SD Metals & Markets With T. Ferguson: Bullion Banks Ready to Ride the Silver Rocket!

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Turd Ferguson of TFMetalsReport.com joins Eric & The Doc this week as a special Gust Host on the SD Weekly Metals & Markets!

On this week’s show, we’ll cover a number of topics, including:

  • The Doc’s recap of physical market trends and the continuing physical gold & silver shortage

  • Massive and unprecedented physical demand in Asia, coinciding with a historic draw-down in GLD inventory

  • Prospects for a summer rally in bullion

  • TF discusses a massive shift in the silver COT, as the commercials have doubled their long position since QE∞ was announced

SD Weekly Metals & Markets with Guest Host Turd Ferguson is below!

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By The Doc, Eric Dubin and Mr. Turd Ferguson

 

The Doc tells me a shipment of big, yellow hats are arriving at SD Bullion today.  This Turd Ferguson chap is a real gentleman.  Maybe we’ll be able to convince Mr. Ferguson to give away a few hats to SD Bullion customers.  Regardless, we’re pleased to welcome our special guest as the Doc, Mr. Ferguson and I talk about the week that was.

 

 

 

Hit the YouTube or podcast play button below to launch this week’s show.

 

Paper Bullion Markets:  The Only Bull Market Funeral We’ll Be Attending

 

By Eric Dubin

 

Another week has come and gone, with the cartel still in lockdown mode.  Last week, we noted there would be pretty good odds we’d get past $25 on silver simply because keeping this proverbial paper ball under water is unleashing a level of physical market demand that jeopardizes the cartel’s long-term suppression effort.  By Wednesday, we were shaping up for exactly such a temporary relaxation, as both gold and silver and the mining shares ran higher through much of the day and even managed to turn in an unusual performance during thinly traded access market hours.

 

Follow through days are seldom allowed, however, and with the Friday economic calendar filled with G7, G20+ and Bernanke appearances, the obligatory capping continued Thursday.  But don’t miss the forest for the trees.  This week’s performance was quite respectable, particularly in silver.  Cartel skunks sprayed all over the place, but basically accomplished nothing when it comes to silver and $25+ and a testing of $26 probably has only been delayed for a mere week.

silver

 

The $26 level is a critical threshold for silver.  When a given price serves as long-term support for an extended period of time, that price typically becomes an upside resistance cap after its support failure.  For over two years, $26 served as a rock solid paper market floor.  Silver bounced off the $26 and change level five times.  But the events of April, culminating on the 12th and 15th changed all that as cartel skunks excreted naked short volume exceeding annual mine supply and their odoriferous spray still lingers.  The skunks have even resorted to their previous pattern of protecting a critical, standard chart resistance trigger by adding a dollar to “buffer” the target.  We saw the same thing back when getting past $30 was upside resistance (where the skunks sprayed to defend $29 instead).  The same thing happened later, when $29 became the new upside resistance target.  You might think technical analysis is all just a load of hooey, but enough big money momentum traders follow the signals and the cartel exploits this fact.

 

The good news?  Busting $26 silver and $1520 gold came with massive costs.  It triggered a worldwide tsunami of physical demand for both gold and silver, placing tremendous stress on the paper markets.  You need only look at the unusually high and rapid drainage of bullion inventory at the COMEX to see confidence in that rogue institution is deeply wounded.  We’ve heard reports of many high net worth investors demanding their bullion transition out of custodial relationship with firms like JP Morgan.  In a post MF Global world, where investors can no longer take for granted that the CME Group will perform its traditional role of backstopping the market against failing member firms is it any wonder confidence in the COMEX is on the decline?  Mark J. Lundeen has kept charts that put the rapid decline into context.  The decline continued this week and J.P. Morgan’s vault movements are particularly noteworthy.

 

comex-gold-april-26-2013

 

 

Add to this perfectly rational fear the growing realization that COMEX and LBMA paper leverage over true ownership claims to physical gold and silver has reached levels of sheer lunacy.  Most of you have know this for years.  You’ll have to cut mainstream investors a bit of slack.  They’re slow, lazy and overly trusting.  But fear is a powerful motivator, and some of these investors have pulled away from the goings on in their typical lives to make a phone call or have a meeting with their family wealth managers.  An increasing number of high net worth investors are beginning to understand they don’t own gold nor silver at all — only a bastardized derivative that has been hypothecated and rehypothecated into the stratosphere.

