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The Golden Backwardation Rabbit Hole Gets Deeper: Subzero GOFO Slide Accelerates

Tyler Durden's picture


Yesterday we described the historic inversion in the Gold Forward Offered Rate, where the 1 and 3 Month GOFO rates sliding into negative territory for the first time since 2008 and 1999 respectively. Today, using the latest LBMA rate update, we observe that the gold backwardation is accelerating, and now the 6 Month GOFO has also joined the complex into sub-zero territory.

This is how we summarized the disturbing observation in the chart above, which as we said yesterday 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.

Today, the golden backwardation story goes mainstream, with the FT catching up:

The lack of liquidity in the leasing market has pushed gold forward rates, known as “gofo”, into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices – a rare situation that has occurred only a few times in the past 20 years. The last time forwards were negative was in November 2008, when a scramble for physical gold spurred a sharp price rally.


Traders said that investors were alert for the possibility that the current tightness could trigger a squeeze among hedge funds with short positions in gold, potentially driving prices higher. “It has piqued people’s interest”, said one senior precious metals banker. Gold was trading at $1,248.50 a troy ounce on Tuesday, up 5.8 per cent from a three-year low at the end last month.

Bottom line, whatever is causing the dramatic collapse in liquidity and/or collateral, it is certainly not letting up.


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Tue, 07/09/2013 - 15:43 | 3734987 Bay of Pigs
Bay of Pigs's picture

"A shortage of physical gold for a non-bullion bank market participant"

My money is on that one, even though "all of the above" could be accurate.

Tue, 07/09/2013 - 15:45 | 3734998 ghengis86
ghengis86's picture

Agreed. There's plenty of dollars out there thanks to Crtl P

Oh, fuck you Bernanke!

Tue, 07/09/2013 - 15:47 | 3735012 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

There's plenty of gold, it's just not in the places that it should be.

Tue, 07/09/2013 - 15:51 | 3735026 LawsofPhysics
LawsofPhysics's picture

Just the same, mind if we see that gold as well as the quality of all that other "collateral"?

Tue, 07/09/2013 - 15:59 | 3735054 Divided States ...
Divided States of America's picture

Its obviously that short term yields are rising because either there is a lack of WORTHY collateral out there OR that the quality of the collateral out there STINKS. The Fed has reached the breaking point in this experiment and they have lost all control of everything.

Tue, 07/09/2013 - 16:02 | 3735061 nope-1004
nope-1004's picture

Losing control, not lost yet.  But the air reeks of desperation, for sure.


Tue, 07/09/2013 - 16:05 | 3735065 cifo
cifo's picture

I especially liked this remark: “It has piqued people’s interest”.

I hope it's true.

Tue, 07/09/2013 - 16:16 | 3735106 Scarlett
Scarlett's picture

I so eagerly await for the "From conspiracy theory to conspiracy fact" on this one...  cmon....  blow up already!

Tue, 07/09/2013 - 16:21 | 3735125 Pladizow
Pladizow's picture

"Bottom line, whatever is causing the dramatic collapse in liquidity and/or collateral, it is certainly not letting up."


Tue, 07/09/2013 - 16:35 | 3735190 DoChenRollingBearing
DoChenRollingBearing's picture

This whole negative GOFO is worth monitoring without doubt, but it reflects futures and price of paper gold.  A sustained negative GOFO would be of more concern.

Tue, 07/09/2013 - 16:40 | 3735206 negative rates
negative rates's picture

I'm tellin my people to hold out on physcial delivery until the spot is raised some 30% from todays figures, Vegas style.

Tue, 07/09/2013 - 17:26 | 3735344 TruthInSunshine
TruthInSunshine's picture

The world's most interesting man says:


"I don't buy always buy precious metals, but when I do, I insist that I know...the actual fukkin' genuine thing I'm paying good fiat for."

