Category Archives: Gold

Is The Precious Metals Sector Set-Up For A Big Run?

I had not noticed until I looked mid-day today (Thursday, Aug 24th) and saw that the HUI index was above 200. It ended up closing just above 200. I want to see it hold above 200 dma and move higher from there before I get excited.  But the chart has become mildly bullish.  GDX, which is a larger representation of the large-cap mining stocks, looks even more bullish that the HUI:

I’m not big advocate of using chart “technicals” to forecast the next move in any market, but many traders, hedge funds and investors use them and they can become “self-fulfilling prophecies.” You can see that GDX (same with HUI and GDXJ) has been trending sideways since early February in a pattern of rrowing volatility. Chartists look at this as a pattern that predicts a big move in either direction. I’ve drawn in a white downtrend line through which the GDX appears to have climbed over. It’s also now above its 50/200 dma’s (yellow and red lines, respectively). I’m not ready to declare a “break-out” yet, but I’m feeling optimistic going into the eastern hemisphere’s biggest seasonal period for accumulating physical gold:

The gold chart above is a 2-yr daily for the price of gold as represented by the Comex continuous gold futures contract. Since April the price has been hitting its head on $1300. I remember when gold attempted to break above $400 in late 2003/early 2004. It took several attempts to get up and over $400. Around that time Robert Prechter had predicted that gold would drop to $50. How well did Prechter’s charts work then?

There’s one of many catalysts away from sheer eastern physical demand or an errant tweet
from Trump that can push gold a lot higher in conjunction with the U.S. dollar index quickly falling a lot lower. The most pressing issues currently are the rising geopolitical tensions between Russia/China and the U.S., the upcoming Treasury debt-ceiling battle and, what is becoming more apparent by the day, a deteriorating U.S. economic and financial system.

Speaking of physical demand, extremely negative ex-duty import premiums have been
observed in India. Many of you may have read standard gold-bashing propaganda pointing to that as evidence that India’s new sales tax is affecting gold demand. But quite the contrary is true. As it turns out, there was a loop-hole in the Goods and Services Tax legislation that scrapped a 10% excise duty on imports from countries with which India had signed a Free Trade Agreement. Currently Indian gold importers appear to be sourcing gold from South Korea, which enables buyers to avoid the 10% import duty entirely. Until the Indian authorities move to close this loophole, we won’t have good feel for how much gold is flowing into India until the official monthly statistics are released. Based on the import trend in June and July, there continues to be an usually large amount of gold imported into India this summer. It will likely pick up even more as we head into the India festival season this fall.

The above commentary is from the latest issue of the Mining Stock Journal.  For those of you with huge profit in Novo Resources, I provide some information about Novo that is not in the analyst reports.  It includes some technical information about the nature of the assay results produced up to this point.  The issue contains analysis in support of buying two primary silver producers whose stocks have been sold off well below their intrinsic values.   New subscribers get all of the back-issues.  You can find out more about the MSJ here:   Mining Stock Journal information.

Where Is The United States’ Gold?

A concocted public relations scheme – an event which resembled the annual Punxsutawney ground-hog viewing tradition –  in which the Treasury Secretary emerges from Ft Knox and proclaims, “the gold is safe” does not provide any evidence whatsoever.

On cue, Jim Rickards followed up with a half-baked apology for the unwillingness of the U.S. Government to force a bona fide audit of the public’s gold being “safekept” in the Fed’s custody.

Bill “Midas” Murphy asked my opinion on Rickard’s white washing of the topic:

This is why I don’t read Rickards. I don’t know what his deal is anymore. He was a front for the Pentagon’s goal to circulate the idea of the SDR replacing the dollar as the reserve currency. This is because they know the dollar is toast but the dollar is still the largest percentage share of the SDR so the U.S. would remain in control over the world’s reserve currency if it were to be the SDR.

Now Rickards has pimped himself out to Agora, which really devalued Agora in my opinion. And he’s ripping off the public with his gold letter subscription. Total scam.  I’ve had subscribers to my Mining Stock Journal tell me his subscription service is a farce.