 

There’s likely some truth to the theory that China and other big money buyers taking physical out of the LBMA system contributed to the need to source physical out of COMEX and out the London-warehoused GLD.  Even if we never learn all the details, the raw decline in GLD ounces supports the theory that we’re looking at more than just GLD investor redemptions occurring in a vacuum.  Ironically enough, the lapdog business press gleefully report GLD sales, but no mainstream story has set that selling within the context of vastly larger buying of physical at high premiums worldwide.  In March, China imported 223.5 tons through Hong Kong alone.  Figures for April have yet to be reported but we can assume well over 300 metric tonnes flowed through Hong Kong and the figure could even be above 400 metric tons.  Two weeks ago we reported that the Chinese Gold & Silver Exchange Society completely ran out of gold and was forced to submit orders at more than 400% above April, 2012 purchases.  A major portion of the gold imports reported for Hong Kong end up in the vaults of the Chinese Gold & Silver Exchange Society.

 

HK gold imports 2012-2013silver

              – chart courtesy of ZeroHedge

Odds are, the Western financial press will not report April’s Hong Kong gold imports in any meaningful context when the figures are released.  Just remember it’s claimed that China only holds an official bullion stash of 1050 metric tons.  During April, when imports for the mainland and Hong Kong are combined and we add an estimate for domestic mine production, it’s entirely possible that China swallowed about half of its reported official gold stash during April alone!  Bloomberg will not report the final numbers.  CN-B.S. will not report the final numbers.  Stay tuned to SD for the real story.

 

              — chart courtesy of Merk Investments

While the Western World’s gold flows Eastward, what are Western leaders doing?  Well, holding meetings, of course.  The extent to which they’re trying to keep these confabs under wraps extends even to the participants.  Yesterday, Reuters reported one of the invited officials said they didn’t know why Britain had called the meeting:  ”I am really annoyed that I’ve got to give up my weekend for this.”  At least the food and refreshments for the sequestered finance chiefs and central bankers should keep them focused on the challenge of extending the Cyprus bail-in model worldwide.

 

When we searched the web for news about this G-7 confab the above Reuters report was the only story Google carried as of Thursday.  Odd, to be sure.  A wee-bit more coverage has since surfaced, but it’s clear they don’t want the sheeple to be disturbed.

 

Zip over to Istanbul, where the Turkish central bank is hosting the “Global Finance in Transition” conference today and Saturday.  The G-20 is currently headed by Russia and the event is meant to provide a forum for the newly established G-20 sub-group, the “Reinventing Bretton Woods Committee.”  The reserve currency status of the US dollar will be discussed.  This meeting is part of an overall series of meetings among the BRICS and other emerging nations interested in reforming the global financial system.  The meeting was discussed in the media last month, but other than this blurb, you’d be hard pressed to find current news coverage of the actual event.

With that, it’s time to sign-off.  Enjoy the weekend!

 

Everyone knows that staying updated with precious metals news is a chore in itself, which is why SilverDoctors has created our very own browser add-in toolbar to help you stay better informed. The toolbar supports the three major browsers: Firefox, Chrome and Internet Explorer, and when installed, will add built in functionality to your browser directly below the address bar showing you trending RSS links, provide you the ability to search the SilverDoctors site and give you a link directly to our home page. Click the free install button to install the SD Toolbar =>

Gold Eagles As Low As $74.99 At SDBullion!

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Comments

  1. Now we know why bankers all over the world are lowering interest rates:
    It gets really funny towards the middle(!! but I recommend watching from the beginning).


    • Peter clearly has nfi about Australia. the high dollar, driven by our mining boom has gutted the manufacturing sector.
      complete rubbish from him on this topic.
       

    • @nsw2206 So are you saying that the mining sector alone added the 50,000 jobs in Australia in April? That’s impressive. Other countries have worse problems than booming industries.
      And how is manufacturing being prevented by a high dollar? Could it be that the people in Australia is too rich to bother making their own stuff? You wanna solve his by buying junk (bonds, FX) from abroad with newly printed money in order to get the value of your currency down? Why would that stop people from leaving a less profitable sector (manufacturing) for the more profitable (mining)?
       
