February's Strange Divergence In Precious Metals

Tyler Durden's picture


February has been an odd month for precious metals to say the least. On-again, off-again fears of Bernanke removing the punchbowl (and endless sell-side strategists discussing Great Rotations and the end of the gold cycle) have led to prices for gold and silver sliding notably. However, while all this price deterioration has been going on, demand for physical gold and silver has surged - entirely disconnecting from January's apparent demand-to-price correlation - and Silver set to break all-time record demand highs for a February. We know who was buying in January, as Reuters reports Russia and Turkey were significantly adding to their bullion reserves; and while the divergence between demand and price coincided with Chinese New Year - leaving a large marginal buying nation on the sidelines - we suspect the drop is more to do with hedge fund reflexive selling - now caught offside. It seems at least one smart player was using lower prices to build their stack; manipulation or no manipulation.


Cumulative demand for Gold vs Spot price... (corrected)


Cumulative demand for Silver vs Spot price (corrected)


and this month looks set to see the biggest demand for silver (for a Feb) ever...


Source: Bloomberg and US Mint

(H/t Alex Gloy)

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Tue, 02/26/2013 - 20:12 | 3279857 TheProphet
TheProphet's picture

You should investigate the exchange rate.

Tue, 02/26/2013 - 15:55 | 3278778 Likstane
Likstane's picture

Shouldn't it be called a "safe area box" ?  A safe deposit box sounds to me as a place to store safes. 

Tue, 02/26/2013 - 16:00 | 3278806 Al Huxley
Al Huxley's picture

No matter what they call it, including the word 'safe' or any derivative thereof is extremely misleading.  I mean, they're in BANKS for fuck sake, I can't think of a LESS safe place to leave valuables.

Wed, 02/27/2013 - 00:26 | 3280760 StychoKiller
StychoKiller's picture

Hmm, do canoes do it for ya? :>D

Tue, 02/26/2013 - 16:27 | 3278932 Svendblaaskaeg
Svendblaaskaeg's picture

Thanks, and while your are at it: UFO's

"I saw a UFO" - no you didn't, you identified the opject - it was not an un-identified flying opject aka UFO

Tue, 02/26/2013 - 17:46 | 3279346 Titan Uranus
Titan Uranus's picture

WHAT?  Do you mean it's iimpossible to see a UFO?  Or do you just say, "I saw an FO and I think it's not identified yet?"

Tue, 02/26/2013 - 18:54 | 3279631 akarc
akarc's picture

Am assuming the box was in a bank meaning it wasn't a safe anything. It was just a box.

Tue, 02/26/2013 - 15:36 | 3278669 ParkAveFlasher
ParkAveFlasher's picture

Simon Black says that you can always have your local CIA contacts muscle into the local bank manager's "hacienda" and terrorize his family until he confirms the deposit status, I mean, if you really need to check. 

Besides that, there are quantum viewing devices (green, of course) that allow you to peer through the earth's crust on a refractory basis and penetrate bank vaults to approx. 1cm accuracy, assuming you've implanted a neutron GPS transmitter chip in your PM of choice.

Tue, 02/26/2013 - 15:44 | 3278712 redpill
redpill's picture

We can't all be rising stars at West Point

Tue, 02/26/2013 - 17:51 | 3279372 Poor Grogman
Poor Grogman's picture

Safe deposit boxes simply allow the PTB to confiscate more wealth during a bank holiday, thanks Simon.

They are to physical what bonds are to paper

Centralization of confiscation bitchez...

Tue, 02/26/2013 - 15:03 | 3278518 Pseudo Anonym
Pseudo Anonym's picture


There are a lot of things wrong with that story.

like, ...it was fabricated;  but they got suckers go to their  website.  coohl.

Tue, 02/26/2013 - 15:19 | 3278609 Cognitive Dissonance
Cognitive Dissonance's picture

These are not the suckers you're looking for. Move along.

Tue, 02/26/2013 - 16:15 | 3278887 RockRiver
RockRiver's picture

why would a CIA agent give a shit about 12 Krugs.?

Tue, 02/26/2013 - 18:55 | 3279635 akarc
akarc's picture

Because maybe all them gold bars ain't worth shit? Well, more than the price of tungsten anyway.

Tue, 02/26/2013 - 16:15 | 3278888 Oldballplayer
Oldballplayer's picture

Have the people who make this crap up ever worked in a bank?  You know, the corner, retail branch kind of a bank?  You cannot touch a safe deposit box without a key or a warrant. 

