Thursday, January 16, 2014

Comex Warehouse Potential Claims Per Deliverable Ounce Rises to Historical High 112 to 1

"An almost shocking decline in deliverable (registered) gold has taken the ratio of open interest to deliverable gold to 112 to 1. 

This is not a default scenario since the supply of eligible gold in the warehouses remains adequate and at historically manageable levels as shown in the last chart below. 

Rather, it suggests that higher prices will be required to persuade more bullion owners to place their inventory up for delivery. 

That higher price, of course depends on who those owners are, and how motivated they might be by profits from their metals trades.  For some interested parties it is enough to be the very close friends of the Central Banks, with benefits that make them incredibly rich, self-satisfied, and occasionally audacious to the point of over-reaching.

But of course, it is well to remember that the Comex has become the tail wagging the dog, as the gold bullion markets have shifted to the East. 

February may be an interesting month, in an interesting year.

Weighed, and found wanting.

Stand and deliver."

at http://jessescrossroadscafe.blogspot.com/2014/01/comex-warehouse-potential-claims-per.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29





at  






Half of Every Mortgaged Home in America Still Completely Underwater-Fabian Calvo

"Forget what you are hearing about stiffer mortgage lending requirements.  It’s not true.  Real estate expert Fabian Calvo says, “If you can fog up a mirror or you have a pulse, they will give you a home loan.  That’s what they have done with the car loans, and that’s what they are doing with housing loans.”  The so-called new rules do not have any down payment credit score requirement.  Zero percent down loans are going to make a very big comeback.  According to Calvo, “After the mid-term election, you’re going to see no-money-down loans just really roar back.  It’s all part of the pump and dump I’ve been telling you about for well over a year.”  So, are the housing market problems behind us?  Calvo, whose company buys and sells $100 million in distressed real estate debt annually, says, “Bottom line is we are still in a situation where half of every mortgaged home in America is completely underwater, and the Fed is going to have to print money for a very long time before those values return.  It’s just a matter of fact.” Calvo goes on to say, “Now, worst of all, they are beginning to securitize so they can bring in even more capital.  A third of all real estate in America is rental properties.  You are going to have Wall Street being the biggest landlord in America.  It’s subprime 2.0.” 

 at http://usawatchdog.com/half-of-every-mortgaged-home-in-america-still-completely-underwater-fabian-calvo/

Hathaway - Gold Price To Super-Spike As Physical Flees West

"...The bullion market has been pressured all year by an artificial supply of paper gold with little or no connection to the underlying physical.  We wrote about this more extensively in our website article "Let's Get Physical."
 
We believe that the resolution of the disconnect between paper and physical gold will be a dramatic upside repricing of the real thing.  Most important is the steady migration of physical gold bars held in Western vaults to China and other parts of Asia, where they seem unlikely to be returned, other than for exorbitant ransom.
 
The timing of a resolution so potentially cataclysmic is elusive.  It would be like counting the snowflakes necessary to trigger an avalanche.  The buildup of systemic risk is there for anyone to see, but to the investment consensus, it is preferable, and perhaps more profitable in the short run, to ignore.  A commitment to precious metals and related mining shares is an investment in the almost certain failure of the PhD-standard in central banking, as stated so eloquently by Jim Grant.
 
Based on our perception of markets, it seems to us that the downside risk is limited.  Based on our perception of fundamentals, it seems to us that the upside potential is substantial.

King World News note:  Below are 5 fantastic charts from John Hathaway which take a look at the big picture for gold and the mining shares:


 





King World News note:  It is quite astonishing that you can see in the chart above (figure 52) the adjusted market cap per ounce of gold resource divided by the gold price is back to levels last seen in the 1990 time frame, which was directly in the middle of the roughly 20 year bear market in the price of gold.  Gold is simply experiencing a mid-cycle correction in a secular bull market, and yet the devastation in the mining shares has reached historic extremes on the downside.  This is why people like John Hathaway, John Embry, Egon von Greyerz, Rick Rule and Eric Sprott talk about the unbelievable opportunity this market represents for patient, long-term investors."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/15_Hathaway_-_Gold_Price_To_Super-Spike_As_Physical_Flees_West.html

Wednesday, January 15, 2014

Bank Of America Just Confirmed The Fed's Fears About The US Mortgage Market

"Bank of America just reported an earnings beat, but its mortgage business — a sector everyone's been watching — was a disappointment.
First-mortgage originations declined 46% from this time last year.
And BAC isn't alone in this. Both JP Morgan and Wells Fargo reported declines in their mortgage businesses yesterday. Wells Fargo managed to crush earnings through cost-cutting measures..."

