# Guest Post: Physical Gold vs. Paper Gold: The Ultimate Disconnect

Submitted by Bud Conrad of Casey Research,

How can we explain gold dropping into the $1,300 level in less than a week? Here are some of the factors: • George Soros cut his fund holdings in the biggest gold ETF by 55% in the fourth quarter of 2012. • He was not alone: the gold holdings of GLD have contracted all year, down about 12.2% at present. • On April 9, the FOMC minutes were leaked a day early and revealed that some members were discussing slowing the Fed$85 billion per month buying of Treasuries and MBS. If the money stimulus might not last as long as thought before, the "printing" may not cause as much dollar debasement.
• On April 10, Goldman Sachs warned that gold could go lower and lowered its target price. It even recommended getting out of gold.
• COT Reports showed a decrease in the bullishness of large speculators this year (much more on this technical point below).
• The lackluster price movement since September 2011 fatigued some speculators and trend followers.
• Cyprus was rumored to need to sell some 400 million euros' worth of its gold to cover its bank bailouts. While small at only about 350,000 ounces, there was a fear that other weak European countries with too much debt and sizable gold holdings could be forced into the same action. Cyprus officials have denied the sale, so the question is still in debate, even though the market has already moved. Doug Casey believes that if weak European countries were forced to sell, the gold would mostly be absorbed by China and other sovereign Asian buyers, rather than flood the physical markets.

My opinion, looking at the list of items above, is that they are not big enough by themselves to have created such a large disruption in the gold market.

The Paper Gold Market

The paper gold market is best embodied in the futures exchanges. The prices we see quoted all day long moving up and down are taken from the latest trades of futures contracts. The CME (the old Chicago Mercantile Exchange) has a large flow of orders and provides the public with an indication of the price of gold.

The futures markets are special because very little physical commodity is exchanged; most of the trading is between buyers taking long positions against sellers taking short positions, with most contracts liquidated before final settlement and delivery. These contracts require very small amounts of margin – as little as 5% of the value of the commodity – to gain potentially large swings in the outcome of profit or loss. Thus, futures markets appear to be a speculator's paradise. But the statistics show just the opposite: 90% of traders lose their shirts. The other 10% take all the profits from the losers. More on this below.

On April 13, there were big sell orders of 400 tonnes that moved the futures market lower. Once the futures market makes a big move like that, stops can be triggered, causing it to move even more on its own. It can become a panic, where markets react more to fear than fundamentals.

Having traded in futures for over two decades, I want to provide some detail on how these leveraged markets operate. It's important to understand that the structure of the futures market allows brokers to sell positions if fluctuations cause customers to exceed their margin limits and they don't immediately deposit more money to restore their margins. When a position goes against a trader, brokers can demand that funds be deposited within 24 hours (or even sooner at the broker's discretion). If the funds don't appear, the broker can sell the position and liquidate the speculator's account. This structure can force prices to fall more than would be indicated by supply and demand fundamentals.

When I first signed up to trade futures, I was appalled at the powers the broker wrote into the contract, which included them having the power to immediately liquidate my positions at their discretion. I was also surprised at how little screening they did to ensure that I was good for whatever positions I put in place, considering the high levels of leverage they allowed me. Let me tell you that I had many cases where I was told to put up more margin or lose my positions. Those times resulted in me selling at the worst level because the market had gone against me.

The point of this is that once a market moves dramatically, there are usually stops taken out, positions liquidated, margin calls issued, and little guys like me get taken to the cleaners. Debates rage about the structure of the futures market, but my personal opinion is that a big hammer to the market by a well-heeled big player can force liquidations, increase losses, and push the momentum of the market much lower than the initial impetus would have. Thus, after a huge impact like we saw on April 13, the market will continue with enough momentum that a well-timed exit of a huge set of short positions can provide profits to the well-heeled market mover.

Moving from theory to practice, one of the most important things to keep your eye on is the Commitment of Traders (COT) report, which is issued every Friday. It details the long and the short positions of three categories of traders. The first category is called "commercials." They are dealers in the physical precious metals – for example, gold miners. The second category is called "non-commercials." They include hedge funds and large commercial banks like JP Morgan. Non-commercials are sometimes called "large speculators." The rest are the small traders, called "non-reporting" since they are not required to identify themselves. The ones to watch are the large speculators (non-commercials), as they tend to move with the direction of the market. Individual entities could be long or short, but in combination the net position of the group is a key indicator.

The following chart shows the price of gold as a blue line at the top, and the next panel down shows the net position of these large speculators as a black line. You can see that over the long term, they move together. When the net speculative position is above zero, this group is betting on rising gold prices. Of course, the reverse is true when it's below zero. In this 20-year view, the large speculators were holding net negative positions during the lowest point of the gold price, around the year 2000. As the price of gold rose, their positions went net long, and they profited.

An interesting thing about the chart above is that the increasing amount of net longs reversed itself before gold peaked in 2011, suggesting that these large speculators became slightly less bullish all the way back in 2010. The balance remains net long, but it remains to be seen how long that lasts.

What is not so obvious is that these large speculators are so big that they can affect the market as well as profit from it; when they initiate massive positions in a bull market, they drive the price of the futures contracts even higher. Similarly, when they remove their positions or actually go short, they can push the market lower.

So what happened a week ago was that a massive order to sell 400 tons of gold all at once hit the market. Within minutes the price plummeted, and over a two-day period resulted in the largest drop of the price for futures delivery of gold in 33 years: down $200 per ounce. We don't have the name of the entity that did this. However, the way the gold was sold all at once suggests that the goal was not to get the best price. An investor with a position of this size should have been smart enough to use sensible trading tactics, issuing much smaller sell orders over a period of time. This would avoid swamping the market; and some of the orders would be filled at higher prices and thus generate more profit. Placing a sell order big enough to affect the overall market price suggests that someone with powerful backing wanted to drive the price of gold down. Such an entity could have been a large speculator who already had a sizable short position and could gain by unloading some of its short position once the market momentum had driven the price even yet lower. Or it could be a central bank – one that might be happy to have the gold price move lower, as it would provide cover for its printing of more new money. Of course, it could be some entity that owned long contracts and wanted to get out of the position all at once. We don't know, but this kind of activity, resulting in the biggest drop in 30 years, raises more than just suspicion when we consider how important the price of gold is to many markets around the globe. Can markets really be influenced by big players? Well, was the LIBOR rate accurately reported by huge banks? Have players ever tried to corner markets? The answer to all the above, unfortunately, is yes. There's an even bigger problem with the legal structure of the futures market: even the segregated funds on deposit can be pilfered by the broker for the brokerage's other obligations. That is what happened to MF Global customers under Mr. Corzine. (I had an account with a predecessor company called Man Financial – the "MF" in the name. I also had an account with Refco, which is now defunct. Fortunately, the daggers did not hit my account, since I was not a holder when the catastrophes occurred.) My take: the futures market is dangerous, and not a place for beginners. One last note: after the Bankruptcy Act of 2005, the regulations support the brokers, not the investors, when there are questions of legality about losses in individual investment accounts. Casey Research will be producing a report with much more detail on this subject in the near future. So, what now? We aren't going to see a secret memo – no smoking gun to confirm that what happened on April 13 was an attempt to affect the market. Still, the evidence is suspicious. When big entities can gain from putting on big positions, the incentives are big enough for them to try – LIBOR, Plunge Protection Team, Whale Trade, etc., all support this view. #### The Physical Gold Market Previously, there was little difference between the physical and paper markets for gold. Yes, there were premiums and delivery charges, but everybody regarded the futures market as the base quote. I believe this is changing; people don't trust the paper market as they used to. Instead of capitulating to fear of greater losses, the demand for physical gold has hit new records. The US Mint sold a record 63,500 ounces – a whopping 2 tonnes – of gold on April 17 alone, bringing the total sales for the month to 147,000 ounces; that's more than the previous two months combined. Indian markets, which are more oriented to physical metal, now have a premium of US$150 over the futures price in Chicago. Demand at coin dealers has increased as the price has dropped. And premiums are much bigger than they were as recently as a week ago.

