Time has really gotten away from me this morning so we'd better get started and move along quickly.
For the third time this week, price was effectively capped when London began trading this morning. Again, with this such a recurring pattern, why anyone buys gold futures at midnight or 1:00 am in NY or afternoon is Asia is beyond me. You're going to get your ass kicked more times than not. It happened again last night and here we are, struggling to regain the dollars clipped by the London Monkeys.
Note how the tone for the day is often set in London. If The Monkeys take the day off, price rallies all day through the Comex session. If The Monkeys intervene, price struggles all day. Today is another struggle day.
Though it's nice that prices have rallied, don't go getting too excited just yet. As mentioned yesterday, gold needs to get back above $1350 at a minimum and silver needs $21+ before the spec shorts will begin to get nervous. And all of this Bernank stuff could get yanked right back out next week...in fact it's likely that it will. The Bernank will be in front of Congressional committees again next Wednesday and Thursday as part of his semi-annual updates. https://www.foxbusiness.com/news/2013/06/13/bernanke-to-deliver-semi-annual-testimony-to-congress-july-17-18/ Would you be at all surprised if he turns around and is all "taper taper taper" next week after the reaction to his speech and comments this week? I wouldn't. And you know that the spec shorts will be eager to pounce if given the chance.
Did you notice the huge addition to the SLV last night? The sham picked up 90 tonnes, almost 3 million ounces of silver yesterday alone. WOW! And total "inventory" now rests at 10,125 metric tonnes. Hmmm. Keep in mind that on 1/2/13, the total SLV "inventory" was 10,085 metric tonnes. Some quick math shows that now the SLV is actually UP 40 tonnes YTD. UP!!! All the while, the price of silver has fallen by over 30% from $30 to $20. That wouldn't be too remarkable I guess if the GLD hadn't shed over 30% of its "inventory" over the same time period as its price fell from $1700 to $1300. Whatever...
With all of the bacon lovers around here, I would be remiss if I didn't bring to your attention the current happenings in the Lean Hogs market. It seems there is a very nasty swimming in the "Sus" pool and it's wiping out nearly an entire crop of baby pigs. If a piglet contracts the virus in the first three weeks of life, the mortality rate is 100%. Yikes! https://www.thestar.com/news/world/2013/07/11/pig_farms_hit_by_devastating_virus.html As you might imagine, this has had a rather dramatic impact on the Lean Hog market. It hasn't yet reached the point of signal failure but you need to watch it closely, if anything because, if it continues, even the canned variety of bacon is going to be getting much more expensive.
And speaking of culling the population, you may have heard me mention to Felix of GoldMoney that I'd recently read and very much enjoyed the new Dan Brown book, "Inferno". (Even though the middle third is long on architecture and short on action.) The plot deals with the mathematics of population growth and I found it metaphorical to the mathematics of debt growth. Anyway, it's a fun summer read and if you're looking for something to take with you on vacation, I give it a hearty thumbs up. My next purchase will be the new Brad Thor book, "Hidden Order". Brad's books are always entertaining and I'm sure this one is no different. If you're interested in picking up either one, click the link below. (Turd gets a little commishkey, too, if you do.)
The GOFO rates that everyone is watching continued negative for an unprecedented fifth straight day today. If you want to follow along next week, you can find the rates here: https://www.lbma.org.uk/pages/index.cfm?page_id=55&show=2013 Again, what this purports to demonstrate is an incredible demand and desire for physical gold, such that it is currently more valuable than holding dollars. Physical holders are unwilling to exchange their gold for a futures contract, even though they are guaranteed a significant short-term return. Why is this? Because physical holders either do not trust the system or there simply isn't enough gold available to close his hole. Either way, the past three occurrences of negative GOFO have led to sharp, short-term rallies so many pundits are watching this closely. We'll see...
And, finally, another CoT is due at 3:30 today. For the reporting week, gold was actually UP $4. I know that's hard to believe given the blasting it took a week ago today...but, seriously, it was. And the total gold OI rose again, this time by another 21,000 contracts with much of that coming on 7/3 and 7/5, while price was getting whacked. We should expect another "improvement" in the CoT structure. Last week, The Gold Cartel was net short just 22,000 contracts or 70 mts of paper gold. Could today's report cut that number in half??? Maybe? Probably. Again, we'll see.
OK, that's all for now. I gotta go cuz I got more stuff to do. Have a great weekend but be sure to check back later today or tomorrow for some instant analysis of the CoT.