The "CIA" is not going to walk into a domestic bank and try to take stuff out of a box unless they have a key or a warrant.  And the CIA ain't gonna get a domestic warrant.

Branch managers are like rabid dogs about this crap.

I call bullshit.


Tue, 02/26/2013 - 19:00 | 3279645 akarc
akarc's picture

I call Bullsit too.

Because we all know that the CIA always plays by the rules and even if they didn't Bank Managers would give their lives to save the integrity of their banks.

And besides, I just like to call Bullshit. Often times for no reason.

Tue, 02/26/2013 - 18:26 | 3279536 H E D G E H O G
H E D G E H O G's picture

"It seems at least one smart player was using lower prices to build their stack; manipulation or no manipulation." Thank you, glad someone noticed me!

Tue, 02/26/2013 - 14:40 | 3278448 localsavage
localsavage's picture

Looks like everyone figured out that if you can't touch it, it doesn't exist.

Tue, 02/26/2013 - 15:13 | 3278581 flacon
flacon's picture

I farted on my gold. Do you still want it Mr. CIA? 


Tue, 02/26/2013 - 15:39 | 3278684 ParkAveFlasher
ParkAveFlasher's picture

Questions to the crew, on the topic of farting up your gold:

-how much of the gold supply could be irradiated somehow,
-is that a valid identifier / marker of say a certain mass of gold that may carry in spite of various refining tricks to eliminate chemical signatures, and if so,
-what are the odds that my little RCM ducat is irradiating my frozen peas as we speak?

Tue, 02/26/2013 - 16:11 | 3278865 DCFusor
DCFusor's picture

"Hot" gold, that is, irradiated by neutrons to another isotope (which doesn't decay back into gold) only has a few day half life.  You'd have to get it *damn* hot to make a marker that would last for years.

And, getting it that hot would give you other (safe handling) problems for awhile after you did it.

I know, because I really am a fusion researcher, and we use gold to integrate our neutron production for measurement.  At our levels, no significant gold is lost, and once it cools back off - you can use it again.


Tue, 02/26/2013 - 16:33 | 3278964 akak
akak's picture

So, DCFusor, what IS the state of fusion research nowadays?  What kind of fusion research are you involved in? And can you comment on this "focus fusion" that I remember reading about on the internet that was supposed to herald a radically new, safe, cheap, efficient and small-scale means of power production?

Tue, 02/26/2013 - 14:40 | 3278450 Squishi
Squishi's picture

you can't get there from here

Tue, 02/26/2013 - 14:41 | 3278453 VonManstein
VonManstein's picture

paper squeeze coming round the corner.. a rally all day all night kind of affair...

Tue, 02/26/2013 - 14:43 | 3278457 Sach Mahoney
Sach Mahoney's picture

Soros buying now

Tue, 02/26/2013 - 14:47 | 3278475 DoChenRollingBearing
DoChenRollingBearing's picture

If Soros is buying physical gold, I would very much appreciate a link, thank you.

Tue, 02/26/2013 - 14:54 | 3278503 Sach Mahoney
Sach Mahoney's picture

was saying sarcastically.  It seems whenever gold makes a big move or sustained move, up or down, the press always seem to blame Soros. It's never fundamental. 

Tue, 02/26/2013 - 15:03 | 3278539 Nothing To See Here
Nothing To See Here's picture

lol i never noticed it but now that you mention it, it seems so obvious, thanks!

Tue, 02/26/2013 - 14:44 | 3278466 tony bonn
tony bonn's picture

the sell off in gold was a golden gift.....folks should have been buying with both hands and both feet...just like the chinese.

Tue, 02/26/2013 - 14:50 | 3278481 Meat Hammer
Meat Hammer's picture

Damn right.  As soon as I saw the price getting pummeled I reserved a rental box-truck to back up to the coin shop.

Tue, 02/26/2013 - 14:55 | 3278505 Sach Mahoney
Sach Mahoney's picture


Tue, 02/26/2013 - 14:46 | 3278472 DoChenRollingBearing
DoChenRollingBearing's picture

If this trend continues (physical demand, more scarcity, yet lower paper prices), then the Minsky Moment may be near us soon.  I cannot understand why only 1% (max 3%) of people own physical gold.  Physical gold is one of the few safe harbors in these difficult times, which IMO are only going to get worse.