      I don’t think you’re a troll, but you reason like a keynesian central banker so I am a bit confused as to why you are visiting silver doctors in the first place?

    • @nsw2206  >>>High Australian Dollar
      And the real good news is that the AUD only soared because the IMF added it as a one of the favored ‘Reserves’ together with the Canadian and that caused a massive grab of AUD from the world of fiat and killed the Export Ore Monoplantation known as Australia like a stone. Australian politicians have no idea how to diversify an Economy, and they have sold all the Agribusiness to multi-nationals and are letting smaller business go to the dogs. Politicians all over the Western World have copied the New York and London Vulture-capitalist model to a tea and now Australia has been added to the IMF prison for good.

  2. In response to the cartoon article above it seems the strategy is to give the East a large portion of the gold then devalue.  Let they buy it at $1600 – $1900 then the banks knock the price down to $1300 or $1400 and perhaps lower. 
    I would assume this creates problems for anyone interested in issuing a precious metal backed currency.  So it’s like a 2-for-1 deal. 
     

    • @Powerball I think you are giving them too much credit. I don’t think they have a plan (except printing & praying), but if that were to be the plan then they are going to be very disappointed when the east won’t sell an ounce at those prices :)

    • I’m not saying its a good plan but perhaps one of duck-and-hide.  However, the lower price will create problems for any country wanting to issue any type of metal backed currency.  The question is how long will this strategy work?

    • @Powerball  I see what you are saying. Maybe the MSM will use that kind of twisted logic (if they still exist), but when you think about it, what adds more value to a currency:
      a) it is backed by something tangible of low value
      b) it is backed by nothing tangible
      Should be pretty obvious :) but then again so are a lot of other things which are currently misunderstood

    • @PowerBall:  It’s not an overt plan but more so just collateral damage from the policy of supporting the US Dollar, and in turn, the US bond markests and MBS market, which bails out the banks and also keeps the crack financing line going to government deficit spending (there would be riots in the streets if the government cut back in any meaningful way given how massive the government has become).  The one part I noted about the dollar can be a bit confusing so I’ll unpack that a bit.
      If the Treasury and the Fed were to not support the credit markets, interest rates would shoot higher, crushing the economy, making it less attractive to international investors to park money here, which in turn would lower the demand for dollars given the size of international capital flows.
      In order to keep interest rates low and to have the QE program “work,” there can not be a sudden rise in inflation expectations.  In order to kill inflation expectations, we constantly see this song and dance from Fed govoners about to add more QE or to not — back and forth, in service to the illusion that the economy is recovering but isn’t “too strong” to create higher velocity of money and inflation.  They also employ this flip-flop open mouth ritual when it comes to trying to keep asset prices up, but not exploding higher (see Uncle Ben’s speech yesterday for a prime example).  Meanhile, gold and silver must be kept under wraps lest the little people lift their head from the pasture and baaah questions about what higher gold and silver prices are signaling.  Read Paul Craig Roberts articles on this subject.  You’ll find them very enlightening:  http://www.paulcraigroberts.org  He’s the highest ranking former official in the US speaking truth to power.

    • I would lime to suggest the possibility that, If the BRICS back their currency by gold, and announce a valuation (just stir u up) of say 50,000.00 and will only SwELL gold at that price, then the west would be forced to devalue their gold, otherwise the rest of the world will soak up their gold at say 1500.00 oz. No one will buy east gold at 50k, therefoe all west gold will vaporiE, or they will comply. Theres also the option of being an isolated country? NOT.

    • Thing is they still have the gold while we have a fiat currency that is worth close to zero….

  3. During the Great Depression, we had bread lines.  Today, we have SNAP cards, student loans exploded to over 1/10th of the economy, exploding disability rolls, elevated and extended unemployment payments and a bloated government sector supporting employment at the margin.
     
     
     
    Makes one wonder if we’d be better off with bread lines and to not deny reality.  At least then, we could be honest about what’s going on and people would put pressure on the system to fix things.
     

     
    Eric Dubin
     

    • “Makes one wonder if we’d be better off with bread lines and to not deny reality.  At least then, we could be honest about what’s going on and people would put pressure on the system to fix things.”
       
