A Pattern Emerges

229
Wed, Jul 10, 2013 - 12:14pm

Because I'm still adjusting to the time change coming off of my vacation, I found myself tossing and turning last night when I suddenly came to this realization. Though not on the level of Dr. Emmett Brown after hitting his head on his bathroom sink, I think you'll find this interesting, nonetheless.

As you know, The Bullion Banks have engaged in a relentless campaign to lessen their exposure and potential liability in paper precious metal. Since the announcement of QE∞ last September, price has counter-intuitively fallen by over a third from near $1800 to below $1200. All the while, The Bullion Banks have decreased their total net short position in paper gold from 737 metric tonnes to less than 70 metric tonnes (from the CoT survey of 7/2/13). From a chart perspective, it looks like this:

Now, look closely. See anything? No? Look again, even closer. Do you see anything now? Do you see any type of pattern?? I must admit that, prior to last evening, I hadn't seen it, either. But it's there, waiting for you to discover it.

OK. What if now I gave you this? Take a look at the chart below with some notes made upon it. Now what do you think?

Hmmm. Well that's interesting, isn't it? Yes, price is down by over 30% from last September. However, almost all of the decline has taken place during the five calendar months of October, December, February, April and June. In fact, as you'll see below, the vast majority of the decline has occurred during the middle of those months. Hmmm. That's interesting, too.

Now before we dig further, what if I gave you these two charts?

So, now, let's go back to the current decline. What is so special about the months of October, December, February, April and June? I'll give you a few moments to think about that before we continue...

.....

.....

If you guessed, "They're Comex delivery months, Turd!", then you win today's prize! Yes! Those months are, in fact, "delivery" months for The Comex. Recall that the active futures contract is always the front month for delivery. Currently, this is the August13 contract. As of Monday, it had a total open interest of 206,000 contracts and it will stop trading and have it's First Notice Day on July 31. Anyone holding a contract after that date must show their intent for delivery by providing 100% margin in their account. Deliveries to eligible contract holders will then take place through the month of August.

Still with me? Good.

This same process occurred back in September for the October12 contract. First Notice Day was at the end of September and deliveries took place through October. The price of gold peaked at $1796 on October 5 but managed to hang in there for another week or so. But then look what happened and note the exact date:

DATE PRICE GLD TONNAGE

10/12/12 $1773 1,340.52

10/24/12 $1699 1,336.90

10/30/12 1,336.30

So, what do we see here? Near the middle of the delivery month, price began to drop rather steeply and a little bit of gold was shaken out of the GLD "inventory". Then, after a decent rally in November, price began to decline again once we flipped the calendar to the delivery month of December. Look what happened and, again, note the date:

DATE PRICE GLD TONNAGE

12/12/12 $1723 1,351.42

12/20/12 $1635 1,350.52

12/28/12 1,350.82

And now you're thinking, "OK, Turd. What's the deal?". Well, let's continue, shall we? Again, please note the date:

DATE PRICE GLD TONNAGE

2/11/13 $1669 1,326.89

2/21/13 $1555 1,290.31

2/25/13 1,272.85

Well, that's interesting. This time, the mid-delivery-month decline shook out over 50 tonnes of gold from the GLD. "Hmmmm. I wonder what would happen if we tried that again?"

DATE PRICE GLD TONNAGE

4/12/13 $1564 1,158.56

4/16/13 $1321 1,145.92

4/29/13 1,080.64

"Wow. This is awesome!", the Evil Ones said. "We hit price in February and shook out 50 tonnes. Then, even while price was stable from 2/21 - 4/12, we were able to grab 114 more. Finally, by breaking price down through the floor at $1525, we got 75 tonnes in April! What a deal!!"

Once again, price was relatively stable mid-April to mid-June, while no Comex deliveries were taking place. Then look what happened, again paying special attention to the date:

DATE PRICE GLD TONNAGE

6/12/13 $1394 1,009.85

6/28/13 $1181 969.50

7/9/13 939.75

So, what is the lesson here?

  • The Bullion Banks have utilized the manufactured price drop to lessen their exposure and potential liability in paper gold by over 90%.
  • This resulting "discount" in paper price has led to a surge in global physical demand. For example, see here: https://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=197040&sn=Detail
  • However, Registered and Eligible Comex inventories are dangerously low. As of yesterday, The Comex showed 224 tonnes of Eligible and just 35 tonnes of Registered (ready for delivery).

