Yah, Well...GOFO Yourself!

49
Mon, Dec 9, 2013 - 11:19am

One week ago, London GOFO rates were comfortably positive. One week ago, I warned you that they were about to go negative again and, today, they did. Add this to the pile of bullish fundamentals as we head into the rest of this month and 2014.

Again, why would we expect GOFO to be negative. To make a long story short...physical gold is scarce.

  • The GLD has been drained by over 500 metric tonnes YTD.
  • The Comex has been drained of another 75 mts YTD.
  • China has "officially" imported 1,260 mts through October. (https://www.zerohedge.com/news/2013-12-08/china-october-gold-imports-sur...)
  • And now JPMorgan is sucking up what gold remains at The Comex, stopping to their HOUSE account 96% of the gold deliveries made thus far in December. (https://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf)
  • So, in what should come as no surprise, GOFO rates declined sharply all last week and finally turned negative again today. You can find the data here: (https://www.lbma.org.uk/pages/?page_id=55&title=gold_forwards&show=2013) But it looks like this:

    DATE 1-mo 2-mo 3-mo 6-mo 12-mo

    29-Nov-13 0.07167 0.09167 0.10500 0.13333 0.16333
    02-Dec-13 0.06667 0.09167 0.10500 0.13333 0.16333
    03-Dec-13 0.06000 0.08333 0.10000 0.13500 0.16500
    04-Dec-13 0.05833 0.07500 0.09500 0.13000 0.16500
    05-Dec-13 0.03500 0.04833 0.06000 0.11333 0.14833
    06-Dec-13 0.00667 0.01500 0.02833 0.08000 0.14500
    09-Dec-13 -0.02000 -0.00333 0.01000 0.06167 0.13167

    As a reminder, negative GOFO means this:

    "A negative GOFO rate means that gold in hand today is worth more than U.S. dollars in hand. Think about that the next time someone tries to explain to you why gold has no value. This is a sophisticated transaction being executed by sophisticated banks. They are not in the business of leaving money on the table for others. If they are willing to pay money to get their hands on gold, it means they are placing a higher value on gold than on dollars. That's just the law of the time value of money in action."

    (More here: https://truthingold.blogspot.com/2013/07/gofo-explained-and-why-its-now-very.html)

    Again, prior to 2013...BEFORE THIS MASSIVE, COORDINATED, COUNTER-INTUITIVE AND CARTEL-DESIGNED BEATDOWN SCHEME...negative GOFO was extremely rare. It occurred for two days in 1999, two days in 2001 and for three days at the height of The Great Financial Crisis in 2008. GOFO then went negative again on 7/8/13 and stayed there for 40 trading days. Over that time, which coincided with JPM hoarding July silver AND August gold Comex deliveries, the price of gold rallied over 17%, from $1221 to $1434. GOFO turned negative again during the October delivery month and stayed there for 15 trading days from 10/16 - 11/5. During that time, gold only rallied 8.45% from $1254 to $1360. Note that on both occasions, gold rallied, on average, about 2% per week while GOFO was negative.

    So, here we are again.

    • Negative GOFO tells us that physical gold is temporarily(?) scarce.
    • Sentiment is terrible and nearly every pundit and "analyst" is telling you to sell.
    • The CoT structure is even more bullish than it was at the June price bottom.
    • The BPR structure is similarly more bullish than at any time on record.

    It sure sounds to me that we are set up for some MOASS. If the pattern from July-August and October-November holds, we should see gold rally about 2%/week as long as GOFO is negative. And with the record Spec short positions, even 2%/week is likely a very conservative estimate. What does this mean? Well, provided GOFO stays negative, and I expect it to, we will see:

    This week: Gold to rally toward $1255-$1260. Note the chart below that shows clear resistance there.

    Next week: Resistance breaks and gold rallies another 2% toward $1285-$1290.

    End of 2013: Gold continues to rally and finishes the year pressed up against our old friend, $1320.

    Silver will, of course, come along for the ride. It will rally, too, and finish the year near $22, just like I've told you for weeks.

    Note that gold has broken it's down trendline and is clearly basing/bottoming. Silver is now trending higher.

    Two other updates before we close for today...

