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A Historic Inversion: Gold GOFO Rates Turn Negative For The First Time Since Lehman

Tyler Durden's picture




 

Today, something happened that has not happened since the Lehman collapse: the 1 Month Gold Forward Offered (GOFO) rate turned negative, from 0.015% to -0.065%, for the first time in nearly 5 years, or technically since just after the Lehman bankruptcy precipitated AIG bailout in November 2011. And if one looks at the 3 Month GOFO, which also turned shockingly negative overnight from 0.05% to -0.03%, one has to go back all the way to the 1999 Washington Agreement on gold, to find the last time that particular GOFO rate was negative.

Before we get into the implications of this rather historic inversion, let's review the basics:

What is GOFO (Gold Forward Offered Rates)?

GOFO stands for Gold Forward Offered Rate. These are rates at which contributors are prepared to lend gold on a swap against US dollars. Quotes are made for 1-, 2-, 3-, 6- and 12-month periods.

Who provides the rates?

The contributors are the Market Making Members of the LBMA: The Bank of Nova Scotia–ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA London Branch, Goldman Sachs, JP Morgan Chase Bank, Société Générale and UBS AG.

When are the rates quoted?

The means are set at 11 am London time. These are the rates shown on the LBMA website.  To show derived gold lease rates, the GOFO means are subtracted from the corresponding values of the LIBOR (London Interbank Offered Rates) US dollar means.  These rates are also available on the LBMA website.

How are the GOFO means established?

At 10.30 am London time, the Reuters page is cleared of all rates. Contributors then enter their rates for all time periods. A minimum of six contributors must enter rates in order for the means to be calculated. At 11.00 am, the mean is established for each maturity by discarding the highest and lowest quotations in each period and averaging the remaining rates.

What are some uses for GOFO means in the market?

They provide a basis for some finance and loan agreements as well as for the settlement of gold Interest Rate Swaps.

* * *

Unpleasant similarities with Libor and most other fixed (literally and metaphorically) rates aside, what is known is that under normal market conditions, GOFO is always positive, or in other words gold serves as a money-equivalent collateral for a pseudo-secured loan against paper fiat (USD in this case) hence the low interest rate.

Sometimes, however, normality inverts and the rate goes negative and as such serves as a useful indicator of gold market dislocations. Thus, while disagreements exists, one can safely say that what GOFO is, is simply a blended indicator of liquidity, counterparty or collateral (physical availability) stress in the gold market. Since it is next to impossible to isolate just which component is causing the indicated disturbance, it is prudent to be on watch for all three.

The best known example of a complete collapse in the GOFO rate, is the September 1999 Washington Agreement on Gold, which in brief, was an imposed "cap" on gold sales (mostly European in the afteramth of Gordon Brown's idiotic sale of UK's gold) to the tune of 400 tons per year. The tangent of the Washington Agreement is quite interesting in its own right. Recall the words of Milling-Stanley from the 12th Nikkei Gold Conference:

"Central bank independence is enshrined in law in many countries, and central bankers tend to be independent thinkers. It is worth asking why such a large group of them decided to associate themselves with this highly unusual agreement...At the same time, through our close contacts with central banks, the Council has been aware that some of the biggest holders have for some time been concerned about the impact on the gold price—and thus on the value of their gold reserves—of unfounded rumours, and about the use of official gold for speculative purposes.

 

"Several of the central bankers involved had said repeatedly they had no intention of selling any of their gold, but they had been saying that as individuals—and no-one had taken any notice. I think that is what Mr. Duisenberg meant when he said they were making this statement to clarify their intentions."

Of course, this happened in a time long ago, when the primacy of Fractional reserve banking was sacrosanct, when the first Greenspan credit bubble (dot com) was yet to appear, and when barbarous relics were indeed a thing of the past, only to be proven oh so contemporary following not one, not two, but three subsequent cheap-credit bubbles which have vastly undermined the religious faith in fiath and central banking, sending the price of gold to all time highs as recently as 2011.

Another subsequent negative GOFO episode occurred in early 2001, which coincided with what has been rumored to be a speculative attack and reversal of the futures market. However, while pushing 1 month rates negative, 3 month rates remained well positive.

Indeed, the only other time when both 1M and 3M GOFOs were both negative or almost so (3M touched on 0.05%) was in the aftermath of the AIG bailout following the Lehman collapse in November 2008.

Fast forward to today, when both 1M and 3M GOFOs just went negative.

And while both Antal Fekete and Sandeep Jaitly, traditionally two of the most vocal pundits in the arena of gold backwardation and temporal and collateral gold market arbritrage, are likely come up with their own interpretations of what may be causing this historic inversion, the reality is that one can't know for sure until after the fact. It may be one of many things:

  • An ETF-induced repricing of paper and physical gold
  • Ongoing deliverable concerns and/or shortages involving one (JPM) or more Comex gold members.
  • Liquidations in the paper gold market
  • A shortage of physical gold for a non-bullion bank market participant
  • A major fund unwinding a futures pair trade involving at least one gold leasing leg
  • An ongoing bullion bank failure with or without an associated allocated gold bank "run"
  • All of the above

The answer for now is unknown. What is known is that something very abnormal, and even historic, is afoot at the nexus of the gold fractional reserve lending market. 

h/t S Roche

 

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Mon, 07/08/2013 - 21:23 | 3732715 Spider
Spider's picture

If you are fed up with whats hapening in the PM markets then its time PM investors take back the PM markets.  Join the Silver Pledge - an effort to beat the banks at their own game by having investors join up and buy physical silver - together we can break this market.  You can read more here:

http://www.communitysynergy.com/subscribe/silver_pledge_site.html

Mon, 07/08/2013 - 21:38 | 3732764 TeamDepends
TeamDepends's picture

Sold at "fed up".