He really butchered the truth there with that article. While it’s true that a gold leasing transaction does not have to entail the actual transfer of physical gold from the lessor to the lessee, often it does.  Goldman recently did a lease-style transaction with Venezuela that transferred possession of VZ’s gold to Goldman.

The U.S. would have to audit to the gold if the public forced the issue. Ron Paul tried several times to force the issue on behalf of the public and the Fed spent millions in lobbying money to get Barney Frank to quash Paul’s efforts. The Fed hired Linda Robertson, formerly a lobbyist for Enron, to assist with the effort to snuff out any attempt to legislate an audit. That’s why the Government has never ordered an audit of the PUBLIC’s gold. You don’t spend millions to derail legislation just because you’re worried it will elevate the importance of gold to the public. That’s complete foolish babble but coming from Rickards  makes it sound legitimate.

That’s Rickards’ modus operandi. Offer up some half-baked justification to support his argument because he knows a majority of his audience will nod their head robotically in agreement rather than question the assertion. Does he ever offer proof? Who are his military contacts? Why are we supposed to accept the legitimacy of his assertions with blind faith, especially considering that the “tracks in the snow” suggesting the contrary have been visible for many years. Certainly well before Rickards’ handlers thrust him under the spotlight of the gold investing, truth-seeking community.

As for the actual physical transfer of gold, if gold under the Fed’s control has not been used to satisfy eastern hemisphere delivery demands for several years, how come it took so long for Germany to get its gold bars back, allegedly? Especially given that it took Hugo Chavez just 4 months to repatriate 160 tonnes of gold that was held at several Central Bank vaults around western Europe?  From all accounts, the gold bars Germany originally sent to the U.S. for “safekeeping” after WWII are not the same bars that were returned, assuming they were actually returned.  Again, why does anyone accept with blind faith anything coming from any Government, especially the U.S. Government?

A small portion of the public, led by a high-ranking, long-time Congressman have demanded several times in the last decade to see bona fide evidence that the gold owned by the Treasury, which means the citizens of the U.S., is physically sitting in the various Fed vaults and is unencumbered by any form of counter-party claim. The fact that the Government refuses to do this can only lead to one conclusion – and it’s not Rickard’s half-baked apology.

This is a topic that was put to rest in my mind more than a decade ago.  Some of the gold may be physically sitting in the various Fed vaults “safeguarded” by the military, but most of it is now sitting in the form of refined kilo bars in Chinese vaults or as highly-prized gold jewelry draped around Indian wives.

To counter Rickards’ “military sources” reference, I received this email last night from a reader:

Back in February 2011, I ran into a Kentucky good ole boy who worked at Fort Knox in rural Kentucky. Fort Knox was also an Army Military depot as well as gold storage which it is/was famous for.

Several months before February 2011, the Army made a decision to transfer the Army Military Depot at Fort Knox to other military depots and my Ky guy no longer had a job and had to transfer and relocate to keep a Federal Gov’t job. So that’s what he did, he relocated and how I ran into him.

So I asked him…”Does Ft Knox have any gold there because I have heard there may no longer be any gold there.”

His response: “That’s been the rumor on the Base for some time…but the only people that would know for sure are the people who have clearance to get into the vault.” He didn’t have anything else to add or say because he worked on the military depot part of the base. But this is 6 plus years ago and I believe him because it just came spontaneously out of his mouth. It sent shivers down my spine when he told me this.

This is how I feel about what he said: People can’t keep a secret…just human nature….a worker can tell his spouse, a spouse can talk to a friend…and before you know it, it’s all around the base. Spreads like a wild fire. This is in rural KY so rumors and news like this will never get any national publicity legs so it just stays local.

Should You Use Leverage With Precious Metals And Mining Stocks?

While I will maintain, until proven wrong by the test of time, that Bitcoin and Cryptocurrencies are nothing more than a temporary fad, investing with a long term outlook (20-30 years) gives the investor the best probability of generating life-style changing wealth.

William Powers, of MiningStockEducation.com, invited onto his podcast to discuss using leverage in precious metals and mining stock investing.  We discuss greed/fear, using margin with mining stocks, volatility, options, futures and the leveraged ETFs.

