So here we are. 2014 is half-over and where do we stand? For me, the puzzle comes together by looking at a few, simple clues.

Let's start where we began...with Ken Hoffman of Bloomberg Industries. (For a bio of Ken, see his LinkedIn profile here: https://www.linkedin.com/in/kenhoffman9) Ole Ken unwittingly let the cat out of the bag last December when he confirmed for us what I had been telling you for two years. Namely, that the gold was gone...for good. If you need a refresher, see here:


You might also see this: http://www.ibtimes.com/golds-journey-west-east-switzerland-1393831

And this: http://www.ingoldwetrust.ch/alex-stanczyk-physical-supply-never-been-tig...

Anyway, back to our pal, Ken. As mentioned above, he appeared on Bloomberg TV last December. In the interview, he casually mentions that "the gold is gone...26MM ounces of it...it's just not there anymore". Please take a moment and watch the clip below. The "action" is in the first 45 seconds:

Let's dig a bit deeper into Ken's statement and quote him verbatim. He says, point-blank:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

Therefore, it can be logically deduced that, since the "(London) gold is gone", the key to keeping the fractional reserve bullion banking system together is controlling Western investment demand. To paraphrase Ken, should investment demand return again, from where will the gold come?

And what would cause a resurgence of Western demand? A rising price, of course. That's how we think in "the West". If it's going up in price we want it. If it's going down, get rid of it! Damn the fundamentals or long-term rationale! If it's going up in price, get me more of it. If not, get me something else.

So, how do you control price and sentiment? By painting the chart, of course! As we've been documenting here all year, the most important trendline is the one that connects the initial bounceback highs of May 2013 with the next bounceback high of August 2013. Extend that line further and what do you get? See below:

Notice the persistent, determined effort to maintain the downtrend. I can count at least 12 weekly candlesticks that touch, or even breach, that main trendline. And again, why is keeping price below that line so important? The downtrend must be enforced in order to keep price down and sentiment even lower. Why? Because a rising price and rising sentiment will spur renewed Western investment demand and, as Ken told us, the gold to meet a resurgent Western investment demand "isn't there anymore".

Allegedly, one way to measure investment demand is to watch the flows of "gold" into and out of the GLD. You'll recall that 2013 saw extraordinary and record amounts of "gold" purged from this ETF. I wrote about it often. Here are some samples:




And here's where it gets interesting. In spite of the enforced downtrend on the chart (that just finally broke again last week), the price of gold is UP over 10% through the first six months of 2014, making it the best-performing asset for the first half of the year: http://www.zerohedge.com/news/2014-06-30/shorts-squeezed-most-11-months-...

You might expect that the GLD "inventory" would recover at a similar rate. You would be wrong. Instead, the GLD, which began 2014 with a stated "inventory" of 798.22 metric tonnes (mts), ended June with an "inventory" of 790.70 mts. This puts it DOWN 7.52 mts YTD or a little less than 1%. So, while price and sentiment are returning, the "gold" is still not flowing back into the GLD. Why? What did Ken Hoffman tell us? It just isn't there anymore. There is no supply to replenish the GLD. It's gone.

Knowing this we must expect two things for the second half of 2014:

1) They'll be coming. As noted above, price has once again surged through the main trendline and keeping it in check has forced The Bullion Bank Cartel to add 162 mts of naked shorts in just the past three weeks. Every effort has been made and will continue to be made to drive price back down and below the main trendline. However, here's a closer look at the challenging task that lays ahead of them:

As you can see, getting price back below the main trendline requires at least a $50 drop AND a move back through what has been stout support near $1280. This is not going to be easy.

2) Even if The Cartel is successful in dropping price again, the main line continues to recede, making the task of keeping price below the line increasingly more difficult with each passing day. Therefore, they are fighting a losing battle. Eventually, soon or right now, price has/will break free and clear of the enforced downtrend of the past 14 months. Once this change of trend is eventually recognized by the money managers of The West, investment interest and demand will undoubtedly increase. Rather quickly, too. And, of course, renewed investment interest and demand will only serve to increase physical demand, as well.

Which brings us back to Ken Hoffman...

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

Back in January, I gave you 2014 year-end price targets of $1500 in gold and $26 in silver, both representing a 30% move in price. Given all the events of the first half, there's no reason to adjust those targets now. Price will continue to rally, albeit with bumps along the way, for the balance of this year. The stage will then be set for significant surges in price in 2015.

It has been a rocky and difficult three years for all of us but those days are behind us. Ahead lays a resumption of the precious metal bull market. It will be interesting to see the lengths to which The Bullion Bank Cartel will go to uncover physical metal to meet the concurrent resumption of Western investment demand. Prepare accordingly.



Turd Ferguson's picture

One more thing re GLD


Don't be fooled by the "inventory" additions of 6/30 and 7/1. This is very likely a simple, end-of-quarter short-covering and metal payback. Why? Because the "deposits" are identical.

On Monday 6/30, the GLD added 5.68 mts.

