The Audacity of MOPE

273
Thu, May 16, 2013 - 11:49am

With the metals down again today, I thought it was time to spread some information, not misinformation or disinformation.

The common MOPE regarding the rising U.S. stock market and potential Fed "tapering" is that finally, after four years of fits and starts, the U.S. economy is recovering and growing based on the improving economic statistics and burgeoning housing recovery. So is that really the case?

Yesterday, we discussed the fallacies of the latest BLSBS data and, as any regular reader of ZeroHedge knows, over the past 90 days almost every key metric of economic activity has "disappointed". Just today we had:

And, again, that's just today. The meme is that everything is finally getting better. Really? Really?? Hmmm. Let's go back to that housing starts thingy. As discussed yesterday, there's a certain LAW called The Law of Supply and Demand. For those who failed Econ 101, think of it in terms of a chart with a vertical axis and a horizontal axis. In it's most basic form, it looks like this:

What this is showing you is that price exists at the intersection of supply and demand. If you increase the supply or decrease the demand of an item, the price equilibrium is reset lower and price falls. Conversely, decreasing supply or increasing demand has the impact of raising prices. (See, it's not complicated. Maybe if you had spent more time studying and less time at the bar, you might have had a higher GPA!)

So, what does this mean for our supposedly robust housing recovery? While admitting that this is not the be-all-end-all, these four charts should be enough to give you pause and prompt you to consider whether the mainstream media is giving you the facts or just a heaping pile of MOPE.

If you're going to build a house, an apartment complex or an office building, you need to acquire a number of things. Most of the process is summarized quite neatly by Thornton Mellon in the clip below:

For the purposes of this discussion, however, let's keep it simple. For our house, we'll need lots of lumber for construction, copper for wiring and plumbing, aluminum for all the HVAC stuff and steel for the support columns and crossbeams. Again, price is a function of supply and demand so one might expect that a "robust" housing sector would be causing increased demand for these raw materials. One might expect that but one would be wrong.

Let's see, how's that lumber market doing?

And I think we all know that ole DrC hasn't been doing too well, either...

Uh-oh. Zero for two. Maybe aluminum and steel are faring better? Nope.

Ahh, but what do I know. I'm just a dope with a MacBook (that's for Turdle ). But it sure looks to me that there isn't much of a housing recovery going on. And if there isn't a housing recovery, then the U.S. economy isn't getting any better. And if the U.S. economy isn't getting any better, then tax revenues won't be increasing. And if tax revenues won't be increasing, then the federal deficit won't be falling. And if the deficit isn't falling, then the Fed will have to keep propping up the bond market. And if the Fed has to continue propping up the bond market, the idea of them "tapering" is simple nonsense. And if tapering is nonsense, explain to me why the metals are once again falling this week.

Well, the past three days, it's all started in London. I think I recall that Ranting Andy has a term for this action but I can't remember what it is. What I do know is that when the selling starts at 2:00 am New York time and carries on until about 7:00 am New York time, the selling is originating in London. And who's in London? Just the bullion banks, that's all, doing their dirty deeds to slant the market in the thin, pre-Comex trading, trying to set the tone for the spec momo HFT money to come charging in at the 8:20 EDT Comex open. It's not complicated and it's all right here for everyone to see:

For today, at least, their efforts have been thwarted by all the crappy economic news and we've got a bit of a bounce on our hands. (That hat is still looking tasty, though.) Maybe, just maybe, we're getting a double bottom painted onto the charts? We'll see. Time will tell.

One last thing to discuss today. You know, back in the day, over two years ago when silver was soaring, there was a lot of talk about Comex defaults and commercial signal failures. I have to admit being sucked in a bit by this back then. Obviously, it didn't happen and I've since been very wary of this kind of talk. Again, if we've learned anything these past three years or so its that the primary power held by TPTB is the power to postpone the inevitable. That said, the Comex gold inventory numbers are really beginning to capture my attention on a daily basis.

We discussed this a bit yesterday but it's worth going over again today. After JPM reclassified another 160,000 ounces of gold from Registered (able to be used to for contract delivery) to Eligible (not ready for delivery), the TOTAL Comex registered inventory fell again yesterday and it now stands at just 1,676,000 troy ounces or about 52 metric tonnes.