Here is a vendor page that quotes purchase prices and calculates the premiums on an ongoing basis. It shows premiums of 50% and more in many cases. On eBay, prices for one-ounce silver coins are $33 to$35, where the futures price is quoted as $23. A look on Friday April 19 shows one vendor out of stock on most items:  Buy - Sell On Silver Bullion 2013 Sealed Mint Boxes Of 1 Oz. Silver American Eagles - Brand New Coins 500 Coin Min.(1 Sealed Box) Buy @Spot +$1.80 Sold Out 2013 Sealed Mint Boxes Of 1 Oz. Silver American Eagles "San Francisco Mint" Brand New Coins 500 Coin Min.(1 Sealed Box) Buy @Spot + $2.00 Sold Out 90% Silver Coin Bags (Our Choice Dimes Or Quarters)$1,000 Face Value Figured at 715 Ozs Per $1,000 Face$1,000 FaceValue Min. We Buy @Spot + $1.70Per Oz (Spot+$1.70 X 715) Spot + $4.99 Per Oz(Spot +$4.99 X 715) 90% Silver Coin Bags 50¢ Half Dollars $1,000 Face Value We Ship in 2$500 Face Bags $1,000 FaceValue Min. We Buy @Spot +$1.90Per Oz (Spot+ $1.90 X 715) Sold Out 90% Silver Coin Bags Walking Liberty Half Dollars$1,000 Face Value We Ship in 2 $500 Face Bags$1,000 FaceValue Min. We Buy @Spot + $2.10 Per Oz (Spot+$2.10 X 715) Sold Out Amark 1 Oz. Silver Rounds ( Made By Sunshine ) Pure .999 BU 500 Coin Min. Buy @Spot -15c Sold Out

Clearly, the physical gold market today is sending different signals than the paper market.

The Case for Gold Is Still with Us

The long-term fundamental reasons to hold gold are undeniably still with us. The central banks of the world are acting in concert in "currency wars" or "the race to debase." As they print more money, the purchasing power of each unit declines. They are caught between the rock of having to keep interest rates low to support their governments' huge deficits and the hard place of the long-term effect of diluting their currency. If rates rise, even First World governments will be forced to pay higher interest fees, leading to loss of confidence in their ability to pay back their debt, which will bring on a sovereign debt crisis like what we have seen in the PIIGS or Argentina recently.

The following chart shows the rapid growth in the balance sheets as a ratio to GDP for the three largest central banks. I've extrapolated the expected growth into the future based on the rate at which they propose to buy up assets. One could argue about how long these growth rates will continue, but the incentives are all there for all central banks to bail out their governments and their commercial banks. I fully expect the printing game to continue to provide the fuel for hard-asset investments like gold and silver to increase in price in the years to come.

Buying Opportunity or Time to Flee?

So what does it all mean? The paper price of gold crashed to $1,325 in the wake of this huge trade. It is now hovering around$1,400. My first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity. But what I can't predict is whether big players might again deliver short-term downturns to the market. The momentum in the futures market can make swings surprisingly larger than the fundamentals of currency valuation would suggest.

Traders will be looking for a significant turnaround to the upside in price before entering long positions. However, a long-term, fundamentals-based trader has to look at the low price as a buying opportunity. I can't prove it, but I think the fundamentals will drive the long-term market more than these short-term events. The fight between pricing from the physical market for bullion and that from the "paper market" of futures is showing signs of discrimination and disagreement, as the physical market is booming, while prices set by futures are seemingly pressured to go nowhere.

In short, I think this is a strong buying opportunity.

## Comment viewing options

Tue, 04/23/2013 - 21:36 | 3491173 HyperinflatmyNutts

FUCK Helicopter Ben!!!

Tue, 04/23/2013 - 21:40 | 3491188 zorba THE GREEK

Physical gold = real wealth

Paper is what you wipe your ass with.

Tue, 04/23/2013 - 21:54 | 3491234 Smuckers

With enough physical gold you can get someone else to wipe your ass.

Tue, 04/23/2013 - 22:00 | 3491255 erg

The groom of the golden stool.

Tue, 04/23/2013 - 22:18 | 3491303 strannick

GLD redemptions, ie. redeming GLD shares for physical -which is what is happening- is uber bullish for gold, ie. buyers are spurning paper gold GLD, in exchange for actual golden gold.

Tue, 04/23/2013 - 23:51 | 3491557 TwoShortPlanks

'Off The Shelf' retail Gold and Silver in Australia is pretty much cleaned out. Lead Times between 2-6 weeks.

Once Unallocated Certificate holders start waking up...Blood Bath.

Wed, 04/24/2013 - 02:20 | 3491780 Transformer

When are the coin and bullion dealers going to grow some balls?  Any retail businessman will tell you that price is determined by supply and demand.  So, if you're a dealer, you raise your price until you sell about as much as you can get, trying to find the price point where you can maximize profit.  If people complain about the price, simply tell them this is what you have to do to stay in business.  The Local Coin Shop does not have to be a shill for Wall Street suits.

As the price rises, at some point people will sell their G & S and others will buy.  That's when a market has been established.  I would guess it is somewhere between 20 and 50% higher than we are now.

Wed, 04/24/2013 - 04:43 | 3491931 Urban Redneck

The coin dealers rely on the wall street suits for paper gold to hedge their physical gold risks.

Otherwise, they would all go bankrupt over time.

Wed, 04/24/2013 - 08:03 | 3492137 Its_the_economy...

Wrong. The walls street suits create the volitility that puts their dealership at risk. Without wallstreet's crap, there would be no need to hedge.

Wed, 04/24/2013 - 10:02 | 3492504 ATM

The smart dealers don't hold inventory for long. The guys I deal with either ship to the refiners or sell their daily take that day. They're just arbitragers. They buy and sell at the same time and pocket a spread.

Wed, 04/24/2013 - 11:08 | 3492859 AllThatGlitters

The dealer that this page points to was slow to increase premiums, which meant you could buy cheaper from them than all the larger dealers:

http://www.pmbull.com/gold-price/

I figure they cared less because they were well-hedged.

BTW, gold seems to be popping much more aggressively this morning than silver.

Compare the Live Charts: http://www.pmbull.com/silver-price/

I keep stating that the situation appears to be very different between gold and silver.

At the retail level, silver seems to be in shorter supply. Yet with GLD withdrawals and Comex inventory, it is gold that appears to have delivery problems.

I suspect Gold Shortages will begin to show up at the retail level soon (1/10 ounce gold coins are already down for the count).

Silver doesn't seem to have the same issues as gold (i.e. SLV withrwals and COT reports, etc.). Granted, silver wholesalers that supply retail dealers are out.

Wed, 04/24/2013 - 14:59 | 3493980 Random_Robert

Silver and Gold are actually demonstrating opposite behaviors:

Comex Gold declining, GLD redemptions soaring - the Commercial supplies are dwindling, but you can still find retail stock in one ounce increments and up.

Silver, however is just the opposite- If you want physical, you will either pay a hefty premium on Ebay, or you will pony up 24 Large for a 1000 ounce bar.

What perplexes me is:  Why, if all these COMEX and SLV 1000 ounce bars are sitting there in inventory (which the data suggests), then WHY are the mints all running out of 1 ounce silver blanks?

Shouldn't the planchett suppliers be buying the living hell out of those 1000 ounce Silver bars right now and chopping them into coin blanks?

Something's fishy in the Silver market- either the official 1000 ounce bar inventories are dubious, or the retail "shortage" of Silver is a 100% manufactured phenomenon, just like the Silver price is...

Wed, 04/24/2013 - 11:11 | 3492897 Thisson

That's a silly comment.  If you sell beanie babies (for example) and have an inventory of them, and the bubble for them bursts, the value of your inventory plummets and you, the merchant, suffer the loss.  It's the same exact thing with PMs, except the risk of declining inventory prices can be hedged by either holding a short futures position or owning puts on futures.  Remember, the dealer's only inventory risk is a declining FIAT price, which is exactly what the futures market is hedgingAlso note that even if the commodities markets were to suspend physical delivery and require cash settlement, the dealer would still be hedged, because if the price of his inventory drops, he gets cash from his futures position that offsets the reduction in cash he gets from selling his inventory.

The drawbacks to this system are that you have some small counterparty risk from the exchange, and you also have to be able to match the size of your inventory to the commodities contracts available, or figure out how to obtain the scale you require in some other way, such as via options positions.

Wed, 04/24/2013 - 05:37 | 3491966 TwoShortPlanks

Ummm, coz they're under contractual agreements with the Mints which supply them the physical....with the exception of bullion minted from scrap.

