Ready for The Big Game

Fri, Feb 1, 2013 - 9:41am

Time to take a short break and enjoy some R&R but, first, a few things to ponder over the weekend.

First, today's BLSBS was terrible, regardless of the SPIN and MOPE. Now at 7.9%, the unemployment rate has to fall 18% to get to The Bernank's target of 6.5%. Good luck with that, Benny. Even the buffons who cling to the belief that somehow QE is about economic growth are going to have to admit soon that QE is here to stay...and then buy precious metal as their only protection against fiat debasement.

Speaking of fiat debasement, the situation in The Pig is getting rather tenuous. The Bernank had better send out a Goon or two to talk it up soon or it risks failing at 79 and then 78. IF/WHEN this happens, look out below for a retest of the all-important 73 level. You can plainly see it here on this daily chart. Open your mind and you'll see a year-long, head-and-shoulder top. Therefore, a breakdown here would indeed be a big deal.

But the main point I want to leave you with today are the numbers of those standing for delivery of the Feb13 gld contract. First some context:

Dec12: 4623 standing...that's 462,300 ounces or 14.4 metric tonnes

Oct12: 5178 standing or 16.1 mts

Aug12: 5807 standing or 18.1 mts

June12: 9171 standing or 28.5 mts

As you can see, the June12 was a bit of an outlier at 28.5 while the previous three delivery months, including December which is typically the largest of the year, all were around 16 metric tonnes.

OK, standing for delivery of the Feb13...drumroll please...13,910 contracts or 43.3 mts!

As Ruprecht would say: "That's a lot". Three times the amount that stood for delivery in December!

I guess now we know why the GLD has been drained of almost 22 mts YTD, now don't we?!

Again, this is just one data point and it could be an aberration. I guess we'll see. But, taken in concert with all of the other anecdotal evidence of precious metal shortage...Well, it certainly raises an eyebrow.

Here's what Harvey had to say last night:

"Today we had first day notice and what a surprise. We had a massive 1,391,000 million oz of gold stand or 43.26 tonnes of gold. I have been following the gold and silver comex data from the mid 1970's and I have never seen anything like this before. You will recall that this past December we had only 10 tonnes of gold delivered upon. Generally December is the biggest delivery month of the year. The comex is not a physical market. If one needs physical they generally head over to London at the LBMA and purchase the metal over there. The high amounts standing may mean that our gentlemen from Eastern persuasion are having difficulty finding metal and thus they are heading over to our neck of the woods to obtain this very valuable commodity.

The total number of contracts standing for gold is a whopping 13,910 contracts or 1,310,900 oz of gold which translates to 43.26 tonnes of gold I am sure that Blythe will be one busy girl these next few weeks as she tries to entice some longs standing to accept paper instead of metal."

And Denver Dave had some comments, too.

"Just a little truth tidbit if you're worried about the latest sell-off in the price of gold/silver. There's a lot of misinformation, disinformation and absurd ideas about what's going in the market. The truth is that the eastern hemisphere countries are vacuuming up physical gold and silver that they are having delivered domestically as quickly as the London/New York dealers are printing paper gold and silver contracts. You can see this in any given 24 hour trading period, where the price of the metals rises overnight until Hong Kong closes and London opens. Then the price sells off as the London/NYC bullion banks print up more paper contracts and dump them on the market.

In fact, per today's Comex open interest report, currently there are about 13,900 contracts February open and potentially standing for delivery. This represents 63% of the gold listed as available for delivery on the Comex. This is an extraordinarily high amount in relation to the historical context at this point in any given delivery month cycle (first notice day). We'll see how this unfolds, but I doubt Marketwatch, Bloomberg News and CNBC are reporting this information."

Maybe next week, I'll be able to track down Andy and get his opinion on the matter. Until then, just place this bit of info in your hope chest and rest well over the weekend.

Speaking of the weekend, I'm off with The Boys to watch the Super Bowl. Don't worry, though, there will still be lots of fresh content for you to savor here at TFMR. Later today, I'll be releasing a 70-minute podcast that I recorded with The Jackass yesterday. I know that that's probably too long for most folks but there are a lot of Golden Jackass fans out there that can't get enough. This ought to satisfy them for a while. I'll also have a thought-provoking regular thread released tomorrow so please be sure to check back over the weekend.

That's all for now. Wish me luck and go Niners! (Not that I care either way but I'm definitely laying the 3.5)


About the Author

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Feb 4, 2013 - 9:01am

Hear we go

Monkeys over head

Feb 4, 2013 - 8:03am


Wow, can't believe my thoughts. Is it a coincidence? The SILVER helmet wearing New England Patriots lost in the AFC Conference. Then The GOLD helmet wearing San Francisco 49ers lost in the Super Bowl. Before that the GOLD helmet wearing Fighting Irish of Notre Dame lost in their Bowl Game. Are they trying to tell us something? Nahhhh.