Recall that every Comex gold contract is for 100 ounces. This means that the Comex registered vaults only have enough gold on hand to physically settle just 16,760 contracts. Big deal, you say. So what, you mutter. And you may be right. Most likely, The Shell Game & Charade will continue through the clever reclassification of more than enough rehypothecated gold from Eligible to Registered. OK, maybe. But chew on this for a minute.

The first "delivery" month for gold this year was February. That month, the total number of contracts standing for delivery totaled more than 13,000. This was somewhat odd in that that was nearly more than August, October and December of 2012 combined. That got my attention. Then, when April delivery rolled around, just 6,600 initially stood for delivery. Crisis passed, right? February was just a one-off. An outlier. Uhhh, nope. Over the course of the month, money continued to flow into the April contract for immediate delivery. These buyers were ponying up 100% margin and "jumping the queue" to some extent in that they were seemingly unwilling to wait for June. In the end, when it was all said and done, the Comex ended up delivering to 11,632 contracts in April.

And now here we come toward June. First Notice Day for the June contract is two weeks from tomorrow, the 31st. Again, on that day, the June13 stops trading and all contract holders must put up 100% margin in order to indicate their intent to take delivery. As of yesterday, the total open interest in the June contract was still 200,477. No doubt the vast majority of these are paper traders who, as we approach the end of this month, will sell or cover and roll into August. However, some will hold, intent upon taking delivery. (Maybe if you're Shanghai and you're currently completely cleaned out of gold in your vaults, you might take delivery of a few contracts? Hey, a guy can hope, can't he?) Of course, the question is, how many?

Again, as of this moment, The Comex only has enough Registered gold to settle 16,760 contracts. For some perspective, when we were 11 days out from FND for the April contract, the OI for April was 196,135. When we were 11 days out for the Feb13, the OI was 200,441. So, having the current June OI stand at 200,477 tells us very little. However, we must watch this very closely in the days ahead. Let's keep an eye on Comex vault changes and compare that to the daily drawdown of June open interest.

OK, that's all for today. Once again I plead with you to keep the faith and stand defiant. The laws of supply and demand are currently impacting paper metal which, in turn, impact the price of physical metal, too. This cannot and will not last forever. Hang in there.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  273 Comments

realitybiter
May 16, 2013 - 2:54pm

Hmmmm

A couple of q's from the 'biter:

1) What really got discussed at Obamas banker meeting on the 11th of April?

2) If Bernank can't make the JH meeting why not reschedule? Skype? Sat-link?

3) Nearly every great bull market in the last decade has been an opportunity to "hang ten". Get all your toes on the end of the board just before the "wipeout". Dotcom bubble. Real estate bubble. PMs in 2011? Stocks today? Stick with me on the PMs....PMs were never widely owned, but politically, the 'nank had to bitch slap us hard....think about the Bear Stearns event...that was March 2008....coincided with the silver collapse down to single digits....kind of weird. PMs should be safe haven, no? That was BS 1.0...today? 2011-13 in PM BS 2.0....not terminal, but a slappin' none the less.

And now the equity markets...suck em all in (margin debts are tipping the scales....) and in 6 months they will be crying for their momma....

If you are a PM bear than all of this is meaningless. If you are a bull, then you have watch the bottom process. First the positive divergence will happen (now? maybe????). Then the look to the left old highs will start to give away with impressive force....we shall see..

as they say in Japan:

Erect Weiner Holder 2016

ancientmoneyJ Y
May 16, 2013 - 2:54pm

@JY896 re: the Bernank-crazy like a fox? . . .

Orange and Bohemian posted the link earlier, and I agree, it should be read. I think he is very close to the truth. A conclusional snippet:

"Concluding thoughts

I concede that my thesis is conjecture at this point but it makes sense to me. Here is what I see happening. The Fed withdraws market support, the market crashes in a shocking and rapid descent back to the 2009 lows, the eurozone recession worsens, China's slowdown worsens, Japan's last ditch effort back fires and the world plunges into recession.

In short order a solution is offered - a new monetary system that promises to resolve our problems. The system has the added benefit of a partially gold backed re-set of all sovereign currencies - in effect monetizing the debts of troubled nations once and for all and allowing debt-to-GDP ratios to move back in line with historic norms.

Thereafter, economies start to improve as confidence is restored and the perception of value is evident in all asset classes. Excess reserves rapidly shrink as money lending resumes and investments increase - again based in part on the perception of real value and also the confidence in the new monetary system. In other words, the next secular bull market begins.

