The Great Gray North

Watching the gray metals move higher, too.

Wed, Jan 22, 2020 - 12:48pm

It's another day of sideways action in the Comex PMs...which is both good and bad, I suppose. However and as we keep repeating, every day that Comex Digital Gold remains above $1550 is another step toward $1600 and, above there, things will get pretty interesting.

And why is that? Because you know all about the significance of $1550 and closing above there on a weekly basis. We've now done this three weeks in a row but the last two have come with slightly red weekly candles, so any amateur chart-reader can see that there has been a lack of follow-through. What we need is to remain in this $1550 area long enough that it becomes "the new normal", sort of like how we described $1500 late last year. Or think of it this way...any drop now to $1500 will seem like a bargain and not a top. Thus, over time, $1550 soon becomes that way, too. And then eventually the buying momentum appears again and it drives price on its next leg higher and toward $1600.

So, anyway, greetings from Vancouver where I was asked to speak at the annual AME Roundup show. The weather here blows and I likely won't get many new subscribers from my appearance. So why am I here? I knew I was going to be on the west coast last weekend anyway and, more importantly, MrsF wanted to tag along as she's been all over the world but never to Vancouver.

My presentation yesterday was explanation of why prices are headed higher in 2020 and how The Banks are screwing you every step of the way. To a room full of 250 rock-breaking geologists, I might as well have been speaking Latin. But, whatever. The food here is great and it's not snowing like it is back home. Here's an action shot of your host preaching to the blind and the deaf:

As mentioned in yesterday's podcast, I've promised this day to MrsF so there will not be time for a podcast this afternoon. We fly home tomorrow so there won't be a podcast then, either. Good Lord willing, we'll be back to the regular schedule on Friday.

In the meantime, there's not much news today. The economic datapoints were minor. Existing home sales soared for some reason but "national economic activity" continues to decline. Check the chart below:

Platinum and palladium are both bouncing back today. I hope that you saw this next bit of info yesterday as I believe it to be significant news. Either JPM or one of their clients has hastily withdrawn over 18,000 ounces of palladium that had been stored in JPM's Comex palladium vault. If you've been following along with me for the past two years, then you know that there have been VERY FEW vault movements in palladium. Nothing like the daily shifts we see in gold and silver.

Here's a daily vault stock report from last April where I'd noted that NOTHING had changed in over two months.

And here's the one from last week where I caught the sudden shift of over 4,000 ounces from registered (readily available for delivery) to eligible.

So when the total amount of physical palladium that supposedly backs the exchange falls by 36% in one day, I'd say that's a pretty significant development. Someone...either JPM or a client...did NOT want to take the chance of getting their palladium snatched away in this squeeze. So they first removed the registered tag and then removed the metal. The only question is...Will this palladium be used to settle some accounts across the pond where the shortage is? I guess we'll know soon enough by watching the lease rates.

I've not seen the lease rates from David Jensen today but I assume they're back up and remaining extreme as prices have bounced back from yesterday's drop. On the six month chart below, note the frequent and sharp 5-10% corrections that all preceded higher prices. Here we are again.

And just now in checking Twitter, look what I found. David reported the lease rates AND posted that the 18,000 ounces were indeed JPM's and that they were shipped to London as a sort of emergency physical supply. Interesting times, indeed!

So we'll see where this all heads from here. The vault stock reports are released daily at 3:30 ET. If you want to check for yourself later today, you can do so here:

I'll be checking in from time to time today as I make my way around Vancouver. In the meantime, I see that CDG, CDS and the shares are all mostly UNCH so I guess it's a good day to take the afternoon off.

More tomorrow,


About the Author

turd [at] tfmetalsreport [dot] com ()


Jan 22, 2020 - 12:52pm



Jan 22, 2020 - 12:54pm


Silver and still stacking!

Jan 22, 2020 - 12:56pm


Looking back, why didn't I sell all of my PMs, and buy Tesla and Chipotle on margin? What was I thinking?

Oh yeah, I was trying to preserve the wealth I already have. Maybe not such a bad idea after all . . .

Jan 22, 2020 - 12:59pm


Babysitting for Marchas.

PS. The weather in Vancouver blows? That's the banana belt of Canada, the tropical part. Try living anywhere else in Canada and you'll start to appreciate Vancouver.

Jan 22, 2020 - 1:00pm

Followup for AGXIIK!

The gender thingy is insane. I remember long ago, in high school, the girls wore dresses or were sent home. Those dresses had to be below the knee. A well turned ankle was a joy for men.

I began to notice that the girls (there were only male and female in those days), were a beautiful thing to behold. Those girls were not like my two buddies from grade school, PeeWee and Chip Monk (yep their names in school).

I knew quickly that these young women were a beauty to behold. I was not confused as to what I was seeing. The kids today do not know what they are, even if they stand in front of a mirror or take a shower. Yes, I married one of those beauties, long ago, and she still knows that she is female. Not confused! Jim

Jan 22, 2020 - 1:01pm

in lieu of a podcast

Maybe re-listen to this? David Jensen and I last September. I'll try to have him back again soon.

