Massive Shortages In Gold And Silver Developing – GLD Looting Continues

Renowned gold expert James Turk says prolonged gold backwardation like we are seeing now, where the spot price is higher than the future price, has never happened before. Turk contends, “No, never, and I am a student of monetary history as well, and I have never seen it happen like this in monetary history.  – James Turk on Greg Hunter’s USAWatchdog

The signs are everywhere.  We are seeing extreme “backwardation” in gold on the LBMA. Backwardation occurs when the spot price is higher than the future price for LBMA forward contracts.  It means that buyers of gold are willing to pay more for gold for immediate delivery than pay a lower price to receive delivery in the future (30-day, 60-day, etc).  It means that physical gold buyers do not trust the ability of the market to delivery physical gold in the future.

It is an unmistakable sign of physical gold shortages.

Not surprisingly, the LBMA suspended reporting the gold forward rate which was the best indicator of physical gold shortages in London, but we can still get reports on physical market conditions from London gold market participants, like James Turk.

To reinforce this information, Bill Murphy reported his latest conversation with his LBMA trader source in London (www.lemetropolecafe.com):

The essence of it is more confirmation that the BIG MONEY is buying down here at these price levels.More confirmation that silver is extremely difficult to buy in size. It takes two to four weeks for delivery. What is new is that buying gold in size is now becoming a thing … for our source says it now takes two weeks to buy in size.

Perhaps the most visible sign is the removal of gold from the GLD ETF.   The only way gold is removed from the Trust is when an Approved Participant bank redeems 100k share block in exchange for delivery of bars from the Trust. – (source:  John Titus of the “Best Evidence” Youtube channel, edits are mine) – click to enlarge:

GLD tonnage.001

Make no mistake about it, the bullion banks often can borrow GLD shares to scrape together 100k share lots in order to redeem gold. Or they can smash the gold price with paper and force weak holders of GLD to sell shares in the hands of the bullion banks.  In the last two weeks the short interest in GLD has soared 49% from 9.4 million shares to 14 million.  That represents roughly 46 tonnes.

The ongoing raid of GLD gold is perhaps the most direct evidence that the Central Banks and their bullion bank agents are struggling to find gold in which to deliver into Asia.  But speaking of which, something interesting is occurring on the Shanghai gold exchange.  In the last three days, 298 tonnes of gold have been delivered into the SGE.  While everyone monitors the amount of gold withdrawn from the SGE, the amount of gold flowing in to the SGE is just as important.   This is by far the most amount of gold that has been delivered into the SGE that I can recall.

I get my data from John Brimelow’s “Gold Jottings” report, which is invaluable for tracking the physical gold market outside of London.  He had this to say about the stunning flow of gold into China over the last three days:

Delivery Volume was 90.444 tonnes (Wednesday 112.454 tonnes) and open interest surged 48.374 tonnes (11.26%) to 477.920 tonnes. Since last Friday Shanghai open interest has risen 18.68%. Something is happening in gold in China. What is not immediately apparent.

Finally, to further reinforce the evidence of physical market shortages, we can monitor the gold lease rates, published by Kitco everyday.  I sourced this graph from Jesse’s Cafe Americain, who sourced it from Sharelynx – click to enlarge:

JessesCafeGold lease rates spike up like this when there is heavy demand from bullion banks to borrow physical gold from Central Banks in order to sell the gold into the market or deliver gold that can’t be readily procured in adequate quantities in the spot market.  It is one of the most visible signs that there is a shortage of physical gold on the market.

To be sure, the unprecedented degree manipulation of the gold price in the paper gold market reflects a serious desperation by the Central Banks and western Governments to cover up an enormous disaster fomenting beneath the heavily applied of veneer of “things are so good we need to raise interest rates in September” mantra.  In fact, the specific reason to keep a lid on the price of is to enable the Central Banks to maintain a zero interest rate policy.

The truth is, the Fed can’t afford to raise interest rates and anyone with two brain cells to rub together and a willingness to look at the truth knows that the Fed is trapped – unless it wants to crash the system for some reason.

We note that physical off-take of gold is spiking higher, with Reuters reporting yesterday that the South Koreans are buying gold in record sums while the US Mint reports that sales of gold coins in July were nearly 5 times what they were a year ago.  – John Brimelow, “Gold Jottings” report

 

28 thoughts on “Massive Shortages In Gold And Silver Developing – GLD Looting Continues

  1. Friends in the international bullion trade are telling me that the John Q’s and the Joe SixPacks of the world are starting to become noticeable and appreciated in their demands for physical product.

    Is the HS flying over ? 🙂

    1. The previous longest miners’ bear market lasted about 5 years, roughly from mid 90s to early 2000s, looks like history is repeating again.

    1. Why Let ex-Presidents Cash in?

      President Harry Truman once said that he would never lend himself “to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency.” His successors have not held themselves to the same standard.

      It’s not as if former presidents would risk poverty if they avoided the lecture circuit. By law, each ex-president receives a pension of about $200,000 a year, Secret Service protection, and support (currently about $1 million a year) to pay for maintaining a personal office and staff. Book publishers also pay former presidents exceedingly well for their memoirs (advances are now routinely in the seven figures).

      Accepting cash from a charity may seem harmless enough. Charities pay former presidents to appear at events because their presence adds cachet and boosts ticket sales. Even after speaking fees, the charities clear a profit. But there’s a risk that donors will — quite wrongly — believe the former president is personally involved in the charity when, in fact, he’s just a gun for hire. And shilling, even for a good cause, isn’t exactly presidential — at least not in the old sense of that word.

