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

Maximillion
May 22, 2013 - 11:28am

Understanding the problem is not hard

Here in Uk doctors get circa £100k per yr income, with a 4oth scheme index linked pension after 40yrs (ie 50% of their final salary). Assuming a 30% net tax rate they will each contribute circa £1.2mill before retirement, which at 1.6% compound will give them a retirement fund of £2.0 mill PROVIDED THE MONEY IS ALL ACTUALLY INVESTED and not spent by the Govt in the interim. The same system applies to the majority of Civil Servants. The £2.0 mill fund will just about provide a £50k per annum indexed pension based on current annuity rates.

The simple problem is that very little, if anything is actually being invested, which means the pension promise must eventually be broken! Then what happens?

realitybiter
May 22, 2013 - 11:28am

Yen gets blamed

What an out!

Bernanke can blame America's profligacy induced debt failure on the Japanese. Genius. WW2 all over again. JGBs ruin all bond markets...reset, blame it on the Japanese.

Did we quit when the Germans bombed Pearl Harbor?

How convenient.

I'm old enough to remember $200 taxi fares in Tokyo, $5k for a square foot of real estate, and the movies depicting how Japan would take over the world....indeed...they took the world headlines, infamously...

The Watchman
May 22, 2013 - 11:29am
Utilitarian realitybiter
May 22, 2013 - 11:34am

Reference: Bass and Yen timing

Can not recall the words but he said something like -

You will know the time by the change in the overnight swap rates of ?. When asked how the average person would know. He responded the average person would not have the ability to find out that swap rate until it was to late. When the rate hits, then the jig is up. He also referenced playing the Japanese stock market at this time like - Picking up a dime in front of a steam roller. ... The event will not be hours but will happen within an instant for a poor serf like me.

Just stack and relax. The time will come like a thief in the night.

billwilson
May 22, 2013 - 11:35am

High Noon

The last two days have seen nice spikes right at 12 noon. More today?

DeaconBenjamin
May 22, 2013 - 11:39am
wouldyoubelieve...
May 22, 2013 - 11:39am

@Zoltan

IMHO, his early bow out of Jackoff Ahole in Aug is because 1) he'll be busy with the new systemic problem or 2) be fishing/golfing.

I bet on 2, he knows what is coming this fall and wants to be somewhere far away when it happens.

boatman
May 22, 2013 - 11:39am

wait til the FED minutes come out

u know its all 'exiting QE sometime in the future'

reaction should tell alot about the 1330 double bottom

Prize Fighter
May 22, 2013 - 11:42am

There's a gap @ 21.90

There's a gap @ 21.90

¤
May 22, 2013 - 11:43am

Bernanke signals

Regarding balance sheet accommodations and being able to handle them and lower those balances down drastically....

I wrote a very long time ago (and I'm sticking to it) that at some point an unbelievable but very real Fed balance sheet maneuver will happen that defies (and rewrites) "normal" and historical FASB accounting methods that will be acceptable (they'll have no choice) to many other countries because at some point they'll follow suit (public grudgingly, but privately gleefully).

It'll be nothing more then a debt write down done in private by many CB's in their typical black book ledger moves that none of us (myself included) can fully comprehend as 'doable'.

In short, it's nothing more then a planned write down and this whole build -up of QE everywhere is nothing more then the CB's getting in one last historically humongous "last hurrah".

Will the USD suffer at that point in time from such a maneuver???

You betcha'....right along side with every other currency that follows suit thereafter does so. Do you think the US cares as long as the USD stays strong relative to other currencies at that point once they follow suit.

You betcha'! The Treasury/Fed and other CB's are light years ahead (ok...maybe just decades) of what we think is possible or fair or legal. Hey...they make the laws.

In the end, when the debt apple cart is overflowing the CB's will do what they have to do. Isn't that always the case?

That's when gold and the Chinese gold backed Yuan starts to surface all around the same time (my guess-timate is still the same...early to mid 2017 with serious percolations starting in 2015-2016)

I reside outside the box....and could be wrong.

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