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Stormdancer
07-17-2010, 12:15 PM
Harvey's (http://harveyorgan.blogspot.com/) post is a bit later than he thought it would be and I'm going to have to catch it in the morning. I tried to stay up for it but it's been a rather hectic week full of the unexpected and I'm done in.

But....923,430 ounces of eligible silver disappeared from Brinks and HSBC (http://www.cmegroup.com/trading/energy/nymex-daily-reports.html)yesterday....I reckon Harvey will have some interesting insight into that. See you in the morning!



Edit: to get the inventory spreadsheet scroll to the bottom of the NYMEX page and click on the "Silver Stocks" link just under the "Warehouse and Depository Stocks" heading....

Edit II: The numbers are actually from Thursday....Fridays stocks TBA Monday (I think :))

Edit III: no movement in gold stocks to speak of...127 ounces removed from eligible...a spit in the ocean.

JROCPW
07-17-2010, 03:56 PM
Whoa. How many ozs have been moved in the past couple weeks, and where the heck are they going? It seems to easy to spot-but is this the squeeze?

About AG
07-17-2010, 06:37 PM
Whoa. How many ozs have been moved in the past couple weeks, and where the heck are they going? It seems to easy to spot-but is this the squeeze?

FWIW, 1Moz went into SLV this past week (versus 800,000 oz that went out the week before). I'm not seeing a squeeze yet, but these could potentially be signs of one. Harvey Organ certainly seems to think so ("A default at the silver comex looks eminent.").

Stormdancer
07-18-2010, 04:14 AM
Whoa. How many ozs have been moved in the past couple weeks, and where the heck are they going? It seems to easy to spot-but is this the squeeze?

I don't have exact figures...there have been some large deposits...one I recall was 600,000 ounces, but the total withdrawn just this week is close to 2 million ounces. If you trust the numbers overall....and I don't. They're the best we have, but that ain't sayin' a lot.

The thing that makes me suspicious is that there have been frequent unexplained "adjustments" to inventories the past few weeks involving hundreds of thousands of ounces. Not to mention large movements of silver from the eligible category to the registered category (counterintuitive direction in a delivery month) which are probably explainable as leases to the bullion banks. If they are leases...then someone will have to come up with that much physical silver to pay off the leases ...probably next month.

This month (silver delivery month) was disappointing in the number of contracts standing for delivery. Early on it appeared that 23 million ounces might stand, but we ended up with only 13 million or so, so there wasn't as much delivery pressure as I'd hoped to see.

All eyes on September now :). And if those unexplained movements from eligible to registered this month really were leases that must be paid back in August...September could be a scramble for physical.

August is a gold delivery month so silver will not be in the limelight quite as much while gold is in focus. But I personally believe that any break in the PM market will happen in silver first. It appears to me that the physical market for silver is tighter than gold's.

Interesting little anecdotal account from Harvey's latest (http://harveyorgan.blogspot.com/):


From Ed Steer;

While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our 'Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.

That may or may not be signs of a more serious shortage....as always, something to keep an eye on, but not yet enough to draw any firm conclusions from. If Kitco is out of silver to deliver in Canada (and internationally) and the Canadian Mint is the reason....well....that means customers aren't selling back to Kitco and the mint is dry. It remains to be seen whether this is a blip or a trend.

Carpenter
07-18-2010, 07:05 AM
Only heresay, from one of my junk silver dealers.
He claims the refiners are running overtime.
Do the refiners post numbers?

Stormdancer
07-18-2010, 07:26 AM
Only heresay, from one of my junk silver dealers.
He claims the refiners are running overtime.
Do the refiners post numbers?

If they do, I don't know where to find them. I'd love to have access to such info. In the mean time, I just keep my ears open and hope that enough hearsay surfaces that all points the same direction. It's hard to judge how truthful any hearsay is, but enough of it that all lines up together can become compelling.

That's also one reason I don't trust the figures coming out of COMEX re: stocks and movements.....they have plenty of motivation to obfuscate and outright lie about the true picture. Too much anecdotal evidence is almost as damaging as a smoking gun.

So, I keep sniffing the trail like an old hound dog, losing the trail more often than not, but can't give up until that old 'coon is stuck up a tree ....it's in my blood :).

My sense of smell is getting better with all the practice though :D

wrdavisjr56
07-18-2010, 07:32 AM
I question the drop in the Silver deliveries side. I to thought it would be higher. Could it have been industrial buyers backing away with the slowdown?

Carpenter
07-18-2010, 07:47 AM
Ed Steers comment on the silver delivery delay from the Canadian Mint was interesting.
Is a delay a shortage?

Stormdancer
07-18-2010, 07:54 AM
I question the drop in the Silver deliveries side. I to thought it would be higher. Could it have been industrial buyers backing away with the slowdown?

There are several possible reasons and yours is one of them.

1. Industrial buyers (or investors for that matter) who had contracts and could have stood for delivery decided to cash out or roll over because they believed they could get silver cheaper in the future.

2. JP Morgan and HSBC offered cash incentives to contract holders over and above the value of the contract (or possibly some form of arm twisting if they had any leverage) to discourage standing for delivery. (I have no evidence this happened...but rumours have been rife for months. Other persistent rumours involve long delayed deliveries that weren't resolved until the lawyers got involved)

The fascinating thing about this possibility is that if it were true, then silver is in reality in deep backwardation, but unreflected in the futures market. Fekete has been warning about backwardation and what it means for years.

3. COMEX lying through their teeth in their released data. I am personally convinced there's a lot of lying going on in the data.... I'm skeptical they could get away with lying about how many contracts are standing for delivery...but anything is possible with that lot.

4. The most likely answer in my book is "Some combination of the above."

Carpenter
07-18-2010, 08:06 AM
I question the drop in the Silver deliveries side. I to thought it would be higher. Could it have been industrial buyers backing away with the slowdown?

Loss of industrial demand has been offset by a huge increase in investment demand as well as three consecutive year over year declines in scrap supply.

Something else perhaps?

The Silver Institute.

Stormdancer
07-18-2010, 08:10 AM
Ed Steers comment on the silver delivery delay from the Canadian Mint was interesting.
Is a delay a shortage?

Maybe. Time will tell. It could be no more than a production bottleneck with demand outstripping ability to manufacture blanks and stamp coins. When 1000oz bars become unavailable (or even hard to get) we'll know it's a true shortage.

That's why I'm so focused on COMEX. Evidence that people are trying to get 1000oz bars and can't is going to be the proof I think.

The other side of that is the fact that Canadians aren't selling much back to Kitco either...strong hands?

Silvery Moon
07-18-2010, 11:02 AM
Maybe. Time will tell. It could be no more than a production bottleneck with demand outstripping ability to manufacture blanks and stamp coins. When 1000oz bars become unavailable (or even hard to get) we'll know it's a true shortage.

That's why I'm so focused on COMEX. Evidence that people are trying to get 1000oz bars and can't is going to be the proof I think.

The other side of that is the fact that Canadians aren't selling much back to Kitco either...strong hands?

Well since last week, Perth Mint have listed 1000oz bars as 'not sold'. Thats a first for them in the past three years I know of. May be something to do with their retail shop policies. I havent spoken to anyone at PM to confirm why they are no longer selling the big lumps.

http://www.perthmint.com.au/metalPrices.aspx

Stormdancer
07-18-2010, 11:26 AM
I went back and dug up the numbers for how much silver entered/left the customer inventory at COMEX this week:

Friday (9 July ....reported on Monday the 12th): -258,776

Monday: -196,148 oz

Tuesday: -300,001 oz

Wednesday: -471,597 oz

Thursday: -923,430 oz

So...every day this week saw net withdrawals....no deposits. Net loss for the week was two million, one hundred forty-nine thousand, nine hundred fifty-two ounces :)

2,149,952 ounces fled the COMEX warehouses. If that rate were maintained all eligible silver would be removed within 28 weeks.

Now I'm going to have to dig up last week's numbers....got me curious :)

...I thought a 600,000 oz deposit was stuck in there somewhere this week....must have been last week.

Stormdancer
07-18-2010, 11:33 AM
Well since last week, Perth Mint have listed 1000oz bars as 'not sold'. Thats a first for them in the past three years I know of. May be something to do with their retail shop policies. I havent spoken to anyone at PM to confirm why they are no longer selling the big lumps.

http://www.perthmint.com.au/metalPrices.aspx

Do you know if they've ever sold 1000 ounce bars from that page or has that always been "not sold"?

I also notice they've got 250 oz bars listed as "not sold"....were those on offer when you first checked?

Thanks for the info in any case...got my bloodhound nose quivering :)

Stormdancer
07-18-2010, 12:07 PM
I went back and dug up the numbers for how much silver entered/left the customer inventory at COMEX this week:


...2,149,952 ounces fled the COMEX warehouses. If that rate were maintained all eligible silver would be removed within 28 weeks.

For the week of July 5th-9th (I think we were a day short due to the 4th of July Holiday)

Monday: -100,724

Tuesday: +/- 0

Wednesday: +602,288

Thursday: -400,279

for a net gain of 101,285 ounces. Subtracting that from this week's total gives a net loss for the two week period of

-2,048,667 ounces

I'm going to try to track this a little closer from now on...

97guns
07-18-2010, 01:42 PM
I'm going to try to track this a little closer from now on...


THAT WOULD BE AWESOME, THANKS for the effort.

wrdavisjr56
07-18-2010, 02:50 PM
Interesting about the Perth. I checked our US seller AMPE-X their largest bar is the "Asarco" 975.55oz bar. Comex Deliverable but only one is available. Several other smaller bars listed as these are single bar sales as well. I'm sure they would post more for sale if these bars were sold? I just checked Kitco's selling index page. They list 1000oz bars available (phone order only) but what is really noticable is the huge drop in the amount of other size Silver rounds and bars for sale outside of their own brand. Maybe this has been the norm. I had not checked this page for over a month. Plenty of gold though. :p

07Silverado
07-18-2010, 02:58 PM
Tulving is sold out of 1000 oz. bars (http://www.tulving.com/goldbull.html).

tcg1022
07-18-2010, 03:06 PM
I dunno if it makes any since, cents or sense but with all the investor demand perhaps alot of the 1000 oz bars ahave been melted to make smaller bars and rounds over the last 12-18 months. Perhaps its finally starting to showup. I dunno just a thought fwiw.

silvereye
07-18-2010, 04:57 PM
This may explain the difficulty a cancer patient had in getting her silver from Scotia Bank.

http://www.theglobeandmail.com/news/national/christie-blatchford/an-unkind-complicatedness/article1643419/

as highlighted by Gata.org.

SE

About AG
07-18-2010, 08:51 PM
Tulving is sold out of 1000 oz. bars.

And has been for quite a while; I believe he hasn't had any available since he added them back to the list perhaps 3-6 months ago. I don't think he is actively seeking to get them (I.E. via COMEX), but will buy them from individuals.

Blagio
07-18-2010, 09:16 PM
All this paper shuffling has my head spinning. What I want to know is, registered or unregistered, how much silver does the COMEX have and how much is scheduled (demanded) by those that are requesting their metal. Its simple math that a second grader can figure out.

Can the COMEX live up to their obligations? I think we all know the answer to that.

B

Carpenter
07-18-2010, 09:25 PM
This may explain the difficulty a cancer patient had in getting her silver from Scotia Bank.

http://www.theglobeandmail.com/news/national/christie-blatchford/an-unkind-complicatedness/article1643419/

as highlighted by Gata.org.

SE

Dispicable.

Ms Patel, and her son displayed a lot more class than I could have mustered under those circumstances.

Stormdancer
07-19-2010, 04:50 AM
All this paper shuffling has my head spinning. What I want to know is, registered or unregistered, how much silver does the COMEX have and how much is scheduled (demanded) by those that are requesting their metal. Its simple math that a second grader can figure out.

Can the COMEX live up to their obligations? I think we all know the answer to that.

B

You would probably enjoy following Harvey Organ regularly then. That's pretty much the info he's trying to track...how much silver COMEX has...and how much is going out with each options/delivery cycle.


The current numbers as of Thursday the 15th (Reported Friday at 1:30pm eastern) stand at:

Registered silver: 52,451,491

Eligible silver: 58,440,488

Total: 110,891,979

According to Harvey's latest info there are 707 5000oz silver contracts yet to be delivered this month for a total of 3.5 million ounces plus another 200,000 ounces yet to be delivered on options from June.

9.3 million ounces of silver have been delivered already this month...so the grand total for the month should end up around 13 million ounces.



For those that haven't been exposed to the definitions of "registered" and "eligible":

Registered silver is silver that meets London Good Delivery standards and is assumed to be available to satisfy delivery requirements. It's generally assumed to be owned by the bullion banks.

Eligible silver is silver that meets London Good Delivery standards but it not registered for delivery. It is generally assumed to be owned by private investors and is not assumed to be available for delivery.

But it's more complex than that because neither of those assumptions is true in all cases.

I've been focusing on the "eligible" category because these large scale withdrawals from that category are unusual, and expensive for those that are taking their silver out of COMEX storage. There must be a reason the owners of this silver are willing to pay the price for removing it from the COMEX warehouses.

The owners of physical silver who are removing their stash from the COMEX warehouses must bear significant costs to do so. They have to pay for armored trucks, delivery fees, etc. plus find a new, safe place to store it. Once they remove their silver from the London Good Delivery system and break the chain of custody, they will have to have the silver assayed to verify purity and ensure that the bars were not tampered with before they can put it back into a COMEX warehouse for sale.

Right now, the best explanation I can see for why these silver owners would be willing to pay for all those expenses is trust...or, more specifically, lack of trust.

The only reason I would pay COMEX a monthly fee to keep my silver would be because I felt it was safe there, or I expected to sell it and wanted to keep it within the COMEX system until it was sold to avoid those assay fees.

The only reason I can think of that would make me remove it would be that I no longer felt it was safe there.

Eligible silver could quickly be converted to the registered category (accounting change) and used for deliveries, and because of that, large scale withdrawals still serve to reduce the total amount of silver potentially available for deliveries.

hope that filled in some blanks for some....

Stormdancer
07-19-2010, 05:53 AM
This may explain the difficulty a cancer patient had in getting her silver from Scotia Bank.

http://www.theglobeandmail.com/news/national/christie-blatchford/an-unkind-complicatedness/article1643419/

as highlighted by Gata.org.

SE

That's exactly the type of rumours that have been persistently floating around for months now. Stonewalling, inappropriate demands for "reasons", unreasonable restrictions on where silver can be picked up...just general resistance to delivering anything at all.

This story sure highlights the cruelty they're willing to entertain in pursuit of their goals.....sheesh.

I bet this lady is glad she didn't wait for her estate to settle this, because they probably wouldn't have been able to. They'd most likely have been forced to just sell the certificate rather than endure the legal cost of forcing the bank to redeem it. At least her heirs will get real silver this way.

Gunslingerdoc
07-19-2010, 08:52 AM
Appalling story! I was gunna buy a few of their rounds since they look cool but not now! Infact I'll send them an email telling them so and why. This story is one of those u wish was video'd and it could go viral...the nerve of the bastards! I will feel less bad when banksters hang themselves or jump out of windows!

Rant done!

We need to graph the physical ag supply vs paper 'supply' and see where that takes us....this relationship and it's trend will foreshadow the bomb blowing up, IMO

Stormdancer
07-19-2010, 09:04 AM
Appalling story! I was gunna buy a few of their rounds since they look cool but not now! Infact I'll send them an email telling them so and why. This story is one of those u wish was video'd and it could go viral...the nerve of the bastards! I will feel less bad when banksters hang themselves or jump out of windows!

Rant done!

We need to graph the physical ag supply vs paper 'supply' and see where that takes us....this relationship and it's trend will foreshadow the bomb blowing up, IMO

I'm going to start saving a copy of the NYMEX daily report from now on. It appears there isn't an archive of them available.

Apparently Adrian Douglas has been doing just that for awhile. I was googling around for anecdotes related to silver delivery delays and found this:

COMEX INVENTORY DATA REVEAL AN
ALARMING TREND - February 25th, 2010
By Adrian Douglas (https://marketforceanalysis.com/index_assets/COMEX%20Inventory%20Shows%20Alarming%20Trend.pdf)

I know I've seen total COMEX inventories showing silver stocks in excess of 135 million ounces. But I can't prove it ...and I can't recall if that was in 2008 or 2009. Right now inventories are in the 110 million ounce range. Anyway....gotta start saving the data myself if I'm not going to end up in the same situation next year.

That Douglas article is a pretty good intro into understanding "eligible" and "registered" silver as well for those interested.

Silvery Moon
07-19-2010, 10:29 AM
Do you know if they've ever sold 1000 ounce bars from that page or has that always been "not sold"?

I also notice they've got 250 oz bars listed as "not sold"....were those on offer when you first checked?

Thanks for the info in any case...got my bloodhound nose quivering :)

hi SD yes 1k bars were listed on that page for at least the past three years, until last week. I check prices for various items there several times a week. It is a little curious to see 'not sold', as there was, without exception, always a price before.

In the same time frame, ie three years, the 250 oz bars were always 'not sold'. The 50's went from a price to 'not sold' about 18 months ago. The PM definitely stopped making 50s.

The 1k bars are from London in any case, not made in Perth. They are shipped in once or twice a month.

You will see on the PM webpage various descriptions for other items; 'subject to availability' or 'temporarily unavailable'. However, 'not sold' appears to mean Perth Mint have withdrawn that product line altogether. If that is the case, silver is no longer available in large quantities to PM retail customers.

http://www.perthmint.com.au/metalPrices.aspx

Stormdancer
07-19-2010, 11:37 AM
hi SD yes 1k bars were listed on that page for at least the past three years, until last week. I check prices for various items there several times a week. It is a little curious to see 'not sold', as there was, without exception, always a price before.

In the same time frame, ie three years, the 250 oz bars were always 'not sold'. The 50's went from a price to 'not sold' about 18 months ago. The PM definitely stopped making 50s.

The 1k bars are from London in any case, not made in Perth. They are shipped in once or twice a month.

You will see on the PM webpage various descriptions for other items; 'subject to availability' or 'temporarily unavailable'. However, 'not sold' appears to mean Perth Mint have withdrawn that product line altogether. If that is the case, silver is no longer available in large quantities to PM retail customers.

http://www.perthmint.com.au/metalPrices.aspx

Thanks for that....and thanks to everyone else who has dug up evidence from other outlets as well. Not sure what to make of the info yet....but certainly glad to be able to add it to the reservior ...and keep an eye on it.

Blake Mitchell
07-19-2010, 09:22 PM
Right now, the best explanation I can see for why these silver owners would be willing to pay for all those expenses is trust...or, more specifically, lack of trust.

The only reason I would pay COMEX a monthly fee to keep my silver would be because I felt it was safe there, or I expected to sell it and wanted to keep it within the COMEX system until it was sold to avoid those assay fees.

The only reason I can think of that would make me remove it would be that I no longer felt it was safe there.

You keep using hyperbolic expressions like “the best explanation,” and “the only reason” when you haven’t mentioned an obvious reason, CONSUMPTION. Silver is withdrawn and consumed. All that solder and electronic micro connective tips (as well as millions of other things) are partially made from silver. It’s called industrial demand.

People who know what they’re talking about don’t have to use exaggeration and hyperbole to get their point across.

Carpenter
07-19-2010, 10:11 PM
You keep using hyperbolic expressions like “the best explanation,” and “the only reason” when you haven’t mentioned an obvious reason, CONSUMPTION. All that solder and electronic micro connective tips (as well as millions of other things) are partially made from silver. It’s called industrial demand.

People who know what they’re talking about don’t have to use exaggeration and hyperbole to get their point across.

Organ, Steers, Butler, Hommel, along with Stormdancer and others that post here refuse to take things at face value.
They will however be relieved to discover all of their research done in an attempt to pull back the shroud of secrecy at the Comex has been a waste of time.

While you're at it contact Gata, you can set them straight as well:rolleyes:

justthinkin
07-19-2010, 10:57 PM
Is that you Jon posting under the name carpenter? Sounds so much like the nadler style

JROCPW
07-20-2010, 12:34 AM
^P'raps he is simply expressing the idea that wishful thinking is pointless, and COMEX shortage will NEVER happen, and that TPTB are what they are for a reason...they are powerful and know how to keep it that way...

If he was, there is plenty of history to back him up. Did the Hunt Bros bust the COMEX...? The rules were changed in the middle of the game.

If Carpenter was Nadler, I'd have to go and read some of Nadler's writings. Not everything is black and white or easily pinned down.

Damn, now I'm thinking. Like the song "What if God was one of us?"-what if Nadler was one of us? What if Ron Paul, or Marc Faber, or Timothy Geithner, or Ben Bernanke, or hell-Alan Greenspan! Cracking up over here about the possibilities.

Stormdancer
07-20-2010, 02:05 AM
You keep using hyperbolic expressions like “the best explanation,” and “the only reason” when you haven’t mentioned an obvious reason, CONSUMPTION. Silver is withdrawn and consumed. All that solder and electronic micro connective tips (as well as millions of other things) are partially made from silver. It’s called industrial demand.

People who know what they’re talking about don’t have to use exaggeration and hyperbole to get their point across.

If consumption is the reason, then why haven't we seen withdrawals at these levels before the last few months? You reckon industrial consumption has made some kind of dramatic spike with the economy falling off a cliff? :) Hey....I guess it's a perspective....but I don't buy it due to the unusual volumes.

As far as the expressions I use, and that you took completely out of their context by eliminating half of each, are intended to convey the possibility that there may be reasons that I don't know about. Which I think is probably quite clear to anyone who is not trying to deliberately twist what I said. Adios :)

Carpenter
07-20-2010, 06:34 AM
Is that you Jon posting under the name carpenter? Sounds so much like the nadler style

LOL.

Yeah,........ in Bizzaro world.

BuyLowSellHigh
07-20-2010, 09:51 AM
Comex shortages dont bother me, you can always dig up more dirt and yank some silver from it and form new Comex bars, it's called mining

Stormdancer
07-20-2010, 11:03 AM
This may explain the difficulty a cancer patient had in getting her silver from Scotia Bank.

http://www.theglobeandmail.com/news/national/christie-blatchford/an-unkind-complicatedness/article1643419/

as highlighted by Gata.org.

SE

cross posting from another thread...relevant to the discussion of potential shortages:

Here's a Kingworld interview with Adrian Douglas, Harvey Organ and Lenny Organ detailing previous storage and delivery issues with Scotia Mocatta (Scotia Bank):

Adrian, Harvey and Lenny (http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/4/7_Andrew_Maguire_%26_Adrian_Douglas.html)

For those that don't have time for the 20 minute audio interview, three instances of fraudulent activity were outlined. Two involving Scotia Mocatta (same outfit that gave this lady such a cruel runaround) and one involving a lawsuit against Morgan Stanley in 2005 which was subsequently settled in 2007.

The first instance involved Lenny Organ insisting on laying eyes on the silver supposedly being held in Scotia Mocatta's vaults. After some wrangling the Organ's broker got himself and Lenny into the vault on September 3rd, 2008 and the family's silver was not there.

The silver was purchased on COMEX and delivery taken, arrangements made to ship the silver to Mocatta's vault and assurances given that all that had taken place. Storage fees had been charged.

After insisting that the family's silver be placed in the vault immediately the Organs were informed that there would be more fees to get it there, higher insurance for keeping it there and higher storage fees...when supposedly all those fees had been paid in the first place.

Harvey and Lenny said "I don't care...get it here!" and after 6 or 8 weeks they finally got their silver.

A second instance involves Harvey Organ receiving a call from Stephan Spicer, President of Central Fund of Canada who was in contact with the (unnamed) Senior Vice President of a Canadian bank, who tried to take posession of 15,000 ounces of silver and discovered that it wasn't there. Spicer suggested the bank Vice President contact Harvey Organ himself. Long story short, the bank Vice President did get his silver six or eight weeks later but only after involving lawyers and the silver had to be flown in from Hong Kong!??

Both instances were shared with the CFTC by Harvey Organ (including lawyer's phone numbers...etc...and Harvey encouraged the CFTC to call the bank Vice President...they never did.)

The third instance involved Morgan Stanley selling investors silver, charging them storage on the silver, but never purchasing a single ounce...news story from Reuters here:

Morgan Stanley to settle class-action suit (http://www.reuters.com/article/idUSN1228014520070612)

If a bank Vice President isn't well enough connected to get 15,000 ounces of silver without involving lawyers...I wonder who can?

If Scotia Mocattta sold a billion dollars worth of PM certificates in 2008 alone (and they did), where is the metal? It wasn't there when Lenny Organ toured the vault in September and found roughly $100 million in metal. What about all the certificates sold before 2008? Where is that metal?

This lady's case is extreme in the sense of its cruelty, but quite normal in the other particulars evidently....and not just with Scotia Mocatta.

If I had PM certificates in an RRSP or some other form....I'd be figuring out how to get my grubby hands on the real thing...and quick.

The audio link is still worth listening to...there's a lot more in it besides what I summarised.

Add to this historical evidence of resistance this week's revelations of delivery delays from the Canadian Mint, and Kitco's depleted Canadian PM inventories...and things are looking pretty darned tight north of the border

Stormdancer
07-22-2010, 06:59 AM
Harvey has put out three posts on his blog since the last one mentioned here...and they've been staggering in their implications. I'll be back with a synopsis a bit later.

I've been keyed up about silver in September since early this month when the number of contracts standing this month proved disappointingly low...now I'm wondering if we'll make it to September without some fireworks.

Stormdancer
07-22-2010, 08:17 AM
Man...I hardly know where to start. Some background:

First...I am not an options expert. Several months ago I determined to educate myself about the options market to the extent that I could understand the forces at work during options expiry. I have never traded an option myself. What you're seeing here is an effort to share, not what I have learned..but what I am learning. Big difference, and one people should keep well in mind.

My intention is to follow next month's gold delivery cycle here very closely so that interested parties can learn the language/definitions, different days relevant to options/futures deliveries, and be up to speed for September's silver delivery cycle....which has the potential to be an exciting month.

Since I am not an expert I would appreciate it if anyone who sees me make a mistake, a misstatement or error of any kind would correct me as soon as they see it. I'm striving for accuracy but have unknowingly made false statements in the past which I caught myself later...nobody pulled me up on it. I went back and edited out the bad info...but I shouldn't have gotten away with it :). DYODD.

On with the show.....

Stormdancer
07-22-2010, 08:41 AM
THURSDAY, July 16th


As of Thursday the 15th there were 707 silver contracts left to be delivered...keep that number in mind.

Here's Harvey's report for Thursday the 15th (reported on Saturday the 17th)

The total no of contracts served upon the longs so far this month total 1869 contracts or 9.3 million oz.

The total remaining to be served total 707 contracts or 3.5 million oz.


The total no of oz of silver standing this delivery month of July is as follows:

9.3 million oz (already served) + 3.5 million (waiting to be served) + .2 million oz (options exercised in June)= 13.0 million oz.

Thursday was also the day that the incredible 923,430oz withdrawal from COMEX happened....the withdrawal mentioned in the first post of this thread.

If you haven't read Harvey's post on Thursday's action it's here...report dated Saturday, 17 July (http://harveyorgan.blogspot.com/2010_07_11_archive.html)

Canudigit
07-22-2010, 08:47 AM
I am looking forward to Stormdancer's insights on the action. I read harveyorgan missives daily but don't always get the significance of his observations. I know it's an important story, could impact prices bigtime...

Stormdancer
07-22-2010, 09:18 AM
FRIDAY, July 16th

The first strangeness showed up in the silver open interest numbers. Normally, open interest (the total number of silver futures contracts in existence for all months) tends to fall when silver prices take a dive. In this case, on a day when silver fell 23 cents, open interest rose by 297 contracts. There's not a lot you can read into this...it's just an oddity. What it may imply is that the longs had unusually strong hands. Normally longs would liquidate on down days and for whatever reason they didn't this time.

Inventory numbers

There was a net deposit to customer (eligible) inventory of 202,253 ounces. But that's not the whole story. There were actually 1.1 million ounces deposited, and 897,747 of those ounces were immediately withdrawn again, leaving a net deposit of 202,253 ounces.

Even though the eligible category saw a net gain, there was still a mass exodus of customer silver out of COMEX warehouses.

In Harvey's own words:

The CFTC has given an explanation on the second deposit from the customer inventory of *202,253oz

In reality, supposedly there was a deposit of 1.1 million oz into the customer inventory and then
a withdrawal from the customer of approx. 900,000 oz of silver leaving a net deposit of 202,253 oz

Delivery Notices

But the strangeness was just getting started. There was also a withdrawal from the "registered" (dealer) category. Nothing remarkable in itself...until you consider that there were NO delivery notices served. None of the silver withdrawn from the dealers went to satisfy any silver deliveries.

For whatever reason, 23,315 ounces of registered silver went *poof*.


Contracts Left To Be Served

The high strangeness reaches a peak in the numbers of contracts left standing for delivery this month. Remember that 707 contracts from Thursday?

Well...no contracts served on Friday...yet the total number of contracts standing for delivery increased by 36 contracts to 743! Another 180,000 ounces worth of silver contracts crawled out of the woodwork somewhere and stood for delivery.

Instead of 13 million ounces standing we now have a total for the month 13.2 million.

In Harvey's own words:

...the number of contracts left to be served increased in number to 743 or 3.7 million oz from 3.5 million oz. Anybody that buys silver comex
for the july month must pluck all his money down. He no longer is allowed 10% down. It is the entire amount. So if you see the number of oz to be served
rises you can bet the farm that they are standing for delivery and they are jumping queue.

The total number of oz of silver standing so far remains at 1869 or 9.3 million oz.
The total number of oz standing for this delivery month of July is 9.3million + 3.7 million + .2 million = 13.2 million oz, a gain of 200,000 oz of silver.

As I have repeated many times there is a lot of smoke and fire at the silver comex.

Harvey's post on Friday's action here: report dated Monday, July 19th (http://harveyorgan.blogspot.com/2010/07/commentary-july-192010extremely.html)

Stormdancer
07-22-2010, 09:22 AM
I am looking forward to Stormdancer's insights on the action. I read harveyorgan missives daily but don't always get the significance of his observations. I know it's an important story, could impact prices bigtime...

Canudigit I pray this isn't arrogance on my part...but that's part of the reason I'm doing this. Harvey's writing style is sometimes quite dense if you're not already familiar with the terminology, and I feel like I may be able to explain things in terms more people can understand. The information is so critical, and Harvey's insights into it so important that I'm hoping to help more actually understand it clearly.

Anyway..since you brought it up I figured I'd take the opportunity to explain another one of my motives. Maybe Harvey will hire me to edit for him :)

07Silverado
07-22-2010, 09:42 AM
Thanks for the interpretations Stormdancer. I understand now that there's a lot of money being laid out on the table in order to get physical silver.

Makes me really wonder what the elderly woman with cancer who was so persistent in getting her physical from Scotia knew.

Also- how 'bout that action RIGHT NOW? I'm looking at a 30 cent spike. WOWZER. :eek:

Stormdancer
07-22-2010, 10:17 AM
Monday, July 19th

Total open interest increased by a slight 123 contracts...all very normal and expected for a day with silver closing up 15 cents.


Inventory Numbers

229,959 ounces of silver were deposited into the eligible (customer) inventory with no mention of withdrawals, so customer inventory increased.

I haven't been focusing on the registered category, but I probably should start giving them equal time because you have to take the registered numbers into account to get a full picture of what happened today.

628,206 ounces of registered silver were withdrawn and no deposits were made to offset any of it. That's significant because even subtracting the silver deposited into the eligible category...the total amount of silver at COMEX decreased by 398,247 ounces. Another 398,247 ounces just went *poof*....and this time it appears to have disappeared from registered silver.


Delivery Notices

There were 14 delivery notices served representing a total of 70,000 ounces. An oddly small number of deliveries for this late in the month.


Contracts Left To Be Served

736 contracts left to be served...but wait :). We had 742 on Friday....14 served today which should have left 728 remaining....but we have 736.

Once again....seven contracts crawled out of the woodwork and stood for delivery. Somebody wants silver...and wants it badly.

The total amount of silver standing for the Month of July has increased for the third day...now 13.3 million ounces.

Harvey's post on Monday's action here: report dated Tuesday, 20 July (http://harveyorgan.blogspot.com/2010/07/commentary-july-202010.html)

Stormdancer
07-22-2010, 10:27 AM
Thanks for the interpretations Stormdancer. I understand now that there's a lot of money being laid out on the table in order to get physical silver.

