Tag Archives: silver

Hedge Funds Record Net Short Paper Gold

The latest commitment of traders report (COT report) showed that the hedge funds on the Comex (the “managed money” account) is now net short 33.9k contract of paper gold.  This is a record net short position in paper gold for the managed money account on the Comex.  The previous all-time high was 27.2k contracts at the end of December 2015.

This explains a lot to me about the character of the price decline in gold since early April. Just like in the stock market, the large macro “quant” funds use computer algorithms to momentum trade Comex futures. It’s this factor that caused the price of gold to drop quickly once it went below its 50 dma on April 12th. The shift to a net short positioned reflects hedge fund computers unloading long positions and piling into the short side.

At some point this dynamic will go the other way and, at the very least, there will be a significant short-covering rally as the hedge fund positioning swings back the other way. This will really get interesting if the hedge fund algo move to cover  shorts on the Comex at the same time the stock market heads south again. This would  stimulate a hedge fund algo party that could finally send gold over $1400.

The Mining Stock Journal focuses on junior exploration mining stock ideas and, on a selective basis, larger-cap producing mining stocks. You can learn more about this newsletter here:  Mining Stock Journal information

Tuesday’s Paper Gold Raid And Fake Journalism

“Central banks stand ready to lease gold in increasing quantities should the price rise.” – Alan Greenspan, July 1998 testimony to Congress

At 8:39 a.m. EST 523,200 ozs of paper gold were unloaded onto the Comex in the space of less one minute:

Anyone who’s traded big positions on a trading desk knows that the best way to unload a position that is larger than the immediate liquidity of the market in which the security trades (yes, Comex contracts are “securities,” not actual physical gold) is to feed it out over time.

In that chart above, why wouldn’t the seller try to sell its position in a way that would enable it to get a price for the entire position that was in the vicinity of the market price at the time the sell-order was executed? After all, the market has clearly rebounded to the price level at the time massive sell-order bombed the trading systems, suggesting that the seller could have achieved much larger sell proceeds with a little bit of patience in its selling

This is all rhetorical, of course, because the all-too familiar “fishing line” 1-minute chart is the blatant footprint of market manipulation. Of course, Kitco’s “reporter” on the scene chose to attribute the sudden price plunge to a market “hamstrung by not much risk aversion in the world marketplace” Kitco.com.

It’s hard to believe an educated person wrote that commentary (“Gold Prices Sink To 4-Month Low On Scant Risk Aversion” by Jim Wycoff). Honestly, that headline makes me chuckle. Well then, Jim, the Dow is now up 153 points as I write this 5 hours later, which by your logic would imply there’s even less risk aversion than the “scant” risk aversion at 8:39 a.m.  How come, Jim,  the price of gold rebounded to the level where it was trading when fear of “scant” risk aversion triggered someone to unload 16 tons of paper gold in less than 60 seconds if indeed fear of scant risk aversion was the catalyst for sell order?

How Banks Create Money Out Of Thin Air

“The credit creation theory was something I intuitively grasped before from other alt-media sites, John nailed it down.” – Comment from someone who watched the podcast below

The “money supply” number as provided by official Federal Reserve statistics, it turns out, is not the true money supply. The fractional banking system allows banks to lend money on its reserve capital at a rate of 90 cents for every $1 of reserve capital. Technically, a loan is not considered “money creation” because of the legal provision that a loan has to be paid back. Because of this legal “glitch,” the creation of credit is not considered to be part of the money supply.

Yet, borrowed money behaves in the economy exactly like printed money until that point in time at which the borrow must pay back the loan. The spending power created by the creation of credit is identical to the spending power of printed money. The person or entity doing the spending does not know the difference.

This means that the amount of debt issued and outstanding by the U.S. Treasury should be added to the “official” money supply number (for example, M2) in order to calculate the true supply of money circulating in the system.  This especially true because the amount of debt issued by the U.S. Government increases in quantity on a daily basis – it’s never repaid (anything considered “repaid” has been repaid with new debt).

In this podcast, which is the latest segment of John Titus’ “Mafiacracy” series, Titus explains how and why it is that banks create money out of thin air. Once you understand the principles reviewed in this podcast, you’ll understand how the U.S. became a giant Ponzi Scheme:

The Paper Raid On The Gold Price

Gold was smacked $22 from top to bottom overnight and this morning.  It was a classic paper derivative raid on the gold price, which was implemented after the large physical gold buyers in the eastern hemisphere had closed shop for the day.  This is what it looks like visually:

As you can see, as each key physical gold trading/delivery market closes, the price of gold is taken lower. The coup de grace occurs when the Comex gold pit opens. The Comex is a pure paper market, as very little physical gold is ever removed from the vaults and the paper derivative open interest far exceeds the amount gold that is reported to be held in the Comex vaults (note: the warehouse reports compiled by the banks that control the Comex are never independently audited).

Today technically is first notice day for April gold contracts despite March 29th as the official designation. Any account with a long position that does not intend to take delivery naturally sells its long position in April contracts. Any account not funded to accommodate a delivery is liquidated by 5 p.m. the day before first notice. This dynamic contributes to the ease with which a paper raid on the gold price can be successfully implemented.