Mon, 07/08/2013 - 21:52 | 3732799 I think I need ...
I think I need to buy a gun's picture

iN bEN wE tRUST!!!!

i DON'T WANT TO END UP LIKE MICHAEL HASTINGS DID IN JUNE I'M NOT QUESTIONING ANYTHING ANYMORE

Mon, 07/08/2013 - 22:04 | 3732847 THX 1178
THX 1178's picture

Shitstorm's a brewin'....

Mon, 07/08/2013 - 22:19 | 3732893 Jam Akin
Jam Akin's picture

Lock and load.

Mon, 07/08/2013 - 22:43 | 3732978 fourchan
fourchan's picture

i dont give a fuck what the paper pushers are doing brothers, i'm stackin!

Mon, 07/08/2013 - 22:50 | 3733002 Lore
Lore's picture

Re: "Join the Silver Pledge...Put your name on our list...Rah Rah Rah!"

Loose Lips Sink Ships

Mon, 07/08/2013 - 22:56 | 3733031 SafelyGraze
SafelyGraze's picture

pledge your metalz to me!

ha ha ha

just joking!

hugs,
corzo

http://blogs.marketwatch.com/thetell/2013/07/08/jon-corzine-will-not-fac...

 

Mon, 07/08/2013 - 23:52 | 3733176 AllThatGlitters
AllThatGlitters's picture

If I'm reading correctly, this negative GOFO rate has been known since 10 or 11 London time?

So what has put the fire under gold and silver tonight?

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

Live Silver: http://www.pmbull.com/silver-price/

Although, the movement tonight seems to have started around the time that Tyler posted this article.

Is tonight's movement a headfake, or the beginning of a blast-off?

Tue, 07/09/2013 - 00:14 | 3733213 markmotive
markmotive's picture

The diehards are still talking up gold big-time. It makes me wonder...have these guys lost touch or has everyone else?

Sprott interviews Jim Sinclair on gold:

http://www.planbeconomics.com/2013/07/sprott-money-interviews-jim-sincla...

Tue, 07/09/2013 - 01:18 | 3733278 NeverForgetSilver
NeverForgetSilver's picture

They will do it regardless the price since they know that the price is artificially set by government to convince poeple to sell.

Tue, 07/09/2013 - 02:01 | 3733334 Herd Redirectio...
Herd Redirection Committee's picture

Sprott has made moves into at least two silver juniors in the last couple weeks.  They now own more than 15% of Arian Silver (mine in Mexico, but have had a milling issue) for one.   And the price has been beat up hugely.  Not investment advice blah blah blah

Tue, 07/09/2013 - 05:27 | 3733448 new game
new game's picture

long blinders and ear plugs-fuck sproot and sinclair-think for yourself-go to amazon if you want to buy a book...

gold is savings - end of story...

equity in home WAS savings

gold is now ONLY option left for true savings.

if the s(really does)htf, what do you want for savings?

paper anything? (except a$$ wipe).

equity in home that NO ONE can afford to purchase?

or GOLD???

now we are all experts!

Tue, 07/09/2013 - 07:12 | 3733498 GetZeeGold
GetZeeGold's picture

 

 

 

Do not screw with mother nature!

 

You have meddled with the primary forces of nature, Mr Beale. And you will atone.

 

Am I getting through to you, Mr Beale?

Tue, 07/09/2013 - 09:48 | 3733765 pmbug
pmbug's picture

July 8 - rates negative out to 3 mo.

July 9 - rates negative out to 6 mo.

There's a nice post (with chart pr0n) here about the historical significance of these numbers:

http://www.pmbug.com/forum/f2/negative-lease-rates-gold-silver-341/index7.html#post21888

Tue, 07/09/2013 - 03:50 | 3733400 CSA
CSA's picture

Neither... it is one step forward, two steps back until it normalizes.

Mon, 07/08/2013 - 22:58 | 3733032 DoChenRollingBearing
DoChenRollingBearing's picture

FOFOA commented not really long ago that a negative GOFO (or "backwardation") might not be the "Yikes, this IT!" signal that Antal Fekete wrote before (2009?  earlier?).  Because GOFO tracks paper gold!

***

Cost of mining gold is the Cover Story in the new issue of American Hard Assets.  Lots of other interesting articles as well in the magazine.

"Review of American Hard Assets -- Issue No. 4"

http://tinyurl.com/krozhv7

Tue, 07/09/2013 - 03:09 | 3733382 mkkby
mkkby's picture

All this means is nobody wants to borrow gold.  Since most of the action is in paper, that makes total sense.  It's a bear market in paper gold.  Hedge funds getting muppetized and bailing while they still have life left.  No mad max prediction needed. 

Mon, 07/08/2013 - 23:22 | 3733103 DoChenRollingBearing
DoChenRollingBearing's picture

10-4 Jam Akin, but I have seen lots of this kind of moments, well, for many years...

Tue, 07/09/2013 - 19:51 | 3735675 Jam Akin
Jam Akin's picture

Still is a good time now to be at higher state of readiness Do Chen!

Mon, 07/08/2013 - 22:13 | 3732875 spanish inquisition
spanish inquisition's picture

Speaking of drive by wire, anyone know if Canadian trains are fully computerized?

Mon, 07/08/2013 - 23:08 | 3733073 Maxter
Maxter's picture

I heard that the brakes needs to be applied manualy on the first 10 car or so.

The locomotive was on fire 10 km away from the crash about 2 hour before the crash.  The firefighter neutralised the fire and left.  It is unclear what went wrong after that.

 

I went several time in this city. What a disaster!

Tue, 07/09/2013 - 12:21 | 3734221 PrinceDraxx
PrinceDraxx's picture

If it was a runaway train, why didn't they decouple the engine so the cars would stop?