The problem for most investors, and the reason many have not made a lot of money – or might have lost money – in the precious metals sector is the inability to invest with a long term perspective.  Since 2001, gold has outperformed every asset class.  The mining stocks, in general as measured using the HUI index, have outperformed the Dow/Naz since 2001.

If your reason to be invested in a sector is still valid, there’s no reason to sell investments in that sector.  Have the reasons for investing precious metals as a hedge against a collapsing U.S. economic and political system, and thereby a collapse in the U.S. dollar, changed? Have the problems taking the U.S. down been fixed?  The answer is pretty obvious, which means you should be holding your precious metals investments, even if you bought them in early 2011.   In fact, if you bought then, you should be buying more now.  I know I have been adding to my holdings gradually since early 2016.

The next issue of the Mining Stock Journal will be published this Thursday.  I’ll be reviewing a junior stock that  has gone parabolic and a mid-cap producer that has been hammered hard but is poised to bounce back just as sharply.  You can learn more about the MSJ here – new subscribers get all of the back-issues:  Mining Stock Journal information.

America’s Supernova: The Final Stage Of Collapse

I started observing the slow-motion train-wreck in process in 2001 – a year removed from my perch as a junk bond trader on Wall Street and living several thousand miles away from NYC and DC in the Mile High City, where the view is a lot more clear than from either coast.

The United States has been in a state of collapse for several decades.   To paraphrase Hemingway’s flippant description of the manner in which one goes bankrupt, it happens in two ways:   slowly then all at once (“The Sun Also Rises”).

The economic decay was precipitated by the advent of the Federal Reserve;  then reinforced by FDR’s executive order removing gold from the citizenry’s ownership, the acceptance of Bretton Woods, and the implementation of what is capriciously termed “Bretton Woods Two” – Nixon’s disconnection of the dollar from the gold standard.  If you study the monetary and  debt charts available on the St. Louis Fed’s website, you’ll see that post-1971 both the money supply and the amount of debt issued at all levels of the system (public, corporate, household) began gradually to go parabolic.

I would argue the political collapse kicked into high-gear during and after the Nixon administration, although I know many would argue that it began shortly after the Constitution was ratified in 1788.  At the Constitutional Convention, someone asked Ben Franklin if we now had Republic or a Monarchy, to which Franklin famously replied, “a Republic, if you can keep it.”

Well, we’ve failed to keep the Republic.  Now the political, economic and financial system is controlled by a consortium of big banks, big corporations, the Department of Defense and a handful of very wealthy individuals, all of which are ruthlessly greedy and misanthropic.

The current political and social melt-down is nothing more than a symptom of the underlying rot – rot that was seeded and propagated by the implementation of fiat currency and a fractional banking system.  The erection of the Fed gave control of the country over to those with the authority to create paper money and issue debt.

And now the political and social clime of the country has gone from ridiculous to beyond absurd.  James Kunstler wrote a must-read piece which captures the essence of the Dickensian  societal caricature that has sprung to life before our very eyes (Total Eclipse):

What do you know, long about Wednesday, August 16, 2017, House Minority Leader Nancy Pelosi (D-Cal) discovered that the United States Capitol building was infested with statues of Confederate dignitaries. Thirty years walking those marbled halls and she just noticed? Her startled announcement perked up Senator Cory Booker (D- NJ) who has been navigating those same halls only a few years. He quickly introduced a bill to blackball the offending statues. And, of course, the congressional black caucus also enjoyed a mass epiphany on the bronze and stone delegation of white devils…

…Just as empires tend to build their most grandiose monuments prior to collapse, our tottering empire is concocting the most monumentally ludicrous delusions before it slides down the laundry chute of history. It’s as if the Marx Brothers colluded with Alfred Hitchcock to dream up a melodramatic climax to the American Century that would be the most ridiculous and embarrassing to our posterity.

I would urge everyone to read the entire piece, which I’ve linked above.   And now for America’s coup de grace, it has offered up “president Trump,” which by the way not any worse than the alternative would have been.  Rather, it’s another symptom of the cancer beneath the skin.

Empires in collapse are at their most dangerous to the world when they are on the brink of imploding.  I was discussing this with a good friend the other day who was still clinging to the brainwashing we received in middle  school history classes that “America is different.” This just in:  America is not different.

