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

About the Author

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

  171 Comments

  Refresh
ancientmoney
Jun 5, 2013 - 1:12pm

An act of war?

I wonder if the west would consider China backing its currency with gold to be an act of war. It would certainly feel like a currency/trade attack by China. However, it was the U.S. that took the world off the gold standard that created this situation brewing now.

It seems that our leadership, if you can call it that, is caught entirely flat-footed. They know there is no good way out, and so they simply prepare by buying guns and bullets to try to contain the coming fallout.

Nothing from congress, POTUS, academia, think-tanks, nothing. Meanwhile, China exhorts its people to own gold and silver, and actively buys every ounce it can find.

It seems impossible for our intelligentsia to be so completely helpless to do anything, let alone the right thing. Yet, it is so.

Bugzy
Jun 5, 2013 - 1:10pm

Which way around?

Genius humour with a few inappropriate comments directed at woman in particular.

Or

Systematic abuse of women, on a public forum, by some perve, who attempts to justify it under the guise of unique brand of genius comedy.

Well, when somebody HAS to write at the bottom of all his comments that he is some modern day Jihadist comedian, as we would otherwise probably see it as something vile and not in the least bit funny.

Imagine, if you will, that the comedy jihad is omitted - he really would seem as mad as the hatter.

There are some very good comedians on this site who know the difference between intellectual fun and abuse. Monedas is not one of them.

ancientmoneyrealitybiter
Jun 5, 2013 - 1:03pm

@realitybiter re: shorting silver . . .

From your comment to monkry:

"Taking a new short position now is playing russian roulette with a six shooter that has "clicked" 5 times! Maybe the primer will misfire. I guess that is possible."

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

It is very possible, when you consider that JPM is allowed to load the six-shooter with its home-made reloads . . .

realitybitermonkry
Jun 5, 2013 - 12:57pm

monkry

Okay, moron was a bit harsh. But his statement is factually moronic - he is making his facts up. https://www.silverinstitute.org/site/supply-demand/

If he is simply looking at charts, we can have that discussion. Looking at charts, this thing is WAY oversold. On a 20 year chart of weeklies, MACD AND RSI have NEVER been more oversold. Taking a new short position now is playing russian roulette with a six shooter that has "clicked" 5 times! Maybe the primer will misfire. I guess that is possible.

SilverSurfers
Jun 5, 2013 - 12:54pm

Mind

screw poor poor Greg Hunter at watch dog, my three post have been waiting 4 hours for moderation, to clear for posting. Ever hear of cut bait or fish. LMAO He must be worried about getting sued, LMAO!!! Its not like trudville, you can call out the bad guys with impunity, and can just rock and roll here, this is such a great place.

Peter Gabriel - Shock The Monkey

In todays world, there are benefits to living poor and fearless. Turdville makes it happen, you can just rock and roll here.

Celente says it best

When you loose everything, and have nothing to lose, YOU LOSE IT!! LMAO!!

Next post:
Lose civility, meh, I dream of corn holing that she head, for the butt hurt.

Turd, how about another demand letter: I hereby demand, Poopers Up!!,

which for silver surfers, longing for Surfs Up!!, its kind of a double dutch.

Frankie Smith - Double Dutch Bus (Official Music Video)
Big Buffalo
Jun 5, 2013 - 12:54pm

4 hour

The 4 hour chart is holding strong in gold and silver. Something to consider.

Dobocop
Jun 5, 2013 - 12:52pm

I've said it before and Ill say it again

Monedas, one of the few posters here at TF metalsreport that I do not scroll past. Over the top? sometimes. Offensive? occasionally. I find his posts a breath of fresh air, relevant free thinking and funny.

El Gordo summed it up nicely, cant deal with the curve ball stay out of the ball diamond.

monkryrealitybiter
Jun 5, 2013 - 12:48pm

@ BITER

"That Brandt guy is a moron. Industrial demand for silver, primarily due to its use in solar and medical apps, has been growing constantly. Read Dave Morgan."

IMHO Brandt is not a moron, he comes from the trader side POV, where shorter term movements takes precedence for his posts.

