Category Archives: Gold

Gold And Silver: Similar To 2008

In 2008, gold was taken from $1020 to $700 and silver was pounded from $21 to  $7 during the period of time that Bear Stearns, Lehman and the U.S. financial system was collapsing.  The precious metals were behaving inversely to what would have been expected as the global financial system melted down.   Massive Central Bank intervention was at play.

Currently the prices of gold and silver are being dismantled by what appears to be massive hedge fund shorting of Comex paper gold.  As of last Tuesday, the “managed money” trader category as detailed in the Commitment of Traders report showed that the hedge funds were short a record amount of paper gold.

As of yesterday the open interest in Comex paper gold was about 17,000 contracts higher than the open interest shown in last week’s COT report.  This represents another 1.7 million ozs – or 48 tonnes – of paper gold that has been dumped on the market.  It is highly probable, if not a certainty, that most of the increase in short interest is attributable to hedge fund algos chasing the paper price of gold lower.

Meanwhile, behind the scenes, the Bank of International Settlements (BIS) has been actively intervening in the physical gold market during July, as detailed by Robert Lambourne, a consultant to GATA:

Use of gold swaps and gold derivatives by the Bank for International Settlements, the gold broker for most central banks, increased by about 17 percent in July, according to the bank’s monthly report…The BIS’ July Statement of Account gives summary information on its use of gold swaps and gold-related derivatives in the month. The information is not sufficient to calculate a precise amount of gold-related derivatives, including swaps, but the bank’s total estimated exposure as of July 31 was about 485 tonnes of gold versus about 413 tonnes as of June 30.

That is an increase of about 72 tonnes or 17 percent. The increase came as there increasingly appeared to be a correlation between the gold price and the valuation of the Chinese yuan, both of which fell substantially during the month.

The BIS refuses to explain what it is doing in the gold market and for whom, engendering suspicion that it is helping one or more of its members to manipulate the currency markets through deception.  To place the bank’s use of gold swaps in context, its current exposure of 485 tonnes is higher than the gold reserves of all but 10 countries. (documentation and links: BIS gold market intervention increased by 17% in July)

While visible evidence of a declining gold price can be seen with Comex futures prices and the daily London gold price “fix,” the BIS is operating in the physical market to increase the supply of physical gold available for bullion banks on the hook to deliver physical gold to the countries buying large quantities of physical gold on a daily basis.  As long as the BIS can ensure the flow of physical gold remains uninterrupted, the demand for physical gold will not offset the effort to take-down the price of gold in the paper derivatives markets.

The effort to push down  the price of gold is to silence the alarm gold provides to signal global systemic distress. It’s not just the emerging market economies  and China. The U.S. economy, based on all the private sector data I dig up an analyze on a daily basis, hit a wall sometime between March and May.

This is most evident in the housing market nationwide, which  has been rapidly deteriorating (notwithstanding a few areas that may still have some flaming embers of activity).  Just one supporting data-point is  mortgage purchase applications, which have declined each week over the past 5 weeks. This is not a good omen for the housing market during the seasonally peak selling months. We know it’s not an inventory issue because inventory across the country in all price segments has been rising in most areas and soaring in some of the hottest areas.

While today’s headline retail sales number shows a 0.5% increase in July over June, the “increase” was manufactured for headline purposes by a large downward revision of June’s retail sales numbers. Furthermore, the headline number is a nominal number. Net of true price inflation, retail sales declined. There are other problematic inconsistencies between the Census Bureau-generated numbers and the actual numbers as reported by private-sector companies.

The bottom line is that the prices of gold and silver are being systematically taken down as a mechanism to help cover up the fact that a large-scale financial crisis is going to hit the global financial system. I don’t know the timing, but I would suggest that the EM currency melt-down that began in South America and has spread to the eastern hemisphere represents a series of earthquakes that  are generating a “tsunami.”

While I’m loathe to forecast a price-bottom for gold and the timing of the forthcoming systemic crisis, I would suggest that anyone who is shaken out of their gold, silver and mining stocks right now will regret selling when looking back a year from now.

My Short Seller’s Journal subscribers and I continue to rake in easy money shorting the homebuilder sector. Two of my short-sell picks, Zillow Group and Redfin, have been annihilated in price over the last week. In the last issue I also laid out why Tesla is technically insolvent and likely will be irrelevant as a company within 12-18 months. You can learn more about this weekly newsletter here: Short Seller’s Journal information.

