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

turd [at] tfmetalsreport [dot] com ()


Feb 2, 2013 - 2:09am

With absolutely No disregard to prior Train things posted.

Pining, I allways appreciate your efforts, and thank you for them.

Perhaps this has been posted before. I don't see it so much as a train thing as an expression of freedom. I also see the propaganda in it.

But while we can't recreate the past, we can stand for something pure for the future.


Feb 2, 2013 - 2:18am

This may be the best book on the lesser depression

Economics and the Public Welfare: A Financial and Economic History of the United States, 1914-1946 by Benjamin M. Anderson. (PDF below)

The book is one whose stature should be much more well known. It is one of the most effective critiques of the theories back of modern governmental economic policies. It should be required reading for all who advocate more planning.

In the turbulent years between passage of the Federal Reserve Act (1913) and the Bretton Woods Agreement (1945), the peoples of the Western world suffered two World Wars, two major and several minor international financial panics, an epidemic of currency devaluations and debt repudiations, civil wars, and revolutions. They also enjoyed a decade of unprecedented prosperity and a decade of unprecedented depression and deflation. They also saw the beginning of a period of prolonged, world-wide inflation.

No period in history could serve better as a case study for the analysis of applied economic policy. From his vantage point as economist for the Chase Manhattan Bank and editor of the Chase Economic Bulletin, who participated in much of what he records, Dr. Anderson here describes the climactic events of a turbulent era.

A pivotal study of the Great Depression and the New Deal

This book is primarily a financial history of the years 1913-46, although, as the title suggests, it covers a wider range. Several chapters are devoted to foreign financial developments and to political changes that affected financial conditions. From 1920 to 1939 the author was economist for the Chase National Bank in New York and wrote the often brilliant Economic Bulletin's published by that bank. He has drawn extensively on them in writing this book. As a Chase Bank officer he had a "front seat" at numerous events of national and international moment and he knew personally many political and financial leaders. The book thus has an autobiographical and journalistic tone too.

Anderson had definite cogent positions on the causes of various crises, on the validity of certain economic theories, and on the reasons for some of the world's ills. He backs these vigorously with logic, history, personal anecdotes, and statistics. For example, he says that the New Deal really commenced about 1924 (p. 115) when open market operations were used to create credit and help several European nations return to a gold standard. This was the first significant resistance to forces that might bring the economy towards an economic equilibrium (pp. 220- 21). Such resistance, Anderson contends repeatedly, is the cause of many of economic ills. The 1924 and 1927 open market buying operations created large bank reserves and set in motion the speculative forces culminating in the 1929 debacle (pp. 128, 136). Incidentally, one of the leading causes of trusts, he says, is easy credit and boom conditions which make combinations more desirable and easier to achieve. Two great booms coincided with chief periods of trust formation: 1898-1903 and 1927-29 (pp. 497, 503). Any chances of early recovery from the 1929 panic were dashed by the enactment in 1930 of the Smoot-Hawley tariff (pp. 224, 270). The strict rules governing margins and short sales in the 1930's made the stock market dangerously thin at times; the greatest single decline took place under the New Deal in 1937, not in 1929 (pp. 438, 454-55). Our modern low interest rate pattern was the result of excess reserves of the early 1930's (p. 412), and was preserved by still greater excess reserves; it was not caused by the implementation of Keynesian theories. The panic of 1937 was caused by large-scale strikes leading to wage and price increases which businessmen interpreted as likely to reduce profits (pp. 444-46). American unit banking is not inferior to branch banking (Chap. 44).

The book bristles with provocative challenges and interpretations, always well supported. Beneath them all there runs the thesis of equilibrium economics (pp. 59, 301, 407 n.). The New Deal, Anderson cites figures to show, failed to solve the unemployment problem and slowed down capital growth. He concludes that such government planning "robbed us of production we might have had and the consumption which we might have enjoyed had we had the old flexible, unregulated economy" (p. 494).

As for Keynesian economics, he makes no concessions to it, and says that it offers no help (p. 407). Repeatedly he criticizes the "oversaving" thesis (pp. 382, 385-87). He devotes an entire chapter to showing that Keynesian economists achieve plausible theories only by altering the meaning of their terms whenever they run into a logical impasse (Chap. 60). It is one of the more effective criticisms of Keynesian economics in print.

Economics and the Public Welfare

More of Anderson’s material can be found here

Feb 2, 2013 - 2:58am

re: Cash Only

My doctor's office is cash only for co-pays. They accept insurance, but if you owe them anything out-of-pocket they only take cash. My doctor is a feisty Philippina in her late sixties. For all the world, she reminds me of Granny Clampett. Great lady.

Feb 2, 2013 - 5:22am


Saturday mornings are the best.

Get out of bed at 9:00, but just because you know that at around 9:30 the DHL guy will be here to deliver goodies.

At 9:30, open the front door for the DHL guy, take your plain brown package and sign the sheet.

