Doc & Dubin Break Down The HUGE Story, Its Implications, & the RESUMPTION of the Secular Gold Bull Market:
It appears Black Rock has a problem on its hands. Trapped between a bright, shiny “pet rock” and a hard place, Black Rock announced the suspension of the issuance of new IAU Gold Trust shares. Time will tell how long the suspension remains in effect. Suffice it to say, Black Rock has egg on its face – as does anyone that continue to make specious arguments about the precious metals market not being tight.
Circumstances forced Black Rock’s hands. As investors buy the ETF, the premium versus IAU’s “reported” physical holdings expands over time if new shares are not issued in association with the purchase of additional gold bullion. Notice how the premium to net asset value was around 2 percent a few times this month? That’s somewhat high, and tracking the premium in the coming weeks will be interesting. It should trend higher when gold is under accumulation. But one does have to wonder if an announcement like this – along with rising IAU premiums – might steer some investors away from IAU and towards other previous metals related assets. IAU is popular in Europe and given high taxes in many European countries, with high VAT taxes on bullion, there are built-in incentives for people to favor derivative instruments like IAU versus the instant pocket-picking physical bullion investors must endure.
The Kitco 72 hour charts reflect the action, and I’m also including a 5 year gold chart for perspective given that Doc and I make references to gold’s trading milestones over the last few years:
As I write, Friday’s regular market session is now closed, and gold has given back most of its reversal following the 8:30 a.m. Eastern Standard Time employment report. Silver was still reflecting a “catch-up” momentum move throughoutFriday’s trade, relative to gold. Silver has been lagging gold for quite a few weeks, partly related to fears of an uncontrollable deflationary spiral slowing down silver industrial demand, but we’ve also witnessed the cartel attacking silver, periodically, in a failed effort to contain gold. By now, we should have already seen a bit more improvement (falling) in the gold-to-silver ratio. That will happen in the coming weeks and months as more people come to recognize that the precious metals bull market is real, and metals are going MUCH higher.
Last week, we warned of the high probability that the cartel would attack this week, and that the cartel would most likely act with the committeemen of traders data report cut-off in mind. But other than on Wednesday, they were not able to get much traction to the downside. This coming week, expect another cartel effort. On Monday, Fed Vice Chairman Stanley Fischer is scheduled to deliver an address titled “Reflections on Macroeconomics Then and Now” at the National Association for Business Economics Economic Policy, and Fed Board Governor Lael Brainard will be opining and likely issuing “MOPE signals” at the Institute of International Bankers Annual Washington Conference, held in Washington, D.C. Thus, we have a perfect set-up for a capping effort starting as early as Sunday evening. But as Doc and I discuss, near-term attacks will not likely have meaningful, lasting impact. Scaring “weak hand” investors and traders is a good thing when it comes to the intermediate- and long-term health of this precious metals bull market.
For additional discussion about my contention that we are already in the third phrase of this secular precious metals bull market, click here for the latest Welcome To Dystopia, “Gold Bull Market Spanking Permabears.” Jason Burack and I recorded the podcast near the close of Thursday’s regular market session.
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Enjoy the weekend! – Eric Dubin, independent financial/geopolitical analyst.