What to do, what to do? The plan is clear! Raid price during the delivery month!! Create the selling and panic necessary to shake loose tonnage from the GLD. Use this gold to settle delivery obligations, not only in New York but London, too. Once the current delivery "crisis" has passed, leave gold alone to wallow and flounder, only acting to cap price whenever necessary to keep the downtrend in place. Once the next delivery month arrives: Wash, rinse and repeat.

Going forward, this likely means that we're "safe" for about another month. Besides, it's summer and we're in the middle of vacation season. Aside from the occasional short squeeze or price plunge, the pattern suggests that gold will be stable between $1250 and $1350 until early August. But then....watch out!

Forewarned is forearmed.

TF

About the Author

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

  229 Comments

Holy_Crap
Jul 10, 2013 - 7:16pm

Maybe EVER

2+ points??? Amazing!

foggyroad
Jul 10, 2013 - 7:23pm

Whats Up?

Tee hee.

F@#k You.

Jamie.

Exbroker TF
Jul 10, 2013 - 7:24pm

We don't need the Towelheads.

I worked for Standard Oil in the 70's. This is what they told me during oil embargo.(Don't worry kid. We have more oil in Alaska than the have in the entire middle east. And we are not going to bring it out of the ground until we get 5 buck a gallon for it. By the way...That's when I left Standard Oil.

Gold Dog
Jul 10, 2013 - 7:27pm

Lantern and KR

My Green friend,

You flatter me! I have taken more from here than I will ever be able to repay!

I have just gotten home from the Salt Mine, I called my secretary to ask her about "guys in ties", here is her response.

The setup was three microphones where you could line up to ask two questions and then Sinclair would move to the next line. Being single, she gravitated and had her eye on the tie guys more than the scruffy guys, until about an hour in and she realized that a lot of blue jeans peeps were talking about millions in gold....then her head was on a swivel looking for the cutest guys. The normal chick rules were out the window.

She let on that the tie guys seemed to be there for two or three answers and then would peel off. Dollar stays reserve currency-four ties out the door. Strongest hidey hole the Yuan- six ties out the door, etc. Her impression wasn't that they were there to screw around, they asked a lot of good questions and instead of sitting down would just blow after they got their answer.

Katie- I too agree with you and Einstein and am half scared to death by hive collapse, I even had my wife instruct our gardener to plant six sunflowers around the back lawn so I could start a seat of the pants census. The only real time that I have spent on the patio is over the Fourth and the occasional cocktail after work. On the North side of my home is twenty-five acres of woods and out back I guess we may have a three or four acre privacy patch of woods. The bee count here is as dense as I can recall, which I find reassuring. (I don't know what is a bee verses what is a wasp.)

Another good sign is the frog count in our pond/cat tail area. Fifteen years ago I was worried about ozone depletion frying the toad and frog eggs and the news that amphibians were in danger. I am happy to report that some evenings we close the bedroom windows because of the mating racket coming from the pond which I guess starts around 250 feet from the windows and is probably four acres, roughly round in shape.

My wife tells me that the turtles who come into the lawn to lay their eggs all over the place are also having a bumper year!

Your friend,

Dog

PS- The mosquito count remains high!

Bollocks
Jul 10, 2013 - 7:42pm

Turd - RE: Your GoldMoney interview with Felix Moreno

I totally agree with you about your comment on bitcoin.

Yes, it's ridiculous to assume that it's "not something that they can ultimately control too" (your words exactly). It's an electronic currency. Who has control of the means of it's use? Umm.

Umm.

And: "I would be much more happy to continue to stack sound physical money that I can hold in my possession".

Me too. And plenty of other Turdites here, I'm sure. Well said.

Well said.

-----------

edit: bitcoin is a scam. Probably created and promoted by tptb. It has zero intrinsic value. A clear sign that something is very wrong with it. Another fiat currency.

