TFMR Podcast #41 - Andrew Maguire Discusses Gold Backwardation and Current Gold Price Trends

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Today, we conclude our analysis of the current backwardation in gold by visiting with legendary trader, Andrew Maguire.

A couple of things before we get started:

  • If you haven't yet, I strongly encourage you to listen to yesterday's podcast with Sandeep Jaitly before you listen to this one with Andy. I posted Sandeep first for a reason...you need as clear an understanding of backwardation as possible so that you can give this your full consideration.
  • There are good people, like Trader Dan, who have looked at this issue and concluded that there is no current backwardation in gold. Perhaps it all depends on what you're measuring. All I know is that Sandeep and Professor Fekete are global authorities on this stuff and I tend to side with them. Reasonable people can disagree, however, and it is disagreement that helps to make a "market", whether it's gold, silver, stocks, whatever.
  • Andy will have more to say in March and he's promised to come back soon for another podcast. This particular podcast primarily deals with the current backwardation and the implications for price in the short, intermediate and longer terms.

And keep in mind as you listen...Andy is "boots on the ground" in London, the center of the gold trading world for the past 200+ years. The Comex in New York controls paper price but, as you know, the underlying fundamental going forward is global, physical demand and this takes place in London. Where Comex may physically settle 1,000,000 troy ounces (30 metric tonnes) once every two months, London allocates and settles that much physical metal nearly every single day. Therefore, spot vs futures backwardation is a big, big deal. It drives allocation and purchase decisions for many of the central banks and other sovereigns currently racing to convert dollars into hard assets. Therefore, you must fully consider the ramifications of what is happening and I'm confident you'll find that this podcast will promote your understanding of the situation.

TF

p.s. Once again, I urge you to consider a subscription to Coghlan Capital, perhaps only for Andy's detailed and extensive, weekly commentary. He provides the reader with background and information you simply cannot and will not find anywhere else. Along with the commentary, you also get real-time access so you can follow along with Andy's daily trading activity as well as unbiased and objective technical analysis from Paul Coghlan. Yes, it's expensive but what service of real value isn't? At this critical time, it might be the smartest investment you could make. https://www.coghlancapital.com/daytrades-application?ak=turd_army

  135 Comments

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ReachWest
Feb 28, 2013 - 5:03pm

Excellent!

Very interesting podcast, yet again.

I think the discussion about arbitrage and counter-party risk associated with taking that arbitrage bet was the most interesting portion for me. We live in a world where trust and rule-of-law are no longer taken as 'given'. And, thus what may appear obvious under the old 'honest' paradigm, no longer is.

Thanks Andy and Turd. Your efforts are tremendously appreciated.

Horst
Feb 28, 2013 - 4:28pm

Brilliant. More.

Brilliant. More.

22tlaneTF
Feb 28, 2013 - 4:22pm

Interesting History Lesson for my kids

I bought a 1864 Confederate States of America $20 today. Interesting piece of history. In an effort to help win the war the north started printing counterfeit confederate money to devalue the south's currency. Our dear leaders sure do not learn their history very well. It had been in an old book as a bookmark for years. I guess we can always use our useless FRN's as bookmarks one day.

TheRationalistRationalMind
Feb 28, 2013 - 4:04pm

Andy's Service @ Rational Mind

No probs, RationalMind

I must say I've been keeping an eye on this because I'd like to get involved, I have the money, I'm in London and I have the time.

It's frustrating, because with a little extra input from Coghlan, and maybe Turd, people such as myself, who are presently on the fence could easily make our contribution. Maybe one day a more user friendly version might be developed, although I guess Andy and Turd are wary of offering a service that might make them look like tipsters, and thus liable for all sorts of responsibilities they'd understandably rather avoid.

RationalMind
Feb 28, 2013 - 3:51pm

Andy's Service @TheRationalist

Thanks @TheRationalist.

Looks like we are in the same boat. I have both stock and equity option trading experiences. But not metals nor currencies. And as I am still working, my ability to keep consistently to any London trading hours will be limited.

Wallace Hartley
Feb 28, 2013 - 3:50pm

March POMO Schedule

Looks like there are only 2 business days where the Fed won't be handing billions to the TBTF banks for their "reindeer games". The largest money creation days are on the 15th and the 28th. The 15th is options expiry day for equities and the 28th is the 2013 Q1 end date. They've also included a couple large days during silver options week (19th and 22nd). I know this is no surprise to Turdites, but expect the manipulation to continue this month too....

meddle magic
Feb 28, 2013 - 3:35pm

Santa

If Santa's right on his bottom prediction and the banksters get long in here somewhere; it sure would make a stealthy ass bottom.

SAB, Turd fell free to add this to your list.

meddle magic
Feb 28, 2013 - 3:16pm

I'm going to side with Ted

I'm going to side with Ted Butler on this.

If one of the parties deliberately mis-reports their data, then the entire report wouldn't add up because for every short there is a long and vice versa.

Now maybe the entire report is a complete fabrication...that's at least a possibility...and in this age of SPIN and MOPE, one that must be considered.

meddle magic
Feb 28, 2013 - 3:09pm

Turd

good interview !!! Turd what's your take on Santa saying COT is rubbish?

SteveW
Feb 28, 2013 - 3:08pm

FDN

CME is currently showing Mar13 silver OI at 2597 (~13 Million oz), yesterday's figure.

Not a huge amount and fewer will be left after today's shakeout knocked off another 50 cents!

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