Makes me really wonder what the elderly woman with cancer who was so persistent in getting her physical from Scotia knew.

Also- how 'bout that action RIGHT NOW? I'm looking at a 30 cent spike. WOWZER. :eek:

Jimminy! busy posting and wasn't watching the ticker....I made a little buy early today (it's almost midnight Thursday here) at $20.06 (AUD) ...it's $20.34 now....I like, I like! And it probably hasn't even shipped yet :).

07Silverado
07-22-2010, 10:35 AM
Jimminy! busy posting and wasn't watching the ticker....I made a little buy early today (it's almost midnight Thursday here) at $20.06 (AUD) ...it's $20.34 now....I like, I like! And it probably hasn't even shipped yet :).

I talked to my dealer about a half hour ago. He told me that some big boys that he deals with say to watch the markets in the first couple of weeks of August. The word is stocks down hard, metals up hard. I don't have much faith (given past manipulation), but I do know that my dealer has some pretty decent inside contacts.

KILOFINAL
07-22-2010, 10:53 AM
I talked to my dealer about a half hour ago. He told me that some big boys that he deals with say to watch the markets in the first couple of weeks of August. The word is stocks down hard, metals up hard. I don't have much faith (given past manipulation), but I do know that my dealer has some pretty decent inside contacts.

I don't know if its related, but I read a prediction from an astrologer who said there was going to be a stock market crash in the next two- three weeks I think. This is the same guy that predicted the start of the gulf war and a few other events.

Stormdancer
07-22-2010, 11:11 AM
Tuesday, July 20th

Harvey's comment on open interest:

The silver comex OI also fell by 1371 contracts to 117,371. I would like to point out that gold and silver rose yesterday, making these numbers a little suspect.

However, I have to take what they give me.


Inventory Numbers

A net deposit to the eligible inventory of 77,434 ounces was recorded, so again the total amount of eligible silver increased. But, again, that was not the whole story. The actual deposit was 440,000 ounces...of which...362,566 ounces promptly got up and walked out the door...leaving the 77,434 ounce net increase. Silver is fleeing COMEX at a staggering pace.

Here's what Harvey thinks happened:


The 440,000 oz of silver deposit was probably silver that was leased in prior months being asked to be returned. Most of that silver was removed as fast as their little feet would carry them.


No deposits or withdrawals were recorded for the registered category. Which gets very interesting when we get to:


Delivery Notices

A nice 267 contracts were served delivery notices. 1,335,000 ounces. Yet no withdrawals from the registered category? Where'd the silver come from?

From Harvey:

To boot,we got one of those classic 1.03 million oz of "internal transfers" where the customer leased his silver to give to the dealer. He prays that his silver will be returned in the next delivery cycle.

On the delivery front, a very large 267 contracts were served upon the longs. This totalled 1.335 million oz of silver. The internal transfer was necessary in order to satisfy these patient longs.



Contracts Left To Be Served

umm....736! With a hefty 267 contracts served upon....the number of contracts left to be served didn't change at all! Yowzers!

I'll let Harvey explain the rest:)

The number of contracts on silver served upon so far totals 2150 contracts or 10.8 million oz

The number of oz of silver standing for this delivery month of July is as follows:

10.8 million oz (already served) + 3.6 million oz (left to be served) + .200 million oz (options exercised from prev. month) = 14.6 million oz of silver. a jump of 1.4 million oz of silver.

This is huge and I can safely say that the silver comex is in trouble.

The total numer of ounces standing for July just jumped from 13.3 to 14.6 million....nice! Maybe this month won't be as disappointing as I thought :) We're still nowhere near the originally expected 23 million...but hey...we've got another week 'til the 30th when deliveries must be complete (the 31st is a Saturday).

Harvey's comments on Tuesday's activity: report dated Wednesday, July 21st (http://harveyorgan.blogspot.com/2010/07/july-212010-commentaryimportant.html)

Stormdancer
07-22-2010, 11:17 AM
Arrright...we're up to date. Wednesday's numbers will come out at 1:30pm eastern and Harvey's post is usually out around 8:00pm eastern...I'm off to bed.


Edit: I've got to get onto options expiry for August gold very quickly. Expiry is next Tuesday...the 27th...and you can bet the forces surrounding options expiry are already in play....this little pop today is surprising me actually...it'll probably be attacked tomorrow if not sooner.

Stormdancer
07-23-2010, 12:33 PM
Today really highlights a problem that I have not yet mentioned. Many are aware, but that doesn't necessarily include those of us peering into the abyss for the first time.

The problem is the accuracy of the COMEX numbers. This may take some effort to explain, but bear with me.

I'm going to start today with number of contracts left to be served...because it demonstrates that all this number crunching may be pointless. How accurate can you possibly be if the numbers you start with are lies? If nothing else, today's numbers demonstrate the level of transparency we really have in the silver market.

Remember that Tuesday's numbers indicated that 736 contracts (3,680,000 oz) were left to be served for this July delivery month.

Today we see that COMEX has reported that 98 contracts were served, which should leave us with 638 contracts remaining to be served...right?

So, why is it that COMEX is reporting 384 contracts remaining to be served? What the heck happened to the 254 contracts that are now seemingly unaccounted for?


ahhhh! das hats mich auf geregt!

Back later.

Stormdancer
07-23-2010, 01:32 PM
I need to add something related to the last post. For some time now, Harvey has been "rounding" numbers and in the past has stated that he's doing that because he simply doesn't trust the numbers in general. For example...If anyone has been following me with a calcualtor you might have noticed that Harvey reported 3.7 million ounces in some places where the actual number from the NYMEX reports indicated 3.68 million.

I've been "sharpening" some of those numbers and not others because this is a bit of a spur of the moment project and I'm developing a set of conventions as I go...I didn't start with a well developed plan.

As a result, the inconsistencies are multiplying...and I'm coming to a personal understanding of why Harvey started "rounding" numbers off in the first place.

As we proceed...just keep that in mind. The differences in numbers don't materially affect the conclusions....yet....there's no guarantee they won't in the future.

If the COMEX numbers are truly as big a lies as they appear to be in some cases, then none of them are trustworthy and it may be that this exercise is incapable of proving anything except just how untrustworthy the COMEX numbers really are.

I suppose even that has some value. If COMEX numbers are internally inconsistent...then somebody somewhere is manipulating something.

If insiders have access to market information you and I can't obtain because the insiders control the flow of information (lies?), then it's pretty obvious that markets are not free and not fair by any measure.

I shouldn't have to be developing a set of "conventions" at all. Truth doesn't require such.

Stormdancer
07-23-2010, 02:18 PM
Wednesday, July 21st

Harvey's comment on open interest:

The silver comex OI however dropped another 1235

contracts as the intermediate banks do not like the looks of things. They are exiting some of their shorts, leaving the entire paper supply to the likes of JPMorgan and HSBC.


Inventory Numbers

A net 193,009 ounces of silver were deposited into the eligible silver stocks, so those stocks increased again...I'll report the weekly numbers after Thursday's numbers are reported.


Delivery Notices

From Harvey:

In a footnote, the comex revealed another of those famous internal transfers...this one
a huge 540,000 oz of silver transferred from the customer inventory to the dealer.

Then the comex revealed that 193,009 oz was deposited into the customer inventory.

The total number of notices served upon the longs today was 98 or 490,000 oz


Contracts Left To Be Served

One possible explanation for the apparent "disappearance" of 254 contracts that I was complaining about two posts ago... is that those option holders were paid cash premiums for their options to entice them not to take delivery.


Here's Harvey's summary of where we stand for the month:

The total number of notices served so far this month total 2248 or 11.2 million oz.

What does this mean? Simply the comex is in trouble and sought help from the customer.
It leased 490,000 oz of pure silver and must have paid a huge premium. The customer
then bought with the proceeds an equal number of Sept contracts with a prayer that there is no default.
He wins if the silver game is still alive in Sept. He loses on a default but gains only with fiat money as his silver inventory
is gone.

11.2 million oz + 1.9 milion oz of silver to be served or 380 contracts + .2 million oz of options exercised = 13.3 million oz.

The silver comex notices decreased by 1.3 million oz..



Edit: I encourage everyone to read Harvey's entries for the full story: report dated 22 July (http://harveyorgan.blogspot.com/)

Edit II: July 25th - this post has been edited extensively from the original. If you don't recall reading this when you thought you had already...that's probably why :). Harvey Organ's blog post dated Saturday, July 24th contained a correction that is now reflected here....and my original complaining about anomalies in the "contracts left to be served" section has been amended to reflect a possible explanation for the discrepancies.

Stormdancer
07-24-2010, 08:50 AM
Harvey's comment on this graphic (below) from the report dated 7 July (http://harveyorgan.blogspot.com/search?updated-max=2010-07-08T17%3A29%3A00-07%3A00&max-results=7):


You will note that over the entire spectrum the total number of puts is represented by 36,383 puts against 28839 calls.

If you just include the 1150 through to 1225 price of gold you get twice as many puts as calls: 27494 to 13,618

This should put a floor on the price of gold. Also remember that the put options writers are the smartest players on earth.

Are they getting ready to take possession of gold at 1250.0? What will the cartel bankers do when expiry times comes in 3 weeks?

Usually gold calls outnumber puts by a two or three to one margin. Something is going on here as well!

Should be very exciting.

I've usually mostly ignored the puts when trying to predict what price levels the PTB would be gunning for at options expiry. Can't do that this month...the ratio of puts to calls is way out of the norm.....so this is really gonna take some 'splainin :)

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif
Graphic produced by Richard at Scarborough Desk Centre - LeMetropole Cafe (http://www.lemetropolecafe.com/)

I've used up my broadband allocation for the month and this stuff is taking hours to dig links up and post. Dial-up speeds don't cut it. My account resets to broadband speeds about 24 hours from now but I may not be able to accomplish much in the meantime

This month's (August) options expiry is very different than normal. I wish I had begun paying attention to this earlier....

Stormdancer
07-24-2010, 10:35 AM
I probably should start with some definitions...and text I can do even at dial-up speeds. I was going to link to the NYMEX rulebook and other sources for this but with 5 minute page load times it's not practical right now....so forgive me (and point it out) if I make any mistakes...this is off the top of my head. I'll make any necessary corrections and add links later, after my internet speed goes back to normal.



Options

Options are a financial derivative of gold (or silver or wheat or sugar...etc). When you purchase an option you are basicly purchasing a promise from someone, for a fee. There are two kinds of options....puts....and calls. There are two sides to each option, a buyer and a seller (also called a "writer").

Futures are a zero sum game. Options are not. In Futures, for every short there must be a long and the totals net out. The number of long and short futures contracts is always equal.

Not so with options. Options can be asymetrical because they're not intimately tied to any particular contract and people can promise whatever they wish, as many times as they wish....and collect the appropriate fees.

Breaking it down:

The Put

Lets say that I sell you an August Gold put option with a strike price of $1250. What I sold you is a promise that I would purchase 100 ounces of gold from you on or before July 27th, 2010 (options expiry day for the August option).

So, how do I win? How do you win?

I will win if the price of gold is over the $1250 strike price. If I've promised that I will buy at $1250, and the price is actually $1260 at expiry, you will have no reason to exercise the option. You could sell your gold on the spot market for $1260 so why bother with exercising the option? You'd just cost yourself ten dollars an ounce.

As the put writer (seller) I win if the option I sold you expires worthless. I get to keep the money you gave me to buy the option.

For you it's the opposite...you win if the price of gold is lower than the $1250 strike price at expiry. I promised to buy 100 oz of gold from you at $1250, so if the actual POG is say...$1230...then you can force me to buy your 100 ounces of gold, take the $1250 per ounce from me, go to the spot market and buy 100 ounces of gold for $1230 and pocket the $20.00 per ounce difference as profit. That scenario would net you $2000.00 minus whatever you paid for the option, and you would still have your 100 ounces of gold.

The Call

Now let's assume I sell you a call option with a strike price of $1250. For a fee (which I keep regardless of whether you exercise the option or not), I'm selling you a promise that I will provide you with 100 ounces of gold, on or before the July 27th expiry date, at $1250 per ounce.

In this case, I win (keep the fee) if the price of gold is below the $1250 strike price at expiry. If the POG is below $1250, you'd have no reason to exercise the call option you bought from me. You'd get the gold cheaper by purchasing at spot.

You win if the POG is above the $1250 strike price. In that case you can buy my 100 ounces of gold at $1250 and instantly turn around and sell that gold at a profit...pocketing the difference between the $1250 per ounce you paid me...and whatever higher price you re-sold it at in the spot market.


Somebody please let me know if this is not making sense....I'll try again. It's really not as complex as it seems...but still not that easy to explain.

It was simpler when I could just ignore the puts....can't do that for now and you'll see why shortly.

Clear as mud? :D

Stormdancer
07-24-2010, 11:29 AM
Here's something that it's very important to keep in mind as we go through this. Risk! The risk in options is NOT symmetrical, and the dividing line is not between puts and calls...the dividing line is between buyers and sellers (writers).

When I purchase an option (whether a put or a call) my risk is limited to the price I paid for the option. Period. My potential profit is virtually unlimited, but my risk is never more than the initial purchase price of the option.

When I sell an option however, my potential gain can never be more than the fee I collected for writing the option, while my potential losses are virtually unlimited!

Because of this, most small investors are option buyers...it's the big banks and sophisticated financial instutions that do the writing. Because of that, I'll be analysing what is happening from the perspective of the option writers from here on out.

It's the big banks that have the most to lose, which means they have the most to gain from manipulating market prices in such a way that they DON'T lose.

This is what was behind Harvey's comment that the put option writers are some of the smartest men on the planet. They eke out incremental gains on their PM positions by collecting a steady stream of fees for writing options, but do so at considerable risk if the POG does something dramatic and unexpected.

An example:

Lets say that a year ago, when the POG was about $950, I wrote an August 2010 put option with a strike of $1250. You paid me a fee equal to $20.00 per ounce to purchase the put. $20 X 100 ounces = $2000

Ok...I've collected $2000 from you...and that represents the maximum profit I can make on this transaction. My only hope is that you never have a reason to exercise the option. If the option expires worthless....that's the end of the story. I keep the $2000 and you are left explaining to your wife there's no vacation this year :).

My risk on the other hand is limited only by how low gold can go. I promised to buy 100 ounces of gold from you on or before July 27th, 2010 for $1250 per ounce. If the POG is $680 on that date...whew! You can buy 100 ounces of gold at spot, "put" that gold to me by exercising the option, and I have to pay you $1250 per ounce for it. I lose $570 per ounce....or $57,000 dollars....and you get to surprise wifey with a trip to Tahiti instead of the Great Smoky Mountains.


For call writers it's even worse. If I wrote a call under the same conditions, once again the fee is all I can ever hope to collect. My profit is limited to the fee and again, my only hope is that the call option will expire worthless.

If the price of gold is $2300 on July 27th, 2010, you will "call" my gold away from me and only pay me $1250 per ounce for it. You then either have some really cheap gold to keep for yourself or you can turn around and sell that $1250 gold for $2300, and put $105,000 profit in your pocket (less the $2000 fee you paid me to write the call).

Stormdancer
07-24-2010, 11:49 AM
Now study the chart again, and you'll begin to see why this month is quite unusual. Normally, calls would outnumber puts by 2 or 3 to 1. You could analyse the price action from the perspective of the call writers (because that's where the potential losses were focused) and almost ignore the put writers.

With the puts outnumbering the calls this month....the put writers cannot be ignored....something is up here. The big boys made a very dramatic change in their typical strategy in writing options this month.

Instead of the typical two or three calls written for every put, there are more puts than there are calls overall this month, and for some strike prices there are twice as many puts. A very dramatic reversal of the typical ratios by any measure.

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

goldfanbrad
07-24-2010, 01:17 PM
Now study the chart again, and you'll begin to see why this month is quite unusual. Normally, calls would outnumber puts by 2 or 3 to 1. You could analyse the price action from the perspective of the call writers (because that's where the potential losses were focused) and almost ignore the put writers.

With the puts outnumbering the calls this month....the put writers cannot be ignored....something is up here. The big boys made a very dramatic change in their typical strategy in writing options this month.

Instead of the typical two or three calls written for every put, there are more puts than there are calls overall this month, and for some strike prices there are twice as many puts. A very dramatic reversal of the typical ratios by any measure.

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

I've been wondering ever since seeing that chart, and it probably doesn't make any sense. Could the big banks want all those put options at $1200, $1180, and maybe even $1150 to finish in the money? Wouldn't they "have" to buy the gold, and they could use this to either get rid of some shorts or get some much needed physical to use to prop up problems at Comex. If they really have been paying extra to get people to not take delivery at Comex, they wouldn't mind losing a bit of money on the put options and it might be cheaper for them. They could also use this as another way to be loading up on gold, if they knew the price was about to explode.

If JPMorgan can get dollars basically for free, then why would they mind paying extra dollars in lost options, to get gold that they are having extreme problems getting in quantity?

Just a thought, I'm probably way off base here.

Stormdancer
07-24-2010, 01:25 PM
Look at the chart again ... There are concentrations of options at several strikes:

1250, 1200, 1180 and 1150 so I'm going to focus on those. There is the most to win or lose at those prices, so those are likely price targets for the manipulators.

I'm getting a bit excited, because it's going to be very hard to make the majority of these options expire worthless because of the unusual distribution this month. There are probably going to be quite a few more happy option buyers than normal this month...and conversly....a few more hurting bankers than normal. Unless the bankers are also the option buyers...which gets to a whole new level of tin-foil...

At the $1250 Strike

Look at the top line on the chart and you'll see that there are about 5200 puts and 8200 calls written at that level.

Put writers lose money if the price is below $1250 at expiry. They will gain gold!

Call writers lose GOLD and money if the price is above $1250 at expiry.

This is that whole new level of tin-foil I mentioned. The odd put/call ratio may mean we need to focus less on where the money is, and more on where the gold is. In the past it's been enough to just focus on the money. I'm not sure that's true now. I'm still sorting through the implications....but my tin-foil beanie is a sparkin'...and I think the PTB would much rather lose money than gold.

Let's work through a couple of scenarios.

Let's say that the POG is $1260 at 1:30pm on the 27th (expiry).

The 8200 put options would expire worthless. In fact, every put option on the chart would expire worthless at $1260.

Those 5200 call options will be in the money by $10. That means that 520,000 ounces of gold would be called away from the call writers and those call options would be exercised, forcing someone (bankers) to come up with over a half million ounces of gold.

But, don't forget the rest of the chart either. It's not just those 5200 call options ...it's ALL of the call options throughout the whole chart...all of them would be in the money and would be exercised.

That would be a disaster of epic proportions for the bankers. There are 28,839 call options at risk if POG closes at $1260 on the 27th, representing 2,883,900 ounces of gold.

Now, we're looking at the top of the chart with only $10 per ounce at stake, the losses for the call writers at the bottom of the chart would be legendary.

Each call option written with an $1150 strike would be in the money by $110 per ounce for a loss to the call writer of $11,000 and 100 ounces of gold.

Stormdancer
07-24-2010, 01:29 PM
I've been wondering ever since seeing that chart, and it probably doesn't make any sense. Could the big banks want all those put options at $1200, $1180, and maybe even $1150 to finish in the money? Wouldn't they "have" to buy the gold, and they could use this to either get rid of some shorts or get some much needed physical to use to prop up problems at Comex. If they really have been paying extra to get people to not take delivery at Comex, they wouldn't mind losing a bit of money on the put options and it might be cheaper for them. They could also use this as another way to be loading up on gold, if they knew the price was about to explode.

If JPMorgan can get dollars basically for free, then why would they mind paying extra dollars in lost options, to get gold that they are having extreme problems getting in quantity?

Just a thought, I'm probably way off base here.

Congratulations! You just explained the crux of the "whole new level of tin-foil" I'm having to consider here...and you probably did it better than I can. You're not off base at all...it's a possibility that has to be considered. lol...I'm going to continue...but you well and truly landed right in the middle of where I'm trying to go :)


I was trying to "set up" for exactly what you've outlined when I wrote:

Put writers lose money if the price is below $1250 at expiry. They will gain gold!

Call writers lose GOLD and money if the price is above $1250 at expiry.

This is that whole new level of tin-foil I mentioned. The odd put/call ratio may mean we need to focus less on where the money is, and more on where the gold is. In the past it's been enough to just focus on the money. I'm not sure that's true now. I'm still sorting through the implications....but my tin-foil beanie is a sparkin'...and I think the PTB would much rather lose money than gold.

Canudigit
07-24-2010, 01:33 PM
I'm just making my way through the first explanation post and all I can say is thanks for the attempt to make the concepts understandable.
Your effort is a valiant one.
I feel like I'm enrolled at SDU. (Stormdancer University).

Stormdancer
07-24-2010, 02:02 PM
I'm just making my way through the first explanation post and all I can say is thanks for the attempt to make the concepts understandable.
Your effort is a valiant one.
I feel like I'm enrolled at SDU. (Stormdancer University).

Canudigit....what helped me the most was taking the time to put myself into each of the four different option positions, and working through a price point scenario for each.

Thinking through what it would look like financially to be a 1) a call option writer, 2) a call option buyer, 3) a put option writer and 4) a put option buyer.

It takes some time...but that helped me sort out the differences and get me familiar with who stands to gain or lose under different price scenarios.

And thanks for the encouragement. I'm never quite sure if I'm explaining or muddying things up. If you take each of the four positions and work through them one at a time it reduces the complexity enough that the whole picture can start to fit together.

Stormdancer
07-24-2010, 02:58 PM
I started at one end of the extreme...the top of the chart... where all put options expire worthless and all call options are exercised.

Now lets go to the other extreme....the bottom of the chart...where all call options would expire worthless and all put options would be in the money.

Now we'll look at what happens if the price of gold is $1150 or below next Tuesday:

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif


At the $1150 Strike

Let's use a POG of $1140 (at expiry) this time....ten dollars below the lowest strike.

At this level all calls expire worthless and all puts are moneymakers (for the buyer...losses accrue to the put writers). We have about 2700 calls and 5400 puts at the $1150 strike.

If POG closes at $1140 on Tuesday, the put writers are sucking wind...or are they? The puts they wrote at $1150 will be ten dollars in the money and the put buyers will be buying spot gold at $1140 and "putting" it to the put writers...making them pay $1150 for it.

The call writers are in good shape. They keep the option fees and no calls are exercised. Call buyers are the losers as their options expire worthless.

Are you catching what Goldfanbrad outlined now?

Have the bankers decided they're ready to take title to 3,638,300 ounces of physical gold, even if they have to pay $1250 per ounce to get some of it?

That would go a long way toward unwinding their outsize short positions wouldn't it?

If you get your money for nothing (and your chicks for free :)) and you knew gold was much scarcer than most figured, would you mind trading some of that free money for gold...even at a premium? If you knew for certain gold was going to be much higher than $1250 in six months, would you mind paying $1250 now?

I honestly don't know if that's what is going down, but that chart is certainly suggesting the potential for it.

If they jam the POG below $1150 on Tuesday....we'll really have to consider it.

Would someone get a fire extinguisher please? This tin-foil hat of mine is about to catch me on fire......


Edit: The "perfect" set up for the bankers under this scenario would be for them to write as many calls as the market would stand...they'd keep the fees on those...which would offset some of the monetary losses they'd take when the put options were exercised. But remember....all those put buyers exercising their options would mean big monetary wins for the put buyers (and big monetary losses for the banks)...but the banks get the gold!

Stormdancer
07-24-2010, 03:08 PM
Harvey's Saturday post (http://harveyorgan.blogspot.com/)is out......and it's a doozy. I recommend reading it even if you aren't yet able to understand all of it. You will be able to soon....and it's all important.

Stormdancer
07-24-2010, 03:44 PM
I just had a real fit of "What the hell do you think you're doing" run through my mind. As I've said before, I'm self-educated in this stuff and far from being an expert.

I just left a note on Harvey's blog letting him know about this thread and asking if he might peek in here and correct any misunderstandings or misrepresentations I may be guilty of writing up here.

He's probably a very busy man and might not have the time to waste...but I'd love to hear what he has to say about this options analysis so far....

I got skeered :) lol

If you don't hear from me after this Harvey probably hired a hit man.....

:D

Edit: I'm a bit comforted that Goldfanbrad saw the same thing I did in the options chart. Now you've gotta stand next to me if Harvey blows in here with fists flying... :D

SecretGoldfish
07-24-2010, 04:44 PM
only problem being, even if harvey wanted to post in this thread, unless he's already a member it would take him 7 days before he could even say 'hello' . . .

beastie
07-24-2010, 07:36 PM
Well I'm hoping Harvey is at least reading it. Harvey, if you are reading this please point me in the right direction for physical numbers and deposits to and from the comex going back a year. I'll be reading your blog hoping that you will respond to this request.
If it's in a spreadsheet even better. If not I can pull one together and share it via google apps if I have the numbers.

There IS something going on here. Either a simple shakedown of the Comex or someone actually wants to break the Comex to run the price up by doing what the Hunt brothers couldn't do. As I have stated before I think it's Sprott.

Just wondering how much the guy who recently cornered the Cocoa market made?

steveo
07-24-2010, 08:19 PM
Up to Fridays close he was down about 35 million

Stormdancer
07-24-2010, 08:31 PM
Something to keep in mind...the scenario I just outlined is examining the extremes and assuming that every option that is in the money would result in the movement of real gold.

In reality most gold and silver options are settled in cash. I'm not sure what percentage of options normally stand for delivery, but it's very small.

About 1% of futures contracts stand for delivery, and I don't know for sure but suspect it's even less for options.

That doesn't mean the analysis has no merit at all. It could still represent an effort by the banks to shake loose some physical gold. And they'd have to be pleased with the fact that all calls would expire worthless, meaning that they don't have to risk giving up any gold themselves...I don't think they have much at this point...certainly not as much as they pretend to.

If gold closed at $1140 at expiry, that top line on the chart would cost them a lot in cash. About 5200 put options would be exercised at $1250, meaning the banks would be buying gold that was $110 per ounce higher than spot. $110 per ounce X 100 ounces would represent an $11,000 cash loss per option X 5200 options for a gross loss of $57,200,000 dollars.

What the banks would get in that scenario is 520,000 ounces of gold.

Repeat the process all the way down the chart for each strike price (all the puts would be in the money) and the monetary losses would be pretty huge. 36,383 put options exercised, representing 100 ounces of gold each for a total of 3,638,300 ounces (113.17 tonnes!).


The question is "Do they care?"

What would happen to their short positions if something caused gold to rocket from $1200ish to $1650 in the space of a couple of weeks?

Is it possible they're willing to pay a $110 per ounce premium now and use the gold to unwind some of those shorts because they're afraid that if they don't they might end up $400 dollars per ounce further underwater if the price gets away from them? Would it cost them less to take the hit now?

I don't have answers to those questions...but I can't help wondering.

I've been at this too long for one sitting :)......see you guys soon :)

Edit: still playing with numbers and "what if" scenarios....fascinating possibilities....but I'm really off to get a nap this time. Sheesh...we haven't even touched the futures yet....

JustaNumber
07-24-2010, 09:47 PM
Storm Dancer,
As a novice in this area, I also thank you for the excellent tutorial. Even though my brain is starting to smoke, I believe I see the potential you are talking about. A question: let's say the banks are indeed intending to take delivery of a significant amount of gold. Does this have the potential to affect the price of gold any more than if they had just settled in cash? I guess a sale is still a sale (whether or not delivery is requested), however if inventories change significantly, does that change anything? Thanks,
JustaNumber

Gold Bouillon
07-25-2010, 12:24 AM
Thanks for all the hard work and explanations Stormdancer.

Would it also not apply to a savy call buyer that if gold was hard to obtain and they knew the price was going way up in a week they could be willing to exercise their "losing" call and be able to get some gold, even if over spot?

Just a quick eyeballing of the chart, and excluding getting more gold schemes, it would seem the "best" price for the bankers would be between 1225 and 1230.

JROCPW
07-25-2010, 01:32 AM
SD, thanks for taking the time/effort to lay this out in a way I can try to understand in a few readings. I'm going to need to read these couple of pages a few times to get it all together, but thanks to you much of this is clearer than it was before.

With regards to the discrepancy in the silver numbers, could "naked" shorting that apparently is going on to suppress spot be causing this? I'm inclined to believe there's a "perfectly logical" answer to these numbers that can explain away any discrepancy, as it almost seems too idiotic to let these numbers out without one. I'm ignorant in much of this. I have however read of the fact that contracts do not have to be settled in physical silver/gold, but can be settled in shares of SLV/GLD and cash settlements...

Stormdancer
07-25-2010, 03:42 AM
Storm Dancer,
As a novice in this area, I also thank you for the excellent tutorial. Even though my brain is starting to smoke, I believe I see the potential you are talking about. A question: let's say the banks are indeed intending to take delivery of a significant amount of gold. Does this have the potential to affect the price of gold any more than if they had just settled in cash? I guess a sale is still a sale (whether or not delivery is requested), however if inventories change significantly, does that change anything? Thanks,
JustaNumber

I have to start out by saying I'm not an expert either and I don't know the answer to your question for sure.

With that said I'll try to take what I have learned so far and take a stab at at least some of it.

Since I've never traded an option before, and certainly never used an option to stand for delivery, I'm not clued in on how that delivery process works in detail.

One little peculiarity I've learned is that when a gold option stands for delivery, it stands directly for 100 ounces of gold. A silver option on the other hand, stands for a futures contract, which can then be used to stand for delivery of 5000 ounces of silver. I don't know why there's a difference between the two metals or why silver has to take that intermediate step. NOTE: THIS STATEMENT IN BOLD HAS BEEN PROVEN INACCURATE ELSWHERE IN THE THREAD - 29 Jul 10


Also to reiterate...very few of these option contracts historically stand for delivery...the vast majority are cash settled, so cash settlement is really the "norm". Harvey always watches and reports on how many options are actually standing each month at the end of the month. Because the end of the month is a Saturday, it may be Monday the 2nd of August before we know that number, but we don't have long to wait.

Now to take a stab at answering....I am doubtful that cash settlements would move prices and can't see how they would move inventories at all.

What would be unusual is if an abnormally large number of option contracts stood for delivery. That would almost have to cause changes in the inventory numbers...which is something Harvey tracks very closely. Exactly how those numbers would change I'm not sure, but if this wild speculation about banks taking large amounts of gold that is "put" to them by small investors has any merit, I'd expect to see large amounts of gold moving out of the eligible category and into the registered category.

Another aside....I've been narrowly focused on options 'til now, but there's still futures to consider which can also stand for delivery.

Focusing on options was primarily for the purpose of understanding how they work, and what motivates the manipulation often seen around options expiry.

Stormdancer
07-25-2010, 04:42 AM
Thanks for all the hard work and explanations Stormdancer.

Would it also not apply to a savy call buyer that if gold was hard to obtain and they knew the price was going way up in a week they could be willing to exercise their "losing" call and be able to get some gold, even if over spot?

Just a quick eyeballing of the chart, and excluding getting more gold schemes, it would seem the "best" price for the bankers would be between 1225 and 1230.

Boy, now there's a question I never thought of. It's always been my understanding that the option buyer is the one who makes the decision to exercise the option or not. Could someone choose to exercise an out-of-the-money call option? I honestly don't know...but if someone wanted metal bad enough to pay a premium for it....maybe they would?? Good question....though I'm not sure how to find out the answer. I'll keep an ear peeled for clues though.

As to the chart....in the months when the put/call ratio was normal, I'd been getting pretty good at predicting where the POG would close at options expiry. This wildly out of whack ratio has thrown a monkey wrench into that for me.

Before, it was fairly easy to establish what price level would result in the most call options expiring worthless and you could bet that's where the price would be at expiry.

With so many more puts than calls this month, the only thing that's clear is that somebody's strategy (probably banks...but not guaranteed) has changed dramatically.

(Beastie mentioned the possibility that Sprott might have something to do with all this...something I haven't had time to think through yet...but we do know Sprott is exceedingly interested in obtaining physical gold and silver right now)

anyway....so far I've managed to think of two different explanations for the put/call ratio change. One is the wild speculation that banks might be writing put options (at considerable monetary cost) for the purpose of obtaining real metal...which I've already covered.