Mantis
Jul 10, 2013 - 8:00pm

Bollocks bollocks bollocks

Bitcoins are valid honest money as is gold and silver. The key thing about all of those is that the supply is constrained. TPTB can't shutdown the internet and they can't control enough processing power to control the bitcoin blockchain.

edit. i'm not going to stick around for inevitable bitcoin argument. Too late for me. G'night Turdville. Thanks to all for many interesting discussions

57Goldtop
Jul 10, 2013 - 8:01pm

Katie, how much can be hand pollinated?

This is our second year with little or no bees, but I've been successfully hand-pollinating. My tomatoes and peppers are on strings and thus can be pollinated by flicking the string every couple of days. The fruit aren't ripe, but there will be lots.

The cucumbers, squash, zucchini aren't self-pollinating so I had to learn gourd husbandry. Yes, it feels a tad dirty. There are lots of Youtubes on hand pollination.

I'm a novice but have heard from other gardeners in our area that hand pollination is a total assumption now.

My first hugelkultur bed is about 4 feet by 15 feet and has gone absolutely wild. Tomatoes planted on May 24 are now 7 feet high, having outgrown the stringer system I built. They will now grow over the top and back down the sides as needed, and there are many hundreds of fruit out there. No watering, no fertilizer. Just mother nature.

My raised cedar beds? Same seedlings from the same flats, planted same day, and none of the plants are 2 feet high. They have an average of about one tomato per plant. Have to work on drainage and soil preparation next year. Hydroponic organic growth fertilizer has now been applied and seems to be promoting rapid growth.

DirkDirkler
Jul 10, 2013 - 8:02pm

Skip to 11:50. The only guy

Video unavailable

Skip to 11:50. The only guy you need to listen to, who actually has a track record.

The gist of it: Yes we are below production cost, but it's not that unusual and we may not have hit bottom yet and we might stay here quite a while longer.

Tulsa_51 Exbroker
Jul 10, 2013 - 8:04pm

I worked for Standard Oil in the 70's

I had an uncle that worked for Standard Oil. When did the company drop the 2 for 1 match?

ChewYourOwnFaceOff
Jul 10, 2013 - 8:21pm

Top 4 Silver Miners?

Who are they? I swore off them a while back since every one of them got hammered. I doubled down and they got an even bigger hammering. Third time is a charm? Nope, more of the same.

But, maybe some day, when/if things have definitely turned around, I might have another go at it. AG is one of the four, but what about the others. (I won't touch SVM again).

Thanks in advance.

DirkDirkler
Jul 10, 2013 - 8:29pm

Re: POSX

Noticed it now. I agree, can't remember a day where it moved 2 points. Even 1 point changes happen rarely. Well, Rick Rule got it right when he said "unprecedented volatility going into 2013".

the_circle
Jul 10, 2013 - 8:35pm

@Mantis "TPTB can't shutdown the internet"

Don't be stupid, of course they can. Bitcoins aren't sound money. Anything can be money, really. But gold and silver are the best examples, and are backed by universal acceptance and fungibility. I'm pretty sure that's gold's function- it's not really used for anything else.

If you aren't connected to the internet you have no 'money' with bitcoins. Whenever hyperinflation arrives in the US, we'll see how many shopkeepers and farmers are accepting your bitcoins for their goods.

bigal60
Jul 10, 2013 - 8:35pm

Its all about the bond yields

The metals will come back down by tomorrow the 10 yr will get back under control and all will be back to normal. Man I need a happy pill or at least some scotch. Well will pull my head back out of the sand in a month or so to see where the metals price is at. Just dont want to look at it since I dont have any more dry powder and dont plan on selling either.

Beastly Stack
Jul 10, 2013 - 8:52pm
treefrog
Jul 10, 2013 - 9:27pm

silver manipulation

whoever is doing the manipulation has a quirky sense of humor. silver is hovering around NINETEEN EIGHTY FOUR!

edit: now it's moved on up.

Down Range
Jul 10, 2013 - 9:32pm
treefrog
Jul 10, 2013 - 9:42pm

pork bar - b - que

pigatha now down closer to two points than to one in 24 hours.

crunch time?

Mickey
Jul 10, 2013 - 9:47pm

now

for 2 years we have been wondering how anybody could see a good economy, how msm did not worry and report on the extreme printing etc.

now the fed and govt is admitting there is a huge problem. How many of us said the printing would never end (aside from the sinclairs and turks and whomever).

