Pillaging the GLD

167
Fri, Oct 18, 2013 - 5:31pm

While cobbling together some data for today's podcast, I found some interesting information that I thought I'd share with everyone. Some food for thought over the weekend.

Every day the CME publishes delivery notices and warehouse stocks. It is through these updates that I'm able to track the delivery notices for each delivery month and monitor whether or not JPMorgan is issuing or stopping (taking delivery) contracts. The warehouse stocks are usually updated by mid-afternoon each day and the delivery notices get updated by late evening. If you want to follow along yourself, the page can be found here:

https://www.cmegroup.com/trading/energy/nymex-delivery-notices.html

As you know, I've been tracking the almost-daily pillaging of the GLD this week, this month and this year and doing so has helped me considerably in projecting price, particularly since I noticed the obvious correlations back in July. This has continued to be helpful this month since, as soon as I noticed JPM being the major issuer of October Comex deliveries, I projected that the GLD would soon be hit for about 20-25 metric tonnes of gold and that price weakness through the first half of the month would be an attendant factor.

For those keeping score at home...The GLD is now down 23.76 mts MTD and price, after declining more than $76, looks to have bottomed and reversed into an UPtrend as of Tuesday-Wednesday.

Anyway, that's not the point of this post. Here's what I want you to consider this time:

On Wednesday of this week, even though price rose $9 on the Comex, the GLD was plundered for 3.6 metric tonnes of gold or 115,742 troy ounces.

On Thursday, 2.582 metric tonnes or 83,024 troy ounces of gold magically appeared in HSBC's Comex vault in the eligible, or sometimes considered "unallocated", category. (Recall that HSBC is the custodian for the GLD.) On the CME Gold Stocks report, it looked like this:

Later on Thursday, even though price rose by another $41 on the Comex, the GLD reported that another 3.3 metric tonnes of gold or 106,097 troy ounces had left its "inventory". This dropped the total "inventory" to just 882.23 metric tonnes, now down 467.69 metric tonnes or 34.65% year-to-date.

Your Wed-Thu totals are: Price UP $50. GLD "inventory" down 6.9 mts or about 222,000 ounces.

This afternoon, the latest CME Gold Stocks report shows two important things:

  1. Of the 83,024 eligible ounces that HSBC took in yesterday, 72,162 went right back out the door today.
  2. And JPMorgan showed an increase of an incredible 192,900.000 ounces in their eligible vault.
  • Note first that it's exactly 192,900 ounces. Given the variances of weights and measures, there's a 1 in 1000 chance of showing nothing to the right of the decimal point.
  • Then note that 192,900 troy ounces is almost exactly 6 metric tonnes. The exact number is 5.99986 metric tonnes. Basically they were just 4 troy ounces short of a perfect and exact 6 metric tonnes.
  • Maybe the two bullet points above are simple coincidences. Maybe not. You decide.

Below is today's CME Gold Stocks report:

Your Wed-Thu Comex Vault totals are: An increase of 197,307 ounces, all in the eligible category.

Putting it together, I have no remaining doubts. "Quod Erat Demonstrandum".

The bullion banks are desperate for gold to settle in both London and New York. We see it in the declining Comex stocks and the occasional London Forward Rate backwardation. In order to settle their current obligations and replenish their vaults for future delivery requirements, the bullion banks now regularly orchestrate predictable raids on paper price in order to create the selling conditions which give them cover to raid the "inventory" of the GLD for their own use.

Lastly, as further evidence, I also submit this:

Again, to me it is abundantly clear. The GLD is being consistently and regularly pillaged by the bullion banks as they desperately search for gold to settle their obligations. The question you need to ask yourself is:

As physical gold becomes increasingly scarce right before your eyes, do you have enough??

Probably not.

Prepare accordingly.

TF

About the Author

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

  167 Comments

Mr. Fix
Oct 18, 2013 - 6:20pm
daveyboy
Oct 18, 2013 - 6:28pm

i think that this is yet

i think that this is yet another dead end as there have been prominent proponents of silver have stated there are masses of gold which have not been declared.

Bix Weir wrote an extensive article about it

Jim Willie has stated something similar

You have had the female imf insider say similar

Gold by the way, continues to be in a down trend and silver is the only one which is above the high of October 2010, so for 3 years now despite the increased demand for Gold it's slumping.

I say do the math, it would appear that what the 3 above have said are worth assessing.

I am not saying that Gold is only going down from now, but the truth is I really don't know and not many do, but what I will say is the trend is king.

elpicador
Oct 18, 2013 - 6:28pm
Kuchek
Oct 18, 2013 - 6:28pm

2014 - Helicopter Money is Coming! Jim Rickards, Currency War Up

Jim Rickards on Bitcoin, Gold, and Fed Printing Money, QE
¤
Oct 18, 2013 - 6:39pm

☯ Movers and Shakers of China’s Shadow Banking

P2P Companies: The Movers and Shakers of China’s Shadow Banking

By Eve Cary

October 19, 2013

Credit in China is like a leaky spigot–impossible to turn off all the way. When major banks were told to stop or slow lending this spring,shadow banking emerged to fill in the gaps.