Housing Heads South – Precious Metals Getting Ready To Soar

“We’re now forecasting slower revenue growth for the third quarter based on an unexpected drop in Redfin’s bookings growth in the past three weeks, slowing traffic growth in a weakening real estate market.” – CEO of Redfin (RDFN) on the earnings conference call. Redfin stock plunged 22% after it reported its latest quarter this past Thursday after the market closed. I’ve been recommending RDFN as a short for several months in my Short Seller’s Journal.

I joined Elijah Johnson and Eric Dubin on SD Bullion’s weekly Metals & Markets podcast  to discuss the popping housing market bubble and to explain why the risk of missing a big move higher in the precious metals market is much greater than the risk of more downside from here:

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I just released my latest issue of the Short Seller’s Journal in which I explain why Tesla’s days may be numbered and I offer ideas for speculating that TSLA goes to zero sometime in the next two years. I also update my homebuilder short-sell ideas. You can learn more about this newsletter here:  Short Seller’s Journal information

WTF Just Happened: Gold Forms A Bottom And 420-Time For Elon Musk

Perhaps the most baffling aspect of the Elon Musk “Funding Secured” tweet is the number of financial media outlets and so-called “analysts” that are taking it seriously. The idea is a complete joke. Any valuation in excess of potential asset value minus the debt and other liabilities (included in “liabilities” will soon be a flood of lawsuits). Some bucket-shop stock analysts issued reports explaining why a buyout of Tesla could occur at an even higher price. We’re beginning wonder if the Tesla buyout idiocy will mark the end of the valuation insanity that has permeated the entire U.S. stock market…Meanwhile, hedge funds assumed a record short position in Comex paper gold futures. This along with the worst sentiment toward the precious metals since early 2001 and late 2015 suggest the potential for a bottom in gold, silver and mining shares.

In this episode of “WTF Just Happened?” we discuss these issues plus offer a view on the correlation between the dollar-price of gold and the $/yuan (WTF Just Happened is a produced in association with Wall St. For Main Street – Eric Dubin may be reached at  Facebook.com/EricDubin):

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Tesla is on its way to bankruptcy.  I don’t know how long it will take that to occur but the Company will be insolvent if it can’t raise money before the end of the year.  I explain why a buyout of the Company is next to impossible in the next issue of the Short Seller’s Journal and offer several ideas for using put options to express a bearish view of Tesla stock.

Visit these links to learn more about the Investment Research Dynamic’s  Mining Stock Journal and Short Seller’s Journal.   

The Trading Action In Gold

There’s no question in my mind that the intervention in the gold market is similar to the intervention that occurred in 2008 ahead of the financial crisis. However, I believe that,
because of the massive physical off-take in the eastern hemisphere, the western Central
Banks and bullion banks will be unable to push the price gold down on the same scale as it
was taken down in 2008 from March to October. Currently, gold is 15% above the low it hit at the end of 2015. It’s 7% above the interim low it hit at the end of 2016.

As of last week, money managers (hedge funds primarily) held the biggest net-short position in futures and options in records going back to 2006. A measure of gold volatility is near the lowest since January.

My good friend and colleague, Chris Marcus, invited me onto his podcast show that he produces for Miles Franklin.  We discuss the gold market, the deterioration U.S. economy and the reasons I believe that the trading action in gold and silver is preceding another financial collapse similar to 2008 only worse:

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In the latest issue of the Mining Stock Journal, which was released this afternoon, I present data that suggests the current decline in the price of gold is beginning to bottom and is setting up for a big move in to the fall. Also discuss my view of the theory that China has pegged the price of gold to the yuan and I present a gold stock idea that has dropped price to a level that makes it “stupid cheap.” You can learn more about this newsletter here: Mining Stock Journal information

The Q2 GDP Farce, The Big Short 2.0 And Gold

The Bureau of Economic Analysis (BEA) released its “advance” estimate of Q2 GDP on Friday. The Government would have us believe that the U.S. economic growth accelerated to a 4.1 annualized growth rate in Q2. Other than the fact that a one-time jump in soybean exports ahead of the trade war contributed to 25% of the alleged 4.1% growth, nothing about the report is credible. (excerpt from the latest issue of the  Short Seller’s Journal)

Total home sales in SoCal were down over 11% year over year in June (as reported by the California Association of Realtors).   With housing, as goes SoCal, so goes the rest of the nation.  The homebuilders are the short seller’s gift that keeps on giving.