Paper gold crashing yet physical demand going up.  Wait until the SELLERS of physical decline to sell at all.


Tue, 02/26/2013 - 14:52 | 3278492 Sach Mahoney
Sach Mahoney's picture

Agree, physical is the true safe harbor.  But in reality, it is not very mobile, not so safe and easy to store, not very convenient, e.g. time and expense to ship....so it is more about the practicality of owning physical that gets in the way

Tue, 02/26/2013 - 15:04 | 3278540 nope-1004
nope-1004's picture

Oil and uranium are much easier to store.


Tue, 02/26/2013 - 15:44 | 3278701 ParkAveFlasher
ParkAveFlasher's picture

So are Cadillac Escalades.

edit: sorry, I thought you said "easier to stuff".

Tue, 02/26/2013 - 18:02 | 3279426 Poor Grogman
Poor Grogman's picture

Hide your " oil" in your cars engine

The bastards will never think to look for it there...

Tue, 02/26/2013 - 15:19 | 3278605 McMolotov
McMolotov's picture

Plus you can't eat gold, and you can fondle it all you like, but it won't respond.

Tue, 02/26/2013 - 15:43 | 3278703 thewayitis
thewayitis's picture

Can you eat dollars idiot? Also, you can sell gold/silver as easily as equities. And you don't have to wait for the check. CASH in hand. Its not too late to jump on the train .......

 GOLD bitchez.....

Tue, 02/26/2013 - 15:56 | 3278788 McMolotov
McMolotov's picture


Tue, 02/26/2013 - 16:02 | 3278818 Al Huxley
Al Huxley's picture

It's ok. I think most of us got it.

Tue, 02/26/2013 - 15:56 | 3278744 oddjob
oddjob's picture

Your money used to be redeemable in Silver. Not too bulky.


Tue, 02/26/2013 - 18:39 | 3279591 H E D G E H O G
H E D G E H O G's picture

I know you're bein sarcastic, but you need to add <sarc> @ the end of your post so you don't get throttled. And by the way, I can stuff 50 Pamp Suisse 1 ouncers (approx. $100,000) in my pockets with ease and am very fucking mobile. AND, my nice .45ACP Glock model 36 keeps it nice and safe. Any other questions Baloney?

Tue, 02/26/2013 - 20:26 | 3279927 BidnessMan
BidnessMan's picture

Plus it sinks if you have a boating accident. At least paper has a chance of floating....

Tue, 02/26/2013 - 14:55 | 3278507 Meat Hammer
Meat Hammer's picture

 I cannot understand why only 1% (max 3%) of people own physical gold.



Could you repeat that?  I was listening to Snooki talk about her new baby.  

Something about Gold's Gym and being physical?  

Never mind...Ellen is coming on.  

Tue, 02/26/2013 - 15:05 | 3278532 akak
akak's picture


Is that like "Here Comes Honey BooBoo" and "My Redneck Vacation" and "Searching for Bigfoot" being TV gold?

Hey, if it's not good enough for Oprah and Dr. Oz to endorse on the air, then it's not good enough for me.


Tue, 02/26/2013 - 15:06 | 3278548 Meat Hammer
Meat Hammer's picture

+1.  It's not like Tom Cruise is jumping on Oprah's couch over gold.  

Tue, 02/26/2013 - 15:18 | 3278604 akak
akak's picture

Besides that, I keep all my money secure in the bank --- I mean, it's not like they aren't the safest place for it, and aren't looking out for me.  Never trust yourself when you can trust somebody else, especially a large Wall Street corporation.  Just like the government, they always know what's best.

Tue, 02/26/2013 - 16:07 | 3278845 Al Huxley
Al Huxley's picture

Yes, same here.  And I store my booze with the drunk who lives over the vent up the street (because who knows better about how to look after booze) and my dope with the dealer across town (for the same reason).  ALWAYS trust the professionals

Tue, 02/26/2013 - 16:09 | 3278854 akak
akak's picture

How lucky we are to live in the best of all possible worlds!

Tue, 02/26/2013 - 16:58 | 3279111 RockyRacoon
RockyRacoon's picture

Heard one o' them thar financial wizard guys who "manages" lots of OPM that one shouldn't invest (sic) in gold because its volatility is based on emotion.   Seems to me that he made the exact case FOR owning the stuff.  Where is the sanity?

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