"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Wednesday, July 31, 2013

August Gold enters its Delivery Period

With all the chatter out there about shortages of gold, Comex warehouse stocks drawdowns, etc., the delivery process for August gold could be interesting.

I must say that given all the recent fanfare, to see Deutsche Bank being a large issuer on the first delivery day seems to take the steam out of this talk. They are delivering 1,103 contracts worth of gold at 100 ounces each.

JP Morgan was the largest stopper with 847 contracts picked up for the house and 200 for their clients.

Remember when we had all that talk that Deutsche was taking delivery of Comex gold in order to return it to Germany.... Well...

The truth is that the gold delivery process has always been and will remain opaque. Firms may stop in previous months only to show up as big sellers in subsequent months. We simply have no way of knowing why they are buying or selling because we are not insiders working within their firms.

That is why, while the process is always interesting to observe, drawing conclusions from it can be rather risky.

A better gauge of the demand for gold is merely watching the price action. That will tell you what you need to know and eliminate all the worry and fuss over trying to figure out who is doing what behind the scenes in the gold market. If elephants are walking through a plot of ground, they always leave big footprints that are difficult to not see! Remember that.


  1. Well Dan. Gold is making one helluva comeback as we speak!!! GDX just went positive on the day. Maybe those Dinosaur footprints just might show up?

  2. Silver in the GREEN for the DAY!!!! Up 19Cents. Damn, and I sold some miners last nite due to the fear factor and the FEDDY just crumbled. Well they know the world is collapsing so they make up more stats to cover up the old crappy fudged stats. At some point this thing is going to BLOW UP. Sorry, I do not look forward to it, but if we can take our medicine and fight back we have a chance. If we keep taking on more heroin then at some point the legs give and we might not be able to get back up.

  3. Looking at how you feel id say we pull back soon white wolf...

    1. Friday is coming and yes, I am not buying back until the beat it down some more. The jobs report will do the next ITS CLOBBERIN TIME. But no fear, it will claw back again. I mean the dilution of all currencies around the world will not allow this to go on forever. When it does come, I hope I am in for an amount that I can hang on for a few years.

  4. Sorry all. When you read about a bs statistic being proposed and think? No way, they are not that crazy to go back to 1929 and add an R&D data point to the GDP? Cannot happen. Then it actually comes to fruition and the world just yawns? I mean what in the heavens is going on here. I know that acceptance is the key to many problems and gods word will win out and take no pity on those that turn this country into a bastion of liars and thieves. It is just hard to watch play out. My ability to keep my head sometimes just evades me. Watching the main street media fall over themselves on the higher prices of homes, when income is falling? Revenues falling for most of the stocks on the market yet, the stock market continues it path northward? Currencies devalued at a pace never seen in history, deficits cheered, it makes me sick. So if I owe an apology to cheerlead SOUND MONEY, then I offer it.

  5. is it just me, or why are all the pm bulls so bearish on fracking? just saying in sparks, steve

  6. "while the process is always interesting to observe" [...] "to see Deutsche Bank being a large issuer on the first delivery day"

    Hello Dan - thank you for your ongoing educational efforts and for the general spirit of your blog - which is quite rare and, thus, all the more uplifting for the kindred.

    In the said spirit: where does one "observe" the delivery process? How can one "see" that a bank such as Deutsche is "an issuer"? Your explanations and some links will be grately appreciated.

    Very best regards.

    1. contulmmiv;

      You can monitor the delivery process by going to the CME Group website


      look over at the right hand side of the page and you will see a heading for delivery...

    2. I just realized that I 'stared' at that report in the past, but it remained opaque as to its significance. Your article is the first I read which shades some light on it, by interpreting it in the wider context of the discussions about gold. The pieces have finally come together. Educational to the last :) Thank you.

  7. Remember, the day after the FOMC minutes is usually the "Ben Bernanke Coronation" rally from hell, where stocks are bought by the Fed, gold slammed, as if the officials are sending the market a message as to who the boss is.

    How many times have we seen selling at the end of the day post FOMC, only to be reversed the next day with higher highs on the Dow?

    And don't forget that tomorrow is another day when mutual fund money comes in and money manglers scramble to "put the cash to work", LOL...

