A Big, Fat Zero (public)

90
Mon, Aug 19, 2013 - 1:26pm

The subscriber base reached a consensus over the weekend that important articles such as this one should always be made "public" within 24-48 hours. So here you go...

A doughnut. A cookie. A goose egg. Call it what you want and it's still the same. A big, fat zero. It's not often that I get all worked up on a Saturday but, when I noticed this, it was clear that I needed to write up a new post.

"What in the world are you talking about, Turd?'"

Comex August gold delivery notices. Would you like to know how many went out yesterday? Zero. Zilch. Nada. In other words...none.

And this is happening in the midst of an incredible surge of global demand for physical gold. To refresh your memory or in case you missed it, this data comes from a World Gold Council (not exactly our best friend) report that summarized global demand for the second quarter.

On the demand side we have:

  • Demand from India and China alone in Q2 was 310 tonnes and 276 tonnes or 586 tonnes combined. This demand alone vastly outnumbers the ETF outflows.
  • Globally, jewelry demand was up 37% in Q2 2013 to 576 tonnes (t) from 421t in the same quarter last year, reaching its highest level since Q3 2008. In China, demand was up 54% compared to a year ago; while in India demand increased by 51%.
  • There were also significant increases in demand for gold jewelry in other parts of the world: the Middle East region was up by 33%, and in Turkey demand grew by 38%.
  • Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500 tonnes in a quarter for the first time. In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewelry demand and bar and coin investment together, global consumer demand totaled 1,083t in the quarter, 53% higher than a year ago.
  • For the tenth consecutive quarter, central banks were net buyers of gold, purchasing 71t, which reinforces the trend that began in Q1 2011

But on the supply side of the equation, we have this:

  • On the supply side, recycling fell 21% in the quarter while mine production was 4% higher than a year ago, at 732t. In total, supply was 6% lower than a year ago.

I would also ask you to once again consider these charts. Thank you, Jesse! (https://jessescrossroadscafe.blogspot.com/2013/08/comex-gold-remains-at-...)



So, let me see if I've got this straight...

Global, physical demand is surging and even on The Comex we've seen this this trend influence things. How?

Last December, a month that is typically one of the biggest delivery months of the year for Comex gold, I was surprised to note that The Comex only delivered 3,253 contracts. Then, once February rolled around, got an even bigger surprise. For the February delivery month, The Comex delivered 13,070 contracts. Holy cow, that's a lot! The trend continued in April as The Comex delivered 11,632 contracts and June saw 9,869 delivered. But now in August....even though there have been no signs of decreased global demand....there have only been 2,965 deliveries? AND ZERO YESTERDAY? Seriously??

And what if I threw this next log on the fire???...

The cumulative total deliveries for the last four delivery months is 37,824 contracts. During that period, JPMorgan settled (stopped) a total of 2,162 contracts directly into their proprietary (house) account. That's 5.71% of all deliveries for the past four delivery months.

This month, of the 2,965 gold deliveries made through last Thursday, JPM had stopped into their house account 2,151 of them (72%). That's interesting, isn't it? Just this month alone, JPM has stopped as many contracts for themselves as they had in the previous four months combined.

But wait, there's more...Over the past nine days (8/5 - 8/15), The Comex has delivered just 1,003 contracts and the JPM house account has stopped 945 of them. That's 94%! And now yesterday, 8/16, The Comex has no deliveries at all? Seriously??

So now, suddenly, even though global demand does not seem to be falling off, The Comex is on a run rate of just 4,000 deliveries again. Hmmm. The average total deliveries for the previous three delivery months this year is 11,524 and yet this month is coming in 60% less? Seriously??

Does anyone else see and smell a very smoky fire here? Here are just some random dots. Feel free to connect them:

  • The CoT and BPR reports show that JPM has flipped a 50,000+ contract net short Comex position into an 85,000+ net long position over the past eight months.
  • Though they had shown very little interest in silver deliveries earlier this year, JPM's demand for silver deliveries into their house account rose to 2,824 of 3,444 total Comex deliveries for July. That's 82%.
  • First Notice Day for the July silver contract was Friday, June 28. On that day, silver rose 92¢ from $18.60 to $19.52. By July 16th, it had risen to $20. Yesterday, it closed at $23.37.
  • First Notice Day for the August gold contract was Wednesday, July 31. It was a very volatile day. Gold traded $15 higher before closing $20 lower at $1313. Yesterday, gold closed at $1371 and then traded even higher on The Globex with cash gold closing at $1376.