 

Tue, 07/09/2013 - 22:24 | 3736138 Maxter
Maxter's picture

The engine was not running.  The train was simply going downhill without any driver.  The train was parked up a hill 10 km away from the city.  There is a altitude difference of about 100 meters between where it was and where the city is.

The train was rushing full speed toward the city and blew up when it reached a wide turn.

There is about 50 dead right now.

 

Crazy video can be seen here: http://zone911.fm93.com/actualites/incendies/item/16850-lac-m%C3%A9gantic-une-nouvelle-vid%C3%A9o-%C3%A0-donner-des-frissons

Tue, 07/09/2013 - 12:31 | 3734262 bluskyes
bluskyes's picture

They're not fully computerized, but there is a remote start system installed in CN's trains - Runs them for 1/2 hr every few hours to keep them warm for the next crew. Important in the Great White North.

Trains are equipped with maxi breaks that are active unless released by air, or manually released by crank.

Faulty bearings can cause fires, but there are Radio enabled thermal imaging shacks installed along the tracks every so often to identify hot wheels (bearings approachine end-of-life), and relay that info to the engineer.

Tue, 07/09/2013 - 20:25 | 3735743 MeelionDollerBogus
MeelionDollerBogus's picture

Vancouver skytrain is.

Mon, 07/08/2013 - 21:55 | 3732800 I think I need ...
I think I need to buy a gun's picture

I WATCHED GREMLINS LAST NIGHT FOR THE FIRST TIME IN 30 YEARS WHEN THIS BUBBLE BREAKS WILL IT BE LIKE ALOT OF GIZMOS RUNNING AROUND ALL SWEET AND SCARED OR DO YA THINK WE WILL HAVE GREMLINS EATING ALL THE FOOD IN THE THEATER?