Feb 4, 2013 - 4:34am

The US WILL NOT be downgraded as this is Why

Firstly you will hear what I am about to write in the future and it will seem new but I am for the record putting it in words here.

The original US downgrade was a cock up IMO. Think about it, why not earlier or why not more downgrades since, the grounds for downgrading are not distinctly different. I think the initial warning or whatever you want to call it got out of hand and the PTB were too slow to get to the ratings agencies. There has been a larger than normal gap between the last DG and now.

In Europe they have effectively said they are going to ignore the ratings agencies. The ESM specifically states this.

If all the countries are downgraded where do the institutions that invest in bonds go? They are banned from non AAA rated bonds. But if all are not AAA rated, then the money needs to go somewhere and since the governments need these investors I am sure a deal will be done somewhere to agree on a lower rating as acceptable.

A movement has taken place amongst sovereigns to reign in the agencies. Egan Jones the only big, independent agency has been muzzled by trumpted up charges. Also the US agencies seem keener to DG non US countries/banks and the Europe agencies keener to DG non Europe ones.

Also the Ratings Agency market needs to be considered an oligopoly. This is evident in the few large agencies and the interdependencies of their calls. For example if one downgrades a country the others are called into question. So either they all do or they all don’t. Game theory is inherently part of this behaviour. Whilst it is harder to maintain tacit collusion with larger numbers of agencies it is still possible and if they were `managed’ as US and non US it would make the behaviour easier to manage.

So here it is. If the PTB don’t want a DG of the US they won’t get one as a US agency will not go it alone as the fear of reprisals and loss of collisional benefits would result. Therefore it will either be all agencies at once or not at all.

Remember the agencies have stated what would constitute grounds for a DG but with wiggle room. As long as the US circumvents or used the wiggle room or down right kicks the can the ratings agencies can/will never DG.

Feb 3, 2013 - 7:00pm

A Bunch Of Games

Song heard last night.

10 thousand tonnes of gold on the wall, 10 thousand tonnes of gold

take one down lease it around, 9,999 thousand tonnes of gold on the wall.

(if not passed out when you get to zero, continue)

zero tonnes of gold on the wall, zero tonnes of gold

call back a lease, zero tonnes of gold on the wall.

zero tonnes of gold on the wall, zero tonnes of gold

call back two leases this time, zero tonnes of gold on the wall.

(if still not passed out, continue til number of leases match the lost gold)

zero tonnes of gold on the wall, zero tonnes of gold

call back 10 thousand leases, zero tonnes of gold on the wall.

10 thousand leases in hand and still no gold on the wall

so just sell 10 thousand more leases for gold on the wall.

gold bug-ger since 2001
Feb 3, 2013 - 2:41am


It sounds like Jon Nadler has a new job already at Credit Suisse.

Feb 2, 2013 - 11:28am

CS GS et al

Of course they are calling the end of the gold bull and recomend selling... because they are buying!

Just like with all that garbage they say to buy is because they are selling.

Of course they pander to the high net worth individuals that like to be pampered and who actually listen to them and can actually afford to take losses. But hey, to each their own.

Stack'em High
Feb 2, 2013 - 10:37am

So, What Happens Now? Are We Going Higher...

Or... We closed on Fri at 14,009 and 1513. All time highs were Oct 9, 2007 at 14,164.53 and 1565.
Feb 2, 2013 - 10:22am

It would be impossible for me

It would be impossible for me to sleep if I sold off my phys (pm's). CS & GS feel the same I'm sure! Holding fiat = holding debt notes. Holding equities is like holding a time bomb with such low OBV and debt fundamentals.

Dow 14k in 2008 had 8T debt

does NOT equal

14k in 2013 has now 16T debt

The wolves are holding phys: Be the wolf, not sheep...

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Feb 2, 2013 - 9:48am

First Goldman now Credit Suisse?

The vampire squid has been pulling that crap about gold collapsing as well lately:

I could see a drop in the "paper" gold prices as the EE contnues to manipulate prices lower. But this will be where physical and paper price finally diverge for good and true phyzz will skyrocket in worthless dollar value.

Phyzz is ounce will always be an ounce. We must keep stacking no matter how they manipulate the game and always understand that thinking of phyzz in "dollar" terms or any other fiat terms is their game and it's a total fallacy.

The Stackers will win in the end!

Stack'em High
Feb 2, 2013 - 9:23am

I'm calling an end of Credit Suisse...

before an end to the PM bull run.

Doesn't the financial sector of the economy total up to something like 17%, and what do they produce? NOTHING!

Seems more likely that CS is circling the toilet bowl, not the PM's...

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