Tag Archives: LBMA

Gold And Silver Are Set Up For A Huge Move

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , ,

“There is a growing recognition that the much-heralded V-shaped recovery is not going to happen beyond a temporary recovery following lockdowns. That being the case, the Fed is committed to unlimited monetary inflation, which is already undermining the dollar, the trade weighted version of which continues to decline.” – Alasdair Macleod, Goldmoney.com

Institutional investors have maybe 0.5% of their assets invested in the precious metals sector. At the peak of the gold/silver in 1980 institutions had 5% invested in the precious metals sector. Since then that allocation has not been above 1%. Eventually a monster move is coming in silver and the mining stocks, though no one can say when it will occur.

The catalyst for the move will be large institutional and wealthy investors reallocating cash from the stock market in general into mining stocks. I believe Buffet was a harbinger of that even though he only bought a small amount of Barrick in relation to the size of Berkshire’s assets.

The overrbought condition that developed in July/early August is now neutral/oversold per the RSI and MACD indicators. Yesterday gold bounced off its 50 day moving average. Technically gold (and silver) is set up for a bullish move.

In addition, based on the data from India which reflects gold import activity (from John Brimelow’s Gold Jottings report), India started importing dore bars Monday and soon will be importing kilo bars. India has been absent for the last three weeks.

September through December is the seasonal period when India imports its most gold on an annual basis. This will have the  effect of exacerbating the already tight supply of gold available for delivery to buyers who demand actual physical delivery rather than leaving purchased gold in bank custodial vaults.  A groomsman in India dare not show up to a wedding with just a receipt for gold purchased to give to his bride.

Chris Powell (GATA.org) also pointed out several more factors that indicate the potential for a monster move in the precious metals and mining stocks:

— the smashdowns don’t work as they used to, seldom more than a couple of days;

— volatility in the metals has exploded;

— the geopolitical situation is growing more strained, not less;

— The U.S. and European economies are wrecks – the massive money printing directed at the deferral of financial and economic collapse functions as rocket fuel for gold/silver.

Furthermore, Chris points to the obvious indications that the supply of physical gold that can be delivered to entitled buyers on the Comex and the LBMA is exceptionally tight:

— The mechanics of the market: the rise and fall of EFPs, the sudden conversion of the Comex to physical off-take, the panicked dance between the LBMA and the Comex, the huge expansion of the Comex’s approved bar list, the failure of the Comex open interest to contract on falling prices, all of which suggest big underlying changes and increasingly tight supplies – whether one disagree’s or not with Andrew Maguire, he has been shouting for months that it’s impossible to get prompt delivery of metal in the LBMA system and is consistent with the unusual behavior exhibited by the CME/Comex and LBMA since April;

Finally, per the research of GATA consultant, Robert Lambourne, BIS intervention in the gold market on behalf of its member Central Banks is at its highest level in years and perhaps its highest level in history for the second month in a row (July and August).  Historically BIS gold swap activity has been suspiciously correlate with visible bullion bank efforts to prevent the price of gold from rising.

While the gold price was unable to sustain its move over $2,000 – for now – the overt price intervention efforts over the last 4 weeks has had, at best, limited success.  At some point this effort will fail.

Though it can’t be proved without access to the BIS records – and the BIS refuses to comment on its gold swap activities (as does the Fed) – it is thought by many who have evaluated the swap activity that the BIS uses this operation to make physical gold bars available to Central Banks for market interventions and delivery obligations.  Likely it is not a coincidence that for most of August both the a.m. and p.m. London price fixings have featured heavy offerings almost daily  which result in downward pricing pressure on gold.

All of the above factors lead me to conclude that there’s a high probability that the precious metals sector will stage a big move between now and the end of the year.

