A glut of metal, a seller’s market, stuck buyers and more? Oh yeah. This one’s got it all…
(by Half Dollar) Those gold traders are just drowning in metal!
Bloomberg’s words, not mine.
You’ll notice I zoomed way out to show the gold article for a reason – there’s zero coverage of Minneapolis on the main section of Bloomberg, and nothing but a sea of green in the stock market ticker at the top of their website.
As if tens of dozens of buildings in one single city weren’t burned, looted, or more overnight, to which, the chaos has continued today.
Regardless, it sure seems gold’s ready for its next big move up, based on the fear trade, so Bloomberg had to get to work doing the only thing they know how to do when it comes to honest money – crank out the propaganda.
Let’s look at a little of Bloomberg’s latest anti-gold propaganda, with the goal of helping others notice it too.
Right off the bat, well, a glut (bold added for emphasis for commentary purposes):
The New York gold market has been flipped on its head in just a couple of months, with a scramble for the metal turning into a glut.
What’s the truth?
At face value, if there is somehow a “glut”, then it’s simply the result of logistics workarounds, which will get worked around.
The demand is there.
Gold has been bid, gold is bid, and gold will continue to be bid.
Earlier this year, traders who had sold contracts paid a steep premium to close positions after the coronavirus pandemic grounded flights, sparking worries about the ability to get gold to New York. That drove futures to the highest premium to the spot price in four decades, attracting a flood of metal to the U.S. from around the world. Now, contract holders are trying to avoid taking delivery from the massive inventory.
This is NOT what a futures market is supposed to be about.
And to read more about our ongoing coverage of the paper vs physical dynamic, see our Market Disconnect tag.
June futures sank to more than $20 an ounce below August this week, from a premium in mid-April. Notices to deliver on June contracts will begin to be filed Thursday. The June contract is also below spot prices, after fetching a $12 premium as recently as mid-May and $60 in March.
The steep discount echoes some of what oil traders saw earlier this year, when crude stockpiles surged after fuel demand plunged. In that extreme case — which no one expects to be repeated in gold — prices plunged below zero as traders who had bought futures but weren’t able to take delivery were forced to pay buyers to unload the contracts.
Of course, the mainstream qualifies their propaganda by saying “no one expects to be repeated in gold”, but nonetheless, they’ve planted that seed.
Also, notice the word choices there, and throughout the article really, and notice they’re quite hyperbolic.
That’s also on purpose.
“It’s a little bit of a game of chicken,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “All of a sudden you get into a similar problem that you had in crude, but slightly different: for crude they literally didn’t have a place to put it — whereas in this case speculative longs don’t want the logistical hassle of holding physical metal, which is why cost to roll has blown out.”
The intent of a futures market is NOT to be a “game of chicken”.
Not even a little bit.
Let’s just skip ahead to the last paragraph to wrap it up:
“It is a seller’s market because of the premium and the buyers are stuck right now,” Peter Thomas, a senior vice president at Chicago-based broker Zaner Group, said in a telephone interview. “Do you want to deliver now, or do you want to deliver into the back, where the premium is high?”
I mean, could it be any more obvious?
With stuck buyers and a seller’s market, who in the heck wants to buy any gold right now?
The fact that there’s a huge difference between fake paper gold and real physical gold is lost on most people, because, let’s face it, most people are sheeple.
What do you see in regards to this latest anti-gold propaganda coming from the mainstream, and what did I miss out?
Hopefully readers of this article are better equipped to spot propaganda when they read it.