P2P has become an emerging piece of the shadow banking puzzle. P2P companies, in this context, are online platforms that serve as credit matchmakers: they evaluate creditworthiness and bring together individual and business borrowers and interested lenders. The borrower signs an agreement with the individual lender, and the P2P firms pocket transaction fees.

P2P lending is good for both parties: borrowers without access to bank loans can get capital, and lenders can receive much higher returns than they would via other avenues. Caixin cites an October 2013 report by National Business Daily and wangdaizhijia.com which found that 87 percent of P2P investors received yields higher than 18 percent.

P2P lending represents a small sliver of shadow banking, though it’s growing rapidly. Credit Suisseestimates the total value of shadow banking is 22.8 trillion yuan (approx. $3.7 trillion), and Caixinestimates that P2P lending comprises 60 billion yuan of that figure.

The first P2P lender in China was PPDai.com and CreditEase has emerged as one of the leaders, with estimated monthly loans of 100 million yuan, as of 2011, according to Caixin.

So who are these borrowers and lenders? The borrowers are individuals or businesses that have found it otherwise impossible to find credit. In many cases, this is because state-owned banks direct much of their funds to state-owned enterprises (SOEs), despite recent pushes to fund small and medium-sized private enterprises. Additionally, after what many saw to be an emerging bubble earlier this year, the central government slammed the brakes on available credit.

The lenders are looking for better returns than are available nearly anywhere else, due to extremely low savings interest rates, volatile stock markets, and crackdowns on real estate investment. Interestingly enough, many are middle-class Chinese. The National Business Daily and wangdaizhijia.com report found that 60 percent of lenders make less than 100,000 yuan (approximately US$16,000) a year.

It’s not all smooth sailing, however. Or rather, it’s best not to expect smooth sailing in the future. The China Banking Regulatory Commission issued a risk notice for the sector in August 2011, pointing out a number of structural issues. Many P2P companies guarantee loans, and there is concern that companies could default on these loans. They are allowed to guarantee up to 10 times their capital, but Caixin quoted Xu Jianwen, Renrenmoney.com’s CEO, as saying that “most” P2P companies have “far exceeded that limit.”

There is also concern that the lending creates continued investment in overheated sectors, exacerbating existing economic problems.

As is wont to happen, the industry has also diversified into other investment products, such as loan packaging (creating wealth management products). As Caixin notes, “many such websites in the country have taken on businesses they are not allowed to operate, such as packaging loans into wealth management products that investors are very willing to snap up, soliciting deposits directly or in disguised form from the public, and providing unrealistic loan guarantees.” There is also the issue of loan maturity mismatches within these wealth management products: short-term funds are invested in long-term projects, meaning the investors earn their returns before the project legitimately does so.

Future regulation of the sector is murky: it is unclear which branch or department is responsible for monitoring these types of websites. Caixin observes: “if the authorities decide to group P2P lending websites under asset securitization institutions, as in the United States… the CSRC would be responsible for regulating them.” It’s worth noting that some companies are taking the initiative to strengthen themselves by working with licensed loan guarantee companies.

Shadow banking and P2P lending platforms are serving an important function in the economy: giving individuals and small businesses access to credit. However, the sectors are also wildly unregulated and failures within these sectors could be detrimental to the economy. Only time will tell whether they have a net positive or negative effect on China’s financial system.

https://thediplomat.com/
Oct 18, 2013 - 6:42pm

Again and with meaning

GLD "inventory": DOWN 34.65% YTD

PHYS inventory: DOWN 1.3% YTD

SLV "inventory" UP 3% YTD

Spartacus Rex
Oct 18, 2013 - 6:47pm

@ daveyboy

Paper gold can easily be manipulated to drop in spite of increased physical demand. What part of the scam, or ability to recognize physical Gold's true value, still eludes your comprehension?

pbreed
Oct 18, 2013 - 6:51pm

Big deal...

I think that you missed something really big here....

The ONLY way the gold in sprotts PHYS fund is going to go down is if someone buys a large enough basket of PHYS to ask for redemption. Anyone holding enough PHYS can ask for redemption, it requires no special standing.

I get the impression that the bullion banks don't like Sprott because he seems to be open and above board... if gold is so tight that the power to be are grovelling over to sprot to buy bullion at a premium that is just HUGE!

Its also interesting that PHYS is currently showing a 1% discount, it normally has a premium to spot... why the

discount? it seems that this should be an easy 1% arbitrage since its fully convertible? Strange...

(It could just be that some one is arbitraging the low premium)
jackstar
Oct 18, 2013 - 6:56pm

Can you help?

