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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  197 Comments

The Watchman
Feb 1, 2013 - 12:10pm
Road_Scholar
Feb 1, 2013 - 12:13pm

Kyle Bass

on CNBS this morning. I'll paraphrase: He was asked about the overall economy and more specifically where he is telling investors to put money. He said money printing is the main driver in the overall economy and basically said that it's important to look at real terms not just nominal. The example he sited was that Zimbabwe's stock market was one of the best performing as their currency devalued. However, even as the stocks rose by a huge percentage, someone's entire portfolio might now only buy a few eggs!

Keep stacking...

Swineflogger
Feb 1, 2013 - 12:14pm
GroanerSwineflogger
Feb 1, 2013 - 12:17pm

Swine

As Bill Murray said in Caddy Shack.. hey look, its a perfectly good Baby Ruth and takes a bite!

Xeno
Feb 1, 2013 - 12:17pm

High Standing

Oh boy oh boy, big games are afoot alright. Nearly 4 times the avg. amount standing for delivery seems a very big deal. But will we see the usual pay-offs that drastically reduce that number as we've grown accustomed to, or will stand and deliver be the battle cry in the first of a 1 - 2 combination with March silver delivering the final blow that transitions us into a gold standard? That is the question.

As an article in Forbes[1] (of all places) points out; "...gold bullion itself is not really necessary for a gold standard system. Gold is the "standard," in other words, the "standard of value." It is just something you compare against."

"The standard of value". Hmmm, isn't that what SRSrocco has been pointing out with his writing that silver and gold represent stored energy? Which, imho, is a different way of saying that the metals represent a store of value of the labor required to extract, process, and refine an ounce of gold. Even moreso in days past when the stored energy value represented the manual labor required to dig, process, and refine.

Isn't that the idea, an honest days wage for an honest days work? A standard for valuing all labor? After all, what honesty and integrity is there in a system that values knowledge and labor at such disparate rates that grind working mens bones to dust?

Please don't misunderstand me, I am not advocating for labor unions that overvalue their worth against executives who are even more overvalued than they are worth. Or the execs who value their worth on a percentage of the take. No, I advocate the honesty and integrity of a standard of value and worth.

It's often been said that a bull market, especially in the precious metals, takes as few people with it as possible. Ever wonder why that is? Couldn't the volatility, the wild swings in both directions, the slow grinding consolidations that try mens souls, the surprise moves, just be the things that drive traders to the poor house and cause those without patience and commitment to give up for the simple reason of expressing an unadulterated standard of value and worth?

After all, if traders were able to hold on, what would they do when a standard of value was defined? They would sell without a moment of thought wouldn't they. They would throw away true value like a used napkin(i.e. paper contracts), so why shouldn't they go broke trying to trade the bull? And what of those tattered souls with the patience and commitment to buy and hold physical at great expense and sacrifice until a new standard of value is defined? It's more likely than not that they would live their lives according to that value with honesty and integrity and not sell something so precious short or willy nilly.

"To implement a gold standard system — in ten minutes — you simply have the Federal Reserve stop managing the base money supply according to an interest rate/quantitative easing framework, and start managing it according to a gold standard framework. All this means is that the base money supply is adjusted at different times, and in different quantities." [1]

If this record amount standing for delivery is the precursor to a system redefined by true value, honesty, and integrity, we should know relatively soon, by the end of March is my guess. Who knew that the 10 min. it would take to implement that system would take so long?

[1] https://www.forbes.com/sites/nathanlewis/2013/01/31/the-10-minute-gold-standard-its-much-easier-than-you-think/

s2man
Feb 1, 2013 - 12:18pm

The Pig

They are not worried about the dollar dropping. In fact, they want it to. Every county is in a "race to debase". They each want their currency to drop, relative to the others, in order to make their exports more attractive. Europe is upset that the euro is rising; They are falling behind. They were even more upset when Japan recently announced they will debase the yen.

See Kyle Bass' report on U.S. plan

Video unavailable

Summary:

Kyle to senior administration member - How are you going to export our way out of this without nominal wage deflation?