Mon, 07/08/2013 - 22:38 | 3732844 francis_sawyer
francis_sawyer's picture

"A HISTORIC INVERSION"?...

~~~

Thanks, again for the 'GRAMMER' lessons... [& thanks '2x' for the kito/Divine Wind twins to 'JUNK' a grammar correction]...

Mon, 07/08/2013 - 23:56 | 3733184 kito
kito's picture

You need to up the dosage on your obsessive/compulsive medication

Tue, 07/09/2013 - 01:51 | 3733327 prains
prains's picture

bifurcation bitchez!, spread it

Tue, 07/09/2013 - 05:58 | 3733459 The_Small_Lebowski
The_Small_Lebowski's picture

As far as i was aware this is not club for helping kids to read good. Picking up on grammatical errors is a waste fo everyones time - including your own!

 

Tue, 07/09/2013 - 08:51 | 3733627 GeezerGeek
GeezerGeek's picture

That's easy for you to write (right?), considering all the errors your post contains. The problem for me is that sometimes it's hard to overcome the errors and tell what point the writer is trying to get across. From a different perspective, sloppiness in writing may sometimes be equated to sloppiness in thinking. 

 

Tue, 07/09/2013 - 08:54 | 3733637 Gavrikon
Gavrikon's picture

Perhaps.  But it also could mean that the writer is not a native speaker of English.  I shudder when I consider my grammatical errors when I write something in German or Russian.

On the other hand, the writer might be a 2-digit IQ retard.

Tue, 07/09/2013 - 12:29 | 3734254 PrinceDraxx
PrinceDraxx's picture

You are correct, sir. The possibility exists that the thinking is disjointed or even deranged. Proper punctuation and spelling are the epitome of good manners.

I can hardly wait for the down votes. My girlfriend kicked me off her friends list for three days after I told her this. :)

Tue, 07/09/2013 - 18:57 | 3735554 MeelionDollerBogus
MeelionDollerBogus's picture

OMG. THEY WILL EAT EVERY CAPSLOCK KEY SO THEY CAN NEVER BE TURNED OFF EVER AGAIN

Mon, 07/08/2013 - 22:16 | 3732886 LiquidityandLunacy
LiquidityandLunacy's picture

Paulson is down 65% but I'm only down 36%. #winning

Tue, 07/09/2013 - 05:03 | 3733437 disabledvet
disabledvet's picture

QE. causing massive shortages of dollars everywhere. gold and silver "lease rates" going negative sounds "reasonable" in the sense that yield hungry investors (those who search for any income at any price) are seizing up the money markets. this is shooting fish in a barrel in my view since the USA is fast becoming the worlds largest energy superpower. in other words I could very easily see a massive move higher in the dollar ala 1980-1986. outside of treasuries avoid debt markets as they are way over extended and harm liquidity of the underlying instrument (the equity.) I think Wall Street understands this and will limit/deny issuance in many cases. having said that a lot of debt could be issued at very favorable terms as the need to build a capital base to compete with North Dakota becomes paramount. that means buying dollars and "dollar substitutes" (energy futures, AAA rated muni debt, dollar swap agreements, mortgage insurance, etc.) this New Normal of Large Scale Asset purchases is not going anywhere. one of those assets is the US dollar. these rungs have a serial number hence the actual amount in circulation can and is being traced. M1-M2 are at zero growth. too few dollars chasing too many goods. go long liquidity providers in the form of "dollar cartels"...in other words equities that generate massive amounts of free cash flow through internal growth.

Tue, 07/09/2013 - 05:45 | 3733454 new game
new game's picture

keyword-oil...black gold. petro dolla; unless russia/china can break its backbone(not likely).

oil dipped dollar or gold

Mon, 07/08/2013 - 22:23 | 3732910 zorba THE GREEK
zorba THE GREEK's picture

I'm totally invested in physical, but I'm not down at all. I still have the same 

number of ounces and I sleep like a baby every night.

Mon, 07/08/2013 - 22:45 | 3732988 fourchan
fourchan's picture

the peaceful sleep of reality, gotta love it. 

Mon, 07/08/2013 - 23:04 | 3733054 tmosley
tmosley's picture

Really?  I find that practically every time I open my safe, there is more in there.  The trend has become much more prominent since silver went below $20.

In this case, they will soon be able to say that the housing collapse was caused by falling silver prices, as my home caves in on itself.

Mon, 07/08/2013 - 23:10 | 3733076 Jam Akin
Jam Akin's picture

You should go long jackposts.

Tue, 07/09/2013 - 12:35 | 3734277 PrinceDraxx
PrinceDraxx's picture

Keep it split up and in several places lest the jack booted thugs come calling and decide they need to hold it for evidence.

 

Tue, 07/09/2013 - 18:54 | 3735548 MeelionDollerBogus
MeelionDollerBogus's picture

+1

on youtube h1inc (now gone) had this happen. Guns, silver, gone. Some returned with a fight but some may never be. No charges even, just an "investigation". That's how they do it.

It wasn't all in one pile either, so they didn't get it all.

Tue, 07/09/2013 - 05:54 | 3733457 The_Small_Lebowski
The_Small_Lebowski's picture

FROM THE SILVER PLEDGE PAGE: "All we need is 1 million people pledging to buy 5 ounces of silver a month. That is it. That would be enough to significantly impact world supply"

Note the mention of world supply, but you can only fill the form out with an American address. Sorry guys but America accounts for about 5% of the worlds population? This is the most half assed attempt i have ever seen.

Tue, 07/09/2013 - 09:18 | 3733698 Agstacker
Agstacker's picture

When silver is under 20 bucks, I'm sure as hell stacking more than 5 ounces a month!!!

Mon, 07/08/2013 - 21:21 | 3732717 bank guy in Brussels
bank guy in Brussels's picture

Backwardation, bitchez !

Mon, 07/08/2013 - 21:26 | 3732732 SHEEPFUKKER
SHEEPFUKKER's picture

GOFO da gold MOFO's!!

Mon, 07/08/2013 - 21:36 | 3732758 TeamDepends
TeamDepends's picture

Do you feel the tingle down your leg?

Mon, 07/08/2013 - 22:50 | 3733008 TeamDepends
TeamDepends's picture

And staying on topic, metals just went vertical brothers and sisters!  Can we have a Hallelujah in the house?!?!

Mon, 07/08/2013 - 23:15 | 3733096 ghengis86
ghengis86's picture

GOFO dies, POMO's rise and physical looks to the sky?!

GTFO!!

Mon, 07/08/2013 - 23:29 | 3733133 RockyRacoon
RockyRacoon's picture

Not chicken feed either:

http://finviz.com/futures_charts.ashx?t=GC&p=m5

I guess the really important people read ZH.

Wonder what CNBC will say about all this in the morning -- if it gets a mention.

Mon, 07/08/2013 - 23:34 | 3733145 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, I just saw (approx. 11:31 ET) that gold was up $17.

Tue, 07/09/2013 - 00:00 | 3733192 TeamDepends
TeamDepends's picture
  1. Yeah, seventeen rapidly fading FeDeral reserve notes

 

Tue, 07/09/2013 - 00:24 | 3733227 DoChenRollingBearing
DoChenRollingBearing's picture

Who's da bish minus one-ing all of us?

Tue, 07/09/2013 - 00:30 | 3733233 TeamDepends
TeamDepends's picture

A fiat flapper?  A paper pusher?  Alan Ben Geithner?

Tue, 07/09/2013 - 02:05 | 3733339 Mobius Poop
Mobius Poop's picture

Finally Mervin King has plenty of time to troll ZH.

Mon, 07/08/2013 - 21:31 | 3732745 old naughty
old naughty's picture

Right on the heel of the China radio comment?

Currency war escalating, perhaps?

Mon, 07/08/2013 - 22:07 | 3732861 max2205
max2205's picture

Think UNG.  Once pair traders jump on this it'll get worse and last a long time. Glta

Mon, 07/08/2013 - 21:22 | 3732721 spastic_colon
spastic_colon's picture

how many other definitons of GOFO can we think of?  just too tempting.

Mon, 07/08/2013 - 22:02 | 3732839 eddiebe
eddiebe's picture

Go Fo the gold!

Mon, 07/08/2013 - 21:23 | 3732723 Undecided