So, if you're like me and you think that this points to even higher prices ahead, you'd probably like some charts with a few mileposts for the road ahead. Here you go. The journey won't be easy but it certainly seems to be heading in one direction.



OK, I think I'll stop there. It's after noon on a Saturday and MrsF is calling. Go now and get some rest. I'm going to need you back here on Monday with your gameface on. It promises to be a very interesting week and remainder of the month...and year....and next year...

TF

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  90 Comments

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TheGoodDoctor
Aug 20, 2013 - 9:39pm

Full moon tonight so you

Full moon tonight so you never know!

Iceberg SlimTheGoodDoctor
Aug 20, 2013 - 7:56pm

JPM Gold Dump

personally, i wouldn't mind if they did that. it would truly be a gift in fact, and will completely backfire on them like the last FED coordinated ambush did...as much as i want PMs to blast off like a rocket, i'm also kinda on the look out for another price dump simluar to Apirl & June to burn dry powder and stack heavy on. appears the bottom certainly is in though, which is fine by me. i'll still be buying a little bit periodically, nothing will change there, regardless of price.

TheGoodDoctor
Aug 20, 2013 - 7:00pm

What if the Morgue decides to

What if the Morgue decides to just dump all that phyzz at the most unexpected time?

Be Prepared
Aug 20, 2013 - 6:39pm

50 Yr UST.... why not 100 Yr UST?

If they were or are considering a 50 Yr UST.... then why not a 100 Yr UST? Does the obviousness of the insanity ever become clear to these financial constructs? You can bet the terms of those loans will be re-crafted to clearly state that they are full recourse and non-dispensible in bankruptcy proceedings. Student loans have already gone that way.... it's not a leap to think that mortgages and other forms of debt will go that same route. Sign a paper for debt and it's yours and your successors until it has been repaid. You can almost see the rising of a new Marshalsea where corporations can lock you away for a late payment.

I know that it seems that I am taking this to an extreme point, but, if you look behind us at the progression of things, the line starts to project a more authoritarian approach by the few in control on the masses in debt. :-)

sierra skier
Aug 20, 2013 - 5:23pm

Tulving

Hannes Tulving is considered to be grumpy. (you probably would be also if you answered the phone at all hours) They run a no frills operation with an apparent huge volume to keep prices down. Their communication is poor and my last 2 orders have taken longer than in the past. I however have never had an issue beyond timing and communication involving the 6-8 orders we have done with them.

Yes it is unsettling to have a big chunk of dry powder out for a couple or several weeks until the order arrives but with the delays most of the other suppliers have I don't think they are so bad.

YMMV

treefrog
Aug 20, 2013 - 1:58pm
SilverSurfers
Aug 20, 2013 - 12:26pm

LOL

tulving is apparently is an old sour puss, I get along with him fine, though Im patient, LOL, like a hurricane

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Kerbouchardgw
Aug 20, 2013 - 12:08pm

@ gw

I have no skin in this. I was merely reporting the Tulving issue in regard to one of their clients. If I find a follow-up post directing you to legal recourse, I will be sure to pm you.

Meanwhile, I sincerely hope you get this resolved asap.

Best,

K.

SilverSurfers
Aug 20, 2013 - 11:52am

@Turd

Silver reclaims 23 handle at 23.23, could close in the 23.30ish for what might be called an outside reversal, dont know in 1 day of down action qualifies, that is turd's expertise, and gold hitting 1376 move strong above yesterday comex high. So, apparently, after 1-2-3 reversals ABC, PGM move up, and gold silver just smoke a slam attempt, looking for 1 day down action outside reversal, to the upside, looking for comex high closes of this move, this day, and it aint even late august yet with the ruppe tanking, think of it at full steam ahead with the coal bunkers over filled, plowing through the chop. :)

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