I read all I can.

These days however I don't believe much of any of what I read, pro or con PM's, markets, etc.

ancientmoney
Jun 5, 2013 - 12:41pm

China strives for gold-backed Yuan . . .

"Countries have been battling each other in order to cheapen their currencies. The problem with a cheaper currency is that commodities cost more. So China has decided to opt for a higher currency.

The move in the yuan overnight was one of the most significant upticks I have seen. Like I said, the yuan moved to an all-time high. The yuan has advanced roughly 5% against the US dollar in just nine months. China also imported over 200 tons of gold for the most recent month. That is an extraordinary number. At that rate that’s over 2,400 tons of gold per year on an annualized basis.

This simply speeds up the point at which China will be the largest gold holder in the world. China saw gold come down and they didn’t just buy on the dip, instead they bought as much as the market would give them. And, again, you see the yuan going up so that is making the price of gold even cheaper for the Chinese.

It’s only a matter of time before the Chinese back the yuan with gold. This will push the yuan front and center as a key element in terms of being part of the world’s reserve currency basket. China gets the message. They are doing whatever it takes to establish their dominance in the world, particularly in the commodity arena. Their currency is flying and they are importing as much gold as they possibly can.

And without a doubt, China has been hoarding massive amounts of gold. Everyone agrees on that. But what nobody knows is exactly how much gold China currently has stockpiled, because China is not telling anybody.

One recent estimate put China’s gold reserves at more than 7,000 tons of gold, but it could potentially be far higher than that. When China does finally tell the rest of us how much gold they have, they will probably be just a move or two away from checkmate.

What we do know is that China is importing absolutely enormous amounts of gold right now even though China is also the number one gold producer on the planet.

According to Reuters, more than 223 tons of gold was imported into China from Hong Kong in March. That smashed the previous record of 114 tons in December.

Overall, Chinese imports of gold from Hong Kong tripled in 2012, and the final number for 2013 is going to absolutely smash what we saw in 2012.

Obviously something is happening.

China is massively hoarding gold at the same time that it is trying to substantially raise the international influence of the yuan.

It doesn’t take a genius to see where all of this is headed.

If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar. At that point you could forget about cheap gasoline or cheap Chinese imports. Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively. If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living. Today, most U.S. currency is actually used outside of the United States. If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us.

So keep an eye on China, and look out for any news about the yuan."

https://silverdoctors.com/does-china-plan-to-back-the-yuan-with-gold-and-make-it-the-primary-global-reserve-currency/

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

Maybe the loss of our western living standard that this entails is why the DHS has amassed 2 billion rounds of ammo, etc. It would also indicate that the U.S. no longer has the gold to competitively back the dollar, in order to stay in the game. The only solution is to continue QE to keep things going until China makes its move, and hope things work out til then. After that, God only knows what will happen. It may not be possible to adequately prepare for the shitstorm that results from the sudden collapse of the dollar. But we must try.

2x2
Jun 5, 2013 - 12:40pm

ignore user

I don't use this feature. I do however think some posts here are, well, puerile. (edit: Some may think that of some of mine!). I just scroll past them world tour 2013.

Xty - I've never corresponded with you personally but don't let one poster get the better of you. Yours are amongst the posts that really make this place what it is.

Subscribe or login to read all comments.

Contribute

Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
7/29 2:30 ET CGP presser
7/30 8:30 ET Q2 GDP first guess
7/31 8:30 ET Personal Income and Spending
7/31 8:30 ET Core inflation
7/31 9:45 ET Chicago PMI

Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
7/21 2:00 ET Senate vote on Judy Shelton
7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
7/23 10:00 ET Leading Economic Indicators
7/24 9:45 ET Markit flash PMIs for July

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

Recent Comments

Forum Discussion

by dangerkitty, 31 min 44 sec ago
by Cawaceva, 2 hours 30 min ago
by Tyrion, 3 hours 15 min ago
by 11IMIX, 8 hours 33 min ago
by 11IMIX, 8 hours 42 min ago
randomness