The Financial Times has written a disturbing – yet accurate – accounting of the current turmoil facing the White House and the world (America Is Now A Dangerous Nation):

The danger is that these multiple crises will merge, tempting an embattled president to try to exploit an international conflict to break out of his domestic difficulties…Mr Gorka’s flirtation with the idea that the threat of war could lead Americans to rally around the president should sound alarm bells for anyone with a sense of history…Leaders under severe domestic political pressure are also more likely to behave irrationally.

In commentary which reinforces my view presented above, the FT article closes with:

A final disturbing thought is that Mr Trump’s emergence increasingly looks like a symptom of a wider crisis in American society, that will not disappear, even when Mr Trump has vacated the Oval Office. Declining living standards for many ordinary Americans and the demographic shifts that threaten the majority status of white Americans helped to create the pool of angry voters that elected Mr Trump. Combine that social and economic backdrop with fears of international decline and a political culture that venerates guns and the military, and you have a formula for a country whose response to international crises may, increasingly, be to “lock and load”.

The current “everything bubble,” fueled by the creation of massive amounts of fiat money and debt issuance is America’s “supernova.”  It’s the final explosion of fraudulent currency printing and credit creation.   I sincerely hope that when the pieces hit the ground, there will be enough material with which the original Republic can somehow be reconstructed.

 

The Government’s Retail Sales Report Borders On Fraud

As a quick aside, I got an email today from a colleague, a self-admitted “very small fish,” who told me he was now getting cold calls from Goldman Sachs brokers offering “very interesting structured products.” I told him the last time I heard stories like that was in the spring of 2008. One of my best friends was getting ready to jump ship from Lehman before it collapsed – he was in the private wealth management group. He told me he heard stories about Merrill Lynch high net worth brokers selling high yielding structured products to clients. He said they were slicing up the structured garbage that Merrill was stuck with – mortgage crap – that institutions and hedge funds wouldn’t take and packaging them into smaller parcels to dump into high net worth accounts. Something to think about there…

As conditions worsen in the real world economy and political system, the propaganda fabricated in an attempt to cover up the truth becomes more absurd.  Today’s retail sales report, prepared and released by the Census Bureau which in and of itself makes the numbers extraordinarily unreliable, showed a .6% gain in retail sales in July from June.  As I’ll show below, not including the affects of inflation, in all likelihood retail sales declined in July.

The biggest component of the reported gain was auto sales, for which the Census Bureau attributed a 1.1% gain over June.  While this correlates with the SAAR number reported at the beginning of the month, the number does not come close to matching the actual industry-reported sales, which showed a 7% decline for the month of July.  Note: the SAAR calculation is fictional – it implies that auto sales, which are declining every month, will continue at the same rate as the rate measured in July.  Per the stark contrast between the Census Bureau number and the industry-reported number, the number reported by the Government is nothing short of fictional.

The automobile sales component represents 20% of the total retail sales report on a revenue basis.  If we give the Government the benefit of doubt and hold the dollar value of auto sales constant from June to July (remember, the industry is telling us sales declined sharply) and recalculated the retail sales report, we get a 0.03% gain in retail sales.

Another huge issue is the number recorded for building material and sales.  In the “not seasonally adjusted” column, the report shows a huge decline from June to July (a $1.3 billion drop from June to July.  But through the magic of seasonal adjustments , the unadjusted number is transformed in a $337 million decline.   Given the declining trend in housing starts and existing home sales, it would make sense that building and supply stores sold less in July vs. June.  But the Government does not want us to see it that way.

Yet another interesting number is in the restaurant sales category, which the Census Bureau tells us increased .3% in July from June.   Restaurant sales are also one of the largest components of retail sales, representing 12.1% of what was reported.   This number was diametrically opposed to the Black Box Intelligence private sector report for monthly restaurant sales, which showed a 2.8% drop in restaurant sales in July (a 4.7% drop in traffic).   The Census Bureau survey for total retail sales is based on 4,700 questionnaires mailed to retail businesses.  The Black Box restaurant survey is based on data compiled monthly from 41,000 restaurants.   We don’t know how many restaurants are surveyed and actually respond to the Government surveys.

