A National Holiday

Two score and seven years ago this day, during the tumultuous Keynesian Epoch and the disastrous reign of King LBJ, Mama Ferg brought forth a Turd...

...It's just too bad that today isn't a bank holiday (yet).

Anyway, there is just so much stuff going on, behind the scenes and right in front of us, that it is really easy to miss/overlook a few things. Additionally, it makes it very challenging to know where to start.

For example, years ago a story like this one would have been BIG news and it would have elicited all sorts of hand-wringing, discussion and speculation. http://www.zerohedge.com/news/2013-01-28/currency-wars-heating-taiwan-korea-and-china-fire-warning-shots Now it's just another headline in a virtually endless string of fiat currency devaluations.

And then there's this. Glossed over last week and completely ignored by the MSM, this story speaks volumes about the current state of affairs. http://www.sovereignman.com/expat/scam-complete-the-us-government-takes-a-page-from-diocletians-book-10559/

But again today, I want to focus upon that which I know is happening. Of course, I can't prove it and certainly others will suggest that they know the exact opposite. One day, in the (not too) distant future, the Chinese will introduce a gold-backed renminbi for international trade settlement and an alternative to the U.S. dollar as a reserve currency. (By the way, perhaps you'll know this day is drawing near when your spellcheck does not think "renminbi" is a misspelled word.)

Anyway, we know that China officially imported about 800mts in 2012, on top of 400 or so in 2011. Their last public pronouncements on their reserves came in 2009, so, given all of official imports since then, the unofficial and off-the books imports AND the amount they've mined and not exported, it's really anyone's guess as to how much gold they are actually sitting upon. 3000 mts? 4000?? 6000??? And the total continues to grow, as do the imports of so many other nations. Take this headline as just another example. http://www.bloomberg.com/news/2013-01-28/russia-kazakhstan-expand-gold-reserves-as-central-banks-buy.html And, of course, the German Gold Hijinx is just the start of a global move to repatriate reserves. Is Switzerland next? http://goldnews.bullionvault.com/swiss-gold-bullion-repatriation-012420136

And how does this story fit into the picture? http://in.news.yahoo.com/china-introduce-gold-exchange-traded-funds-052201538.html

So, finally, for today let's simply focus upon the strange occurrences within SLV and GLD since the first of the year. Two weeks ago, the SLV added about 18.4MM ounces in one day, more than it had added in all of 2012. http://www.zerohedge.com/news/2013-01-17/slv-etf-adds-record-572-tons-silver-one-day-more-all-2012. Then, back on Friday alone, over 7 million ounces were withdrawn. What in the heck is going on? There are many theories but by far the best I've seen comes from Uncle Ted. Since 18MM ounces would be a holding of just under 5% of the fund...and 5% is the level at which a concentrated position must be reported...Ted thinks that a large investor (a Buyer of Size) has taken this position for the expressed purpose of taking delivery. Fast. Again, this makes the most sense considering all of the anecdotal evidence we've accumulated of delivery delays in similar-sized orders through the LBMA. And just who would be wanting 20MM ounces of silver in a hurry? Go back up a paragraph and read the "china etf" story again.

Even if official Chinese sources are not the buyers of this silver, someone is...and that someone seems intent upon building up a sizeable inventory. Is this the "final straw"? Will we look back with hindsight later this year and conclude that this was the sign that the silver market was finally breaking, after years of price suppression finally led to shortages and defaults? Maybe. Regardless, I like Ted's idea a lot and it certainly seems a plausible explanation for the strange goings-on. (You can read Ted's entire analysis by becoming a subscriber: http://www.butlerresearch.com)

Contrast this action within the SLV with the GLD. While SLV has added (and withdrawn) all of this silver this year, the total inventory at the GLD has been declining. By over 20 metric tonnes! On 1/2/13, the total GLD inventory stood at 1349.92 mts. As of Friday, it had fallen to 1329.90. Hmmmm. So while prices have been rising, falling and rangebound for the first four weeks of the year, both ETFs have seen massive withdrawals of metal by someone looking for immediate access and delivery. What does this tell you?

And here you are, spending your weekend obsessing about the writings of some guy who, fresh off his release from the pokey, seems determined to remake himself into some sort of contrarian. Whatever. He can draw all sorts of lines on his silly charts but none of them will change the insatiable demand of the Chinese for physical precious metal as they prepare the next global financial paradigm.