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A portion of the commentary above is from  the latest issue of the Mining Stock Journal. You can learn more about  this newsletter by following this link:  Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Gold, Silver And Mining Stocks Are Just Getting Started

Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

Eventually – and I want to emphasize “eventually” – the precious metals sector will do what the tech sector/Nasdaq is doing right now. That is to say will undergo a blow-off top that will take gold, silver and mining stocks to all-time highs.  The precious metals sector is far from this attribute of a blow-off top.  Any MSM financial media commentator who proclaims that the sector is in a bubble is either tragically ignorant or regurgitating official propaganda – probably a combination of both in every instance.

Bill Powers of Mining Stock Education and I chatted about the precious metals sector and why it’s still extraordinarily undervalued. I also suggest a couple of stocks that I particularly like right now:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

New Mining Stock Journal Subscriber: “This is a lot of value for $20 a month. Thank you so much!” – Jorgen

Gold, Silver And Mining Stocks Smell The Demise Of The Dollar

Financial Markets, Gold, Market Manipulation, Precious Metals, , , , ,

The news that Warren Buffet took a stake in Barrick Gold stimulated animal spirits in the precious sector on Monday. To be sure, this was a factor in the move on Monday. However the precious metals are starting to price in the next round of money printing by the Fed and the coming avalanche of new Treasury bonds, both of which will be considerable in quantity and serve to further devalue the U.S. dollar. On that note, the US dollar index tumbled below 93 on Monday. In addition, per the TIC report which shows the flow of international capital into and out of U.S. securities, foreign entities led by China dumped $20.6 billion worth of Treasury securities in June.

The message is clear: the Fed will need to be a large buyer of the upcoming Treasury bond issuance and the precious metals sector loves the smell of this.

Chris (Arcadia Economics) and I discuss last week’s one-day price pullback in the precious metals sector and factors that will drive gold, silver and the mining stocks up to levels that may even surprise jaded goldbugs:

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Several of my junior and larger cap stock ideas have had huge moves higher. I will be discussing what to do with these stocks in the next few issues of my Mining Stock Journal plus presenting any new ideas I uncover that have yet to be widely discovered. You can learn more about Investment Research Dynamic’s newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

The Precious Metals Bull Market Is Beginning To Rage

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

The precious metals and mining stocks have a long way to go before this secular bull market is over. My view is that it will culminate with a global monetary reset that will re-incorporate gold/silver into the monetary system. The dollar-based price of gold and silver will end up at multiples of their current prices.

Silver Doctor’s Paul Eberhart invited me back on to his podcast to discuss the big move in the precious metals market, including whether or not the current investor sentiment is overly euphoric, the degree to which the mainstream media spits out anti-gold propaganda, the U.S. dollar and the general economy/stock market/Tesla (Silver Doctors):

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Several of my junior and larger cap stock ideas have had huge moves higher. I will be discussing what to do with these stocks in the next few issues of my Mining Stock Journal plus presenting any new ideas I uncover that have yet to be widely discovered. You can learn more about Investment Research Dynamic’s newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

What’s Going On With Silver?

Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , ,

Chris Marcus wanted my opinion about whether or not a silver “smash” was coming:  “I would never want to be as dogmatic as saying ‘never’ because anything can happen with a banking [and financial markets] system as corrupt as the one in the U.S.”

But silver is historically cheap as an asset in relation to the universe of dollar-based financial assets and relative to the dollar-value of gold.  Until the global monetary system is reset, gold and silver are going much higher price in ALL fiat currencies. As silver moves higher, there will be even more aggressive attempts to control its rise and this will entail higher volatility – both up and down but mostly up.

Chris (Arcadia Economics) and I examine this topic in our latest podcast and I draw from 20 years of experience in the precious metals sector including a 4-year span in the early 2000’s when I traded silver futures almost around the clock:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Gold / Silver: Brief Pullback Then Higher

Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

The market will always from time-to-time remind us that nothing goes straight up in the stock market. The mining stocks, especially the riskiest juniors, have had huge run since mid-March. The HGNSI (Hulbert Gold Newsletter Sentiment Index) has been a remarkably reliable contrarian signal for mining stocks over the years. Sell/take profits when it moves above 60 and buy with both hands when it goes below 20.