Tue, 07/09/2013 - 19:47 | 3735666 Herd Redirectio...
Herd Redirection Committee's picture

Look, you have to pay more for gold delivered today, than you do for gold delivered in 1 month.

What does that tell you?  You are paying a premium!  Meaning, you are worried there will be no delivery in 1 month?  

Tue, 07/09/2013 - 22:47 | 3736199 0z
0z's picture

Perhaps the US' fear instillation is waning.

The market is considering that DC might lose control of one or more of their important colonies (Read Japan, southern Europe).

In which case, a wolrd medium-of-exchange monopoly starts to crack harder.

The market will never care how much physical gold there is or isn't in the Warlords' vaults,

as long as it believes they have the firepower to go get whatever amount of metal they might need whenever they so desire.

It's all about the Violence, folks.

P.S: US-based citizens' so-called personnal gold really isnt considered "their possession" by the marketplace. If they want it, they WILL come get it!

Tue, 07/09/2013 - 23:12 | 3736299 ghengis86
ghengis86's picture

Okay...who is that little pussy fuck that went through and neg reports everybody?

That you Ben? Kevin? Choomy-chalk?

Man up you limp dicked cunt!

Tue, 07/09/2013 - 23:22 | 3736346 Pinto Currency
Pinto Currency's picture


Negative GOFO at the LBMA indicates a physical problem.

Perhaps the Brits realize that Carney actually is batshit crazy and thinks he can achieve "escape velocity" by printing money.

Extraordinary physical demand for gold worldwide can only lead to further price decline.


Tue, 07/09/2013 - 23:01 | 3736256 laomei
laomei's picture

For every buyer there's a seller. Look who's doing the selling. It's the big banks that are dropping it like a hot potato.  Why the lower price on gold a month later?  Because they are shorting the hell out of it, it will go lower, and in the meantime they are selling for a higher price than it will be in a month, discount or not.  This isn't a "bargain", not by any standard.


Here's the sign to watch for, the big banks stocking up on more gold.  Till that happens it's just going to be essentially flat, or it's going to continue falling.  The paper makes it too easy to suppress.

Wed, 07/10/2013 - 01:46 | 3736581 fourchan
fourchan's picture

its just a transfer of gold confiscated from americans decades ago to china by the roth system.

Wed, 07/10/2013 - 03:47 | 3736705 saveandsound
saveandsound's picture


so who is the "world's most interesting man"?

Tue, 07/09/2013 - 16:42 | 3735213 RockyRacoon
RockyRacoon's picture

Understatement of the week (year?):

“It has piqued people’s interest”.

That translates into:  Many traders are scared shitless.

Tue, 07/09/2013 - 19:26 | 3735626 Alexandre Stavisky
Alexandre Stavisky's picture

I wonder how they are going to teach finance/economics in the future.  With every distortion caused by money unpinned from any constraint.  In my youth, there was only the communisim, socialism, mixed economy, market economy, free market economy dynamic.  Can't put the genie back in the bottle.  How to snow over another generation of youth once having seen the open racketeering collusion of state/money?

Gold has always and will always be the "go to" elemental backstop.  All think that the constructs of CBs are the ultimate backstop.  By what?  Coerced assumption upon all the acquired skills and labours and reserves of the "liberated" serfs.  But all the CBs of the world are in a fierce, if camouflaged, strategic withdrawal due to the press of superior foe:  USURY.

The growth paradigm which presumes upon the exploitation of resources, labour, entrepreneurial ability, saving/consumptive habits of the commons has been tapped out; even more, it has been pushed far beyond its carrying capacity.

Now is the time of the printing press, where weaning mankind from coin or the defining and constraining baseline of economy toward paper proxy is pushing its legitimacy by full abuse of confidence and promise-making.  Truth be known, the global inhabitants are shaking in their hovels, even the pirates are shaking in their purloined palaces.  This long-time-in-the-making and long-time-in-the-playing out of a strategic withdrawal by the nations of the world is a wonder of wonders.  Moving from country to country, like farmer from sown to fallow fields, the reserve currency holders have experienced their inevitable rise, pinnacle, and declines.  But, the USA wunderkind is unlike any other by uncounted factors of dimensions.