Silver Doctors invited me on the Weekly Metals & Markets podcast to discuss the GDP report, the housing market and gold:

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I just released my weekly issue of the Short Seller’s Journal. In this issue I present more stunning housing market collapse data, I discuss AMZN’s latest earnings report and I talk about Steve “The Big Short” Eisman’s latest short position, which has been one of my SSJ recommendations for a several months.  You can learn more about this newsletter service here:  Short Seller’s Journal information.

Trump’s Fed Comments Sends Gold Soaring

Last week Donald Trump broke the theoretical “Chinese Wall” that is supposed to exist between the Government and the Fed when he offered a stunning rebuke of the Fed’s current policy to continue raising interest rates. Though, it’s really more like “nudging” rates up at a snail’s pace.

Gold shot-up in price immediately after Trump’s ill-advised comments recorded on CNBC it the tape, more than offsetting a vicious sell-off in the gold price that occurred in the paper derivative gold markets in London and New York.

The Office of Management and Budget further revised higher its Federal spending deficit forecast for FY 2018.  The original forecast was under $500 billion.  The latest forecast is nearly $900 billion.  Without a doubt, we believe the spending deficit will top $1 trillion this year.

The point of this is that Trump’s remarks were likely directed at pushing the dollar lower as part of the escalating trade war.  That, combined with a Government budget that will soon spiral out of control – and thereby necessitate a flood of new Treasury issuance – will likely force the Fed to reverse course on its monetary policy which in turn will send gold soaring in price.  We explain why on the latest episode of, WTF Just Happened (WTF Just Happened is a produced in association with Wall St. For Main Street – Eric Dubin may be reached at  Facebook.com/EricDubin):

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You can take advantage of undervalued junior mining stocks using the Mining Stock Journal. OR learn how my subscribers and I are making a small fortune shorting the housing market, as homebuilder stocks are already in bear market, with the information and analysis provided in the Short Seller’s Journal. This week’s Short Seller’s Journal also discusses the coming demise of Tesla and how to best play it from the short-side.

Many Americans Are Living In A Financial/Economic Nightmare

The following is guest post from a Mining Stock Journal subscriber who runs a family business in the northeast part of the country:

Our family has been in business here for over 100 years. Presently we run a collection of consumer-based businesses, including a hotel, restaurant and an apartment complex. We have very well run businesses with tight controls. All my top managers have been with the company for well over two decades.

Because of the nature of our businesses and related customer base, I have a first-hand, “front row view” of the economic condition of the average household. I can say with direct knowledge that the average American has entered an income and debt nightmare.

I’m writing you because the entire area where I live and work has finally hit a wall of debt. It’s gutted our customers, our businesses, and the entire economy in my area…Everybody including small and mid-size businesses use debt to maintain their daily existence.

It finally showed up in ALL of our business starting this spring…our customers are BROKE and not coming thru the doors. Everyone up here lives by increasing their credit card balance each month, except for the very few that have their entire life savings in overvalued stocks. Before I wrote this, I asked my managers about their friends, family, and our employees. All are broke, living paycheck to paycheck.

Even in the alt-media, there is plenty written about the consumer being tapped out, but few are mentioning small and mid size businesses. Most are in the EXACT shape as the general public – just the numbers are bigger.

The drug use…heroin/meth is OUT OF CONTROL, a huge percentage of people up here can only survive with State and Federal assistance.

Dave, I’m not a gloom and doom’er, but starting the spring of this year…something changed…it’s like a wall was hit. You can bet your ass this area of the county is a mirror image of what I see in my businesses and the surrounding communities. Something is close Dave, very close. I have never seen anything like it in my 60 years. We both know what’s coming, and it’s not good.

Sorry I don’t have positive news……but it’s the truth!!