The HGNSI has pushed up to 86% last week (86% of gold newsletters have buy recommendations). Mark Hulbert commented that “the HGNSI jumped today in concert with gold, and now stands at the 99.8th percentile of the distribution since 2000; the HGNSI’s current level represents extreme bullishness.” The latest reading (July 15th) is 76 – still too high to be aggressive with positioning.

A red flag for me is when a bullion bank like Goldman Sachs sticks a $2,000 price target on gold. Why $2,000? Why not $2,500? For me, the HGNSI and bullish price targets for gold from Wall Street banks after a big move has occurred already is a signal to take some profits or hedge my mining stock portfolio.

With the massive scale of fiat currency devaluation – aka money printing or “QE” – there’s an “invisible hand” of economics that seems to have, for now anyway, put a floor under the gold price. Add to that the enormous appetite for physical gold imports from India, which was the equivalent of waking up a starving elephant when quarantine restrictions were lifted, and any pullback for which I’m looking could be shallow and short-lived.

Chris Marcus (Arcadia Economics) and I discuss the gold market technicals. And I’ll go one up on Goldman and call for $2,000 gold before Labor Day:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

The Money Printing Road To Perdition – Got Gold?

Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

Where’s the “V?” – Obviously the Fed has injected monetary cocaine into the stock market to make it appear as if stocks are “discounting a “V” economic recovery.  But a “V” on Main Street is nowhere to be found (graphic is from Crescat Capital -the comment bubble is my edit):

The chart above plots the NY Fed’s weekly index of economic activity (red line) vs. the Bloomberg U.S. financial conditions index, which attempts to measure the relative strength of the bond, equity and money markets (white line). With the amount of money the Fed has injected into the financial system, it’s no surprise that the financial conditions index is soaring. However, as I’ve suggested in recent issues, this money is having little, if any, effect on real economic activity.

Compounding the insanity of the current market valuations is the fact that no one has any idea just how bad the economic damage has been from the shutdown of the economy and the virus crisis. We won’t know for several months the degree to which unemployment and overall economic activity will recover. Certainly this idea that there will be a full recovery by the end of the summer (per several White House officials) is completely foolish.

The economic numbers that appear positive are merely a “statistical” bounce attributable to the “re-opening” during May from the highly depressed state of the economy during the lock-down period. But household debt delinquencies – credit card, auto and mortgage – continue to rise, while there’s little evidence that the majority of those who lost their jobs will be re-employed any time soon, if ever.  What will be the effect on the economy when unemployment benefits expire for a large portion of those receiving them now and who can not find a job?

The Fed asserts that its money printing is necessary to restore economic health.  But this is poorly disguised Orwellian propaganda.  Most of the Fed’s money printing has been used to keep the Too Big To Fail banks from choking to death on subprime and non-performing “assets,” such as leveraged loans to the retail and oil sectors, CLO liabilities and counter-party exposure from OTC derivatives (credit default swaps, primarily).  The resumption of money printing in September 2019 is evidence of that assertion. The rest of the printed money is funding the enormous load of new Treasury issuance.

Gold hit a new eight-year high today. This comes interestingly on the heels of escalating tensions with China. Trump likely does not understand this, but China holds several aces up its sleeve which can be used to undermine the U.S. dollar and detonate the ticking time bombs embedded in the U.S. financial system.  The most notable wild card held by China is its increasing control over the global physical gold market.

In the context of these comments from a Vice Chairman at the China Securities Regulatory Commission (i.e. a CCP member), it’s quite possible that China is starting to flex its muscle slowly to reset the price of gold to more closely align the vast spread between the paper derivative gold price determined in London and NYC and a true “price discovered” price of gold that reflects the underlying supply/demand reality:

Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions.

“Such things have already happened to many Russian businesses and financial institutions. We have to make preparations early – real preparations, not just psychological preparations,” Fang said at a forum organised by Chinese media outlet Caixin.

