by sticking it to the US, that long-term view has to be countered by the realization that Obama is an incredibly weak president, particularly in foreign pissing contests, and they likely won't see one this weak again. So if I were the Chinese, I'd want to strike while O is in office, ideally with at least a couple of years left in his term.

We'll know in the next year if that theory plays out...

California Lawyer's picture

Crimson Avenger - Brilliant Observation!

I had never thought of that.  Yes indeed, Obummer is perceived as incredibly weak, both domestically, and abroad.

But it is more than that, too.

Because the main stream media is completely corrupted, there is no legitimate source of information that can or will reach the low information voter, or as I like to call them, the Free Shi- Army.

Suppose China tells an Obummer Admin official that US dollars are no longer acceptable as balance of trade payments?  Suppose China tells also that the USA balance of trade payments need to be made in physical specie, like gold, silver, or trade of actual assets or resources, like oil drilling rights off the coast of California?

Obummer is so corrupt, and his handlers so intertwined in the crony corruption, that Obummer will care little and will simply agree to whatever terms are asked.  Even if there were to be a public awareness or outcry, no media outlets will ever tell the tale.

So, it is quite brilliant thinking to surmise that China would act now as Obummer is essentially still subject to being propped up by his handlers.  

In a year, after the midterm elections, when Obummer is a lame duck, and possibly facing a republican congress hell bent on revenge, I agree that the stakes are much higher for China to rattle any of its sabers.  

Thanks for the great post.

ivars's picture

Swing voters

I see an in depth discussion brings the best from people here to respond. 

So now replace the commodity with voters again and think. What conditions are necessary for swing voters to decide outcome of elections? What philosophical concept sees battle of opposites as necessary origin of development and growth? Which human weaknesses are satisfied and cultivated by such growth? What is the genepool selected in such environment? How important is constant change and stress for swing voters and capital to gain bigger market share and influence? Is swing oil colluding with swing capital and voters to produce changes and stress? Are they really needed?

why do I even bother's picture

COMEX DEFINITIONS

I am still deeply deeply uncertain / nervous about the COMEX Reports (and how to interpret/reconcile them):

In Chapter 7 of the NYMEX Rulebook (specifically s.703B 5 & 10 -  http://www.cmegroup.com/rulebook/NYMEX/1/7.pdf#page=49 ) a clear distinction is made between Registered and Eligible inventory, based upon whether a Warrant has been attached in respect of a particular Bar (the Warrant specifies the individual Bar Number).

This tells us about the location and the status of the Gold, but no reference is made to whether it is in "Customer" or "House" ownership.

In contrast, in the CME Delivery Reports ( http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf ) explicit reference is made in separate line-items to Customer ('C') and House ('H') accounts.

I have been unable to find any documented connection between the two, and I therefore think that there is not.

If this is indeed the case, then I am concerned that a number of Commentators whose analysis I deeply respect may perhaps be reaching false interpretations about what has been going on in terms of settlements

As an example of this, consider the COMEX Inventory Report dated 3rd January 2014, referencing activity on 2nd January 2014: HSBC Received 2154 ounces into its Eligible inventory, whilst Manfra Tordella saw a Withdrawal of 2700 oz from its Registered inventory, and we must surely assume that this involved 'Breaking the Warrant' on those 27 100 oz. Bars. (The balance of 546 oz appears to have left the Exchange entirely.)

Now lets look at the corresponding COMEX Delivery Reports (http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsMTDReport.pdf) for Run Date 3rd January. Cumulative Total 4 Contracts have 'stood', and none of these were for either HSBC or Manfra Tordella accounts. (In fact, HSBC appears to have had no deliveries either in or out for its Customers during December 2013 either, and Manfra Tordella is not recorded as having any settlement activity whatsoever in either month).