Spot +2%-3%

Wed, 04/24/2013 - 06:08 | 3491996 Pegasus Muse

New Jim Sinclair article, dated 24 April, is up @ KWN.

Sinclair - Full-Blown Panic As People Ask “Where Is The Gold?”

=====

And for those that missed it, the William Kaye audio on the Bernanke/O'blamer/Bullion Banksta orchestrated Gold Hit Job, is as insightful as it gets:

=====

Andrew Maguire's latest audio is also quite good:

Wed, 04/24/2013 - 06:57 | 3492030 JOYFUL

Interestingly enuff....my KWN feed fails to open about 50% of the time now...

guess that puts to rest the notion that KW is jus a shill site...

they only stick it to the real deal sites. Shills talkin down KW be warned...

we on to yus!

Wed, 04/24/2013 - 08:00 | 3492121 TwoShortPlanks

Yeah, classic!

I still reckon the Central Banks closed the Gold Lease Window (GLW; just made that up), and that means the Bullion Banks need to find the physical instead of being able to roll the contracts over and over again.

HYPOTHESIS: We can test my suggestion by looking for signs of Bullion Banks not rolling over large numbers of Treasuries, once they mature. If not, I'd have to say I'm wrong.

Wed, 04/24/2013 - 08:26 | 3492169 EmileLargo

Thanks for these links. They are all very good and informative.

Tue, 04/23/2013 - 22:30 | 3491334 FeralSerf

Tue, 04/23/2013 - 21:50 | 3491229 q99x2

The Morgue has lost control.

Wed, 04/24/2013 - 00:04 | 3491363 erg

Exactly.

Cue the shot of adrenaline plunged directly into the heart of the cabal in an attempt to revive the victim in extremis.

...wrapped around the face of humanity, relentlessly jamming it's blood-funnel into anything that smells like money.

Wed, 04/24/2013 - 02:24 | 3491787 JOYFUL

An entire article bout the latest smashdown...with nary a mention of McGuire and the LBMA* failure....

that's gotta be the real - Ultimate Disconnect - !!!! Casey strikes out!!!!!!!!!And dum meets dumber. How to create a 'legacy' article in real time!

Time to move on...the bullion banks are now dead. Obumboy is using the full faith n credit of the paper dollar to give them one last 'weekend at Bennies'...

then it's another "Pearl Harbor" - with Jap bonds-not-bombs, this time round...and then it's sayonara western worlds...

"the Morgue" is still in total control...because their mandate is to crash the system and turn y'all into simpering serfs of the moneypowerz....

*

Whether you 're a brother or whether you 're a mother,

you 're stayin' alive, stayin' alive. Feel THE CITY breakin' and everybody shakin',

and we're stayin' alive, stayin' alive. Ah, ha, ha, ha, stayin' alive, stayin' alive.

BEEGEES 1976...predictive programmin or psychic viewers?

Wed, 04/24/2013 - 06:40 | 3491865 i-dog

"predictive programmin or psychic viewers?"

I think the explanation is even simpler: Particularly gifted members of the entertainment industry have often been drafted, groomed, and promoted, by the Khazarian-Ashkenazi kapos of Tinsel Town and Tin Pan Alley...and are encouraged to write (or are spoonfed) lyrics and scripts to implant the memes and forewarnings of the Kabbalists.

Another lyrical example is Dire Straits "Telegraph Road" (1982), which is a potted history of the US from its beginning to the end.

I honestly think the Khazarian Kleptokratic Kapos have fallen nearly 2 decades behind schedule - due to such delays as those caused by the likes of Sadman Hussein failling to destroy the Iranian Shi'ites, many European states failling to fall into the EU/EZ trap, the Mediterranean states failling to fall into a Mediterranean Union trap, the dotcom bubble failing to impoverish the west, Gaddafi holding out 6 extra months, Assad likewise, Ach,me'dinner'jacket! holding out against the mullahs, and other unintended consequences still arising, even as we speak.

For a look into the deep konnection between the Khazarian-Ashkenazi-Jesuit "intelligence services" and the music industry, have a look into 'Laurel Canyon' in Beverly Hills and its role in the promotion of psychedelia, flower power, the hippie generation, the Manson family, and the very divisive 'anti-war' movement (really the first experiment in dividing family generations...which still continues today through rap and hip-hop).

http://www.davesweb.cnchost.com/nwsltr93.html

The (Ashkenazi) guy that currently owns one of the largest and most famous houses on Laurel Canyon - and the shooting location of 'Californication' - is one of the premier rap promoters. Laurel Canyon also appears to have housed a large, but hidden and secret, movie studio around the time of the first moon landing....

Wed, 04/24/2013 - 06:50 | 3492022 JOYFUL

Jus got back from town, n Dawggone it!....like clockwork

...l check the gold chart 1st and...bingo...London opens-gold takes a tumble...

then open the Hedge,

drone-jocks on duty before the daily-drop of drone-laden lethal deliveries begins have taken the time to tick the vote meters in obedience with Central Command...

and as I learned from workin Georges thread 18 hours yesterday...the pattern analysis shows complete conformity -

drop gold\drop bombs\drop votes...and pick up bonus!

Listen phuck ups....Nooooooooooobody downs the Dawg.

This be war!

Wed, 04/24/2013 - 09:27 | 3492394 supermaxedout

Great link i-dog. Th.is "Laurel Canyon" thing is fascinating, really.

Wed, 04/24/2013 - 09:41 | 3492452 JOYFUL

Dave McGuire's work on the 'pyscho-delic' generation is a must read for any body near to bein a boomer...

exposed as bein son\daughter of members of the MIC...pressed into service as members of the CultureWars militia against Merika!

You'll never listen to "light my fire" or Crosby Still Nash(or Young) again the same way!

Tue, 04/23/2013 - 23:12 | 3491453 Kirk2NCC1701

Whenever I hear of one of these Nobel-grade comments of "Fuck you, Bernanke!", I have to think of a scene in the movie The Life Of Brian.

"...fucking Liberation Front of Judea! We're the People's Front of Judea.  Fucking splitters!"

Tue, 04/23/2013 - 21:36 | 3491174 uno

add in solar demand for real silver, not exactly paper silver etf

http://www.caseyresearch.com/cdd/look-out-silver-here-comes-solar-demand

Wed, 04/24/2013 - 01:48 | 3491762 JOYFUL

the trouble with solar at the moment is that the S.P.E.C.T.R.E guys are vertically-integrated with every facet of making this world a hell pon earth...

they're at it big time here in the Mediterranean...three bright blue sunny morns in a row...as the sun rolls outta the east...and there to the west...you can watch the parallel bands of chemtrailers moving across the sky...and their toxic shit behind them. It's playing havoc with trying to run offgrid...those aluminium\barium trails simply catch up 90% of what is required to convert 'solar rays' into electricity...couldn't even recharge the computers yesterday, by mid day the sky was just haze.

Course I'm sure it's not just for purposes of blocking the survivalist segment...those bands are over Greece...and Cyprus. Where the term 'crowd control' has taken on new meaning!

Thu, 04/25/2013 - 22:03 | 3500884 MeelionDollerBogus

Problem with solar is the most efficient uses are solar-thremal sterling engines, solar-thermal black water heaters, solar-thermal cookers and solar-biomass fuel from photosynthesis which is highly efficient. And… that most solar in markets is demanding the nonsensical photovoltaic technology. Highly inefficient. I’d be better off using solar-thermal to bleed off excess heat for a TEG-brick to produce electricity. The market, rigged as it is, seeks anything but what is efficient because what’s efficient is so easy, so obvious that no one needs an IPO, just to build it, even copy how it’s been done on youtube before.

Wed, 04/24/2013 - 08:58 | 3492252 Ranger4564

Solar is a great investment if the oligarchy wasn't about to destroy the world economically / socially / politically. I had investments in solar and industrial equipment at one time, on teh hope that proper investment in future thinking technoloigies would advance civilization and restore some balance, but it was clear that was not going to work because everyone else was still taking profit, and the oligarchs were taking the biggest of it.

Anyway, solar won't matter much in the near future because the global economy will be collapsed.

On the other hand, a few solar panels to run contraband radio or underground networks might be a perfect investment. Shortwave radios, CB radios, cheap wireless routers, etc. Setup a mesh network with locals.