Now we wonder how this rally will take shape. Is the cartel done playing and ready to let their longs work? How many hedgies have to cover and when you cover after hours and there are no sellers.......

This could get real interesting overnight--selling unbacked futures in quantity is a heck of a lot different than buying back shorts-how can they do this in a stealth manner??

Maybe we have a nice run now.

ancientmoney
Jul 10, 2013 - 9:57pm
ancientmoney
Jul 10, 2013 - 9:59pm

Ron Paul is about the closest thing . . .

there is to a statesman in the U.S. Congress. Or was, as he retired.

Green Lantern
Jul 10, 2013 - 10:02pm

@Katie Rose, 57GoldTop

Bee's dying by the millions. Farrell just blogged about it today.

https://gizadeathstar.com/2013/07/bees-colony-collapse-disorder-and-scie...

Look, I know this is not a popular sentiment and might be construed as a doomster perspective. It really isn't because there is a bigger picture then the destructive phase of the cycle. But Western society has been overlayed everything from the sciences, agriculture, education, finances, social engineering etc... All these things are deeply entangled...quantam entanglement. We are seeing converging trends in all these area's reaching critical mass. And i bet ya that a real solid analysis using cycles would bear this out and we would find how multiple cycles are converging right about NOW.

And while our focus is specifically on the financial aspects, if you followed any of the above trends happening now you would see that Russia and China are not only fighting a war against the dollar but against the western monopoly on the agriculture business. And they ain't having it.

The net/net is this mother is gonna blow. Where the leak happens, when and how is anybodies guess. But I guarantee you this.... at the moment of critical mass, life won't be the same as it was before. It could actually be better in some cases. But that's a story for another day.

DeaconBenjamin
Jul 10, 2013 - 10:03pm
Hunt brother
Jul 10, 2013 - 10:10pm

Did someone request a belly dance?

1st place in competition Queen of the Pyramid 2010. Bellydancer ...

► 8:02► 8:02 www.youtube.com/watch?v=LRC631LI2TY Apr 29, 2012 - Uploaded by Husamzz

1st place in competition Queen of the Pyramid 2010. .... best belly dance ever in my history ...


Jul 10, 2013 - 10:12pm

Stupid, stupid, stupid! I think...

I sold some silver to the LCS yesterday (to show a loss to the IRS for for 2013) intending to buy it back right away. As I left the coin shop, with that piece of paper in hand, I noticed that my briefcase was much lighter! That's when it really, really hit me that paper is not money. Those ounces in my briefcase felt good. The lightness did not. The dealer was more than happy to buy me out. I felt like a sucker as I walked out.

LCS dealer told me he had a standing order from a regular for $100K worth of silver that he could not fill.

I cashed the check. Now I have a little stack of cash and nobody in town has any gold for sale. But Turd's column today gives me pause. Gold may get slammed in August. and according to Gold dog, Santa did not put any hope out there that gold is heading up significantly soon based on currency fundamentals. I can do the math.

@ Juggernaut Nihilism... please take your nihilistic outlook and toss it out the window. We don't need to be kicked when metal is down. I know good and well that metals have performed poorly but I invest for other reasons that you don't seem to grasp. We seem to have incommensurable perspectives. Why not post something helpful, something that contributes instead of discourages, unless you are being paid to do just that? Turd's advice and perspectives have been worth every dime I have contributed.

Doctor J
Jul 10, 2013 - 10:16pm

Thanks, Doc. I hope the move

Thanks, Doc.

I hope the move went well.

ancientmoney
Jul 10, 2013 - 10:18pm

Bees . . .

When I was a kid, there were honey bees galore. In spring, you could hardly walk in the yard (full of dandelions as almost nobody sprayed to kill them then) without stepping on honey bees.

Today, they are rare sight unless you live near a bee farmer's hives. Still, there are plenty of other insects to help pollinate such as bumblebees, smaller bees/hornets, etc.

Honeybees are more efficient pollinators, but other insects can still do the job--just not as well.