Fang’s comment came at a time when Washington is pondering how far it should go to use the US dollar’s key role in international payment to punish Chinese individuals, companies and financial institutions for alleged involvement in issues such as Xinjiang and Hong Kong.  (Caixin Gloal, via Zerohedge)

I’m just speculating here,  but China may be starting to flex its muscle in the gold market. It’s a widely accepted proposition that China’s Central Bank holds many multiples of the amount of gold officially reported.

China is the world’s largest producer of gold and now its setting its sights on acquiring robust western hemisphere gold mines.  Two State-controlled Chinese mining companies have made three notable western gold mining company acquisitions this year: one with a mine in Canada (TMAC); one with a soon-producing gold mine in Columbia (Continental Gold); and one in Guyana (Toronto-based Guyana Goldfields).  All three mine properties host very high-grade gold resources.  China would not spend hundreds of millions to acquire high margin gold mines to sell the gold produced at a manipulated,  artificially low price of gold.

Beyond China’s “invisible hand,”  I don’t know how else to explain the strength in the gold price during a period of time – late 2019 through present – when China and India have largely been absent from the gold market based on import data, while at the same time the Comex paper gold open interest has declined over 40% since January.

Gold has been surprisingly strong this morning, hitting an eight-year high at $1785 (August gold basis). If August gold can jump over the $1788-1790 area, which has been defended vigorously by the paper gold slinging western bullion banks, the $1800 level may fall like Gaul…

Fact, Fiction And Fraud At The Comex

Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

“I think there will be a full monetary system reset after the world has had enough of Jay Powell and his digital printing press.”

The alleged gold flow into the Comex and amount of gold for which contract longs are taking “delivery” is at a historical extreme. I use “delivery” because “taking delivery” means being assigned an electronic warrant that records ownership transfer of a Comex registered bar presumably (but not guaranteed) to be sitting in a Comex-approved vault.  It  does not mean that the party taking delivery takes possession of  a physical bar.

Chris Marcus and I discuss the unusual activity at the Comex and the LBMA in the podcast below.  But first read this excellent article from Ronan Manly at Bullionstar.com, who dissects fact from fiction about the Comex vault and delivery reports:

However, given the opacity of the wholesale gold market and the unconvincing explanations from its fronting organizations the London Bullion Market Association (LBMA) and COMEX operator CME Group (e.g. closed refineries, grounded flights), those looking for a ‘Theory of Everything’ framework to connect all of the above have had to do so on their own.

While Bloomberg and Reuters are content with repeating spoon-fed handouts about all of the above – eating the breadcrumbs instead of following the trail – and between them have published at least 30 articles on the subject, thankfully there are many on the sidelines who are more inquiring and less gullible, hence the skepticism, speculation and debate.  “The Curious Case of Comex Gold Deliveries…”

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

Is A Run On Comex And London Gold & Silver Occurring?

Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

Indications of stress developing in the physical gold and silver markets of London and NYC were apparent last summer, well before anyone ever heard of the term “coronavirus.” The shortage of gold in NY that led to roll-out of the infamous “4G enhanced gold” contract that fractionalized LBMA gold bars for “delivery” on the Comex is just one of the “footprints” in the snow that lead us to this conclusion.

In addition, the big spread between spot gold and gold futures which persisted for several weeks and now has spread to the silver market reflects a large dislocation between the physical market and the paper derivatives market for silver.

Chris Marcus of Arcadia Economics and I discuss what appears to be a drain on the physical supply of gold and silver on the Comex and LBMA:

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You can learn more about  Investment Research Dynamics newsletters by following these links (note: a minimum subscription period beyond the 1st month is not required):  Short Seller’s Journal subscription information   –   Mining Stock Journal subscription information

Note:  I do not receive any promotion or sponsor payments in any form from the mining stock companies I present in my newsletter. Furthermore, I invest in many of the ideas personally or in my fund.