Tue, 04/23/2013 - 21:37 | 3491175 AssFire

Nope, I am waiting for $1100, it will go back to that... before it skyrockets. Tue, 04/23/2013 - 22:32 | 3491339 CURWAR2012 Agree, as soon as EUROPE IMPLODES gold will go on sale. Better cash it up now. Tue, 04/23/2013 - 23:07 | 3491441 Reptil IF the euro implodes you'll have HYPERINFLATION. What will people put their savings in, while banks do a domino? Dollars? In the same bank? A safe haven (like the cypriots didn't) A matress? No gentlemen this is not 2008. This is worse. Wed, 04/24/2013 - 00:06 | 3491601 TwoShortPlanks A fist full of paper looking for sellers at$1,100....good luck with that [simple] notion.

Wed, 04/24/2013 - 01:23 | 3491734 Deo vindice

@ RottenAlpha - the link you provided ...

That article was truly a waste of time. He argued nothing and proved even less.

P.S. He could also take a basic course in English grammar.

Tue, 04/23/2013 - 21:37 | 3491178 aphlaque_duck

We really can't say that this has happened until the exchanges default. Until then it's just a minting bottleneck.

Tue, 04/23/2013 - 22:00 | 3491258 defender1be

But when the exchanges default then its too late / no longer possible to buy.

Tue, 04/23/2013 - 22:17 | 3491301 aphlaque_duck

Yes I agree, this is a warning. I thought the disconnect would happen rapidly, but maybe it is just taking some time to play out.

You can still get generic bars close to spot. Last chance?

Wed, 04/24/2013 - 01:24 | 3491735 Deo vindice

Generic bars close to spot? What do you define as "close"?

Tue, 04/23/2013 - 23:20 | 3491472 augustusgloop

add to that ABN Amro's refusal to tender gold from allocated gold accounts + anecdotal stories of people not getting gold / having to cash settle their allocated gold... it has to be played out yet, but this is in line with MSM (see, my tin hat jargon) analysis from a few months ago that it doesn't matter if gold is actually in the vaults.

bottom line (clip on white collar jargon), if gold were so shitty, banks wouldn't be so hard pressed to meet physical demand. there are a lot of big players out there that are pissed that they aren't getting what they thought they held. there are a lot of little people out there that see cyprus and look back to their own countries (germany, china, ...all) and see the re-play of asset confiscation--hence small coins getting sold out. charlie munger was paradoxically right on - the jews that sewed gold into their clothing got out.

Wed, 04/24/2013 - 00:19 | 3491628 rehypothecator

Don't forget Sinclair's friend who was refused a redemption of a Swiss allocated amount, "because it was above $200,000". Does that count as a failure to deliver? Seems if they are worried about money laundering, they'd check his ID as he set up the account, not when he wants to redeem. (Unless of course they don't have the metal.) Then he's just Corzined/Cyprussed/rehypothecated. Wed, 04/24/2013 - 05:06 | 3491951 Urban Redneck It's suspicious but only because it involves a position closing transaction, don't assume FINMA and the other Federal Authorities here don't fuck with foreign transactions all the time, there is a reason HSBC was running its drug money laundering business in the US and not Switzerland. The Swiss authorities checked IDs for Q'daf, Mubarak, Ben Ali, Osama and a lot of other people who were "socially acceptable" when they looked to open accounts, and were much quicker than the US to seize assets when those customers became unacceptable. Without more specific information and certain facts it is hard to draw any accurate conclusion. However, if there was a money laundering issue involved, the bank wouldn't be allowed to offer cash settlement, it would simply freeze withdrawals. There's also a sensitive issue now with the US Embassy in Berne running espionage operations inside Switzerland where its moles are aged in all sorts of criminal activity and dragging the Banks into it. The increasing spook activity more than offsets increased banking transparency, as far as actually getting to the bottom of anything goes. Wed, 04/24/2013 - 06:02 | 3491989 Ghordius +1 I had friends that were able to do certain transactions in Switzerland and others that were gently and kindly told to "buzz off" - of course not in those terms - for the same kind of transactions imho fact is if a Swiss Bank does not like your profile, then you won't be served - and the spook activity you have noticed makes them even more suspicious Wed, 04/24/2013 - 06:04 | 3491992 Bearwagon It's a big club, and you have to be in it, in order to participate .... Wed, 04/24/2013 - 06:23 | 3492006 Ghordius in this case I think the biggest factor is that they try to avoid customers that might spell trouble, later - coupled with an increasing global aversion vs "hot money" of all kinds (too black, too violent, too political, too fast, too unfathomable) Tue, 04/23/2013 - 21:37 | 3491183 pods The biggest risk for the big boys is that all the little guys take their gold and go home. That is what I do. Fuck em! pods Tue, 04/23/2013 - 21:38 | 3491184 fonzannoon If they are naked shorting should we look into it or just have them remain nameless? Tue, 04/23/2013 - 21:46 | 3491215 unwashedmass you missed the memo... naked shorting money laundering theft of assets all legal if done by a big bank. Tue, 04/23/2013 - 21:38 | 3491185 unwanted flatulence Does casey have any cred? Just bookin their talk. Wanna buy a nice place in Argentina? Just ask Doug. Im pro pm, just against caseys flagrant book talk Tue, 04/23/2013 - 21:41 | 3491186 Stanley Lord Dont be mad, just an opinion, gold is slowly going lower, my guess is over the next few years it goes to$850, it shoots past the $1000 it costs to take it out of the ground, when gold goes under$1000 we will take a look again, until than the fix is in, it is manipulated and we have a three year wait.

Comex will default, but gold will still go lower, I know it sounds crazy, but everybody already knows Comex is broke.

Tue, 04/23/2013 - 21:44 | 3491205 seek

I don't think it's impossible for it to go lower, but I think your time frame is far too long.

At current rates COMEX will have guaranteed delivery failure this year (within a few months, actually), and one rumor regarding the sell-off is that it was to help get the LBMA out of a delivery failure situation.

Far more likely is we see the final split between physical and paper markets within a year, and paper goes into free fall.

Tue, 04/23/2013 - 22:27 | 3491325 kito

sorry, but i see plenty of headwinds for gold..........seems the overlords would rather confiscate the peoples money rather than print too much to completely debase the euro or dolllar..................the overlords would rather leave the masses dry of dollars and euros rather than print into obliviion...total wealth transfer to the top for the overlords to fill their coffers........i have stated this many times...i still believe ben and his favored sons know the ship is going down one way or the other...totally inevitable.......better for them to let the dollar swim and the people sink rather than have the dollar and the people sink..................................

Tue, 04/23/2013 - 22:31 | 3491338 fonzannoon

well lucky for you Kito you still have a chance to buy bonds, which are not in a bubble, and grab the S&P at 1400, which represents reality.

This is strange tonight.

Tue, 04/23/2013 - 22:33 | 3491342 kito

never have i said bonds......never...ever.....ever......................all things that have been filled with dollars shall burst.....................

Tue, 04/23/2013 - 22:35 | 3491343 fonzannoon

yeah well then help me out with the treasury post because if that is not a glitch in the matric I don't know what is.

Tue, 04/23/2013 - 22:37 | 3491349 kito

fonz, its not hard to see the trend has changed from the greek model to the cyprus model...........better to just siphon off all those delicious euros and suck them up to the top of the food chain rather than kill the currency itself..............so its the physical cash that the masses will crave........................

Wed, 04/24/2013 - 06:23 | 3492003 Acet

And yet, with very little effort even physical cash can be stollen in bulk through money printing and ensuing devaluation without actually having to do anything directly to the holders of that cash.

That's the whole point of discrete ownership of physical PMs (or any other similar store of value): it can't be taken away from people in bulk by simply ordering you bank to withold a portion of it because it's not in a bank and it can't be taken away from people in bulk by printing some more and devaluating what you have under your mattress.

The only way to take away physical PMs is by direct physical force, one person at at time: a far harder mechanism, with a far higher rate of failure and which is much more likelly to cause widespread social unrest (and associated risk of the heads of members of the elite ending up on top of pikes). At best, what TPTB could do to try and affect holders of physical PMs would be to pass laws that make it risky to openly use it for trade, which would still not impair its value as a means of long term wealth preservation.