Field commanders keep sharp eyes upon all their units.  The greater coalition being a composite of all lesser groups.  Tyranny of military command is a necessity in face of death.  Tyranny hates nothing more than mutiny.  But mutiny happens in the peaceable spaces wherein a lesser organization organizes and sweeps out a greater to prosper THEIR self-defined need.  No one dare call retreat in the face of all superior force on the battlefield, mutiny.  It is ROUT!  And the currency wars are nearing a final chapter of the endgame!

Strategic withdrawal which is too slow in the face of fortified opposition,  who are fearless-due-to-conquest bloodlust, become a killing field.  Wise combatants who have seen many conflicts and sense that dense push in the fog of war, make hasty but structured retreat.

When that retreat is savaged by a better positioned, stronger foe, what is left?

ROUT!  Run for what little lives you have left.  No training, no fine assembly, no organizations among men remain.  So overwhelming has become the physics or dynamic action of the field that all higher order mental/physical constructions are abandoned.  EVERYMAN FOR HIMSELF.

The only remedy for disorderly retreat or full rout?  Superb Commander!  Rallying point.  Organic man falling back upon training.  And a rallying point of such soundness as to hold the mercurial confidence of newly defeated, nearly killed cowards.


When the full army begin to rout (as is evidenced everywhere globally), they will not rally to paper currencies mocking dead presidents or heralding (like Montefiore of Judea) sneaky conquest.  They rally, IF THEY RALLY, only upon the greatest rock, the most defensible rock, the utimately rallying spot where all renewals draw strength.

GOLD! Geld! Kin! OKane! Oro! Gulden! even Sterling!  The rest will be pitched with the dead, rotten, decaying, offal and execrement of the financial field of folly! To the worms.

Tue, 07/09/2013 - 21:50 | 3736056 exartizo
exartizo's picture

how poetic and graphic. :)

well written!

Tue, 07/09/2013 - 22:47 | 3736220 Scarlett
Scarlett's picture

They'll teach like today:  mostly about WW3.0 and the previous collapse period being mostly a sidenote.

Wed, 07/10/2013 - 02:01 | 3736602 terryfuckwit
terryfuckwit's picture

in civils and land survey we are rigorously tought about the risk of dangerously cumulative errors from using over elastic tape measures. even euro standard steel bands can be verified against vanadium bands which have superior lower expansion coefficients to heat. Yet every day i read so called phd fuckwit economists procrastinating about data based on the ultimate stretch armstrong bastardized fiat dollar unit of account...History will so mock these retards

Tue, 07/09/2013 - 16:43 | 3735214 Oh regional Indian
Oh regional Indian's picture

Yeah, look here. The Indian govt. is fighting tooth and nail to keep gold OUT of it's hungry buyers hands.

Who is pulling the strings..... note gold, dollar and oil are up together, of a sudden.....

 something wicked this way comes...

Tue, 07/09/2013 - 17:29 | 3735357 AssFire
AssFire's picture

Had to up vote you for not posting a link to your blog!

Tue, 07/09/2013 - 18:02 | 3735441 Tinky
Tinky's picture

Funny! But the Bradbury reference was worth something too.

Tue, 07/09/2013 - 18:50 | 3735539 AllThatGlitters
AllThatGlitters's picture

Mondern Version:  

"Beware my friend. shit winds are a comin."

Wed, 07/10/2013 - 03:25 | 3736689 Manthong
Manthong's picture

good observation, ORI

maybe the spirit  of Gresham is alive

Wed, 07/10/2013 - 02:11 | 3736618 kareninca
kareninca's picture

He's from India.  He's probably actually read SHAKESPEARE:

The phrase "something wicked this way comes" originates in Act IV scene 1, line 45 of William Shakespeare's play Macbeth. The speaker is the second witch, whose full line is, "By the pricking of my thumbs, something wicked this way comes." (Wikipedia)

Ray Bradbury, good grief.