      Additional concerns arise from paid speeches in countries whose values (on human rights, free speech, etc.) are very different from our own, and where a former president’s appearance may be spun as American support for despicable policies. George W. Bush and Clinton have accepted money to speak in Saudi Arabia, the United Arab Emirates, China and Russia.

      These two former presidents have also rented their prestige to a long list of private, moneymaking entities — Goldman Sachs, Morgan Stanley Dean Witter, Cayman Island Alternative Investment Conference and Union Bank of Switzerland — with an obvious interest in influencing federal regulatory policy.

      UBS is a particularly troubling example because it has had so much trouble with the law.
      This dubious organization employed George W. Bush and Clinton at a series of events from 2011 through 2015, and paid them well for their services — about $100,000 to $200,000 for each appearance. It’s not difficult to imagine UBS telling clients: If two former presidents are willing to work with us and be prominently listed on our website, with a company logo next to their pictures, why should anyone question our integrity?

      When a former president appears at an event, that sends a message to prosecutors, regulators and the State Department.

      The message: The sponsoring organization, country or person has friends in high places, and ought to be treated very carefully.

      http://www.huffingtonpost.com/steven-strauss/why-let-expresidents-cash_b_7949070.html

  2. According to Mish (Mish’s Global Economic Trend Analysis): “Any time you see articles promoting the difference between physical gold and paper gold you are most likely reading a pile of crap.”
    Read more at http://globaleconomicanalysis.blogspot.com/2015/08/reader-question-is-gold-manipulated.html#oiUGEZHgFVxp9sPz.99

    Mish plays fast and loose with the definition of physical gold. As far as I know, unencumbered gold in your hand is the ONLY physical gold. Anything else is a derivative.

        1. I had to deal with Mish on a more personal basis in 2013. And I can only confirm what you have said. From my point of view he is just a vain, conceited idiot!

  3. I think it was Kyle Bass that said he asked a US Treasury official what the plan was to reduce the deficit. His reply was ” we’re just going to kill the dollar ” ! Knowing this and that the Debt ceiling clock was tuned off back in March ( Is it back on ? ). I suspect that the trigger will be when the Fed does in fact raise interest rates. Then the real crap is going to hit the fan. Your right the Fed can’t raise rates. Until the day comes that they have completed the looting of America and they are safely hidden away. Then the rates will be raised and we’ll be left to fend for ourselves.

    1. I wonder if the owners of the eligible gold that was moved into the registered category by JPM were notified of its reclassification. The entities that are standing for delivery will probably continue to do so since they can get gold in size from the Comex. It will be interesting to see if metal continues to be removed from the Comex vaults.

  4. “In the last three days, 298 tonnes of gold have been delivered into the SGE

    ——————————————–

    That’s some serious weight going into Shanghai in just 3 days … I’m guessing the Chinese have had enough with being fleeced by “Pump & Dump” schemes on the stock exchanges.

  5. Dave, I got a friend in Hong Kong telling me that Kitco (Hong Kong) was (still is?) having some unusually deep discount on gold/silver coins a while ago, she is upset as she bought many coins from them at ‘regular’ prices in recent years. What’s your take on this move by Kitco?

  6. So what’s the endgame for the paradigm shift? Only the major corporations own massive accounts of physical gold and silver, but ownership is outlawed for the common people “for the common good”? Only a few get to benefit from the next rise in gold and silver, at least without “windfall profits taxes” and outright confiscation by the US government (again)? We’ve already seen how Goldman Sachs ex-presidents try to get on the executive board of Newmont Mining Corp. Obviously they know what is going to happen, no matter the prices of precious metals today.

  7. My guess is that 666 tons in the GLD is the rock bottom of the inventory = zero tons available. I am not sure that it really matters though as only the banksters can supposedly take delivery from the GLD.

    Regarding the SLV inventory, my guess is that it is all fake / phony paper an and inventory numbers. And same with the Comex. If the SLV really has 10,000 tons of silver and the Comex really has 50 Million ounces of silver, then why cant they make a measily 4 Million silver eagles per month for Joe six pack. The only answer that makes sense is because none of the silver inventories are real.

  8. I want to know how the precious metals firm Apmex can offer special deals on
    Silver American Eagles as we speak with reported shortages.
    You think one of their bankers is Jp. Morgan.
    The apparently have a lot of silver. Remember those TV commercials where they
    Consistently were selling Eagles over the last 8 months at 25 dollars then came down to 23.95 all while the futures price went all the way down to 14 and change and some think
    It could still go down to 9/10 before they take it back up.
    I say they are all in on it trying to screw and confuse the public about owning precious metals.
    The jig should be up soon and major arrest of these perps should begin becoming public. In my humble opinion. Suspicious also is bullion direct a precious metals
    Exchange for physical went recently into bankruptcy . I wonder if Jp Morgan was their banker also. Inquiring minds want to know!!!!
    They have set all this up but soon the suppression will back fire on them.

      1. If cheap American Eagles are making their way into the marketplace and we all have access, that’s likely good thing for the sake of distribution. Debt-free assets will and are being monetized within the market, organically. That’s where the assets belong, not in the hands of a mint, a CB or a government. They’ve been the biggest hoarders of all in recent history.

        The institutional apexes are slowing being dissolved. They were necessary short of the information age.

  9. Just as a correction to the above post regarding what I have noticed.
    Apmex was not selling silver Eagles on tv but I was referring to another outfit
    Gold reserve something like that. As I said out of nowhere they came on tv in a big way
    Selling silver and gold Eagles and like magic the spot price kept going down.
    While physical price stayed static. Where did all this physical inventory come from??
    Is all this just a coincidence???

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