The second is that the change is just an aberration and the goal is taking profits in dollars just as it normally is. If that's the case, then this is going to be a very happy month for options buyers and the banks are going to suffer unusually stiff losses, because there's no "level" above which the banks lose and below which the banks win more. With this distribution of puts and calls, no matter where the price ends up there will be many options in the money.

You identifed the $1225-1230 level as a possibility....

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

Without crunching any numbers I was eyeballing the $1220 level for this scenario....so we're in the same ballpark...but that huge number of both puts and calls at 1200 bothers me too. I'll have to sharpen my pencil and work out some price point scenarios to get a better idea of what happens at those different levels.

As a preliminary working hypothesis I'm thinking that if we see the price of gold plunge to near or below $1150, that wild speculation about bankers using costly, money losing puts to draw real metal away from smaller investors just may not be so wild after all.

If we see the price of gold heading upward to somewhere near or above $1220...it's more likely that the bankers are seeking a "median" where their cash losses are the lowest.

Need to crunch more numbers......


As I said before I really wish I had begun paying attention to this earlier. Harvey posted this chart on the 7th of July, and looking back...he made a comment (and I recall reading it...just didn't take time to think it through) as follows:


You will note that over the entire spectrum the total number of puts is represented by 36,383 puts against 28839 calls.

If you just include the 1150 through to 1225 price of gold you get twice as many puts as calls: 27494 to 13,618

This should put a floor on the price of gold. Also remember that the put options writers are the smartest players on earth.

Are they getting ready to take possession of gold at 1250.0? What will the cartel bankers do when expiry times comes in 3 weeks?
Usually gold calls outnumber puts by a two or three to one margin. Something is going on here as well!

Should be very exciting.

(Harvey's July 7th blog entry here (http://harveyorgan.blogspot.com/search?updated-max=2010-07-08T17%3A29%3A00-07%3A00&max-results=7)..)

He mentioned both your $1225 price level as being a potential "floor" for the POG....

And then the part I bolded seems to imply he's also considering that wild put option strategy I outlined...

That wild strategy would leave thousands of put buyers joyfully sitting on huge monetary gains, and the put writers would be buying $1250 dollar gold. Dumb like a fox.......

Stormdancer
07-25-2010, 05:00 AM
SD, thanks for taking the time/effort to lay this out in a way I can try to understand in a few readings. I'm going to need to read these couple of pages a few times to get it all together, but thanks to you much of this is clearer than it was before.

With regards to the discrepancy in the silver numbers, could "naked" shorting that apparently is going on to suppress spot be causing this? I'm inclined to believe there's a "perfectly logical" answer to these numbers that can explain away any discrepancy, as it almost seems too idiotic to let these numbers out without one. I'm ignorant in much of this. I have however read of the fact that contracts do not have to be settled in physical silver/gold, but can be settled in shares of SLV/GLD and cash settlements...

I haven't had time to comment on Harvey's latest (Saturday)...but he details a similiar situation where more contracts seemingly just *disappeared*..but this time he explains it. I bet the explanation for those numbers that frustrated me is exactly the same....and you're right...it is a logical explanation....and a darned bullish one :) Check this out:

Now let us see how the notices shaped up:



Wow, we have only 3 days to go and only 6 notices were served upon or only 30,000 oz of silver

Please notice that we now have 1.4 million oz or 283 contracts left to be served. On Thursday's reading he had 380 contracts, so we lost

97 contracts yet only 6 were served upon.


The rules of the comex states that if silver or gold is served upon, it must come from the dealer inventory and then withdrawn

This did not happen yesterday. Then how could 97 contracts disappear? This is 485,000 0z of silver which represents approx. 8.7 million usa dollars worth of silver.

The owners of these long positions having plucked their money down on July 1.2010 surely would not give up this late in the game and also having surely witnessed the chaos at the silver comex. Something happened and if I am a betting man,

it looks like these guys got a huge cash settlement instead of taking the metal. There is no other explanation.

This makes me think two things. If these yahoos are willing to pay big premiums to get people NOT to take delivery....what does that tell us about the true price of silver? It means it's much higher than the spot price is telling us. Now that brings on yet another very important issue...the issue of backwardation. If the price paid for real metal NOW...is higher than the front month futures contract, silver is in (possibly severe) backwardation. Backwardation indicates there's a shortage of real, physical silver. We can't know exactly how severe the backwardation is unless we find out how much the premiums paid were...but even if it's minor backwardation its bullish as can be.

I forgot the second thing that made me think :)....lol....I have to run...there's a debate between Guillard and Abbot coming on and I need to watch it....Australia's future is on the line here.... back in a bit and I'll try to recall what the heck that second thought was :)

Edit: The debate is over and that second thought headed for the hills and didn't leave a trail.....

Stormdancer
07-25-2010, 06:02 AM
SD, thanks for taking the time/effort to lay this out in a way I can try to understand in a few readings. I'm going to need to read these couple of pages a few times to get it all together, but thanks to you much of this is clearer than it was before.

With regards to the discrepancy in the silver numbers, could "naked" shorting that apparently is going on to suppress spot be causing this? I'm inclined to believe there's a "perfectly logical" answer to these numbers that can explain away any discrepancy, as it almost seems too idiotic to let these numbers out without one. I'm ignorant in much of this. I have however read of the fact that contracts do not have to be settled in physical silver/gold, but can be settled in shares of SLV/GLD and cash settlements...

I recall reading that as well...and also seem to recall AboutAG coming up with some evidence that it wasn't exactly true. Something else I haven't made time to investigate thoroughly yet. It had something to do with the "exchange for physical" rules and how they applied....but details escape me. If AboutAG is around...perhaps he can refresh the topic.

silvereye
07-25-2010, 09:18 AM
Thanks for all the hard work and explanations Stormdancer.

Would it also not apply to a savy call buyer that if gold was hard to obtain and they knew the price was going way up in a week they could be willing to exercise their "losing" call and be able to get some gold, even if over spot?

Just a quick eyeballing of the chart, and excluding getting more gold schemes, it would seem the "best" price for the bankers would be between 1225 and 1230.

I had asked the same question about a month ago in a different thread. A board member who has played options advised that you do have the right to ask for delivery and pay the higher price.
SE

Stormdancer
07-25-2010, 09:38 AM
Thursday, July 22nd

Harvey's comments on open interest:

Gold closed down by $7.80 to finish the week at 1187.70. Silver however did not follow its wealthier cousin, it remained unchanged at 18.11

refusing to go below the 18.00 mark.


The open interest on the gold comex fell considerably with Fridays reading down 6485 contracts (basis Thursday) to 552,377.

The silver comex Open Interest behaved differently, rising by 1568 contracts to 117,862.

It looks like we have reached the rock bottom stage in OI with respect to silver where no amount of bank intervention will cause the longs to liquidate.

In gold we still have some weak longs that refuse to understand the criminal nature of how the banks operate.

In these Saturday reports, Harvey normally comments on the latest COT (Commitment of Traders) report:

At 3:30 pm Friday, the COT report was released and you can see first hand the damage done by the bankers.

In the gold COT:

The large speculators that have been long decreased their positions by a huge amount to the tune of 15,904 contracts. They got fleeced for the umpteenth time.

The large speculators that have been short surprisingly increased those short positions by quite a large margin to the tune of 10710 contracts. They supplied the necessary

paper along with the larger commercials during last week's raid.

The large commercials that have been long in gold, increased their long positions by quite a large 10,482 contracts. These large commercials are swap dealers and intermediate bankers

who are closer to real physical than the other large commercials like JPMorgan and HSBC who do nothing but short and supply the paper.

Speaking of these guys, those commercials who have been short since 4 BCE, used the raid opportunity to cover a massive 22 202 contracts.

The small specs who have not been in the game recently, behaved in the following manner:

Those specs who were long, reduced those longs by a huge 5212 contracts. Those specs who were short, increased those short positions by a good sized 858.


Generally, the specs get it wrong. This is the most bullish COT report that I have seen for gold in quite some time.


Let us now go to the silver COT report:

The large speculators that are long silver, pitched some of their long positions to the tune of 1349 contracts.

The large speculators that are short silver increased those short positions to the tune of 2199 contracts as these guys supplied the necessary paper.

The large commercials that have been long silver did not follow their cousins in gold, they INCREASED their long positions to the tune of 1153 contracts.

The large commercials (JPMorgan and HSBC) that have been short silver from the beginning of time, covered their shorts by a smaller margin to gold: 2101 contracts

The small specs in silver are still not in the game.

So you can see the struggle in the COT report whereby the bankers still have control over gold but are losing it in silver.


Inventory Numbers

479,140 ounces were withdrawn from the eligible silver stocks and there were no deposits.

Another 91,831 ounces left the registered category and was NOT deposited to the eligible (customer) inventory...so a grand total of 570,971 ounces has again fled the COMEX warehouses.

From Harvey:

There was also another strange internal transfer of silver. This time 450,000 oz of silver was transferred back into the customer

inventory as this no doubt was a lease repaid from May. This silver no doubt was the major part of silver removed from the

customer inventory as these guys refused to let any of their silver stay at any comex facility.


I promised to tally the eligible category gains/losses for the week once we had Thursday's numbers so here it is...beginning with Friday, July 16th:

Friday: +202,253

Monday: +229,959

Tuesday: +77,434

Wednesday: +193,009

Thursday: -479,140

Total: +223,515 ounces were added to the eligible category this week.

This isn't capturing the full story, so next week I'll modify my reporting to include both the registered and the eligible categories and a grand total of the two.

On Friday, the NYMEX daily report showed that a grand total (both categories) of 110,891,979 ounces of silver were stored at COMEX warehouses.

Thursday's report shows a grand total of 110,366,049 ounces.

The total amount of silver stored at COMEX decreased by 525,930 ounces this week.


Delivery Notices

Wow, we have only 3 days to go and only 6 notices were served upon or only 30,000 oz of silver

Please notice that we now have 1.4 million oz or 283 contracts left to be served. On Thursday's reading he had 380 contracts, so we lost

97 contracts yet only 6 were served upon.



The rules of the comex states that if silver or gold is served upon, it must come from the dealer inventory and then withdrawn

This did not happen yesterday. Then how could 97 contracts disappear? This is 485,000 0z of silver which represents approx. 8.7 million usa dollars worth of silver.

The owners of these long positions having plucked their money down on July 1.2010 surely would not give up this late in the game and also having surely witnessed the chaos at the silver comex. Something happened and if I am a betting man,

it looks like these guys got a huge cash settlement instead of taking the metal. There is no other explanation.

Silver is now in backwardation as players are getting more for the silver in the front month than in future months.

We are witnessing the leasing of silver metal by the customer to the dealer for a huge premium and now settlement for huge dollars instead of taking the metal.

The silver comex is in crisis.


Contracts Left To Be Served

The amount of silver standing in this delivery month of July is as follows:



1.4 million oz (283 contracts) left to be served+ 11.2 million oz (22 54) + .200 million oz of silver options exercised) = 12.8 million oz of siver.

(the other 485000 oz of silver was cashed at a premium)


If you haven't read Harvey's Saturday report (http://harveyorgan.blogspot.com/)I encourage you to. He mentions the $100 billion dollars worth of Treasury notes to be auctioned and there's a must read letter from Jim Willie there as well.

Understanding the Treasury auctions is important because that's been a time when the manipulators have been active in the past. The PTB don't seem to like it much if gold is rising while they're auctioning more debt.

Stormdancer
07-25-2010, 09:47 AM
I had asked the same question about a month ago in a different thread. A board member who has played options advised that you do have the right to ask for delivery and pay the higher price.
SE

Thankyou for confirming that. I suspected Gold Boullion might be right but wasn't sure...a promise is a promise after all. (HA! I can't believe I said that about anything related to COMEX....)

goldfanbrad
07-25-2010, 02:46 PM
Stormdancer, thanks for all you are doing.

I've got several rambling questions.

Does anyone have, or know where to get a current put/call chart, to see if there are any big changes since July 7th? And how about a chart for the next major contract month (October?).

Question about who initiates things after the close. When a call ends up in the money, I believe they have a day or 2 to put up the money necessary for the contract. Is that correct.
How about when a "put" ends up in the money? When do they have to put up the gold, or agree to put up the gold? A day or two, or longer? And at what timeframe can they decide they no longer want to exercise their winning put? Or can they even do this. If gold ends at $1160 on Tuesday afternoon, the $1180 puts are winners. But what happens if gold then goes to $1200 Tuesday evening, or later in the week. Can the put writers still require the put holders do the deal? Just wondering about the timing of these things.

Even though most things are settled in cash, legally can the put writer refuse to settle by cash, and demand the gold from the put winners? Therefore either getting gold, or saving money if the put winner just walks away refusing to get rid of the gold. Or can the put holder have to sell the gold. And what happens to the price of gold if some of the put holders have to buy gold to settle?

My random thoughts. The big banks and PTB have to know that eventually things at Comex will blow-up, and they will lose control in gold and silver. Especially if the new rules have any teeth (Mr. Chilton please watch what planes you get on, and don't get Spietzer'ed.) Many people believe near the gold/silver endgame the PTB will orchestrate a huge drop in gold and silver and try to cover most of their shorts. Will that drop coincide with what is being discussed here with the options, allowing the PTB to cover all their shorts and basically flip to the long side overnight? I don't think it happens this month, but somewhere down the line. Hopefully we can come up with enough clues to possibly see it coming if this is the case.

About AG
07-25-2010, 03:34 PM
I recall reading that as well...and also seem to recall AboutAG coming up with some evidence that it wasn't exactly true.

COMEX deals with futures contracts, which are a legal obligation to buy or sell gold/silver in the future. When you buy, you are legally required to come up with the full amount of the contract -- unless you sell the contract before it expires. The only reason that futures contracts can go without delivery is because someone is evening things out (for example, someone with 10 short contracts buys 10 long contracts, at which point they owe themselves the gold/silver, and therefore don't have to take delivery).

So the short is legally obligated to provide gold/silver to the long (assuming the long stands for delivery). If the short doesn't provide the silver, the clearing member (the broker that the short used to trade) would be responsible for providing the silver. If they don't, COMEX is required to -- except that they have the option of settling in cash. But even if they do, the long could sue the short or the clearing member (broker). However, that could potentially take years, and those parties might have gone bankrupt before you can get the silver.

About AG
07-25-2010, 03:37 PM
I had asked the same question about a month ago in a different thread. A board member who has played options advised that you do have the right to ask for delivery and pay the higher price.

That is correct. Options are similar to futures -- they are essentially contracts. With a call option, you have the option of buying the gold/silver futures contracts at the strike price, but do not have to. Although it would normally be silly to exercise the contract if the spot price was below the strike price, you can if you want (that's what the writer of the option agreed to).

Stormdancer
07-25-2010, 04:27 PM
Stormdancer, thanks for all you are doing.

I've got several rambling questions.

Does anyone have, or know where to get a current put/call chart, to see if there are any big changes since July 7th? And how about a chart for the next major contract month (October?).

I'm trying to learn where this information is found myself. To this point, I've relied on Harvey for charts. I suspect this data is available from NYMEX/COMEX/CME in report form, but I haven't dug for it yet. I don't know of a regularly updated chart. Share it if you find one :)


Question about who initiates things after the close. When a call ends up in the money, I believe they have a day or 2 to put up the money necessary for the contract. Is that correct.

This month, the 27th is options expiry, the 28th is Last Trading Day (also known as Termination Day) for the August futures contracts.....and as I understand it all accounts standing for delivery must be fully funded on the 29th. I know that is true for futures and assume it's true for options.

The 29th is also "Last Notice Day" for the June silver delivery cycle. All deliveries must be complete by that day according to the rules.

The 30th is "First Notice Day" for the August gold delivery cycle...ie...the first day delivery notices can be issued to futures contracts standing for delivery.


How about when a "put" ends up in the money? When do they have to put up the gold, or agree to put up the gold? A day or two, or longer?

I honestly don't know now that the specific question is asked. I'd never considered the gold side. For now I'd assume it would have to be made available on the 29th ...same as the cash...but I'm not certain.



And at what timeframe can they decide they no longer want to exercise their winning put? Or can they even do this. If gold ends at $1160 on Tuesday afternoon, the $1180 puts are winners. But what happens if gold then goes to $1200 Tuesday evening, or later in the week. Can the put writers still require the put holders do the deal? Just wondering about the timing of these things.

Got me wondering now too! I honestly don't know. I've read some things in Harvey's blog about the PTB trying to shake option and futures contract holders out of their positions during the delivery cycle, so I suspect the that people standing for metal can change their minds right up to the time they're served with a notice of delivery. Once notice of delivery has been served, then a warehouse receipt is obtained from the warehouse and ownership of the actual metal has officially changed hands. After that the option or the futures contract is dead...so I don't think there's any going back after that point.

Also as I understand it, futures contracts standing that have not been served delivery notices can still be traded after last trading day (or settled for cash)....but they're not being traded "on the board" and the numbers reported.

As to the put writers being able to force performance....I'm skeptical but don't know the answer to that either.

Even though most things are settled in cash, legally can the put writer refuse to settle by cash, and demand the gold from the put winners?Therefore either getting gold, or saving money if the put winner just walks away refusing to get rid of the gold. Or can the put holder have to sell the gold

Man you ask hard questions! :) I don't know ....and now I'd like to for sure. In this case I suspect the answer is yes. The option contract is for 100 ounces of gold and could be settled in cash if both parties agreed. I suspect either party could force compliance with the contract and insist on a gold exchange if cash settlement wasn't mutually agreeable.

And what happens to the price of gold if some of the put holders have to buy gold to settle?

All this is happening in the murky halls of COMEX so I'm not sure what the exact mechanisms are, but it sounds to me like a buy in those circumstances would have to be made on the spot market and would tend to push the price of gold upward.

My random thoughts. The big banks and PTB have to know that eventually things at Comex will blow-up, and they will lose control in gold and silver. Especially if the new rules have any teeth (Mr. Chilton please watch what planes you get on, and don't get Spietzer'ed.) Many people believe near the gold/silver endgame the PTB will orchestrate a huge drop in gold and silver and try to cover most of their shorts. Will that drop coincide with what is being discussed here with the options, allowing the PTB to cover all their shorts and basically flip to the long side overnight? I don't think it happens this month, but somewhere down the line. Hopefully we can come up with enough clues to possibly see it coming if this is the case.

I don't know how they'll do it, but I know JPM and HSBC desperately need to cover those shorts before they lose control of the market. A big drop and an orgy of short covering is the most obvious way for them to do it, but they've got so many shorts that covering a bunch of them all at once would drive the price right back up. I don't see how they can do it...which means we probably need to be on the lookout for something sneaky and underhanded. I just can't imagine what it might be.....

You've depressed me by making me think about how much more studying I've got to do! lol....I'm kidding

Stormdancer
07-25-2010, 04:35 PM
Good to see you About AG :). If you'd like to field some of goldfanbrad's questions please feel free. Don't be at all concerned about stepping on my toes if that crossed your mind....I'd like to know the answers too...and be corrected if I gave any bad ones myself.

Stormdancer
07-25-2010, 04:50 PM
...... Many people believe near the gold/silver endgame the PTB will orchestrate a huge drop in gold and silver and try to cover most of their shorts. Will that drop coincide with what is being discussed here with the options, allowing the PTB to cover all their shorts and basically flip to the long side overnight? I don't think it happens this month, but somewhere down the line. Hopefully we can come up with enough clues to possibly see it coming if this is the case.


Harvey Organ responded to my post on his blog (hat tip to 07Silverado for pointing it out to me). Take note of the very last part that I highlighted in bold:

Harvey Organ said...
Storm: I have no cofidence in the inventory levels of silver and gold at the comex.

The inventories are divided into eligible (customer) and registered (dealer)

we strongly feel that most of the inventory of the dealer is encumbered ie. an obligation to resettle someplace else.

This is why we are experiencing so much chaos at the silver comex.

the internal transfers are amazing to see, ie. on a transfer from a customer to a dealer is a lease where the customer receives a bonus to supply his silver. He is not going to do it for a zero lease as is recorded at Kitco.

the reverse is the payment back to the customer is he is lucky enough to get it.

the lowering of the notices to be served on Friday by 97 notices is something to behold..it could only mean one thing and one thing only...the comex boys are settling for cash and the premium to settle is big.

Please understand one important point here: we are dealing with a comex with massive criminal elements and the transparency that you seek is nothing but an opaque board.

We have one good friend at the CFTC in Bart Chilton and with the new legislation, we will expose this to the world.

In the meantime, I will do my best to glean whatever data I can to give all of you the knowledge when a default will occur.All the best
Harvey.

July 25, 2010 5:13 AM

That's what this thread is all about....just trying to get a "heads up" on the inevitable in time to sidestep some of the worst effects.

Harvey if you peek in here again....God bless you and thank you for all you are doing, and for taking the time to share it with us.

About AG
07-25-2010, 06:12 PM
How about when a "put" ends up in the money?

The put/call options are for futures contracts (at least on COMEX; there are other options too such as options for shares of SLV).

So if a put ends up in the money, the person who bought the put option can sell futures contracts at the strike price (but doesn't have to if they do not want to for whatever reason). They cannot settle the contract with cash or even gold itself; it is a gold futures contract that they have to settle with (of course, they could default, but that's another story...).


The person writing the put option cannot force the buyer of the put option to do anything; the buyer has complete control.

If someone wants gold, they could buy gold call options, which guarantee them the right to buy the gold futures contracts (although perhaps at a price that is higher than the spot price when the options expire). Once they get the gold futures contracts, they can stand for delivery if they want.

The other questions I'm not in a position to answer (at this time, at least; I've got more to learn on the intricate details of the options).

beastie
07-25-2010, 07:46 PM
Now it starts to get interesting :)

http://www.zerohedge.com/article/lbma-closes-public-access-key-bullion-bank-trading-data

Stormdancer
07-26-2010, 05:14 PM
Backwardation was mentioned a while back, so while I'm waiting for Harvey's Monday commentary (due out in four hours or so), I want to present this:

Red Alert! Gold Backwardation! - July 25th, 2010 (http://fofoa.blogspot.com/)

FOFOA (Friend Of a Friend Of Another) is following a track set by an anonymous source by the name of "Another" from wayyyy back on the forum at USA Gold. It's a long story....too long for here, but "Another" outlined ways of looking at gold in relation to international finance/fiat currency that opened my eyes to a whole 'nother world. Google :)

That blog entry I just posted will give anyone willing to spend the time a very detailed understanding of backwardation and its importance. It took me literally weeks to read and absorb just the essays by Antal Fekete that are linked there so it's not a one and done task. But it is very, very important for anyone who is seeking a detailed understanding of precious metals and their relationship to fiat currencies.

I can help with a basic (very) description of backwardation in gold and silver for those completely new to the concept, but it's only an "assist"....you'll have to do the work to develop the detailed understanding.


Backwardation


In PM's (or any commodity exchanged via a futures market) there is a "normal" relationship between the spot price and the futures price. Normally the spot price is a few cents cheaper than the front month futures price and this market condition is called "contango".

That few cents difference in price is the cost of carry....or storage. If contango were not the normal condition for the market, warehouses/depositories could not make a profit. They must be able to earn income from each month metal is left in their safekeeping. It's the warehouseman's cut.

If the spot price ever becomes more expensive than the front month futures contract, then the market is said to be in "backwardation".

Backwardation is abnormal and very rare because it is an open invitation for arbitrage and risk free profits. How does that work?

Let's say you own a 400 oz gold banker's bar..free and clear. You notice that the gold market is in backwardation by $2.00. Spot price is $1150 and the September futures price is $1148.

If you sell your bar at spot, and immediately purchase a September Futures contract, you instantly collect $800 dollars "free" money, and take back your gold in September. Free money is a juicy incentive and it's the reason that PM markets NEVER remain in backwardation for very long and rarely go into backwardation at all.

Once backwardation manifests, arbitrageurs immediately begin selling in the spot market and buying in the futures market. This depresses the spot price (spot supply increases) and increases the futures price (futures demand increases) and the market quickly moves back into "contango". In a normal market, backwardation is a self-correcting anomaly.

So what is it telling us if PM's go into backwardation...and stay there?

Why would you forego risk free profits on your "dead" bullion? You'd forego it if you were concerned that you would not be able to get your gold back in September.

Extended backwardation is proof of the existence of a shortage of physical metal. It's an indication that market participants do not believe that gold or silver will be available in the future and for that reason they are willing to pay more to get it now.

This is why I mentioned backwardation before. If Harvey is right and the exlanation for these "disappearing" contracts this delivery cycle is that people are being paid massive cash premiums to give up their right to delivery...then the silver market is "de facto" in backwardation whether the futures prices show it or not.

We typically think of PM's in terms of price....a certain number of dollars bidding for gold or silver.

Thinking in terms of backwardation is a slight shift of perspective. Think in terms of gold bidding for dollars.

When there is no gold left that is willing to bid for dollars, you get a situation where backwardation is permanent, and no amount of dollars will buy you any gold. Think about it.

beastie
07-26-2010, 08:37 PM
Correct me if I am wrong and for playing devils advocate.
Wouldn't it be possible that they are selling at spot because they think or know the price will drop in the future and are not interested in the price offered for Sept.

Per Cyclist/ Quad/ Metalking etc. we are looking at a drop in Gold and Silver in the near future
Not my personal view. I am thinking tomorrow after all the usual options shennanigans we are going to get a good bounce up in gold/silver and the HUI. What it will do next week I have no idea.

About AG
07-27-2010, 06:55 AM
Correct me if I am wrong and for playing devils advocate.
Wouldn't it be possible that they are selling at spot because they think or know the price will drop in the future and are not interested in the price offered for Sept.

For the person selling, it may well be that they think/know that spot is going to drop. If the price is manipulated as many believe, it could be the people doing the manipulation that are selling.

The key in lies with who is buying. If you are buying silver or gold, and planning to hold on to it for a while, you normally will pay more to have it delivered in the future (because you don't have to pay the storage costs, and your money keeps earning interest). So why would you pay more for the silver today, if you could get it cheaper next month?

Now let's go back to the seller. He's happy with this situation, as he gets more money selling now, and he saves on storage fees. So wouldn't he look everywhere he could for silver to sell? Wouldn't he sell everything he has available to him, and immediately buy a futures contract for the next delivery month to replace his stock? If enough people did that, the market would go back to the normal state of contango (with future months costing more).

Stormdancer
07-27-2010, 09:34 AM
Friday, July 23rd (reported Monday the 26th...we're always a trading day behind...)

Harvey's comments on open interest:

Gold closed down by$ 4.70 to 1183.00 holding the resistance line of $1180 beautifully. Silver did not follow gold as it rose by 9 cents to $18.20.

The comex OI on gold rose astronishly by a huge 8218 contracts (basis Friday). Its final resting position is now at 560,595. You will recall that gold had a real roller coaster ride on Friday and eventually it fell by 8.00 dollars. So the rise in OI is nothing but short selling by the bankers.

The OI is silver continues to contract falling another 1940 contracts to 115,922 as the bankers are desperate to figure out what to do in that they have a rising price of silver on their hands coupled with a declining physical supply. To boot, the comex boys are having their hands full trying to satisfy those patient longs who have been standing for silver metal.

It looks like the banks might have gotten a little bit of that long liquidation in silver ....


Inventory Numbers

First of all, notice again that zero oz of silver was withdrawn from the dealer inventory.
And again there was a customer withdrawal of 15,731 oz.

I must inform you that there was another of those famous internal transfers..this time 220,000 oz of silver
was transferred from the customer to the dealer or to put it in plain English..silver was leased from a customer for a substantial payment.

The 220,000 oz of silver approximates 44 contracts.

There were actually 39,590 ounces of silver removed from the eligible stocks today, offset by a 23,859 ounce deposit which left the net -15,731 ounces reported by Harvey.

There were no deposits or withdrawals in the registered category, so the total amount of silver stored at COMEX (both categories) fell by 15,731 ounces from Friday, and currently stands at 110,350,318 ounces.


Delivery Notices

This was the most interesting part of an otherwise ho-hum day.....

On the notice side of things, a grand total of only 27 notices were served upon the bankers or 135000 oz.

The number of contracts that remain to be served dropped from 280 down to 173 for a loss of 103 contracts.

Only 27 contracts were served upon. What happened to the remaining 76 contracts? They just disappeared.

76 contracts is 380,000 oz of silver worth 6.8 million dollars. It is almost impossible for owners of these contracts, having deposited 6.8 million dollars

on July 1.2010 to abandon their claim. They were thus paid off handsomely to remove their bid for physical silver.


Contracts Left To Be Served

The total number of silver contracts left to be served and are standing for silver (and cannot be bribed )equals 173 notices or 870,000 oz

The total number of silver oz standing for physical on this delivery month of July equals 11.4 + .87 million oz + .2 million oz= 12.47 million oz.

A total of 1.0 million oz of silver have been paid in cash and probably these guys have bought future Sept contracts with their bonus dollar gains.

Next month, August is not a silver delivery month so the focus will be shifting to gold over the next few days. In preparation for that....from Harvey:


In gold:

please notice again that no gold has entered any registered vaults. We are now 26 days past the last delivery day in June and still no sign of entry of any gold
to settle our longs.

also notice, that we still do not have any "internal transfers" in gold yet.

There were 27 contracts served upon on options exercised or 2700 oz.

The number of contracts already served equal 836 or 83600 oz or 2.6 tonnes of gold.
A total of .3 tonnes of gold notices are left to be served upon. We should end up with 2.9 tonnes of gold standing in this non delivery month. This is a huge number.

In the front month of August, we have a massive 176,066 contracts standing or 17.6 million oz. I am sure that many of these will roll but still with two days to go, this is still very high.

If history serves, nowhere near 176,000 futures contracts will stand for deliver of gold...Harvey is simply commenting that this number is the current open interest for August and is higher than normal for this point in the delivery cycle. That may mean more contracts than normal will stand for delivery, but we'll have to wait until the 29th's numbers come out to be sure. The 29th is when those contracts standing for delivery must have their accounts fully funded with enough cash to purchase 100 ounces of gold. The 29th is the day the bankers get their first look at how much metal they need to come up with for August deliveries.

Link to Harvey's entry for Monday, July 26th (http://harveyorgan.blogspot.com/2010_07_25_archive.html)

Stormdancer
07-27-2010, 09:55 AM
As a preliminary working hypothesis I'm thinking that if we see the price of gold plunge to near or below $1150, that wild speculation about bankers using costly, money losing puts to draw real metal away from smaller investors just may not be so wild after all.

If we see the price of gold heading upward to somewhere near or above $1220...it's more likely that the bankers are seeking a "median" where their cash losses are the lowest.



...That wild strategy would leave thousands of put buyers joyfully sitting on huge monetary gains, and the put writers would be buying $1250 dollar gold. Dumb like a fox.......

We've got until 1:30pm today....$1150 is looking more likely than $1220+ at this point....another $23 or so down to get $1150, or $50 up to get +$1220 ( boy that would be a whipsaw and a half!)

Happy trading :)

Bring the Gold
07-27-2010, 10:51 AM
We've got until 1:30pm today....$1150 is looking more likely than $1220+ at this point....another $23 or so down to get $1150, or $50 up to get +$1220 ( boy that would be a whipsaw and a half!)

Happy trading :)
Awesome, awesome work in this thread. Clearly they wanted gold "put" to them. For what ends? Further suppression down the road or is there a big jump coming well above the established 1250? Any thoughts Stormy? I realize your brain must be half cooked from all the work you've done here, just though I'd ask.

Bring the Gold
07-27-2010, 10:52 AM
Awesome, awesome work in this thread. Clearly they wanted gold "put" to them. For what ends? Further suppression down the road or is there a big jump coming well above the established 1250? Any thoughts Stormy? I realize your brain must be half cooked from all the work you've done here, just though I'd ask.
Another thought. To prevent people from standing for delivery for the August month will gold surge tomorrow?

Stormdancer
07-27-2010, 11:04 AM
Awesome, awesome work in this thread. Clearly they wanted gold "put" to them. For what ends? Further suppression down the road or is there a big jump coming well above the established 1250? Any thoughts Stormy? I realize your brain must be half cooked from all the work you've done here, just though I'd ask.

Thankyou BTG....but I'm not ready to cry "victory". I'd like to see what open interest did yesterday and today before I claim any predictive powers :).

If yesterday shows a big increase in open interest (on a down day) and a still bigger increase today, I'll interpret that as a half-successful attempt to manipulate downward yesterday, followed by a BFH today...a measure of desperation that pulled out all the stops to get to the $1150 mark.

