Guest Post: "The Death Of The Gold Market", by Paul Mylchreest

96
Sun, May 8, 2016 - 11:11am

Our friend, Paul Mychresst, has written this extraordinarily comprehensive report on the current state of the global gold "market". His timing couldn't be better. As price holds firm against the extreme efforts of The Bullion Banks, it is absolutely critical that you take the time to read this tremendous summary of the current situation.

As you've often heard me state, the global gold "market" is much more vast than the Comex-centric analysts would have you believe. There are literally hundreds of moving parts that affect price...and the price "discovered" on the Comex has no direct relationship to physical supply/demand fundamentals.

This new piece from Paul Mylchreest is the sort of thing I would have loved to have written myself...if I had the time and expertise to do it! With Bullion Bank leverage soaring to extreme levels and paper obligations to deliver gold reaching heights unseen for years, it is CRITICAL that you take the time to read through this report.

Mylchreest Gold London Bullion by zerohedge

Additionally, NOW would be an excellent time to re-watch this exceptional presentation from another one of our friends, Grant Williams. Though originally posted in early January, many of the themes Grant discusses are still relevant four months later. PAY PARTICULAR ATTENTION to the information presented at the 20:00 mark and forward. I've grabbed screenshots so that you're sure not to miss them. In 2015, the cumulative allocation of global pension fund assets to gold and gold-related securities was only 0.15%. If that were to double to just 0.3%, the effects upon gold, the gold ETFs and the mining shares would be historic.

Now consider that, in this environment, The Banks are already on the run. As we learned a few weeks ago, the Central Banks are no longer providing unlimited amounts of gold to The Bullion Banks for the management of price. Without this supply, The Banks are desperately working to cover and manage all of their outstanding lease arrangements as well as meet the global demand for physical metal. We've often referred to this is living off of "flow" instead of "stock". The Bullion Banks manage the global physical gold market in much the same way your supermarket manages its inventory. Namely, with "just in time" delivery. So what happens at the first delivery failure...when the music stops and there's a sudden scramble for chairs?

And this is what the Banks on the Comex (The Bullion Banks for those too obtuse to otherwise understand) recognize and this is why they are so desperately doubling down and adding to their record short positions at present. Having been left to their own devices by the Central Banks, the Bullion Banks are left with no choice but to put "good money after bad" in the hopes of exhausting Spec demand and reversing price lower.

As of the most recent Commitment of Traders report, the gold "Commercials" were net short 295,000 Comex contracts. Again, that's NET. On a a gross basis, it's 411,545 contracts! But even on the NET basis, that short position is equivalent to nearly 30,000,000 ounces of gold. Therefore, every move in price generates an additional paper loss of 0,000,000. Doing the math, a 0 move generates additional losses of ,000,000,000! And this is just one reason why The Banks are so desperate to contain price here.

The other is the physical situation described by Paul Mylchreest. In "the west", investors only seem to value items that are moving up in price. Assets that are falling in price are considered dead money and "pet rocks". However, as prices rise, western investors seemingly want more and more. Therefore, a rising price...a price allowed to move through 00 and 00...would only exacerbate the physical situation for The Banks. And, as laid out here daily, it is the physical market that will ultimately bring about the demise of the Bullion Bank Paper Derivative Pricing Scheme.

Putting this all together, you can now see the urgency behind this rare Sunday morning post. The Banks (on the Comex and in London) are doing everything they can to stymie this rally as they realize the very real and existential threat that it poses. Will they win and will they survive? I suppose that depends upon just many folks learn of this struggle that is unfolding behind the scenes. At TFMR, we're glad to do our part to bring these issues to everyone's attention and we are extraordinarily grateful for the efforts of good folks like Paul Mylchreest and Grant Williams in aiding the cause.