Prelude To A 2008 Event: Paper Gold Manipulation Intensifies

The trading action in the paper gold markets of London and NY this week further convinces me that gold is being pushed down in price by the western Central Banks similar to the take-down in the paper price that occurred in 2008.  The motive is to prevent a soaring gold price from signalling to the markets that a big problem is percolating in the global economic and banking systems.

Once again, in the early morning the price of gold was slammed just after the London a.m. price Fix (3 a.m. EST) and again at the open of the Comex gold pit (8:20 a.m. EST) – click on image to enlarge:

This pattern has been persistent over the last two months.  It’s not about gold being “pinned” to the SDR, as Jim Rickards is now promoting.  And it’s not about some mystical gold peg to the yuan.  It’s about western Central Bank desperation to keep the dollar alive in order to defer the inevitable collapse of the record level of dollar-denominated debt and the associated derivatives.

It’s no coincidence that Rickards has floated this theory about the gold price and the SDR recently.  Rickards was rolled out several years ago to promote the idea that the SDR would be the next reserve currency. The Deep State knows the dollar’s life-span is limited. The U.S. dollar is 58% of the SDR, making the SDR the best replacement of the dollar which thereby enables the U.S. Deep State to maintain some semblance of global hegemony.

For the time being, gold is trading almost in perfect inverse correlation with the dollar. The dollar currently is rising vs. all fiat currencies. Therefore, of course it might look visually like gold and the yuan or gold and the yen are trading in tight correlation. But at the root it’s all about the dollar and the effort to prevent the dollar from collapsing.

As for the brewing collapse of the financial system, here’s an interesting chart comparing Deutsche Bank’s stock price with the gold since the beginning for February. The idea here is that the Fed/ECB/BoE began to work on the gold price when it became obvious that the world’s most systemically dangerous bank was in a state of collapse:

Certainly the mining stocks are generally “skeptical” of gold’s price action since April:

And has anyone checked gold lease rates lately?  Currently the lease rate curve for gold and silver in London is inverted. In fact, lease rates gold from 3 months to a year are negative.  Negative lease rates mean the Central Banks will pay bullion banks to lease gold and silver.  Long-timers like me know that this means there’s an immediate and anticipated shortage of physical gold and silver available for delivery, where “delivery” means the metal is removed from the London vaults and shipped to the entitled buyer.

Both gold and silver are backwardated.  It took 11 iterations in the LBMA p.m. fix on Tuesday to balance out the heavy demand for physical gold from bidders. 11 iterations is rare occurrence. 5-6 iterations is rare. 1 or 2 is typical. Metal is tight in London.

If you are monitoring the Comex Hong Kong kilo bar vaults, you are aware that the movement in and out of the vaults there suggests that metal is also tight in Hong Kong, which means it is likely tight in Shanghai.

The point here is that the paper price behavior of gold right now is not what it seems.  I’d be more worried about the motives behind the take-down of the gold price using derivatives than I would about where the price of gold will be in 3-6 months.  I’ve always said that the occurrence of events triggering the price of gold to soar  will make life unpleasant for everyone.

The explosive questions the gold riggers won’t answer-and the press won’t ask

Over the years, I’ve asked several skeptics of the idea that Central Banks and Governments, using the bullion banks as their agents, manipulate the gold price this question:   The Big Banks have been convicted and fined numerous times for manipulating interest rate and currency markets.  Is it realistically conceivable given this fact that they would leave the gold market alone?  The question, of course, is rhetorical and I’ve yet to receive an answer.

The answer is obvious to anyone who has looked at the facts.  I have written several articles with Paul Craig Roberts detailing how the manipulation is executed on the Comex and the motivation behind the manipulating the gold market.  Remarkably, there are public notes of a meeting chaired by Henry Kissinger in 1974  that discusses the importance of removing gold completely from the monetary system which is conveniently ignored.

The following is a re-post of an article posted by GATA’s Chris Powell. Even if you have your had in the sand and refuse to believe that Central Banks and Governments manipulate the global gold market using paper gold derivatives, at least brush the sand out of your eyes and read this carefully:

How easy it would be for any major financial news organization or trade association to confirm, expose, and combat the rigging of the gold market by governments and central banks. Such an effort could start with the documentation, most of it from official sources, collected by GATA and compiled here: Taxonomy

Everything could be nailed down to the present moment by a few specific questions put to the key participants in the rigging. These questions already have been prepared and posed, just not publicized enough.