Wed, 07/10/2013 - 03:46 | 3736704 Manthong
Manthong's picture

And thus I clothe my naked villany, … And seem a saint, when most I play the devil.” (King Richard III)

Tue, 07/09/2013 - 18:20 | 3735486 stacking12321
stacking12321's picture

what blog?

post a link, please!

Tue, 07/09/2013 - 23:18 | 3736323 gtb
gtb's picture

I, for one, appreciate your attempt at humor. 

Wed, 07/10/2013 - 01:52 | 3736589 stacking12321
stacking12321's picture

kind of you to say so.

it's a thankless job, being a contrarian.


Tue, 07/09/2013 - 19:03 | 3735563 DosZap
DosZap's picture

Yeah, look here. The Indian govt. is fighting tooth and nail to keep gold OUT of it's hungry buyers hands.


Oh Regional, and just how is that NOT working out?, lol.If Joe 6 Pack in India cannot afford Au,they are piling into Ag.So the Goobermint, is still screwed as far as propping up the currency value.

Catch 22.

Tue, 07/09/2013 - 19:25 | 3735613 fiddler_on_the_roof
fiddler_on_the_roof's picture

No, Indians are not piling into Silver. They are going into smuggling route, they are familiar with. smugglers supply jewellers.No Govt can fix this.

Silver imports are dropping in India. You just made a statement -"If Joe 6 Pack in India cannot afford Au,they are piling into Ag" without any data.

 When Gold price goes down, Indian just buy more of it or if Govt restricts, they just smuggle it.

Even "Oh regional Indian" does not know what he is talking about.


If paper price crashes when GOFO is negative, Gold bugs will vomit their Gold. I hope I will have the nerves to hold tight as FOFOA says.

Tue, 07/09/2013 - 20:47 | 3735809 ArgentoFisico
ArgentoFisico's picture

Indian silver imports are dropping?

at 7:40

Tue, 07/09/2013 - 21:45 | 3736032 tmosley
tmosley's picture

Dropping from WHAT? They imported the entire world's silver production a couple of months ago, all on the books and public-like.

SRSRocco had a good write up on it, and he isn't the only one:

So now why don't you provide your source for your claim of dramatically falling silver imports?

Wed, 07/10/2013 - 01:33 | 3736575 merizobeach
merizobeach's picture

That's fascinating.  At 2400 tonnes from Jan - May, India has imported 20% of the world's silver production so far this year.

Tue, 07/09/2013 - 23:03 | 3736263 DeadFred
DeadFred's picture

Gold bugs do not vomit up their gold, they have it pried from their cold, dead hands.

Tue, 07/09/2013 - 16:10 | 3735084 fonzannoon
fonzannoon's picture

I can't think of any other reason DS. The only think I thought they had control over was short term yields. Apparently not.

Tue, 07/09/2013 - 17:34 | 3735377 Harbanger
Harbanger's picture

These central planners in charge are not as smart as most people think, we read too much into their actions.  Who are they really? They were raised as "priveleged" over-awarded spoiled bastards that are going to cry uncle when their plans backfire.  Their recent trade agreement plans  to create a false king dollar is going to smack them in the face when they realize they have no power over the global markets. 

Tue, 07/09/2013 - 21:57 | 3736078 RockyRacoon
RockyRacoon's picture

Here's a tidbit for those who will have to buy/sell their precious metals at some time in the future.  The current legal situation on taxation.  At least until the rules are changed that is.

IRS Reporting Rules for Cash Transactions and Precious Metals
Wed, 07/10/2013 - 00:10 | 3736450 DoChenRollingBearing
DoChenRollingBearing's picture

+ a really big one!