  8. Hi Dan. Thanks as always and nice updated photo! my 2 centavos is that I doubt the German government and its over-leveraged proxy DB, would initiate an event that would force the hand of their allies in the bullion banks. If indeed the gold is gone, it has to play along with the rest of the Western World and pretend like it isn't, or not only risk not getting it back, but also collapsing faith in the monetary order. A Nash equilibrium?

    1. MDLGTO;

      I am with ya on that... the entire Western monetary system is linked together like a daisy chain. if one link falters, the whole thing weakens.

      That is why I believe that the Europeans did not make much noise when the Abe government in Japan first put forth their plan to pump all that money into their system and weaken the yen as a result. IN the past, they would have cried bloody murder and protested every day. They realized that if Japan succumbed to deflationary pressures, odds are that they were next and thus they had to go along with it.

      No one wants to rock the boat because they are all concerned that the boat is taking on water.

  9. $85B monthly to $420 stimulus by the Fed; Really, acclaimed guru, money manager, consultant to God, Keith Barron, where did you get this figure? Oh, silly me, you were with Michael Pento, Stephen Leeg, Egon von Greyerz and you all put your heads together and again formed a classic rock pile; you should be ashamed, oh and I forgot Fleckenstein, who wants to compare Greece to America, kind of like comparing La Jolla, Ca weather to Bangor, Maine; have a good one, all you hyperinflationists, in sparks, I am steve

    1. Steve;

      I realize that you strongly disagree with some of the comments from some of those folks over at KWN. Can you do me a favor however and instead of insulting them personally, rather just call attention to those things that you disagree with and let those be known and why?

      I have no problems whatsoever with you disagreeing with some of them. I think anyone who regularly reads here understands that I have different views also from many of them. But the markets, in order to be markets, all have a bull side and all have a bear side. It is evident that they are always on the bull side. We know that. So rather than mock them let's just agree to strongly disagree with them, at times, and let it go at that.

      I too once believed that the Fed policies would create hyperinflation but it is now evident, that after 5 years of it by now, deflation is still a major concern. Hell, even the Fed said as much today and that is pretty mind-boggling.

      My take is that if we have already had QE1, QE2, Operation Twist, QE3, and now QE4, and the Fed still cannot get inflation up near 2% annually, how much more money will it take before we get it?

      Right now, even the Fed admits that inflation is not sufficiently high enough as far as they are concerned. That is exactly the same boat as Japan finds itself in. One has to wonder if we are heading down the same path as the Japanese where debt to GDP is now over 200%.

      Anyway, if the Fed were to ever reach a point of printing $420 billion a month, and as you, I have no idea where that number came from, life here in the US would be intolerable as the system would have collapsed.

      My own hope is that we get a change in administrations and in fiscal policy and in particular, something that will unleash the potential of the energy industry here in the US.

      I would much rather have gold tame and going nowhere with a sound currency and a prudently run government than I would some sort of chaos. You have said the same thing as I Have.... those who are wishing, praying, begging, etc for higher gold prices had best be careful what they are wanting - because when they get it, it is going to be accompanied by misery. I do not wish that on my children.

      Thanks for being receptive to this Steve,

    2. "My take is that if we have already had QE1, QE2, Operation Twist, QE3, and now QE4, and the Fed still cannot get inflation up near 2% annually, how much more money will it take before we get it?

      Right now, even the Fed admits that inflation is not sufficiently high enough as far as they are concerned."

      Hi Dan, what about MOPE related to inflation here?
      Is real inflation under control, or is just a manipulated number?
      Expectations of high inflation would benefit gold, as you mentionned. Is it not the Fed's game to manipulate and hide the figures so that the dollar remains the world's "safe haven" and interest rates on US debt remain low?
      Low inflation expectations and fear of deflation allow US to keep printing (which they desperately need to do) and US dollar to not collapse vs other currencies and gold.
      In this perspective, maybe all this speech is BS and Shadowstats gives a more accurate number of inflation?

  10. Dan, Your points are well taken; I am always calling out their ideas, not them personally; I just get sick and tired of these outofthisworld bull calls; we are on the same page and you do fine work; steve in sparks

  11. Dan.
    You say:
    "those who are wishing, praying, begging, etc for higher gold prices had best be careful what they are wanting - because when they get it, it is going to be accompanied by misery. I do not wish that on my children."