    Crude continues to rally and The Pig continues to slide. I expect this general trend to continue, too. By holding these gains, crude will next challenge $99-$100 and The Pig looks like it's ready to fall toward the 79.75 region.

    That's all for now. More in the podcast later.

    TF

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      49 Comments

    tyberious · Dec 9, 2013 - 11:21am

    First

    On Monday.

    · Dec 9, 2013 - 11:29am

    And this is simply fantastic

    PLEASE READ: https://www.theburningplatform.com/2013/12/08/may-the-odds-ever-be-in-yo...

    It includes this chart. The "bottom" 60-80% ain't gonna stand for this very much longer. What happens when The Pig finally loses superiority and all those printed dollars come home to roost? 

     Table 1: Income, net worth, and financial worth in the U.S. by percentile, in 2010 dollars

    Wealth or income class

    Mean household income

    Mean household net worth

    Mean household financial (non-home) wealth

    Top 1 percent

    $1,318,200

    $16,439,400

    $15,171,600

    Top 20 percent

    $226,200

    $2,061,600

    $1,719,800

    60th-80th percentile

    $72,000

    $216,900

    $100,700

    40th-60th percentile

    $41,700

    $61,000

    $12,200

    Bottom 40 percent

    $17,300

    -$10,600

    -$14,800

    From Wolff (2012); only mean figures are available, not medians. Note that income and wealth are separate measures; so, for example, the top 1% of income-earners is not exactly the same group of people as the top 1% of wealth-holders, although there is considerable overlap.

    R man J · Dec 9, 2013 - 11:36am

    Australia Wants It's Gold Back

    Actually it looks like just a petition drive, but it could lead somewhere. This would also help drive a negative GOFO rate.

    https://goldsilverworlds.com/physical-market/australia-wants-its-gold-back/

    ...Australia has 80 tonnes of gold which is managed by the Reserve Bank of Australia (RBA) as part of its foreign reserves assets. The RBA’s PR department has stated that Australia’s 80 tonnes of Gold Reserves is stored at the Bank of England, in London for cost efficiency and security reasons. However, Australia has international standard bullion storage facilities with capacity to store Australia’s gold at cost competitive rates. Also the cost to build a new Federal Government owned facility is negligible when compared to the current value of Australia’s gold ($3.3 billion)...

    But I guess that since we have been told that the Perth Mint has an constant supply, never any shortage, this is a moot point. Perth can just borrow it to the government as needed. Or the government can give them cash for it.

    rl999 · Dec 9, 2013 - 11:36am

    NUGT

    Bought NUGT & JNUG today - I place it in the 5+ year investment plan, and now intend to forget that I own it.

    Will go looking for other miners throughout the week. As this is my first foray into that area I would be grateful to learn what other members own. ??

    2nd

    Brought to you by the Second Amendment and by Second Class Citizens, all the veterans (& others) that have had their rights raped away by a government that is at best incompetent and at worst evil. By the scheming court system, by the diabolic three letter agencies, by the militarized police, and by a general public that is drugged up, dumbed down, out of touch and almost out of time.

    Remember that you are only allowed to protect your life if the .gov says so. Soon there will be few people with rights. The .gov has already excluded felons, seriously decreased the rights of people seeking treatment for mental maladies, and tipped their hand with the trick about passports and back taxes.

    Mr. Fix · Dec 9, 2013 - 11:41am

    Isn't it interesting:

     We seem to focus on the only commodities whereby the more bullish the fundamentals are, the lower the price drops.

     Warning! Warning! Warning!!! 

     All indicators are now more bullish than ever,

    look out below!wink

    ArtL · Dec 9, 2013 - 11:43am

    6th!

    6th amendment.

    In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence

    this one seems to cause a lot of problems for the criminal state. much easier to lock em up after a forced plea bargain.

    USLV doing great, if you want to speculate with some play money.

    · Dec 9, 2013 - 11:47am

    Recall that we discussed this

    Recall that we discussed this extensively a couple of months ago. A more accurate rate of unemployment is 3-4% higher.

    https://nypost.com/2013/12/07/warning-jobless-rate-may-be-rigged/

    GoldenWizard rl999 · Dec 9, 2013 - 12:27pm

    NUGT

    During the down wave last week picked up some NGD (New Gold) and OSK (Osisko Mining). I think as Eric Sprott has to say when Gold and Silver make new highs (hopefully next year) then the gold and silver stocks which are already producing will rise faster as they will capitalize on the rising PM prices as well as their increased mining production.

