Via Investment Research Dynamics
“The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.” – disclaimer now posted on the Comex gold and silver daily warehouse stock report as of Monday, June 3, 2013 – Investment Research Dynamics – June 4, 2013
Yesterday I published an article detailing the Comex gold futures to deliverable physical gold ratio that is now north of 200:1. But an erudite colleague of mine, John Titus of “Best Evidence,” correctly pointed out that: “They are probably bluffing. In other words, the real number is significantly higher than 200:1.”
For the record, John does more thorough research on the economic numbers and reports that he studies than anyone I’ve ever come across. And he does it with the trained analytic eye of a seasoned patent litigation attorney.
Let’s put everything in perspective. The numerical reports from which fancy graphs and and dry detailed data presentations are created originate from the Too Big To Fail Banks. I’ve said for quite some time that IF the bullion banks who control the Comex and the LBMA are submitting honest data reports for the Comex and LBMA, it would be the only business line in which they do not hide the truth and report fraudulent numbers. What is the probability of that?
JP Morgan was recently caught stuffing proprietary Comex futures short-sell trades into the “Managed Money” account category of the COT report. The CFTC scolded JPM and slapped them with a whopping $650,000 – LINK. Does anyone really believe that the CFTC wrist-slapping corrected any fraudulent data reporting by the likes of JP Morgan? Really?
Put your “think like a criminal hat” on for a moment. You know that the people who care about this sort of thing already know that the there’s a paper vs. physical problem in the market. So just show them a number that they’ll buy into and that will be “the number.” Most analysts will accept that number at face value and use that in their articles and blog posts. That number then becomes accepted in goldbug circles as the “real” number.
But the truth of the matter is that they are more than likely reporting numbers they want us to see, not the real numbers. For instance, the silver market is now seizing up from lack of supply. Please see this report from Greg Hunter and David Morgan if you are still skeptical: Retail Silver Has Seized Up.
Yet, the Comex bank custodians are reporting over 51 million ounces of silver available fore delivery – LINK. In fact, CNT – an official supplier to the U.S. mint – is showing 13.3 million ounces of deliverable silver. So why is there’s a shortage of silver at the U.S. mint? IF that silver were actually in the vault, the U.S. mint could buy a spot contract – September has a silver contract open – and take immediate delivery.
Also, why did the CME, unannounced, start slipping that little accuracy disclaimer into its daily gold and silver inventory reports in 2013? I’ll let you draw your own conclusion about the truth.
The silver market is seizing up which means that there’s a severe shortage of silver available. It is also showing up in the LBMA wholesale market based on the backwardation in gold and silver forward contracts that have been observed for several weeks. It means that any visible inventories reports from ETFs and Comex/LBMA banks custodial vaults are fraudulent. That includes SLV reports.
It also means that the recent discovery that the LBMA altered its gold refining flow statistics, revising what was originally reported to be 6,601 tonnes of gold cleared by the LBMA in 2013 down by 2,000 tonnes to 4600 tonnes, are likely off the mark. That’s a big miss, given that the total global mine production annually is around 2500 tonnes.
The significance of this is that it’s easier to explain how 4600 tonnes of gold was refined into bars and sent to Asia than 6600 tonnes, given that the total global supply of gold from mine production + scrap production was reported to be slightly more than 3000 tonnes.
From where did that extra 1600 tonnes come? The REAL question is, from where did the extra 2600 tonnes come if we use the original number? And is the 6600 tonne number a good number? Was the real number even higher?
The obvious conclusion is that the supply deficits in gold and silver are being remedied by hypothecating gold and silver bars from allocated accounts held at bullion banks, including the accounts held in behalf of the gold/silver ETFs, like GLD and SLV. This is why ABN Amro and Rabobank stopped allowing their physical gold account investors to take physical delivery of the gold they thought they have invested in – the gold was not there to deliver. This also occurred in 2013.
Now for the final blow to any skeptics. You’ll note that the LBMA revised down the amount of gold it cleared from refineries in 2013. But you’ll also note that the Comex inventory report disclaimer at the top of this post was first inserted into the daily Comex inventory reports in June 2013. See any coincidences? Bueller…
Bill Murphy and GATA have maintained for year that the fraud and corruption in the precious metals market would eventually be revealed as the biggest financial fraud scheme in history. It would seem that the cracks in the wall of this scheme are growing wider and it’s becoming easier to see rays of truth.
History tells us that all Ponzi schemes and market interventions fail. I believe we are on the cusp of a massive failure in the scheme to cover up the truth about the precious metals market.