As banks lend M2 will expand rapidly and inflation will be the short-term consequence. And yes, the gold bugs will be proven right as inflation will push gold sharply higher and that will also be of benefit to sovereigns who now hold gold as a partial backing of their own currencies. Bonds will fall and yields will rise once again rewarding the prudent amongst us who will benefit from normalized rates. In fact, higher interest rates will be necessary to keep inflation in check.

What might be the most surprising aspect of this whole scenario is the incredibly rapid pace of the events. Here too we may have a clue on timing. Consider that Bernanke has announced he won't be in attendance at Jackson Hole this year due to a scheduling conflict. One wonders what that conflict might be that would pre-empt the single biggest event of the year for a central bank head. It certainly can't be an emergency as he announced that he wouldn't attend several months before the event.

What possible reason would he have for announcing he would not attend? Maybe he plans to be pre-occupied selling Congress on the need to adopt the new system or maybe he simply plans to take the lead in introducing and selling the system to the world and the timing for this event has already been set and conflicts with Jackson Hole. I do think the stage is set and now is the time to begin the final chapter in the process of orchestrating an epic and positive shift that I see as resolving many issues that have held us captive in a secular bear market that is well into its second decade."

---------------------------------------------------------------------------------

Notes:

1. I agree that QE into bonds will continue. However, this author says stock market support by Fed will be pulled away. Crash!!

2. The Jackson Hole conference is August 29-31, 2013. Bernank excused himself from it already in April.

3. The current system of "QE forever!" is unsustainable. Cyprus Steal announced that fact to the world.

4. Since Cyprus event, physical gold stockpiles are nosediving across the world, while EVERYONE who is "big money" is selling their paper gold--which is the result we are allowed to see.

5. Ted Butler surmises that JPM is taking the GLD gold. As JPM=Fed, this makes good sense. Maybe some of it goes to Germany, and others, so all nations receive the "proper level of gold reserves" needed for the new financial system.

6. New C-note with gold embellishments to arrive October 2013. Just in time to introduce the new system?

There is a-whole-lot-a-shakin'-goin-on behind the scenes, as governments and the banking system prepares for what comes next. I think it'll still be the west vs. the orient, though, as they no longer trust the western bankers. they are establishing their own system, likely with gold backing of some sort. So, the west needs to be ready to compete by doing the same.

Howard Roark
May 16, 2013 - 2:58pm

@Larry

I´m in a hurry all I can say is that in a sense we are all "JGalts".

Potentialy, I mean.

A big hug.

HR

GoldistheFuture
May 16, 2013 - 3:06pm

SOROS IS BACK!

Well it looks like gold equities might be coming to a bottom. Soros just loaded up the boat and he seems to be pretty good at sensing bottoms and tops in the gold market. Soros even loaded up on Juniors!! Read this article!
https://bullmarketthinking.com/soros-reports-over-239mm-in-gold-position...

Southern Cross
May 16, 2013 - 3:08pm

Possible False Flag - FYI - 50K Scouts Expected

National Scout Jamboree 2013 False Flag Insider Warning. Nevada Governor 2014 David Lory VanDerBeek

Wednesday, May 15, 2013 14:15 Story originally posted at nevadagovernor2014.com.

FEMA JULY DRILL

I have been on the phone with two reliable sources connected with military and a well known private investigative network. The military source decided to come forward because of the Boston bombing and the evidence that it was staged by the FBI. The source provided information regarding a July FEMA mass casualty terror drill that has been kept a secret from the public. As I’ve previously said, it is not the announced FEMA/DHS/FBI terror drills that concern me, it is the unannounced drills that go live like Boston that concern me because real people can and do die. The source indicated that we need to scrutinize the National Scout Jamboree 2013 for a possible mass government staged false flag attack. https://summit.scouting.org/en/Jamboree2013/Pages/default.aspx The leaders of the event are changing the location of the event for the first time in 30 years. Governor Earl Ray Tomblin of West Virginia has signed an executive order giving DHS, FEMA, and the national guard martial law police power over the event. “Thousands” of national guard soldiers will be there. https://www.register-herald.com/local/x2063990347/State-s-Division-of-Homeland-Security-to-coordinate-Jamboree Governor “Tomblin said he expects several thousand National Guard from West Virginia and across the country on the ground during the Jamboree “in case of an attack … or health crisis.”” There will be 50,000 scouts there with their families. The source provided notes from a government source that FEMA is preparing an unannounced disease outbreak drill caused by conventional and unconventional terrorism in July with 4:1 ratio of mental and “sick” and believes this drill could be held at the Jamboree. Unconventional terrorism is chemical and germ weapons. There will be kill and wounded family members involving sociogenic illness which means that a medical condition will be shared by a mass of people. They will have multiple unexplained physical symptoms. There will be no clear start or stop to the event that will be long term inciting panic and mistrust of public officials. Being at this reserve, the scouts would be in the perfect location to rationalize a quarantine. Rioting/”breaking quarantine”, “noncompliance with vaccination and medical orders” as well as “resisting travel restrictions” are addressed in this powerpoint by the man named as the FEMA expert Steven M. Crimando overseeing the drill scenario https://www.njeha.org/pdf/Steven%20Crimando%20-%20Psychology%20Disaster.pptx.pdf If you look at his bio slide, he was a responder to both terrorist attacks on the WTC 1993 and 9/11 and Anthrax threat. In other words, this man is an expert in what would be the 9/11 scale of bio/chemical terrorist attacks.