Undecided's picture

Dam Can't believe Tyler took my comment off...didn't see that comming on this site.

Mon, 07/08/2013 - 21:40 | 3732767 Unprepared
Unprepared's picture

Are you sure you were not just unable to make up your mind about submitting said comment, UNDECIDED?

Mon, 07/08/2013 - 21:49 | 3732792 Undecided
Undecided's picture

Positive was the first comment on the board, Probably still hates the Globe and Mail XD http://www.theglobeandmail.com/news/toronto/photos-of-flooding-blackouts...

 

Mon, 07/08/2013 - 22:17 | 3732887 Unprepared
Unprepared's picture

I'm also in the middle of that shit right now. Lucky got home early enough.

Mon, 07/08/2013 - 22:42 | 3732977 Jendrzejczyk
Jendrzejczyk's picture

I'm undecided on whether or not I'm unprepared for a shortage of underware.

Tue, 07/09/2013 - 00:43 | 3733246 James_Cole
James_Cole's picture

Another (near daily occurance) totally normal 'once-in-a-lifetime-freak -weather' event.

Tue, 07/09/2013 - 02:07 | 3733341 Herd Redirectio...
Herd Redirection Committee's picture

Glad I got out of TO (i.e. moved away years ago) right about now!

My thoughts are with those not as fortunate.

Mon, 07/08/2013 - 22:52 | 3733015 augustusgloop
augustusgloop's picture

i like the photos of what look to be a goth girl and her amish bf in the flooded subway (where are the rats?) and the people patiently sitting with their feet up in the flooded tram waiting for help to arrive. this is how you can tell it's not an american city

Mon, 07/08/2013 - 23:21 | 3733113 DoChenRollingBearing
DoChenRollingBearing's picture

Canadians are too polite, and Canada is too clean for there to be any rats...

Mon, 07/08/2013 - 21:39 | 3732725 One And Only
One And Only's picture

Another example of derivatives perverting shit.

Buy it. Sink it in your canoe 'accident' and claim a total loss.

KISS

GOFO rates = go fuck yourself.

Tue, 07/09/2013 - 07:24 | 3733518 YHC-FTSE
YHC-FTSE's picture

Yep. As repeated in the threads, GOFO tracks paper gold. 

Demand,  production, & inventory no longer have any effect on the price of, well everything!  How long can manipulation be sustained is the question on everyone's lips, but GOFO may reflect the same crazy reaction of govt bond safe haven bullshit when its rates go negative. Paying someone to borrow money from you, or a debt that pays for itself is the new normal. It doesn't get much more insane than that,  or does it?

Mon, 07/08/2013 - 21:25 | 3732729 fonzannoon
fonzannoon's picture

First the Hindenberg shows up a whole bunch of times. Now the Gold GOFOKYOSELF thingy does something strange. I fear the market may only end up flat tomorrow.

Mon, 07/08/2013 - 21:41 | 3732770 Unprepared
Unprepared's picture

Black swans fly in clusters.

Mon, 07/08/2013 - 21:54 | 3732805 Al Gorerhythm
Al Gorerhythm's picture

A cluster flock.

Tue, 07/09/2013 - 12:32 | 3734268 Cult of PersonALity
Cult of PersonALity's picture

@ Al Gorer   

Now that ...   that was funny.  Too bad you didn't think of it yourself.  The gobermint had a big ... uh ...  really big part of that.  After all, we put the cluster in fuc ...   in ah...   flock.

Mon, 07/08/2013 - 21:25 | 3732731 Seize Mars
Seize Mars's picture

Hmm. If we were talking about any other commodity, this would be sympomatic of underlying fundamentals. For example if soybean lease rates plummeted, perhaps it could mean a glut of beans. But as we all know, trading in gold is different for two reasons, it's real money, and more or less non consumable (unlike soybeans), and it is severely manipulated by banks.

So what does it NOT mean? Well it does NOT mean anything about supply and demand of gold metal. Who knows. All I know is, most people hoard paper. The prudent see danger.

Mon, 07/08/2013 - 21:29 | 3732733 newengland
newengland's picture

I dislike fiatscos, but the world is a contest of ideas; a team effort.

Buy physical gold and silver, and see who joins you. Sellers are idiots in this 21st century. Paper money would be ok if career politicans and their fans didn't want something for nothing.

They want a champagne lifestyle on a beer budget. 

Mon, 07/08/2013 - 21:57 | 3732817 Al Gorerhythm
Al Gorerhythm's picture

They live a champagne lifestyle on no budget. A budget means you actually care about income to debt ratios.

Mon, 07/08/2013 - 21:33 | 3732748 Divine Wind
Divine Wind's picture

 

 

Tyler's ongoing posts regarding rapidly declining COMEX reserves may also provide some clues.

Mon, 07/08/2013 - 21:33 | 3732749 MGA_1
MGA_1's picture

And will continue to go down...

Mon, 07/08/2013 - 21:34 | 3732752 Bay of Pigs
Bay of Pigs's picture

ZH's Turd Ferguson gets featured at GATA's site. Banksters have gone net long again and flipped on 191K contracts (600 tons of gold).

http://www.gata.org/node/12768

Mon, 07/08/2013 - 21:48 | 3732789 fonzannoon
fonzannoon's picture

BOP don't take this the wrong way, but I have seen that motherfucker Turd come on here and shit all over the ZH crowd. Fuck him, that arrogant piece of shit. 

I put a lot more faith in what you have to say, than that wannabe dipshit.

You said he booted you off his site. That only enhances my point. I can deal with the Jim Willie stuff. But Turd is nothing more than Jim Willie suffering from mud butt.

Mon, 07/08/2013 - 22:12 | 3732838 Bay of Pigs
Bay of Pigs's picture

Yeah fonz, I don't know why Turd got all worked up around here and left. I'm not really sure why he trashed the folks who post here either. Obviously I don't frequent his site anymore, having been booted to the curb in Turdville.

I will say that Chris Powell and Bill Murphy of GATA are good people, whom I've known for over 15 years. Chris is especially well versed in the manipulation of the gold market. I've never seen anyone in the MSM try to debate him, and for good reason. He'd eat them alive.  

 

Tue, 07/09/2013 - 04:45 | 3733427 jmcadg
jmcadg's picture

Good to hear you say that BOP. I greatly respect both Chris and Bill (and thought Adrian was on it RIP :( ). But when they had 'The Debate' with fuck monkey Jeff Christian, Chris would have wiped the floor with him, where as Bill bumbled (at the time) to a seemingly slight loss (if truth be told).

As time progresses though, whether a little bumbling or not, GATA have it, and TPTB know it.

I'll give Bill proper props too - in that as the metals have been slaughtered, he has not continued to call a bottom and cheerlead, like many a blowhorn. He's been honest and said, this can continue much further, but that we all know the fundamentals will assert themselves in time.

Mon, 07/08/2013 - 22:11 | 3732871 Dr. Engali
Dr. Engali's picture

Damn Fonz. I'm not sure that I know how you feel about Turd. Do you care to elaborate a bit?

Mon, 07/08/2013 - 22:13 | 3732876 Bay of Pigs
Bay of Pigs's picture

Doc, I don't think fonz would get a real warm reception over there. LOL...

Mon, 07/08/2013 - 22:21 | 3732903 fonzannoon
fonzannoon's picture

What I appreciate most about you (doc) and you (BOP) is that you are just hangin around here, airing out your brains, for all of us to see, and pick apart.  This goes for many others as well. If either of you decided to come on here and promote something you decided to do, I'd be the first one to help in any way i could.

All I see from that dude is someone who leveraged a personality formed on here for his own benefit, and then got tweaked at the lack of interest in his new gig from his old crowd.

Maybe I have it wrong.

Mon, 07/08/2013 - 22:50 | 3733000 francis_sawyer
francis_sawyer's picture

"you are just hangin around here, airing out your brains, for all of us to see, and pick apart..."... SELECTIVITY... [what a concept]...