Reply - We're just going to kill the dollar.

Groaner
Feb 1, 2013 - 12:20pm

DVR.s are great..

I am looking forward to the Super bowl,, now I can fast forward the game and watch the commercials and half time show.

Mickey
Feb 1, 2013 - 12:21pm

alister Macleod from Gold money FYI on gold deliveries

by Alasdair Macleod - Head of Research

Weekly Market Wrap-Up The Week To Come
Gold and silver started the week strongly – silver in particular showed the characteristics of a bear-squeeze. However, on Wednesday morning the bears hit back with a concerted raid eroding most of the gains by Thursday afternoon, New York time. There is little doubt that one motivation was to ensure that maturing options were out of the money, and therefore abandoned.

We are now delivering futures for February, and already notices have gone out for 914,200 ounces of gold, which for first day notices must be close to a record. What it means is that buyers are prepared to stump up the cash for physical possession of over 28 tonnes of gold, indicating real demand at current levels and shortages in other markets. There is a further 476,800 ounces for February delivery taking the total to as much as 1,391,000 ounces.

Open interest figures for gold have fallen considerably since the last Commitment of Traders report, from 461,369 to 431,137 contracts at Thursday’s close; but this includes the expiry of the January contract. Nevertheless, it does illustrate that there are still mug-punters in the market, vulnerable to periodic bear-raids.

Silver is very different, with open interest actually rising by 9,401 to 151,680. It is clear that the shorts are having great difficulty buying back their positions, and every bear raid leads to net buying.

Back in the real world, the gold price in Japanese yen has hit a new record at ¥153,000 per ounce, and it is reported that anxious citizens are buying bullion in increasing numbers. This is down to yen weakness, which started last September against a background of deteriorating fundamentals. If the Japanese see further yen weakness, they are likely to continue to buy gold.

The US Mint seems to be having difficulty getting enough silver to satisfy public demand for coins. In India, Indians are now accumulating silver as well as gold. With public demand for both gold and silver bullion growing around the world, it seems very odd that over the last 10 days bullion has been withdrawn from GLD and SLV, the two big physical ETFs. The only plausible explanation is that bullion banks are shorting them to get their hands on scarce physical for onward delivery.
SRSrocco
Feb 1, 2013 - 12:34pm

TO ADD TO THAT POINT...

GOLD & SILVER = MONEY

ENERGY = MONEY

GOLD & SILVER = STORED TRADE-ABLE ENERGY

I have had some very interesting email exchanges from some of those who attended the 2013 Virtual SilverSeek Conference. Some of these folks are HIGHER-UPS in the industry.

While some asked questions, most where quite surprised of the connection between precious metals and energy. I mean... they were surprised that they didn't make the connection before.

Some folks who are strict followers of the School of Austrian Economics... such as Peter Schiff, fail to understand the energy component of VALUE.

These same folks get stuck on the MARXIST Labor Theory of Value. Because it came from an individual who was known for being the farther of MARXISM... they get a sour taste in their mouth. Again, Adam Smith (Wealth of Nations) was writing and talking about the labor theory of value a century before Marx, and the Greeks and Romans were conducting trade with the same labor theory of value 2,000 years before those two gentlemen.

I despise ALL ISM's.

Its like professional football. As soon as a person picks a team... then the other team is the BAD GUY.

Anyhow... gold & silver will be some of the best stores of value going forward, because they are stores of trade-able energy. Not only will gold and silver protect ones wealth from the ravages of monetary debasement... but also from the increased costs of energy as well as future shortages.

Nice to see Gold & Silver shoving it in the face of the paper traders today...

Ilya Repin
Feb 1, 2013 - 12:35pm

The HS in USD is already

The HS in USD is already confirmed by many cross'

Metals are going launch in FEB based just on the charts situation. Physcial market just reinforces this. things will start on any pull back of EUR or YEN. But will happen anyway regardless. massive stretching of Metal Cross' will snap back soon. Weekly XAG mega bullish oscillators!

USDNOK

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