Halftime

104
Thu, Jul 3, 2014 - 7:23am

So here we are. 2014 is half-over and where do we stand? For me, the puzzle comes together by looking at a few, simple clues.

Let's start where we began...with Ken Hoffman of Bloomberg Industries. (For a bio of Ken, see his LinkedIn profile here: https://www.linkedin.com/in/kenhoffman9) Ole Ken unwittingly let the cat out of the bag last December when he confirmed for us what I had been telling you for two years. Namely, that the gold was gone...for good. If you need a refresher, see here:

https://www.tfmetalsreport.com/blog/3924/gonefor-good

You might also see this: https://www.ibtimes.com/golds-journey-west-east-switzerland-1393831

And this: https://www.ingoldwetrust.ch/alex-stanczyk-physical-supply-never-been-ti...

Anyway, back to our pal, Ken. As mentioned above, he appeared on Bloomberg TV last December. In the interview, he casually mentions that "the gold is gone...26MM ounces of it...it's just not there anymore". Please take a moment and watch the clip below. The "action" is in the first 45 seconds:

Let's dig a bit deeper into Ken's statement and quote him verbatim. He says, point-blank:

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

Therefore, it can be logically deduced that, since the "(London) gold is gone", the key to keeping the fractional reserve bullion banking system together is controlling Western investment demand. To paraphrase Ken, should investment demand return again, from where will the gold come?

And what would cause a resurgence of Western demand? A rising price, of course. That's how we think in "the West". If it's going up in price we want it. If it's going down, get rid of it! Damn the fundamentals or long-term rationale! If it's going up in price, get me more of it. If not, get me something else.

So, how do you control price and sentiment? By painting the chart, of course! As we've been documenting here all year, the most important trendline is the one that connects the initial bounceback highs of May 2013 with the next bounceback high of August 2013. Extend that line further and what do you get? See below:

Notice the persistent, determined effort to maintain the downtrend. I can count at least 12 weekly candlesticks that touch, or even breach, that main trendline. And again, why is keeping price below that line so important? The downtrend must be enforced in order to keep price down and sentiment even lower. Why? Because a rising price and rising sentiment will spur renewed Western investment demand and, as Ken told us, the gold to meet a resurgent Western investment demand "isn't there anymore".

Allegedly, one way to measure investment demand is to watch the flows of "gold" into and out of the GLD. You'll recall that 2013 saw extraordinary and record amounts of "gold" purged from this ETF. I wrote about it often. Here are some samples:

https://www.tfmetalsreport.com/blog/4633/enencumbered-gold

https://www.tfmetalsreport.com/blog/5167/pillaging-gld

https://www.tfmetalsreport.com/blog/5220/tale-three-etfs

And here's where it gets interesting. In spite of the enforced downtrend on the chart (that just finally broke again last week), the price of gold is UP over 10% through the first six months of 2014, making it the best-performing asset for the first half of the year: https://www.zerohedge.com/news/2014-06-30/shorts-squeezed-most-11-months...

You might expect that the GLD "inventory" would recover at a similar rate. You would be wrong. Instead, the GLD, which began 2014 with a stated "inventory" of 798.22 metric tonnes (mts), ended June with an "inventory" of 790.70 mts. This puts it DOWN 7.52 mts YTD or a little less than 1%. So, while price and sentiment are returning, the "gold" is still not flowing back into the GLD. Why? What did Ken Hoffman tell us? It just isn't there anymore. There is no supply to replenish the GLD. It's gone.

Knowing this we must expect two things for the second half of 2014:

1) They'll be coming. As noted above, price has once again surged through the main trendline and keeping it in check has forced The Bullion Bank Cartel to add 162 mts of naked shorts in just the past three weeks. Every effort has been made and will continue to be made to drive price back down and below the main trendline. However, here's a closer look at the challenging task that lays ahead of them:

As you can see, getting price back below the main trendline requires at least a drop AND a move back through what has been stout support near 80. This is not going to be easy.

2) Even if The Cartel is successful in dropping price again, the main line continues to recede, making the task of keeping price below the line increasingly more difficult with each passing day. Therefore, they are fighting a losing battle. Eventually, soon or right now, price has/will break free and clear of the enforced downtrend of the past 14 months. Once this change of trend is eventually recognized by the money managers of The West, investment interest and demand will undoubtedly increase. Rather quickly, too. And, of course, renewed investment interest and demand will only serve to increase physical demand, as well.

Which brings us back to Ken Hoffman...