Tue, 04/23/2013 - 22:38 | 3491356 kito

everything is upside down fonz...but the overlords are starving for cash to feed their habits.........that much i know.......................

Wed, 04/24/2013 - 01:22 | 3491731 toothpicker

"Overlords"? You mean: cheating psychopathic bankster midget-porn-lovin cabal moron donkeys?

Wed, 04/24/2013 - 09:20 | 3492342 Acet

And yet, our "overlords" will, just like everyone else, go for the low lying fruit first. In this case the low lying fruit for confiscation is money in bank accounts and any form of paper wealth.

Don't fall into the trap of thinking that those that happen to be in positions of power and influence at the moment are there because of some inherent intellectual or strategical superiority. They are there through previledge of birth and/or because they are well adapted to a society that values appearences above all and which applauds behaviours which are commonly associated with sociopathy.

These guys don't have exceptional minds, just exceptional connections, and they are just as incapable of dealing with very complex situations as most people. I would say this is being displayed by their inability to spot and avoid the current economic situation or even by the side effects we are seeing of the slamdown of paper gold (somehow, I don't think that a worldwide rush into physical gold by retail was part of the plan).

As such, quietly owning physical PMs is one of the best ways of adding enough complexity to the process of confiscation that the likellyhood that one will loose one's wealth to these types is almost zero. If and when that changes, one can always look at alternatives.

Wed, 04/24/2013 - 12:22 | 3493245 Herd Redirectio...

I wish more people would get it.

They are ruthless, well-connected, and have been doing this a long time.  Thats it.

They aren't smarter, stronger, more clever, brighter.  They are good at stepping on others in order to secure their own advancement.  Lying through their teeth.  Pretending to have a conscience.

Psychologists have NEVER cured a psychopath.  Not one.  'Therapy' teaches psychopaths how to manipulate more effectively.

Tue, 04/23/2013 - 21:52 | 3491219 fonzannoon

That is the question. Comex defaults and then what happens? A bunch of people get settled in cash....okay..apparently that is happening now. It seems to me the only way a true disconnect happens is when a gold backed currency is offered up. Then everyone will be forced to show their balls.

Tue, 04/23/2013 - 22:54 | 3491397 Croesus

@ Fonz:

The Gold-backed currency is the final outcome, but the disconnect between paper and physical will happen when supply simply vanishes from the exchanges.

TwoShortPlanks had a good comment the other day, namely that retail demand may be impacting the ability of Bullion Banks to repay physical to the Central banks at lease maturity, and that CB's may not be renewing their leases.

If the CB's have flipped on the Bullion banks (and there's plenty of anecdotal evidence for that), then I would say that Seek's comments re: "they're closing the exits", are probably true.

Wed, 04/24/2013 - 11:18 | 3492943 Thisson

That doesn't make sense, because if you're sitting on a big pile of gold, the only way to get a yield out of it is to lease it out, or roll the commodities markets selling the front months and buying the back months.

Tue, 04/23/2013 - 23:50 | 3491555 Diablo

"Comex will default"....people just dont get get it. comex CANT default. if they dont have the gold to deliver, they just write a check. thats it. thats the way its always been. this whole garbage about defaulting is a non-arguement.

Wed, 04/24/2013 - 05:19 | 3491960 Urban Redneck

Invoking cash-settlement would force transactions for physical gold to use a different benchmark, which is actually a far more significant event then bankruptcy of some trading house.

Thu, 04/25/2013 - 22:13 | 3500917 MeelionDollerBogus

that IS default. Delivery of bullion is the only non-default outcome. Garbage? This garbage is the reason people are flocking to physical instead of dumping paper: they saw MF Global and realized defaulting by non-delivery of contracted METAL is already in play, with losses not premiums being paid out.

Thu, 04/25/2013 - 22:05 | 3500889 MeelionDollerBogus

impossible without a rise in interest rates offered by central banks – and that is not happening. Comex , LBMA, are the only mechanism to force gold lower with this high physical demand and low interest rates + printing money. By all means, take away the low rates & printed money and let's see gold go lower as a less-needed emergency currency but WILL it? Not any time soon, not for many years, probably 10 to 15 more years. Japan's been on stimulus-mode for 20 years and has nothing to show for it but Fukushima. And that's NOT helping.

Tue, 04/23/2013 - 21:40 | 3491193 dollartheque@ya...

here we go again!!! WHEN ARE YOU GONNA STOP THIS FUCKING NONSENSE ABOUT PHYSICAL AND PAPER, if you think that 10%premium on silver coin is a fucking disconnect, you better start stop smoking weed

Tue, 04/23/2013 - 21:58 | 3491253 HulkHogan

Funny how the dealers say there's a disconnect. They just don't want to lower their prices too much. It's a cashflow game for them and they want DOLLARS, not PMs. Think about that.

Tue, 04/23/2013 - 22:17 | 3491298 Help Is Not Coming

They want dollars because the mint doesn't accept anything else for payment. The dealers make their money dealing. They buy the bullion with dollars and they sell it for dollars. They make their money in dollars and then probably store their wealth in their own gold. At least I would if I were a dealer.

So sure, it's a seller's market right now. It's time for them to make some money. Dealer's gotta eat too. Nobody complained about how it was unfair to the dealers when the price dropped hundreds of dollars. You don't get to complain now that there is huge demand for physical and their premiums go up.

Wed, 04/24/2013 - 11:20 | 3492955 Thisson

Agreed 100%.  Also note that all of the dealers' liabilities are in dollars.  Their taxes, mortages, health care costs, kids' tuition bills, etc. are all in dollars.  They make profits selling for higher prices than they buy, and to the extent they have profits, they can save/store them in PMs or any other asset class.

Thu, 04/25/2013 - 22:13 | 3500919 MeelionDollerBogus

it’s been over 20% so now how do you feel about it? Some data says 35% disconnecthttp://goldprice.org/gold-prices/1004-silver-coins/Canadian_Silver_Maple_Leaf_1_Year_Premium.png

Tue, 04/23/2013 - 21:42 | 3491199 walcott

There's no disconnect. What a bunch of bullshit.