Here’s the Census Bureau’s dirty little secret (click to enlarge):

The sections highlighted in yellow are marked with an asterisk.  In the footnotes to the report, the Census Bureau discloses that the asterisk means that, “advance estimates are not available for this kind of business” (Retail Sales report).  In other words, a significant percentage of the Government’s retail sales report is based on guesstimates. Lick your index finger and stick it up in the political breeze to see which way you need to make the numbers lean.

I calculated the total amount of sales for which the Census Bureaus claims is not based on guesstimates.  45.3% of the report is a swing and a miss. Not coincidentally, the areas of its report that conflict directly with actual industry-provided numbers and area guestimate categories happen to be auto sales, building materials and restaurant sales.  Get the picture?

Just like every other major monthly economic report – employment, GDP, inflation – the retail sales report is little more than a fraudulent propaganda tool used to distort reality for the dual purpose of supporting the political and monetary system – both of which are collapsing – and attempting to convince the public that the economy is in good shape.

Is The Fed On The Verge Of Losing Control?

After hitting an all-time low of 8.84 three weeks ago, the VIX more than doubled at one point this past week, closing up 55% for the week.  The attributed cause, those far from the primary reason, was the childish verbal skirmish between North Korea and Trump.  The cat-fight bordered on the traditional playground, “my dad is stronger than your dad” duel.

From the U.S. propagandists’ perspective the show itself was a great device to deflect the public’s attention from the collapsing U.S. financial and political system, the process of which will get a boost from the upcoming political war over the Treasury debt ceiling (remember that?).

Silver Doctor’s invited me to join Eric Dubin and Elijah Johnson to discuss last week’s action in the stock and precious metals markets and why the stock market may be on the verge of a historic sell-off.

The Mining Stock Journal and the Short Seller’s Journal are designed to offer a low-cost, high-quality stock and financial markets research tool help you take advantage of the historically undervalued precious metals sector and greatest asset bubble in history. Click on either image below to find out what each has to offer:

Dave, just a moment for some feed back. I just placed an order for 1oz gold eagles thx to my profits off your Tesla and BBBY short-sell ideas, thx as always. – subscriber feedback

Why Is The Dow Outperforming The SPX And Naz?

“The combination of central banker-applied brute force (buying everything in sight) and deitylike central banker pronouncements has dampened market volatility and frisky free-lancing, but at the same time it has encouraged risk taking (in market positioning, not it business formation). We have thought, and still think, that confidence in central banks and policymakers has been unjustified and thus could erode or collapse at any time. Since the major financial institutions which comprise the financial system are still way overleveraged and opaque (in fact with record amounts of debt and derivatives at present), such a break in confidence could happen abruptly and without warning.” – from Paul Singer’s Q2 investor letter (note: Paul Singer is the founder of Elliot Management, one of the most successful hedge fund management firms since its inception in 1977).

Singer is considered one of the most shrewd and accomplished investors in the modern era. The quote above embodies two of the concepts I’ve been discussing for quite some time in the weekly Short Seller’s Journals:  Central Bank intervention will ultimately fail in spectacular fashion; the Too Big To Fail Banks (TBTFs) currently have more leverage and OTC derivatives – the latter well hidden off-balance-sheet – than just before the 2008 financial crisis/de facto collapse.

Singer has been quite vocal recently about the inevitability of an eventual market/systemic collapse. It’s not a question of “if,” but of “when.” I read an analysis last week from Graham Summers of Phoenix Capital in which he suggests that the Fed would lose control of the VIX – lose control of its ability to keep the VIX suppressed – and a large spike up in the VIX would trigger an avalanche of selling from the $10’s of billions in Risk Parity Funds. These funds buy stocks when the VIX falls and unload stocks when it rises – all based on algorithms which are automatically executed by “black box” computerized trading systems.

I have to believe that the Fed (not the FOMC figure-heads but the Phd “rocket scientist” personnel who work behind the scenes at the Fed) is well aware of this possibility and has
taken the necessary steps to ensure the readiness of a “safety net” that will buffer the selling deluge that would accompany an uncontrollable spike in the VIX.