    Orange · Dec 9, 2013 - 1:06pm

    NUGT

    I also bought NUGT last week. 

    In Sept 2011 it was above $2,100 per share, so if one were to buy 1,000 shares today for about $27,000 when gold gets to $1,900 your shares would be worth $2.1 million. 

    If Sprott is correct and gold goes to $2,400 by next year, the 1,000 shares should be (a guess) over $4 million.

    Of course when you sell, convert it physical gold.

    Hence, 22 oz now could be converted to 1,667 oz excluding taxes.

    TF · Dec 9, 2013 - 1:10pm

    More

    Again, this just is not going to continue indefinitely. The masses may be mollified for now but wait until the severe inflation finally hits home. When you can no longer afford to eat, feed your children or drive to work...well, I fear a return to this period of history:

    https://www.zerohedge.com/news/2013-12-09/third-quarter-rich-got-richer-...

    perdman · Dec 9, 2013 - 1:12pm

    NUGT

    Agreed Guys. I think NUGT is one of the best plays out there right now as long as you have plenty of Fizz metal on hand as well. The upside on NUGT is stunning. I have been watching it for months and think its a no brainer at these levels. I know the hedge funds love to play NUGT. Once their money starts flowing in the sky is the limit. I am currently carrying 1000 shares as well.....I call it the ETF version of BIT Coin where 25-30k investment can net you millions if you hold for a few years...

    Levon · Dec 9, 2013 - 1:20pm

    NUGT

    I hope everyone is aware of the erosion due to daily rebalancing.

    https://www.minyanville.com/businessmarkets/articles/leveraged-etfs-leve...

    Mickey · Dec 9, 2013 - 1:28pm

    NUGT and other leveraged plays

    I use stockcharts and have comparison charts set up for say NUGT HUI and GDX --Then say USLV AGQ and SLV and SILVER same for GLD GOLD UGLD and DGP.

    What I have found is on the downside being in the leveraged is brutal in addition to the obvious plus leakage--but on the upside I find they track fairly well. Nice set it and forget it and just look at macro moves.

    I used them and options fantastically in 2010-2011--since then have had too many false starts. and the problem is we see sudden up and down moves so its easy to get whipsawed.

    My strategy is once the upmove is confirmed I use triple leveraged--at some point as we near resistance level I move down to double leveraged--if we get rejected I move down to no leverage. If we break thru above I go to triple leverage AND use call options. Hit and run take the profits. Use option profits to buy physical.

    1ShotAK · Dec 9, 2013 - 1:29pm

    neg GOFO, Supply and demand ???

    All due RESPECT. Don't mean crap. What you are talking about is less than 10% of the market. You have been telling us that fact for a long time. Last time we had -GOFO for 40 days and now we have the greatest sale on AU and AG I think we are ever going to see. From my critical thinking figures, we should be some were in the range of 575 and climbing for silver and 4750 gold and climbing. But BUT only when the paper BS game comes to an end. So I "assume" you are telling us that all this -GOFO is bring us closer to the paper end game. PLEASE don't take this wrong, I'm NOT calling you out! I have the most respect, gratitude and man kind of love for you and all that are here. I'm a proud Turdite.

    V/R

    1ShotAK

    tyberious · Dec 9, 2013 - 1:52pm

    Gotta Love RT

    “The BANKERS RULE THE EARTH” and… “The US Congress is Nothing But A Den Of Traitors” — Ken O’Keefe from RT, via MOXNEWSd0tC0M: https://www.youtube.com/watch?v=T-k2C90ONiw&feature=player_embedded

    Mickey · Dec 9, 2013 - 2:12pm

    metals sector today

    feels a little different-for the good

    1ShotAK · Dec 9, 2013 - 2:12pm

    No offense taken

    But I don't think you understand. My point is this:

    While GOFO was negative twice earlier this year, gold rose on average about 2%/week.

    GOFO is now negative again and, as long as it stays there, all of the asswipes who claim that gold is going to $1050 will be DEAD WRONG.