Clearly, 2700 oz delivered is a far larger number than 4  x 100 oz contracts stopped on 2nd January 2014, and so the warehouse movements noted in the Delivery Report cannot be reconciled 1:1 on any particular day with contracts Standing/being Stopped. Some of those Bar's in Manfra Tordella's Registered inventory clearly did not belong to Manfra Tordella, and whoever did in fact own them (by holding and then breaking the Warrant) was apparently quite content for them to sit in Manfra Tordella's warehouse until there was some good reason for moving them somewhere else. On 3rd January, in respect of 546 oz, that 'somewhere else' appears to have meant 'somewhere outside COMEX', but for 2154 oz the preferred destination was HSBC's warehouse, Eligible section. As we have seen from the Delivery Report, during both December and January there were no Customer deliveries either in or out at HSBC, but these 2154 oz all went into Eligible. In fact, during December, HSBC's 'House' Account stood for a (net) 2717 contracts, and so there is no way that this physical transfer from Manfra Tordella can be reconciled to an identifiable settlement in either contract month. The ownership of those 2154 oz remains completely opaque to us - although it appears that neither Manfra Tordella nor its Customers were involved as anything other than passive custodians.

This clearly establishes the fact that Manfred Tordella's 'Registered' inventory does not directly correspond to Manfred Tordella's 'House' account (and the same must surely be true of every other dealer). Does this therefore also imply that 'Eligible' inventory does not necessarily correspond only to 'Customer' positions? Think about the 2700 oz again: assuming that whoever legally owned the 2154 oz on 2nd January could apparently have continued to keep them safe and secure in Manfra Tordella's warehouse, why would they withdraw them if they didn't want to remove them to e.g. China? The answer could perhaps be that only 546 oz was owned by 'Customer' account(s), and the 2154 oz was/is in fact owned by HSBC itself as part of its 'Eligible' inventory; in contrast, where else would HSBC store its own 'House' Gold if not in an HSBC warehouse? If this is the case, then 'Eligible' inventory cannot be reconciled back exclusively to 'Customer' ownership either - at least not on a 1:1 or same-day/month basis.

I stand ready to be corrected on all of this, and I am in active correspondence with the CME to gain further clarification; however, my suspicion is that misunderstanding (due to imprecision in the terminology) and opacity in the figures (due to aggregation / netting effects) fundamentally undermines any attempt to track physical settlements on COMEX via the daily Inventory Reports (and even a 'zero' figure may in fact represent the net effect of significant transfers between House and Customer ownership.)

The ultimate crunch therefore - and my next challenge - is to tease out whether the 6254 contracts stopped by JP Morgan's 'House' account in December (see http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf ) tally with movements reported in J P Morgan Registered Inventory during December. My suspicion is that they do not, and that settlement of JP  Morgans 'stops' will have been in large part completed by either transferring a Warrant (written on some other dealer's Registered inventory) or by transferring legal ownership of physical Gold within the JP Morgan Eligible inventory, but with the physical metal still remaining where it is; if this is the case, then we have no idea what JP Morgan's 'House' position looks like, because some of it will be reported in other dealer's Registered inventory (those bars with Warrants against them) and some of it will be reported in JP Morgan's Eligible inventory (bars without Warrants), where it is reported in aggregate along with all of JP Morgan's 'Customer' positions. If a settlement delivery takes place between e.g. a JP Morgan 'Customer' and the JP Morgan 'House' account, we would never see it, because JP Morgan's Eligible inventory would remain unchanged. Imagine how ugly this could be if JP Morgan had been leasing metal from its Customers within the Eligible inventory, and legal ownership of any given bar was timesliced by duration mismatches ....

This didn't become so complicated by accident: see e.g. s. 706 http://www.cmegroup.com/rulebook/NYMEX/1/7.pdf#page=49

mac's picture

Norcini rattles the cage

Yup, Mr Dan, the touted big time commodities trader, called "Trader Dan" as if he is above most others, well, he isn' eally appreciated by many.

Today Norcini said: " ...only Western Demand can drive Gold...." So he is not showing any brilliance here.

Dan reads charts like many others. This is "elf" work, but it may enable a big picture view, but if the Fed is painting the pic, well then you interpret lies....Dan works with zombie-children that rely on painted pics?

Is he a paid agent of the Fed?

Jim Sinclair says Norcini is his "friend".

You know, Santa as he is sweetly called by some, well, this Santa is running all over the country to tell people to get out of the system, the american system, it's banks and to move your wealth away. Mr Gold is now gonna be a protector of our hard earned money, he imagines. That's likely a result of guilt, Mr Gold's guilt, for smashing so many people's financial world, via his sociopathic personae.

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