Until 10:00, look at the newly minted 2013 silver goodies.

At 10:30, go snorkeling.

At 11:00 notice that you've lost the new silver AGAIN, and that maybe you should start using something else for ballast while diving.

Feb 2, 2013 - 6:06am

Invasion Miami

Machine gun fire from military helicopters flying over downtown Miami Fl.
Feb 2, 2013 - 7:52am

Expect to see more of this......(from FT)

Last updated: February 1, 2013 7:38 pm

Credit Suisse calls end to gold bull run

Credit Suisse has called the end of gold’s decade-long bull run, saying the “fear trade” that caused the metal to more than quintuple in value peaked last year.

In a note to clients published on Friday, the Swiss bank said gold “appears significantly overvalued”. “We think it highly likely that the market has already seen the absolute high,” it added, in a reference to September 2011, when prices touched $1,920.30 a troy ounce.

Oh, dearie me, we'd best sell our gold as fast as we can!

Feb 2, 2013 - 8:53am

swiss allocated accounts

CS now calling for a sell off in gold? that seems odd they have just offered allocated gold accounts. this looks like 2 ways to keep people from removing their gold. "it is safer now that it is in your segregated account or just sell it back to us for fiat" desperate times require desperate measures.

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...

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!

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...

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 - 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.

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


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

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.

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 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 - 9:01am

Hear we go

Monkeys over head

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Exclusive discount for silver purchases, and a private iTunes feed for TF Metals Report podcasts!

Key Economic Events Week of 6/24

6/25 10:00 ET New Home Sales
6/25 1:00 pm ET Chief Goon Powell
6/25 5:30 pm ET Goon Bullard
6/26 8:30 ET Durable Goods
6/27 8:30 ET Q1 GDP final guess
6/28 8:30 ET Personal Income and Consumer Spending
6/28 8:30 ET Core Inflation
6/28 9:45 ET Chicago PMI

Key Economic Events Week of 6/17

6/18 8:30 ET Housing Starts and Building Permits
6/19 2:00 ET FOMC Fedlines
6/19 2:30 ET CGP presser
6/20 8:30 ET Philly Fed
6/21 9:45 ET Markit flash June PMIs

Key Economic Events Week of 6/10

6/11 8:30 ET Producer Price Index
6/12 8:30 ET Consumer Price Index
6/13 8:30 ET Import Price Index
6/14 8:30 ET Retail Sales
6/14 9:15 ET Cap Ute and Ind Prod
6/14 10:00 ET Business Inventories

Key Economic Events Week of 6/3

6/4 All day Fed conference in Chicago
6/4 10:00 ET Factory Order
6/5 9:45 ET Markit Services PMI
6/5 10:00 ET ISM Services PMI
6/6 8:30 ET US Trace Deficit
6/7 8:30 ET BLSBS
6/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 5/28

5/28 10:00 ET Consumer Confidence
5/30 8:30 ET Q1 GDP 2nd guess
5/31 8:30 ET Personal Income and Consumer Spending
5/31 8:30 ET Core Inflation
5/31 9:45 ET Chicago PMI

Key Economic Events Week of 5/20

5/20 7:00 pm ET CGP speech
5/21 10:00 ET Existing Home Sales
5/22 2:00 ET FOMC minutes
5/23 9:45 ET Markit PMIs
5/24 8:30 ET Durable Goods

Key Economic Events Week of 5/13

TWELVE Goon speeches through the week
5/14 8:30 ET Import Price Index
5/15 8:30 ET Retail Sales and Empire State Manu. Idx.
5/15 9:15 ET Cap. Ute. and Ind. Prod.
5/15 10:00 ET Business Inventories
5/16 10:00 ET Housing Starts and Philly Fed
5/17 10:00 ET Consumer Sentiment

Key Economic Events Week of 5/6

5/9 8:30 ET US Trade Deficit
5/9 8:30 ET Producer Price Index (PPI)
5/9 10:00 ET Wholesale Inventories
5/10 8:30 ET Consumer Price Index (CPI)

Key Economic Events Week of 4/29

4/29 8:30 ET Pers Inc, Cons Spend, Core Infl
4/30 8:30 ET Employment Costs
4/30 9:45 ET Chicago PMI
5/1 8:15 ET ADP jobs report
5/1 9:45 & 10:00 ET Markit and ISM Manu PMIs
5/1 10:00 ET Construction Spending
5/1 2:00 ET FOMC Fedlines
5/1 2:30 ET CGP presser
5/2 8:30 ET Productivity and Unit Labor Costs
5/2 10:00 ET Factory Orders
5/3 8:30 ET BLSBS
5/3 9:45 & 10:00 ET Markit and ISMServices PMIs

Key Economic Events Week of 4/22

4/22 10:00 ET Existing Home Sales
4/23 10:00 ET New Home Sales
4/25 8:30 ET Durable Goods
4/26 8:30 ET Q1 GDP first guess