That would not be proof...but would certainly support the idea that my analysis had some merit.

I really don't have any thoughts about "to what end" except that covering shorts must be on their minds after Bart Chilton's video this week. Maybe they'll use whatever they gain here to somehow reduce their shorts....dunno.

It could be that they need the metal just to make August deliveries and keep that sham alive another month.....just speculating out loud :)

Gold Bouillon
07-27-2010, 11:08 AM
...That wild strategy would leave thousands of put buyers joyfully sitting on huge monetary gains, and the put writers would be buying $1250 dollar gold. Dumb like a fox.......

Another thought. To prevent people from standing for delivery for the August month will gold surge tomorrow?
Another thought. If gold surges after expiration it might put a damper on put buyers exercising their options. A put buyer, if he/she wants their profit, would have to sell their gold hoping to be able to buy more at a price cheaper than the put - and actually be able to get it.

Stormdancer
07-27-2010, 11:09 AM
Another thought. To prevent people from standing for delivery for the August month will gold surge tomorrow?

Now there's one I'm betting on. That has been the pattern regular as clockwork for months. The odd put/call ratio and the obvious change of strategy that represents makes me wonder a bit.....but not enough to stop me from making another buy first thing in the morning (my morning in Oz).

If today's action is the result of manipulation, we'll probably get a bounce started before 3:00pm eastern. Certainly by Wednesday.....

Stormdancer
07-27-2010, 11:41 AM
Another thought. If gold surges after expiration it might put a damper on put buyers exercising their options. A put buyer, if he/she wants their profit, would have to sell their gold hoping to be able to buy more at a price cheaper than the put - and actually be able to get it.

I really need to call a broker or something....someone that knows the inside poop on options. I don't think that would put a damper on who exercises a put option. I think the value of the option is "set" at expiry...1:30 pm today. Not so for futures contracts....but you guys are sure showing where the holes in my education are :)

Stormdancer
07-27-2010, 11:59 AM
A bit of explanation....the buy I'm making in the morning isn't motivated by the potential for an upward move due to the cessation of manipulative selling.

It's motivated by the AUD sitting a hair over 90 for the first time in a long time...and the fact that I don't trust it to stay there :) The buy isn't a trade.....it's accumulation for the long haul.

Edit: Another aside...it won't surprise me at all if silver priced in USD is lower the last week of August than it is now....I'm not terribly bullish short term.

Gold Bouillon
07-27-2010, 12:08 PM
I really need to call a broker or something....someone that knows the inside poop on options. I don't think that would put a damper on who exercises a put option. I think the value of the option is "set" at expiry...1:30 pm today. Not so for futures contracts....but you guys are sure showing where the holes in my education are :)You're right as far as that goes. Here's what I'm thinking:

Say you bought a put option at 1200. Gold closes at $1160 and your option expires $40 in the money.

Now, if gold climbs back to $1220 before you excercise your option you will have to decide if it is really worth it to collect that money. Do you sell and hope you can buy back in later at a lower price? Do you sell and hope that physical will be obtainable at any price?

Just some thoughts as I am not an options trader and don't think like them. Perhaps they, in general, have absolutely no interest in physical which would eliminate my second consideration anyway.

Stormdancer
07-27-2010, 12:36 PM
You're right as far as that goes. Here's what I'm thinking:

Say you bought a put option at 1200. Gold closes at $1160 and your option expires $40 in the money.

Now, if gold climbs back to $1220 before you excercise your option you will have to decide if it is really worth it to collect that money. Do you sell and hope you can buy back in later at a lower price? Do you sell and hope that physical will be obtainable at any price?

Just some thoughts as I am not an options trader and don't think like them. Perhaps they, in general, have absolutely no interest in physical which would eliminate my second consideration anyway.

Thanks for the second try :)...it finally got through my thick head. I see your logic...why would you exercise a put if you could get more for the gold selling at spot.....

Hmm....that makes me rethink expecting a bounce too...because if the bankers are using the put writing strategy I outlined and their motive is to aquire title to real gold...they wouldn't want to discourage the put buyers from following through and exercising their options. Downward manipulation just might continue for awhile in that case.

And I think you're right in general as well...only a very small percentage of options stand for delivery...it's mostly a cash profits playground for high leverage speculators. The only thing that made me think something besides cash might be at stake this month is that odd put/call ratio.

At the rate we're going right now there might not be any calls in the money to worry about...and I'm almost certain the banks don't want any of those ...a call standing for delivery costs them physical gold...puts just cost them money.

We're at $1161 right now....

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

...which only leaves 3000 calls in the money at this level...and those not in the money by a great deal.

Not sure....but I'm betting the calls scare them a lot more than puts...just under an hour to go ....I'm betting they try to take them all out.

audiotom
07-27-2010, 12:59 PM
stormdancer

excuse my ignorance

I've heard of this puts and calls graph
but what website(s) publish this each month

thanks

Stormdancer
07-27-2010, 01:09 PM
stormdancer

excuse my ignorance

I've heard of this puts and calls graph
but what website(s) publish this each month

thanks

I probably should have been giving "credit" for this chart every time I posted it, but I got it from Harvey's July 7th blog entry, and it appears he got it from someone over at LeMetropole Cafe named Richard of Scarborough Desk Center.

I've always relied on Harvey for the charts ....If you find a website that posts this info in chart form on a regular basis please let us know! :)

GS_Stacker
07-27-2010, 01:15 PM
Even If there Is a site, with just the numbers....that would be good enough....
Thanks to a friend on this site, I am now able to Import and update data, In Excel...
It Is very easy to make charts of this, In Excel, If you have the data available...just select the data, and the style of chart you want, and done...
I will say...those charts caught my eye also, Stormdancer, and I nearly asked you where you got them myself...
I knew someone else would do It for me..

JudyG

Stormdancer
07-27-2010, 01:38 PM
It looks like they got all but the last two lines on the chart...$1158.90 close...I'm off to bed ...it's after 3:00 am :)...gonna be a hard slog tomorrow!

Enjoyed it folks....back tomorrow for more fun :) I'll have to wait til tomorrow to see if it pops or drops from here :)

goldfanbrad
07-27-2010, 07:27 PM
Thanks for the second try :)...it finally got through my thick head. I see your logic...why would you exercise a put if you could get more for the gold selling at spot.....

Hmm....that makes me rethink expecting a bounce too...because if the bankers are using the put writing strategy I outlined and their motive is to aquire title to real gold...they wouldn't want to discourage the put buyers from following through and exercising their options. Downward manipulation just might continue for awhile in that case.

And I think you're right in general as well...only a very small percentage of options stand for delivery...it's mostly a cash profits playground for high leverage speculators. The only thing that made me think something besides cash might be at stake this month is that odd put/call ratio.

At the rate we're going right now there might not be any calls in the money to worry about...and I'm almost certain the banks don't want any of those ...a call standing for delivery costs them physical gold...puts just cost them money.

We're at $1161 right now....

http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

...which only leaves 3000 calls in the money at this level...and those not in the money by a great deal.

Not sure....but I'm betting the calls scare them a lot more than puts...just under an hour to go ....I'm betting they try to take them all out.

And there lies one of the main questions from the other day that I hoped someone knew. How long do the put winners have to decide if they want to exercise their puts? I don't expect a bounce until that time period has passed, whenever that is. But is it 1 day, 3 days, 1 week, a month?

About AG
07-27-2010, 08:22 PM
And there lies one of the main questions from the other day that I hoped someone knew. How long do the put winners have to decide if they want to exercise their puts? I don't expect a bounce until that time period has passed, whenever that is. But is it 1 day, 3 days, 1 week, a month?

It just happened. At options expiration, the options that have not been exercised expire, and become worthless.

goldfanbrad
07-27-2010, 10:07 PM
It just happened. At options expiration, the options that have not been exercised expire, and become worthless.

Cool. Thanks for the information.

HedgeHOG
07-27-2010, 10:15 PM
It just happened. At options expiration, the options that have not been exercised expire, and become worthless.

Yup. And tomorrow, everyone is going to look at each others hand to see whos holding what . Its the card up everyones sleeve that adds all the excitment. Think next couple days will be nothing to see. I mean, who would get long now with out knowing they were in control of the situation. By the way, anyone know what reports/data coming out that could be used as an excuse to push one way or the other?

Gold Bouillon
07-27-2010, 11:31 PM
http://i108.photobucket.com/albums/n5/Stormdancer_photos/AugustGoldOptions.gif

...which only leaves 3000 calls in the money at this level...and those not in the money by a great deal.

And there lies one of the main questions from the other day that I hoped someone knew. How long do the put winners have to decide if they want to exercise their puts? I don't expect a bounce until that time period has passed, whenever that is. But is it 1 day, 3 days, 1 week, a month?

It just happened. At options expiration, the options that have not been exercised expire, and become worthless.


I had asked the same question about a month ago in a different thread. A board member who has played options advised that you do have the right to ask for delivery and pay the higher price. SE
That is correct. Options are similar to futures -- they are essentially contracts. With a call option, you have the option of buying the gold/silver futures contracts at the strike price, but do not have to. Although it would normally be silly to exercise the contract if the spot price was below the strike price, you can if you want (that's what the writer of the option agreed to).

AG, I'm confused again. First, you indicate one can exercise an option that is out of the strike price. I was assuming the choice would be based on the price of gold/silver at the time of options expiration but you now say those options are worthless and can not be exercised.

So when then can an out of strike price option be exercised - in the month prior to options expiration and up until 1:30 that Tuesday? I'm also assuming time frames for put and call options are the same

Stormdancer
07-28-2010, 03:31 AM
Antal Fekete is the absolute master of the basis in my opinion and may be the most important monetary theorist of our time. Those of you desiring to dig deep into understanding PM's will be well served googling and studying all of his essays. Casual readers may want to skip this....but Fekete has responded to FOFOA's blog posted earlier.

Antal Fekete Responds To FOFOA's Speculation On Gold Backwardation Manipulation (http://www.zerohedge.com/article/antal-fekete-responds-fofoas-speculation-gold-backwardation-manipulation)

I changed my mind about buying today....gonna see what tomorrow holds. PM's look weak...no post expiry pop...stock futures modestly up...the AUD is down to 89.5 from .90 but the likelyhood of one more day of /risk on for the AUD seems high.

I may be kicking myself in the morning :)

Stormdancer
07-28-2010, 03:52 AM
Even If there Is a site, with just the numbers....that would be good enough....
Thanks to a friend on this site, I am now able to Import and update data, In Excel...
It Is very easy to make charts of this, In Excel, If you have the data available...just select the data, and the style of chart you want, and done...
I will say...those charts caught my eye also, Stormdancer, and I nearly asked you where you got them myself...
I knew someone else would do It for me..

JudyG

Judy finding those numbers is on my list of things to do. I'm betting they're somewhere on the NYMEX/COMEX/CPM Group website...but not sure. Just haven't made time to dig yet. If I find them I'll let you know. I'd love to be able to construct my own charts (but you may have to teach me Excel....) Or you could do it for us....lol

AgAuPM
07-28-2010, 04:35 AM
Judy finding those numbers is on my list of things to do. I'm betting they're somewhere on the NYMEX/COMEX/CPM Group website...but not sure. Just haven't made time to dig yet. If I find them I'll let you know. I'd love to be able to construct my own charts (but you may have to teach me Excel....) Or you could do it for us....lol

Making an Excel chart from selected column is very easy.

Example of having just put and call contracts at selected strike price.
In 1 column you have in each field number of put open interest contracts and in 2nd column you have in each field number of call open interest contracts.
In 3rd column you have strike prices.

Then you just click on Chart graph and select those 3 columns fields (click and drag) and that's it.

Once you have such file and graph you just modify value of each field after few days and you see where's option pain.

No need to even do it yourself (even when having such file all you need is 5' to modify values) since there are few sites or blogs (like mine) that can crunch and post these numbers and put small explanation.

For yesterday's option expiration day - option pain for gold was around $1,220 and this (at closing time at 13:30 EST) at $1,158.x was missed badly but option pain for silver was between $17.50 and $18.00 and this (at closing time at 13:30 EST) at $17.6x was spot on.

If you'll read a bit about option pain online, you'll discover yourself that this option pain strategy of predicting where the manipulators will move the price few days before or on options expiration day, is not 100% right (maybe even below 85%).

But it's a valuable tool for gold and silver options and futures traders.

Stormdancer
07-28-2010, 04:40 AM
Monday, July 26th (report dated Tuesday, July 27th (http://harveyorgan.blogspot.com/))

Harvey's comments on open interest:

Gold

Gold was blindsided by the banking cartel today. Gold closed down by $25.00 to 1158.00 Silver was driven below $18.00 closing at 17.62 down 58 cents.

The open interest surprises me to no end. The gold comex OI fell by a huge margin (basis Monday) to 551,017 dropping a gigantic 9578 contracts. The volume on Monday was a monstrous

331,000 contracts so we certainly witnessed quite a bit of speculator selling against this criminal raid. Also keep in mind that this OI reading is yesterdays not today. The OI for today should drop by quite a margin.

I'm obviously not up to speed with predicting what open interest will do. It did the opposite of what I expected...but the price still went down. Monday was't a big mover...the drop was modest....only $5 or $6 dollars from open to close. In any case I expected an increase in open interest for Monday and a very dramtic increase in open interest to be evident when we get Tuesday's numbers. That was based on the assumption that banks would have to be selling massive numbers of short contracts in order to drive the price down. We'll see what Tuesday's numbers show...but in all cases I trust Harvey's explanations more than my own.

Silver


In silver the OI rose by 622 contracts to 116,554 contracts.

Silver O/I moved up as I predicted...but the silver price actually ROSE .18 cents on the day. The O/I rise was very small as well....statistical noise pretty much. Can't say I got this one right either...but it does point out once more the very unusual strength of silver. Normally silver will move the same direction as gold, but move further and faster percentage wise. That has not been true on several occaisions the past week or two and deserves monitoring. That may be another indication of the tension in the silver space. Silver moving in the opposite direction of gold is very unusual.


Here's Harvey's synopsis of options expiry:


Today was options expiry and as always we see raids occurring. What is very strange this month was the huge 2:1 ratio of puts over calls. Normally, the ratio is the reverse, with a 2: 1 ratio of calls over puts. Tonight a massive amount of puts are in the money which means the sellers of those puts ie. the underwriters take possession of gold contracts.

Somebody big is in need of whatever supplies of gold are available at the comex. I smell firworks and the regulators are asleep.

My guess: the holders of the put contracts that are taking delivery, are the bankers themselves trying to get the last amount of gold and silver in their names prior to default.

I promise that I will follow this development for you.

Thanks Harvey :) Your efforts have been valuable for a long time...and are getting moreso.

Inventory Numbers

Freak me out...no movement of any silver at all...in or out...of either category. There actually was one tiny 36 ounce "adjustment" added to the eligible category...most likely an accounting correction I'd guess...but not even worth noting.


Delivery Notices



As you can see, we witnessed zero oz withdrawn from both the dealer and the customer.
There was also no internal transfers...strange indeed. I guess the comex boys need a little breather.


There were only 15 notices served upon our patient longs to the tune of 75000 oz of silver.
The comex notes that there are 129 notices left to be served.

Yesterday, I reported that we had 173 notices left to be served upon. A total of only 15 were served; thus we should have 158 notices

left. Somehow we are left with 129 notices, so 29 notices disappeared or 145000 oz of silver. These guys were paid off handsomely to roll and not take

delivery. The comex scene is getting very frantic.


Evidence of more cash payoffs ... I know if I had plunked my money down back around a month ago and I could smell desperation ....I'd be playing hardball on the premium I'd accept to withdraw my delivery demand. I suspect the players on the field are a lot smarter than I am...this can't be cheap for the banks.

Contracts Left To Be Served

The total number of oz of silver standing in this delivery month is as follows:

.

the no. of notices already served equals 2296 or 11.4 million oz + .645 million oz to be served + .200 million standing from June = 12.24 million oz of silver.

The number of oz dropped as over 1.00 million oz accepted a huge fee for rolling. Silver is in backwardation as the front month is receiving a higher price than future months.

Well...today we got a nod toward both that wild put option theory and the concept of "hidden" backwardation in silver. I'll be very interested to see Harvey's opinions on those two topics going forward as more info comes to light.

Stormdancer
07-28-2010, 05:12 AM
Here's a snippet from Harvey's post last night that is worth noting as focus shifts from silver to gold:

In gold, it is very strange that we are witnessing zero oz withdrawing or entering the comex vaults. We are 27 days past the last delivery month and we still have no gold entering.
This is probably the reason for the massive puts and someone is anxious to take physical gold.

We had only 2 contracts served upon our longs for a total of 200 0z of gold.

July was not a delivery month for gold, but there were still a few contracts (I think they were options) that stood for delivery in July. They will actually recieve delivery in August. That's where those two contracts served came from.

Otherwise, what Harvey is commenting on refers to the fact that inventory movements are not typical for this stage of the delivery cycle. Normally, you would expect COMEX inventories to shift from registered to eligible, and generally decline in total during a delivery month (June was the last delivery month for gold).

Then you would see new gold coming into the COMEX during the "off" month to replenish the supplies that delivery depleted previously. I would assume most of this "new" gold would be fresh supply from miners and refiners.

Here, Harvey is pointing out that there has been no movement of new gold into COMEX this month to replenish what left in June. And the new gold delivery cycle begins this week. Just another anecdotal oddity...but they're piling up....

About AG
07-28-2010, 06:53 AM
Judy finding those numbers is on my list of things to do. I'm betting they're somewhere on the NYMEX/COMEX/CPM Group website...but not sure. Just haven't made time to dig yet. If I find them I'll let you know.

I think I've found them again. Go to http://www.cmegroup.com/trading/metals/precious/silver_quotes_volume_voi.html (the 'Volume' tab when viewing Silver at cmegroup.com). Then click 'Daily Bulletin'. Choose Metal, Silver, and leave the dates as they are. Click 'Create Report'. It will then send you the report that they had previously created, which shows open interest for options (and futures). I hope you have more spare time! :)

Stormdancer
07-28-2010, 07:13 AM
Making an Excel chart from selected column is very easy.

Example of having just put and call contracts at selected strike price.
In 1 column you have in each field number of put open interest contracts and in 2nd column you have in each field number of call open interest contracts.
In 3rd column you have strike prices.

Then you just click on Chart graph and select those 3 columns fields (click and drag) and that's it.

Once you have such file and graph you just modify value of each field after few days and you see where's option pain.

No need to even do it yourself (even when having such file all you need is 5' to modify values) since there are few sites or blogs (like mine) that can crunch and post these numbers and put small explanation.

Thanks for that :). I'm bookmarking this for when I get around to building a spreadsheet :)


For yesterday's option expiration day - option pain for gold was around $1,220 and this (at closing time at 13:30 EST) at $1,158.x was missed badly but option pain for silver was between $17.50 and $18.00 and this (at closing time at 13:30 EST) at $17.6x was spot on.

If you'll read a bit about option pain online, you'll discover yourself that this option pain strategy of predicting where the manipulators will move the price few days before or on options expiration day, is not 100% right (maybe even below 85%).

But it's a valuable tool for gold and silver options and futures traders.

The max-options-pain theory is pretty much what we've been looking at except that we diverged from the normal and speculated about a change in strategy due to the wildly out of whack put/call ratio this month. Thank you for bringing it up by name though...it's a worthy concept to understand and as you said...it can be predictive. At minimum it's a good indicator to be aware of and it certainly adds weight to any other indicators that are lining up in the same direction.

Both the thread you started (https://www.kitcomm.com/showthread.php?t=64293&page=2) back on the 9th and your blog (http://agaupm.com/trading-options-on-august-2010-gold-futures/)look worth the time for anyone wanting to explore that max-options-pain idea more thoroughly....thanks for sharing!

About AG
07-28-2010, 07:15 AM
AG, I'm confused again. First, you indicate one can exercise an option that is out of the strike price. I was assuming the choice would be based on the price of gold/silver at the time of options expiration but you now say those options are worthless and can not be exercised.

So when then can an out of strike price option be exercised - in the month prior to options expiration and up until 1:30 that Tuesday? I'm also assuming time frames for put and call options are the same

The answer is that they have until either 3:00 or 4:00 on the day that the options expire.

Let me go through the dirty details (which helped me better understand). The NYMEX Rulebook section 116.08 specifies that the options expire on the options expiration date. It goes on to say that holders have until 3PM on the day of expiration to give notice ("Notice of Exercise") that they wish to exercise the option (buy the silver/gold, or sell it, depending on whether they have a put or call).

Section 116.09 conflicts with this, saying that they have until 4PM. They can also exercise the option any other trading day -- so they could exercise a few days before option expiration to help ensure that they didn't get caught by a 'price slam'.

Interestingly, Section 116.06 has an error in it (it refers to gold, not silver). I'm going to let them know about that.

Stormdancer
07-28-2010, 07:18 AM
I think I've found them again. Go to http://www.cmegroup.com/trading/metals/precious/silver_quotes_volume_voi.html (the 'Volume' tab when viewing Silver at cmegroup.com). Then click 'Daily Bulletin'. Choose Metal, Silver, and leave the dates as they are. Click 'Create Report'. It will then send you the report that they had previously created, which shows open interest for options (and futures). I hope you have more spare time! :)

You guys are awesome :). Time to get busy Judy! lol


Edit: geeze...they would put that out as a .pdf instead of a spreadsheet...looks like all the info is there but man...that would be quite a project getting the data into a spreadsheet to make a graph.

Stormdancer
07-28-2010, 08:40 AM
Here's a comment Harvey posted on his last blog's comments section:

Harvey Organ said:


please understand this: if I bought a put, I could put the contract to the underwriter to force him to take the contract.

Many guys would like to take possession of gold so they would underwrite a put at a strike price below what was trading at the time, say 1200 when gold was trading at 1240. The bankers would also have sold piles of calls on gold which is their usual custom. They would do these puts and calls in the coming front delivery month of gold
ie. august.

Then they bombard the futures with gold contracts driving the price down ..(remember that they are not forced to cover on the futures yet)..so the calls become worthless and now the puts are in the money.

they stand for delivery and jump queue ahead of other physical long
holders wishing to take delivery.

This is an end game scenario.Harvey

July 28, 2010 3:58 AM

The part I bolded is an interesting little insight into to why the banks have chosen to focus more on put options this month instead of sticking with futures in this little game.

(Dang he's an early riser!)

Canudigit
07-28-2010, 08:47 AM
SD, I'd read the latest Harveyorgan posting, but missed the comment you so ably brought to our attention. I wonder if he's saying THIS is the endgame.

Carpenter
07-28-2010, 08:52 AM
The part I bolded is an interesting little insight into to why the banks have chosen to focus more on put options this month instead of sticking with futures in this little game.

(Dang he's an early riser!)

An astute thinker as well.

Stormdancer
07-28-2010, 09:02 AM
SD, I'd read the latest Harveyorgan posting, but missed the comment you so ably brought to our attention. I wonder if he's saying THIS is the endgame.

I can't speak for Harvey, but it sure sounds to me like he's at least considering the possibility.

Instigator Al
07-28-2010, 09:21 AM
The end game ?

You guys are starting to worry me.

Lots of good info on this thread, and i applaud all of your efforts.

But im sorry to say that none of this will matter one iota. None of it.

The end game is default ,insolvency and pain for all.

They will not stop until we are all broken.

Comex numbers mean nothing.

The entire world is against us. The markets, the producers, the Govt. the central bank and especially the clearing houses.

At this point, our money would be better spent on Lead,and ways to propel it.

Stormdancer
07-28-2010, 09:24 AM
Somebody kindly corrected something I said way back, in response to a post I made on Harvey's blog. Back in post #73 I said:

One little peculiarity I've learned is that when a gold option stands for delivery, it stands directly for 100 ounces of gold. A silver option on the other hand, stands for a futures contract, which can then be used to stand for delivery of 5000 ounces of silver.


This is incorrect. Someone posted this link for me CME Group - Gold Options (http://www.cmegroup.com/trading/metals/precious/gold_contractSpecs_options.html)....which clearly states:

Gold options are financial tools that offer the right but not the obligation to buy or sell a Gold futures contract at a specified strike price.


I picked that idea up from Harvey's blog at some time in the past...which means I must have misread it. Sorry :o

If the person who corrected me over there is around here as well...thanks :)

Stormdancer
07-28-2010, 09:27 AM
The end game ?

You guys are starting to worry me.

Lots of good info on this thread, and i applaud all of your efforts.

But im sorry to say that none of this will matter one iota. None of it.

The end game is default ,insolvency and pain for all.

They will not stop until we are all broken.

Comex numbers mean nothing.

The entire world is against us. The markets, the producers, the Govt. the central bank and especially the clearing houses.

At this point, our money would be better spent on Lead,and ways to propel it.

If it means I can make one more physical buy right before the roof blows off and there's no silver to be had for a time....it'll matter a lot to me :)

Stormdancer
07-28-2010, 11:02 AM
Here's something I missed from last night's blog. It appears Harvey is giving us a "heads up" on what he'll be watching as the August gold delivery cycle begins:

The month of August, at the comex, will be fascinating to watch:

1. how many oz of gold will be standing?

2. how many put options exercised for gold will stand?

3, how will the comex settle with the 2.3 million oz of gold standing from the June delivery month?

4. how will the comex handle the rapidly depleting silver?

5. will the comex folk continue to offer dollars to silver longs to roll instead of taking deliver?. How long will this last?


I will concentrate most of my commentaries on the physical side as this is without a doubt more important than anything else.

I will report late tomorrow night.

Harvey

Gold Bouillon
07-28-2010, 11:33 AM
It seems that Sinclair may be thinking along similar lines as Harvey in that this is now the "Endgame." Here is his post from yesterday (bolding mine):
http://jsmineset.com/2010/07/27/gold-community-will-not-make-the-most-profit-on-golds-rise/
My Dear Friends,

I have said to you many times that the entities that will make the most profit on the gold price will not be the gold community, but rather just those that the community identifies as the enemy, the gold banks.

What is happening now is the setup to that event.

Recently Armstrong questioned publicly if the Goldmans of the world were using his cyclical analysis. Judging from what we have seen the answer is yes by intention or coincidence.

Those wishing to offset their pain on me today have to be defined as the public. The only bulls today are the stone professionals who can see what is taking place in the published numbers.

The gold banks are engineering their short cover and will shift to the long side of gold. It is in fact happening right now as the public panics. The currency market and media will be called into service in order to take gold to and through $1650.

Respectfully,
Jim

97guns
07-28-2010, 11:40 AM
all we can do is watch and root like a classic baseball game or should i call i pro's Vs. Joes

Bring the Gold
07-28-2010, 06:42 PM
It seems that Sinclair may be thinking along similar lines as Harvey in that this is now the "Endgame." Here is his post from yesterday (bolding mine):
http://jsmineset.com/2010/07/27/gold-community-will-not-make-the-most-profit-on-golds-rise/
I've heard that so often, but a number of anomalous things make me think this might be it. QE2 on deck, weird options spreads so as to soak up physical, off season opportunity to catch people off guard and a few cyclical things. No doubt the fall will be blast off, I just think August might be a tad juicier than many think.

Stormdancer
07-28-2010, 08:06 PM
Harvey's Wednesday post is up a bit early tonight, and he's all over the map.

So much so that I am reluctant to insert my own comments. He's covering a lot of territory as the silver delivery cycle closes out and the gold delivery cycle ramps up.

Go read it :). I'll comment on a couple things later I'm sure...but this one really needs to be read as a whole...and perhaps discussed after that.

Harvey Organ - Wednesday (http://harveyorgan.blogspot.com/2010/07/july-282010-commentary.html)

Stormdancer
07-28-2010, 08:46 PM
I just made that purchase I put off from yesterday and believe me...you guys that can buy in the US have no idea how blessed you are when it comes to premiums! *ouch*

Cost about AUD 6.77 over spot..including shipping.

Canudigit
07-28-2010, 09:02 PM
Congrats on the purchase StormyD.
I find that the further away I am from the purchase date, the less painful it feels to have parted with fiat, even considering the premium fees, and the better I feel about having the very real thing.

I'm finding Harvey easier to read these days. He's right - going to be interesting next few days.

Stormdancer
07-28-2010, 09:14 PM
Congrats on the purchase StormyD.
I find that the further away I am from the purchase date, the less painful it feels to have parted with fiat, even considering the premium fees, and the better I feel about having the very real thing.

I'm finding Harvey easier to read these days. He's right - going to be interesting next few days.

Believe me, the agony was in deciding when to pull the trigger :). I complain because I know you guys can get Eagles for a couple dollars over spot...it's the premiums I'm griping about :). I'll pay far more than I did today before this is all said and done. And sleep quite well...I tossed a bit last night wondering if waiting was the right choice...tonight will be sweet :)

SecretGoldfish
07-29-2010, 06:25 AM
wow . . . how much of that premium do you get back on the other end?

Stormdancer
07-29-2010, 02:27 PM
wow . . . how much of that premium do you get back on the other end?

dunno....never sold any :) lol

Stormdancer
07-29-2010, 07:08 PM
Tuesday, July 27th(report dated July 28th (http://harveyorgan.blogspot.com/))

Harvey's comments on open interest:

The open interest on the comex gold continues to baffle everyone. The reading today which of course is basis Tuesday night was 560,016 for a rise of 9,049 contracts.

The silver comex OI rose as well to the tune of 826 contracts to 117,370 OI. Please remember the huge drubbing that silver and gold received yesterday.

Generally with a fall in gold and silver one would expect a massive contraction in OI. It did not happen.

Lately I have been having my doubts as to the accuracy of the comex OI figures. It looks like the comex boys cannot keep their numbers straight.

However, if these numbers are true, then the entire sell off was short selling and no liquidation whatsoever.


Inventory Numbers

Again...it's probably better for you to read Harvey's blog yourself to get this. His entry is long and nuanced...I'd probably add confusion trying to comment on it myself. Perhaps it would be better if anyone has questions about what Harvey said they might quote the relevant commentary and post the question. Perhaps, together we can clear up any confusion by discussing case by case examples. If you do post a question...be clear about where it comes from....Harvey will be releasing today's comment in the next couple of hours if not sooner and it will be easy to get confused between this blog post (yesterday's) and the one soon to come out (todays).

I will track the info I've been tracking to this point:

A net 223,148 ounces were deposited into the eligible silver stocks.

There was a 20,970 ounce withdrawal from registered stocks so the total amount of silver (both categories) stored at COMEX increased from 110,350,318 ounces to 110,551,404 ounces....an overall increase of 201,086 ounces.


Delivery Notices

68 contracts were served delivery notices for a total of 340,000 ounces


Contracts Left To Be Served

111 contracts remain to be served this month. There were only two days of delivery left as of these figures and the number of contracts left to be served is remarkably high for this close to the end. Something to watch....will they get them all delivered by Friday or will someone be forced to get lawyers involved as has been rumoured in the past?

Harvey's summary:

There have been so far 2364 notices served on the long holders of silver to equal 11.8 million oz.

So the total number of oz of silver now standing at the silver comex in this delivery month is:

11.8 million oz + .556 million oz + .200 million (options exercised) = 12.556 million oz.

What excites me greatly is the low number of silver contracts served upon our long holders with Friday the last day to deliver official silver to our longs.

I will follow this story for you .

Stormdancer
07-29-2010, 09:48 PM
Harvey's commentary for today (http://harveyorgan.blogspot.com/)is now up. I've got to get some real-life work done so I'll have to get back to this later.

Stormdancer
07-30-2010, 01:07 AM
Wednesday, July 28th(report dated Thursday the 29th (http://harveyorgan.blogspot.com/))

Harvey's comments on open interest:

Gold closed up by $7.90 to 1168.00 Silver closed up by 17 cents to 17.60

The gold comex open interest number simply astounds me. The OI contracted by 21,849 contracts all the way down to its final resting place last night at 538.172.

The contraction is very suspicious as gold was rising after an initial hit. This does not conform well to a contraction in OI.

The comex gold volume was a new record: 424,316 contracts. It is also difficult to have such a high contraction on a record high volume interest.
Silver did not follow gold as its OI rose by 773 contracts to 118,143. Also very suspicious!!

I am having serious doubts as to the accuracy of these numbers. The volumes have been extraordinarily high and the comex contraction in gold is also quite high.