at http://www.businessinsider.com/bac-beats-but-mortgage-business-suffers-2014-1#ixzz2qUwxEUi4

Faber: We are in a Gigantic Financial Asset Bubble

"Marc Faber, publisher of the Gloom, Boom & Doom Report, appeared on Bloomberg Television’s “Street Smart” yesterday to discuss the impact of Fed policy on the global economy and his predictions for 2014. As you could imagine, he is bearish.
Marc told Trish Regan and Adam Johnson that “we are in a gigantic financial asset bubble.” He has warned before that he believes the bubble could pop in a 1987-style crash.
While I see froth – think Tesla or Twitter or the mania surrounding Bitcoin – I don’t think equities today are anywhere near where they were in 1999, which truly was a bubble. Also see Marshall’s recent post on bubbles, which I think is a good one in terms of understanding the phenomenon.
Faber also spoke about Bitcoin, saying, “I prefer physical gold and silver, platinum to bitcoin. Bitcoin can have a lot of competition. Gold, silver, platinum — they have no competition. How do you value a bitcoin?… How do you value Netflix? Is it overpriced or underpriced? Is Tesla overpriced, underpriced?”
My own definition of a bubble is a two-standard deviation move – meaning that you enter bubble territory when the price moves to a level two standard deviations above the norm on a long-term valuation benchmark metric. I think of a bubble coming from the fact that price movements are never entirely independent of previous price movements. When prices are near long-term norms, the intertemporal dependence is not an overriding variable in price movement. However, as prices move away from trend – either above or below – previous price movements take on increasing importance. That’s why markets overshoot both to the upside and the downside..."

The Eurozone’s Really Bad 2014, In Two Charts

"Headline writers have found some brutal things to say about the eurozone lately. To take just a few of the dozens of possible examples:
It goes on and on, through youth unemployment and political turmoil and every other kind of malaise short of major war. Meanwhile, the news in most of the rest of the world is, if not great, at least not horrendous. Here in the US headlines containing “despair” or “depression” are limited to pharmaceutical ads. And Japan, with its low interest rates and positive growth, seems to think it’s recovering (you have to admire their ability to compartmentalize, what with a nuclear plant melting down right in the middle of the country)..."

It’s PARAMOUNT to OWN some PHYSICAL Gold & Silver – Here’s WHY

"Stop lamenting the current price of gold and silver and questioning the validity of owning PMs because without gold and/or
 silver it will be almost impossible to survive what is to come.  No one knows when, but when it does, and it is a historical certainty, are you really going to care what you paid for your gold and silver?..."

Gold, Silver & Hyperinflation As We Head Into 2014

"No one, except those steeped in Austrian economic theory, fear the consequences of too much money creation, which means that money creation will continue until it is obvious to all that excessive money creation causes still more problems.

Until then, we can expect massive money creation from all central banks, perhaps not all at the same time and perhaps not at the rate that economists outside the central banks want, but it will come, sometimes in spurts, sometimes in massive quantities.

Still, when central banks announce money creation programs, there are economists, columnists and academicians who say it's not enough, regardless of the amount announced.  Paul Krugman, famed New York Times columnist and recipient of the 2008 Nobel Memorial Prize in Economic Sciences, is the most prominent economist who has called for money creation in amounts way beyond what have been created.  At one point in the midst of the World Financial Crisis bailout, Krugman called for the creation of $10 trillion.  Such is the belief that money creation is the answer to financial and economic woes.

Worse, though, is the silence about the dangers of too much money creation.  No one in the mainstream ever registers any opposition.  The word hyperinflation is never used.

Getting specific about money creation, European Central Bank president Mario Draghi recently declared that an interest rate increase in the European Union was “off the agenda.”  Further, rate setters on the governing council in Frankfort, where the real power lines in the EU, declared their “... resolve to keep monetary policy ultra loose far into the future.”  There is even talk of charging banks in the EU a levy for holding “excess reserves” with the ECB.  The reasoning behind “negative interest” to ECB member banks would be to stimulate bank lending, which further increases the money supply.

In Japan, the Bank of Japan and the government are working hand in hand to achieve two percent inflation, with the BoJ doing the printing and the government doing the spending.  Presently, the price inflation rate in Japan is running at 1.61%, which means that still more money creation lies in Japan's future.