      Well, as Ayn Rand once said, “We can evade reality, but we cannot evade the consequences of evading reality.”  TPTB WILL try, of course, but they WILL fail.  Reality has a way of intruding upon the most idealistic of plans.  ;-)
       

    • @Ed_B
      Ayn Rand really said that? Sounds like a paradox. The consequences of evading reality would logically take place in reality, but she said that reality can be evaded, so then the consequences would be evaded too? I thought she was smarter than that (but I have not read much of her work to be honest).

    • @flying-wombat
      Bread lines would be better in the sense that they don’t hand out iphones, cigarettes, alcohol, strippers and other non-necessities. But who knows… maybe in the Obama world they would :)

    • @widget – maybe I should become a state social worker.  Just think of all the perks and job security.  :-)

    • @flying-wombat Ha ha. Now THAT is a booming sector :)

    • “Ayn Rand really said that? Sounds like a paradox.”
       
      Yes, she really said that.  But it is not a paradox.  What she is saying is that while we can ignore reality for a while, reality WILL overcome the fact that we are ignoring it.  It WILL force us to look at it objectively, unlike what we were doing when ignoring it.
       
      Look at it in terms to which we can all relate.  The Fed can ignore honest money in favor of fiat currency for quite a long time but eventually, real money will overcome fiat in spite of all of the actions that the Fed has taken.  About all they can do is stretch out the time we have before fiat collapses.

  4. i see the demand for gold, but silver is becoming more available with some sites down to $1.50 per ounce premiums.  the dichotomy in demand between gold/silver has me confused, does anyone here have an opinion?

  5. Heaven forbid gold goes up and creates 100,000′s of mining jobs, we need jobs. Oil goes over $100+ and jobs in the sector grow like weeds imagine all the jobs in North American if if if gold traded steadily around $2500, wtf is govt waiting for ? scary $2500 gold oh noooo well guess what meat heads most the world knows your full of it and $2500 would be played down by your media trolls any way so who cares blame it on gold shortages and get the jobs flowing oh unless your ok with the great waitressing jobs your creating

    • Good points.  The U.S. has a tremendous amount of ore reserves that have been sitting idle for the past 50+ years.  There’s no reason they couldn’t roll back some of the over-the-top regulations, allow the metals to rise which would create hundreds-of-thousands of jobs in the sector. Plus, it would keep money from going overseas to buy these metals whether its zinc, copper or gold.

  6. DONT LOOK NOW BUT KING WORLD NEWS HAS PARADED OUT THE BULLS AGAIN. THE LBMA AN COMEX COLLAPSE IS IMMINENT….LOL…TURK OUT WITH HIS USUAL 12000 GOLD AND 600 DOLLAR SILVER.

    • DON’T LOOK NOW BUT SLD IS 12 YEARS TOO LATE IN RECOGNISING THE BULL MARKET IN GOLD AND SILVER.
      HIS INSIGHTFUL UTTERANCES ABOUT THE IMMINENT RISE IN PURCHASING POWER OF THE DOLLAR MUST SURELY PAN OUT, CAUSING A STAMPEDE OUT OF RARITIES AND INTO THE SAFE HAVEN OF ZIMBABWEAN COLLECTIBLE NOTES. GET INTO THAT MARKET BEFORE IT’S TOO LATE!!!!!!!!!
       
       

    • You wonder if SLG even read this article? I doubt it.  
       
       

  7. Oil goes over $100+ and jobs in the sector grow like weeds
    -  -  -  -  -  -
    Yes – oil sector jobs may grow like weeds, but the many of the few remaining Manufacturing jobs in America will disappear when oil spikes again.  The Mill where I am employed is dependent upon oil as one of its main energy sources.  A rise in price will also be accompanied by a rise in the cost of other inputs such as wood, steel, and all of the other materials we purchase in order to manufacture our products.
     
    The result will be a loss of over 275 jobs in this county, as well as a loss of a good chink of business for our suppliers.  @PowerBall refers to “over-the-top regulations;” I assume this means environmental regulations and yes – they indeed also contribute to our operating costs.

    • Hmmm now if only the Chinese started to buy their own products but bought raw materials through us at nice inflated prices, the crappy thing is our govt hasn’t played nice and china is making deals for raw materials with others….