It is for this reason, I do not want to comment on these numbers until tomorrow night when the data will be a lot more accurate as the data will be as of tonight at 4 pm.

Harvey's Saturday commentary will be an important one. By then, exactly how many contracts are standing for delivery will be clear (Thursday was the day that anyone standing for delivery had to fully fund their accounts.)

Tomorrow (Friday) the banks will know exactly how much gold they've got to come up with for delivery this month.


Inventory Numbers

Harvey declined comment on the inventory numbers today, so I'll report the numbers I've been following:

135,125 ounces of silver were deposited and 10,873 ounces were withdrawn from the eligible stocks. The eligible stocks grew by a total of 124,252 ounces net.

442,290 ounces of silver were withdrawn from the registered stocks and none were deposited.

The total number of ounces in COMEX storage (both categories) declined by 318,038 ounces from Tuesday and stand at 110,233,366 ounces


Delivery Notices

The fun begins in silver.

As I stated to you yesterday there were 111 notices left to be served upon with 1 day to go. Only 36 notices were served upon for silver or 180,000 oz of silver.


Contracts Left To Be Served

I thought this was interesting:

There has been no update on the number of oz left to be served. However, theoretically 75 contracts are left to be served upon.(380,000 oz of silvere)

I will give a detailed analysis of the comex inventories and notices in the Saturday commentary

No update on contracts remaining to be served eh? Fertile ground for conspiracy :) Harvey didn't provide his usual summary of the total amounts of silver delivered...I'm sure we'll get that Saturday. It'll be interesting to see what happens to that "contracts to be served" number...

Stormdancer
07-30-2010, 03:38 AM
Perth Mint (http://www.perthmint.com.au/metalPrices.aspx)

1000oz bars listed as "not sold"

Tulving (http://www.tulving.com/goldbull.html)

1000oz bars still listed as "sold out"

APMEX (http://www.apmex.com/Category/518/Silver_Bars_Secondary_Market__New.aspx)

6 1000 OZ bars listed for sale

Nucleo Exchange (http://www.bulliondirect.com/nucleo/lp/Silver_Bullion_999_pure_Bar_CMX_(1000.00_oz).html)

8 1000 oz bars on offer...but at $714,000.00, one of the offers seems a bit on the high side :) Ya reckon somebody out there is bullish on silver? :D $714.00 per ounce....hmmm.

It was interesting that there is a bid for FIFTY 1000 oz bars at $17,100.00 each.

Feel free to add any outlets you may know of that typically sell 1000 ounce COMEX bars. I couldn't check Kitco because I don't have an account.

goldfanbrad
07-31-2010, 12:55 PM
Why is this now in the survival preparations forum???

Ten bears
07-31-2010, 03:37 PM
You got me by the shorthairs on that one goldfanbrad. I've sent Cajus a PM asking if this was a mistake and requesting a return to the Silver Discussion forum. We'll see what develops.
Moving this now, back to silver.
Thank you,

Threads in the wrong place are being moved as quickly as we can find them.

Ten bears

Stormdancer
07-31-2010, 03:43 PM
Much appreciated Ten bears :)....thankyou

silvereye
07-31-2010, 03:57 PM
StormD great timing on your purchase!

I have been following Harvey for the past couple of months and he has become my favorite source. Your thread is adding to my understanding, thank you.

Harvey's Saturday post is now up and has a lot of information.

SE

Stormdancer
07-31-2010, 04:13 PM
StormD great timing on your purchase!

I have been following Harvey for the past couple of months and he has become my favorite source. Your thread is adding to my understanding, thank you.

Harvey's Saturday post is now up and has a lot of information.

SE


Thank you silvereye....I'm digging through it now while the coffee kicks in (5:00am Sunday morning....the body is willing...brain is still rebelling :))

DayStar
07-31-2010, 10:14 PM
On Saturday Harvey reported the following on his blog:

It does not explain the massive contraction of 22,000 contracts of Thursday and another 5900 contracts on Friday.

I will wait until Monday to give you more conclusive evidence, but it seems that the banking cartel fleeced many of the long holders who have now vacated

Does anyone know in concrete terms what "fleeced" refers to? What I saw on options expiry was the cartel driving the price of gold down to about 1155 at the pit closing time of 1:30 Eastern, so options for the longs closed out of the money for the most part. The price thereafter began to rise steadily and has been pretty much rising ever since. Is this what he meant by "fleeced"? I can see why the options holders would eat their losses and exit the arena. You can't win when the house has a rigged wheel, so there is no point playing anymore.

DayStar



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Stormdancer
08-01-2010, 03:56 PM
On Saturday Harvey reported the following on his blog:

It does not explain the massive contraction of 22,000 contracts of Thursday and another 5900 contracts on Friday.

I will wait until Monday to give you more conclusive evidence, but it seems that the banking cartel fleeced many of the long holders who have now vacated

Does anyone know in concrete terms what "fleeced" refers to? What I saw on options expiry was the cartel driving the price of gold down to about 1155 at the pit closing time of 1:30 Eastern, so options for the longs closed out of the money for the most part. The price thereafter began to rise steadily and has been pretty much rising ever since. Is this what he meant by "fleeced"? I can see why the options holders would eat their losses and exit the arena. You can't win when the house has a rigged wheel, so there is no point playing anymore.

DayStar



aaa

aaaa

When Harvey talks about longs being "fleeced" he's referring to the age-old process of shaking the holders of long futures contracts out of their positions at a loss.

Most futures contracts are held on margin...purchased for ten percent of their total value. If the value of a contract decreases and the position threatens to become worth less than the amount of actual cash in the trading account the broker sends out a "margin call".

A "margin call" is a demand that the trader either place more cash in his trading account to cover potential losses, or sell the position. If the trader does not meet the margin call in a very short time the broker will sell the position without further notice.

Often smaller traders don't have the cash to meet margin calls on sharp manipulative downdrafts, or simply aren't willing to put that much cash at risk....so they sell their positions at a loss.

For the bankers it's like taking ice cream from a baby.....

As for the options...remember....all but a few call options expired worthless this month but almost ALL put options were in the money. And there were roughly twice as many put options this month as there were call options. The majority of this month's options were in the money....some by a very healthy amount. Put option holders at a strike of $1250 (and there were about 5200 of them alone) were in the money by about $92 per ounce. $9200 profit per contract (less what was paid for the option + broker fees, etc). Options holders are not subject to margin calls.

Stormdancer
08-01-2010, 04:59 PM
Thursday, July 29th(report dated Sat, July3 (http://harveyorgan.blogspot.com/)1st)

Harvey's comments on open interest:


Silver COT:

In the large speculator category:

those large speculators that are long in silver increased those positions to the tune of 658 contracts.
those large speculators that are short on silver increased those short positions to the tune of 1950 contracts.

and now the commercial category:

those commercial players that are long in silver and thus close to the physical scene increased those long positions to the tune of 931 contracts.
and those commercial players that are short and are the major suppliers of the paper comex silver contracts, decreased their shorts to the tune of 261 contracts..very tiny.

and now the small speculators:

those small speculators that are long in silver reduced by a tiny fraction to the tune of only 211 contracts.
those small speculators that are short in silver reduced their shorts by 316 contracts.



Harvey didn't feel he was able to make much sense of the COT data this week so I'm certainly not going to try to add my two bits :). As he implied, the picture may be clearer on Monday.

I didn't accomplish as much this month as far as bringing clarity to what was going on during this options exiry/rollover period as I'd hoped. I encourage you to keep reading Harvey's entries yourselves because over time understanding will come. It can be a hard slog at first while you learn the terminology...but it's not wasted time even if you don't yet understand it all. In time you will.


Inventory Numbers

In silver:

There were 7240 ounces deposited to the eligible category and 7211 ounces were withdrawn. The eligible stocks of silver increased by a meagre 29 ounces today.

455,553 ounces were withdrawn from the registered category and none were deposited.

The total number of ounces stored at COMEX (both categories) decreased by 455,553 ounces to finish at 110,095,880 ounces.

The total ounces stored figure for today does not add up correctly when starting with the numbers from the previous day's report.....no wonder Harvey doesn't trust these numbers.

Another aside...I have not monitored these numbers regularly for some time now, but there was a time I did. I don't know what might have happened in those months that I wasn't watching, but FWIW, I don't recall ever seeing the total stocks fall below 109,000,000 ounces. We're at the bottom of the range from what I've seen.

This post is going to get too long, so I'll report the COMEX inventory totals for the week in the next post.


Delivery Notices

....I reported to you that on Thursday only 36 contracts were served leaving 76 contracts to go or
380,000 oz of silver. The removal of the 455,553 oz of silver is probably to satisfy the 76 remaining longs and part of the 36.

If you recall, COMEX declined to even report on the contracts remaining to be served yesterday...so we're left with guessing what is going on. Harvey seems to be commenting that today's withdrawal from the registered stocks appears to be just about enough silver to cover those contracts that remained to be delivered for July silver. Since COMEX didn't see fit to provide specific data as is customary, guessing is all we have.

This next comment needs a bit of explanation:

In silver only one contract was served upon options exercised to the tune of 5000 oz .

Thus so far we have 5000 oz of silver standing for this non delivery month of August.

There is no question that we have turmoil in both silver and gold comex with internal transfers now occurring in both metals.

This single contract that was served upon was not from July. This was an August silver option and this represents the first (and likely only) delivery notice for August silver. August is not a delivery month for silver, but there are a few August silver futures and options that can stand for delivery. It's not all that common because any August silver futures or options may stand this month, but they will not actually receive any metal until September, which is the next regular silver delivery month.

The July delivery month for silver is now fully closed out and from here we will be focused primarily on gold until August options expiry...at which point we'll need to begin following both closely again. Options expiry in July was focused on gold in preparation for August delivery of gold. This month options expiry will be focused on silver in preparation for the September silver delivery month. Confused yet? :) Keep hammering at it...it'll come...and hopefully I'll get better at clarifying with practice....


Contracts Left To Be Served

There are no contracts (admitted to anyway) remaining to be served for July delivery. It will be interesting to keep our ears to the ground as time goes by. It's possible that COMEX's refusal to report this information is because all the contracts didn't get delivered by the required date. If we begin to hear stories of people forced to get lawyers involved before they could get their silver delivered it'll be telling.

Stormdancer
08-01-2010, 08:27 PM
I stuck with commenting only on silver in the last post because it was going to end up too long otherwise, but Harvey said a lot about gold that deserves attention...which I'll cover here in it's own post.

Gold closed up by $13.30 Friday to 1181.70 Silver rebounded firmly to 17.99 rising by 39 cents.

The gold comex OI for the entire gold complex fell again yesterday by 5909 contracts to 532,234.


Harvey's comments on the weekly COT report for gold:

Before going into the delivery notices and inventory levels, I would like to give you the COT report released at 3:30 pm yesterday.

To say the least, the report is very bizarre.

In gold:

the large speculators that were long in gold increased slightly their positions to the tune of 288 contracts.
the large speculators that were short on gold decreased significantly their shorts by a large 10,306 contracts ( i.e. they covered their shorts)

and now the commercials in gold

the commercials that are involved in gold and are thus long in gold unexpectedly sold massively to the tune of 15,266 of their long positions.

and our notoriously short gold commercials like JPMorgan etc increased their short positions but by a tiny 3375 contracts.

and now the small speculators who are coming to the party late:

those speculators that were long on gold increased those positions to the tune of 5009 contracts.
those speculators that were short on gold increased those positions to the tune of 3712.

This data is of Tuesday night.

It is extremely difficult to ascertain what happened to those commercials that are normally long to liquidate such a massive quantity of the long positions.

In my opinion, analysing these COT reports is a lot like reading tea leaves. A lot of these very experienced traders can make some good guesses and I certainly trust the Harvey Organs, Ted Butlers and Adrian Douglas' of this world to interpret things better than I can. But the fact remains that we're all trying to draw conclusions from very limited data with multiple possible interpretations.

There are a few things about the COT that are reasonably certain. High open interest numbers usually mean high interest in gold or silver investments. More traders are buying more contracts and there is more money comitted to PM investments when the open interest is high.

Interest is usually highest when prices are moving higher so, often (but not always) open interest increases on days when the price of gold is moving higher.

The opposit is also usually true. In a declining market open interest often goes lower as PM investment interest wanes.

Remeber back when I commented that the futures market is a zero sum game, where options are not? In futures, the number of longs and shorts is always exactly equal. For every long there must be a short and vice versa.

When analysts talk about "net short" or "net long" positions reflected in the COT, they're talking about relative positions held by different players within the futures market...which as always remains a zero sum game en toto.

Harvey comments on four different categories of players within the market.

The large commercials:

These are generally assumed to be the market makers...the big bullion banks most likely to manipulate the market including the biggest offenders JP Morgan and HSBC. It would probably also include the metal trading desks of the big international banks like Deutscher Bank, BNP Paribas, Societe General, Goldman and the like....but the huge shorts are carried by JP Morgan and HSBC with JP Morgan by far the biggest short of the two. It's probably safe to assume that GLD and SLV activity shows up in this category as well since JP Morgan and HSBC are intimately involved with those ETF's.


The small commercials:

These guys are assumed to be intermediate banks directly associated with the metals trade like Bank of Nova Scotia for example, miners and refiners and perhaps the very largest of the PM dealers.


The large speculators:

This category may include commodity funds, PM mutual funds, smaller ETF's, technical funds, large volume momentum funds...etc. They might be described as "managed money".


The small speculators:

These are the "non-reportable" positions held by us little investors down here on the mushroom level.


Studies show that commercials hold a superior record to other trading groups in forecasting significant market moves. The large commercials are generally believed to have the best fundamental supply and demand information on their markets, and thus position their trades accordingly. Along with the advantage of having the best fundamental supply and demand information on their markets, large commercials also trade large size, which in itself moves markets in their favor.

The small specs have a distinguished history of getting run over time and again. This is because most small speculative traders of futures markets are usually under-capitalized (subject to being driven out of their position by margin calls) and/or on the wrong side of the market.

enough brain burn for one post :)

Stormdancer
08-01-2010, 08:35 PM
Harvey concluded his comments on this week's COT as follows:

So we have witnessed a complete change in thinking in gold and silver with respect to the large speculators.
In gold they have covered their short positions big time; in silver they have increased their short positions.

In the commercial field in gold, those that have been long for quite a while decided to lighten up on their longs
yet in silver those that have been long increased those positions.

We have not gleaned too much information from the COT report

Stormdancer
08-01-2010, 08:36 PM
Weekly inventory summary:

For the week beginning Friday the 23rd and ending Thurs. the 29th...eligible stocks...

Friday -15,731 ounces

Monday +36 ounces

Tuesday +223,148 ounces

Wednesday +124,252

Thursday +29 ounces

Total +331,734 ounces were added to eligible silver stocks this week.

The total amount of silver stored at COMEX (both categories) began the week at 110,350,318 ounces Friday and ended with 110,095,880 ounces on Thursday.

The total amount of silver stored at COMEX declined by 254,438 ounces this week.

I'm guessing this is pretty normal for a silver delivery month. You'd expect the registered category to decrease and the eligible category to increase as silver is delivered into standing contracts. The part that might be anomalous is the overall decline and as I previously mentioned it appears that total stocks are at a fairly low level historically. As we build a longer term base of information analysing changes may get more meaningful.

Bearing in mind the possiblity (likelihood?) that the numbers themselves are less than trustworthy :)

07Silverado
08-01-2010, 08:45 PM
So we have witnessed a complete change in thinking in gold and silver with respect to the large speculators.
In gold they have covered their short positions big time; in silver they have increased their short positions.

In the commercial field in gold, those that have been long for quite a while decided to lighten up on their longs
yet in silver those that have been long increased those positions.

We have not gleaned too much information from the COT report

Maybe that's to compliment the divergence in the point and figure charts for Au & Ag.

Silver targeting $29 (http://stockcharts.com/def/servlet/SC.pnf?chart=$SILVER,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G).

Gold targeting $1050 (http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,P&listNum=).




:eek:

Stormdancer
08-01-2010, 08:50 PM
Maybe that's to compliment the divergence in the point and figure charts for Au & Ag.

Silver targeting $29 (http://stockcharts.com/def/servlet/SC.pnf?chart=$SILVER,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G).

Gold targeting $1050 (http://stockcharts.com/def/servlet/SC.pnf?c=$GOLD,P&listNum=).




:eek:

I've got to say I really appreciate the contributions others are making to this thread. That's a very interesting insight O7Silverado. I can't imagine a scenario where gold and silver would diverge to that degree so it's interesting that there are charts pointing to exactly that.

Those price points would put the GSR at 36.21 or so....not out of the realm of possibility.

Hurrah for the power of a group....much more interesting results that way...thanks again.

GS_Stacker
08-01-2010, 09:01 PM
Reading and thoroughly enjoying this thread, Stormdancer...
I much appreciate your breakdowns of Harveys Blog..
It makes It so much easier, to understand what Is going on...
So, thankyou...and please keep It up..

JudyG

07Silverado
08-01-2010, 09:05 PM
I've got to say I really appreciate the contributions others are making to this thread. That's a very interesting insight O7Silverado. I can't imagine a scenario where gold and silver would diverge to that degree so it's interesting that there are charts pointing to exactly that.

Those price points would put the GSR at 36.21 or so....not out of the realm of possibility.

Hurrah for the power of a group....much more interesting results that way...thanks again.

No problem Storm. :)

I can't imagine a scenario like that either.

In all fairness, we did just come out of the expiry on gold options which might have skewed the figures...

...on the other hand the target for gold was based on the closing price of July 1st.

Stormdancer
08-02-2010, 01:36 PM
We just might need to be limbering up our imagination 07Silverado :) Gold flat and silver a poppin'.......my silver spidey senses dragged me out of bed at 2:00am :D


...and yer wekkum Judy :)....glad you're enjoying it :)

Stormdancer
08-02-2010, 04:57 PM
Remember the arguments that indicate backwardation is evidence of physical shortages? I didn't comment on it at the time, but at Tuesday's close (the day before the August futures stopped trading and went "off the board") Harvey observed the following:

In another startling event, the following three months of gold all settled at the same price of 1160.40 which signifies zero contango. The July (editor's note: here "July" refers to the spot price), August and Sept comex gold
all settled at 1160.40

Gold is in short supply

Now that's not backwardation...but it's as close as you can get. Just one cent cheaper for either August or September gold and it would have been in backwardation.

He followed that observation with another indication that there is lots of activity in the physical markets...high demand:

We are hearing that the LZ swap or London Zurich swap has gone positive by about 20 cents per oz. This is indicative of refiners going at full tilt as demand for physical gold is

skyrocketing. The swap is usually negative 10 -20 cents.The refiners take a 400 oz brick and break it into 100 oz or 10 oz bars. The jewellers are back in business.


Then came this from the Thursday data (reported Saturday):

However in another strange development the Sept contract traded at a twenty cent backwardation to the August delivery contract in gold.
Very unusual!.

...and that is backwardation....however brief...it's another little clue in this surreal COMEX environment.

Again....I can't encourage you to read Harvey's work for yourself enough. I'm not covering everything and not even able to cover some of it...If you're not reading for yourself you're missing out :).

Harvey's latest should be out in three or four hours....

Edit: One more little comment. Harvey mentioned somewhere in his COT/Open Interest analysis, that it appeared that the manipulators still had pretty firm control of gold, but appeared to be losing it in silver. Today's price action would tend to support that thesis......:D Can't really read anything definitive from one day's action...just noodling out loud here :).

Stormdancer
08-03-2010, 12:14 AM
Friday, July 30th(report dated Monday, August 2nd (http://harveyorgan.blogspot.com/))

Harvey does all the work this time :). Not much for me to comment on while Harvey waits for more trustworthy numbers:


Good evening Ladies and Gentlemen:

Gold closed today up by $1.70 to 1183.40. Silver on the other hand closed up by 41 cents to 18.40

The gold and silver comex numbers simply floor me.

In gold, the comex gold OI contracted by a huge 10,597 contracts which is basis Friday. Please remember that gold shot up by 18 dollars on Friday.

So a contraction of this size is quite large.

In silver, the silver OI rose by a huge 1597 contracts to 119,111.


I will not comment on the notices served on gold and silver until the dust clears.

All I can tell you for sure, is that 3860 contracts or 386,000 oz of gold remain to be served.

It also looks like, 4847 notices have been served or 484,700 oz of gold.

What alarms me is the contraction of open interest totally opposite to silver. If longs received cash, they would buy a future contract and OI would remain the same.

Why is OI contracting with a rising gold price? Why has the GLD contracted by 38 tonnes of gold?

The GLD's gold is really the Bank of England gold and the GLD boys received this gold as part of a swap. Does the Bank of England need this gold as Europeans are demanding the physical metal and there is

none around?


Let us wait a day as see how the options and delivery notices play out by tomorrow

DayStar
08-03-2010, 01:23 PM
Friday, July 30th(report dated Monday, August 2nd (http://harveyorgan.blogspot.com/))

Harvey does all the work this time :). Not much for me to comment on while Harvey waits for more trustworthy numbers:

It seems to me that part of the demand for gold might be the move from unallocated to allocated gold. Gold investors are beginning to realize that if they don't have allocated gold, they don't have any, and as Storm pointed out in another thread, lots of folks are having second thoughts about unallocated gold, and large numbers are moving to allocated accounts. The allocated accounts have serial numbered bars stored in your name which makes it more difficult for the banksters, aside from outright theft (not impossible), to use your gold in a swap, lease or some other device where physical gold disappears to be replaced with paper.

DayStar

07Silverado
08-03-2010, 02:51 PM
I posted this thread over in the gold forum. Linking it here because it fits. :)



Gold Movements Suspect (https://www.kitcomm.com/showthread.php?p=1043729#post1043729)

Stormdancer
08-03-2010, 03:28 PM
Darned right it fits! Good catch!

Harvey is a very careful commentator and as you have seen he prefers to simply not comment if he's usure of what's going on with the numbers. He works very hard to avoid spreading misinformation, which is one of the big reasons I think his work is so valuable.

The guy in the article 07Silverado has linked (http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=12482)is looking at the some of the same oddities in the numbers that Harvey has taken note of and trying to make some sense of it all. Definately a must read...and if you've been following this thread from early on, you've been introduced to enough of the lingo to understand the article fairly well.

Must read stuff...Harvey is obviously not the only bloodhound on the trail. :)

Stormdancer
08-03-2010, 05:00 PM
Harvey's Saturday report (http://harveyorgan.blogspot.com/2010_07_25_archive.html)was long, involved and diverse and because of that I didn't feature all of it here in this thread. In light of 07Silverado's article it might be good to reach back and look at some more of it.

Before commencing, we got for the first time an internal transfer in the gold comex.

The exchange notified everyone that there was a massive 367,716 oz of gold transferred from the customer to the dealer.

We were seeing these kinds of transfers in silver becoming a regular occurance and several times in the past Harvey has indicated he was expecting to see them in gold too. Well, it's begun. The implication is that if the dealers (banks) are finding it necessary to lease gold in order to make deliveries right at the beginning of the delivery cycle...where are they going to get the rest? Is this indicating a lack of deliverable gold at COMEX? Time will tell, but if it is true that physical silver and gold are in short supply, that's plenty of incentive for COMEX to be lying about open interest, delivery notices, inventory and every other questionable number they've been throwing around lately. Hiding the true condition of physical supplies would be paramount if supplies are short....or non-existant.

There is no question that the amount in question was a lease where the customer was provided with a handsome payment or fee for leasing his gold with the promise that the gold will be returned to him shortly. It is interesting to note that the transfer coincided with almost exactly the number of notices served upon our new entrants to the physical gold. Please refer to the no of 3685 notices served, which represents 368,500 oz of gold. We will have to wait and see if 368000 oz of gold is removed from the dealer inventory.

In another strange event, these numbers were released late Thursday instead of late Friday. This constituted a 3,685 contraction in OI as these guys are not longer
standing, they have been served.


These are some of the same topics dealt with in the Numismaster article (http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=12482)07Silverado linked to. FWIW

goldensilver
08-03-2010, 07:15 PM
what scares me is if ppl are wanting delivery of gold and silver and they don't have it, all the more reason to drive the POG/POS much much lower.

Stormdancer
08-03-2010, 07:36 PM
what scares me is if ppl are wanting delivery of gold and silver and they don't have it, all the more reason to drive the POG/POS much much lower.

I share that concern ....short term. I get a bit frustrated when some run around screaming "manipulation" with every downtick of the price of PM's. There are indications of when price changes are manipulative if you know where to look and not every change is due to malevolent intervention. Claiming they are discredits the reality when the PTB does intervene.

With that said, there are times when manipulative activity is much more likely than others, just because the stakes are higher and we're in such a time....assuming these little signs we've been observing are truly indicative of metal shortages.

I'm very much on the lookout for a concerted effort to drive PM's into the dirt...probably in concert with a dramatic decline in the stock markets.

With what appear to be preparatory moves toward another big round of quantitative easing being sounded almost daily now, the need to bolster confidence in sovereign debt (bond markets) after so much negative press on the topic....the PTB's incentive to keep people from seeing PM's as a safe haven has seldom been stronger.

They're fighting an uphill battle because the European crisis caused many to turn to gold in a big way. Now, those that chose gold during that crisis instead of running to the traditional safety of bonds, will likely do so in the next crisis unless they're severely discouraged from it by a big hit on the POG.

The PTB cannot afford that when they need investors buying tons of bonds in support of their next QE manuevers.

As always, time will tell...but the incentives for manipulative activity are off the charts right now.

I don't think they'll achieve the same level of success they did in 2008 this time though...too much water under the bridge, and I think it highly possible that the divergence between the spot price of PM's and the price you actually have to pay for real metal may be much more dramatic than it was in 2008.

Stormdancer
08-04-2010, 06:03 AM
Monday, August 2nd(report dated Tuesday August 3rd (http://harveyorgan.blogspot.com/2010/08/august-32010-commentaryimportant.html))

Harvey's comments on open interest:

Gold rose today up $1.80 to 1185.20. Silver rose 1 cent to 1841.00 after flirting with 18.55 early in the session.

The gold comex OI rose today by a good 1416 contracts to 523,083 dispelling rumours of a complete spec liquidation.

In another surprising statistic, the silver comex OI continues to rise, closing today at 120730 up 1639 contracts.

In silver it seems that the banking cartel are trying desperating to cover their shorts. In gold, the picture is still quite mirky

but it seems that demand is rising globally for the physical metal. We even had the head of banking at UBS state that many

investors are turning their unallocated gold accounts into allocated accounts. (UBS report linked in this GATA article (http://www.gata.org/node/8882))



Inventory Numbers

Gold is now more in focus than silver since this is a gold delivery month but I'll keep an eye on both from here on out.

In Silver:

No notices were issued so we remain at one only notice issued for a total of 5000 0z of silver

However we did see another massive withdrawal of silver to the tune of 188,857 oz. Some silver found a home at a registered

comex facility to the tune of 71,291 oz. Probably this silver will leave in a couple of days satisfying some longs.

However the bulk of the silver (approx 111,000 oz) left all registered comex facilities.


The total amount of silver stored at COMEX (both categories) fell by 117,566 ounces and stands at 110,243,698 ounces.

There were no adjustments indicating any leasing activity.

In gold:

I am just going to report the facts and I will leave the rest to your imagination.

On the 30th of July we saw an internal transfer of approx 90,000 oz of gold leave the customer inventory and head over to the

dealer inventory.

I have no doubt that this amount will satisfy the 90,000 oz of gold options exercised for July gold. You will know that this has happened

when you see a withdrawal from the dealer inventory of 90,000 oz and the gold either enters the customer inventory or leaves outright.

Today we saw 64,016 oz leave the customer inventory. I do not think this has anything to do with the 90,000 oz of options exercised.

I believe that this 64,000 oz is another nervous nelly leaving the scene of the crime.


My addition to Harvey's commentary will involve tracking the total amount of gold stored at COMEX.

The total amount of gold stored at COMEX (both categories) fell by 64,016 ounces to 11,112,103 ounces as of Monday's close.


Delivery Notices

Now for the all important notices. Actually there were no notices yesterday and today a tiny 468 notices equal to 46800 oz of gold.


Contracts Left To Be Served

There remains 3179 notices left to be served or 317900 oz of gold.



The total number of gold standing for this delivery month is as follows:

4865 notices served so far equal 486500 oz of gold:


so 486,500 oz already served + 317,900oz to be served = 90,000 oz of options exercised= 894,400 oz


The amount of gold standing is less than we had anticipated.


I find this a bit interesting because we ended up with much less silver than expected standing for delivery last month. About ten million ounces less. I can't draw any conclusions....just an observation.

Harvey continues:

However it does not explain what happened to all of our

long OI's that were decimated. I find it very unusual that the longs who have been patient all a sudden on July 30.2010 they

decided on mass not to play the game anymore and cash in their chips. They certainly did not roll to a Oct or December contract

as OI would be much higher today.

I am sorry, I do not have an answer. Gold is trading differently to silver. It seems that the silver longs are now pressuring the comex shorters

and they are sweating bullets. No so in gold.


Harvey picked up some info from UBS about gold demand in India (strong) and he also picked up on that article 07Silverado linked to at Numismaster....it's worth your time to read the rest of the blog (http://harveyorgan.blogspot.com/2010/08/august-32010-commentaryimportant.html)...as always :)

Instigator Al
08-04-2010, 07:13 AM
Thanks for the post Storm.

Once again Jim Willie is spot on. Best info and writing on the subject by a huge magnitude, in my opinion.

Stormdancer
08-04-2010, 07:42 AM
Thanks for the post Storm.

Once again Jim Willie is spot on. Best info and writing on the subject by a huge magnitude, in my opinion.

Jim Willie has been a must read for me for years now. Very few commentators can match his record of accurate predictions. He's been early quite a bit....but seldom wrong.

Stormdancer
08-04-2010, 08:38 PM
Here's an article I think it worth reading from Casey Reports...generally a pretty sound source for gold/silver analysis.

Gold Meltdown Or Mania - Batten Down The Hatches (http://www.zerohedge.com/article/guest-post-gold-meltdown-or-mania-batten-down-hatches)

It outlines arguments that seem plausible to me and explain why gold and silver may not get caught in this next stock market downdraft to the same degree they did in 2008. But, it may produce some really attractive, low risk entry points for PM stock investors.


Harvey's latest didn't spend a lot of time on his usual analysis ....today was all about news and he has compiled a good reading list for that. The most likely explanation for today's "pop" is the news out of China about China's "new" initiatives in setting up a fully functional PM trading system. There are many good articles linked all over Kitco on the topic as well.

One of two things is happening here. Either China has just stuck the western powers in the eye and turned up the heat on the PM market manipulators, or we're seeing the tentacles of the Vampire Squid working their way deeper into the bowels of Beijing.

Either China is seeking a greater place and greater say in the PM markets (and by extension in the global currency markets), or the manipulators are scrambling to set up a western style fractional gold market that can be used to divert the burgeoning demand for gold in Asia into another leveraged paper storm similar to the COMEX and London Bullion Markets.

Either way, this development will have long term consequences for PM's....but those could take some time yet to fully develop.

We're not out of the woods yet in spite of today's pop. We're still in the depths of seasonal weakness and while that's no guarantee, I'm not ready to discount it yet. I'll feel a bit more confident about the chances of seeing a sustained uptrend in PM's when the seasonal doldrums begin to wane in a month or so.

Bring the Gold
08-04-2010, 10:48 PM
You're the man Stormy! I will respond to your PM when the wife gives me a shot at the full computer. All I can say is thank you very much for that. Your post on the BIS and unallocated gold was also a show stopper.

By the way if China is working with Goldman and by extension their string pullers, then we are all in the deepest of doo doo.

I'm praying fervently that China and Russia haven't been co-opted. I'm not quite to the point of "the enemy of your enemy is your friend". Obviously, both of those countries are even worse!

That said anything that can oppose the western PTB is helpful for the time being.

Gold Bouillon
08-05-2010, 02:09 AM
One of two things is happening here. Either China has just stuck the western powers in the eye and turned up the heat on the PM market manipulators, or we're seeing the tentacles of the Vampire Squid working their way deeper into the bowels of Beijing.

By the way if China is working with Goldman and by extension their string pullers, then we are all in the deepest of doo doo.

I'm praying fervently that China and Russia haven't been co-opted. I'm not quite to the point of "the enemy of your enemy is your friend". Obviously, both of those countries are even worse!

