Ding ding ding ding…It was reported yesterday that Trump has appointed the co-author of the book “Dow 36,000,” Kevin Hassett, as the Chief of the White House’s Council of Economic Advisors (LINK). “Dow 36,000” was published a few months before the dot.com/tech bubble burst in March 2000.
Given the irrational semi-parabolic move in the Dow since election night, the appointment of Hassett in the context of his spot in the history of stock market manias is seeded in comedic, if not tragic, irony. There’s numerous similarities between the current stock market and pre-crash moves in 1929, 1987, 1999 and 2007. However, in terms of true valuation metrics, the current market bubble is most similar to the Dutch Tulip Mania.
The demand for gold in India and China so far this year has soared, a fact which is completely ignored by the western financial media. The ex-duty Indian gold import premiums (approximately $10 earlier this week) are quite remarkable, “as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived” – John Brimelow’s Gold Jottings, brimelowgoldjottings@gmail.com).
Brimelow also reported that 162 tonnes of gold were delivered into into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes on Friday. The Friday delivery is the largest by far that I’ve observed in watching this statistic over the last several years.
While the eastern hemisphere is busy converting fiat currency into physically delivered gold, the United States political system is becoming increasingly unstable and unpredictable, as the Trump White House, in an effort to repair the frayed relations with Russia, is under systematic attack from the Deep State. Trump’s erratic leadership combined with the Deep State’s political terrorism will likely spark political and social chaos in the U.S.
The relentless buying strength of physical gold in the east along with the incipient instability of the U.S. are fundamental catalysts to drive the price of gold and silver a lot higher. Furthermore, the emergence of accelerating price inflation thrown into the mix has the potential to create the “perfect storm” for higher precious metals prices.
In an earlier post I explain why now is the time to use the manipulated paper gold price take-downs as buying opportunities. This viewpoint was vindicated during the two-day Fed Chairman staged Congressional propaganda event, which historically is a period in which the banks slam the gold market with tonnes of paper gold in order to prevent the price of gold from signaling a message that conflicts with the economic and financial fairytale artfully spun by the Fed-head (or not so artfully, as it were, in Yellen’s case).
Gold was slammed nearly $20 just prior to and during Yellen’s hot air exhalation sessions on Capitol Hill on Tuesday and Wednesday. The catalyst was a series of paper gold volume surges on the Comex in which the NY Fed and its agent bullion banks drop a payload of gold futures on both the Comex floor and into the CME Globex trading system, targeting the stop-losses set by hedge funds that are long gold contracts. This detonates an avalanche of selling by momentum-chasing hedge fund algos.
The price level and trading activity in the precious metals market – gold and silver specifically – has reached mind-blowing absurdity. Make no mistake about it, the fact that the U.S. mint had to suspend sales of 1 oz Silver Eagles until at least early August is definitive evidence that the natural market function of price as a mechanism to balance supply/demand has been completely destroyed by the western Central Banks using the big bullion banks as their agents of manipulation.
As you can see from this graph to the left, the open interest in silver is historically correlated with the directional price movement of silver. This correlation blew up and the amount of paper silver open interest on the Comex began to go parabolic last summer, while the price continued to head south. This is direct evidence that that Comex paper silver is being used to push down the price of silver.
In fact, as we all know from the work by SRSRocco, India finds the price of silver so attractive that it is on track to import a record a amount of silver this year.
The gold paper open interest on the Comex has now begun to go parabolic. As recently as April 3, the total gold paper open interest on the Comex was 382k contracts, or 38.2 million ounces of gold. As of yesterday – July 14 – the open interest in paper gold had soared to 462k contracts, or 46.2 million ounces. This is a 21% increase in the amount of paper gold. In fact, China finds the price so attractive that it is on track to “consume” a record amount of gold this year.
To put the gold paper open interest in perspective, as of yesterday Comex vault custodians were reporting an alleged 482k ozs of gold in the “registered” account and 7.8 million in total gold. The open interest just for the August front-month gold contract is 235k, or 23.5 million ounces. This is 48x the amount of physical gold that has been made available to back the August open interest. The total open interest in paper gold on the Comex is 600% greater than the amount of total gold that could potentially back that open interest.
To describe as “absurd” this imbalance between the paper gold and silver contracts on the Comex and the condition of the global supply/demand for physical gold and silver is an insult the word “absurd.” This is nothing less than complete criminal and fraudulent manipulation of the gold and silver markets by elitists and bankers who are now officially above all Rule of Law.
The more I learn, the more I realize that the Fed is nothing but a criminal enterprise and the guys at the top know it. Everyone within breathing distance of top slots at the NY Fed is a criminal. Remember, the NY Fed shares space with the ESF even though the latter’s formally part of the Treasury.
The real underlying issue with this manic and blatant manipulation of gold and silver is yet to be determined. But when Janet Yellen announces that the Fed is on track to raise interest rates this year, when the economic reports released daily show an economy starting to collapse, and when an obscure and opaque “military exercise” across the United States begins on July 15, 2015 – yes, Jade Helm begins today – and the S&P 500 spikes higher while the price of gold and silver are slammed – then you know your system is doomed.
It’s pretty obvious by looking at the numbers above that the bullion banks – JP Morgan, Scotia and HSBC – are using paper futures to loot the gold and silver on the Comex. If that’s not the case then I would urge them to allow us to conduct a physical audit of their vaults. Otherwise please explain how the mint can run out of silver. It’s also quite obvious that the Comex is headed for a force majeur cash settlement of the open interest. There is no other explanation.
Several years ago a good friend and colleague of mine and I both asserted that we would know they’re ready to let the system collapse when they let the Comex default. I would suggest that we drawing close to that time.