The Comex Has Big Problems

Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

An article from Bloomberg was published 2 days ago which alleged that “New York Gold Traders Drown in Glut…”  The Comex is now reporting there’s 26 million ozs of gold in Comex vaults, 17 million of which is in the “eligible” account.  This is up from 9 million total ozs at the end of March, 5.5 million of which was “eligible.”

I find it amusing that the mainstream media swallows the Comex data reports without fact-checking or insisting on an independent audit of the bars.   Ronan Manly of Bullionstar published a research piece in which he dug up a letter from the CME to the CFTC which stated that the CME believes the deliverable supply of “eligible” is 50% of the reported number.  That’s if we take the CME’s estimate prima facie.

The world was told 6 weeks ago that it was impossible to transport gold bars oversees and a scheme was rigged to make London gold (400 oz bars) available on a fractional basis to satisfy Comex deliveries at the option of the party taking delivery. But the bars were to remain in London. Suddenly the Comex “found” several million ozs of gold in its warehouse stock report. Bars that are unaccounted for and supposedly sitting in London vaults.

In all likelihood, the 17 million ozs of gold added to Comex vaults is a product of double-counting bars in London. I know many of those reading this might find this to be “conspiratorial,” but it’s been long acknowledged that the LBMA is running a fractional bullion system.

That said, assume the 26mm ozs of gold are real. Discount the 17mm “eligible” by the CME self-admitted discount factor of 50% and that leaves 17.5 million alleged gold ozs available for delivery.  But the gold contract open interest is 510,000 contracts, or 51 million ozs of paper gold. In relation to the 17 million ozs of gold that may be available for delivery, it’s highly misleading – and probably intentionally misleading – to call the supply of gold in NYC a “glut.”

Add to this deceptive Bloomberg article a report from Reuters that CME banks are pulling back from the Comex.  To begin with, HSBC attributed its $200 million dollar hit from gold trading to its London operations. The article also claims that 400 tonnes of gold have been shipped to NYC despite the narrative in April that gold couldn’t be moved from London to NY.  I surmise the “movement” of gold is digital-based.  As Bill Murphy commented, “we were told there’s trouble getting gold to NY – now they say there’s too much…Don’t believe any of it – they are scared to death about something.”

There’s a big problem at the Comex and that’s why the bullion banks are pulling away from it.  ScotiaMocatta is closing its precious metals operations and taking a loss to do it. Mocatta Bullion has been in operation since 1684 and was one of the largest operators on the Comex in gold and silver.

I’m not sure it’s even credible to say the bullion banks are pulling away from the Comex. The gold open interest was over 800,000 contracts (80 million ozs of gold) earlier this year. The banks have been working hard to reduce their open interest and short exposure – that much is true. But historically the open interest on the Comex for gold has ranged between 200,000 and 400,000 contracts. In that context how can a drop in o/i to 500k contracts be considered “pulling back?”

Since late August 2019, the activity on the Comex has been what many of us consider strange, if not engulfed with the scent of desperation. The fractional 400 oz gold contract and the two articles discussed above are a few examples out of many. Recall the CME introduced the “pledged gold” category back in October 2019. “Pledge gold” is just another form paper derivative gold. HSBC jumped on that designation immediately. We find out a few months later that HSBC had impaled itself on its gold trading and custodial activities and required the “pledge gold” designation in order to meet the collateral requirements as a clearing member of the CME.

As with the fiat currency fractional banking  monetary system, the bullion market in London and NYC has become a fractionalized system of derivatives and other forms of paper gold (leases, hypothecation, lending) backed by a tiny amount of real physical gold relative to the amount of paper claims.  This fractional bullion system is crumbling at its core and the propagandist articles like the ones above being disseminated through the mainstream media are a reflection that something is seriously wrong at the Comex.

If you don’t have possession of the gold you think you own, you do not own it.  The world will eventually understand why that assertion is true…