JeezoPete. I've been sitting here, trying to watch CNBS and The Bernank in front of Congress...and I just can't do it. It's all nonsense MOPE and SPIN. Just brutal.
Again, all the talk is "taper this" and "taper that". Sure, maybe for political purposes, The Fed may curtail some of the $40B/month in free money they are passing along to the banks. Knock it back to $20B/month and claim they've "cut QE" from $85B/month to $65B. "That's a cut of over 23%", I can hear LIESman say. Whatever. And what are we to make of The Fed's own Primary Dealer ButtBoys cutting their Q2 GDP forecasts back to just 1%? (http://www.zerohedge.com/news/2013-07-15/goldman-joins-jpm-cutting-q2-gdp-1-stall-speed-funny-chart-becomes-funnier) Like I said, it's all just nonsense MOPE and SPIN.
Here's a new angle for you...With all this incessant talk of taper, is The Fed simply trying to send a political message to the Republocrats, attempting to frighten them into acting "responsibly" when the debt ceiling issue once again rises up this fall? Maybe. As if The Fed, though, would NOT print and print as much money as The Treasury requires. Like I said...just nonsense MOPE and SPIN, all part of a gigantic charade.
Speaking of charades, have you been following this? The officially reported U.S. government debt level has now been stuck at $16,699,396,000,000 for 8 weeks! Apparently, the Treasury is using "extraordinary measures" to fund the government, which allows the accumulated debt to remain a full $25,000,000 below the mandated limit. And this deliberate deception will continue until early September. http://cnsnews.com/news/article/treasury-debt-has-been-exactly-1669939600000000-56-days
Of course, the debt still continues to accumulate. It's not $16.7T. Check the debt clock. It's actually $16.86T (http://www.usdebtclock.org/) but who's counting. The Congress and Treasury will just say it's whatever they want it to be so that they don't have to deal with any pesky laws or mandates and they can go along their merry way with an August recess. Absolutely shameless.
Alright, moving along...The GOFO rates steepened lower again today, marking the eighth, consecutive day of being negative for one, two and three months. Again, this is unprecedented! At the height of the Great Financial Crisis of 2008, GOFO went negative for three days. We are now on our eighth day and rates are have been steepening all week. http://www.lbma.org.uk/pages/?page_id=55&title=gold_forwards&show=2013
To that end, if you haven't yet read this excellent summary from Grant Williams, I encourage you to do so immediately. If follows along nicely with the Sprott report I posted yesterday and connects all the dots very, very well. http://www.mauldineconomics.com/ttmygh/what-if. Grant did such a nice job that even Mineweb had to admit that he had some valid points! http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=198098&sn=Detail
Following along with Grant's spot-on analysis, the GLD shed another 1.5 mts yesterday, dropping its "inventory" back to 937.57 mts, down over 400 tonnes YTD (-30.54%). Again, compare this to the SLV, which added another 2MM ounces Monday and now has added 139 tonnes YTD (+1.4%).
Here's a great followup to the KWN interview of William Kaye last week. Recall that Mr. Kaye boldly asserted that Hong Kong refiners are taking London bars, assaying them and re-refining them into new bars. Gee...I wonder where he got that information?...but I digress. I'm just glad that this guy has gone "on the record" and divulged more info. Start here: https://www.metallwoche.de/clarification-of-william-kaye-re-german-us-gold-in-hong-kong-refineries/ and then read the text at GATA: http://www.gata.org/node/12801 (Maybe shoot GATA some fiat while you're there. Bill and Chris are putting in long hours these days for your benefit.)
Finally today let's talk a little more about Shanghai and Chinese demand. First, there's this interesting article from Bloomberg of all places that discusses the issue: http://www.bloomberg.com/news/2013-07-15/gold-deliveries-from-shanghai-bourse-jump-on-physical-demand-1-.html. In typical Bloomberg style, the writer tucks in this little gem of disinfo:
"Still, monthly gold deliveries are now below the record 236 tons in April, having eased to 224 tons in May and 180 tons in June.
“Investors aren’t inclined to rush to buy gold the way they did to the abrupt price drop in mid-April,” said Long Ling, an analyst at Industrial Futures Co. in Shanghai."
Isn't that cute? 180 metric tonnes of demand in June is apparently an indication that "investors aren't inclined to rush to buy gold". Oh, really? Really?? Funny that they failed to include these charts in their story. Oh well, probably jut a space constraint or something like that.
And speaking of Shanghai, this is interesting. Yesterday, Max had as his guest Jan Skoyles of The Real Asset Company in London. The segment begins at about the 12:00 mark. You should watch it.
Finally, just a couple of things that have occurred while I've typed. First, the site crashed again. This is no surprise, really, as longtime readers will recall that on three occasions back in 2012...precisely when The Bernank began his testimony before Congress...the site was hit with a DOS and crashed. In an amazing coincidence, it happened again today. And, once again, right as The Bernank began to speak. Nah...move along...nothing to see here. Just a coincidence, I'm sure.
And, as easily predicted, the metals have been smashed back lower. The Bernank opened his mouth with a few morsels of truth last week and UP went the metals. Well, we can't have that, now can we? So, what happens next? The Benrnank SPINs and MOPEs his way through the Pumphrey-Hawkins testimony and the metals are jammed back down. The Large Specs and their HFTs will be allowed to remain in control until they aren't. When will that happen? Hard to say for certain but I doubt it will be for much longer, given the reasons laid out above.
Hang in there and keep the faith.