After decades of manipulation laced market making, is the LBMA about to be made obsolete!?!
The ‘trend is your friend’, until an epic reversal occurs…
Overnight, CME Group Inc., the world’s largest futures market, halted all of its Globex electronic trading markets, including gold and silver, for four hours due to a “technical glitch.”
All other Globex electronic trading markets, including U.S. Treasury’s, oil, gold and U.S. stock indexes were affected with many markets having order routing problems.
(Editor note: the question is where will GLD find the physical gold to replace the inventory that was sucked East in 2013?)
The mighty GLD gold ETF’s bullion holdings have remained stable in 2014, an impressive feat. Last year they suffered an epic outlying record plummet as the Fed’s stock-market levitation sucked capital out of alternative investments. (and as the East sucked every ounce of AU out of the vaults)
This year’s resiliency in the face of the ongoing stock-market melt-up almost certainly means the bottom is in. GLD’s holdings are set to surge as weaker stock markets entice traders back.
“I just think that the COMEX data is corrupted. It’s very hard to make any sense of it all. The fact that there’s no deliveries from the dealers is incredible. You’d think there’d be some change in the inventory. I don’t care whether it’s up or down, but at least you’d think there’d be some change.” -Eric Sprott
One of the keys we watch here along with the US dollar is the price and movement of gold.
If you do any research on gold at all, you will quickly discover that there is a commonly held view that Central Banks hate gold and think of it as a useless asset that does not earn interest.
As usual, if you dig a little deeper and do more research you discover a different story.
Legendary gold trader Jim Sinclair sent out an email alert to subscribers Monday night regarding the manipulative dump of $1.3 billion in paper gold on the week’s COMEX open.
Sinclair, who called the top in the last gold bull market to the day, stated that Monday’s gold take-down was to allow the bullion banks to cover their shorts, and to initiate and expand long positions in advance of gold’s coming bull rally.
Sinclair, who has long stated that the entities that will make the most during gold & silver’s massive secular bull markets are the very bullion banks who have been naked short throughout the duration, warns that the bullion banks are GOING LONG HERE AND NOW!
Sinclair states that long term cycles in gold are turning positive and that this was likely “the last take down before gold trades at new highs“.
Sinclair’s full MUST READ alert is below:
With an unallocated account the customer doesn’t have an entitlement to any specific bullion bars, and is a creditor of the bullion bank. So long as the customer is happy with the counterparty risk, this is the cheapest way for him to have exposure to gold. F
rom the bank’s point of view, there is no need to hold more gold than required to meet customer withdrawals. Furthermore, even this gold doesn’t have to be bought, merely leased from a central bank, remaining in the Bank of England’s vault unless needed.
There can be little doubt that the increase in the quantity of gold held in the Bank’s vaults between 2006 and 2013 reflected, among other factors, physical backing for increasing unallocated accounts during the 2000-2012 bull market.
In the past a bullion bank’s risk to a rising gold price either went unhedged, or was managed through derivatives, using forwards futures and options. Therefore, so long as systemic risk is not regarded as a material factor, the bullion banking community can absorb significant gold demand from investors by expanding unallocated accounts without any physical buying required.
However, the investing public’s greater awareness of risk to bank deposits from bail-ins could change this in future.
India’s central bank said on Wednesday it has sought quotes from banks to swap gold in its own vaults for international-standard gold, aiming to improve the management of its reserves.
The Reserve Bank of India said the operation would “standardise the gold available with RBI in India with respect to international standards” and the gold acquired would be delivered to its overseas custodian, the Bank of England.
By holding gold reserves in London, the RBI would gain flexibility to mobilize them if needed to defend the currency.
It appears the Indian government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market in exchange for gold of the rehypothecated paper variety .
What is incredible to me is that they are justifying this with a so-called “swap” into phantom gold at the Bank of England.
They see the kill in the not too distant future, they taste the blood that is not yet extracted from their victims. They are a bloodthirsty lot, indeed.
While many precious metals blogs and investors have proclaimed an imminent COMEX default since 2008, we have long maintained that the COMEX is more likely to fade into irrelevance than to outright default on gold or silver bullion as physical Asian demand would facilitate the development of physical exchanges in the east.
It appears that the CME decision makers have seen the light and agree with us, as Reuters reports this morning that the CME plans to launch a physically settled gold futures exchange…in Asia.
Stock-market capital finally started flowing back into the flagship GLD gold ETF for the first time in 14 months in February!
Though this buying was small, this is truly a momentous event. Extreme gold-ETF outflows were the dominant culprit behind last year’s epic gold selloff. Without that massive influx of additional supply weighing on the global markets, gold is going to surge on strong physical demand.
Writer and researcher Jan Skoyles joins the SGTReport to discuss German gold, the paper silver and gold Ponzi, three dead international bankers in one week and the stunning work of her pal Koos Jansen, the man Harvey Organ calls “the go-to researcher” when it come to Chinese gold accumulation and the Shanghai Gold Exchange.
Harvey Organ joins the SD Weekly Metals & Markets Wrap this week to warn of a possible February COMEX Gold Default:
- Continued decline in “registered” gold inventory at the COMEX- 2o tons of gold “kilo bars” withdrawn from JPM vaults headed to Hong Kong!