I had a conversation with a close friend the other day about the financial situation in the U.S. and the rest of the world. Like many here, I believe we're headed for some tough times. I mentioned the significance of the inability to taper money creation, the size of the operating deficit, the size of unfunded liabilities, etc. He doesn't dispute the facts, but says he is confused by the following question: If things are as bad as you say, why aren't the financial experts as concerned as you are? We don't hear about any of this in the media, he says. Although he is an educated person, he had never heard the term "taper" in the sense that we're using it vis-a-vis the federal reserve. He had never heard the term "capital controls". He didn't know that it was illegal for Americans to own gold from 1933 until 1975.

In answer, I brought up von Havenstein, the president of the Reichsbank through the Weimar inflation period, a financial expert who thought it was OK to print trillion mark notes. I brought up the concept of normalcy bias. We wondered whether the CNBS stock shills are secretly buying hard assets while openly touting the stock market.

I would like to pose his question to the resident financial gurus here in Turdville. How can I explain the fact that the financial experts don't seem to share our concerns about America's deteriorating financial situation? That they are OK with unlimited QE? Please help.

Bongo Jim
Oct 18, 2013 - 7:03pm

2 words

Paid off

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 12/9

12/10 8:30 ET Productivity and Unit Labor Costs
12/11 8:30 ET CPI
12/11 2:00 pm ET FOMC fedlines
12/11 2:30 pm ET CGP presser
12/12 8:30 ET PPI
12/13 8:30 ET Retail Sales
12/13 10:00 ET Business Inventories
12/13 11:00 ET Goon Williams speech

Key Economic Events Week of 12/2

12/2 9:45 ET Markit Manu PMI
12/2 10:00 ET ISM Manu PMI
12/2 10:00 ET Construction Spending
12/4 9:45 ET Markit Services PMI
12/4 10:00 ET ISM Services PMI
12/5 8:30 ET Trade Deficit
12/5 10:00 ET Factory Orders
12/6 8:30 ET BLSBS
12/6 10:00 ET Wholesale Inventories

Key Economic Events Week of 11/25

11/25 8:30 ET Chicago Fed Nat'l Idx
11/25 7:00 pm ET CGP speech
11/26 8:30 ET Advance Trade
11/26 9:00 ET Case-Shiller home prices
11/26 10:00 ET New home sales
11/26 10:00 ET Consumer Confidence
11/27 8:30 ET Q3 GDP 2nd guess
11/27 8:30 ET Durable Goods
11/27 9:45 ET Chicago PMI
11/27 10:00 ET Pers Inc & Cons Spndg
11/27 10:00 ET Core inflation
11/27 2:00 pm ET Beige Book

Key Economic Events Week of 11/18

11/19 8:30 ET Housing Starts & Bldg Perms
11/20 2:00 ET October FOMC minutes
11/21 8:30 ET Philly Fed
11/21 10:00 ET Existing Home Sales
11/22 9:45 ET Markit November Flash PMIs

Key Economic Events Week of 11/11

11/12 Three Fed Goon speeches
11/13 8:30 ET CPI
11/13 11:00 ET CGP on Capitol Hill
11/14 8:30 ET PPI
11/14 Four Fed Goon speeches
11/14 10:00 ET CGP on Capitol Hill
11/15 8:30 ET Retail Sales
11/15 8:30 ET Empire State Manu Index
11/15 9:15 ET Cap Ute and Ind Prod
11/15 10:00 ET Business Inventories

Key Economic Events Week of 11/4

11/4 10:00 ET Factory Orders
11/5 9:45 ET Markit Services PMI
11/5 10:00 ET ISM Services PMI
11/6 8:30 ET Productivity & Labor Costs
11/6 Speeches by Goons Williams, Harker and Evans
11/8 10:00 ET Consumer Sentiment
11/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 10/28

10/30 8:30 ET Q3 GDP first guess
10/30 2:00 ET FOMC fedlines
10/30 2:30 ET CGP presser
10/31 8:30 ET Personal Income & Spending
10/31 8:30 ET Core Inflation
10/31 9:45 ET Chicago PMI
11/1 8:30 ET BLSBS
11/1 9:45 ET Markit Manu PMI
1/1 10:00 ET ISM Manu PMI

Key Economic Events Week of 10/21

10/22 10:00 ET Existing home sales
10/24 8:30 ET Durable Goods
10/24 9:45 ET Markit flash PMIs
10/24 10:00 ET New home sales
10/25 10:00 ET Consumer Sentiment

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Recent Comments

Forum Discussion

by IGBY, 1 hour 47 min ago
by JAL, 2 hours 49 min ago
by JAL, 3 hours 10 min ago
by JAL, 3 hours 15 min ago
by JAL, 3 hours 20 min ago
by JAL, 3 hours 22 min ago
randomness