Chew On This One

Fri, Feb 8, 2013 - 11:07am

Maybe it's the massive blizzard about to hit New York and Boston? I don't know but the markets are so boring today that I thought I'd disappear down the rabbit hole for a moment or two.

Video unavailable

Part of the reason that things are so quiet today is the general lack of news. The only noteworthy item was the release of the December U.S. trade deficit. It shrunk. This, of course, caused Reuters to cheer, happily proclaiming that perhaps Q4 GDP won't be as awful as first projected. ( Of course, this is silly. The U.S. is a consumption-based economy and when imports fall, we are consuming less. And, as usual, ZH provides a better analysis (

The gold market yawned at the "news" and that, usually, is that. However, I soon thereafter received an email from a rather enlightened individual who noticed, contained within the Reuters story, was this little nugget: "Friday's data showed U.S. exports surged by $8.6 billion during the month, boosted by sales of industrial supplies, including a $1.2 billion increase of non-monetary gold."

Hmmmm. Well that's interesting, now isn't it? Why on earth would the U.S. see a $1.2B increase in "non-monetary gold" exports? (The concept that any type of gold is "non-monetary", notwithstanding.) The alert emailer further suggested that:

"When the deficit shrinks, it is a sign that the US creditors are not accepting the USD as a means for conducting trade.
The US has to pay with something else (oil/gold) and curtail imports.
So what happened in Dec?
Imports – largely driven by autos (likely to be Germans) and oil dropped in total by 2.7%
Exports – largely driven by oil exports and gold increased by 2.1%
Someone is asking for payment in oil and gold and not USD is the message.
One can take a guess but my gut tells me it is either China or one of the non-friendly oil producers asking for gold."

OK, now we're onto something. it possible that this is finally beginning to happen? We know that plenty of other nations are transacting gold-for-oil deals. Just google "Turkey Iran gold" and see what you get. Anyway, the timing of this fits well. QE∞ was announced back in September and this is data for the very next quarter, Q4. Again...hmmm. 

Now, here's one that, admittedly, is a bit of a reach. Reading these emails this morning reminded me of an email I received earlier this week. An alert Turdite caught this on the facebook feed of one of his relatives who is a flight attendant. This particular person was simply perturbed by the delay in her flight schedule and posted this seemingly innocuous bit of information:

"Dubai~Take 2
Yesterday was a very long day that ended in the disappointment of not getting on my flight to Dubai due to weight restrictions! Yeah, isn't that a real kicker!! I was #10 on the standby list and they kept calling us one by one and then~bam! Stopped after #9! Even with quite a few empty seats left on the plane, the cargo in the belly was so heavy (and valuable monetarily) that they couldn't chance adding more standby passengers."

A flight to Dubai with cargo that is "so heavy and valuable monetarily"? Hmmmm. Well that's interesting, too.

Look, I know it's all anecdotal and, once you disappear down the rabbit hole, you can easily hang yourself by the rope you use connecting all of the dots. But I thought this was interesting enough to share with you. Lots of possible implications to ponder. Knock yourself out and have a great day.


About the Author

turd [at] tfmetalsreport [dot] com ()


Feb 8, 2013 - 11:08am


Nuff said.

Feb 8, 2013 - 11:11am

@Byzantium capping

In short term daily trading activities capping is visible, I agree. In long term PM prices- no. So does it have to do with PMs as such - most likely due to huge marketshares of some players- or in the reason for futures existence- to reduce volatility in future prices- can be discussed if that is interesting.

From long term PM price development fact point of view, no capping is present. Fundamentals are at work, and , honestly, i have seen very few or almost none confirmed relation to fundamentals on these pages, which would be the first thing to start with.

I am 100% sure the only thing that matters by 95% is the USG debt and its development, with Gold prices measuring the loss of trust in USG treasury based monetary system (and thus USD as reserve currency) that comes from this development.

Silver , albeit more volatile than gold due to its smaller market ( law of big numbers- standard deviations are proportional to 1/sgrt(Size of market) ) , has also performed in the last 12 years ar MONETARY metal. Hence I disregard all the supply /demand /industrial use issues as if they were playing any role, the curve for silver on average would be different from gold. Its NOT. The industrial Users are paying premium on silver for using monetary metal in production of chips etc. Whenever silver has been monetary metal in history, it had fetched a premium vs. gold (like 1:16 ratio) compared to periods when it was non-monetary ( e.g. from 1873 in the USA- today) - exactly because monetary use enhance silver price vs. gold, nothing else. Silver behaves like monetary metal in following the gold price over last 12 years, so the GSR ratio should also come down a bit to reflect it, but 1:16 is highly unlikely, as is sustainable 1:20 or even 1:25. I think 1:32 would be a realistic target.