Instead, let's focus on these lines and these silly charts.

Finally, don't forget that today is the day that the U.S. Mint had promised to resume sales of ASEs. Hmmm, I wonder how long it will take until they are forced to suspend sales again? Later today? Tomorrow? Friday? We'll see. Come to think of it, since ASE demand only seems to increase as price rises, perhaps now we know why silver has been beaten back over $1.50 since Wednesday. Did Little Timmy send out orders to Jamie, instructing him to have The Monkeys bash price in order to curtail ASE demand this week? Makes about as much sense as anything else emanating from the silver pit lately.

With that, have a great day and try to keep your wits about you. The Feb13 gold options finally expire today. (And with it my $1800 call that I bought back in November. Ouch.) And though price will likely remain pressured through FND on Wednesday, things should rebound in short order later this week. Maybe the BLSBS will be a catalyst for buying...for once!

TF

203 Comments

Wizard's picture

RE: Questions about nickels...

As a general rule No Nickels have left the house since 2008. And this rule will remain in place

for the foreseeable future. Hopefully that will be enough

Dyna mo hum's picture

Babagonoush2307 Listen

Keep the shiny pm. This is a panic suckers market. Plant your feet on the sidelines and watch. I am already hearing ar 15 stripped lowers and getting cheaper. Market forces always prevail. Our overseers in congress know the best path to involuntary retirement is to vote with the gun grabbers. I saw this same shit in 1994. Face it Bro nearly all the congressman and senators in DC are a bunch of damned cowards and to me they are not worth a pinch of bat shit!( I would not piss on the sorry bastards if they were on fire) but they do 2 things real well. They kick the can down the road and they lie like hell to get re elected. (rinse and repeat) Also don't forget that lying ass  communist harry reid. Harry boy the self serving fairy of the senate has been real quiet through all the 2nd amendment babble. He knows those folks in Nevada will give him the boot before he and his cronnies can wave their communist flag over DC. I regret my modest use of profanity and if I have offended any of the faithful in time rest assured I will repent but for now this war.  One of these days I am gonna jump up and tell all you good folks how I really feel.        

gearhead_24's picture

Happy 47th B-Day Turd

Not much more to say but thanks.

GH

That_1_Guy's picture

Ballyale Smelter idea

Bally,

I have been in conversation with several North American miners that cant smelter other than in China. They are interested and we have delivered the message to Sprott. Its an undertaking to say the least. Worth the trouble though....theres plenty of ore that needs a home.

I dont really play in paper. What paper I do play is significantly reduced. I got a position in these guys. Im sorta on the fence about holding "any" paper, so im considering pulling it out...but these guys look strong. I dont know....held by sprott...producing...expanding? Plus, maybe looking at minting coins....? They got my interest.

In other news...got another small group today that I liberated from the public at large. 8 x 1962 proof washington quarters ms-70 quality. 30$ :) Those are never coming back to the market.

Swift Boat Vet's picture

Birthday Markers to Remember

3 years after "oiweghopiwgn" happened or 1 year before "iohgne" happened so-and-so was born.

Balderdash!

Try this for easy -----

One year after that gold grabbing, supreme court packing, socialist piece of garbage FDR finally began pushing up daisies,

SWIFTY WAS BORN  !!!!!

And now back to our regularly scheduled programming.

double 007's picture

happy birthday

happy birthday; dude

double 007's picture

happy birthday

happy birthday; dude

silver66's picture

Shanghi Cooperation Organization ( SCO)

This had been discussed a few weeks ago, the winds of change, they are a blowin

http://en.haberler.com/erdogan-s-shanghai-organization-remarks-lead-to-252885/

Silver66

silver66's picture

Shanghi Cooperation Organization ( SCO)

This had been discussed a few weeks ago, the winds of change, they are a blowin

http://en.haberler.com/erdogan-s-shanghai-organization-remarks-lead-to-252885/

Silver66

Ilya Repin's picture

Gold 1800 in February

Gold 1800 in February

ScottJ's picture

Government Ties is why the Government Lies

Government Ties is why the Government Lies

(Lyrics are unmatched in facts.. yet vulgar)

Puck T. Smith's picture

@tyberious: "Martin is the

@tyberious: "Martin is the lone man in the wilderness not calling for hyperinflation, why is that? Sorry forgot about Harvey Dent :("

I haven't been following him much lately, but Mish Shedlock was always a bit of a deflationist. Or so it seemed to me.

