Not So Happy Tuesday

171
Tue, Jun 4, 2013 - 1:57pm

Lots going on today and I'm off to a late start so let's dive right in.

First, let's talk about the price action today. After the surprising rally yesterday, I asked you to watch the Asia and London trade for clues to the Comex action today. What did we see? After a flat Asian session, the London Monkeys did their usual thing from about 2:00 am EDT on. The London Monkeys have now acted on 14 of the past 17 days. Check this chart from Ranting Andy:

The result was a giveback of more than half of yesterday's gains.

Why did we see this? Hard to say for sure but, with volume light ahead of the BLSBS later this week, I suspect that a lot of this was some Bullion Bank selling that was aimed at lessening some longs ahead of the CoT survey. No doubt the action since last Tuesday is a continuation of the trend of last week's report. Therefore, the banks tried today to lighten a few of the longs they had built up over the course of the week. This also serves the dual purpose of defending the 20-day MA and restoring some confidence to some of the shaky spec shorts. At any rate...we're down a modest $13 as I type. Let's see what tomorrow brings.

Speaking of the CoT, there has been some excellent analysis written in the past few days so I thought I would highlight some here. Again, the positioning of the Commericals vs The Specs has gotten so extreme that it has reached historic levels. Ultimately, how you interpret this depends upon just whom you think is really in charge. Is it The Specs or do The Cartel Banks lead The Specs by the nose into whichever position they would like? Let's start with longtime CoT-watcher Gene Arensberg: https://www.gotgoldreport.com/2013/05/gold-and-silver-disaggregated-cot-report-dcot-for-may-31.html

Next, read this link over at KWN: https://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/4_This_Amazing_Chart_Shows_Gold_Set_For_Massive_$1,000_Spike.html. While we might disagree that this chart alone shows that "gold is set for a massive $1000 spike", the interview is helpful and in contains this excellent chart. (Click on it to enlarge.)

Reading that article inspired the Turdite "WildStyleChef" to create the chart below. This shows graphically how Commercial positioning is inversely correlated to price. (Again, click to enlarge.)

OK, moving on. I found this to be interesting. Recall that when the Dutch bullion bank, ABN AMRO, announced their plan to settle in cash a few months back, many of us called it a default. https://www.tfmetalsreport.com/blog/4667/gold-delivery-or-default This article published Friday follows along with that theme. I don't know anything about the author but that's OK. He probably doesn't know anything about me, either. https://www.jcaschipper.nl/2013/05/nationalized-abn-amro-offers-fools-gold/

Still lots of talk out there about Fed QE "tapering". Again, I think is all silly and it may be a non-topic as soon as Friday at 8:31 am. Regardless, as mentioned last week, even if The Bernank was to announce some type of "taper", it would likely come from the $40B/month MBS-purchase side of the QE∞ equation. The Fed could still monetize $45B/month in treasuries directly while cutting the Primary Dealer kickback life support handout welfare bullshit MBS purchases to $20B/month. This would still be $65B/month in QE and silence all the hawks. Not saying that it will happen, just saying that even if it did, it's no big deal! $65B/month is still nearly $800B/year in fresh greenback, created from whole cloth for the purpose of sustaining The Great Ponzi. Read more at ZH: https://www.zerohedge.com/news/2013-06-04/chart-day-feds-taper-perspective And here's how it looks graphically:

Finally, I don't know if you've noticed but lately there sure have been a lot of big mines that have been taken off-line.

So, now, what to make of all this? Well, if you believe that everything is hunky-dory and that there are no supply issues in gold, then this is no big deal. After all, even though The Grasberg mine is the largest in the world, it still only produces about 30 metric tonnes per year or a little over 1% of all global mine production.

If, on the other hand, you think that the Bullion Banks are living hand-to-mouth and frantically trying to keep their Fractional Reserve Bullion Banking system alive, then it is a big deal. A very big deal.

That's a lot of gold...a lot of currently anticipated and expected supply that isn't coming. How much of this production was already sold forward into the market? And if it was already sold forward, what happens when it fails to materialize on schedule? Hmmmm. Could that lead to those contracts being covered? Could it lead to some new long purchasing as a hedge against supply delays, not only from the suppliers but from the end-users, as well? And with the current CoT structure in gold being akin to an overgrown and dried out California ravine just waiting for a spark...

Let's just leave it there for today. I hope that the rest of your Tuesday goes well and I look forward to seeing what tomorrow brings. Again, if I'm right about the cause of today's drop being Cartel CoT-positioning, then we should see a bit of a bounceback on the Globex and overnight.

TF

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  171 Comments

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¤
Jun 4, 2013 - 8:29pm

Gold and silver prices

Adjust your timelines and take the...

Green Day - Longview [Official Music Video]

Cry Me A River
Jun 4, 2013 - 8:14pm

More Down For The Nikkei

This Updates On Page Refresh:

Bollocks
Jun 4, 2013 - 7:56pm

Well, this is quite amazing.

David Icke launched an appeal 4 days ago for funding towards a TV station.

I personally am not with him about some of the stuff he says, but he does speak the truth, in my experience, in many, many areas and has been doing a great job over the last 25 years or so in trying to wake people up to what's really going on. He's gone from mass-ridicule to where he is now, and has never wavered in his message. KUDOS.

£73,000 ($110,000) raised. In just 4 days. Wow.

https://www.indiegogo.com/projects/the-people-s-voice

القراع عصفور
Jun 4, 2013 - 7:21pm

got this from Fidelity today

i can't get it to format right. received by e-mail. i have signed up for electronic delivery, so assume it also is being sent by mail. i thought the timing was a bit odd.

Because one or more products or account positions in your Fidelity account are eligible for FDIC insurance coverage, we want to remind you about current FDIC coverage limits and why you should monitor your balances.
Generally, deposits at a bank held in nonretirement and qualified retirement accounts such as traditional or Roth IRAs are eligible for up to $250,000 coverage per account owner, per depository institution. Certain holdings at Fidelity are eligible for “pass-through” FDIC insurance coverage subject to these same limits.

Eligible positions include:

Certificates of deposit (CDs) — Brokered CDs that are issued by an FDIC-insured institution
Core balances in the Fidelity® Cash Management Account1
Core balances in eligible Fidelity IRAs or Fidelity Health Savings Accounts1
Any 529 Bank Deposit Portfolio investments
Please keep in mind, monitoring your FDIC coverage is your responsibility.
Cry Me A River
Jun 4, 2013 - 7:19pm
SilverSurfers
Jun 4, 2013 - 7:06pm

LOL

atta boy, bo tox, love a good rant.

Ilya Repin
Jun 4, 2013 - 7:04pm

@JY896

I don't know, i haven't made charts to that degree of detail for Oil and wheat. Gold i am working on but it takes lots of calculating.

But a simple answer is... "Much higher" ... and that is a bad thing


Urban Roman
Jun 4, 2013 - 6:52pm
Jun 4, 2013 - 6:43pm

@Ilya

It all depends.... what is your projection for:

a) gold

b) oil

c) bread / wheat

in the same timeframe? ;-)

That USD isn't as rigid a measurement unit as it used to be... esp. over a 3-yr timeframe.

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