apmex buy $1,462.40 spot$1,424.00 Sell $1,504.39$80 premium on $1,500.00 They're naked shorting so keep jacking off on your stack. Tue, 04/23/2013 - 21:57 | 3491244 Charles Nelson ... I prefer my wife's hair when she's not expecting it... Element of surprise that makes me laugh. You on the other hand I could see finishing off a pair Siamese cats in honor of Paul Krugman Tue, 04/23/2013 - 23:36 | 3491521 Fish Gone Bad Doing one's business with Siamese cats is so incredibly wrong .. Funny, but still wrong. Wed, 04/24/2013 - 07:10 | 3492050 JOYFUL sumthin fishy about your comment... you know too much??? Wed, 04/24/2013 - 02:29 | 3491794 JOYFUL I hereby pronounce you "Sir Charles" - Knight of the ZHingdom....you are now nobility here! Wed, 04/24/2013 - 01:09 | 3491713 lickspitler If i am a bullion dealer I have silver inventory. Since it has been above 23 dollars since novemebr 2010 i have probably purchased it at a higher price. Do I take the loss and sell it to the punters lined up outside or do I limit the sales and/or increase the premium. DER ! Wed, 04/24/2013 - 11:21 | 3492972 Thisson You short 1 silver futures contract for every 5000 ounces of silver you have in inventory, and sleep soundly at night. If the price of silver goes down, your customers get better prices and you have a winning position on the futures contracts. If prices go up, you lose money on the futures contracts but make it back by charging the customers higher prices. This is not rocket science. Tue, 04/23/2013 - 21:48 | 3491216 GOSPLAN HERO Tue, 04/23/2013 - 22:03 | 3491222 Cabreado It's ok to guess, but no one yet has correctly predicted the endgame of Chaos. Tue, 04/23/2013 - 21:49 | 3491225 IridiumRebel Please disconnect....please. Tue, 04/23/2013 - 21:52 | 3491231 q99x2 Nice article. Tue, 04/23/2013 - 21:57 | 3491243 FieldingMellish the gold holdings of GLD LOLZ! Tue, 04/23/2013 - 22:00 | 3491246 RSBriggs I'm not sure I understand - why are we being quoted nothing but silver prices in an article about gold? I mean I like silver and all, but if the article is about the disconnect between paper and physical gold, shouldn't there be a gold price or two in there - especially in a section titled "The physical gold market" ? Tue, 04/23/2013 - 22:08 | 3491275 HulkHogan They're cherry picking numbers that's why. They can't find bags of gold sold out. Wed, 04/24/2013 - 02:34 | 3491800 JOYFUL Casey Research's bottom line: whatever it takes to get you onboard their profit-earnin programme... Sweet dreams are made of this who am I to disagree/ I travel the world and the seven seas/ Everybody's looking for something/ Eurythmics 1978...the original "Euro-skeptics?" Tue, 04/23/2013 - 21:59 | 3491261 Manipuflation Price of copper over the last six months? Why? Tue, 04/23/2013 - 23:21 | 3491475 Manipuflation Hint: What do they use copper for? Tue, 04/23/2013 - 22:02 | 3491265 MoneyChasingReturns I never understood why someone would buy gold as an investment? Gold always is ZERO, never up, never down. It is the great median in the economy. The value of Dollars\Oil have risen, gold stays put. An investor buys assets which produce a constant positive return. There are millions of oppertunities to invest in better then gold. The world is full off oppertunity, in times of inflation and chaos there is even more oppertunity. Forget gold, buy a palm oil plantation in Malaysia or something that provides a constant positive cash flow. If rather be a man in Monaco renting and living well owning a Palm oil plantation, then a gun owning hermit investing in gold. Which gold provides no money to live from. Tue, 04/23/2013 - 22:10 | 3491283 BeerBrewer09 gold is not an investment. it is money. when you hold gold you hold money that took energy/time/labor/land to produce. it has intrinsic value. Tue, 04/23/2013 - 22:21 | 3491311 HulkHogan It's better to plant apple trees in your backyard and sell the fruit at the farmers market. Then you own a physical asset and your dwelling is kicking back some return (your money can grow on trees). Wed, 04/24/2013 - 02:31 | 3491798 Debugas not obvious. You have to pay land taxes and there is no garantee your apples will be sold to cover taxes Apples rot, gold does not. Gold is nothing more but a vehicle to shift fruits of your labour into the future Wed, 04/24/2013 - 02:56 | 3491815 JOYFUL Farmers Markets? Nice forward-thinkin micro-picture strategy brainiac! Sell gold. Plant trees. Wait 5 years(ok...mabbe 3 for dwarf varietal*!)...meanswhile...EPA has determined that you are in violation of clause(s)405050\to infinity-organic manure is a 'potential toxic substance'; the BLM has decided to refuse you permission to go ahead with your proposed tenacy on your own spread; FDA has outlawed 'domestic apple production' as potential terrorism; the Dept o JistUs has decided that based upon your intercepted tweet about home schoolin you are a wingnut waco-type...requiring FBI\ATF interdiction...and STATE announces that based upon the SPLC interpretation of the penal code...you are now a wanted suspect for refusing to allow Denali-drivin "share-croppers" equal access to your 'Forty acres and a mule'...and your refusal to drop a 20 in the tin cup of that LGBT panahandler outsida Whole Fools\Monsanto-sponsored 'farmers market' last weekend has resulted in a suit brought against you by the "HUMAN RIGHTS COMMISSION" Great work dude. Why don't you change your avatar to "WILYECOYOTEJR"??? *available online from "ACMESURPLUS"-online taxes not included! Wed, 04/24/2013 - 06:40 | 3492014 JOYFUL pologies...I forgot... that rifle that the UN says you cannot own... you're wanted by the International Court of JustUs...for trial in the Hague as a war criminal. Happy pickins Johnny Appleseed! Thu, 04/25/2013 - 22:18 | 3500928 MeelionDollerBogus I need to eat stuff that’s not apples and I need to carry my wealth in my pocket and apple trees don’t fit. By all means when a safe place is found I'll plant an apple tree or something but with currency collapse on the horizon & Fukushima a stark reality I'm guessing in a number of years (not very many either) I'll be on the other side of the equator from where I am now. Having already checked years ago where the ocean conveyor currents are I have a fair idea what is a safe locale from the caesium 137 and I've already been checking out how to detect & filter it. Tue, 04/23/2013 - 23:26 | 3491488 augustusgloop you own a producing asset then that's the best case. what is wealth that comes from palm oil stored in? where is your palm oil plantation located? maybe it just gets seized by the anti-colonial powers that be. Wed, 04/24/2013 - 03:39 | 3491861 Debugas in the world of overproduction owning a producing asset poses a risk that selling goods produced will not cover your maintenance costs (property protection, insurance, repairs, taxes etc) Wed, 04/24/2013 - 11:25 | 3492983 Thisson There is no such thing as overproduction. What we call "overproduction" just means prices are too high. Thu, 04/25/2013 - 22:18 | 3500933 MeelionDollerBogus ludicrous nonsense, over and underproduction are the cornerstone of economic reality, prices merely REFLECT the social market detection OF that over/under production, and always lag the event. Thu, 04/25/2013 - 22:15 | 3500921 MeelionDollerBogus gold depends on labour & energy costs, and difficulty of exploration, all of which are changing chaotically, which means gold’s value is NEVER still. Tue, 04/23/2013 - 22:05 | 3491271 scatterbrains Gold is not going to continue to rise just because the fed has to print indefinitely it's going to continue to rise as more and more people realize that the capital markets are corrupt, rigged and no matter what they say it can never be trusted again. Tue, 04/23/2013 - 22:18 | 3491307 IridiumRebel I think you hit the nail on the head. Tue, 04/23/2013 - 23:27 | 3491499 augustusgloop Wed, 04/24/2013 - 00:25 | 3491637 rehypothecator That says it all! Tue, 04/23/2013 - 23:37 | 3491523 Kirk2NCC1701 With paper-Gold exiting the market (nearing the miners' marginal production cost), Gold will now be priced at the market price for bullion ---> based on supply/demand. Setting the paper price to even lower levels will only fuel the Demand side. Since the Supply side is inelastic and slow to adjust, the premiums will be adjusted by gold's supply chain (mines, minters, middle-men). Some interesting dynamics, rumors and pulp fiction should emerge. Enjoy the show. Wed, 04/24/2013 - 05:56 | 3491982 auric1234 You forgot to mention that mining supply is extremely low in comparison with total gold supply, and that on the other hand, demand side is much more inelastic than total supply side. When the run to the exit occurs, and everyone desperately wants out, don't expect the miners to have any influence on the price of gold. Tue, 04/23/2013 - 22:09 | 3491280 dehdhed if someone measures their wealth by what they see on a computer screen, it is easily vaporized. when someone measures their wealth by tangible things (land, cars, hammers, ammo, etc.), that value has permanency. when someone owns precious metals, they never lose anything because it always weighs the same. Tue, 04/23/2013 - 22:41 | 3491361 Kreditanstalt And why are futures even ALLOWED to be price-setters at all? DELIVERY!!! Wed, 04/24/2013 - 11:17 | 3492939 Alpha Monkey Because big banks make the money that buys politicians and regulators that allow them to do whatever they want so long as they keep greasing the cogs. Don't ask why the world is unfair, just realize it is. Tue, 04/23/2013 - 22:43 | 3491369 nobodyimportant I like this analogy -- in 1955 a gallon of gas cost about a quarter -- a silver quarter. Today a silver quarter is worth about 2 gallons of gas. That is why I feel no pain at the pump because gas has never been cheaper. Tue, 04/23/2013 - 23:58 | 3491575 Diablo silver quarter is worth about one gallon of gas (not two). congrats, so