— Three months ago U.S. Rep. Alex X. Mooney, R-West Virginia, wrote to the secretary of the treasury and the chairman of the Federal Reserve asking what the U.S. government’s policy on gold is and whether it remains, as government records from years ago establish, to drive the monetary metal out of the world financial system. Mooney also asked whether the U.S. government, directly or through intermediaries, like the Bank for International Settlements, trades in gold and gold derivatives and what the purposes of any such transactions are. Mooney’s letter is posted at GATA’s internet site here: Mooney Letter

Mooney has received no response.

– Last November GATA put similar questions to the BIS. What, GATA asked, is the purpose of the gold swaps and derivatives purchased and sold by the bank and the purpose of the bank’s involvement in the gold market generally?

The bank replied promptly but only to say it would not answer the question: BIS Letter

— Five weeks ago your secretary/treasurer and GATA consultant Harvey Organ wrote to the comptroller of the currency in the Treasury Department, Joseph M. Otting, whose office regulates the banking industry, calling attention to the recent explosion in use of the emergency procedure of “exchange for physicals” to settle gold and silver contracts issued on the New York Commodities Exchange by government-regulated banks. The financial risks undertaken by the banks in these transactions, GATA wrote, apparently were not being reported to the comptroller.

GATA’s letter concluded: “Could you review this matter and let us know your conclusions?” The comptroller has not responded.

Please click here to read the rest – it’s worth the time spent:   Unanswered Questions About Official Gold-Rigging

What’s Going On With Gold?

Several of us who stick our neck out in public with analytic opinions on the market have been thinking  that gold has reached a tradable bottom.  I’m sure many would say that view is flawed based on today’s action.  Let me preface my thoughts by saying that, over the last 17 years of daily active involvement in the precious metals sector, I don’t pull my hair out over intra-day or even intra-year volatility.  Measured from the beginning of 2002, gold is up 441% while the S&P 500 is up 158%.

The point here is that, given how easy it is to print up paper gold contracts and flood the market, the price of gold can do anything on any given day. If you want to own gold for the reasons to own gold, you have be play the long game. The mining stocks do not seem to care about the day-to-day vagaries of the gold price right now. You shouldn’t either.

The trading pattern in gold is somewhat similar to its trading pattern in the summer of 2008, right before the great financial crisis (de facto banking system collapse) was set in motion.   The price of gold was taken down from $1020 in mid-March to $700 by October, while the financial system was melting down. That set up gold’s record run to $1900 over the next three years.

It’s becoming obvious to anyone who chooses to not put their head in the sand or become intoxicated with the copious amounts of official propaganda, that the U.S. Government is technically bankrupt and the financial bubbles fomented by a decade of money printing, credit creation and near-zero interest rates are about to explode.  It’s not coincidental that gold was slammed ahead of Congressional testimony by Fed-head Jerome Powell, one of the primary propaganda-spinning hand-puppets.

Gold started rolling downhill after the London a.m. fix. Right after it. The cliff-dive occurred as the Comex floor was opening. This is a pure paper operation. It’s either the hedge funds or the banks piling into the short-side of the market by flooding the market with paper gold and hitting all bids in sight. The managed money category of trader segment in the COT report has been getting net short and more net short the last two weeks. Hedge funds could be shorting even more paper gold, trying to push it further downhill to book profits on their shorts. OR it could be the banks piling into the short side but hide this by booking the trades they report to the CME (daily o/i) and the CFTC (weekly COT) into the managed money trader account in the COT report.

The latter is entirely possible. JP Morgan was already caught once doing this in silver. If you don’t trust the Government to report the truth, why would you trust the banks to report the truth? After all, the banks ARE the Government.

Today’s action has nothing to do with the $/yuan to gold relationship or the $/yen to gold relationship. The dollar is higher and gold usually trades inversely to the dollar. Gold likely is being managed like this to help disguise the coming financial and economic bombs that are set to explode – just like in 2008.

We’re dealing with a system in which banks and other big corporations control the Government and there is no RULE OF LAW whatsoever. Think about what you would do if you completely lacked a moral compass and were in control of the system, to a large degree. You would do exactly what they are doing. And I’m not talking about just gold. It’s everything. They have used debt to put the squeeze on the population.