When I was in HS my first job after being a paperboy (newspaper, not PM paper), was on a bee farm. I got stung so many times that summer I felt like a pincushion. Turns out the older guys gave me the suit with holes all over; once a bee gets inside and stings, the other bees vector toward that smell and attack as well . . . lucky I had no allergies so stilla round to tell the tale.

wouldyoubelieve...
Jul 10, 2013 - 10:21pm

@DeaconBenjamin

cost of advertising sign=$5

number of customers who see it= 1,000's

value to those who truly understand= priceless

ancientmoney
Jul 10, 2013 - 10:40pm

Turd re: this post . . .

Your tossing and turning yielded some thoughtful results. Thank you for explaining your thought process, which makes sense to me. Here is how I interpret your post:

As the bankers drive price down, the natural result for mom-and-pop ETF investors is to get out of Dodge on the next train, selling shares in the ETFs, freeing up some phyzz.

As those people sell, the bankers are eagerly licking their chops to pick up the phyzz behind (some of) the ETF stock, so while shares outstanding go down along with the phyzz, the bankers are now owning that phyzz outside the ETF--at least that amount not headed east to the Orient.

As COMEX prices drop, and the longs demand delivery, the banks must use some of their new-found treasure (phyzz) from the ETF to make whole those phyzz-hungry COMEX longs.

The more demand at COMEX, the more phyzz they need to remove from the largest stockpiles on earth--the ETFs GLD and SLV.

Since they control the stockpiles there, and investors (other than APs) get paid out in cash, the bankers control the playing field--so long as there is phyzz in the ETFs to make good on required deliveries.

Is this what you are implying?

DayStar
Jul 10, 2013 - 10:55pm

Harvey's Up!

Robert Fitzwilson: We would expect the Federal Reserve to perform their magic and make sure that the liquidations were orderly and did not cause interest rates to spike. That did not happen on Friday. Entities wanted to sell, the selling was in size, and interest rates exploded to the upside. • DS: The spike in interest rates was intentional. It was a test to see what the market would do if the Fed talked of tapering and did not intervene. The next time Bernanke stands up and says interest rates will increase, it will be over for the US and world economy. • Robert Fitzwilson on fiat currency: While we certainly do not relish the chaos that would result from a meltdown of the bond market, it happens every time with fiat. There are no examples in history of any paper currency not culminating in a violent collapse. None. It has been tried by all of our ancestors throughout human history. All examples resulted in failure. It just does not work. • GoldCore: Gold Forward Offered Rates (GOFO) or the cost to borrow gold remains negative. The last time forwards were negative was in November 2008, when a scramble for physical gold led a sharp price rally of 46% from $682/oz to over $1,000/oz between October 2008 and February 2009. Bloomberg: Asia, excluding India this month, is witnessing one of the strongest waves of physical gold buying ever, with bargain hunters using the drop in prices to secure jewelry and gold coins and bars which is creating liquidity and supply issues in the global gold market. The price gains seen post the Lehman bankruptcy in September 2008 seem quite likely in the coming months given increasing supply issues in the gold market. • Harvey: I parsed through all the data going back to 1999 yesterday. There were only 4 instances when GOFO went negative: Sept 1999, March 2001, Nov 2008 and now. In all previous cases, the negative rates lasted only 2 days AND coincided with market bottoms forming. • Bill Holter: So we now have the theoretically impossible (in a perfect world) backwardation of gold. Along with the above, we have seen demand for gold surge in every language spoken on the planet. • Dave Kranzler: What the negative GOFO really means is that the massive shortage of good to deliver 400 oz. bars we've been hearing about in Europe, Asia, and the Middle East is true. • William Kaye: The supposed bear market in gold is simply a liquidation of exchange-traded funds by the bullion banks that control them. closed-end gold funds like Sprott Asset Management's have experienced hardly any liquidations at all. All this and more on...

The Harvey Report!

https://www.tfmetalsreport.com/comment/601876#comment-601876

DayStar

ancientmoney
Jul 10, 2013 - 10:59pm

Mostly but remember that

Mostly but remember that Comex delivery is miniscule compared to London and the demands from the Far East.

The ETF liquidation is just one tool being used to satisfy physical demand. Now, as we approach the culmination and things begin to fracture, you see immediate gold demand increasing dramatically...thus the negative GOFO rates.

And again, anyone who has not yet read this needs to do so immediately. It all makes perfect sense in the bigger picture: https://truthingold.blogspot.com/2013/07/gofo-explained-and-why-its-now-very.html

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