"So the most interesting thing, especially as we look in to 2014, is if there is interest in gold again, and I'm not saying there is or isn't, that gold is just not there anymore."

Back in January, I gave you 2014 year-end price targets of $1500 in gold and $26 in silver, both representing a 30% move in price. Given all the events of the first half, there's no reason to adjust those targets now. Price will continue to rally, albeit with bumps along the way, for the balance of this year. The stage will then be set for significant surges in price in 2015.

It has been a rocky and difficult three years for all of us but those days are behind us. Ahead lays a resumption of the precious metal bull market. It will be interesting to see the lengths to which The Bullion Bank Cartel will go to uncover physical metal to meet the concurrent resumption of Western investment demand. Prepare accordingly.

TF

About the Author

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turd [at] tfmetalsreport [dot] com ()

  104 Comments

Jul 2, 2014 - 11:35am

One more thing re GLD

Don't be fooled by the "inventory" additions of 6/30 and 7/1. This is very likely a simple, end-of-quarter short-covering and metal payback. Why? Because the "deposits" are identical.

On Monday 6/30, the GLD added 5.68 mts.

On Tuesday 7/1, the GLD added anothe 5.69 mts.

Broken down to the ounce, the deposits are nearly identical

6/30: 182,882.27 troy ounces of "gold"

7/1: 182, 881.01 troy ounces of "gold"

So, the difference in the two days additions is just 1.26 ounces. This is not random or happenstance. This is a short-seller "paying back" the gold it previously withdrew and doing so in two tranches.

This is interesting on two levels:

  1. Why now? Is the short seller concerned (afraid) of higher prices to come?
  2. How long will it take for this "gold" to be re-withdrawn by another party?

There have been several other additions earlier this year that were almost immediately withdrawn.

Jan 17: +7.49 mts to 797.05

Jan 23: Back to 790.46

2/13: +7.50 mts 806.35

2/19: Back to 795.61

3/13-14: +5.39 mts to 816.59

3/17: Back to 812.78

3/20 and 3/24: a total of 8.69 mts to 821.47

By 3/31: Back to 813.08

Smaller additions in April and May were also wiped out in the days following.

Let's see what happens with these latest additions in the days ahead.

squib
Jul 3, 2014 - 7:46am

great info

Turd, thank you for your hard work and intelligent analysis!!!

vonburpenstein
Jul 3, 2014 - 7:52am

accidental first!

After turd anyway...Check that 2nd thx to olé squibly...breakfast time and multiple slices of bacon on the way...and looks like the best day of the week to add to the booty

Blankone
Jul 3, 2014 - 7:57am

Holiday

Yes Von, Im going to celebrate the holiday early today by adding to my shiny collection at these prices.

Pattaya7
Jul 3, 2014 - 8:08am

Tonight was great

you were at your best tonight.. Very logical.

s1lverbullet
Jul 3, 2014 - 8:22am

Take down in progress, classic.

Walk gold down 15 dollars after the Comex closes into today, then when the BLSBS number is announced we spike back to around 1325-1330. All to keep gold under the critical 1331. Seen it a thighs and times. Criminal bastards.

Keg
Jul 3, 2014 - 8:24am

I'm just did something that I will regret

Turned on CNBS for the one time a month that I watch. About 15 minutes will be too much. I will likely regret doing it.

AlienEyes
Jul 3, 2014 - 8:30am

even as we read...

Gold just took a dive. I wonder if the monkeys read turd?

amarula4
Jul 3, 2014 - 8:42am

I know this is a meme, but what about the flock of black swans?

Media interviewees and interviewers do like their phrase de jour - which tend to inflate and mutate along the way. 'Kicking the can down the road' and 'black swan event' are two of my least favourite, they attained the status of cliché too slowly in the first case and and fairly quickly in the second for my liking. But of course the artful interviewee could vary the theme with ease, and it is this that concerns me now - someone (I forget who), coined the elegant variant, 'flock of black swans circling overhead' - and it is this that worries me. No-one is calculating the increased likelihood of just one black swan of many landing on the gold trend line and sending all the calculations awry. With all the wars and rumours of wars, oil price surges, and pseudo-random unpredicatables like the outcry against the Fed in Germany, does no-one else think that 2014 will be the $2000 year for gold? Not that I am licking my lips at this - but I expect the price of silver to benefit even more...

judejin
Jul 3, 2014 - 8:45am

silver inventory at shanghai futures exchange

drops to 200 tons today!

china needs to start stockpiling silver.

it might already be too late!

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

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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

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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