In all probability the price of gold (June gold basis) will likely not stay below $1300 for long. China’s demand has been picking up and India’s importation of gold is running quite heavy for this time of the year. Soon India will be entering a seasonal festival period and gold imports will increase even more. Today’s price hit will likely stimulate more buying from India on Friday.

“New” World Order Bankers Caused The American Revolution

“My sense is we are coming up on another crisis and it’s going to be worse than the last one” – John Titus

“Money exits not buy nature but by law” – Aristotle – When Rule of Law breaks down, it enables bankers, via their Central Bank tentacles,  to take control of the monetary system.  The process is accompanied by the gradual collapse of the system upon which that money is predicated.  This process can not occur unless a gold is removed from the system.

John Titus of Best Evidence video productions presents the next chapter in his “Mafiocracy” series with a review of Alexander del Mar’s accountings of the way in which bankers usurped England’s sovereignty and led to the American Revolution.  Gresham’s Law is in effect here:

Welcome To 2019: Declining Stocks, A Falling Dollar And Rising Gold / Silver Prices

The stock market has become the United States’ “sacred cow.” For some reason stock prices have become synonymous with economic growth and prosperity. In truth, the stock market is nothing more than a reflection of the inflation/currency devaluation caused by the Fed’s money printing and lascivious enablement of rampant credit creation. 99% of all households have not experienced the rising prosperity and wealth of the upper 1%. The Fed’s own wealth distribution statistics support this assertion.

It’s been amusing to watch Trump transition from tagging the previous Administration with creating a “big fat ugly stock bubble” – with the Dow at 17,000 – to threats of firing the Fed Chairman for “allowing” the stock market to decline, with the Dow falling from 26,000 to 23,000. If the stock market was big fat ugly bubble in 2016, what is it now?

If the Fed pulls back from its interest rate “nudges” and liquidity tightening policy, the dollar will sell-off, gold will elevate in price rapidly and the Trump Government will find it significantly more difficult to finance its massive deficit-spending fiscal policy. Welcome to 2019…

SBTV, produced by Silver Bullion in Singapore, invited me onto their podcast to discuss the Fed, the economy and, of course, gold and silver:

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If you are interested in ideas for taking advantage of the inevitable systemic reset that  will hit the U.S. financial and economic system, check out either of these newsletters:   Short Seller’s Journal  information and more about the Mining Stock Journal here:   Mining Stock Journal information.

A Quiet Bull Move In Gold, Silver And Mining Stocks

Silver is up 12.4% since November 11th, gold is up 9.3% since August 15th.  But the GDX mining stock ETF is up 21.4 % since September 11th.  GDX is actually up 71% since mid- January 2016.  By comparison, the SPX is up just 34% over the same time period (Jan 19th, 2016).

There’s a quiet bull market unfolding in the precious metals sector.  But don’t expect to hear about it on CNBC, Bloomberg TV or Fox Business – or the NY Times, Wall Street Journal and Barron’s, for that matter.

My colleague Trevor Hall interviewed precious metals analyst and newsletter purveyor,  David Erfle to get his take on what to expect in 2019 for the sector and  a couple of his favorite stocks (download this on your favorite app here: Mining Stock Daily):

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I discuss my outlook for the precious metals and mining stocks in my latest Mining Stock Journal, released to subscribers last night. I also present a list of large and mid-cap mining stocks that should outperform the market for at least a few months, including ideas for using call options. You can learn more about the Mining Stock Journal here:   Mining Stock Journal information.

Trump’s Trade War Dilemma And Gold

If the “risk on/risk off” stock market meme was absurd, its derivative – the “trade war on/trade war off” meme – is idiotic.  Over the last several weeks, the stock market has gyrated around media sound bytes, typically dropped by Trump,  Larry Kudlow or China,  which are suggestive of the degree to which Trump and China are willing to negotiate a trade war settlement.

Please do not make the mistake of believing that the fate the of the stock market hinges on whether or not Trump and China reach some type of trade deal.  The “trade war” is a “symptom” of an insanely overvalued stock market resting on a foundation of collapsing economic and financial fundamentals.  The trade war is the stock market’s “assassination of Archduke Franz Ferdinand.”

Trump’s Dilemma – The dollar index has been rising since Trump began his war on trade. But right now it’s at the same 97 index level as when Trump was elected. Recall that Trump’s administration pushed down the dollar from 97 to 88 to stimulate exports. After Trump was elected, gold was pushed down to $1160. It then ran to as high as $1360 – a key technical breakout level – by late April. In the meantime, since Trump’s trade war began, the U.S. trade deficit has soared to a record level.

If Trump wants to “win” the trade war, he needs to push the dollar a lot lower. This in turn will send the price of gold soaring. This means that the western Central Banks/BIS will have to live with a rising price gold, something I’m not sure they’re prepared accept – especially considering the massive paper derivative short position in gold held by the large bullion banks.  This could set up an interesting behind-the-scenes clash between Trump and the western banking elitists.