On Tuesday 7/1, the GLD added anothe 5.69 mts.

Broken down to the ounce, the deposits are nearly identical

6/30: 182,882.27 troy ounces of "gold"

7/1: 182, 881.01 troy ounces of "gold"

So, the difference in the two days additions is just 1.26 ounces. This is not random or happenstance. This is a short-seller "paying back" the gold it previously withdrew and doing so in two tranches.

This is interesting on two levels:

  1. Why now? Is the short seller concerned (afraid) of higher prices to come?
  2. How long will it take for this "gold" to be re-withdrawn by another party?

There have been several other additions earlier this year that were almost immediately withdrawn.

Jan 17: +7.49 mts to 797.05

Jan 23: Back to 790.46

2/13: +7.50 mts 806.35

2/19: Back to 795.61

3/13-14: +5.39 mts to 816.59

3/17: Back to 812.78

3/20 and 3/24: a total of 8.69 mts to 821.47

By 3/31: Back to 813.08

Smaller additions in April and May were also wiped out in the days following.

Let's see what happens with these latest additions in the days ahead.

squib's picture

great info

Turd, thank you for your hard work and intelligent analysis!!!

vonburpenstein's picture

accidental first!

After turd anyway...Check that 2nd thx to olé squibly...breakfast time and multiple slices of bacon on the way...and looks like the best day of the week to add to the booty

Blankone's picture


Yes Von, Im going to celebrate the holiday early today by adding to my shiny collection at these prices.

Pattaya7's picture

Tonight was great

you were at your best tonight..  Very logical. 

s1lverbullet's picture

Take down in progress, classic.

Walk gold down 15 dollars after the Comex closes into today, then when the BLSBS number is announced we spike back to around 1325-1330. All to keep gold under the critical 1331. Seen it a thighs and times. Criminal bastards.

Keg's picture

I'm just did something that I will regret

Turned on CNBS for the one time a month that I watch.  About 15 minutes will be too much.  I will likely regret doing it.

AlienEyes's picture

even as we read...

Gold just took a dive. I wonder if the monkeys read turd?

amarula4's picture

I know this is a meme, but what about the flock of black swans?

Media interviewees and interviewers do like their phrase de jour - which tend to inflate and mutate along the way. 'Kicking the can down the road' and 'black swan event' are two of my least favourite, they attained the status of cliché too slowly in the first case and and fairly quickly in the second for my liking. But of course the artful interviewee could vary the theme with ease, and it is this that concerns me now - someone (I forget who), coined the elegant variant, 'flock of black swans circling overhead' - and it is this that worries me. No-one is calculating the increased likelihood of just one black swan of many  landing on the gold trend line and sending all the calculations awry. With all the wars and rumours of wars, oil price surges, and pseudo-random unpredicatables like the outcry against the Fed in Germany, does no-one else think that 2014 will be the $2000 year for gold? Not that I am licking my lips at this - but I expect the price of silver to benefit even more...

judejin's picture

silver inventory at shanghai futures exchange

drops to 200 tons today!

china needs to start stockpiling silver.

it might already be too late!

Hammer's picture

NFP better than expected.

NFP better than expected. Market reacts like the well trained crowd they are. That's all.

jwmkratz's picture

Another subjective jobs report

83,000 jobs confirmed and 205,000 jobs added via birth death calcs. I am a believer when the two reverse job creation roles.

procog's picture

10 yr took another Swan Dive

Just like 8:00 am yesturday.

CPE's picture

The dip isn't

buzlightening's picture

Nothin but gold & silver short covering into

the 3 day freedom fest.  Just as James Turk predicted.  He even says the short squeeze in the metals is commencing.  KWN read if you like.  I ternd to think he's right on this call as the metals have been so paper price pounded for so long; the physical so eaten up, up, & up for so long; it's just a short squeeze away from reality of metals prices asserting themselves. 

As for the illusion of lies which keeps the fake markets of paper assets inflating; this too will pass.

Thanks for the public commentary today turd.

Mickey's picture

i think birth death model

was 121k--the 205 was last month

household survey added 407k jobs

not in labor force up 121k

unemployed  in household survey down by 325k

the data is worthless--too many huge swings

thats what happens when the stuff is fudged.

why can't they just take data from payroll taxes submitted via computer which shows all soc sec numbers and withholdings? could probably get hours worked and full or part time classification including business sector.

The stuffs already there.

probably the productivity increase would cut jobs in govt which is the last thing they want to do before and election and we are always just before an election.

Fred Hayek's picture

The mainstream media puzzle pieces don't fit

I was curious what yarn would be spun today on the jobs report.  Huge beat of expectations!  288,000 jobs "created"!  Unemployment rate down to 6.1%!


So, here's the koolaid the citizenry is supposed to swill down all at the same time:

Retail sales are getting killed in the U.S. and retail buying is something like 70% of the U.S. economy but we're suddenly creating more jobs. 

And workforce participation is the lowest in 40 years but unemployment is down to a seemingly normal-ish 6.1%.

