Pre-Bernank Post

130
Wed, May 22, 2013 - 10:05am

Just a quick post as The Bernank is due before Congress at 10:00 a.m. EDT.

Five things...in no particular order...

First, the Yen is rolling over again. In case you missed it, here's a reprint of a chart I posted as a comment back on Sunday. I went searching for something historical. One, to put the decline into context and, two, to look for a potential bottom level. Well, I think I found a bottom and it looks to still be a ways away. Maybe 85/115?

The open interest levels as we approach FND for the June13 gold are getting more interesting. The latest number is as of Monday. This leaves us with 8 trading days to go (including yesterday, for which we get the numbers today). As of Monday, the total OI in Comex gold had grown to 453,048. Interestingly, this is the highest OI level since March 13th. Additionally, with 8 days to go until FND, the June13 OI still stands at 186,952. Now don't go getting too excited just yet...but...with 8 days to go before FND for the April13, OI stood at 176,921 and with 8 days to go before Feb13 FND, the Feb13 OI was 187,059. Could we get 12,00-15,000 contracts standing on FND? Maybe. Why is this important? As of last evening, the total Comex registered inventory stood at just under 52 mts. Some quick back-of-the-envelope math reveals that this is only enough gold to settle 16,680 contracts. Hmmmm...

And this is fun. The GLD shed another 8.42 tonnes of "inventory" yesterday, dropping the alleged total "inventory" back to 1023.08 metric tonnes. How long before the total tonnage drops back into he triple digits? At this rate, not very. And chew on this little nugget I was sent yesterday: Back in the day, the GLD added about 230 mts in a little over a month. From 1/16/09 to 2/18/09, the "fund" went from 795.5 mts to 1024.09. Again, hmmmm. We are now back to that level. Will we now see 200 tonnes exit the "fund" in rapid succession???

Jim Quinn has written another excellent article. Please read this today: https://www.theburningplatform.com/?p=54125

And, finally, please check out the growing list of prizes for the Riff-Raffle. We've added several new items, most prominently, a one ounce Gold Philharmonic coin. This brings the total gold coins to be given away up to two!! The deadline for buying tickets has been extended to Friday so please consider purchasing a few and taking your chances. The current pool is about 450 tickets so you still have a decent shot at winning!

Have a fun day and enjoy the pleasant mutterings of The Bernank!

TF

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  130 Comments

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JackPutter
May 22, 2013 - 3:37pm

Might I Point Out?

That the "spot price for gold" is actually the spot price of promises made on the futures market. The futures are themselves derivatives of the underlying assets they are supposed to represent. It is blatantly selling what you don't have.

The prices of these futures (paper promises are the Kitco price) are a little high when taken into consideration the risks of MFGlobal and PFGbest, which are extraordinary events of loss. Especially since the COMEX has shown that it will not step forward and warranty the deals.

Hence the promises were broken. That is a HUGE risk in my book. That for every price rip down it further separates itself from the actuality of getting metals-to-hand. This is why the premiums continue to grow.

There are real sales of ounces of gold happening above FRN-$1500. The price limits can be seen on Ebay with the buy-it-now options available. If you see a buy-it-now this means you are the first to see it, or everyone else who has have already passed on it. There are bidders who are bidding for actual delivery.

We must separate our thinking (A challenging thing to accomplish.) from the expectation of fiat-price (A paper promise of value with the specified loss of %2 per year) for the promise of real assets.

Edit for clarification - The buy it now sales are your Ask, and the bidding sales ongoing are your Bid.

May 22, 2013 - 3:24pm

A chart comparison, without much comment

other than there has been a different kind of disconnect between paper and physical it seems to me. Here is the DJIA compared to gold and then gold in usd and yen.