 
Ferd Torgerson's picture

Hippo Birdy, Turd

Sorry I was a little late to the party.

Puck T. Smith's picture

I can't believe no one posted this.

Or did I miss it?

¤'s picture

A little late to the party

But never too late to bring a B-Day cake with a friend inside.

Happy Birthday TF 

main.jpg

brokerk22's picture

Big Happy Birthday

Happy Birthday Turd!  May God Bless You!

¤'s picture

Caixin Online: CSRC Mulls Launch of Gold Exchange-Traded Funds

CSRC Mulls Launch of Gold Exchange-Traded Funds

Booming market for the precious metal created need to diversify investment options, official at regulator says
 

(Beijing) – The securities regulator is mulling launching gold exchange-traded funds (ETFs) as a way to create choices for investors.

The China Securities Regulatory Commission (CSRC) issued provisional guidelines for gold ETFs on January 25.

The booming gold market required diversified investment instruments, a CSRC official said. Preparations for launching the gold ETFs have been made over the past few years, and the funds would be available soon.

Gold ETFs would be allowed to invest in the spot contract traded on the Shanghai Gold Exchange and up to 10 percent of other products, the official said.

Gold ETFs are widely traded on the world's major financial markets. By July 2012, more than 240 gold ETFs were traded and they had total assets of more than US$ 140 billion, the CSRC said.

China is now the world's biggest buyer and consumer of gold. In 2011, it produced 361 tons of the precious metal and it consumed 761 tons, the China Gold Association said. The rising demand reflects Chinese investors' growing appetite for using gold to hedge against risk amid sluggish stock market performance and inflation concerns.

Currently, Chinese investors mainly invest in gold by buying bars and notes. The country also has four gold-related Qualified Domestic Institutional Investor (QDII) funds, which allow domestic investors to buy overseas gold assets.

http://english.caixin.com/2013-01-28/100486986.html

Robespierre's picture

Thanks For Everything.....

Happy Birthday

Karankawa's picture

HAPPY BIRTHDAY TURD!!!!!!!

Mucho happiness, and profitability!

¤'s picture

Bull in the China Shop: Yuan

China Bulls Gain on Record Structured Notes for Yuan

China Bulls Gain on Record Structured Notes for Yuan

Jerome Favre/Bloomberg

China has pledged to support offshore yuan hubs as it seeks a greater role for the currency in global finance at a time when monetary easing in the U.S., Europe and Japan is boosting the supply of dollars, euros and yen.

Investors turning bullish on Chinaare buying record amounts of structured notes tied to the yuan as the country recovers from a two-year economic slowdown.

Individual investors in the U.S. bought $79.9 million of notes since December that rise and fall in value based on swings in the offshore Chinese renminbi, according to data compiled by Bloomberg. The nine notes created by HSBC Holdings Plc (HSBA) use the highest leverage for such securities since Bloomberg began compiling the data in January 2010 to generate yields as much as five times more than the yuan’s appreciation.

The Communist nation’s economic growth accelerated last quarter for the first time since 2010, fueling speculation that the government would allow the currency to rise at a faster pace. The median forecast of analysts surveyed by Bloomberg was for the yuan to gain 2 percent by the end of 2013, following a 1 percent rise last year, the slowest since 2009.

“In the last six months, we have seen increased demand from high-net-worth investors looking for ways to access the growing Chinese market,” Todd Fruhbeis, managing director and head of structured-product sales for the Americas at HSBC in New York, wrote in an e-mail. “We expect this trend will continue given China’s continued growth prospects.”

Yuan Hubs

The offshore exchange rate, known by the symbol CNH, tracks the official rate in the domestic market, or CNY. The official rate is allowed to fluctuate a maximum 1 percent on either side of a reference rate set by the Bank of China.

China has pledged to support offshore yuan hubs as it seeks a greater role for the currency in global finance at a time when monetary easing in the U.S., Europe and Japan is boosting the supply of dollars, euros and yen.