Upon further reflection, I believe that the eventual “black swan” event will be an unanticipated derivatives explosion that occurs from an out-of-control OTC derivatives position buried deep off-balance-sheet on one of the TBTFs. This is what occurred in 2008. The Lehman bankruptcy/liquidation triggered a massive counter-party failure by AIG on OTC derivatives underwritten by Goldman Sachs. This was the event that prompted then-Treasury Secretary and ex-Goldman CEO, Henry Paulson, to scramble furiously to arrange a Fed/taxpayer bailout of AIG and Goldman. The bailout was extended to dozens of banks, domestic and foreign. But the Goldman/AIG implosion was the nexus.

Circling back to the relevancy of Paul Singer’s quote, the degree of risk embedded in TBTF bank OTC off-balance-sheet derivatives can not be properly assessed because, not only did changes to accounting regulations enable banks to hide derivatives more easily and thereby lie to the institutional investor universe, but bank officials (including CEO’s) lie about their risk exposure to the Fed and to Government regulators. Some bank CEO’s do not even know the full extent of risk hidden on their bank’s balance sheet. Jamie Dimon admitted this when the JP Morgan London derivatives “whale” catastrophe occurred (2012). Having been on a risky bond trading desk in the 1990’s, I can attest first-hand that trading desks have the ability to hide risky or bad positions from a bank’s upper management. We did this every year before our books were marked to market and squared for bonus pool assessment by the risk control and accounting people.

At this point, I thus think that stock market crash event-trigger will be the detonation of a derivatives bomb (Warren Buffet’s weapon of mass financial destruction). Likely a credit, interest rate or currency based derivatives position and related counter-party default. The Fed will not see it coming because it was covered up and never disclosed to the Fed. Is this the flight-to-quality that marks the beginning of the end for the stock market
run?

The Fed heads dating back to at least Alan Greenspan always remark that it’s impossible to know whether or not an asset bubble is occurring until after it pops. Yellen went as far as to suggest there would not be another financial market crisis in our lifetime. These assertions are so absurd that I don’t think a response is necessary. But I ran some varying duration index comparisons and discovered this (click to enlarge):

You can see that the SPX, Dow and Naz were tightly correlated in mid-July. This correlation extends further back in time. You see that the Dow began outperform the SPX/Naz starting Tuesday, July 25th, after AMZN reported an unexpectedly huge earnings miss (the plunge in the green line), the SPX and Naz entered a downtrend while the Dow continued higher.

Back in the day when investors were more likely to on focus fundamentals rather than stockprice momentum, a chart like the one above would elicit references to Dow theory, which asserts that the final stage of an out-of-control bull market culminates with a “flight-to-quality” from risky stocks into the lowest risk market sectors. Traditionally the Dow is considered less risky than the universe of stocks that comprise the SPX and Naz.

The idea behind this theory is that, as big investors sense that smaller-cap, higher-beta stocks have reached a point of overvaluation and high risk, these investors move money from the overvalued stocks into the Dow stocks, which are traditionally considered more stable and more liquid. Investors ride the Dow until the entire market rolls over. Some articles appeared last week which made note of the deterioration in technical indicators. For instance, one analyst noted that the recent string of Nasdaq new highs occurred with “negative breadth” to a degree that ha not been seen since 1999-2000. Negative breadth is when an index has more stocks declining than advancing. It’s a negative divergence that often signals that large investors are moving more cash out of the stocks than is flowing into stocks.

No one knows for sure which of the many hidden “financial bombs” will explode unexpectedly and cause a market melt-down.  But like all Ponzi schemes throughout history, the U.S. Ponzi scheme will implode under a massive weight of hubris, extreme greed and widespread ignorance disguised as complacency.

The above commentary is from the latest Short Seller’s Journal. Despite the inexorable climb to new records in the Dow, SPX and Naz, dozens of stocks are falling from the sky like pheasants in hunting season.  The Short Seller’s Journal can help you make money from the short side. You can learn more here:  LINK

 

More B.S. From The BLS Leads To A Blatant Attack On Gold & Silver

With the release of the latest BLSBS at 8:30am EST, the market interventionists were set up for a spectacular effort today. The S&P was first out of the gate, to the upside of course, and the precious metals were slammed. Ironically, the impulse triggered by the headline jobs report should have effected the stock market and the precious metals similarly.