youre net zero on your almost 70 year investment. no cash flow, no dividends, no appreciation whatsover. i GUESS thats a good thing? Wed, 04/24/2013 - 00:42 | 3491666 RockyRacoon Does the phrase "store of value" ring a bell? It's not about appreciation, it's about retaining purchasing power. No wonder you are confused. Thu, 04/25/2013 - 22:19 | 3500937 MeelionDollerBogus it’s a great thing – it means no loss and loss did happen everywhere else. Tue, 04/23/2013 - 22:48 | 3491370 fuu 2012 April 20,000 oz, 26,000 coins 2013 April 183,500 oz, 284,000 coins 2012 Total 753,000 oz, 1,129,000 coins 2013 Total 476,000 oz, 817,500 coins http://www.usmint.gov/mint_programs/american_eagles/?action=sales&year=2013 Tue, 04/23/2013 - 22:50 | 3491386 FranSix The irony is that Goldman Sachs has now closed its short position on gold. It would be even more ironic that they would expect delivery on their long positions, considering that most of the gold used to short sell bullion during the decline came out of allocated accounts where people are being settled in cash. Tue, 04/23/2013 - 22:54 | 3491399 seek Is there any doubt that if Goldman wanted to settle in physical they'd get it? Of course they would. Cash settlesments are just for suckers that play their paper game. Wed, 04/24/2013 - 06:17 | 3491999 FranSix They closed out their short position, but at the same time, they recommend to their clients to short the metal. Tue, 04/23/2013 - 23:28 | 3491493 Kirk2NCC1701 So, it turns out that if people approached PM with intelligence, rather than religious ideology ("It's always a good time to buy" -- LOL), we would have sold in the Oct. 2012 peak (Sell High!), and bought about now (Buy Low!). In the interim we could have seen a hefty rise in stock between Oct. 2012 and April 2013. It turns out I'd be 35% better off, had I listened to my Fidelity guy, than the gold bugs. Looks like I hedged the wrong way by going with the ZH crowd. :-( Even so, I'm now opting for allocated bullion over unallocated bullion. Now I'll just sit back and watch the PM party unfold. And plan to keep my cash cache dry for... BTFD on Stocks. Cause there's more money to be made in re-valued equities. Tue, 04/23/2013 - 23:43 | 3491534 honestann The only allocated bullion is bullion in your physical possession. I can't believe people honestly take terms like these seriously any more. Amazing! Wed, 04/24/2013 - 02:02 | 3491774 JOYFUL Die Lemming Die! Wed, 04/24/2013 - 02:24 | 3491791 Harbanger Oh stop it Joyful. Only the Lord delivers justice. But when it comes it will be VERY personal and then he will cry out for mercy in vain. Wed, 04/24/2013 - 06:38 | 3492013 JOYFUL Lemmings always die of natural causes...no divine intervention required... Just let gravity take it's course! Wed, 04/24/2013 - 05:51 | 3491976 auric1234 So, it turns out that if people approached PM with intelligence, rather than religious ideology ("It's always a good time to buy" -- LOL), we would have sold in the Oct. 2012 peak (Sell High!), and bought about now (Buy Low!). In the interim we could have seen a hefty rise in stock between Oct. 2012 and April 2013. Only to obtain paper profits. If you want paper profits, why do you risk your real money (gold) in obtaining them? You can never be sure you'll be able to exchange your paper for gold when you so decide. If you're inclined to profit from the paper gold downturn, why don't you just use paper bets? Leave your gold untouched. Buy some put options. Then you're short gold in paper terms. You don't have to hold a net long position in paper gold. All the benefits of holding gold (real gold) apply all the same if your physical position is hedged in paper, or even if your net position is short! Tue, 04/23/2013 - 23:37 | 3491520 Croesus From JSMineset: "Just received a text from my futures broker at Linn Group: Just tweeted about your links. Leo Mahlamed former Ch/CEO of CME took delivery of 2 gold contracts. They would only give him a warehouse receipt not the gold. This from the floor." Wed, 04/24/2013 - 06:46 | 3491967 Urban Redneck Any idea which twitter feed? (and I'm assuming they are implying/talking about Leo Melamed) As that allegation would imply that one of the Crimex's real customers just picked up the phone and said their gold is no longer available. Tue, 04/23/2013 - 23:53 | 3491565 Manipuflation On one site that I use for my "dates BU rolls" purchases, the price has not changed at all on BU rolls of dimes. Even common dates. Apmex is not much better for those dogs they sell. I have been receiving some cleaned "BU" coins here from more than one source. Not that BU is a grade or anything. Ain't sliders... I bought a few sliders too to be honest at a lesser premium. The best part? I have them in possession. They will be needed. For the sake of my tempered tongue here... Wed, 04/24/2013 - 00:44 | 3491668 Kina If find it interesting that the ones getting most upset and emotional about all this are the ones against gold. Well if you are not for holding PMs what does it matter to you so much that you get so emotional angry and start having hissy fits because others are giving valid opions, that you might disagree with. I get the feeling that some of these people are from the MSM talking the Fed's / Bullion bank's book. Well if you are against holding PMs then state your case and not just issue childish hissy fits. We had an event where 400-500 tons of paper gold were dumped on the market in an undisputable attemept to crash the market. AND as former Assit Sec Treasury said only a govt could have the resources and connections to coordinate this. This raises valid and important questions as to why on earth would they do something like this. What is it to them the price of gold in USD? Well it must be extremely important to them to undertake such a balantly corrupt action. So it is entirely valid and very important to discover what on earth is going and what it means to the average person. The answer is of course is that bullion banks don't have the gold and silver they should have and a massive dump was to shake the tree, have people dump physical, and remove interest in gold/silver ownership. A dump in gold also helps protect the USD and rates, so they are killing two birds with the one gold dump. Now the hissy fit proponents obviously think everybody should just buy stocks and not protect themselves or think about the gold silver market. IT is importatnt to know if there really is a large/huge defficiency in gold silver holdings by GLD / bullion banks etc... because it is market sensitive and important data for the average person wishing to protect themselves. We know central banks like China are buying huge amounts of gold year after year and will probably continue. We have seen strengthening individual demand even after and dump of gold/silver....we know Japan, USA will have to create fiat at huge levels for a long time ultimately devaluing the purchase power of same. These are basic facts that make the case for gold extremely strong. So why the hissy fits from some here?? THE very big question is going to be .....at what stage are bullion banks going to have to start coughing up physical gold and silver.....and what happens if they cannot in response to increasing demand from big influential international players.....? Can they just refuse to deliver on allocated accounts, settle in cash, issue warehouse receipts...how long before strong demands and law suits..... Crashing gold more is only going to inflate demand for physical as EVERYONE knows they don't have the physical. Ironically the only way these bullion banks can reduce calls for delivery for physical is allow the price to climb to a stage where people will be happy to take profits. Wed, 04/24/2013 - 00:52 | 3491681 Kina "Comex will default"....people just dont get get it. comex CANT default. if they dont have the gold to deliver, they just write a check. thats it. thats the way its always been. this whole garbage about defaulting is a non-arguement. The Comex will fail to be a price setter for bullion once it is established that physical gold and silver cannot be obtained through it. So defaults matter. You will see an alternative mechanism evolve for the trading of gold and silver. Meanwhile there will be a rush on the bullion banks to repatriate gold/silver they don't have. Default on the comex = massive loss of confidence in the bullion banks and system. Wed, 04/24/2013 - 11:34 | 3493034 Thisson Your argument doesn't make sense when continued to it's rational conclusion. You're basically saying that when the Comex defaults, a new marketplace where physical exchanges occur will open. So basically, a new Comex will open. How is a new Comex going to be any better (or different) from the current Comex? It can't be different, because both are fundamentally based upon the rule of law and the enforcement of contracts, which in our legal system, means that damages are paid in MONEY rather than in physical PMs. Thu, 04/25/2013 - 22:20 | 3500938 MeelionDollerBogus That’s not the rational conclusion, that’s your conclusion. MY conclusion is that physical markets will open everywhere with no contracts where gold and silver are traded hand to hand on the spot to fully replace the comex – and pallet by pallet if need be for large acquisitions. With the advent of currency collapse it may very well be then that bullion accounts will replace deposit accounts and that bullion in hand will replace cash in hand completely. I already keep the bank account to near zero and hold in gold, silver, cash at all times so I’m ready when dollars turn to toilet paper. Wed, 04/24/2013 - 00:52 | 3491683 alentia We are comfortably selling and have stock at 17.5% premium on gold and 25-30% premium on silver. Looking at other dealers -most are out of silver. Some still have gold in stock. Wed, 04/24/2013 - 02:37 | 3491805 Debugas i can