So PM price capping is impossible in the long run if fundamentals ( USG debt or /and inflation) is at work. That should be a comforting thought, as we are not after PMs prices as such, but as the hedge towards USD based fiat system disintegration- the hedge is there, perfectly in place.

However, over and underboughts get corrected, which is not capping...its correction. So as PMs ran ahead of USG debt curve on expectations the USA will implode after 2008-2009 due to costs related to its appeasement , they need to turn back to that curve. Which is happening still.

There is nothing mysterious in this behavior.. Impatience is understandable, but can also result from our own ignorance or one sided look at facts after we have a stack with average around 30 or more. But still- I wonder why people would need it to be mysterious?

Again, on daily basis the manipulation is obvious. But that is common in all markets with monopoly/oligopoly structure, is it not?

Feb 8, 2013 - 11:12am

worth the read every day

[Ok, so far we have a cop who has decided that the law doesn't work and therefore he's not going to put up with it. That's a (big) problem.

I'll assume for now that the alleged perp is utterly insane and has no reason for what he's doing, other than deciding in a mentally-ill state that he wants to kill people. I'm taking this position only for the purpose of debate, as it is the most-favorable toward the LAPD and other agencies involved. If I'm wrong in that assumption then everything I write below is far worse.]

Feb 8, 2013 - 11:14am


Not by a long shot.

In other news, Clif High getting rowdy with his silver predictions ( a la the web bot). Predicting price rising over the next week...

Carry on.

Feb 8, 2013 - 11:18am

Happy Phyz Day

May the Phyz be with you

Feb 8, 2013 - 11:18am

Not much happening

Yer right Turd. Boring markets. I'm just gonna continue to suck on my big toe until that day of discovery comes when enough people realize that gold and silver are going bye bye. Let the supply squeeze continue.

Feb 8, 2013 - 11:19am

I like that heavy cargo story

It's probably more raw material for gold Dinars!

Video unavailable
Feb 8, 2013 - 11:22am

Relax, all

That plane was just carrying a load of non-media books I just sold to them.

Feb 8, 2013 - 11:23am

Hidden in plain sight?

Hidden in plain sight? (No pun intended)

Bongo Jim
Feb 8, 2013 - 11:23am

If you have...

Cargo that is so heavy and valuable, why wouldn't you charter a plane for it? Can't afford to keep your monetarily valuable and heavy cargo a little bit secret? Even a stand-by flight attendant knows about the cargo.

El Gordo
Feb 8, 2013 - 11:26am

Sorry to disappoint you....

...but I was on that flight which was the cause of the over weight limit precaution.

Feb 8, 2013 - 11:26am

Survived the last thread

without adding any one to my ignore list. had i seen anyone blame Jerry Garcia then i might consider doing that. Since we all come here for Turd and TEOTGKE, we are all on the same same side of the ledger. let's not forget first and for most to STACK it is that easy

Feb 8, 2013 - 11:27am

Business in the UK

Bollox, GM re your posts yesterday: my brother in law, who runs a small engineering/repair business in Cumbria made a loss last year for the first time ever.

Feb 8, 2013 - 11:28am
Feb 8, 2013 - 11:32am

Flatline market

good time for rest before the SHTF...

Urban Roman
Feb 8, 2013 - 11:34am

CFTC Finally Does Something About Market Manipulation

I liked this one so much I'm reposting it here. Turd, did you see the article Jesse is talking about? 

Speaking of the CFTC, it appears that those fine fellows have finally done something about the obvious and blatant manipulation that all too often plagues the futures markets in commodities.

That's right, the CFTC is joining a defense motion to dimiss the $30 million fine levied against the Amaranth trader who was caught manipulating the natural gas market. Why?

Because the CFTC and the trader's defense attorneys contend that the Federal Energy Regulatory Commission should not be investigating market manipulation in futures, because not doing anything about it is within the jurisidction of the CFTC.

Hey, nobody can touch our crooks but us, and we're too busy and understaffed to do it. Now that's industry friendly!

... Links here: 

Gold Daily and Silver Weekly Charts - CFTC Finally Does Something About Market Manipulation [Jesse]

Ex-Amaranth Trader, CFTC Unite to Ask Court to Toss Fine [Bloomberg]
Feb 8, 2013 - 11:34am

That Carson speech

Posted in the last thread was excellent.

Note that at 27.13 Obummer whispers something in Biden's ear.

Probably "Put him on the list"

Bongo Jim
Feb 8, 2013 - 11:41am

RE: Hidden in plain sight

Maybe things are getting so sketchy that it's quicker to throw it on a commercial flight than worry about secrecy

Feb 8, 2013 - 11:44am

Who are the most dangerous

Who are the most dangerous gun slingers in America?