    The point of this and nearly every post over the past three weeks is to assure everyone here that prices are not headed lower. There is no need to panic and sell.

    chucka · Dec 9, 2013 - 2:18pm

    Thanks Turd. You are probably

    Thanks Turd. You are probably one of the very few out there not looking for new lows in gold. Almost all are convinced that we will break the june lows. Certainly the analysis that you put forth on what is going on at the COMEX helps. Some of the turdites here might have sold but for the iron clad research that you shared with your subscribers.

    · Dec 9, 2013 - 2:21pm

    It's funny. I was just

    It's funny. I was just thinking about this yesterday.

    All of the hubbub and hubris. Speeches from John Kerry and WoodyII. Leading the world directly into a conflict that, once started, would be very hard to contain.

    Some "deal" gets announced that made the Russians the custodians of the alleged weapons and then the entire thing fades away as if it never happened.

    If anything demonstrates once and for all the utter, dangerous incompetence of WoodyII, this is it.

    https://libertyblitzkrieg.com/2013/12/09/how-the-washington-post-and-the...

    tyberious · Dec 9, 2013 - 2:42pm

    We read it here first!

    Speculators Hold Smallest Bullish Gold Positions Ever In One CFTC Report

    One the two reports compiled by the Commodity Futures Trading Commission reviewing weekly trading positions shows large speculative traders cut their bullish gold futures and options holdings to the smallest ever, according to data released late Friday.

    In the Dec. 3 commitments of traders disaggregated report, these traders narrowed their net-long position in gold futures and options traded on the Comex division of the New York Mercantile Exchange to the lowest level since the report started in September 2009. In the older legacy report, large speculators also cut their net-long position to the lowest since July 16. That’s also significant as the net-long positions reported in July were some of the lowest tallies in recent years.

    This is the fifth straight week of these traders trimming bullish exposure to gold. Additionally, they cut back on silver positions for the fifth consecutive week, with large speculators turning net-short silver in the disaggregated report. Bullish position cutbacks were also seen in the platinum group metals, while these traders lightened up on their bearish copper holding.

    https://www.kitco.com/news/2013-12-09/Speculators-Hold-Smallest-Bullish-...

    Fat Willie · Dec 9, 2013 - 2:42pm

    Being short

    Have to wonder where they start to worry, then panic, and then squeeze. We could use a nice squeeze. 20 in silver ought to be a good start. 

    · Dec 9, 2013 - 2:46pm

    Nice bump

    Must be some GoonSpeak headlines out there...

    · Dec 9, 2013 - 2:53pm
    1ShotAK · Dec 9, 2013 - 2:55pm

    I under stand

    winkI'm proud to say I don't read "crap". For those that do read "crap" I understand what you are telling them. All the data you put out I have been checking it out for myself, so far your data is spot on. What is so very hard to predict is the next move by the A$$*^&*^, to screw the unknowing out of their FRNs.

    Keep up the GREAT WORK. p.s. I have been looking into NUGT for some time now and just made a move. First time in two years exchanging paper for paper, yah yah I could have had 50 TFMR rounds.. BUT I now have a stackwink

    V/R

    1ShotAK

    G-Rod TF · Dec 9, 2013 - 2:58pm

    Classic consolidation of power

    Kim Jong Un is simply getting rid of potential rivals who are too close to the throne.

    · Dec 9, 2013 - 3:09pm

    Another ton of kilo bars?

    Maybe ole Bron's right and the banks book in 1000 lots of kilos bars all the time. Here we go again today:

    So, now, here's the question:

    Since the only way this can work is IF an entity has deposited 1000, 99.99% pure kilo bars...why on earth does this continue to happen? Just who or what is parking that kind of gold at the Comex?

    And, since The Comex uses 99.95% gold to settle, it would be completely foolish and nonsensical to ever reclassify this as registered for delivery. So, again, who or what is parking so many kilo bars in Comex vaults and why?

    · Dec 9, 2013 - 3:13pm

    Of course...

    Another option is that this is all just bullshit. Simple fraud. Perhaps the reason for this disclaimer?

    "The information in this report is taken from sources believed to be reliable; however,

    the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness.

    This report is produced for information purposes only."

    infometron · Dec 9, 2013 - 3:17pm

    Ag tickling $20

    but will it break through today?

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