Gone...For Good?

346
Tue, Jun 19, 2012 - 11:44am

For weeks, I and others have been telling you about massive sovereign and central bank demand for physical metal at the current paper price. From this demand alone, we can infer quite a few things. Today, I can take it one step further.

First, some background. Members of "Turd's Army" become subscribers to Andrew Maguire's "DayTrades" and "MetalsTrades" service. This service allows traders to follow Andy's actions, thereby learning how and when Andy affects trades in the gold and silver markets. In it's own right, the service is very effective at producing consistent, monthly returns for his clients and the "Army". However, subscribers also have access to Andy's weekly "Market Commentary", which he posts every weekend. This commentary is always informative and provides subscribers with a sort "insider's perspective" which simply cannot be found anywhere else on the internet. No one has more experience, more wisdom and more contacts than Andy and, without question, subscribers benefit from the access he provides.

Similarly, I like to think that everyone here in Turdville benefits from the access that I am able to provide. I receive a lot of on-the-record and off-the-record information and I try to pass along as much of it as I can. Some of it is just speculation and some of it is the sort of "inside baseball" stuff that I attempt to further refine into nuggets that can help you plan for the future.

All of that said, what we now know is this. Beginning some time ago, but continuing today at an accelerating pace, physical metal is being purchased in London and then delivered out of the system. Under "normal" circumstances, this is not necessarily unusual. The bullion banks simply expect this metal to return to them at some point, where it can be re-leased, re-hypothecated and re-delivered in the future. This is how it has worked for decades. However, this time it's different.

What I have learned and have since been able to confirm via a second source is this: London Good Delivery bars are being delivered to Eastern buyers. Instead of being vaulted inside the LBMA system, these bars are being sent directly to refiners. The bars are then being melted and recast in 1 kilogram sizes. The new bars are then being stamped with official, government insignia and sent on to vaults outside of the LBMA system and points east, never to return again.

​What does this mean and why is this important? Quite clearly this information, if accurate, has several significant ramifications:

  • The Chinese and others are preparing for a new system. Whether it's simply a new gold pricing and delivery system to replace the LBMA/Comex or whether it's a new global trade settlement system that is guaranteed with gold is impossible to say, at this point.
  • The physical gold supply of the LBMA and secondarily the Comex, much of which has been acquired/supplied through leasing, is being rapidly depleted and will not be coming back.
  • The bullion banks, which have profited for years from leasing, trading, vaulting and the like, are about to feel the rather dramatic effects of this supply depletion.

As this pertains to the banks, last week I wrote this ( https://www.tfmetalsreport.com/blog/3893/still-pounding-away) and I think the auto dealer analogy is still a good one here. IF China and others are buying gold in London and IF the bullion banks are delivering to them leased and rehypothecated gold and IF the Chinese are taking this gold and melting it and IF they are then recasting it into non-LBMA, 1-kg bars, then the bullion banks have a serious problem on their hands. The delivered gold isn't coming back into "the system". It is no longer in "London Good Delivery" form. It's gone. For good.

My advice to you today is to ponder this information and its implications. Ask yourself these questions:

  • If you vault gold within the current system, do you really own it?
  • If the banks begin to scramble for physical metal, will paper price trade higher or lower?
  • If the Chinese and others are planning for a new, international trade settlement system to supplant the U.S. dollar as reserve currency, what does that mean for the future value of the dollar? What would that mean for the future value of all fiat currency? What would that mean for the future value of gold and silver?

Perhaps now would be a good time to go back and review this post, too. (https://www.tfmetalsreport.com/blog/3885/last-desperate-acts) At 34,000+ views, most of you have already read it. Maybe it's time to read it again.

Think. Look around. Trust your instincts. Prepare accordingly.

TF

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turd [at] tfmetalsreport [dot] com ()

  346 Comments

Nuclear RocketmanLevon
Jun 19, 2012 - 1:39pm

June 21, 2012 significance

Levon, one possibility might be the start date for the new Chinese silver exchange that Andrew McGuire has been involved with. Turd mentioned one time a June timeframe. Since the PAGE system was killed, I agree with the philosophy of not discussing the details of this new system until it is (hopefully) up and running.

realitybiter
Jun 19, 2012 - 1:40pm

Sinclair / Armstrong

I like reading Sinclair. Has he been wrong? Sure, who hasn't? Predicting the monthly moves in this market is like predicting which way (and how hard) the Bronc is going to buck in the next instance.

At GATA Sinclair said you could not trade this market. The volatility would be too extreme. He also said you needed to get off and stay off margin as the volatility would force you out. Is he wrong? In general, very much no. Pretty good advice. He predicted this entire generational move. Who else did? If Warren Buffett had sold a bunch of stock and bought huge gold in 2000 his minions would have elevated him to God Status, beyond "Oracle". BRK.a:$gold on stock charts.