That said anything that can oppose the western PTB is helpful for the time being.

I would be greatly surprised if the Chinese govt didn't have an army of analysts reading every financial site, blog and even PM forums like this one. They would be well aware of GS's machinations. If they end up at the ball together, China will be dancing with her eyes wide open.

Who will out-step who though remains to be seen. Stay tuned for The Dragon Whale vs. the Vampire Squid.

Stormdancer
08-05-2010, 04:45 AM
Tuesday, August 3rd(report dated Wednesday, August 4th (http://harveyorgan.blogspot.com/2010/08/august-42010-commentary.html))

Harvey's comments on open interest:

The gold comex OI continues to confound me and many analysts and they just do not know what to make of this development.

Today, the OI continued to contract losing another 4400 contracts to finish with todays reading of 518,643 (basis yesterday).

Again, silver OI is going the other way, rising by a huge 2694 contracts to 123,464.

There was little activity on both the comex gold and silver level. I will go into details tomorrow.


Inventory Numbers

In silver:

In silver, another 117000 oz left the customer inventory...

...In silver, massive amounts of silver are leaving and no contracts are being hit due to lack of inventory.

I believe that the silver comex has sold out of silver. The jury is still out on gold.

I am truly astonished that Harvey did not comment more specifically on the silver inventory changes...they strike me as quite dramatic. In fact, the more I look at this the more it appears that Harvey may have made a mistake and read from the previous day's NYMEX Daily Report (http://www.cmegroup.com/trading/energy/nymex-daily-reports.html). I reported a 117,566 ounce withdrawal for Monday ...which is about the same as what Harvey is reporting for today...and today's (Tuesday data) NYMEX report is showing much different numbers.

Today's report is showing that a very significant 828,363 ounces of silver were withdrawn from eligible stocks...and even that is only part of the story.

There were no withdrawals or deposits recorded for the registered category, but there was another of those mysterious "adjustments" in which another whopping 449,717 ounces were subtracted from registered totals...but were not deposited into eligible stocks. It appears this silver also just got up and left the COMEX.

The total amount of silver stored at COMEX (both categories) declined by 1,278,080 ounces to rest at 108,965,618 ounces. I haven't always watched this number as closely as I have lately, but that is the lowest total I've ever personally seen for COMEX silver stocks. If anyone knows what the historical low for COMEX silver stocks is I'd love to hear what that number is.


In gold:

In a nutshell, no gold is entering the gold vaults, no gold is leaving to settle accounts.


63,825 ounces were deposited to the eligible gold stocks and 321 ounces were withdraw for a net change of +63,504 ounces.

An additional 299 ounces were withdrawn from registered stocks, and likely ended up as part of the total +63,504 ounces added to the eligible category.

I can understand why Harvey wouldn't detail these numbers because the amount deposited today is very similar to the amount withdrawn yesterday. the net change over the two day period is negligible.

The total amount of gold stored at COMEX (both categories) rose by 63,204 ounces to stand at 11,175,308 ounces.


Delivery Notices

Harvey chose not to report these statistics, but I'll hazard a guess and say that the 299 ounce withdrawal of gold from the registered stocks may indicate that three gold contracts were served upon.

Contracts Left To Be Served

Harvey also chose not to give these statistics and his customary summary of ounces standing for the month. I suspect he'll catch us up later tonight.


Note: Those wishing to have a look at the actual NYMEX Daily Report I've been looking at can do so by going to the "NYMEX Daily Report" (http://www.cmegroup.com/trading/energy/nymex-daily-reports.html) page. Once there, scroll down to the last heading entitled "Warehouse and Depository Stocks" and you'll see links for "gold" and "silver" just below the heading. Clicking on those will bring up the spreadsheet for each metal.

Stormdancer
08-05-2010, 04:56 AM
Some comments have appeared on Harvey's blog and it appears that the NYMEX Daily Report came out late and Harvey may have been trying to report without data in hand as opposed to accidently opening the wrong day's report. Harvey posted the following comment on his blog in response to another poster who was wondering about the low silver number as well:

Harvey Organ said...
Chris: thank you so much for the information. 1.3 million oz removed is getting quite scary.

let us see what tomorrow brings .
it is unusual that they have not been able to hit any options that are standing for delivery...very unusual.\\

Chris: don't look at the total inventory in silver. I will bet that there is a lot of paper silver in that inventory.
I prefer to look at movements into and out of the comex and the number of delivery notices.

however in quantum you are right, it is the lowest in quite some time.

anonymous: when we deal with apex tulving etc we are dealing with smaller bars and coins.

in the comex we are dealing with good delivery bars..big difference.

when London cannot deliver bars then our smaller dealers will not get their supplies.
August 4, 2010 7:46 PM

silvereye
08-05-2010, 09:18 AM
Storm
Thank you for keeping us updated. It is certainly getting interesting.
SE

Stormdancer
08-05-2010, 09:41 AM
Storm
Thank you for keeping us updated. It is certainly getting interesting.
SE

you are most welcome silvereye...and I agree...interesting indeed.

Bring the Gold
08-05-2010, 11:49 AM
Storm, this continues to be the "go to" thread on silver. Absolutely masterful work, hats off and keep it coming as much as you can! Cheers!

wrdavisjr56
08-05-2010, 03:28 PM
Of the remaining two categories of Silver standing at 108,965,618 ounces. Is there any idea as to a percentage of how much is eligible? I have only been following the Comex reports for a few weeks. I'm new to the Silver market but slowly seeing the important changes of whats to come. :o

Stormdancer
08-05-2010, 06:59 PM
Of the remaining two categories of Silver standing at 108,965,618 ounces. Is there any idea as to a percentage of how much is eligible? I have only been following the Comex reports for a few weeks. I'm new to the Silver market but slowly seeing the important changes of whats to come. :o

wrjdavis,

Of that 108,965,618 ounce total,

50,883309 ounces are registered stocks, and

58,082,309 ounces are eligible stocks.

Eligible stocks are just shy of 54% of the total.

HedgeHOG
08-05-2010, 07:54 PM
So, non farm payroll report out tomorrow, anyone know what the take down time of metals might be?

Stormdancer
08-05-2010, 08:20 PM
Hedgehog....so far, I'm pretty much a one trick pony. I've really made an effort to study the alleged manipulative activity surrounding the monthly PM options expiry and have come away conviced it's real.

As to the manipulation around the Non-Farm Payroll report...I'm still learning. This was the report that Andrew Maguire spoke of in his emails that walked the CFTC through the JPM manipulation of silver, so I have to wonder...will the banks/FED dare to leave manipulative footprints in the tickers after Maguire exposed it so conclusively? I don't know.....just asking :).

I'll make a guess though. The NFP is released at 8:30 am, and I'd guess that they'd want to make gold and silver look weak before a bad report were released. If that's the case, the smackdown would need to begin in London trading.

Another question: Do the insider/manipulators have a preview of the report? Bet on it. Would they necessarily attempt a PM takedown even if the report is unexpectedly rosy? Might not....but then again the chances of this being a 'rosy' report are slim to none...unless the report itself has been manipulated...and there's ample evidence of that in the past as well.

Anyway....my best guess is that if we see manipulative activity in PM's it will probably show up in London at least a couple hours before the report is released.

NY gold trading opens at 8:20am, ten minutes before the report is released...a smackdown at the NY open is always a possibility, but that would be a pretty poor choice of timing in my book...too obviously manipulative.

All guessing :)

HedgeHOG
08-05-2010, 08:29 PM
Thanks stormdancer, too bad no thanks option for post. Will be an interesting morning . . . or not.

digbird
08-05-2010, 08:45 PM
Yes and a hearty thanks from me as well Stormdancer, great thread and hats off for doing a lot of digging. cheers

DayStar
08-05-2010, 09:08 PM
Yes and a hearty thanks from me as well Stormdancer, great thread and hats off for doing a lot of digging. cheers

And from me as well, Storm. Doing good work here.

DayStar

Stormdancer
08-05-2010, 09:34 PM
Guys I am enjoying doing this and knowing that others are getting some benefit out of it is the source of the enjoyment...so thanks for the encouragement.

Kitco's registered membership is just about to roll over the 24,000 mark and has been increasing by tens per day for some time. When I came here years ago, many people fed my need for basic knowledge and understanding, and I imagine the people signing up now are much as I was at first...and still am.

I imagine many of them are stumbling in here with a dawning awareness that CNBC isn't giving them any true insight into a world that appears to be crumbling around their ears, and I'm very doubtful that they have the luxury of five years to get up to speed that I got.

In spite of years of hard data there are still many that deny that our markets are manipulated, and realizing that manipulation is so much a part of the modern landscape is critical to understanding reality. Understanding reality is critical to making decisions about how to protect loved ones.

I have a heart for these new people seeking truth and understanding of what's going on around them. If even one manages to grasp a personal revelation of this hidden reality in time to adjust their life in ways that mitigate the pain of the coming changes for themselves and their loved ones....well, that's a good thing.

Digbird, your "Back to the land..." (https://www.kitcomm.com/showthread.php?t=43346) thread is an absolute marvel and at nearly 62,000 views it's obvious many are feasting at the table of knowledge you've set.
Those that follow your lead in producing a bit of food for themselves are buying into an idea that's much more likely to affect their future than understanding this manipulation will!

But, that said, when we each offer whatever it is we've been given to share, the whole is strengthened.

My deepest appreciation goes out to AGoldHamster, QuadG, Cyclist and a host of other people who have unsparingly shared their insights....I've learned much I likely wouldn't have learned if they hadn't made the sacrifice.

BringTheGold, Zephania, Denarii....thankyou for taking the time. Through you guys I've learned more about how to present firm, quiet reasoning in the face of provocation :).

I've been banned a number of times for my acid wit and two-fisted brawler posting style...you guys are teaching me better :). More and more I'm realizing that getting the info out is more important than the shallow satisfaction of verbally kicking someone in the teeth.

As a Christian it's even more important for me to do that. I'm charged with the command to "speak the truth...in love"....hard for me but that won't get me far as an excuse...in that realm obedience isn't optional.

I haven't mentioned Krank, strannick, Rockwell, Feral Child and hundreds of others, each striving toward the truth and sharing diverse perspectives.....it's what makes Kitco the most valuable messge board I've ever seen...by a wide margin.

And you new guys lurking out there? Come on in...the water's fine. Every perspective, every bit of expertise is valuable and your contributions (or questions) are needed.

It's time to learn how to run. The adversaries of what is good and right are riding horses and we have to out race them anyway. And we will. Together.

Enough maudlin rambling :). I had a really incredible private message exchange with BringTheGold over the past few days that really drove home to me just how much I need others. Blame him :)

Guardian
08-05-2010, 09:50 PM
Yes. Thank you Stormdancer. Valuable information.

Stormdancer
08-06-2010, 05:32 AM
Wednesday, August 4th(report dated Thursday, August 5th (http://harveyorgan.blogspot.com/2010/08/august-52010-commentary.html))

Harvey's comments on open interest:

The open interest on both gold and silver continue to astound me and just about all analysts in the know on these precious metals.

The gold comex OI fell another whopping 7206 contracts to 511,437. Silver's OI continued to advance up another 1235 contracts to rest at

124,679. This is of course basis yesterday with gold and silver advancing nicely!

I am having great difficulty in understanding the reporting process with respect to gold. I can understand silver. In gold, there has been a tremendous

lack of clarity from July 30 2010 until today.

I am having difficulty in understanding why almost 100,000 contracts or 10 million oz of gold comex oz has disappeared in less than a month.

I'm going to jump in here to explain something that Harvey is assuming you already know. If you're new to this, you won't necessarily catch what he's saying.

Here, Harvey is referring to the fact that the total open interest in gold (across all months) was well over 600,000 a month ago as opposed to today's 511,437 contracts. These changes in open interest simply don't "fit" the circumstances and Harvey, with all his experience, is at a loss to explain them.

Next, Harvey shifts gears in a way that isn't readily apparent:

I am having difficulty in understanding why 27,000 OI contracts after waiting the entire month decided to cash in their chips and not roll despite massive evidence to these traders that gold demand was on the rise throughout the world.

Here Harvey is talking about AUGUST gold open interest. Not the total, just the number of August 2010 gold futures contracts. Normally, as the holders of August contracts that did not wish to stand for delivery got close to the COMEX "Last Trading Day" (the 28th of July in this case), you'd see the open interest for August futures go down, but the total open interest across all months would remain about the same. Holders of August contracts would close out their August contracts by "rolling" them into a futures contract further out, leaving total open interest unchanged.

For whatever reason, 27,000 contracts didn't "roll" this month...they just walked off the playing field...and total open interest fell dramatically. Again, Harvey is marveling because it just doesn't make sense in a market with so many indications that gold demand is on the increase.


Why is the silver Open interest rising and the gold open interest falling? Why has no gold entered any of the registered vaults at the comex?

I will seek answers to these questions and it looks like something big is happening behind the scenes.

I think I've got a clue...a possibility at least. Remember a few posts back when I mentioned that perspective shift? We usually think in terms of dollars buying (bidding for) gold. If we make that perspective shift and think in terms of gold bidding for dollars what does 27,000 contracts simply walking off the playing field tell us?

Let me ask it this way. Is paper gold bidding for dollars, and not finding any dollars willing to be bought? (or...fewer dollars at least)

Are those dollars rejecting bids from paper gold now seeking a bid from physical gold? Is physical gold getting ready to demand more dollars? Are we seeing the beginnings of the long awaited paper/physical disconnect? Time will tell, but I think it's getting hot in here. Heat burns paper.....but it purifies gold.


Inventory Numbers

In Silver:

Now for silver where again strange things are happening over there.

We got another of those internal transfers where 440,000 oz of silver leave the dealer. The (a) part of the equation was released Wednesday night.

ie. 440,000 oz of silver leaving the dealer to destinations unknown.....
Then (b) part of the equation showed 440,000 oz of that silver deposited into the customer inventory.

Normally this is handled together but for some strange reason, the Comex folks decided to release this reporting in a rather haphazard fashion.

When silver leaves the dealer and enters the customer inventory, it is lease in silver that is paid back. It does not address where the silver came from!

To boot, another 301,920 oz of silver from destinations unknown was deposited to a registered comex vault of a customer (not a dealer)

So, evidently that silver I reported leaving the registered category yesterday did show up in the eligible stocks at a repaid lease....it just showed up a day late.

Today there was another minor adjustment where 5518 ounces were leased, removed from the eligible stocks and placed in the registered stocks.

Overall, the total amount of silver (both categories) rose by 751,638 ounces to stand at 109,717,256 ounces


In Gold:

Please notice that zero oz enter the dealers inventory and thus none withdrawn. Only a small 1866 oz enters the customer inventory.

There were 493 notices served or 49300 oz of gold. We have had a total of 5407 notices served or 540700 oz of gold.

The total amount of gold stored at COMEX (both categories) rose by a modest 1866 ounces to stand at 11,177,174 ounces

Delivery Notices

In Silver:

The comex announced that 4 notices were served for a total of 20,000 oz of silver.
The total number notices served so far is 10 or 50,000 oz. They also announced that there are no more options to be exercised
So the total number of oz of silver standing for this non delivery month of July is 50,000.,

In Gold:

There were 493 notices served or 49300 oz of gold. We have had a total of 5407 notices served or 540700 oz of gold....

The total number of gold standing for this delivery month of August is 540,700 + 247,700 + 90,000 oz = 878,400 oz or 27.3 tonnes of gold


Contracts Left To Be Served

There remains 2467 notices left to be served or 246,700 oz of gold.

I'm sorry for the long, cumbersome post...I'll try to pare it down in the future but there's one more item from Harvey's blog that deserves attention:

Silver has rebounded by about 80 cents from the beginning of August. Bryant Blake has been following the lease rates and he noticed a sharp rise in the lease rate

on July 31.2010:


http://i108.photobucket.com/albums/n5/Stormdancer_photos/ag_go_0030_ls.gif

He comments on what could have happened during the last few days of July and the first week of August with respect to silver. It looks like he is right:

"In the last week, silver has gained 81 cents with a 39 cent gain Friday (7/30), a 41 cent gain Monday (8/2), and 1 cent worth of gain for the other 3 days combined.

Comparing this data to the silver lease rates, rates were in contango on 7/29, then the one month lease went into full backwardation on 7/30 and 8/2, then the market returned to full contango on 8/3.

It looks like someone need to borrow silver for one month in a big way. The price in the window is not the actual price and a positive lease rate was agreed to for the one month lease.

The borrower then bought hundreds or thousands of long silver contracts to hedge their borrowing. This explains the large price increase for Friday and Monday and explains why open interest has been increasing in silver while open interest in gold has been dropping. If this is correct, the silver inventory withdrawals are going to continue or accelerate."

After a post of this length I don't dare try to get into the news articles Harvey shared....but they're worth the time it takes to read them.

See you soon :)

07Silverado
08-06-2010, 06:45 AM
[SIZE="3"]Overall, the total amount of silver (both categories) rose by 751,638 ounces to stand at [B]109,717,256 ounces...

The total amount of gold stored at COMEX (both categories) rose by a modest 1866 ounces to stand at 11,177,174 ounces



GSR of metal standing at COMEX is 9.8:1.

Just sayin'.

Stormdancer
08-06-2010, 06:48 AM
GSR of metal standing at COMEX is 9.8:1.

Just sayin'.


Annual mine production runs pretty close to the same :)

The last few years have seen 2400-2500 tonnes of gold and 22-24,000 tonnes of silver produced each year.

wrdavisjr56
08-06-2010, 07:39 AM
wrjdavis,

Of that 108,965,618 ounce total,

50,883309 ounces are registered stocks, and

58,082,309 ounces are eligible stocks.

Eligible stocks are just shy of 54% of the total.

Thanks Storm. Thats good to know.

Is that 54% eligible down from a previous percentage, say from the first of the year?

Stormdancer
08-06-2010, 07:59 AM
Thanks Storm. Thats good to know.

Is that 54% eligible down from a previous percentage, say from the first of the year?

I wish I knew :). I've started capturing a copy of the NYMEX Daily Reports each day, but only since a couple weeks ago. There's no historical archive that I know of so I have no idea what COMEX inventory levels were at the beginning of the year.

07Silverado
08-06-2010, 08:03 AM
I haven't mentioned... Feral Child...

Now that you did mention him, where the heck is he? I knew something significant was missing from this board!

Stormdancer
08-06-2010, 08:15 AM
Now that you did mention him, where the heck is he? I knew something significant was missing from this board!

I think life has just gotten busier for him and he doesn't post as much. I have seen him pop up very occasionally the past few months....haven't seen Rockwell for awhile either...I miss both!

Stormdancer
08-06-2010, 08:21 AM
Well....no sign of a manipulative smackdown in honor of the Non-Farm Payroll report so far. New York opens in two minutes....



Edit: 8:41am....certainly not a good NFP report

Disappointing NFP: (http://www.zerohedge.com/article/disappointing-nfp-private-just-71k-consensus-90k-total-down-131k-consensus-64k)

July Non Farm Payrolls miss expectations, coming in at -131,000, way below the consensus of -65,000, yet the unemployment rate drops once again to 9.5% as even more people drop out of the labor force. Total Private Payrolls rise only 71k, on consensus estimates of +90k. The June Jobs report is revised majorly downward to -221K, from -125K, as the double dip gets yet another validation. The 2 Year Treasury just hit another fresh all time low of 0.5136%. More as go through the report.

HedgeHOG
08-06-2010, 09:11 AM
Noticed gold taking off. Maybe a runup first? speaking of MIA members, anyone get a pm from Tartosa rescently? Miss his thread also.

where is Tartosa (https://www.kitcomm.com/showthread.php?t=19102&page=237)

Stormdancer
08-06-2010, 10:34 AM
Noticed gold taking off. Maybe a runup first? speaking of MIA members, anyone get a pm from Tartosa rescently? Miss his thread also.

where is Tartosa (https://www.kitcomm.com/showthread.php?t=19102&page=237)

Wow...that link took me back :). I haven't heard from Tartosa and I'm a bit concerned...I miss his thread too...and him.

This run ($15.00+ so far) is encouraging and a total surprise to me. When this week began I thought we had a good chance of seeing $1160 again by today.

I'm not yet sold on the idea we've seen the bottom though. A few more days of steady to up action would get me started changing my mind but we're still in the depths of seasonal weakness and incentive to manipulate is very high. It's going to have to be convincing....but I gotta admit this is how it would start if the seasonal doldrums were to end early this year.

07Silverado
08-07-2010, 01:33 AM
From Patrick Heller's article (http://news.coinupdate.com/gold-and-silver-us-dollar-plummets-commodity-prices-soar-0395/) today (yesterday actually- warning- this is the punchline- to read the whole piece click the link):


Kevin Warsh, a governor of the Federal Reserve Board, in a September 17, 2009 letter to the Gold Anti-Trust Action Committee, Inc. (GATA), admitted that the Fed has current gold swap arrangements with other central banks.

So, it is possible for the prices of gold and silver to be held down while the dollar is falling and other commodity prices are mostly soaring.

But gold and silver prices cannot be suppressed forever. In fact, it does not look like they can be held near current levels very much longer. With major trading partners of the US government, who almost certainly helped perpetrate the manipulations, now closing out their COMEX gold and silver short positions at a record pace, that indicates that those companies expect much higher prices soon. You can acquire your gold and silver today, or maybe have to pay a lot more for it in a month or two—if you will then be able to find any to buy!

dsken4562
08-07-2010, 03:16 PM
Oh yeah... it'll end soon - but at the same time it has been tampered with since 1918. Does this mean that somebody really believes that any government will go straight and literally stop all the corruption?

The prices will go up, but not because the governments are going to play nice.

Stormdancer
08-07-2010, 07:46 PM
Oh yeah... it'll end soon - but at the same time it has been tampered with since 1918. Does this mean that somebody really believes that any government will go straight and literally stop all the corruption?

The prices will go up, but not because the governments are going to play nice.

I agree....I do believe we're in a good place with silver, but it's going up in spite of governments, not because of them. It takes an educated, aware, activist citizenry to keep the government within its bounds and we've not done a good job of that for at least two generations.

I think that is changing...just hope the change is coming quickly enough.

Zarkov
08-07-2010, 07:56 PM
In gold everyone reduced their positions. Those that were long reduced their longs. Those that were short reduced their shorts. Even the spreaders reduced their spread positions

This is not normal behaviour and something big has happened.

Is it possible that many of the contraction in OI is the receiving of gold notices through the GLD? And not report on this?

Ladies and Gentlemen: the gold comex figures just do not pass the smell test. Something sinister is going on behind closed doors. The figures just do not add up. Maybe I am wrong

Harvey Organ

DayStar
08-07-2010, 11:47 PM
I agree....I do believe we're in a good place with silver, but it's going up in spite of governments, not because of them. It takes an educated, aware, activist citizenry to keep the government within its bounds and we've not done a good job of that for at least two generations.

I think that is changing...just hope the change is coming quickly enough.

Storm, I just saw this interview on www.theaureport.com/pub/na/7009 (http://www.theaureport.com/pub/na/7009) with the Shadow Stats editor, John Williams. He says we are approaching the abyss with a situation that will make Zimbabwe look like childs play. Here is a sample:

The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That's beyond containment. The government can't cover it with taxes. They'd still be in deficit if they took 100% of personal income and corporate profits. They'd also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.

We're going to have a much rougher time in the U.S., of all places, than they had in Zimbabwe... When people don't have food, you end up in very dangerous circumstances.

DayStar

Bring the Gold
08-08-2010, 12:57 AM
I think life has just gotten busier for him and he doesn't post as much. I have seen him pop up very occasionally the past few months....haven't seen Rockwell for awhile either...I miss both!
Rockwell!!! The guy who's posts sold me on Kitco. Definitely the board misses him. I think he got tired of some of the stuff that goes on. Sad, a great loss for the board. On the good news front Feral Child is coming back afaik.

I wish we could coax Rockwell back on to the boards. That guy was a real visionary.

Stormdancer
08-08-2010, 02:15 AM
Storm, I just saw this interview on www.theaureport.com/pub/na/7009 (http://www.theaureport.com/pub/na/7009) with the Shadow Stats editor, John Williams. He says we are approaching the abyss with a situation that will make Zimbabwe look like childs play. ...

I think he's going to be proven right....excellent article. Timing is always the difficult bit to pinpoint, but I don't see how anyone could argue that we're in better shape now than we were in 2008.

2007 gave us the sub-prime debacle, the banking crisis and the TARP theft. 2008 gave us the Global Financial Crisis and a good Autumn pounding to the stock markets. I thought that was the beginning of the death spiral, but we recovered long enough to muddle through 2009's "green shoots". 2010 got us going with the European crisis and raised the spectre of sovereign defaults. None of those previous issues has improved. They've been swept under the rug to fester a bit longer...not fixed.

How the last half of 2010 plays out remains to be seen, but whether it's a new crisis out of Japan or somewhere else in Asia or a revival of one of those other unresovled crises, the chances of something coming unglued before the end of the year are very high.

FWIW (not much) I think we've got a good chance of seeing the problems in the PM market begin coming to a serious head before September has run it's course, and I'll be surprised if we make it past November before we see another global scale crisis in somebody's bond market. Japan, the US and Europe are all good candidates to kick it off.

Not trying to be gloomy...but it might be wise to be getting ready for the possibility.

The most encouraging thing I see right now is the fact that I've pretty much been wrong with every prediction attempt so far related to timing :) I pray I'm wrong again.

Stormdancer
08-08-2010, 04:18 AM
Thursday, August 5th(report dated Saturday, August 7th (http://harveyorgan.blogspot.com/2010/08/fw-commentaryaugust-72010.html))

Gold closed up by $6.10 to 1203.10. Silver rose in fine fashion as well closing at 18.46 up 15 cents.


Harvey's comments on open interest:

The gold comex OI finally started to turn upwards, rising by 1573 contracts to 513,070

The silver comex Oi however fell marginally by 581 contracts to 124,098.


And on to the COT (the CFTC Commitment of Traders report). Just a reminder for those unfamiliar...the COT report is reporting the futures positions of the various classes of traders in gold and silver. The data is reported weekly and released each Friday. The data in each report covers from Wednesday to Tuesday...so the data is already over two days old when the report is released.

Harvey's Saturday COT commentary:

For gold:

The comex revealed the COT report after the market closed and it was a doozy!!:

In gold, the large speculators that were long reduced those long positions by a rather large 5547 contracts.

the large speculators that were short gold reduced their short positions also by a rather large 2161 contracts.


even the spreaders reduced their long/short positions by a huge 14497 contracts.


Now for the commercials in gold:

those commercials that were long in gold reduced their positions to the tune of a whopping 13,553 contracts.

those commercials that are perennial shorts reduced their short positions to the tune of a whopping 19079 contracts.

Now for the small specs:


those small specs that were long in gold reduced their positions by 7826 contracts.

those small specs that were short reduced their short positions by 5686. contracts.

Do you see the picture:

everyone reduced their positions. I have never ever seen that happen before.

Generally when you see that happen, you cannot get a more bullish sign to enter "all in" in gold.


and for silver:

Now for silver where the COT responded normally:

Those large specs that were long in silver increased those positions by 4705 contracts.
Those large specs that were short in silver reduced those short positions to the tune of 1413 contracts.

In the commercial category:

those commercials that were long in silver reduced their long positions by a tiny 1298 contracts.
and those commercials JPMorgan etc that have been short silver since the beginning of time added to their short position by a rather hefty 4477 contracts.

In the small spec category:

hardly any move..not worth talking about it.

So you see a massive difference in gold and silver.

In gold everyone reduced their positions. Those that were long reduced their longs. Those that were short reduced their shorts. Even the spreaders reduced their spread positions

This is not normal behaviour and something big has happened.

In silver, basically what we expect: the large specs increasing their long positions and the commercials like JPMorgan increasing their shorts by supplying the paper.


Is it possible that many of the contraction in OI is the receiving of gold notices through the GLD? And not report on this?

Ladies and Gentlemen: the gold comex figures just do not pass the smell test. Something sinister is going on behind closed doors. The figures just do not add up. Maybe I am wrong

but it is totally different to the silver comex market.



Inventory Numbers

In silver:

As you can see, we saw another 255,325 oz of silver leave the comex from the dealer inventory.
Strangely we saw another 495,913 enter the customer inventory of silver.
We have yet to see large deposits of silver enter the dealer inventory to satisfy all of our long notices.


The total amount of silver stored in COMEX warehouses increased by 240,588 ounces and stands at 109,957,844 ounces.

I'll report the weekly changes in a separate post ...this one is again threatening to get too long and cumbersome.

In gold:

In gold, again we see no gold enter the vaults and a paltry 688 oz deposited to the customer.

The total amount of gold stored in COMEX warehouses fell by an insignificant 688 ounces to stand at 11,176,486 ounces.


Delivery Notices

We saw only 14 notices served for a total of 1400 oz, yet for some strange reason we saw over 500 notices
that were to be served vanished into thin air. ...The total number of notices served thus far total 5420 or 542,100 oz of gold.

The total number of oz of gold standing for this delivery month equals 542,100 + 197,500 + 90,000 = 828,600 tonnes or 25.8 tonnes of gold.

It looks like 2 tonnes disappeared .



Contracts Left To Be Delivered

We now have only 1975 notices left to be served or 197,500 oz


There are a couple more interesting items I'll catch in the weekly inventory summary post.

Harvey has redesigned his blog and it looks pretty good. The print column is now much wider and it may stop cutting off the right half of charts and graphs like it has in the past....check it out :) (http://harveyorgan.blogspot.com/2010/08/fw-commentaryaugust-72010.html)

Stormdancer
08-08-2010, 07:32 AM
Weekly Inventory Summary


Silver

For the week beginning Friday, July 30th and ending Thursday, August 5th ...total stocks...

Friday +265,384 ounces

Monday -117,566 ounces

Tuesday -1,278,080 ounces

Wednesday +751,638 ounces

Thursday +240,588 ounces

A net -138,036 ounces were withdrawn from total silver stocks this week.

The total amount of silver stored at COMEX (both categories) began the week at 110,095,880 ounces Friday and ended with 109,957,884 ounces on Thursday.


Gold

Friday +120,342 ounces

Monday -64,106 ounces

Tuesday +63,205 ounces

Wednesday +1866 ounces

Thursday -688 ounces

A net +120,619 ounces were added to total gold stocks this week.

The total amount of gold stored at COMEX (both categories) began the week at 11,055,777 ounces Friday and ended with 11,176,486ounces on Thursday...90 ounces more than the tally indicates. I made a half-hearted check to find the 90 ounce discrepancy but didn't find it. As little confidence as I have in these numbers anyway it didn't seem worth it to apply any more time to looking for it.

Here's a couple more interesting tidbits from Harvey's saturday blog:

From Ed Steer:
Thursday's CME Delivery Report was pretty skinny... with only 14 gold contracts posted for delivery on Monday. The GLD ETF reported receiving 29,329 ounces of gold... and the SLV ETF dropped a chunky 979,024 ounces of silver. That drop was a bit of a surprise, as there's been no negative price action in the last week that would account for it. I didn't talk to Ted after the ETFs updated their numbers, but I would guess that someone needed to take delivery of silver they owned... so they redeemed their shares. The SLV is down at least 10 million ounces of silver from its high of 304.7 million ounces on February 26/10.



and, US Mint sales are still screaming:

Ed also commented on the huge volume of gold and silver minting at the US MINT:



The U.S. Mint had another report yesterday. They reported selling another 10,500 ounces into their gold eagle program... and another 3,000 24-K gold buffaloes as well. There was no silver eagle update. Month-to-date... 14,000 ounces of gold has disappeared into the gold eagle program, plus another 4,500 in the buffaloes... along with 275,500 silver eagles.



g'nite :)

07Silverado
08-08-2010, 08:14 AM
...14,000 ounces of gold has disappeared into the gold eagle program, plus another 4,500 in the buffaloes... along with 275,500 silver eagles.

275,500/18,500= gsr 1:14.89- right in there with the historical average/average in the earth's crust.



Sorry, I just can't hep muhsef. :o

Bring the Gold
08-08-2010, 07:57 PM
275,500/18,500= gsr 1:14.89- right in there with the historical average/average in the earth's crust.