The Yen goes first, in late fall 2012, and then the Dow Jones in January 2013. It really looks like an enormous bubble to me, and some fairly brutal correction might well occur. I am a simpleton, but patterns are patterns, and despite the current wag in the tail, I am still much happier owning more rocks than paper.

hai
May 22, 2013 - 3:19pm
Willy
May 22, 2013 - 3:11pm

Rosen Charts

The latest charts from Ronald Rosen are nice to see I must say. He has been doing this for over 50 years as well. Man, it would be so nice if we got a nice rip up in the metals over the next 10 months. If you look at how long we've been correcting (almost 2 years), sentiment (as bad as it can get), fundamentals (amazing), demand (massive), supply (tight), Commercials net long or close to it (super bullish) it all suggests that a big move is ahead. Who know's 10 months from now we may look back and say those were the toughest of times to be in but it was well worth it.

I also watched Maloney's video he just released and he made a great point about silver. He said, today silver is trading at $22. In 1980 it traded at $50. What can you buy today (other than microchips for example) that is cheaper today than it's 1980 price? Great point! Where was the DOW at? 1000-2000 points I'm guessing? A car $2000? A house $20000? What do all of those cost today? And here's silver at $22! HTFD which is hold this F'n Dip!!!!!!! Buy it too :)

Silver Monkey
May 22, 2013 - 3:11pm

uhhhhhhhhhhhh

what the hell is going on re Woolwich?

https://twitter.com/BOYADEE

start w/ this tweet:
Boya Dee @BOYADEE 4h

Ohhhhh myyyy God!!!! I just see a man with his head chopped off right
in front of my eyes!

Mickey
May 22, 2013 - 3:08pm

the talk of tapering qe is

or whatever term used, is to give impression that the economy is improving.

If they are thinking qe can end we must be getting better.

explain that to WMT and TGT with same store sales down, or Best Buy or Cat or IBM , or many others (I like AMAT since its revs according to IBD Marketsmith are now red 7 quarters in a row and its stock is up 50% since december.

is the new rule to buy contraction?

old tradesman
May 22, 2013 - 3:08pm
May 22, 2013 - 3:06pm

Regarding "tapering"

It seems to simply be taken as an overall reduction in QE.

But what no one has yet to point out is that QE∞ is in two parts:

  • $40B/month in MBS welfare purchases from the PDs.
  • $45B/month in direct debt monetization through treasury purchases

What if this so-called "tapering" is simply a reduction of the MBS giveaways purchases? What if The Fed dropped that back to $25B/month? They could say they were cutting QE w/o too material of an impact on rates and the overall bond market.

More on this in a new post very soon.

Sheetrocker
May 22, 2013 - 3:03pm

Swedish Riots

Swedish Youth Riots Enter Third Day

Submitted by Tyler Durden on 05/22/2013 - 11:32

Sparked by the police shooting of a machete-wielding 69 year-old man, traditionally calm-and-collected Sweden is suffering amid its third night of riots. It seems underlying tensions from high youth unemployment and rising nationalism against the nation's large immigrant population have been catalyzed by this seemingly unrelated event. As the Daily Mail notes, immigrant ghettos have been created where unemployment is high and there are few opportunities for residents with left-leaning commenters adding that the riots represented a 'gigantic failure' of government policies, which had underpinned the rise of ghettos in the suburbs - "We have failed to give many of the people in the suburbs a hope for the future." An anti-immigrant party, the Sweden Democrats, has risen to third in polls ahead of a general election due next year, reflecting unease about immigrants among many voters. What is driving this tension? After decades of practicing the 'Swedish model' of generous welfare benefits, the country has been reducing the role of the state since the 1990s, spurring the fastest growth in inequality of any advanced OECD economy. Given Sweden's 24.7% youth unemployment, we wonder just what will happen to the 60% of unemployed youths in Greece and Spain when school lets out this summer?

Call me what you will, but I have long held that the massive, unrestricted immigration from third-world countries is an orchestrated event, designed to destroy the cultures of the invaded countries and bring them down. This is happening in every developed nation in the western world, including the US.

Why is the US backing the most radical, jihadist muslim groups in every conflict in the MEMA? I say it's part of a globalist plan to create tension and chaos.

Welcome to Sweden of Today.
Video unavailable
Cry Me A River
May 22, 2013 - 3:01pm

Jake, excellent observation

EVERYONE PLEASE GO BACK AND READ IT

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