In the UK, the Bank of England is keeping interest rates at historic low levels, despite calls outside the BoE for tighter monetary policy.  Bloomberg editorial board member Marc Champion says that a tighter monetary policy would be an act of “madness.”  No fear of too much money creation by Mr. Champion, who notes that in the UK ".  “... real wages have been falling, inflation is decelerating and the country's economy is still smaller than it was in 2008.”  The U.K.’s third quarter growth was only 0.8 percent.  No wonder Keynesians are calling for loose monetary policies..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/15_Gold,_Silver_%26_Hyperinflation_As_We_Head_Into_2014.html

Thursday, January 9, 2014

The Recovery™ In One Chart

"Corporatism by any other name, or brand...

h/t for the chart to those wild and crazy guys at GMU."

Household and Non-Financial Credit in Spain Sink, Government Debt Expands; No Recovery in Sight

"Here's an interesting chart regarding credit expansion and contraction in Spain from Guru's Blog. I added translation on the chart in red. 



Between 2009 and 2013 bank credit to government grew at rates between 14% and 36%. Meanwhile, credit to households and businesses has been in clear contraction since 2010..."

If You Are Waiting For An “Economic Collapse”, Just Look At What Is Happening To Europe

"If you are anxiously awaiting the arrival of the "economic collapse", just open up your eyes and look at what is happening in Europe.  The entire continent is a giant economic mess right now.  Unemployment and poverty levels are setting record highs, car sales are setting record lows, and there is an ocean of bad loans and red ink everywhere you look.  Over the past several years, most of the attention has been on the economic struggles of Greece, Spain and Portugal and without a doubt things continue to get even worse in those nations.  But in 2014 and 2015, Italy and France will start to take center stage.  France has the 5th largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly falling to pieces.  Expect both France and Italy to make major headlines throughout the rest of 2014.  I have always maintained that the next major wave of the economic collapse would begin in Europe, and that is exactly what is happening.  The following are just a few of the statistics that show that an "economic collapse" is happening in Europe right now...
-The unemployment rate in the eurozone as a whole is still sitting at an all-time record high of 12.1 percent.
-It Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.
-The youth unemployment rate in Italy has jumped up to 41.6 percent.
-The level of poverty in Italy is now the highest that has ever been recorded.
-Many analysts expect major economic trouble in Italy over the next couple of years.  The President of Italy is openly warning of "widespread social tension and unrest" in his nation in 2014.
-Citigroup is projecting that Italy's debt to GDP ratio will surpass 140 percent by the year 2016.
-Citigroup is projecting that Greece's debt to GDP ratio will surpass 200 percent by the year 2016.
-Citigroup is projecting that the unemployment rate in Greece will reach32 percent in 2015.
-The unemployment rate in Spain is still sitting at an all-time record high of 26.7 percent.
-The youth unemployment rate in Spain is now up to 57.7 percent - even higher than in Greece.
-The percentage of bad loans in Spain has risen for eight straight months and recently hit a brand new all-time record high of 13 percent.
-The number of mortgage applications in Spain has fallen by 90 percent since the peak of the housing boom.
-The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.
-For 2013, car sales in Europe were on pace to hit the lowest yearly level ever recorded.
-Deutsche Bank, probably the most important bank in Germany, is the most highly leveraged bank in Europe (60 to 1) and it has approximately70 trillion dollars worth of exposure to derivatives.
Europe truly is experiencing an economic nightmare, and it is only going to get worse..."

Noonan: “Gold” War Has Replaced Cold War in China/Russia vs. U.S. Struggle for Economic Dominance

