So that was fun, huh? – 4/28/13
“An absolutely amazing flood of anti-gold vitriol has been spewing forth in the media in recent days, in many cases penned by people who demonstrably know absolutely nothing about gold, mostly Keynesian gold haters from the statolatry faction. Not one of them ever told people to buy gold at the lows of course, or at any point on the way up. But they sure all just know now that the bull market is over!” — Peter Tenebrarum
Dear All,
On April 12th and 15th, in 10 hours and 20 minutes of trading, more gold was sold under futures contracts on the New York Comex than is mined globally in a year (precisely, 1.2 years). The unprecedented smash of precious metals on Friday, April 12th was precipitated by a 1.25 ton sell order at the opening of Comex trade. No rational entity seeking to achieve a favorable selling price places an order to sell 1.25 tons of gold in one instant. It is the footprint of an operation to manufacture a lower price and to trigger sell-stops below the market in order to send price spiraling. 500 tons of gold were sold on the Comex in one day. As a point of reference, consider that under the 1999 Washington Agreement, 14 European countries pledged that their aggregate sales of gold would not exceed 400 tons in any single year nor 2,000 tons over the succeeding 5-year period. 125% of the one year and 25% of the 5-year maximums were sold on the Comex in a single day.
The smash of gold and silver prices set the physical market on fire, unleashing massive demand and depletion of dealer inventories. The U.S. mint has run out of .10 ounce coins. There were widespread reports all week of bullion dealers worldwide being cleaned out of inventory and turning business away. In Japan, where the central bank's overt devaluation policy has created a run out of the yen to hard assets, reported premiums paid this week for minted gold coins brought the equivalent price to in excess of $1,900 per ounce. For silver coins for immediate delivery buyers are paying $29 per ounce, a $5. premium to the paper price. As I stated in my UPDATE last Friday, “The current gold price is untenable. Higher prices are coming, and quickly.” Gold has since bounced $60 and has recovered about 50% of the total $250. plunge. As the paper price of gold was freefalling, holders of physical gold ultimately experienced little or no reduction in the market price of their real gold, with premiums for for physical metal expanding as the paper price dropped and demand surged. Eventually this physical demand will overtake the paper price-setting mechanism. We aren't there yet and the waiting is no fun, but the physical market will assert itself as the price discovery market. As Bill Fleckenstein put it this week, “In the end, the physical market will win out, but in the short run, the paper market has so much more volume and is so large that it is the tail that wags the dog.” Having experienced this nonsense for 14 years, I will remind you that we are winning the war. Gold began at $258 and this latest attack, although ferocious, is just one of many that investors in this bull market have had to endure over the years.
Gradually, the bifurcation between the paper and physical market pricing is creating awareness by market participants that all is not well with the gold held (or believed to be held) within the banking system. The default by Dutch bank ABM Amro on delivery of customer gold and the U.S. Federal Reserve's need to stretch out the return of Germany's custodial gold over 7 years are confirming suspicions that gold within the banking system has been over-hypothecated, resulting in multiple claims to the same gold.
On the possibility that the attack was merely a normal correction: Gold and the Eight Standard Deviation Move
”So Friday was a 4.88 standard deviation move in the price of gold. For simplicity sake let’s call it a five standard deviation move. Statistically we get a five standard deviation move approximately once every 4,776 years. So we should not expect another move like this out of the price of gold until May 17, 6789. That is the first (and probably the last) time I will every use the number 6789 as a year.”
Following the Boston Marathon bombing, as President Obama was asserting that “Americans refuse to be terrorized,” police and federal agents proceeded to do precisely that by creating a scene even more ghastly and frightening than the horror of the deaths and injury to innocent life at the Marathon. But there it was – a police and federal operation so vile and excessive that a wide area of the Boston metro area was effectively under martial law with a show of heavy armored vehicles, government agents brandishing high-tech weaponry and of course, the requisite intimidation costumes generally favored by boys between the ages of seven and twelve. Without cause and without warrants government bullies violated the U.S. Constitution's Fourth Amendment and were videoed illegally ordering people out of their homes. The population, which would have been quite safe with a simple, low-tech firearm in each home and absolutely no law enforcement presence whatsoever was instead under siege by government ruffians barking orders while looking for one 19 year old kid (The kid by the way, was unarmed and wounded. Initial reports stated that the suspect, Tsarnaev opened fire at police; subsequent reports stated that his injuries were self-inflicted. The truth is he was shot by authorities.).
Residents likely thought this was all perfectly reasonable in the name of public safety. Then again, nearly one third of Americans stated they would agree to be subjected to vaginal and rectal exams by Transportation Safety Administration misfits if it would “make flying safer.” That it all appears to seem reasonable is precisely what makes it so disturbing to those who understand the effect that incremental stepped-up police action has on a dumbed-down populace. A compliant media offered its congratulations to the macho weapon-totters. The final abhorrence was footage of boobus massachusus cheering the announcement of the (sans Miranda) capture of the suspect with shouts and fist-pumping (“U-S-A!”…U-S-A!”) as though it were a football game. Brandon Smith — How The Boston Bombing Is Already Being Exploited To Introduce Tyranny
The Boston Marathon is run on Patriot's Day, which commemorates the commencement of the American Revolution with the Battles of Lexington and Concord. One wonders what the Minutemen might have thought of the prospect of such a spectacle 238 years hence, in which the citizenry would applaud — let alone tolerate — armed government bullying.
The trend…
Reuters: France plans currency swap line with China
On gold and silver…
A plethora of “analysts” are pronouncing the gold bull market over, which of course assures that it is not. Bull markets do not end with a whimper and without a speculative frenzy, a phase still in front of us. GoldSilver.com founder Mike Maloney was interviewed by Chris Martenson recently, a portion of which I append below. Among other things, Mike captures the essence of secular wave investing, and the requisite perspective for its profitable navigation. His insight is particularly applicable for staying the course with gold and silver mining equities, which exploded in price during the initial six years of the precious metals bull market and have lagged terribly for the past six. While the returns have been manically lumpy, notwithstanding their dissapointing returns for the latter half of the period, no asset class has performed better over those 12 years. They are today loathed, profoundly cheap and are to be bought aggressively.
“You do not want to stay in just one investment class your whole lifetime. But it is a very powerful tool to be able to measure these classes against each other and then jump from an over-valued asset class to an under-valued asset class at the appropriate time for the road to true wealth. And it only requires a few big decisions during your lifetime….If you are doing a Dow Gold ratio, you jump from being invested in paper assets like stocks and then back to gold for the long investment waves. I would say it is somewhere between 8 and 20 years you spend in an asset class, and you can do this with anything…It is a very powerful tool that I believe has a high degree of predictability and safety to it, if you do not let the short-term noise flush you out….Right now we are in consolidation. Gold has been chopping sideways for 19 months now, and it has worn people out. But basically gold is up. It is not up from 19 months ago when it was nearing $2,000, but it sure is up over the last decade. So I do not let the short-term noise affect me now that I know that we have not reached the point where the price of gold equals the points on the Dow. Right now gold’s value is one-ninth of the Dow, and so I know that it needs to rise by a factor of 18 against stocks before I need to get worried and start watching gold.”
One of the more thoughtful pieces I've come across in recent days are Peter Tenebrarum's Gold -What We Like and What We Don't Like, and do read Matt Taibbi's latest: RollingStone: Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
“The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix.”
My best,
Jeff
2013-04-28 17:49:24
Source: http://goldmap.typepad.com/goldmap/2013/04/draft-1.html
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