Ready for The Big Game

197
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)

TF

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