"China [and Russia] represent the East, importing gold at cheaper and cheaper price levels, as the Western central bankers have been conducting a clearance sale…depleting their physical holdings.  In the war for gold, the East and West are still winning, but for vastly different reasons.
China loaned Mao’s gold to the NY central bank, and it would not [could not] return it. The gold was gone, loaned out, sold, we will not likely know the true story, but it was gone.  Paper was the name of the game for the West.  Physical gold, silver, and natural resources was, and still is the name of the game for China and Russia.  Both have been dumping US Treasury bonds in exchange for gold, silver, and any other asset that is not a derivative of paper.  Because of the NY central bank experience, China is out for revenge.
Russia has always been a known adversary and is winning against the US by default, simply waiting for the US to self-implode, which it is doing.  Where China holds the majority of physical gold, Russia holds energy trump cards over the US and its faltering scheme of the petro-dollar.  It is fast being replaced  by sounder forms of collateral and trade outside of the Western fiat scheme.  The US has become isolated.  Russia has vast amounts of natural gas to supply Europe, replacing, in part, oil.
b) The West
How is the West winning in the war for gold supremacy?  By default, which is all it knows how to do.  The entire Western world remains in the financial grip of fiat obligations. Everything is dependent upon the central banking system that is close to collapse.  The fiat Ponzi scheme is being kept afloat by China and Russia not forcing the totally insolvent Western banking system to make good on its debts.  Instead, China is being rewarded by cheap gold prices and cheap New York real estate that comes with the added bonus of the largest commercial gold vault (they bought 1 Chase Plaza for $750 million, about half of its value, from JP Morgan which also happens to house the world’s largest gold vault) located across the street from the Federal Reserve gold vault.
In spite of the fact that there have been:
  • record sales for silver and gold coins by the public,
  • record imports of physical gold by China and other countries to a much lesser degree,
  • disappearing gold reserves by COMEX and LBMA,
  • the highest demand ever for physical ounces of gold by paper holders,
  • etc, etc, etc."

This Will Create A Major Panic & Then Destroy The Gold Shorts

"Williams:  “The chart below is one of those classic charts, Eric.  A chart like this doesn’t matter to anybody until the one day it matters to everybody.  And when that day comes, it’s going to be very, very interesting to watch.  What we effectively have here is over 80 paper claims for every ounce of gold that’s being held in the Comex warehouse.  This is not yet a disaster for the month of January, but February is a big delivery month.

 

So we will have to wait until the next delivery month to see what happens to that structure.  The pressure is certainly building in the Comex warehouses.  There is gold in the Comex warehouses, but it’s not available at these prices.  Most of this gold is not available for delivery and to shake that gold loose we are going to have to see materially higher prices.

It’s certainly shaping up to be important.  This chart shows elevated levels for six or seven months and there is a degree of complacency now.  People think everything is OK, but nothing could be further from the truth.”

Eric King:  “Ron Rosen has been around these markets for six decades.  Is he correct when he says the West is literally  destroying itself with this war against gold?”

Williams:  “Gold is wealth.  People say gold is ‘money,’ but gold is really wealth.  It’s cultural (that belief) here in the East.  People understand that owning gold is owning wealth.  They also understand that owning fiat money which is being inflated away every day doesn’t make you wealthy.

So there is a tidal wave of gold moving from the West to the East.  It would have been OK for a period of time if the West wanted to give over a little bit of gold to the various entities in Asia.  That’s fine.  But I don’t think the guys trying to manage these markets fully understand what they are doing.  They are letting a ‘Genie’ out of the bottle and they don’t fully understand how powerful it is.  Once they realize it, it’s going to be too late.  And the gold is going to be squirreled away in the hands of people and central banks in Asia.  

The ETF is a perfect example:  We’ve seen 500+ tons of gold liquidated from the GLD.  Everyone in the mainstream media says this is a terribly bearish thing.  Well, that gold is not coming back to the West.  That gold has gone to places where it will not be sold.  So that gold is off the market.  That’s 500 tons of gold that we are not going to see again.  They can’t sell that from the ETF again.

 

That’s extraordinary.  That’s 4 years of gold flows into the GLD ETF gone in just one year.  We can see the gold flying East in the data.  And if the West sends physical gold into cultures where they don’t sell it, where they hand it down from generation to generation, it’s not coming back to the West. 

But when you’ve got an enormous leveraged short position in gold, in a situation where the physical gold is now gone and will not be returned to the West, those entities have a massive problem waiting to happen.  Meaning, when this problem erupts there won’t be anyone ringing a bell.  Instead, we are going to see this imperceptible fear as various entities rush to move from paper gold to physical gold.

The Bundesbank started this process back in January of last year.  They have only managed to get 37 tons of their enormous gold hoard back which is supposedly stored in the US.  This is frankly laughable.  But as this process picks up and feeds on itself there will be an inevitable tipping point where entities start to panic.

When that happens, you tell me, where is the gold?  Where is the gold going to come from?  At these prices it’s not there.  It might be available at $5,000 an ounce.  But if we go screaming up to $5,000, you know what people are like -- they get greedy.  So they might want to hold out for $6,000, $7,000, or even $8,000 an ounce.  Who knows?  There’s a price for it, but it’s certainly not $1,200 an ounce.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/8_This_Will_Create_A_Major_Panic_%26_Then_Destroy_The_Gold_Shorts.html

Thursday, January 2, 2014

Absolutely Shocking Developments In The War On Gold

"People have to remember that silver has lost way more on a percentage basis than gold.  In a period of roughly 32 months the price of silver has dropped from $50 to just under $20, and yet SLV has not been losing much in the way of physical silver.  This is almost beyond comprehension.  The mainstream media will not address this fact because it exposes the fraud and the manipulation.