Jan 22, 2020 - 1:05pm

Here's the front-month Mar20 palladium

And here are the current open interest totals:

And how about the 996 EFPs yesterday? So, allegedly, 99,600 ounces were "exchanged for physical"? That's 3X the Comex vault so it had to be in London. Hmmmmm.

Jan 22, 2020 - 1:17pm


PALLADIUM Just not in my back yard

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Jan 22, 2020 - 1:26pm

"The Federal Debt Is Nothing To Lose Sleep Over"

I wrote the following post today regarding this column. I thought I might as well share it here as well…

This is for anyone who cares at all about the status of our public debt. Efforts are afoot to convince the public that there is no danger in our current debt or its future expansion. These efforts are often led by policy wonk, government subsidized economists who usually attempt to confuse regular people by using impressive sounding and often difficult to understand terminology. It most often takes only the slightest effort to see through the gobbledygook and understand that, at heart, what they are saying is nonsense.

Please read the article attached as the first comment to this post. It is titled, “The Federal Debt Is Nothing to Lose Sleep Over” and is authored by Narayana Kocherlakota (NK), a former president of the Federal Reserve Bank of Minneapolis. If you’ve made it this far, please actually read the article before reading this post any further.

NK argues that the national debt, at any amount, poses no problem because 70% of the debt is owed to U.S. taxpayers and, accordingly, the government can simply tax those taxpayers to make payments on the debt.

He writes,

“Suppose that the government’s debt is $100 million per person -- a huge amount that is many times larger than the current debt -- and the interest rate is 5%. How can the government begin to pay this, a figure that amounts to $5 million per person per year? It’s actually simple. Suppose first that all U.S. taxpayers are exactly the same financially and so they each own the same amount of U.S. government debt. Then, the government can tell each person: your tax bill for this year and every year thereafter is equal to $5 million. People can pay this seemingly huge tax by handing over the $5 million in interest that they receive from the government. The entire process of taxation and debt finance ends up being a complete wash.”

While his analysis is technically true, he fails to consider the most obvious consequences of what he is proposing, and those consequences are terrible. I’ll enumerate some of them here.

1. NK’s proposal eliminates the profit value of any U.S. citizen’s investment in government debt. It takes back from the investor 100% of his return. Why would any U.S. citizen ever again invest in government debt?

2. Because the proposal devalues treasuries in the hands of investors so significantly, the market price of those instruments would plummet, which means the market interest rate on U.S. government debt would sky rocket.

3. Once the market rates on existing government debt has spiked, new issuances of U.S. debt will do the same. Why? First, U.S. citizens (pension funds, mutual funds, etc.) will never be willing to buy U.S. debt again. Why would they once they know every dime of their interest profit will be taxed away. The market for new issuances would shrink to only foreign investors. Supply and demand is real. Less demand, more supply, equals falling prices for bonds. Falling bond prices mean higher interest rates. We’d be at the mercy of the rest of the world…a world that will have just seen how the U.S. Government effectively defaulted on its debt obligations to its own citizens.

4. Much of the U.S. debt has been refinanced into short term instruments and comes due regularly, i.e., it must continuously be refinanced. Accordingly, it’s not only “new debt” which demand higher rates. We almost never pay down ANY of the debt. It only increases and it all must be refinanced regularly. Every refinancing will demand much higher interest rates than we’re currently paying for the same reasons described above.

5. Because the debt is so large (now over 100% of our GDP), we simply cannot withstand significantly higher rates. Foreign investors will understand all of this and factor in an additional risk premium for buying our debt, on the presumption that the U.S. will ultimately either default outright, or by printing money (devaluing the currency) in order to pay investors back with dollars worth much, much less than those used to purchase the debt obligations in the first place.

6. NK ignores that about a quarter of the debt is owed to other arms of the government (like Social Security). Obviously, those agencies will not be taxed. In order for their books to be maintained, they’ll have to be “paid” the interest on their “investments” in government debt. Those payments will have to come through taxation or, what is much more likely, money printing.

NK’s plan results in failed pension funds, ripped off American citizens, spiking interest on the U.S. debt leading to ultimate default, and a significantly devalued dollar leading ultimately to massive inflation. This, from a former Federal Reserve Bank president.

This is just one example of the smoke and mirrors these people use to fool regular people into believing that everything is ok with the national fisc. We are robbing ourselves and our children of everything prior generations have worked to create.

Angry Chef
Jan 22, 2020 - 1:27pm

Here's My Theory on Palladium

I have a theory that in order to keep Grand Ponzi going TPTB have been building cars, trucks, vans. planes etc... on a road to nowhere. GM doesn't make money on cars. They make money on financing cars. We like to talk about derivatives. Like derivatives tied to interest rates and PM's. What if the Morgue and others have been building physical assets like vehicles and storing them in the desert in California, Arizona, and places like Spain. This causes a huge demand for things like palladium. Thus a shortage on the COMEX. When in reality they're is a massive supply being hidden in hot dry places around the world just waiting for the right time to remove the Palladium. Short the market. Bomb the price. And leave everyone else holding the bag.

If they could do it with Tungsten....

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