~~~

Hmmm...

Tue, 07/09/2013 - 02:11 | 3733351 Herd Redirectio...
Herd Redirection Committee's picture

I know it was tough for me when I was trying to promote various blogs (PsychoNews, Capital Research Institute) of mine here on ZH.  The temptation to post a link in every comment is strong, because usually even if a comment got a bad response for being excessive, it still provided hits.  It becomes easy to feel 'under-appreciated'.

Wed, 07/10/2013 - 12:25 | 3737791 fuu
fuu's picture

Link pimping, serious business.

Mon, 07/08/2013 - 22:44 | 3732966 Haole
Haole's picture

Being banned from TFMR might be thought of as a badge of honor... ;)

Mon, 07/08/2013 - 22:50 | 3733007 Jendrzejczyk
Jendrzejczyk's picture

FIRST!!!! I'm a winner now!!!!!!!!!!!!!

Mon, 07/08/2013 - 23:26 | 3733128 DoChenRollingBearing
DoChenRollingBearing's picture

DoChen is SIXTY-FIRST (or so) here on this thread (for the moment).  Bitchez!

Mon, 07/08/2013 - 23:09 | 3733075 olto
olto's picture

Haole man,

It may be as you say above, but I think that being booted off of ZH is a Gold Badge of Honor----

btw----whatever happened to Slewie the Pi-Rat?

Mon, 07/08/2013 - 23:13 | 3733093 tmosley
tmosley's picture

Not really.  I attract those types of bans pretty quickly.

What the good posters that get banned from TFMR tend to do is abuse the host and the community, and refuse to stop when politely asked.  JakeBlues, one of my favorite posters did had just such an incident not too long ago.  I was firmly on his side on that issue (that of Glen Beck being a sociopath who talks a good game but then puts a knife in the back of any serious liberty candidate or campagner as soon as he has a chance), but relented when asked politely (and the discussion on the pro-GB side ended as well), and declined to bring it up again for no reason.  Jake couldn't leave it alone, though, and got banned.  I have disagreed with Turd and been the sole voice on my side of a given argument many times, and have not been banned, even after getting quite nasty.

ZHers often have trouble at TFMR because they are used to Fight Club, and Fight Club isn't allowed on the main blog, but only in the poorly trafficked forums.

Tue, 07/09/2013 - 00:11 | 3733210 Bay of Pigs
Bay of Pigs's picture

I never abused Turd, and really had no beef with him at all. The Mods? Well, that was another story, but no sweat tmos, I'm fine right here.

 

Tue, 07/09/2013 - 00:20 | 3733223 tmosley
tmosley's picture

Just speaking in generalities, BoP.  TFMR is a little bit worse off with each good poster that leaves/is banned.  You were certainly one of them.

Tue, 07/09/2013 - 00:39 | 3733239 One And Only
One And Only's picture

Censorship works really well in fascist communities.

Tue, 07/09/2013 - 08:16 | 3733561 tmosley
tmosley's picture

Moderation=censorship?  I don't think so.  You can talk about anything and everything, however you want to, as long as you take it to the forums.  Main Street is for on-topic conversation only, and the host gets to decide what is on or off topic, and is extremely liberal with that.

Tue, 07/09/2013 - 16:49 | 3735234 MeelionDollerBogus
MeelionDollerBogus's picture

Bull. There's no way to find out what is the real topic but to have the Fight Club.

Mon, 07/08/2013 - 21:34 | 3732753 kchrisc
kchrisc's picture

Looks like the whole thing is about to do a slow and low landing at SFO without glide-slope assist.

Can we call a "go-around?"

Mon, 07/08/2013 - 21:34 | 3732754 tao400
tao400's picture

We don't know what's causing it, but more importantly what does. It mean for the price of gold

Tue, 07/09/2013 - 02:27 | 3733365 SAT 800
SAT 800's picture

Oh, you mean you think it was a co-incidence that 1999 and 2001 corresponded to the long drawn out twenty year bottom in precious metals; or in other words, the beginning of the present secular bull market in said metals. How he managed to avoid making this observation is beyond me; but now I have made it so you can meditate on it. What it means for the price of gold and silver is that, although the bottoming formation may take another full year, or not, as the case may be, and the ultimate inter-day low may be 1100$; instead of the present, ort not; ( detailed predictions are impossible), the downward momentum is over and the new bull wave on to new higher highs is beginning.

Mon, 07/08/2013 - 21:34 | 3732755 Catullus
Catullus's picture

Did we ever really find out what happened to Bear and their silver trade?

Mon, 07/08/2013 - 21:36 | 3732757 Chupacabra-322
Chupacabra-322's picture

The business of America used to be business. Now the businesses of Amerika are war, theft, mass murder, and police state crackdown on anyone who objects.

Mon, 07/08/2013 - 22:55 | 3733025 juangrande
juangrande's picture

You should study the "his"story of America a little closer.

Mon, 07/08/2013 - 21:41 | 3732769 erg
erg's picture

About an hour and a half ago I had a 2 second spasm of butterflies in my stomach for no apparent reason whatsoever. Something I don't recall ever happening before.

I also just realized that my last two posts referenced butterflies. Weird. Monarch? Blue Morpho? Mourning Cloak? I'm getting some kind of cryptic message through a broken antennae.

Sorry, just muttering to myself. Carry on.