I stand by what I’ve been saying all along which is this takedown has been totally organized and orchestrated.  But the cartel’s options are becoming more limited now that 41% of GLD’s physical inventory has been shipped to the strong hands in Asia.  My guess is we are now looking at mid-to-late January of 2014 as a probable and absolute bottom, after which it is going to be difficult for sidelined investors to gain a position because gold and silver will then move very, very quickly in the other direction.  That is why most people are going to miss this move, Eric.

While all of the Western media is filled with anti-gold stories, China continues to buy virtually all of the available physical gold at these levels, and will continue to do so on any further price declines.  Also, the flow of gold into India has continued because of increased smuggling.  But none of the smuggled gold is being reported in the official import numbers.

One of the primary reasons this gold flowing into India is not being reported is because the politicians themselves control the smuggling rings.  The reason India has such a large current account deficit and a loss of confidence in the Indian currency is because of the bad government policies.  The people of India see this and so they seek refuge, as they always have throughout history, in gold.  

The politicians appeared to want to put a stop to that.  They blamed the crave for gold in India which has been eternal, for a current account problem that is structural -- that is basically temporary.  As you know, Eric, I have extremely good sources and contacts in India because we’ve done business there for years.  If our sources are correct, this year the gold imports into India are very close to 1,200 tons, which is a staggering figure.

On top of that, we have the Chinese importing a mind-boggling 2,200 tons of gold for 2013.  That figure actually totals the entire global mine supply for all of 2013 outside of China.
Remember, China does not export any of its mine supply.  If we then add the Chinese import figures with the Indian import figures, including illegal smuggling, quite frankly those numbers are shocking.  You also have to remember that we have enormous demand from other countries around the world such as Russia, Brazil, just to name two.  

But the point I am making here is that these numbers for physical gold demand around the world simply don’t add up without major official sources such as Western central banks, the BIS (Bank for International Settlements), the Fed, and the Bank of England supplying gold from their own vaults.  Otherwise you just can’t square these numbers.  Any child with a pencil who can do arithmetic would not be able to sum those figures.  So these numbers just don’t add up, and this makes me very optimistic as I look out into 2014 and beyond..."

at   http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/12/31_Absolutely_Shocking_Developments_In_The_War_On_Gold.html

The Most Remarkable News In The Gold & Silver Markets

"The following gold chart which starts at the beginning of 1974 shows the MACD indicator on gold has never been this oversold in history:

 at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/1/1_The_Most_Remarkable_News_In_The_Gold_%26_Silver_Markets.html


Monday, December 30, 2013

The Oldest Bank In the World Is On The Verge Of Collapsing Read more: http://www.businessinsider.com/monte-paschi-faces-collapse-2013-12#ixzz2ozPb7qOe

"A delay to vital fundraising at Banca Monte dei Paschi di Siena<BMPS.MI> has increased the risk that Italy's third-biggest bank has to be nationalized, a move the government would like to avoid.
Shareholders led by the biggest investor in the bailed-out bank rejected plans for a 3 billion euro ($4 billion) share sale in January and postponed the capital raising until after May 12.
The bank's chairman and its chief executive may resign following the unprecedented clash with the main shareholder in the Siena-based lender, a charitable banking foundation with close ties to local politicians..."
at http://www.businessinsider.com/monte-paschi-faces-collapse-2013-12#ixzz2ozPfc8r5

NYSE Margin Debt Levels Are Still Climbing

"The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let's examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.
The first chart shows the two series in real terms — adjusted for inflation to today's dollar using the Consumer Price Index as the deflator. I picked 1995 as an arbitrary start date. We were well into the Boomer Bull Market that began in 1982 and approaching the start of the Tech Bubble that shaped investor sentiment during the second half of the decade. The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July, 2007, three months before the market peak.
Nominal margin debt is at an all-time high. In real (inflation-adjusted) terms, the latest margin debt is at an interim high, 0.7% below the all-time real high in July 2007.




at http://www.businessinsider.com/nyse-margin-debt-2013-12#ixzz2ozOtokXq
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