Armstrong: No manipulation? He has admitted naked short selling is rampant so I don't no why this would not be possible with any vehicle, PM futures, too. FB was OBVIOUS manipulation. How else do you explain massive floor at 38 that first day,last 30 mins? Next day collapse. Larry Summers wrote Gibsons Paradox, citing the need to suppress gold price in order to keep low interest rates. If you step WAY back and look at a 30 year chart of the DJIA, it is obvious when the chief practioner of Gibsons Paradox came into play. Equities took off in 95, the year HE stepped into Treas power. It is an obvious "what the hell happened here?" slope increase. Keep gold down, equities and bonds rise. This shits easy!

Except the theory is as flawed as John Laws'.

Look at copper. All the price increases we are seeing now are just Summers/Rubin/Greenspan "payback is a bitch". How else do you explain copper up 500% in the last decade even AFTER the slowdown? Most new houses don't even have copper in them! Asia? It is simple monetary inflation....payback for a silly paper which was nonsense which somebody who can't even control his own intake of doughnuts wrote. And we put him in charge of controlling monetary policy.

As far as short term goes, might I suggest you look at something beyond the interest of the Gibson Paradoxers - FCX and SCCO for example. They are saying quite loudly, "to the moon alice. to the MF moon.

Speaking of MF. I got another check yesterday, which today I am converting to some stacking. Love to short JPM again, but I think I will wait for just a little higher price....

I am now at 80% paid on the Jamie Dimon robbery of MF Global clients. Like I said, here, 8 months ago, they would drag it out, pay us all back, and never convict anyone. Oh Jonny!!! Just a little favor I'd like to request. Please help me stay out of institutional captivity by avoiding all cross walks West of the Mississippi. Thanks.....

Punk-Assets
Jun 19, 2012 - 1:43pm

There may be 'plenty' of gold

There may be 'plenty' of gold out there but the peeps wont get much of it. Guess who will get it? The 2% that own most of everything else. Gold won't be any different. In fact, since banks want it, expect far less for everyone else. Im not dissing silver, far from it. But so far it isnt tonnes of silver that banks are hoarding.

indosil
Jun 19, 2012 - 1:45pm
tpbeta
Jun 19, 2012 - 1:47pm

My bet for tomorrow

Video unavailable
SRSrocco
Jun 19, 2012 - 1:48pm

ONE LAST TIDBIT...

LETS COMPARE GOLD & SILVER RETAIL BUYING

Eric Sprott is always saying that Silver will head higher because people are buying silver a lot more than gold in ratio. If we look at the ratios below we can see that he may be on to something:

US GOLD vs SILVER EAGLE SALES

2007 = 50 to 1

2008 = 23 to 1

2009 = 20 to 1

2010 = 28 to 1

2011 = 40 to 1

2012 = 51 to 1 (first 5 months)

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

Do you see what is happening here? In 2007 in the start of the trouble not many people were buying gold eagles. Gold Eagles did not peak until 2009 when they hit 1.4 million ounces of sales. Ever since then, gold eagle sales have been dropping off because the RETAIL INVESTOR has been lulled to sleep by MSM.

The public has been brainwashed to believe a DOLLAR is a DOLLAR. I talk with many retired people (with BUCKS) who tell me they are going to do this, and they are going to buy that because they think that PONZI MACHINE will keep providing them with this money until they die.

Believe me, when the DOLLAR is devalued, that whole system of PENSIONS and RETIREMENTS is gone forever.... FOR FRICKEN EVER. This is when people will get RELIGION as it pertains to precious metals. I actually believe at this point we will see more people getting into the precious metal religion than most of the flavors that are currently available to those in search of GOD.

Torpedo Fish
Jun 19, 2012 - 1:48pm
SRSrocco
Jun 19, 2012 - 1:51pm

I LIED....ONE MORE TIDBIT...

MARK MY WORDS

WHen the CONTAGION reaches the United States, and we start to hear about people taking money out of their banks and fears of bank runs are spoken at the local sandwich shop and barber... watch GOLD and SILVER EAGLE SALES then. It will be something to tell your GRANDKIDS.

Bugzy
Jun 19, 2012 - 1:52pm

@SRSrocco

Yup,

If the figures in the graphs are correct, it just shows that the retail investors in North America are buying less this year than last. But they are indeed buying, are they not?

Yes, a lot of weak hands bought last year when the graph was looking like a no brainer.

My gut tells me that if QE X is announced world wide and the price goes up - the sheeple will again pile on. Meaning those graphs will need a change in the y axis or a bigger sheet of paper.

Most retail stackers are unsure of Gold - I suspect this will change. I am betting on it!!!

B

exiledbear
Jun 19, 2012 - 1:54pm

@SRSrocco

When we get to that point, lines in front of the banks because they're all out of money - there won't be any coins for sale.

And the people who do have coins, they're not going to trade them back for dollars, they're going to be using them for direct payment.

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