"Liberals With Guns!"
Feb 8, 2013 - 11:47am

Turd:  Seems to me that

Turd: Seems to me that "non-monetary gold" is probably scrap gold ie cash4gold proceeds. Any idea what the total was? This sounds like a lot of gold, and I am wondering if this is a new trend, or if gold has been flowing out this way for a long time.

Also, I can't think of White Rabbit without thinking of this scene from Fear and Loathing in Las Vegas:

Fear and Loathing in Las Vegas (6/10) Movie CLIP - White Rabbit (1998) HD

"Don't fuck with me now. I am Ahab!"

Feb 8, 2013 - 12:01pm

Rabbit Ears

Have to agree that in todays environment that the drop in the trade deficit does not indicate a rosy picture for the economy. But it may be a nudge to start getting the US producing again.

Drop in oil imports and an increase in oil exports? I'd like to see the breakdown on that tid bit. As for the quote "non monetary gold", hahahaha Could that be an indicator that the gold is starting to flow? I hope so because if that trend picks up so will the value and price of the real deal.

The rabbit ears also heard that China will soon write off their U.S. dollar-euro currency denominated derivatives and move to back their currency with real assets.

Chinas new plan for a new year?

frefall Bongo Jim
Feb 8, 2013 - 12:02pm


Finally, something I'm qualified to comment on. I flew people and cargo around the world for 40 years. It could have been gold, no doubt. but it could have been a lot of other things. Passengers get bumped for cargo all the time.

Weapons are heavy, machine parts are heavy, ammunition is heavy. Maybe the captain just wanted some extra reserve fuel. Maybe there was a maintenance issue that limited their range or payload capability. Maybe the flight attendant pissed off the gate agent.

Could have been gold, though. These days, who would be surprised?

Feb 8, 2013 - 12:03pm

A sad day at the Doc's

I am headed to a local dealer to sell some AG so I can close on a house that I am buying. the %$#^ing banks require that my down payment money is "seasoned." They want to see the paper trail for every dollar. I may yet change my mind and go with a smaller down payment. but my wife and I were wondering why they are so afraid that some drug dealer might buy a house with illicit cash (their excuse) and it occurred to us that it is about control of all money, not drug money. These banksters and their Gov henchmen have an Orwellian obsession with my money, even my life. They believe that everything I own is theirs, that they can tax it away from me if they want, and even conscript me into the military to give my live for their causes.

What kind of world do we live in? On second thought, perhaps I'll call the banker and discuss a lower down payment and paying for PMI--their insurance to cover their bankster arses if something goes wrong. No risk for the banks. It's all on my head.

I am talking myself out of that trip to the LCS even as I write.

Feb 8, 2013 - 12:03pm

Monetary vs Non-Monetary Gold

The Question of Miniscule Quantities of Gold Money During the Transition From Barter to a Money Economy

If all existing available forms of gold are placed in one of the two categories of monetary or non-monetery gold, then those two categories must be simply synonymous with the two categories of exchange-valued and subjective use-valued gold, respectively. These are not categories intrinsic to the form of gold in question, but are the result of the intent of the specific holder of the gold to either employ the gold directly to satisfy subjective ends or to indirectly do so through an exchange process. If a given sample of gold potentially has both subjective use-value and exchange-value to its holder, the economic value is the value which is the greater of the two, at a particular time. (cont)It is sometimes questioned as to how Austrian theory can claim that any amount of money is sufficient to supply all of the services that money can provide when the very first use of gold as money must inherently have involved very small amounts of gold.

Feb 8, 2013 - 12:03pm

Rabbit Ears

Duplicate deleted.

Feb 8, 2013 - 12:05pm

Doc: Suggest you find


Suggest you find somewhere for sale by owner. Screw the banks.

System D:

Feb 8, 2013 - 12:07pm

And then there is this


The Balance of Payments and International Investment Position Manual Sixth edition states that:

10.50 Nonmonetary gold covers all gold other than monetary gold. Monetary gold is owned by monetary authorities and held as a reserve asset. Nonmonetary gold can be in the form of bullion (that is, gold bullion takes the form of coins, ingots, or bars with a purity of at least 995 parts per thousand, including such gold held in allocated gold accounts), gold powder, and gold in other unwrought or semimanufactured forms. Jewelry, watches, etc. that contain gold are included under general merchandise, not nonmonetary gold. Nonmonetary gold sales and purchases that are not shipped are valued at transaction prices, not Free On Board. The price should include any dealer’s margins or commissions not billed separately.

Feb 8, 2013 - 12:11pm


Last time I made a large purchase, I put down a small amount then paid off the loan very very early. Less hassle.

Feb 8, 2013 - 12:11pm


Yes, things are slowing down, I'm certain of it.

Feb 8, 2013 - 12:16pm

Not that today has been dull, but...

... even the Kitco datafeed dozed off for half an hour

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