    I understand what you mean by that however I would reply to you by saying:

    - The FED is well aware of what higher -I mean REALLY- higher gold price means. This is why they try to put it down. It is my opinion that the majority of American -the poor and the rich, the educated and the non-educated- is well aware of what HIGHER gold price means: bankruptcy of a system and the misery going with it. However cutting the vocal cords of the canary in the mine will not stop the destruction of the mine!

    - $17T -and counting even if the Obama's administration took the battery off the clock to stop it- is not small potatoes. 48 millions American receiving food stamp is already (huge) misery even if the people get used to the number. Millions of full time jobs lost and replaced by part-time jobs is misery for millions of people...Millions more out of their homes because they either can not afford the mortgage payment or they owe more than the home value...and so on and so forth.

    Your kids and billions of kids in the world are going to pay a heavy price for what is already going on in America. They just don't know it yet AND the price of gold being $1300/oz or $25000/oz will make no difference EXCEPT that the world will stop sleeping and finally wake-up to reality.


  12. Hubert,

    Thanks for finally acknowledging we went over $17T. I have called journalists who think I am lying... even when I send them to the CSpan website where CONGRESS put $17,031,170,624,307.94 ON THE DAMNED TELEVISION SCREEN during Bernanke's speech! No one talks about it. Jim Sinclair AT LEAST posted my screenshot on his website, but then he posts that STUPID story from CSN (who was also not interested in the fact that we went above $17T) and they perpetuate the nonsense by not posting the FACT that US Congress believes we are over $17T two weeks ago! I feel like White Wolf... insane...

  13. Dan,

    What does the Issued and Stopped columns mean? Bought vs. sold?

    1. Nate -

      Issuers are those who have taken short positions and will hold those into the delivery process and intend to actually deliver the metal or commodity to a long position holder.

      The long position holder who actually wants to take physical possession of the metal or commodity informs their brokerage firm that they intend to stand for delivery and then they are assigned based on the date of their actual long position. Those who took the long position at an earlier date get assigned prior to those who might have only recently taken a long position. These are the "stoppers".

  14. Hi Dan, thanks so much for your excellent commentary and insight! I always look forward to your writings, a great break from a lot of the rantings on the net cluttered with ads and hype.....
    I was hoping you could do some charting on silver?
    I have seen this $$$$$ printing thing go on for so long now and we've been so long entrenched in this down trend, when is it going to turn? It seems as if the elephants just hammer the PMs down on any news these days! I often believe the hype of inflation because I want, hope, would like to see a true consequence to all the foolish $policies of our governments!


    1. derry o'

      I try to cover silver on my KWN weekly metals wrap. Right now there is really nothing going on in that market as far as the futures are concerned because it cannot keep its footing above the $20 level. That is a bare minimum that is required for it to have any possibility of getting something more exciting going. I would actual prefer to see it move through $22.50 to give me a better feeling that it can run a bit further.

      I will try to get something up as far as a chart goes if I can find some time in my schedule...

  15. Dan, it kinda feels like players are getting agitated here of late and making more frequent comments and I think that is good and I also feel like Aug may bring more action than people are prepared for, like Aug '82 when stocks broke up and out on huge for that time volume of >100m shares and that is not a missprint; we had a pool in Clayton then after a couple hours with stk and commod jockeys all over and man, that was a helluva day ; looks like pm are tired; steve in sparks

  16. Hi Dan- thank you for your comments. Regarding Germany wanting their 670 tonnes of gold reserves back, why would they want their Gold back unless they had a need to sell it? Some have opined that this move by Germany is "bullish". Could it also be "bearish" from the standpoint that the euro is not such good shape and maybe Germany needs to raise some cash by selling Gold?

    1. Hi Jeff,

      Maybe Germany wants its gold merely because "Euroland" will need to justify it owns a certain quantity of gold (12.000 tons roughly) to give credibility to its currency in a possible coming hyperinflationary environment?
      Just as China is buying gold and tries to obtain roughly 5000 tons in order to give legitimacy to the Yuan internationally?
      If the dollar is dying as a worldwide reserve, maybe gold will be necessary again in the new standard, even if it won't have to back 100% of the currency?

      I won't repeat what Sinclair mentionned about it but I like the notion of gold being a necklace around currencies.
      Not all countries can afford to refuse an audit of their gold reserves for more than 30 years... :)

  17. A better gauge of the demand for gold is merely watching the price action. That will tell you what you need to know and eliminate all the worry and fuss over trying to figure
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