WHO IS BECHTEL?

But this is not all. We need to compare the old long standing location of the National Scout jamboree to the new one, but first I wanted to know about who owns the new location. The previous location for the last 30 years is Fort A.P. Hill, Virginia, an active military base near D.C. I would like to know who made the decision to change the location and why. The new location is The Summit: Bechtel Family National Scout Reserve. Who is the Bechtel family? Google: “Bechtel corruption” They’re bad. Think of it this way: If the Rothschilds are the bankers of global government, Bechtel = the engineering company of global government. Remember the company that provided the poisonous mobile homes at Katrina? Think Bechtel. They have had construction contracts all over the Middle East = war profiteering. Remember all that waste in rebuilding after the first Iraq war? Think Bechtel. $680 for just a year and a half of work at the beginning of the war that blossomed into billions for them even though their works was a failure over and over. I did a search at usaspending.gov for the recipient “Bechtel” from and got back $53,760,324,263 in awarded contracts between 1999 and now. These are also the bastards that privatized Bolivia’s water supply raising the cost of water %50. After they were kicked out of the country due to the people rioting, Bechtel sued them for $50 million and received 30 cents because of international pressure. Remember the story about the corporation who first made the collection of rain water illegal? Think Bechtel. Bechtel = Blood for Water (see their logo below: bloody water/water wars) Here are their contributions https://influenceexplorer.com/organization/bechtel-

silverwood
May 16, 2013 - 3:10pm

seeking alpha article

Thanks Orange for reposting that article from seeking alpha https://seekingalpha.com/article/1437121-the-bernanke-agenda-it-isn-t-what-you-think-it-is?source=email_portfolio&ifp=0

I find it quite interesting and quite plausible. I also was involved in a conversation recently regarding the new $100 bill which is slated to be finally released this fall, more clues? Anyway I want to second what Orange has said in that all of us should read this article. This guy who wrote it may have been privy( via the universal mind/consciousness) what the boyz are up to!

A.B.
May 16, 2013 - 3:11pm

Regarding the inflation...

I think that there is a great inflation going on however it is been sucked up by the stocks. After all it is the only place where the easily created money can funnel into without making a terrible effect and residue to the real economy. Soaring prices are not effecting anything in the real economy.

It is a genius way to hide the inflation.

What a big farce... When it will blow it will really smell very bad for a long time.

Turd tx for the post and the effort as always.

Spartacus Rex
May 16, 2013 - 3:21pm

TF: "just a dope with a MacBook" WTH?

Oh NO, Holy Crap! I must be dyslexic.

I thought TF was a Mac with the Dope Book!

Oh well, as long as the targeted PM keep stackin higher and faster each week, no matter, REPEAT!

Semper Phyz!

foxenburg
May 16, 2013 - 3:25pm

wondering

I am starting to wonder if the only reason gold did so well for ten years is because all these ETF paper-players whipped up such a storm of interest.

Rodney's economics class

Submitted by silverwood on May 16, 2013 - 12:25pm. Hat Tip! 0

What was the movie that this video clip comes from?ool

Back to School (1986)

meluaufeet
May 16, 2013 - 3:31pm

Orange, Bohemian & ancientmoney, etal: Good catch

The great monetary reset this summer (didn't Timmy Geithner also mention this lately).

The pieces are coming together. Thanks for the good work.

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