Sorry, I just can't hep muhsef. :o
Yet COMEX is at about 9.x to 1. Btw, Storm you are the man this thread is pure gold with a silver lining. One might say it's electrumfying! ;) :D

Stormdancer
08-08-2010, 11:07 PM
Perth Mint (http://www.perthmint.com.au/metalPrices.aspx)

1000oz bars listed as "not sold".

I think it may be that the Perth mint simply doesn't intend to sell these massive investor bars as a retail offering. Several categories within the Perth Mint price list are marked "temporarily unavailable" as opposed to the "not sold" annotation. "Temporarily unavailable" sounds more like

"yup..we sell 'em but we don't have any right this minute"

where "not sold" leaves room for an interpretation like

"We buy 'em, but we don't sell 'em. We melt 'em down and make nice high profit margin kangaroos and tiggers and koalas out of 'em and sell those :)"

I also wouldn't doubt that Perth Mint would be happy to help large wholesale investors find as many 1000 oz bars as they were willing to pay for.

In any case, I don't think the Perth Mint price list is really going to tell us much about the availability of 1000 oz silver bars.

Tulving (http://www.tulving.com/goldbull.html)

Both categories of 1000oz bars are still listed as "sold out"

APMEX (http://www.apmex.com/Category/518/Silver_Bars_Secondary_Market__New.aspx)

5 1000 OZ bars listed for sale (one less than last time we checked)

Nucleo Exchange (http://www.bulliondirect.com/nucleo/lp/Silver_Bullion_999_pure_Bar_CMX_(1000.00_oz).html)


There are 8 1000 oz bars available for sale on the BD Nucleo Exchange (same as last time).

6 are asking $18.90 per oz,

1 is asking $21.32 per ounce

and that one asking $714.00 per ounce is still there as well :)....understandably :)

There is a bid for 50 1000 oz bars at $17.90. At $895,000.00 that'll be a pretty hefty transaction if it gets filled.

airbil
08-08-2010, 11:13 PM
Yet COMEX is at about 9.x to 1. Btw, Storm you are the man this thread is pure gold with a silver lining. One might say it's electrumfying! ;) :D

X2
Thx Storm'r!

strannick
08-09-2010, 02:06 AM
Storm;

Thanks for noting the coincidence (Adrian Douglas:There are no coincidences in the silver market) that while Harvey noted Comex silver shorts were up (even though gold commercial shorts were down, silver postion limits are coming, ect...) SLV silver supplies were down by over 900 000 ounces, even though the price of silver was up. Sure would be great to have access to all that SLV silver, since it seems so scarce everywhere else.

Another interesting coincidence is that BullionBank and precious metals ETF custodian HSBC had almost 900 000 silver ounces added to its eligible inventory.

Boy, what alot of interesting coincidences!!

Stormdancer
08-09-2010, 03:13 AM
Storm;

Thanks for noting the coincidence (Adrian Douglas:There are no coincidences in the silver market) that while Harvey noted Comex silver shorts were up (even though gold commercial shorts were down, silver postion limits are coming, ect...) SLV silver supplies were down by over 900 000 ounces, even though the price of silver was up. Sure would be great to have access to all that SLV silver, since it seems so scarce everywhere else.

Another interesting coincidence is that BullionBank and precious metals ETF custodian HSBC had almost 900 000 silver ounces added to its eligible inventory.

Boy, what alot of interesting coincidences!!

You're gracious in giving me credit :). Actually I just recorded the info without connecting the dots until you just did it for me. Thanks for posting that!

I went back and took a look at Thursday's NYMEX Daily report and sure enough....847,739 ounces were deposited to HSBC's eligible stocks....pretty darned close to 900,000.

If HSBC is robbing Peter to pay Paul that's just another signal that real physical silver is getting difficult for even the big dogs to come up with.

ajnock
08-09-2010, 03:21 AM
- - -"Do you see the picture:

everyone reduced their positions. I have never ever seen that happen before.

Generally when you see that happen, you cannot get a more bullish sign to enter "all in" in gold. " - - -

i wonder how you generalize from something you have never seen before

07Silverado
08-09-2010, 10:31 PM
Perth Mint (http://www.perthmint.com.au/metalPrices.aspx)

1000oz bars listed as "not sold".

I think it may be that the Perth mint simply doesn't intend to sell these massive investor bars as a retail offering. Several categories within the Perth Mint price list are marked "temporarily unavailable" as opposed to the "not sold" annotation. "Temporarily unavailable" sounds more like

"yup..we sell 'em but we don't have any right this minute"

where "not sold" leaves room for an interpretation like

"We buy 'em, but we don't sell 'em. We melt 'em down and make nice high profit margin kangaroos and tiggers and koalas out of 'em and sell those :)"

I also wouldn't doubt that Perth Mint would be happy to help large wholesale investors find as many 1000 oz bars as they were willing to pay for.

In any case, I don't think the Perth Mint price list is really going to tell us much about the availability of 1000 oz silver bars.

Tulving (http://www.tulving.com/goldbull.html)

Both categories of 1000oz bars are still listed as "sold out"

APMEX (http://www.apmex.com/Category/518/Silver_Bars_Secondary_Market__New.aspx)

5 1000 OZ bars listed for sale (one less than last time we checked)

Nucleo Exchange (http://www.bulliondirect.com/nucleo/lp/Silver_Bullion_999_pure_Bar_CMX_(1000.00_oz).html)


There are 8 1000 oz bars available for sale on the BD Nucleo Exchange (same as last time).

6 are asking $18.90 per oz,

1 is asking $21.32 per ounce

and that one asking $714.00 per ounce is still there as well :)....understandably :)

There is a bid for 50 1000 oz bars at $17.90. At $895,000.00 that'll be a pretty hefty transaction if it gets filled.


Threeggg posted this over in the gold forum (https://www.kitcomm.com/showthread.php?t=65659):


It is not the first time that gold bullion coin demand has outdone its supply, in the recent past the U.S Mint discontinued its sales of “American Eagle” gold coins and Johnson Matthey has ceased its order intake for 100 ounce silver bars at its Salt Lake City refinery.

http://www.commodityonline.com/news/Swiss-investor-laps-up-Kruggerand-gold-coins-30814-3-1.html

Stormdancer
08-09-2010, 11:24 PM
Threeggg posted this over in the gold forum (https://www.kitcomm.com/showthread.php?t=65659):

I just saw that and you beat me bringing it over here :). I owe Threeggg already...he's the one that introduced me to Harvey's blog. He doesn't say a lot but when he does it's always something good he's dug up :) I've got some thoughts about PM demand percolating and this article is fuel for the fire.

I've long speculated that when the precious metals markets go non-linear it could happen in a very, very short time. A matter of days...a week at most.

This mystery Swiss buyer is exactly the kind of thing I've been looking for as an indicator that "non-linear" circumstance may be developing. If it happens, we'll go through a season where PM's are not available in quantity at any price. You'll still get a trickle of PM's coming to market as the last of the weak hands are shaken out...but it won't be much and it won't be nearly enough to satisfy the BIG money suddenly seeking to hide in precious metals.

This Swiss buyer is surely some of that "big" money leaving footprints in the market....

Stormdancer
08-10-2010, 12:31 AM
Friday, August 6th(report dated Monday, August 9th (http://harveyorgan.blogspot.com/2010/08/august-92010-commentary.html))

Summary of Monday's price action:

Gold closed today down by 2.60 to 1200.70. Silver also fell by 23 cents to 18.23.



Comments on Friday's open interest:

The gold comex OI resumed its northernly trajectory rising by a cool 7897 contracts to its resting position (basis Friday night) at 520,917.

Silver comex OI also increased by 1498 contracts to 125,596.


Friday was an up day for PM's so a modest increase in open interest was pretty normal and expected.

The numbers for today's open interest will be interesting because they may show some of the elephant tracks of manipulators trampling the markets if they're there. I don't expect to find them this time. So far, I see no indication of manipulative activity in today's price action. Today's price declines were fully explainable by normal market dynamics.


Inventory Numbers

In silver:

Let us start with silver:

August is a non delivery month but we are witnessing massive movements of silver.
Today we saw 57,617 oz leave the customer inventory. This phenomenon has been going on for quite some time as
many investors just do not want to leave any silver in a registered comex vault.

We did see 65,218 oz of silver arrive at a registered vault and this silver will satisfy some of the millions of oz of silver standing patiently.
Again for the umpteenth time the comex notified us that 600,000 oz of silver was internally transferred from the customer to the dealer.
This is a lease where the customer received a hefty premium for leasing his silver and he now hopes he will get his silver back in September.

After all the withdrawals and deposits are netted out the total amount of silver stored in COMEX warehouses rose by an insignificant 7,601 ounces to stand at 109,965,445 ounces.


In gold:

In gold, again we see no gold enter or leave the comex vaults. Please remember that we have had over 2 million oz of gold stand in June and in April

and no gold has entered any registered vault.


Gold inventory activity was even less significant. The only two movements on the whole board were a 612 ounce "adjustment" where a lease was paid back and a tiny 64 ounce withdrawal from eligible stocks.

The total amount of gold stored in COMEX warehouses declined by 64 ounces to stand at 11,176,422 ounces


Delivery Notices


Today there were 173 notices served or 17300 oz of gold. The total number of notices served thus far total 5594 or 559,400 oz of gold.



Contracts Left To Be Served

Harvey didn't specifically comment on how many contracts remain...but here's the month-to-date summary:

The total number of gold oz standing this delivery month of August is as follows:

559,400 + 195,950 + 90,000 = 845,350 or 26.33 tonnes of gold. (we gained a few oz from Friday)


Once again, I encourage you to read the blog yourself (http://harveyorgan.blogspot.com/2010/08/august-92010-commentary.html). I'm focused on one very narrow aspect of the PM markets in this thread and often don't mention all of the significant news stories Harvey highlights in support of his analysis and commentary. You're truly missing out if you're not taking in the whole as Harvey himself presents it.

Today is a perfect example. Harvey has posted a story about declarations of "force majeure" in the zinc market. If you want to get a peek into what happens when a futures market starts going haywire that's a starting place.

There's also a MUST READ article by Greg Hunter....

'til next time :)

strannick
08-10-2010, 02:37 AM
[SIZE="3"][B]If you want to get a peek into what happens when a futures market starts going haywire that's a starting place.

Yeah I wonder when we will start hearing stories about silver and gold warehouse fires necessitating force majure. Coffee, wheat, coca, sugar, zinc...seems alot of commodities are skirting shortages, not to mention gold and silver. Meanwhile we are assured that there is no inflation, keep your money in your savings account, not need to buy precious metals, nothing to see here, move along.

About AG
08-10-2010, 07:16 AM
Gold inventory activity was even less significant. The only two movements on the whole board were a 612 ounce "adjustment" where a lease was paid back and a tiny 64 ounce withdrawal from eligible stocks.

OK, I've got to wonder about that one. The 612 ounce adjustment makes sense (6 100 ounce bars +/- 5% can be from 570 to 630 ounces). But a 64 ounce withdrawl? Does that mean there was really a 64 ounce "100 ounce bar"? If so, it sounds like some poor guy tried to withdraw 100 ounces, only to get 64.

But yes, I did verify that in the warehouse report at cmegroup.com, and sure enough it was 64 ounces.

Stormdancer
08-10-2010, 07:22 AM
OK, I've got to wonder about that one. The 612 ounce adjustment makes sense (6 100 ounce bars +/- 5% can be from 570 to 630 ounces). But a 64 ounce withdrawl? Does that mean there was really a 64 ounce "100 ounce bar"? If so, it sounds like some poor guy tried to withdraw 100 ounces, only to get 64.

But yes, I did verify that in the warehouse report at cmegroup.com, and sure enough it was 64 ounces.

I am totally guessing here...but I guessed that some smaller investor may have stored a private stash of 59 AGE's and a 5 oz Pamp Suisse bar at COMEX and withdrawn those....dunno...but I do recall someone (MetalWatcher I think it was) that recounted for us a trip he took through a storage facility and he mentioned the presence of a few coins amid all the bigger investment bars.

scallywag
08-10-2010, 08:50 AM
I must concur with this statement from Stormdancer:

Once again, I encourage you to read the blog yourself. I'm focused on one very narrow aspect of the PM markets in this thread and often don't mention all of the significant news stories Harvey highlights in support of his analysis and commentary. You're truly missing out if you're not taking in the whole as Harvey himself presents it.

Today is a perfect example. Harvey has posted a story about declarations of "force majeure" in the zinc market. If you want to get a peek into what happens when a futures market starts going haywire that's a starting place.

Harvey is not a bad place to find interesting news stories although he is not exhaustive. personally I use bloglines and subscribe to over 40 gold/economic/geoplotitcal sites through it. with one click I can get the latest posts from all the sites i follow(so long as it has the RSS feed) Check it out. It saves me hours as I don't need to check all the sites individually- bloglines does that for me, tho there is a slight time delay sometimes. Harvey's great for following comex inventory numbers and the COT. I found the force majeur zinc story very interesting

Stormdancer
08-10-2010, 08:59 AM
I must concur with this statement from Stormdancer:

Once again, I encourage you to read the blog yourself. I'm focused on one very narrow aspect of the PM markets in this thread and often don't mention all of the significant news stories Harvey highlights in support of his analysis and commentary. You're truly missing out if you're not taking in the whole as Harvey himself presents it.

Today is a perfect example. Harvey has posted a story about declarations of "force majeure" in the zinc market. If you want to get a peek into what happens when a futures market starts going haywire that's a starting place.

Harvey is not a bad place to find interesting news stories although he is not exhaustive. personally I use bloglines and subscribe to over 40 gold/economic/geoplotitcal sites through it. with one click I can get the latest posts from all the sites i follow(so long as it has the RSS feed) Check it out. It saves me hours as I don't need to check all the sites individually- bloglines does that for me, tho there is a slight time delay sometimes. Harvey's great for following comex inventory numbers and the COT. I found the force majeur zinc story very interesting

Fascinating :) In this time-limited world we live in those little time saving hints matter. Especially for us older, less tech savvy folk who benefit from a helping hand getting around the internet. I'll check out that bloglines site....thanks for sharing it. I do have a "must read" list of sites and it sounds like bloglines might save a lot of the time it takes to keep up with them.

About AG
08-10-2010, 09:11 AM
OK, I've got to wonder about that one. The 612 ounce adjustment makes sense (6 100 ounce bars +/- 5% can be from 570 to 630 ounces). But a 64 ounce withdrawl? Does that mean there was really a 64 ounce "100 ounce bar"?

I think I figured it out. The E-Mini contracts are for 33 ounces (presumably 1 kilo bars), so 2 1kilo bars would be 64.3 ounces. The warehouse stocks round to full ounces, so that would account for 64 ounces being withdrawn.

That would be a better explanation than a small investor storing gold there, as the COMEX warehouse stocks should only be for gold obtained through COMEX futures contracts.

Stormdancer
08-10-2010, 09:16 AM
I think I figured it out. The E-Mini contracts are for 33 ounces (presumably 1 kilo bars), so 2 1kilo bars would be 64.3 ounces. The warehouse stocks round to full ounces, so that would account for 64 ounces being withdrawn.

That would be a better explanation than a small investor storing gold there, as the COMEX warehouse stocks should only be for gold obtained through COMEX futures contracts.

That would explain it...but it brings up another question for me. Some time ago (might have been as far back as 2008) they quit delivering single E-minis. They changed the rules such that you had to accumulate 3 E-mini WDR's and then take delivery of a 100 oz bar if you wanted physical.

I haven't heard if they've reversed that rule change...they may have...if they haven't it would make that explanation less likely.


Edit: doing a quick "memory check" ...here's a report related to the E-mini's and WDR delivery from Jesse's Cafe (http://jessescrossroadscafe.blogspot.com/2009/01/is-comex-doing-fractional-reserve.html) from January 2009:

We accumulated 3 emini gold contracts on CBOT for December delivery and we had been given serial numbers and weights last week for the 3 bars we were to receive.

Today we are informed that Comex is invoking a rule in which they can deny delivery of individual mini bars (roughly 33 ounces) and issue you only a Warehouse Delivery Receipt (WDR) against your mini-contract unless you have 3 WDR's, and then they'll issue you a 100 oz. bar.

Otherwise, if you have only 1 or 2 mini-contracts, you only own a WDR, which you sell by shorting a mini against it. If you own a WDR for a 100 oz., they encourage you to safekeep the gold at the Comex and hold a vault receipt.

CLEARLY, the Comex has run out of the bars that were being delivered to holders of emini contracts. Our back-office guy told us that he's been doing Comex deliveries for 30 years and he's never seen anything like this, and he's never heard of this rule on the mini contract. (update: its in the contract if you read it - Jesse)
Fortunately we have 3 WDR's and we will be getting delivery of a 100 oz. Comex gold bar.

But this whole episode brings into the question the validity of the Comex gold inventory. More importantly, the Comex is now going to issue WDR's, which are paper.

Are they becoming a "fractional" reserve depository, where they can issue several WDR's against the same bar of gold, knowing that some of those people will opt to keep storage on Comex and never require actual physical delivery?"

Stormdancer
08-10-2010, 05:33 PM
Fed Decision

No Change!

We start with the text...Read 'em and weep...

Release Date: August 10, 2010

For immediate release Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

Measures of underlying inflation have trended lower in recent quarters and, with substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1 The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.

Voting against the policy was Thomas M. Hoenig, who judges that the economy is recovering modestly, as projected. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when needed. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve's holdings of longer-term securities at their current level was required to support a return to the Committee's policy objectives.


Quick - look surprised! The market, which was down about 106 by the Dow just before the announcement, popped up to about -35 briefly and now seems to be headed back down, but wait, coming back...but wait.... Sadly for the rational: this is a "Who knows?" world and the safest way to play is to stand on the sidelines and let the craziness of markets run amuck.



I apologize (or nearly so) for the earlier headline "ream 'em and weep" - really meant to write 'read 'em and weep". Sometimes truth just leaks. So the faction going for rthe free money to set up a dollar gold carry trade lost. Now what?

(bolded commentary from George Ure at UrbanSurvival.com (http://urbansurvival.com/week.htm) - a good read if you admire out-of-the-box thinking. I don't agree with everything George has to say but even those things I disagree with generally make me think or introduce me to a different perspective.)

Gold Bouillon
08-10-2010, 10:06 PM
Harvey (along with a number of other people) have in the last few days expected the FED to officially announce the purchasing of Treasuries. From Harvey today: In a nutshell, QEII has been announced publicly. As I stated yesterday what has been happening privately will be done publicly!!

Here are two comments concerning that announcement. The first is from ZeroHedge:
From Nic Lenoir of ICAP

The key change in today's FOMC is the announcement of the reinvestment to keep constant balance of securities purchased by the Fed. While there have been a lot of talks about it, it was not priced in by the market. At a time when the political capital to increase the balance of the purchases is lacking, it's probably the only way for the Fed to boost the system, waiting for a confirmation of the inevitable economic rollover to start QE2 properly.

I liked this comment from an anonymous poster on Harvey's blog today:
https://www.blogger.com/comment.g?blogID=4795619781557835773&postID=1427288226552123311
This is it, people. Armageddon in the physical metals markets is here.
Honestly, I believe the Fed Reserve held out on making the quantitative easing announcement public, while doing it in private, until they had the physical metals secured (i.e. they themselves or people they know had control of the physical metal) and the COMEX and LBMA were cleaned out. Well now we're here.

So, now to tie the three comments together. The FED officially announced QEII-lite, the reinvestment of funds into Treasuries, which until now they had been doing on the sly.

They could not go public until they and their cohorts had control of most of the gold and possibly silver. Now they are ready to let panic ensue in the PM markets.

QEII-lite is only a temporary measure. Full blown QE, ie massive "printing" of fiat, is still not justifiable. QE to infinity (as Sinclair puts it) will commence when the economic indicators turn down sufficiently (more) for the FED to put the fear of deflation into everyone.

Then we get hyperinflation. Buckle up folks, this ride is going to get bumpy.

Stormdancer
08-11-2010, 05:34 AM
Monday, August 9th) (report dated Tuesday, August 10th (http://harveyorgan.blogspot.com/2010/08/august-102010.html))

Tuesday's price activity:

Gold closed today during regular hours at 1196.20 down $4.60. Silver was down 8 cents to 18.18. This was at the comex close at 1:30.

However at 2:15 the Fed announced a version of QEII and from that point gold rose in the access market to 1204.00 and silver rose to 18.40 but it is now trading at 18.32.



Comments on open interest:

The gold comex OI fell slightly yesterday by 763 contracts to 520,146. The silver comex OI also fell slightly to the tune of 134 contracts to 125462

All pretty much as expected for a day (Monday) when the POG fell by ten dollars or so...


Inventory Numbers

In silver:

In silver we saw a massive 88,672 oz leave the dealer probably to settle some of the patient longs.

Again we saw 5780 oz leave the customer inventory in open defiance of the registered comex warehouses.



There were no internal transfers. The 88,672 oz should be deposited into a customer inventory and then either stay or leave outright.

We shall see what happens to this amount tomorrow.



Remeber in the reports from last Tuesday and Wednesday? I reported that over 440,000 ounces disappeared from the registered stocks on Tuesday and were not deposited to the eligible stocks...and then on Wednesday that same exact amount showed up as a deposit to eligible stocks.

We'll see what happens to this 88,672 ounces today.....it may show up tomorrow like it did then.

But that certainly makes me wonder why the change in reporting? Are they intentionally trying to make these reports more difficult to keep track of and decipher? I don't know, but I can't understand why, if they can record the withdrawal, why not record the deposit the same day as they always have to this point? Once is chance, twice is developing a pattern, three times and there's a reason...whether we ever find out what it is or not.

After all withdrawals and deposits are netted the total amount of silver stored in COMEX warehouses decreased by 94,452 ounces to stand at 109,870,993 ounces.


In gold:

The fun is beginning in gold.



Again we witness no gold entering the dealer deposit section. However a huge 58,478 oz leaves the dealer inventory as somebody needs gold badly somewhere.

One bar of 100 oz (note it is 96 oz) leaves the customer. The comex only has good delivery bars which can be 100 0z or 400 0z good delivery bars.

It looks like everyone is scraping the bottom of the barrel to get a 96 oz bar of gold.


The part I bolded pretty much rules out my earlier speculation about coins or small bars accounting for that oddly tiny 64 ounce withdrawal. I reckon About AG probably knew that but was just too kind to point it out :). The 33oz (kilo) E-mini bar explanation is obviously the more viable one.

The total amount of gold stored at COMEX warehouses declined by 58,574 ounces and stands at 11,117,848 ounces.


Delivery Notices

Today, the comex notified us that 140 notices were served for a total of 14000 oz of gold.

Thus a total of 5734 notices have been sent so far for a total of 573400 oz of gold




Contracts Left To Be Served

For this delivery month of August, the total number of oz of gold standing is as follows:



573400 oz (already served) + 178,800 oz (to be served) + 90,000 (options exercised for July) = 842,200 0z or 26.23 tonnes (almost the same as yesterday)



The FOMC meeting and statement issued at 2:15pm eastern dominated the news and Harvey has his usual roundup of news and analysis on the topic in the blog (http://harveyorgan.blogspot.com/2010/08/august-102010.html).

Later! :)

Bring the Gold
08-11-2010, 12:04 PM
Harvey (along with a number of other people) have in the last few days expected the FED to officially announce the purchasing of Treasuries. From Harvey today:

Here are two comments concerning that announcement. The first is from ZeroHedge:


I liked this comment from an anonymous poster on Harvey's blog today:
https://www.blogger.com/comment.g?blogID=4795619781557835773&postID=1427288226552123311


So, now to tie the three comments together. The FED officially announced QEII-lite, the reinvestment of funds into Treasuries, which until now they had been doing on the sly.

They could not go public until they and their cohorts had control of most of the gold and possibly silver. Now they are ready to let panic ensue in the PM markets.

QEII-lite is only a temporary measure. Full blown QE, ie massive "printing" of fiat, is still not justifiable. QE to infinity (as Sinclair puts it) will commence when the economic indicators turn down sufficiently (more) for the FED to put the fear of deflation into everyone.

Then we get hyperinflation. Buckle up folks, this ride is going to get bumpy.
My thoughts exactly. Very well put together post, thanks!

Stormdancer
08-11-2010, 06:10 PM
I don't know if this is "it"....but when "it" hits it will look a lot like what we're seeing right now.

ZeroHedge (http://www.zerohedge.com/) is a wonderful resource for following these kind of events.

Here's my early assessment of what began today based almost entirely on info gleaned from ZeroHedge:

About 12 hours ago I noticed FX markets getting really flaky....not long after that ZH posted this:


Guess Which Two Banks Just Used Up $430 Million In Fed USD Swap Lines After A Month-Long Quiet Period (http://www.zerohedge.com/article/guess-which-two-banks-just-used-430-million-fed-us-swap-lines-after-month-long-quiet-period)

...The ECB just announced that it allotted $430 million in its 7-Day USD operation to two banks, for whom the dollar shortage is once again all too real and coupled with the scarcity in EUR we have been discussing over the past month: one wonders just how positioned these banks are if they have allegedly neither USD nor EUR capital in hand...

That made me think "OK...liquidity problem....European....in the banks, not sovereign debt."

A few hours after that we got this:

In Stunning Decision, EU Orders Germany To Start Onboarding "Bad Debt" To Sovereign Balance Sheet: RBS, Fannie, Freddie Next? (http://www.zerohedge.com/article/stunning-decision-eu-begins-onboarding-bad-debt-sovereign-balance-sheet-rbs-fannie-freddie-n)

In what could be the most important news of the day, German Die Zeit reports that, in a stunning move, the EU has ordered Germany to count the holdings of WestLB and Hypo Real Estate (the latter of which failed the stress farce from last month which nobody cares about or remembers anymore) as government debt! As Bloomberg notes, "That could raise Germany’s debt to 90 percent of gross domestic product, Die Zeit said." Of course the implications of this decision are massive...

Now we've got plenty of reasons to blame the plunging Euro on. First two unnamed banks are mentioned, then we get specific mention of two German banks. Liquidity event...banking system...both confirmed.

Stormdancer
08-11-2010, 06:54 PM
So where from here? The danger I see is "contaigion". The Euro is plunging, US dollar strengthening, AUD doing a good imitation of the Euro and the JPY riding a rocket to the stratosphere.

Those FX moves are collectively telling us we're in another /risk off phase of the world's schizophrenic /risk on - /risk off roller coaster.

Insiders started selling on Friday by the way....down here at the mushroom level it's taken me this long to put the picture together...they've been positioning for it since Thursday or Friday. That's why I'm not playing in this casino apart from buying physical precious metals I can hold in my hand. I can't hope to compete in stocks or futures when the guys at the top either know what's happening days before I do....or make things happen when they want it to.

Anyway...back to contaigion. European Crisis Part I saw sovereign debt called into serious question for the first time. Public speculation about nations either defaulting on bonds outright or forcing "haircuts" got aired.

The contagion spread to the European banks who HOLD most of that questionable sovereign debt. Banks solvency was threatened if government bonds got paid at something less than face value.

Once again a trillion dollar bailout got thrown at the problem in Europe and as much as they'd like you to believe it was governments getting bailed out...it wasn't. It's the banks holding that debt that got bailed out. Just like our wonderful TARP crap was purely for the banks on this side of the pond.

Europe's problems got swept under the rug ...not fixed. Welllllll....it's back :)

German banks in strife...and look at that second story. ECB demanding that the German government take on the bad debt in the banking sector.

In the first iteration sovereign debt threatened to take down banks...now banks bad debt is adding to the debt burden of sovereign governments.

The 'contaigion' corridor runs both ways. Now watch as the contaigion potential jumps the pond......

(more to come)

Gold Bouillon
08-11-2010, 07:02 PM
Germans have tolerated the EU. They may profess to being Europeans but that's because it's the pc thing to do. In their hearts they're still Germans.

The last major irritation was the rest of Europe expecting Germany to bail them out during the past round of the sovereign liquidity crisis game. During that period Chancellor Merkel did not kow-tow completely enough to Brussels and the ECB.

This clearly looks like an attempt to humiliate and weaken Germany. Germans will definitely have their feathers ruffled by such overt meddling in their sovereign affairs. I wonder if it will end up being another nudge toward Germany leaving the EU.

Gold Bouillon
08-11-2010, 07:19 PM
Storm:

While this is somewhat outside the scope of Harvey's thread, it is your statement and I think having people (me selfishly) understand it would be helpful overall: Those FX moves are collectively telling us we're in another /risk off phase of the world's schizophrenic /risk on - /risk off roller coaster.


"Risk on" / "risk off" are terms used a lot on ZH and a few other places. Could you be sure I've got it right and help fill in some markers?

Risk on - money is willing to gamble. Sell gold to raise cash to buy stocks & commodities - except gold of course. Dollar down, EUD up. US Markets up.

Risk off - money wants to play it safe. Dump stocks & commodities. Buy bonds, especially treasuries. Dollar up, EUD down. JPY? (Buy gold? sometimes. Sell gold to meet margin calls.)

Thanks.

Stormdancer
08-11-2010, 07:21 PM
Just a bit before the close comes this:


Is There A Liquidity Problem At Goldman Prime? (http://www.zerohedge.com/article/there-liquidity-problem-goldman-prime)

We received an interesting letter from a reader...

Our Fund tried to do wires out of our GS Prime accounts yesterday. For the first time ever, I got a call asking if “we really needed to wire the money out” and actually had them try to negotiate us out of it. I didn’t think anything of it beyond that.

The thing is, a buddy of mine just told me off-hand that they tried to wire money out of their fund’s GS Prime account too, and they had the same weird attempt to stop the wires…!

Either a) there is a major cash crunch going on (explains DXY up and ECB lending dollars maybe??), b) GS knew market would sell off today and were trying to prevent client margin calls, c) all of the above.

We have sent an inquiry to Lucas van Praag to confirm that all is well with Goldman Prime from a liquidity standpoint. In the meantime, we solicit the response of our readers to indicate if anyone may have experienced comparable "complications" upon redemption events either with Goldman, or other Prime Brokers.

Update: Goldman responds:

Hi Tyler:

We have no idea what this rumor could be about. There are absolutely no issues relating our prime brokerage business, and never have been.
Best / Lucas



Rumours? Yup...nothing more...but consider this: ZH is the "wikileaks" of Wall Street. They've set up a system that allows insiders to provide information without revealing their identity. The ZH founders are obviously former insiders themselves, fully capable of understanding and analysing information they get and still well connected on their own account. "Rumours" from a source like that take on a higher credibility than rumours in general.

Furthermore...in this case it doesn't matter all that much because in a fractional reserve banking system rumours have huge potential to become self-fulfilling whether they are true or not initially.

We're talking Goldman Prime here. This isn't a "run" at a regional bank where middle class customers are trying to grab $20,000.00 out of their account and run.

Here were talking institutional investors like hedge funds and pension funds that will be trying to run with billions of dollars.

So Goldman denies there's a problem. Of course they did :). So did Bear Stearns, Lehman, Enron and WorldCom.

In the world of banking, when a bank is forced to publicly defend against questions of solvency the safest assumption is that the bank is already dead.

It only takes a tiny pecentage of depositors getting scared and withdrawing their money to make the rumour a fact...even if the bank was perfectly healthy before the run began.

(more to come)

Stormdancer
08-11-2010, 07:49 PM
Storm:

While this is somewhat outside the scope of Harvey's thread, it is your statement and I think having people (me selfishly) understand it would be helpful overall:

"Risk on" / "risk off" is a term used a lot on ZH and a few other places. Could you be sure I've got it right and help fill in some markers?

Risk on - money is willing to gamble. Buy stocks & commodities. Dollar down, EUD up. US Markets up.

Risk off - money wants to play it safe. Dump stocks & commodities. Buy bonds, especially treasuries. Dollar up, EUD down. JPY?

Thanks.

I'm stepping outside the scope of this thread too so don't worry too much :). I think it's warranted in light of recent developments. We'll get back to focusing on Harvey's valuable work shortly.

Thankyou for catching me getting "lost in the lingo". This thread is primarily for people who are early in the process of attempting to gain better understanding of what's been going on lately and it helps when people like you show me when I'm not being plain.

Your understanding of /risk on -/risk off is the same as mine.

/risk off is when the world collectively catches its breath and mutters "oh....sh*t"....and people start moving their money into 'safe' places.

In the past, that has meant money leaves stock markets and starts buying sovereign bonds. Money starts fleeing the country/currency percieved to be at the center of whatever problems are coming to light. If the problem isn't the US itself...the US dollar and US Treasuries are the beneficiary.