I’ve labeled this, “Trump’s Dilemma.” As anyone who has ever taken a basic college level economics course knows, the Law of Economics imposes trade-offs on the decision-making process (remember the “guns and butter” example?). The dilemma here is either a rising trade deficit for the foreseeable future or a much higher price of gold. Ultimately, the U.S. debt problem will unavoidably pull the plug on the dollar.  Ray Dalio believes it’s a “within 2 years” issue. I believe it’s a “within 12 months” issue.

Irrespective of the trade war, the dollar index level, interest rates and the price of gold,  the stock market is headed much lower.   This is because, notwithstanding the incessant propaganda which purports a “booming economy,” the economy is starting to collapse. The housing stocks foreshadow this, just like they did in 2005-2006:

The symmetry in the homebuilder stocks between mid-2005 to mid-2006 and now is stunning as is the symmetry in the nature of the underlying systemic economic and financial problems percolating – only this time it’s worse…

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The commentary above is a “derivative” of the type of analysis that precedes the presentation of investment and trade ideas in the Mining Stock and Short Seller’s Journals. To find out more about these newsletters, follow these links:  Short Seller’s Journal  information and more about the Mining Stock Journal here:   Mining Stock Journal information.

Mining Stock Daily: Western Copper & Gold Is Undervalued

The Mining Stock Daily, a collaboration between ClearCreekDigital and Investment Research Dynamics, interviewed the CEO, Paul West-Sells, to learn more about Western Copper & Gold (WRN on both the NYSE and TSX). But first, here’s background on WRN:

Western Copper & Gold is advancing the Casino Project, a world-class copper-gold porphyry deposit, in the Yukon. The deposit contains 4.5 billion lbs of copper and 8.9 million ounces of gold reserve and 5.4 billion lbs and 9 million ozs of inferred resource.

Western Copper was a spin-off from Western Silver after Glamis Gold acquired Western Silver in May 2006 (three months later Goldcorp acquired Glamis). WRN acquired the old Lumina Resources in September 2006 for Lumina’s three copper properties, one of which was Casino. WRN spun-off the other two properties.

WRN only has 106.4 million fully-diluted shares outstanding (including options/warrants), which is remarkable for company that has been developing a massive copper-gold project for 11 years. Insiders own 8% of the stock. A small group of high net worth private investors who have made a lot of money on companies run by WRN Executive Chairman, Dale Corman, own 48% of the stock and institutional/retail own the remaining 44%.

WRN raised $32 million in 2012 selling a Net Smelter Return royalty to Orion Capital. That NSR was sold to Osisko in June 2017 when Osisko acquired a portfolio of royalty assets from Orion.

With a market cap of US$70 million (fully-diluted basis), WRN is extraordinarily undervalued on a risk-return basis. This is especially true considering the recent wave of copper-gold porphyry project M&A activity. Recall that Newcrest invested approximately US$14 million for a 19.9% stake in Azucar’s El Cobre, which valued that early-stage copper-gold project at US$74 million. In 2017, Goldcorp paid US$185 million for Exeter’s Caspice copper-gold project high up in the Chilean Andes.

There have been several other transactions in the copper-gold space, including Zijin’s (Chinese company) acquisition of Nevsun for $1.41 billion (September 2018) for the Timok copper-gold project in Serbia and the recently closed sale of the Malmyzh copper-gold project (Freeport, EMX Royalty) to Russian Copper Company for US$200 million.

WRN’s project is not as large or as high-quality as Malmyzh, but it’s several years closer to being converted into an operating mine. At this juncture, with the current price of copper and gold, the “asset value” of WRN, based on the roster of comparable transactions, is at least US$140 million. I would not be surprised to see one of the companies with projects near Casino make bid a for WRN at some point in next 6-12 months. There’s also a list of other potential acquirers, including RioTinto, BHP and Freeport.

Click on the graphic below to hear Trevor Hall’s interview with WRN’s Paul West-Sells (you can also download the interview on your favorite app by clicking here: MSD platforms):

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The analysis above on WRN is from the November 8th issue of the Mining Stock Journal. To learn more about this newsletter, click here: Mining Stock Journal information

Treasury Debt And Gold Will Soar As The Economy Tanks

“People have to remember, mining stocks are like tech stocks where everybody and their car or Uber driver piles into them when they’re moving higher. It’s not a well-followed, well-understood sector which is what I like about it because it means there’s plenty of opportunities to make a lot money in stocks that don’t end up featured on CNBC or everybody’s favorite newsletter.”

Elijah Johnson of Silver Doctor’s (silverdoctors.com) invited me on his podcast to discuss the fast-approaching economic crisis and my outlook for the precious metals sector:

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I’ll be presenting a detailed analysis of the COT report plus a larger cap silver stock that has had the crap beat out of it but has tremendous upside potential in my next issue of the Mining Stock Journal. You can learn more about the Mining Stock Journal here:  Mining Stock Journal information