Paper gold. It’s what’s for dinner
http://www.zerohedge.com/news/2015-09-09/something-just-snapped-comex
Not to worry….
….the vaults of JPM Moron have been filled this afternoon with a special phyz delivery of the BOE via “The Drain”, the appropriate nickname of the City Waterloo underground line which runs between Waterloo and Bank but which *by coincidence* (**cough, cough**) runs past the vaults of 60 Victoria Embankment, London at 18 meter depth (or was it debt?). Only to return to the BOE tomorrow morning….smoke and Mirrors.
That old joke about how to tell if a politician is lying? If his lips are moving. Any figures put out by our government keep looking like lies to me.
The official gold and silver prices are just meaningless relics like God, the Bible and Constitution. It’s all the New Reality to complement the New Age. Just ask the NEOCONs.
Gold Daily and Silver Weekly Charts – When the Unsustainable No Longer Sustains
“Crime, once exposed, has no refuge but in audacity.”
Tacitus, Annals
Gold and silver were hit early on today, and knocked lower on high volume in relatively quiet trade, while the stock market was being pumped higher.
The Fed would like to set the stage for their FOMC meeting next week, and rather badly so. They are afraid to do it with these unstable equity and bond markets, because if they raise and then the market breaks, then they will be blamed for it. You can see that the IMF and the World Bank have already covered their posteriors by warning.
It is not a 25 basis point increase that will break these markets. They are already broken, an accident waiting to happen.
The Comex continues to bleed out, with additional gold and silver leaving their warehouses yesterday.
Registered (deliverable) gold has fallen to 185,314 troy ounces, a low we have not seen I believe in since before the year 2000. On a quick calculation pending the final numbers early tomorrow, I would think that the ratio of paper claim to actual deliverable gold at price is now at an unprecedented about 225:1. This is not ‘normal.’
Unless something changes, you can stick a fork in the NY version of ‘price discovery’, it is done.
Who is going to keep honoring a price set by a bunch of jokers playing liar’s poker with a stack of paper claims?
The largest gold bullion exchange in the world outside of Asia, the LBMA in London, is scraping the bottom of the barrel trying to find enough bullion to keep satisfying delivery requests for Asia at these prices. That is worth watching closely, although it has always been light on disclosure.
The real game now is in London, and the indications are that the costs to borrow physical for immediate delivery, which means refining into kilobars and shipment to Asia never to return, are soaring.
There are increasing signs of desperation. Once again they look to India to cut imports and start ‘utilizing’ the gold held privately in that country. That means to hypothecate it as collateral for other peoples’ obligations into the bullion float, never to return.
From what I have been reading, it seems as though JPM introduced quite the scheme to do that with unallocated gold, ETFs, and a number of private sources around 2011 in London.
The gold pool shows every indication of a late stage Ponzi scheme. If it was not operating under the ‘cover’ of some unwitting, bureaucratic boobs, it would probably have toppled over already.
Wall Street and the City have skated through so many lawsuits and criminal cases that they have fallen into a recidivistic spiral of white collar crime. They think that they are teflon dons.
Listen to what Peter Hambro had to say in the first half of this recent interview, here.
What I don’t quite get, and I admit it, is why the gold pool keeps pressing prices lower against what is clearly an unsustainable and highly corrosive gambit? Where do they think they are going with this, or have they extinguished all their impulse to caution?
Ok, Jesse, but the price just went lower, and I’m confused, angry, and depressed (head hits table, clunk).
When the going gets tough, these jokers keep doubling down. They are breaking the cardinal rule of never adding new money, even when you are winning, to a proposition that is quickly becoming mathematically unsustainable. That is how almost every secular financial failure, from LTCM to MFGlobal to the London Whale, went wrong.
This pool, long lived as it might seem, is no different from any of the others, such as the infamous London Gold Pool. And the countdown to its end is underway.
Money, except during the relatively short life of a totalitarian state, is a function of market acceptance and global valuation.
Private individuals and governments have always intervened in the valuation of most markets including money.
I watched the ruble burn in the 1990’s. I watched the currencies of the former Soviet bloc pass from an Orwellian fixed value system to free exchange. No currency has ever been held its value against the market forces outside their own borders, and inside, never for longer than the power of the State to control everything.
Given time, the markets have always won. Always.
I am concerned that if these folks do not wise up soon, we will not see an orderly rise in the price of the underlying commodity, but a series of dislocations and breaks sharply high as Jim Rickards appears to now think. That will not be constructive. They forget that it is never the act, but always the extended coverup, that brings even the most powerful down.
Storm warnings are out. Time to get our houses in order.
Jesse