- 2014 will mark the year where physical forces deep “managed retreat” in the least
- Geopolitical and Global Macro review: From MyRA & pension fund confiscation to Ukraine & Emerging Markets
- Fed Taper Review- Eric believes the Fed will overshoot tapering to $50 billion/month, while Harvey believes Wednesday’s taper will be the last
- Harvey discusses why February may very well see strains to the point of the long anticipated COMEX default in gold!
The SD Weekly Metals & Markets with Harvey Organ is below:
The Financial Times has told investors that they should act like the German Bundesbank and “demand physical gold” and warned that gold price “manipulation” could end “catastrophically“.
“There’s surely no chance that the Fed’s little delivery difficulty has anything to do with the cat’s-cradle of pledges based on the gold in its vaults? As has been remarked here before, forecasting the price is for mugs and bugs.
But one day the ties that bind this pixelated gold may break, with potentially catastrophic results. So if you fancy gold at today’s depressed price, learn from Buba and demand delivery.”
In this excellent interview, the Morgan Report’s Senior Analyst David Smith discusses the difference between paper positions and holdings of precious metals and the real deal- and likens paper metals to empty ammunition shell casings.
Do you hold precious metals ammo, or simply the empty shell casings?
Full interview with David Smith is below:
What if you could carry and exchange gold in the exact same manner as you do with the dollar bills in your wallet?
I’ve recently been introduced to a technology that’s making this possible.
In short, a fractional gram’s worth of gold is affixed to layers of polyester, creating a note – called an “Aurum” – similar in dimension and thickness to a U.S. dollar bill. This gold (usually 1/10th or 1/20th of a gram) is commercially recoverable. So an Aurum offers similar potential as a coin or bar, in terms of providing a vehicle for storing and exchanging known, dependable increments of precious metals – just in much smaller (and more affordable) amounts than commercially available to date.
The big idea here? In a world where a 1oz coin of gold costs over $1,200, an Aurum will let you hold a few dollars’ worth of gold in a single note.
If you’ve got pocket change, you can be a precious metals owner.
From an anonymous source prior to the major lows in the gold price more than a decade ago:
“Someone once said, ‘no one wants gold, that’s why the US$ price keeps falling.’ Many thinking ones laugh at such foolish chatter. They know that the price of gold is dropping precisely because ‘too many people are buying it’! Think now, if you are a person of ‘great worth’ is it not better for you to acquire gold over years, at better prices? If you are one of ‘small worth’, can you not follow in the footsteps of giants? The real money is selling ALL FORMS of paper gold and buying physical! Why? Because any form of paper gold is losing value much, much faster than metal. Some paper will disappear all together in a re of epic proportions! The massive trading continues at LBMA,but something is now missing…We have reached production costs…The great mistake by the BIS was in underestimating the Asians. Some big traders said they would buy it all below $365+/- and they did. That’s what forced LBMA to go on a spree of paper selling! Now, it’s a mess.”
Interesting? The gold price is approaching production cost again. We have the physical versus paper demarcation again (most commentators are clueless on this – the paper market is still determining the screen price), but it will probably die once and for all this time around.
Preparations have been or are being put in place by the international monetary and financial authorities for bail-ins of both banks but also other financial institutions. The majority of the public are unaware of these developments, the risks and the ramifications.
The important shift from bail-out to bail-in had not been signalled in a very public way prior to Cyprus. The market’s expectation was therefore confounded when Eurozone finance ministers imposed bail-ins on Cyprus. This forced bondholders to convert into shareholders, and critically, imposed an element of bank deposit confiscation and the forced conversion of these deposits into bank equity.
Never before in the public’s perception had bank deposits been countenanced as potential financing sources for the rescue of insolvent banks. The public was shocked by the freezing and confiscation of deposits and the use of them in a desperate attempt to prevent banks from failing.
The coming bail-ins regimes will pose real challenges and risks to investors and of course depositors – both household and corporate. Return of capital, rather than return on capital will assume far greater importance.
Evaluating counter-party risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow capital and wealth.
It is important that one owns physical gold and not paper or electronic gold which could be subject to bail-ins.
As of Wednesday’s open interest report for Comex gold futures, there were a total of 403,947 open gold futures representing 40,394,700 ounces of gold. As of yesterday, there were 587,234 ounces of “registered,” available for delivery ounces of gold. That’s a mind-boggling 69x times more open interest of paper gold than available physical gold to deliver to the holders of those contracts. Think about that for a minute. If more than 1.4% of those longs stands for delivery, the Comex defaults.
Now we know why Germany wants its gold back, why the Chinese and other BRIC countries are loading up on gold and demanding delivery and why the owners of Comex gold are taking delivery off the Comex. The Comex is a giant Ponzi scheme. “In paper we trust” is the motto of anyone who has a long position in Comex futures OR who safe-keeps their gold at Comex vaults.
The demand for physical gold is exploding all over the world, and bullion banks are now experiencing a supply crunch that is absolutely unprecedented.
As physical demand continues to rise, the massive Ponzi scheme that the bullion banks have been engaged in is going to become increasingly obvious, and at some point the lack of physical gold is going to break the back of the paper gold market and we are going to see the price of gold go to levels that we have never seen before.
You see, the truth is that the central banks of the world and the bullion banks have made “paper promises” that vastly exceed the amount of actual physical gold in existence. This kind of scheme works fine if everyone does not come asking for their gold at the same time.
Unfortunately for the ones running this scheme, people are now starting to ask for their gold back and it is causing huge problems.