  8. @widget
    manufacturing..
    http://www.macrobusiness.com.au/2013/05/australian-manufacturing-pmi-signals-full-blown-crisis/
    employment.. theres the gubbermint  figers and then theres underemployment…  the government claims 1 hour worked makes an employed person.
    http://www.roymorgan.com/findings/unemployment-and-under-employment-201305080803
    australia has a massive housing bubble, which demands high wages to service, but we cant be competitive with high wages and a high dollar. its just common sense.
    as for mining – 5% of the economy,  85%  foreign owned. the investment cycle is coming to an end, ore prices have come off their highs, the end of mining as a saviour is nigh!
    interest rates are  low to stave off our housing bubble collapse, and to stop the carry trade in australian dollars. the aud is not high from a fundamentals, its speculation.
     

    • @nsw2206
      I don’t understand what “demands high wages to service” means here. Can you elaborate? How is the bubble serviced, who is demanding it, who is complying and why?

    • @nsw2206 (and why is mining at fault? and how does the foreign ownership play into this?)

    • maybe stating the obvious, but i interpreted ‘demands high wages to service’ means people need to earn higher and higher wages to pay rent/mortgage

  9. “In a post MF Global world, where investors can no longer take for granted that the CME Group will perform its traditional role of backstopping the market against failing member firms is it any wonder confidence in the COMEX is on the decline?”
     
    As an investor who has watched with considerable interest as the events of the past 5 years unfolded, I am utterly amazed that there is ANY investor confidence in the COMEX.  They had an amazing opportunity to backstop MFG’s clients and preserve the integrity of the market via their claimed $10B insurance fund but failed completely to stand up for their obligations.  They did mutter some drivel about how they were there to backstop the companies, not the clients of those companies.  Well and good… but they should have made that crystal clear to these same clients when they were buying into this system… and, IIRC, they didn’t.

    • Ed, not sure this is a CME issue, though they did put up a lot of money to guarantee positions so that some client money could be returned quicker.
       
      if you gave me $10,000 because i convinced you i would help make good returns, then i disappear with your 10k, is the NYSE on the hook, or any other exchange?  
       
      segregated funds have been sacrosanct, that trust was broken, but not by the exchange.  the crooks like corzine are the ones most culpable.

    • There were articles published wherein it was stated that people bought physical gold and silver bars specifically because they were told that the CME group was back-stopping the trading companies, such as MF Global, and that because of this their money had some degree of protection against loss in the event that those companies failed.  Whether or not these articles were true, I don’t know.  But I never saw any articles wherein this was repudiated.

    • i had not heard that, that is sad if in fact people were told that.  

  10. Yawwwwnnnnnnn!

  11. No new threads or comments this morning…
    Mama must really be cracking her whip on all the SilverDoctors folks!

  12. yea
    I just raise my eyebrows and dont bother reading any articles declaring 5000k or $300 silver.Guys like Turk leeb etc are no doubt  very successful and highly informed about the metals market but they wouldnt win any Prognosticator of the year award.Shit Id be independently wealthy at this stage if all their predictions in the last three years had come to pass.(i also guiltly of having been a little naive since these guys and many other experts all have  vested in interests in seeing the price of metals going up)All their arguments sound logical but as long as the Fed can manufacture money of the thin air in infinite amounts at any time then Silver and Gold will not see any significant moves upwards in the near future.It would be suicide for the Central banks of this world to allow the only viable alternate competing form of real money ascend higher and thus destroy the    US  fiat house of cards which is the lynch pin of the current corrupt system
    Its going to take a(in the short term) a black swam event of epic proportions to change the current paradigm or an abrupt 180 degree turnaround in Usa dollar sentiment to get the metals ball rolling.All things being equal I think the scumbag powers that be can kick this ball down the road for at least another 4-5yrs.From a long term perspective no doubt about it Gold and Silver are the place to be for both wealth preservation and enhancement
    Buy physical and remain long.

  13. All I need is just to buy one more big chunk before the next leg up.  I always need just one more big chunk.  Things just don’t change.  

  14. Ebay-o-rometer: Go to ebay 1 oz. gold. Set it for “time ending soonest.”  Very Sparse. What is available is in the $1600-$2000 range. Why do we talk about globex comex at all?

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