Mon, 07/08/2013 - 21:45 | 3732785 tao400
tao400's picture

That's the most interesting post yet. It's like a sene that the force so to speak is out of balance, which I physically experiencee. Something just isn't right and it ain't just the printing of fiat that is causing it

Mon, 07/08/2013 - 21:49 | 3732794 erg
erg's picture

I agree. It's that inate sense that somebody behind you is looking at you. You get that feeling, you look behind and there they are. It seems to happen too often to be random chaos theory.

Mon, 07/08/2013 - 21:51 | 3732797 HowardBeale
HowardBeale's picture

That sixth sense working to integrate all the incoming info from the other five; if it works, there must be an explanation...

Mon, 07/08/2013 - 21:58 | 3732814 erg
erg's picture

I wish I could inject a hit of purple mike directly into my pineal gland. I betcha that would be pretty spicey.

Mon, 07/08/2013 - 22:16 | 3732883 All_Your_Base
All_Your_Base's picture

"I felt a great disturbance in the Force, as if millions of voices suddenly BTFD in terror and were suddenly silenced."

Mon, 07/08/2013 - 23:02 | 3733045 Ranger4564
Ranger4564's picture

Some people experience their thoughts in vivid imagery that compels them to try to understand / decipher their visualizations, and they are whom we call Artists.

Some people experience their thoughts in verbal metaphors that compel them to try to understand / decipher those words, and they are whom we call Writers / Poets.

Some people experience their thoughts in noises, auditory sensations, and that compels them to make noises to try to understand what they feel / hear, we call them Musicians / Singers.

Some people experience their thoughts as sensations in different parts of their bodies which compels them to decipher their sensations, and they are whom we call Dancers / physical Artists.

Some don't have any thoughts and they are whom we call the money changers / money chasers... Hey, you have to do something when you got nothing. Right?  RIGHT?  I know, I am easy to hate... many people believe I am more incorrect than correct, more insane than sane... hahahaha.

Back on topic...

Some believe these sensations to be insights / gut instinct / hunches. I figure you experience your thoughts physically, maybe the unconscious thoughts you don't want to acknowledge... kind of like heartburn... you ignore your diet, your body reminds you through heartburn... you ignore your insights, your body reminds you through butterflies... tingles in your tummy, sometimes a twitch.

So what are you so worried about that maybe we should be worried about?  Spit it out, we see you!!!

 

Mon, 07/08/2013 - 23:43 | 3733151 erg
erg's picture

Hmmm...I've seen colors...once upon a time (don't ask). It was very much more exotic than I could have possibly imagined. Not tracing.

That would put me in the art class and it's true. Good post.

It's difficult to provide any kind of specifics regarding an approaching storm-cloud.

If I could boil it down to one word I would say denouement. But we all know that so there's nothing new there. Timing is everything.

Not long ago the house of cards merely shivered with abuse and neglect... now increasingly bigger pieces are beginning to fling away.

Clearly this abscissa points into the dirt.

Tue, 07/09/2013 - 00:04 | 3733200 Ranger4564
Ranger4564's picture

I agree. I think the past 5 years have been the one side of a massive tornado. We have been in the  eye for a few months, people starting to feel like coming out, but we have just entered (past 1 - 2 months) the periphery of the other side of the eye wall... and the flinging is going to become violent, as big banks crumble, large portions of wealth is evaporated, personal security is vaporized, work dries up so more people become unemployed, even those service people since who can afford to eat out...

So I agree, we are at the final stage... script has been written and the actors are on stage... curtain is about to be drawn. Be prepared to be awed.

O.O

Tue, 07/09/2013 - 00:17 | 3733217 erg
erg's picture

"The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater."

Frank Zappa

Tue, 07/09/2013 - 15:57 | 3735050 MeelionDollerBogus
MeelionDollerBogus's picture

And some experience their thoughts as violent spasms of hitting their own skulls with hammers and laughing at the result, insisting we should all do so.

We call those Economists.

Mon, 07/08/2013 - 22:03 | 3732845 Al Gorerhythm
Al Gorerhythm's picture

They are behind you. They're in your back pocket GPS monitored phone, laptop, car, washing machine, tv and no doubt your speaker-beeping watch. You name it (electronics) they're there.  NSA! Fuck Yeah!

Mon, 07/08/2013 - 22:24 | 3732897 erg
erg's picture

The collective age of my car, computer, tv: 42 years. It's the first time I added it up.

I don't know if I'm precient or just plain cheap. I'm going with cheap. Shit still works as well as need be.

P.S. Never did the cell thing (telecommunications act of 1996) and everything cash. Dammit, now one can deny that it's a faster transaction.

Buncha idiots I stand behind in the procession of life.

Mon, 07/08/2013 - 23:36 | 3733149 DoChenRollingBearing
DoChenRollingBearing's picture

@ erg

+ mucho for butterfly references, my brother used to be a big-time collector.

Mon, 07/08/2013 - 21:41 | 3732771 Dagny Taggart
Dagny Taggart's picture

This is like the part in the horror flick when the audience knows the slaughter is about to take place, but the victims feign cluelessness. 

Mon, 07/08/2013 - 21:50 | 3732795 HowardBeale
HowardBeale's picture

That begs the question: Whom/what is the victim?

Mon, 07/08/2013 - 22:01 | 3732831 Dagny Taggart
Dagny Taggart's picture

I don't think anyone gets out unscathed.

Mon, 07/08/2013 - 23:05 | 3733063 Ranger4564
Ranger4564's picture

No spoilers, please. I haven't seen this movie yet.

;-)

Mon, 07/08/2013 - 21:52 | 3732801 erg
erg's picture

And you peak through your fingers.

I like how they go one by one like sheep to slaughter. The first guy didn't come back, let's try sending in another one. That will probably help.

Mon, 07/08/2013 - 21:58 | 3732822 Dagny Taggart
Dagny Taggart's picture

Very Hannibal Lecter of you.