The Japanese Yen (JPY) has been an excellent indictor of when the world is getting scared. Due to ridiculously low interest rates in Japan for two decades, Japanese investors have been borrowing cheap money in Japan and investing it in higher yielding markets like Australia, New Zealand, Brazil, the US (not so much..but some) and many other emerging markets.

When the world gets scared so do the Japanese grandmothers and they start liquidating foreign investments and bringing their Yen back home. Foreign currencies begin to fall as they are sold, and the JPY strengthens as the Yen is bought. The investments are collectively called the "yen carry trade" (short yen, long AUD..etc.)

These trades are unwound...reversed...when Japanese investors fear that their capital is at risk from currency exchange rate changes. JPY gets stronger as these trades are unwound.

I was watching the USD/JPY 85 level as my key indicator of trouble. When it sliced through that level like it wasn't even there, I knew trouble had come. I thought that level would provide at least a little support....but it didn't even do that.

When the USD/JPY is falling...it means the dollar is falling and the JPY is strengthening.

So...simplistically, when the AUD/JPY currency cross is falling it's /risk off.

When the AUD/JPY is rising it's /risk on.

There is more to it than that but that's the first thing I look for...and watch like a hawk. It's the primary early warning in my mind. The USD/JPY tells the same story, but due to the massive trade between Australia and Japan the AUD/JPY appears to be even more sensitive as an indicator.

Stormdancer
08-11-2010, 08:33 PM
back to the "contaigion" topic...


I've tried to draw some lines of potential contaigion between banks and sovereign debt markets. FOREX (foreign exchange...currency trading) is another category that can serve equally well as trigger of or victim of a global crisis.

Currency exchange rates have been gyrating wildly the past couple of days. FOREX markets are highly leveraged...people betting with borrowed money.

So, what potentials open up when currency exchange rates are jumping and diving like a jackrabit on crack?

The potential for some big hedge fund to blow up because they were caught on the wrong side of a big currency bet goes through the roof.

And now we're right back to the banking system. Hedge fund blows up and goes underwater...all the money it borrowed to bet with isn't going to get paid back. The bank it's owed to gets thrown in the hurt locker by a huge loan suddenly gone totally sour. The bank scrambles to control the damage...possibly affecting other banks that are counterparty to the first bank's scrambled balance sheet.

In a short time, multiple banks are scrambling to control damage and the potential for a self-reinforcing spiral of instability developing across the whole global banking system is set up.

If this is not quelled quickly, the next sector ...derivatives...starts to come unglued.

Credit default swaps get triggered creating new counterparty liabilities in banks, hedge funds, pension funds, you name it.

Hedge funds and pension funds start scrambling to control damage...stocks sell off further as investors liquidate to meet margin calls and cover obligations that are going bad in a hurry.

Smaller investors start scrambling to liquidate, intensifying pressure on hedge funds, mutual funds, money market funds and the like.


Do you see the potential? Almost everything I've said is pure speculation...I'm just trying to demonstrate the deeply interconnected nature of global markets that can move at the speed of light through electronic connections that span the globe.

It's truly one of those classic situations where a butterfly flapping its wings in
Brazil may ultimately lead to a typhoon in Manila.

(more to come)

Stormdancer
08-11-2010, 09:13 PM
Enough about contagion...I've beat that horse enough I think. A few comments on gold and silver and I'll hush :)


There may have been some minor manipulative activity in gold and silver in the past few days, but the evidence is debatable and if there has been manipulation its been half-hearted and mild attempts. Status-quo maintenance perhaps....but no "smackdown" in sight.

That doesn't mean it's not coming. I've said before that I believe we're in a season where the incentives for manipulation are running high, and I believe those incentives are increasing....not decreasing.

If these problems I've highlighted in the last few posts do actually develop into a serious global event over the next few days or weeks, at some point the people who control and benefit from the current system will do everything they can to keep gold and silver from being seen as a 'safe haven'. That usually means smacking the price downward so that gold and silver appear to be just as unreliable in a crisis as everything else.

ZeroHedge has been following the antics of Goldman Sachs for several months...showing specific examples of how Goldman has "advised" clients to invest in trades only to see those trades go exactly the opposite direction. Guess who is on the other side of those trades? Guess who is winning while their customers are getting slaughtered? That's the background for this...from ZH:


Goldman Goes Goo-Goo For Gold: "Gold Market Poised For A Rally As US Real Rates Head Lower" (http://www.zerohedge.com/article/goldman-goes-goo-goo-gold-gold-market-poised-rally-us-real-rates-head-lower)

Goldman dedicates 9 pages to a regime change in which it goes openly bullish on gold. The report is attached, which we present without commentary but as always, if there is one flashing red light saying the peak price for any asset has been hit, it is a Strong Buy signal by Goldman. The report will likely result in a brief pop in spot over the next 24 hours as the idiot money rushes into the latest Goldman trap. Alas, it also means that GS is now offloading. Be very wary of market dynamics over the next month.

Please listen....Goldman could give a rip about the few of us who have figured out what they're up to. The 98% out there who don't know, have never visited a website like ZeroHedge in their life and get all their news from CNBC or FOX news are still more than enough for Goldman to make plenty of money on. Goldman Sachs recommending gold may seriously be one of the biggest signals we can find that a manipulative downdraft is being planned for the near future. If you go to ZeroHedge and actually read the Goldman recommendation you'll see a truly slick mix of truth and propaganda.

Not long after this was posted at ZH, something else posted in another thread by Fastmover (https://www.kitcomm.com/showthread.php?t=65753&page=2)caught my eye...Cramer's "Mad Money" segment for today:

Why You Should Buy Gold Right Now (http://www.cnbc.com/id/38667230)

Go ahead... I dare you...take a half bottle of dramamine, hold your nose and watch that idiot work. Compare the Goldman stuff with the video. Both have a $1300.00 "target", both mention negative real interest rates. Are we hearing "talking points" from one place delivered by two mouthpieces in coordinated fashion?

Notice that Goldman recommends buying futures and analyses gold ETF flows but never once mentions physical gold.

Cramer's first recommendation for how to "play" gold is GLD...high praise (4:30 into the video) He does mention physical by saying "Gold coins...good to go. Gold bullion, even better if you can afford to keep it in a gold depository bank.." LOL...I kid you not. 4:46 in the video...check it out :)

Anyway ... When the Vampire Squid and a notorious Wall Street shill like Cramer go bullish on gold within hours of each other ....I get nervous.

Is my tinfoil screwed on too tight? You decide :)....but I'd consider keeping some powder dry. We just might see a buying opportunity in gold and silver sometime in the next few weeks ...and it could be dramatic.

Oh...one last laugh. Check out this disclaimer found at the bottom of the Goldman report:

Reg AC
___________________________________

We, David Greely and Damien Courvalin, hereby certify that all of the views expressed in this report accurately reflect our personal views, which have not been influenced by considerations of the firm's business or client relationships.

Riiiiiight! :D

beastie
08-11-2010, 10:59 PM
Great thread SD. Very much appreciated.

Stormdancer
08-12-2010, 05:44 AM
Tuesday, August 10th(report dated Wednesday, August 11th (http://harveyorgan.blogspot.com/2010/08/august-112010-commentary.html))

Wednesday's price action:

Gold closed up by 1.30 to 1197.50. Silver finished the day down 26 cents to 17.89.


Comments on Tuesday's open interest:

The gold comex open interest was interesting. It rose in fine fashion yesterday up by 10,372 contracts to 530,576 as the banker cartel through in every available contract

keeping the lid on the price of gold.

That is interesting because it's a pretty good rise for a day when gold's rise was pretty mild. Maybe it was manipulative short selling capping the price...but silver's numbers don't seem to support the idea:

Surprisingly the comex OI on silver fell a bit down by 230 contracts to 125323 contracts.



Inventory Numbers

In silver:

Let us see if the 88,672 oz of silver withdrawn on August 10 found a home in a customer inventory for August 11:

The answer is yes and much more was deposited to the customer. A total of 722,479 oz was deposited.

We know that 88,672 came from the dealer. Where on earth is the rest of the silver coming from? Maybe from the SLV as we have witnessed

a lot of silver inventories leaving England.

Sure enough...yesterday's "missing" silver found it's way into the eligible stocks...a day late.

Something Harvey chose not to mention is that 199,339 ounces of eligible silver were removed from Scotia Mocatta's warehouse. In spite of the fact that the dealers are finding enough silver to make the overall numbers continue to grow....there is still a tremendous amount of silver that is walking out the door headed for parts unknown.

The total amount of silver stored in COMEX vaults increased by 722,479 ounces to stand at 110,593,472 ounces.


In gold:

You will notice that 63,981 oz of gold withdrawn from the dealer


and 65,011 oz enter the customer. This is the classic situation that I am looking for.


However, we need to see 4 million oz leave the dealer and enter the customer or

4 million oz enter the dealer inventory and then leave for a customer.

We have not seen any sort of that activity in the past 4 months.


The total amount of gold stored in COMEX warehouses increased by 1030 ounces to stand at 11,118,878 ounces


Delivery Notices

Today we saw a total of 465 notices served or 46500 oz of gold. The total number of notices for delivery served

so far this month total 6199 or 619900 oz of gold.




Contracts Left To Be Served

Thus the total number of oz of gold standing for this delivery month of August is as follows:



619900 oz + 164,900 oz (to be served) + 90,000 oz (options exercised for July) = 874,800 oz or 27,25 tonnes of gold.

Surprisingly we have increased in tonnage. We have witnessed only 63,981 oz settle or1.99 tonnes of gold. We have a long way to go

for this month and the last two delivery months.



I've rattled on enough for awhile so...good night :) (read the blog (http://harveyorgan.blogspot.com/2010/08/august-112010-commentary.html)!) :)

Gunslingerdoc
08-12-2010, 07:33 AM
Hey saw this in smaug's thread on the gold side and thought it interesting...I have not had a chance to verify it or update it but thought it very interesting if true...and since we whine more about manipulation on the ag side....


Re: If the commercial shorts have covered in a dramatic fashion over the last 3 weeks
then again according to *John Townsend of TSI Trader...
*
"When the GLD*put/call ratio spikes high, it means that traders/investors are convinced that the price of gold will fall. *I have circled on the chart such instances from the past two years in red.
**
What we can observe is that when the bearish trade gets excessively crowded, when a preponderance of participants are convinced that gold will fall, that is not the top in gold. *Rather, it is the bottom. *I have circled with green the price of gold for each occasion of a put/call ratio spike.
*
Again, think about what is going on here. *When the put/call ratio spikes upward you have an intense perception and emotionally dramatic conviction of traders that substantially puts too many folks on the same side of the trade. *When gold starts to move against them, even just a little out of their expectation range, each owner of a put option is no longer a seller of gold, but becomes a motivated buyer of gold! *This is precisely how huge brisk run ups in price are both setup and then executed.*"
*
http://www.investorvillage.com/smbd.asp?mb=144&mn=49395&pt=msg&mid=9317710

Stormdancer
08-12-2010, 08:58 AM
Hey saw this in smaug's thread on the gold side and thought it interesting...I have not had a chance to verify it or update it but thought it very interesting if true...and since we whine more about manipulation on the ag side....


Re: If the commercial shorts have covered in a dramatic fashion over the last 3 weeks
then again according to *John Townsend of TSI Trader...
*
"When the GLD*put/call ratio spikes high, it means that traders/investors are convinced that the price of gold will fall. *I have circled on the chart such instances from the past two years in red.
**
What we can observe is that when the bearish trade gets excessively crowded, when a preponderance of participants are convinced that gold will fall, that is not the top in gold. *Rather, it is the bottom. *I have circled with green the price of gold for each occasion of a put/call ratio spike.
*
Again, think about what is going on here. *When the put/call ratio spikes upward you have an intense perception and emotionally dramatic conviction of traders that substantially puts too many folks on the same side of the trade. *When gold starts to move against them, even just a little out of their expectation range, each owner of a put option is no longer a seller of gold, but becomes a motivated buyer of gold! *This is precisely how huge brisk run ups in price are both setup and then executed.*"
*
http://www.investorvillage.com/smbd.asp?mb=144&mn=49395&pt=msg&mid=9317710

I've got some issues with that analysis that would take way too much time to explain...but this is as good an opportunity as any to insert a bit of wisdom:

Proverbs 18:17 (Amplified Bible)

17 He who states his case first seems right, until his rival comes and cross-examines him.


You'll find that little proverb is true in a whole bunch of different circumstances....this one included.

I just spent a lot of time and effort building a case for a particular view of where gold and silver prices might go and why.

That doesn't mean I'm right. :D

There is another side....being aware of and open to hearing and understanding both sides is absolutely essential to good decision making.

Thanks for posting Doc :)

Gunslingerdoc
08-12-2010, 09:37 AM
Stormy...my fellow pm nut,

no offense ment or intended....like I said, I haven't looked at and really just threw it up there...I like you want remain objective and search for the truth...now I'm going to have some coffee...some tums and hope I'm making $ today!

Bring the Gold
08-12-2010, 04:32 PM
I don't know if this is "it"....but when "it" hits it will look a lot like what we're seeing right now.

ZeroHedge (http://www.zerohedge.com/) is a wonderful resource for following these kind of events.

Here's my early assessment of what began today based almost entirely on info gleaned from ZeroHedge:

About 12 hours ago I noticed FX markets getting really flaky....not long after that ZH posted this:


Guess Which Two Banks Just Used Up $430 Million In Fed USD Swap Lines After A Month-Long Quiet Period (http://www.zerohedge.com/article/guess-which-two-banks-just-used-430-million-fed-us-swap-lines-after-month-long-quiet-period)



That made me think "OK...liquidity problem....European....in the banks, not sovereign debt."

A few hours after that we got this:

In Stunning Decision, EU Orders Germany To Start Onboarding "Bad Debt" To Sovereign Balance Sheet: RBS, Fannie, Freddie Next? (http://www.zerohedge.com/article/stunning-decision-eu-begins-onboarding-bad-debt-sovereign-balance-sheet-rbs-fannie-freddie-n)



Now we've got plenty of reasons to blame the plunging Euro on. First two unnamed banks are mentioned, then we get specific mention of two German banks. Liquidity event...banking system...both confirmed.
Been attending to other matters which have finally been resolved satisfactorily so have been missing out on this great thread. That decision by the ECB to force Germany to take on bad debt made me spit out my coffee. WOW! If I was German I would been pretty freaking steamed to say the least. How the ECB can tell Germany to count private debt as public is way beyond my understanding and goes to show what a joke of a political system they have in Euroland.

Apparently the PTB are ready to break up the EU. Absolutely nuts! I guess they are going straight to SDR/IMF/BIS global reserve bank and skipping over the NAU and that sort of thing. It's going to be a wild ride ladies and gentlemen as another poster put it, "buckle up"!

Bring the Gold
08-12-2010, 05:07 PM
Just a bit before the close comes this:


Is There A Liquidity Problem At Goldman Prime? (http://www.zerohedge.com/article/there-liquidity-problem-goldman-prime)




Rumours? Yup...nothing more...but consider this: ZH is the "wikileaks" of Wall Street. They've set up a system that allows insiders to provide information without revealing their identity. The ZH founders are obviously former insiders themselves, fully capable of understanding and analysing information they get and still well connected on their own account. "Rumours" from a source like that take on a higher credibility than rumours in general.

Furthermore...in this case it doesn't matter all that much because in a fractional reserve banking system rumours have huge potential to become self-fulfilling whether they are true or not initially.

We're talking Goldman Prime here. This isn't a "run" at a regional bank where middle class customers are trying to grab $20,000.00 out of their account and run.

Here were talking institutional investors like hedge funds and pension funds that will be trying to run with billions of dollars.

So Goldman denies there's a problem. Of course they did :). So did Bear Stearns, Lehman, Enron and WorldCom.

In the world of banking, when a bank is forced to publicly defend against questions of solvency the safest assumption is that the bank is already dead.

It only takes a tiny pecentage of depositors getting scared and withdrawing their money to make the rumour a fact...even if the bank was perfectly healthy before the run began.

(more to come)
I guess I hadn't thought of ZH as a wikileaks for Financial Folks. That's kinda scary, maybe I shouldn't post there. Oh well, I guess its nothing the PTB don't already know about and I'm a tiny fry in a vast ocean.

If Goldman goes under it's because the real PTB have pulled their proboscis out of Goldman and have moved on to better hunting grounds. Leaving behind a corpse of a publicly vilified institution without harming the real operators. I've thought for years that Goldman, JP Morgan and even the FED might be sacrificied on the alter to bring about a new reserve currency and global central bank.

I still say silver is the bullet to use. I absolutely hold gold as well, but I feel like silver is something they don't so thoroughly dominate in physical form.

gunDriller
08-12-2010, 06:22 PM
i thought gold would rise faster in the few days after the FOMC announcement. not complaining though.

peaknik
08-12-2010, 08:07 PM
If Goldman goes under it's because the real PTB have pulled their proboscis out of Goldman and have moved on to better hunting grounds. Leaving behind a corpse of a publicly vilified institution without harming the real operators. I've thought for years that Goldman, JP Morgan and even the FED might be sacrificied on the alter to bring about a new reserve currency and global central bank.


Interesting. I have for a couple of years already been b=playing with the idea that JPM may have been set up to funnel metal to TPTB. i.e. through CB leasing of gold part of it goes to surpress prices part of it is snapped up by Rockefellers Rothchilds etc. JPM was then allowed to get deeper and deeper into manipulative games through derivaties etc in order for someone one or two steps removed to make gains from JPM actions. JPM can then continue functioning as long as it works or if it comes to crunch, i.e. through metal delivery defaults, let it fail.
Just a thought....

Stormdancer
08-12-2010, 08:54 PM
Stormy...my fellow pm nut,

no offense ment or intended....like I said, I haven't looked at and really just threw it up there...I like you want remain objective and search for the truth...now I'm going to have some coffee...some tums and hope I'm making $ today!

Whoa Doc! :) No offense taken at all! I really did appreciate the post. There is always another side and it was a good opportunity for me to point out that I'm biased :)

We all have a bias and that's really the point I wanted to make...to be open in case my bias has overruled evidence. I think I've developed my bias through a lot of study and hard work, but it still stands that I could be wrong. Forcing myself to remain open to new information has been a discipline I've had to learn because in the past it's cost me....and I was just trying to make that point for those who might not have confronted that in themselves yet. I think most of us tend to favor a position the more we have invested in it...just human nature...and a good tendency to be aware of.

Bring the Gold
08-12-2010, 11:55 PM
Interesting. I have for a couple of years already been b=playing with the idea that JPM may have been set up to funnel metal to TPTB. i.e. through CB leasing of gold part of it goes to surpress prices part of it is snapped up by Rockefellers Rothchilds etc. JPM was then allowed to get deeper and deeper into manipulative games through derivaties etc in order for someone one or two steps removed to make gains from JPM actions. JPM can then continue functioning as long as it works or if it comes to crunch, i.e. through metal delivery defaults, let it fail.
Just a thought....
I'm certain you are right. The gold hedges of the 1990's were also MASSIVE gold vacuums for the PTB. It's telling that Rothschild left Barrick right around the time when they realized they were going to take a drubbing from their hedges. Then Rothschild quits the London Gold Fix? That tells me all hell is gonna break loose. Whether it's politics or economics I see bag holders everywhere I look.

Bring the Gold
08-13-2010, 12:26 AM
I'm stepping outside the scope of this thread too so don't worry too much :). I think it's warranted in light of recent developments. We'll get back to focusing on Harvey's valuable work shortly.

Thankyou for catching me getting "lost in the lingo". This thread is primarily for people who are early in the process of attempting to gain better understanding of what's been going on lately and it helps when people like you show me when I'm not being plain.

Your understanding of /risk on -/risk off is the same as mine.

/risk off is when the world collectively catches its breath and mutters "oh....sh*t"....and people start moving their money into 'safe' places.

In the past, that has meant money leaves stock markets and starts buying sovereign bonds. Money starts fleeing the country/currency percieved to be at the center of whatever problems are coming to light. If the problem isn't the US itself...the US dollar and US Treasuries are the beneficiary.

The Japanese Yen (JPY) has been an excellent indictor of when the world is getting scared. Due to ridiculously low interest rates in Japan for two decades, Japanese investors have been borrowing cheap money in Japan and investing it in higher yielding markets like Australia, New Zealand, Brazil, the US (not so much..but some) and many other emerging markets.

When the world gets scared so do the Japanese grandmothers and they start liquidating foreign investments and bringing their Yen back home. Foreign currencies begin to fall as they are sold, and the JPY strengthens as the Yen is bought. The investments are collectively called the "yen carry trade" (short yen, long AUD..etc.)

These trades are unwound...reversed...when Japanese investors fear that their capital is at risk from currency exchange rate changes. JPY gets stronger as these trades are unwound.

I was watching the USD/JPY 85 level as my key indicator of trouble. When it sliced through that level like it wasn't even there, I knew trouble had come. I thought that level would provide at least a little support....but it didn't even do that.

When the USD/JPY is falling...it means the dollar is falling and the JPY is strengthening.

So...simplistically, when the AUD/JPY currency cross is falling it's /risk off.

When the AUD/JPY is rising it's /risk on.

There is more to it than that but that's the first thing I look for...and watch like a hawk. It's the primary early warning in my mind. The USD/JPY tells the same story, but due to the massive trade between Australia and Japan the AUD/JPY appears to be even more sensitive as an indicator.
Stormy when you said "sliced through 85" was that from above or below. Your post is dated the 11th and it looked like it sliced through to the upside is that what you were talking about? Or were you talking about the breach of 85 to the downside not long before that?

Let me rephrase for clairity is Risk OFF USD/JPY of 85+ or below 85?

Thanks in advance.

JROCPW
08-13-2010, 12:57 AM
I'm still learning here, but I believe he's speaking of it breaking to the downside. The USD value in relation to the Yen is dropping, and that I believe is where SD sees the problem. There is less faith (or more fear) in the US markets, and the USD decreasing in relation to the JPY is the indicator. Looking at the chart, you'll see it's a steady descent. Thanks for posting this up SD.

Stormdancer
08-13-2010, 02:09 AM
Wednesday, August 11th(report dated Thursday, August 12th (http://harveyorgan.blogspot.com/2010/08/commentary-aug-122010.html))

Comments on Thursday's price action:

Gold closed up by 17.00 to finish the session at 1214.80. Silver closed up by 17 cents to 18.06.


Comments on Wednesday's open interest numbers:

The gold comex OI rose by 2375 contracts to 525633 as the bankers tried to contain gold from breaking into the 1200 region.

The silver comex OI fell marginally by 223 contracts to 123,141 contracts.



Inventory Numbers


In silver:

There were no internal transfers for either gold or silver.

There was only a slight withdrawal in silver from the customer inventory of 6122 oz of silver.

What is really troubling is the lack of oz of silver entering the dealer or silver leaving the dealer and into a customer

The total amount of silver stored in COMEX warehouses declined by 6122 ounces to stand at 110,587,350 ounces.

Note that all of today's decline is accounted for by withdrawals from the eligible category. I hammer that point because withdrawals from eligible stocks, whether by an industrial user or an investor who has lost confidence in COMEX, are the silver that is least likely to ever return. Eligible stocks depletions are most likely permanent.


In gold:

We witnessed such a tiny withdrawal of only 129 oz of gold from the customer side of things.


The total amount of gold stored in COMEX warehouses declined by 129 ounces to stand at 11,118,749 ounces.


Delivery Notices

There were 87 notices to delivery served upon our longs for a grand total today of 8700oz of gold
So far this month a total of 6286 notices to deliver have been served upon or 628,600 0z 0f gold.



Contracts Left To Be Served

Thus for this delivery month of August:

The number of gold oz standing is 628,600 + 113,800 0z + 90,000 oz = 832,400 oz or 25.93 tonnes of gold

The number of gold oz standing is 628,600 + 113,800 0z + 90,000 oz = 832,400 oz or 25.93 tonnes of gold

a touch less than yesterday.



As always, Harvey gathers some of the day's news and makes relevant comments including presenting the other side of my "Goldman is gonna whack gold" argument. Worth the read (http://harveyorgan.blogspot.com/2010/08/commentary-aug-122010.html):)

Stormdancer
08-13-2010, 07:37 AM
http://i108.photobucket.com/albums/n5/Stormdancer_photos/USD-JPY.png

Now that I've figured out how to do screen captures, I'm too tired and it's too late for me to do much else. I can certainly see why someone looking at a chart after I started posting about the USD/JPY falling below 85 might go ???? "What's he on about?". I was watching the AUD/JPY charts after I woke up...and with that still showing an uninterrupted downtrend I guess it just never occurred to me that I needed to check the USD/JPY again.

The short of it is that it was about 9:00 pm here when the USD/JPY sliced through 85 (downward) like a hot knife through butter. I of course, reacted and got head down, bum up researching in anticipation of posting about it...then went to bed. Evidently I didn't check it again when I woke up to continue a few hours later or I'd have known it had popped up above 85 again.

And there's a lesson for me...I was so sure that when 85 got broken decisively, it would just keep going ...so I didn't even check to see if it had. That was one heck of a move down through 85. It went from about 85.17 to 84.70 in a half hour ....with one heck of a recovery a few hours later too. Technically speaking, 85 was where the bottom was supposed to fall out...I should have done a thorough reasessment after I woke up that morning and didn't....sloppy. Anyway...I jumped the gun and it jumped out of the pit, and here's part of the reason:


BOJ intervention talks weaken the Yen (http://www.ac-markets.com/forex-news/daily-snapshot-2010-8-13.aspx)

The JPY fell for a second day on speculation Japan will take steps to curb gains in the currency that are hindering the nation’s economic recovery heading for its first five-day loss in three weeks against the USD...


http://i108.photobucket.com/albums/n5/Stormdancer_photos/JPY-1hour-1.png

Someone looking at the 1 hour chart would have seen an even less impressive appearing picture. But I was aware that the chart had *almost* kissed the 85 line for the first time on Friday (I've been watching this fall steadily since the 91.50 level in mid-June with each rally falling just a bit lower than the last) so I was extra alert once I'd seen that near kiss.


http://i108.photobucket.com/albums/n5/Stormdancer_photos/AUD-JPY.png


These last two are what I was watching instead of what I should
have been watching. <sheepish grin>


http://i108.photobucket.com/albums/n5/Stormdancer_photos/AUD-USD.png

Anyway...to answer your question directly BTG... /risk off is when the USD/JPY is below the 85 level and it's still a line in the sand to watch.

I'm willing to bet that next time it penetrates that level to the downside we'll also be hearing rumours of trouble somewhere and probably some pretty negative headlines, just like this time. One day there won't be a "stick save"...the fact we did get one this time surprises me...but I should know better. Mr. Market has the last word...not my expectations.

When the USD/JPY is falling, yen carry trades are being unwound and the flow of money is moving out of US dollars and into Yen.

The US dollar is weakening against the Yen.

Bring the Gold
08-13-2010, 11:01 AM
Thanks Storm that's what I figured you meant, but due to the reversal since that post I was a tad confused. Thanks for the clarification.

Stormdancer
08-14-2010, 10:49 AM
Weekly Inventory Summary

For the week beginning Friday, August 6th and ending Thursday, August 12th...total stocks...


Silver


Friday +7,601 ounces

Monday -94,452 ounces

Tuesday +722,479 ounces

Wednesday -6122 ounces

Thursday -22,170 ounces

A net +672,336 ounces were added to total silver stocks this week.

The total amount of silver stored at COMEX (both categories) began the week at 109,957,844 ounces Friday and ended with 110,565,180 ounces on Thursday.


Gold

Friday -64 ounces

Monday -58,574 ounces

Tuesday +1030 ounces

Wednesday -129 ounces

Thursday -29,080 ounces

A net -86,817 ounces were removed from total gold stocks this week.

The total amount of gold stored at COMEX (both categories) began the week at 11,176,486 ounces Friday and ended with 11,089,669 ounces on Thursday.


Edit: Errors found and fixed...numbers are accurate now.

Stormdancer
08-14-2010, 02:11 PM
Thursday, August 12th (report dated Saturday, August 14th (http://harveyorgan.blogspot.com/2010/08/commentary-august-142010extremely.html))

Friday's price action:


Gold yesterday closed basically at par up only 10 cents to 1214.90. Silver closed up 4 cents to 18.04.


Comments on Thursday's open interest:


However, the gold and silver banker cartel certainly were in the wings as we witnessed the open interest surge 13,394 contracts

to 539,047. It looks like JPMorgan and HSBC are not giving up supplying the necessary short paper. It is amazing that the speculators

keep coming back for more, oblivious to the fact that they have been fleeced by these criminal banks for the past 15 years.

The silver comex suprisingly is behaving differently to gold, rising by a smaller percentage--up by 1,439 contracts to 124,580.

The open interest on the silver comex has remained in a tight range of between 120,000-125000 contracts. As I pointed out to you there has been

massive activity at the silver comex with silver leaving the customer inventory coupled with the huge leasing of customer silver and its return.

We have witnessed massive SLV silver leave the depositories over in England for destinations unknown. There has been no additions to silver inventories

at the SLV for some time. However lately the GLD has seen additions to its inventory.



Saturday comments on this week's COT report:

In silver:


Here we see that the longs on silver shortened a bit their positions by a tiny 588 contracts.

Those that were short added a tiny 133 positions to their short list.

In the commercial category, those commercials that were long increased those positions by a small 139 contracts.

And those commercials who have been short, namely JPMorgan, HSBC etc increased their paper shorts by 349 contracts.

Surprisingly it was the small speculators that entered the game as they increased their long positions by a healthy 1189 contracts

and those that were short increased those positions by a small 258 contracts. Usually the speculators get it wrong.. let us see what next week brings.

In summary in silver we are basically marking time. Everybody held their positions from the previous week.



In gold:


In the COT gold report we saw those large speculators who are long gold increase their positions by 1781 contracts.

However those large speculators that were short gold lessened their exposure by a healthy 3391 contracts.

In our commercial category, those commercials that were long gold lessened those positions by a huge 5719 contracts.

And those commercials that have been perennially short gold continued on that vane increasing those short positions by

supplying the necessary paper to the tune of 3232 contracts.

In the small speculator section, again we see these people start to enter the game.

Those small speculators that were long on gold increased those positions by 3040 contracts. However those that were short

lessened their exposure by 739 contracts.

In summary with respect to gold, we are witnessing both small and large speculators entering back into the comex arena with

the large commercial bankers supplying the paper gold with no backing of gold whatsoever.



Inventory Numbers

Silver:


In silver again we see no new silver enter the dealer inventory or leave the dealer and enter the customer.
There has been considerable activity these past few months of silver leaving the registered comex vaults coupled with massive leasing of silver
as the comex folk try to satisfy the longs with delivery of physical silver.


The total amount of silver stored in COMEX warehouses decreased by 22,170 ounces to stand at 110,565,180 ounces.



Gold:


Again we see a massive 27953 oz of gold withdrawn without entering the customer, thus this gold so far has not settled any gold comex contracts.
This gold probably went somewhere to put a fire out in some other location outside of the usa.

Also another 1127 oz of gold left the customer inventory by some nervous nelly.


The total amount of gold stored in COMEX warehouses declined by 29,080 ounces to stand at 11,089,669 ounces.


Delivery Notices


Only 23 notices were served upon for a total of 2300 oz of gold.
The OI for August on Thursday was 1138 and Friday night it was 1012 for a loss of 126 contracts. Twenty three contracts
were notices to deliver, so we lost into thin air 103 contracts to destinations unknown.

For this delivery month of August , the total notices served upon so far total 6309 or 630,900 oz of gold.



Contracts Left To Be Served


Thus the total gold standing for August is as follows:

630,900 oz (already served) + 101,200 0z (to be served) + 90,000 oz (options exercised last month) = 822,100 oz of gold or 25.61 tonnes of gold.
We lost .3 tonnes with the contraction of 103 contracts.

I would like to point out that it is unusual to take this long to satisfy the gold holders of comex contracts. The issuers must pay insurance and storage costs
so it is in their interest to satisfy those contracts as fast as possible. The huge number of open gold contracts for August (1012 contracts) is certainly bothersome to our bank cartel members



Yet another Jim Willie article and other important news in today's edition of Harvey's blog... (http://harveyorgan.blogspot.com/2010/08/commentary-august-142010extremely.html)