How are 100’s of thousands of working age people leaving the labor force yet, somehow, the BLS can report hundreds of thousands of new jobs that were filled? Well, there is the “Birth/Death Model”. The Birth/Death Model, much like the Federal Reserve Note, is just made up out of thin air. A number is determined by the Bureau of Labor Statistics and then entered into the BLS report. It has nothing to do with reality. But someone forgot to tell the BLS that construction spending in June was down nearly 10% year over year from last June because the BLS reports that new construction businesses added 11,000 new jobs to the economy – an economic and statistical extreme improbability.

If there were any markets that actually moved in accordance with fundamentals, natural price discovery or anything associated with reality the S&P and Dow Jones would be moving to the downside as well. Why? Because as Dave explains in the latest Shadow of Truth, if the [equities] markets were sensing the Fed was going to raise interest rates, and if the employment report were based in reality the Fed would be forced to raise interest rates, this would be negative for those indices. But, alas, everything is rigged, so it doesn’t matter. The “market saved us again…”

The Dollar Is Screaming “Buy Gold (and silver)”

First this, but don’t take our word for it:

The US Dollar is under considerable pressure. Week after week, we talk about how the dollar has been going down for the count. It can only take so many hits. Gold and silver are the safe haven assets to own through a currency crisis, and for the moment, the precious metals have been on the clearance sale rack since July. At what point do the dollar bulls capitulate? It has been years since the dollar has come under pressure, and the frequency in which everybody is a genius yet bouncing from job to job, including in the financial sector, there are now so few analysts/financial advisers/traders who have seen a bear market, that one wonders if anybody will hear it when it roars?

The pressure is building. Just look at copper and ask these questions:

  • Is mining supply down for everything, or just copper?
  • How is copper rallying, yet silver price action has found everything except for a bid?
  • If copper finished the quarter with 2nd place overall gains, across all asset classes, second only to crude, then why are the precious metals so far behind?

Here’s a closer look at copper action of late:


The consolidation is impressive, spanning several months. With the recent 7% gains in just the month of July, is copper set for another leg up, or will it come crashing down to the weakness of gold and silver? Gold prices have been trading in a $20 range since last week. Seriously. To the penny. At a price of approximately $1275 going into Friday’s trading action, gold looks ready to either break-out or break-down:

Silver prices are looking very bullish:


Earlier this week, we reported that mining sector 2nd quarter earnings have now hit full stride. Second quarter earnings from the miners have been mixed. Gold miners seem to be weathering the storm, but silver miners not so much:

GOLD CONSENSUS EPS ACTUAL RESULT
Barrick (ABX) $0.2 $0.22 BEAT
Rand Gold (GOLD) $0.74 $0.88 BEAT
SILVER CONSENSUS EPS ACTUAL RESULT
Endeavour (EXK) $0.02 $0.00 MISS
First Majestic (AG) $0.05 $-0.02 MISS

The performance of the miners begs a the question:

Are the silver miners no longer able to compete, or is silver under-priced when compared to current market conditions?

On the fundamental front, we have several issues to be concerned with. ADP Payroll data suggests poor labor market conditions. According to the most recent report, the manufacturing sector shed 4,000 jobs in July, 2017. Today is the official Bureau of Lies and Statistics BLS Nonfarm Payrolls report, and as we are now over half a year into 2017, this employment data is perhaps the most important release ever. We shall not reiterate what a disaster the rest of the economy has become. The “Stock Market” is at record highs, though the barrage of incoming data paints the picture of a seriously sick economy, and it is perhaps terminal.

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

Western Central Bank Fear Of Gold Is In The Air

Ballooning open interest, heavy fix selling, aggressive post-settlement selling, flash crashes – this all seems a lot of bother. Perhaps the Other Side is afraid of something. – John Brimelow from his Gold Jottings report

Wednesday  evening at 7:06 EST, at one of the least liquid trading periods of the 23 hour trading day for Comex paper gold, a “motivated” seller unloaded 10,777 August gold contracts into the CME’s Globex trading system, knocking the price of gold down $9 in 25 minutes.  There were no obvious news or events reported that would have triggered any investor to dump over 1 million ozs of gold with complete disregard to price execution.