TF

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turd [at] tfmetalsreport [dot] com ()

  96 Comments

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Old Howard
Jan 14, 2017 - 12:59am
Markedtofuture
May 9, 2016 - 10:19pm

Notes From Underground Intentions To Financially Repress Germans

Authorities Reveal Their Intentions To Financially Repress the Germans

There were two articles today that exist in direct contradiction to each other in substance, but when taken together reveal how ECB President Draghi and IMF Director Lagarde HOPE to punish and repress the German saving class in an effort to salvage the EU via the alleviation of debt owed by the so-called peripheral nations. The first article of significance is an op-ed piece by the FT’s Wolfgang Munchau titled, “Draghi, Schauble and the high cost of Germany’s savings culture.” The article lays it on the line that the Germans bear a great deal of responsibility for the ECB’s negative interest rate policy because of Chancellor Merkel’s push for austerity budgets to correct the massive deficits of the heavily indebted “peripheral” nations of theEU. The Germans were pushing themselves into AUSTERITYsimultaneously by pushing forward a law on its own BALANCED BUDGET RULE. The battle cry from Germany was growth through austerity. In July 2012, when the debt plagued EU was on the verge of financial collapse, the profligate peripherals were willing to accept any demands put forward by the Germans in an effort to gain access to the Berlin credit card. As Munchau notes: “If German fiscal policy had been neutral during that period, the ECB’s job would have been easier. It would have been able to achieve its inflation target and would not have had to cut rates by as much.”

continued....https://yragharris.com/2016/05/09/repress/

James Crightonquestion
May 9, 2016 - 9:01pm

@question - thanks

many thanks Q - much appreciated.

jc

Markedtofuture
May 9, 2016 - 5:34pm

WAR ON CASH: Larry Summers Calls for the Ban on All Notes above

THE WAR ON CASH: Larry Summers Calls for the Ban on All Notes Above $50

The war on cash continues. Former US Treasury Secretary Lawrence Summers, who appears to be leading the global ground attack on cash, is out with an op-ed in the Financial Times commending the EU for their move to halt the production of 500EU notes. He is now calling for Switzerland to stop production of the 1,000 Swiss franc note:…

https://www.economicpolicyjournal.com/2016/05/the-war-on- cash-larry-summers-calls-for.html

question
May 9, 2016 - 4:57pm

@jc

Lamenting Laverne had posted on the "Active Public Threads" forum on the chance that you might see it.

@ Cashonly and JC - Executive Order, "I cannot post on main street, so I hope you will see it here. It is regarding the Executive Order posts."

It is a lengthy post with good questions and observations concerning executive orders and other things. I was just butting in unasked

James Crightonquestion
May 9, 2016 - 4:46pm
question
May 9, 2016 - 4:10pm

@ Cashonly and JC - Executive Order

Lamenting Laverne posted to you a response;

https://www.tfmetalsreport.com/forum/6316/active-public-thread-comments?...

May 9, 2016 - 10:17am (new)

#274

Please excuse the presumption and interference. maybe I'm out of line

J Siefert
May 9, 2016 - 11:08am

Bought my 50g of Gold at UBS

...this morning.

Then went to the dentist for an hour's suffering preparing for a crown tomorrow. The gold in my pocket did help to comfort me though.

PS In front of me in the queue at the bank was a middle aged Indian couple who bought 10g of gold for some Indian holiday where gold buying is appropriate today.

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Dingo
May 9, 2016 - 10:46am

Current beat down

Pining mentions he's not too worried about the metals weakness and I have to admit that the daily price graphs of Au/Ag aren't the usual vertical waterfall pattern I've become so accustomed to seeing the past few years. Maybe I'm just looking too hard at my tea leaves or it's simply USD/JPY algo driven sans bank naked shorting. I guess time will tell if the raids are getting more difficult for the banks to execute.

lakedweller2
May 9, 2016 - 10:14am

List of Negative News Against PMs

Big Banks still unregulated

Citizens United not Reversed

CFTC still allowing fraud

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