Tue, 07/09/2013 - 01:03 | 3733269 Oliver Jones
Oliver Jones's picture

No, wait - let's all split up! :)

Tue, 07/09/2013 - 02:36 | 3733369 Meat Hammer
Meat Hammer's picture

And go outside into the darkness to check out that weird noise.

Tue, 07/09/2013 - 15:43 | 3734990 MeelionDollerBogus
MeelionDollerBogus's picture

No worry guys, I'll be right back!

Mon, 07/08/2013 - 23:11 | 3733083 Ranger4564
Ranger4564's picture

I've always hated Horror flicks.

Your vignette is so apropos... time to go save a few of the unaware / innocent victims. 

Mon, 07/08/2013 - 21:42 | 3732776 wstrub
wstrub's picture

Could this be why Newmont Canada needed to raise 600 million today?

 

Mon, 07/08/2013 - 21:49 | 3732793 HowardBeale
HowardBeale's picture

I think what can be gleaned from the article is that:

1) gold will go up; or

2) gold will go down.

Mon, 07/08/2013 - 23:38 | 3733156 hootowl
hootowl's picture

Brilliant!!

Tue, 07/09/2013 - 02:33 | 3733366 SAT 800
SAT 800's picture

Look at the chart and think. the other two occurances defined the bottom of the twenty year bear market in precious metals. It will go up. I'm not going to write you a book about this, you'd probably argue with me; the chart speaks volumes; stare at it.

Mon, 07/08/2013 - 21:53 | 3732802 AccreditedEYE
AccreditedEYE's picture

ANY rate set by a group of global banks should be viewed skeptically. Haven't we learned that nothing is as it seems yet? Watch the other hand!

Mon, 07/08/2013 - 21:55 | 3732809 fasTTcar
fasTTcar's picture

Let me remind you what happened to the gold price after Lehman.

Mon, 07/08/2013 - 21:55 | 3732812 Ignorance is bliss
Ignorance is bliss's picture

Quote 

http://www.professorfekete.com/articles/AEFTheDailyBellinterview2013.pdf

Where is the price of gold headed from here? 

A. The price of gold is headed for extinction. I for one don’t believe that the price of gold is headed for five digits. Long before that might happen, permanent backwardation* would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. World trade is facing an avalanche-like transformation flattening out monetary economy into barter economy. Practically all economists, financial writers and market analysts have missed this possible scenario. They don’t see the greatest economic contraction ever staring them in the face. They don’t see the coming tsunami of unemployment. Very few see deflation as indicated by the progressive disappearance of cash gold. It never occurred to Bernanke that the new Federal Reserve notes he is printing galore could also go to purchase physical gold, causing the gold basis to shrink. Once the gold basis* goes permanently negative, the total U.S. debt, all $16 trillion of it, will not be worth one ounce of gold. That will pull the rug from underneath the international monetary system. Barter is the ultimate in deflation, and that  is what the world economy is getting.

Mon, 07/08/2013 - 22:32 | 3732935 Bay of Pigs
Bay of Pigs's picture

If Fekete is correct on this, it sure looks like the Mother of All Mad Max scenario's doesn't it?

 

 

Mon, 07/08/2013 - 22:40 | 3732968 Ignorance is bliss
Ignorance is bliss's picture

Welcome to Barter Town. Bring your gold silver and Lead for pig shit power and food. 

Tue, 07/09/2013 - 02:17 | 3733355 Herd Redirectio...
Herd Redirection Committee's picture

Deflation in goods priced in gold...  Isn't that the game we are all playing?

Mon, 07/08/2013 - 23:43 | 3733164 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

@ Bay and others re Fekete

FOFOA sez that the USG could just make an offer one morning (any morning I suppose) to buy "Any and All Gold" for an arbitrary high price (say $5000 - $10,000 per oz), perhaps to pay down some debt and/or instill some confidence in the USA.  Sure they would get some, maybe even a little bit of mine (you never know).  But, this would be the new floor under the price of gold.

Freegold would likely then follow and fast!  The Treasury would get some gold, but not that much, as Freegold would likely hit fast under such a scenario,  Who wins?  Physical gold owners.  Who loses?  Everyone else exposed to hyperinflation.

Tue, 07/09/2013 - 02:18 | 3733357 trader1
trader1's picture

there's a very simple formula behind every balance sheet:

 

assets = liabilities + equity

 

to equalize the right hand side, the left hand side can be tweaked.  

Tue, 07/09/2013 - 05:14 | 3733441 jmcadg
jmcadg's picture

DoChen, any thoughts on silver here. FOFOA seems to believe silver will not revalue, just gold.

Tue, 07/09/2013 - 08:15 | 3733559 Acidtest Dummy
Acidtest Dummy's picture

Some people think silver is money, it is really just pocket change.I know you weren't asking me so, PROSECUTE THE WAR CRIMINALS!

 

Tue, 07/09/2013 - 15:37 | 3734974 MeelionDollerBogus
MeelionDollerBogus's picture

Silver has an anti-biotic role in a world of failing anti-biotics. Gold doesn't have that role. This is a game-changer because it's life and death for large swaths of the population.

Mon, 07/08/2013 - 22:33 | 3732937 HulkHogan
HulkHogan's picture

Great comment. '08 was our '29, and all the money printing still can't overcome deflationary forces to jumpstart the economy.

Mon, 07/08/2013 - 23:36 | 3733150 hootowl
hootowl's picture

That is because the fiat being created never enters the real economy.  It is just Monopoly fiat for the banksters.

Tue, 07/09/2013 - 02:18 | 3733358 Herd Redirectio...
Herd Redirection Committee's picture

Wait until their financing costs rise (due to rising interest rates) and they have to start paying interest on deposits.  Then those reserves will be lent out licketty split.

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