Rather, the selling was the act of an entity looking to push the price of gold a lot lower in “shock and awe” fashion.  The 10.7k contracts sold were just the August contracts.   There was also related selling in several other contract months.  To be sure, the total number of contracts unloaded included  hedge fund selling from stop-losses triggered in the black boxes of momentum-chasing hedge funds.

In addition to the appearance of frequent, strategically-timed “fat finger” flash crashes, the open interest in paper gold on the Comex has soared by 23,000 contracts since last Friday. This added 2.3 million paper gold ounces to the Comex open interest, which represents nearly 27% of the total amount of alleged physical gold ounces sitting Comex vaults.   In fact, the total paper gold open interest on the Comex is 455,605 contracts, or 45.5 million ounces of gold. This is 530% more paper gold than the total amount of gold reported to be sitting in Comex vaults.

The dramatic rise in open interest accompanied gold’s move in price above the 50 dma.  It’s typical for the bullion banks on the Comex to start flooding the market with additional paper contracts in order to suppress strong rallies in the price of gold.  Imagine what would happen to the price of gold if the regulatory authorities forbid the open interest in Comex gold contracts to never exceed 120% of the total amount of gold in the Comex vaults.  This is unwritten “120% rule” is de rigeur with every other commodity contract except, of course, silver.

The “flash crash” and “open interest inflation” are two of the obvious signals that the western Central Banks/bullion banks are worried about the rising price of gold.  The recent degree of blatant manipulation reflects outright fear. I suspect the fear is derived from two sources.  First is a growing shortage of physical gold that is available to deliver into the eastern hemisphere’s voracious import appetite.  Exports from Swiss refineries have been soaring.   India’s appetite for gold has not been even slightly derailed by the 3% additional sales tax imposed on gold.

Speaking of India, the World Council has put forth a Herculean effort to down-play to amount of gold India has been and will be buying.  After India’s 351 tonnes imported in Q1, the WGC tried to shove a 90 tonne per quarter forecast down our throats for the rest of the year. India’s official tally for Q2 is 167.4 tonnes.  Swing and a miss for the WGC.  Now the WGC  is forecasting  at total of 650-750 tonnes for all of 2017.

The WGC forecast is idiotic given that India officially imported 518.6 tonnes in 1H and 2H is traditionally the best seasonal buying period of the year AND a copious monsoon season means that farmers will be flush with cash – or rupees, rather – which will be quickly converted into gold.  Two more swings and misses for Q3 and Q4 and the WGC is out of excuses for why India likely will have imported around 1,000 tonnes, not including smuggled gold, in 2017.  This aggressive misrepresentation of India’s gold demand reeks of propaganda.  But for what purpose?

Back to the second reason for the banks to fear a rising price of gold:  the inevitable collapse of the largest financial bubble in history inflated by Central Bank money printing and credit creation.   The trading action in the gold and silver markets resembles the trading activity in 2008 leading up to the collapse of Lehman and the de facto collapse of Goldman Sachs.

One significant  difference is the relative effort exerted to keep a lid on the price of silver.   In early 2008, with the price of silver trading between $17 and $19, the open interest in Comex silver peaked at 189k contracts (Feb 29th COT report).   Currently the open interest is 206k contracts and it’s been over 240k.    In late 2008, the Comex was reporting over 80 million ozs of “registered” silver in its vaults. “Registered” means “available for delivery.” There were thus roughly 3 ozs of paper gold for every reported ounce of physical gold available for delivery.  Currently the Comex is reporting 38.5 million ozs of registered silver. That’s 5.3 ozs of paper silver for every ounce of registered silver.

As you can see, the relative effort to suppress the price of gold and silver is more intense now than in 2008.   Given what occurred in 2008, I have to believe that fear emanating from the western banks currently is derived from events unfolding “behind the curtain” that are worse than what hit the system in 2008.