The Bank of England is ready “in principle” to agree a swap line with China’s central bank that would help London become a center for offshore yuan trading, its chief cashier, Chris Salmon, said in a speech in London last week. Taiwan banks will be able to take deposits of and lend in the Chinese currency by the Lunar New Year.

Offshore trading for the Chinese currency started in Hong Kong in 2010, where average volume of yuan deals has doubled in the past year to at least $6 billion a day, according to Standard Chartered Plc. Transactions in offshore options in yuan swelled to between $300 million and $500 million per day, J.P. Morgan Private Bank said.

Dim Sum

The offshore rate traded at 6.2295 per dollar in Hong Kong yesterday after touching 6.1735 Jan. 11, the strongest since its 2010 debut. The domestic rate rose to a 19-year high of 6.2124 three days later and traded at 6.2226 yesterday.

Sales of yuan-denominated, or Dim Sum, bonds in Hong Kong reached a record 175.8 billion yuan ($28.2 billion) in 2012, from 152 billion yuan in the previous year, Bloomberg data show.

The securities have gained for a record seven consecutive weeks since China’s central bank announced plans to accelerate the opening up of capital markets to foreigners and allow cross-border yuan loans, a Deutsche Bank AG index show.

“China has indicated that their priority now is to increase liquidity in the currency,”..........(cont.)

http://www.bloomberg.com/news/2013-01-28/china-bulls-gain-on-record-structured-notes-for-yuan-currencies.html

old tradesman's picture

@dph

with all your research on china, what is your conclusion?  Theory?  yes

kingboo's picture

Happy Birthday Turd.....seems like just yesterday

you were just a little Turd.............

images?q=tbn:ANd9GcRX2-Ts_DKk5anD9RotazR

kingboo's picture

Now look at you......all grown up

and very bullish..........

2863cowboy_greenbroke_blackcat_resized.j

Sterling's picture

Happy Birthday!!

foggyroad's picture

Happy birrdy two yutes

many happy returns all the year trew!

¤'s picture

old tradesman

I'll keep it short as possible because history is hard to predict.

I remember posting on the old blogspot site how I felt China would merely  duplicate the western method of business/banking in regards to opening up their markets and issuing debt instruments like bonds and equities of all types with the help of the Western banks JP Morgan/Goldman.

In the end the banks and big money always moves where the markets are about to get hot before the hot flow really starts.  The banks have no patriotic duty and they'll help out and create markets elsewhere if they see a trend. That trend appears to be the future of the yuan and helping China set-up a bond and market system just like the west's except more tailored for that culture or trading preferences.

If you consider what I've roughly outlined and think about some of the Lndon warehouses and markets moving to China/Hong Kong  and setting up shop there it makes alot of sense. It even makes more sense if that flow of bullion from London or the US is headed East.

Just imagine the leverage the Chinese (and U.S?) could employ over there to skin the Chinese or Asian markets (where there are many, many billionaires and millionaires) who'll invest for the very first time in financial instruments that many of us know about and are wary about that they know nothing about that they should probably be suspicious of like the bullion markets and the gold/silver ETF's  that are  leveraged to the max. 

I think the flow of money to China at some point will be staggering because they operate from a surplus of reserves and there bond/debt market is essentially $0 compared to our massive debt and our bond issuance.  One thing I see potentially benefiting and accelerating the yuan's ascent (besides a gold implied backing) is if the Chinese offer higher rates of return on their bonds than the West can afford to under the current ZNIRP model the CB's are utilizing now.

China could essentially undercut many of the other nations by sweetening the rate pot knowing that the other CB's are hard pressed to match their rates. With the West's banking help (and maybe their transferred gold) it's not hard to see where the paper gold/silver trade might explode and cause a ripple across the ocean's to the other markets to the upside.

Turd Ferguson's picture

GLD loses another 1.81 mts

MODERATOR

Now down nearly 22 metric tonnes YTD.

Pegasus's picture

Happy BirthDay Turd!

May many future ones be healthy, happy & prosperous!

Havenstein's picture

Listening now... new Ron Paul

Ron Paul: I'm Waiting for the Fed to Self-Destruct

http://www.youtube.com/watch?feature=player_embedded&v=PH-YmO73sgE

tyberious's picture

Murphy- The Cartel is

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