buy gold with less than 10% premium at any time Wed, 04/24/2013 - 01:00 | 3491697 sitenine @Bud Conrad - this was a bit of a yawner.. "In short, I think this is a strong buying opportunity." That's all you needed to say. Wed, 04/24/2013 - 02:21 | 3491788 Hobbleknee I also made a list of all the dealers that are having outages and delays: http://www.comparegoldandsilverprices.com/delivery-delays-shipments-and-... Wed, 04/24/2013 - 05:41 | 3491970 Lebensphilosoph 'Disconnect' is a verb. Wed, 04/24/2013 - 09:47 | 3492477 H_Manatee Coud be used as a non too... "there is a vast disconnect between the sheeple and federal policy" Thu, 04/25/2013 - 22:45 | 3501005 MeelionDollerBogus In trader-speak verbs can become nouns at any time. Nouns can become verbs too: ask those who got Corzined Wed, 04/24/2013 - 06:13 | 3491998 Racer On a UK gold coin seller web site still no gold available and been like that for many days now. Previously in the past had deals for buying 5 or 10 Krugerrands but no stock at all on any type of gold bars or coins since the take down in paper Wed, 04/24/2013 - 06:49 | 3492017 Spielbank May anybody be so kind to provide me a link to subscribe to the COT Reports every Friday? Thx in Advance.... Wed, 04/24/2013 - 06:52 | 3492024 H_Manatee Nobody has a clue. The so-called “Experts” are only hypothesising. They know they won’t be lynched for any wrong predictions even though people following them may have spent a lot of money on their recommendations. Having read so many economic forums and schools of thought in the last one year, it looks like nobody has any idea what will happen next or for that matter how it will all end. Prof.Fekete and his terrier Dr.Weiner come close in explaining things to me but then again I am not too sure. Also they appear to come more from the theoretical background. I have stopped listening to the likes of Schiff, Chris Duane, Brother John, Jim Willie, Jim Turk, Sinclaire, Grant and the ilk. Not to mention that voodoo science called the Technical Analysis. One can draw almost any arbitrary line though a confused curve and draw their own conclusions. When the whole market is rigged by the FED to manipulate the prices how anyone can draw any discernible conclusion from such a farce? From my personal view, for the moment, the FED is too powerful for anyone else to do anything about it. Bernanke can prolong this charade for the foreseeable future purely because the Dollar is still valued by the world (though every central banker and their governments have known its inevitable collapse since 1971, so why not give it another 50 years?). For the present world economic model there is nothing besides the Dollar to fall back on, whether you like it or not. So the game continues and we continue to sit idly by, whingeing and moaning. Things won't change to a greater extent at least for another 5-6 years in the US and you will only be the frogs in the gradually boiling pot. The rest of the world continues to bail out the US. Obama will easily manage to scrape through and join the pantheon of the clueless. You now need to focus on the next dictator who is eying for 2016. All this present talk about the imminent US-demise is just a creation of a deluded and paranoid mind finding its compatriots on the internet, believing in their own bullshit. US will be the last domino to fall but not for the foreseeable future. For that to happen, the rest of developed world has to snuff it first. Japan, CPIIGS, France and UK are first in line. It is highly unlikely they all will fall at the same time and this will give time for others due to capital flight from the collapsing nations. Predicting the short term trend of gold and silver prices in the current climate is impossible. Long term (over a decade or two) may be a different story. If price manipulation was the story, silver market should have buckled ages ago. You just can’t run it for too long without getting caught in the physical market. There has to be silver coming from somewhere. The coin shortage mania following the w/c April 15th is only due to the sudden surge in demand due to futures market correction. There simply wasn’t enough in the monthly supplies to cope with the sudden demand this month. Comparing that to backwardation is premature. If it continues for another 60 days perhaps I might buy it. Thu, 04/25/2013 - 22:47 | 3501010 MeelionDollerBogus +1 1) I have stopped listening to the likes of Schiff, Chris Duane, Brother John, Jim Willie, Jim Turk, Sinclaire, Grant and the ilk. 2) Not to mention that voodoo science called the Technical Analysis. One can draw almost any arbitrary line though a confused curve and draw Indeed, real math is required for real quantitative analysis and so-called “technical analysis” should be renamed “cloud-shape calling for stock charts” (#2), whereas in #1 I regarded most as shills from the outset. At least Schiff is honestly shilling for Europac and has a shilling licence. Willie on the other hand admits he’s a jack-ass so if he’s right that’s annoying to the elites, if he’s wrong he’s annoying period, and that’s his schtick. I don’t fault him for it. James Turk, however, hasn’t been wrong, he’s mostly cautious about what time-frame or big swing he expects but on fundamentals he has not been in error. Jim Rickards, however, I’d pay close attention to, same as Jim Rogers. Rogers isn’t afraid to say when he’s bet wrong and is more retrospect in saying he HOPES he’s smart enough to buy low if something drops, that he wants, rather than telling you that you OUGHT to be buying it. Sisterjohnf is a fuckin’ moron, as far as I’m concerned, and a creationist to boot, which is already a -100 to his reputation. 3) When the whole market is rigged by the FED to manipulate the prices how anyone can draw any discernible conclusion from such a farce? I can: measure the behaviours of fraud, any mention of motive or cover-story, to go along with actual mechanics of coordinated central bank activity, lone-bank activity by one (e.g. China, US Fed, Russia) and look at what market-activity/conditions did immediately precede, then follow, those actions. Now look for a long-term multi-year pattern. Their long-term goals didn’t change, only some of the mechanics (not even all) for attaining those goals. #1 goal is to steal #2 goal is to build up power for their political counter-parts Remember that and you should find the analysis you’re looking for without any help from the ‘experts’. 4) For the present world economic model there is nothing besides the Dollar to fall back on, whether you like it or not Untrue. China has already got yuan-(other) swaps in place with Australia, Russia, even Japan is on the table, and others. This eliminates dollars from total trade between nations with China and this means dollars ARE NOT the fall-back anymore. This has been taking place for 2 years or so. Also, gold-for-oil trade is now happening with Turkey, Iran, India and perhaps more, again showing the dollar is rejected as the fall-back. This process is more than 1 year old now. 5) Predicting the short term trend of gold and silver prices in the current climate is impossible. It’s not. I’ve done it myself 2 years in a row. Look at flickr, ‘goldpricemodel’ – that’s me. This latest shove-down did joust the model so I’ll have to work on it again but it’s been highly accurate. HIGHLY accurate for 2 years solid. The trick is that to look 3-12 months ahead I look back at 5 FULL years of data, by the day, even by the HOUR. http://www.fxhistoricaldata.com/download/XAGUSD?t=hour Wed, 04/24/2013 - 08:09 | 3492142 Quinvarius The great charade continues. You are crazy not to buy gold. The real stuff. What the Fed did to the mining industry with price interventions is going to happen in every industry. Gold is the leader and is telling you what Walmart and super market shelves will look like as an unlimited margin account sets prices below production cost. http://en.wikipedia.org/wiki/General_maximum It is back in new electronic format. The results will be the same. Economic destruction. Wed, 04/24/2013 - 08:10 | 3492146 FreeNewEnergy Has anybody thought about the idea that quick drops in price and continued suppression is an effort by the Central Banks and Bullion banks to keep gold and silver out of the hands of the common man by shutting down retail coin dealers, who get upside-down in their net positions when "events" like last week occur? Just a thought, but when a few coin shops close their doors (and I've noticed the lack of "we buy gold and silver" ads on teevee of late), th public gets shut out. It just seems that TPTB want to disorient and impair the public any chance they get. Gold slams, airport delays, high gas prices, food prices, martial law in Boston, all act as inconvenience to working people, who are already struggling enough. It all sucks. Disconnect. Move to a farm and tell the world to leave you the fuck alone seems like the only answer these days. Either that or join the fraud club and make a fortune. There is no middle ground left. Wed, 04/24/2013 - 08:42 | 3492190 Quinvarius Professional Coin dealers do not care about the price. It has zero effect on them. They are hedged. They have their profit margin locked in as soon as they buy inventory. Price drops and inventory clean outs are good for them. Example: They buy 100 gold eagles at 1800. They mark up the price$75 and put it up for sale.  They sell 1 futures contract at 1800.  Price drops to 1400.  They are up 400 on their contract hedge.  They are down 400 on their physical.  They sell the coins at 1475.  Net gain is still \$75.  Same as it would have been at 1800.

Wed, 04/24/2013 - 08:36 | 3492191 H_Manatee

shops close their doors because they do not want to see the existing stock under loss especially when the drop is more than 10%

Wed, 04/24/2013 - 08:41 | 3492199 Quinvarius

No.  They actually don't care.