And now mainstream media experts will probably take more seriously our non federal Federal Reserve's claims that it will raise interest rates in the near future even though the Fed has several trillion dollars of scat, guano, merde, dung treasury bonds on its books that will all have their value destroyed if future issuance of bonds are at higher interest rates

litterbox's picture

Garys opinion



jwmkratz's picture

My bad Mickey

Your info is correct

procog's picture

Want 17,000 for the B-B-Q Party!

What a cue for the crew to chew re govt koo,  too koo koo.

Will We make it?  It will lift Jamie's spirits, if he has any.

ReachWest's picture

Headlines from BI

On a wonderful BLS Day, like today - I like to head over to Business Insider for some humor. Here are the headlines that BI has covering today's horrid job's report.

  • Here's How Fox News Covered Today's Awesome Jobs Report (Screen shot from Fox showing Real Unemployment rate at 12.1%)

  • The US Just Broke The Record For The Longest Stretch Of Private Sector Job Growth

  • The US Economy Is Enjoying A Major Growth Spurt

​BI is an absolute rag for anything other than fluff info that cheers on the normalcy bias. (and the current administration).  Anyway - always good for a chuckle.

abguy4's picture

flock of black swans?

There is NO such thing as a Black Swan Event. It's just a popular myth, and I rather wish we could all drop that from our community vocabulary. It's part of the brainwash propaganda meme. . ALL 'events' are staged. Well calculated, planned and jointly delivered with the consensus of all pertinent parties - except you and me.

One thing I do know for certain. Psychopaths hate to lose. They hate to lose so much, that they will turn over the game board before they will allow the loss to occur. So......be aware, when it becomes apparent that they will lose, (as in the case for example, of no PMs to deliver), they will turn over the Game board and stand there in defiance. . I grew-up with a certified card-carrying psychopath. This is what we have to expect. When the Crimex default "occurs" it will have been apparent to them well before we are aware, and the next game will have already started. Bet on it. As Beelzebub and Lucifer ( Rove an Cheney), recently told us; ((I paraphrase)), "We make History, you useless eaters just watch and wonder."

-SilverIsMoney-'s picture

All that manipulation...

And the PMs are starting to rise back up... 21.20 getting pretty close.

Pattaya7's picture

I agree with you about a lot of that but......

Random events do occur.  That's just math.

Black Swans have to exist.  Math dictates this.......

AIJ's picture

Dollar falling back / Gold and Silver recovering

As the all wise Santa once said, " Things work till they don't "

cashonly's picture

posted at ZH

Had to share this from a commentor at ZH:

Our fiat,

Which art in dollars,

hollow be thy worth.

Thy stocks go up,

thy vix be down

on CBOE as it is on Wall Street.

Give plebes this day their daily crumb of bread

and deliver us thy dividends,

as we distribute to the one percent.

And lead us not into recession,

but deliver us more POMO,

for the kingdom and the power.

and the glory resides at the Fed.


rl999's picture


Should have known that oil would drop (despite the immense geopolitical pressure) heading into one of the busiest travel days of the year. That was a tradable move that I should have seen coming. Sizeable too. I am also shocked, shocked I tell you, that the markets are at all time highs for this weekend. Now all the talk around the grill can be about unicorns defecating skittles. No reality of the greater situation.

On the other hand I was all set to buy some perth mint crocodiles this morning as the bs jobs number was released - boy that dip was brief! I missed it but am more than happy to buy considering the strength that silver is showing.

ETA: Provident has 2014 maples at $1.7-1.8 over spot. Crocs are $2.6

abguy4's picture


Argumentive this morning are we?

Don't need to lecture an engineer with grad work in  Statistics about probabilities.

Whether you hit the nail in the road on the way to work, or your neighbor does, that's a random event.

911, Pearl Harbor, '87 Crash, 2010 Flash Crash (Beta Test), Flt 370, 2007 Wall St ( 'we never saw it coming - honest~!'), civil war in Ukraine, those are totally staged events not to be confused with random black swan - damn you made me say it - events.

cashonly's picture


Unicorn skittles..... oh I know that feeling so well

All that come here feel the frustration of living in this time of illusion, myself especially.  I find at times I want the collapse now!!!  However when I gain control of my emotions I realize that we should enjoy these peaceful times because we know that this will eventually come to an end and when it does it won't be pretty as life will change for all of us.  Even if we stacked and are OK we will still feel sorrow for those of our loved ones who did not. 

I had a co-worker come up to me the other day as say "Man, that market is amazing!!, I am so glad I maxed out my contribution years ago!!.  I'm now sitting on 700k!!! ".   I congratulate him on a smart investment.   Do I really want tell him he is playing in a big ponzi scheme perpetrated by an even bigger ponzi scheme: the U.S. Dollar?  Then body slam him with the fact that Social Security is another ponzi scheme?.........lol.   I am sure if I tell him that he will immediately start stacking G/S because my advice is better than that of CNBC.

Eat some skittles, they aren't really that bad and your friends and co-workers will still like you and not think your ready for the loony bin.

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