Thanks, Rocky!

Tue, 07/09/2013 - 20:45 | 3735807 Jumbotron
Jumbotron's picture


Head of Fukishima Plant Dies of Throat Cancer

Wed, 07/10/2013 - 00:02 | 3736438 Bringin It
Bringin It's picture


Wed, 07/10/2013 - 02:05 | 3736611 fourchan
fourchan's picture


Wed, 07/10/2013 - 04:24 | 3736732 Herd Redirectio...
Herd Redirection Committee's picture

"No deaths have been directly attributed to the radiation released by the accident, but it has displaced tens of thousands of people and left large areas of land uninhabitable, possibly for decades."

Well isn't that nice. /s

Tue, 07/09/2013 - 16:13 | 3735095 Its Only Rock N Roll
Its Only Rock N Roll's picture

Indeed they have.  Since we do not have true price discovery in markets the realization of such and lack of liquidity will continue cause major dislocations in the markets.  Equities will have their day of reckoning. 

Tue, 07/09/2013 - 17:53 | 3735417 Harbanger
Harbanger's picture

The sole purpose of an unmanipulated market is price discovery.  That's when we discover the BS they're selling ain't worth the paper it's printed on.

Tue, 07/09/2013 - 19:47 | 3735667 Alexandre Stavisky
Alexandre Stavisky's picture

And historically, how do you turn the nation among nations which holds preeminence in nearly every field of endeavour, and whose people are highly educated, sophisticated, wealthy (before the rug-pull), and cultured into a nation that attacks all its neighbors and any weak groups or "traitors" within its ranks?

Destruction of the money.  Destruction of the institutions.  Dilution of all those containers of the unseen human values that society deposits its future and hopes into.  Sudden, step function-like, fractures in all social contracts.

And no man of corporeal body can resist the hot anger kindled in true fury by such devestating betrayal.

And what if that betrayal comes to an entire globe, not nation?

The aggrieved and human hostility will form a point.  And that point will quench only in destruction.

Tue, 07/09/2013 - 21:14 | 3735751 Harbanger
Harbanger's picture

Yes, we may have been a nation among nations which held preeminence, but in our emotional quest for fairness, we've degenerated into the common average. I'm not sure why, except our obvious opulance. But I do know where we should be. We're certainly seeing global betrayal but it all starts personally at home. Who are you?, I ask my kids. I make sure they think about that. I'm a pretty straightup tuff hard working successful no nonsense guy. But I'll tell you something, my adopted daughter, now 10yrs old, made me cry like a bitch when she sang "you raise me up" to me at her school.



Tue, 07/09/2013 - 21:30 | 3735994 Spanky
Spanky's picture


For a frank admission...

...but in our emotional quest for fairness, we've degenerated into the common average. I'm not sure why... -- Harbanger

The term propaganda applies here, insofar as emotion trumps reason. The one-eyed-god is an emotional medium and jealous of its power.

Tue, 07/09/2013 - 23:18 | 3736325 DeadFred
DeadFred's picture

My experience says it will make a great father-daughter waltz for her wedding in a few years.

Tue, 07/09/2013 - 16:19 | 3735122 resurger
resurger's picture

or maybe traders are moving from "Registered" to "Eligiable"

Tue, 07/09/2013 - 17:16 | 3735315 Kprime
Kprime's picture

we will let you see it in 7 years.  that's our 1st available appointment.  trust us

Tue, 07/09/2013 - 15:51 | 3735027 derek_vineyard
derek_vineyard's picture

spx has been in backwardation for are treasuries


Tue, 07/09/2013 - 15:53 | 3735032 disabledvet
disabledvet's picture

that's funny. i was going to say the same thing about cash. thank God taxes are going down and transparency is at an all time high on "how it all is being spent."

Tue, 07/09/2013 - 17:50 | 3735416 alfred b.
alfred b.'s picture


      Right, there is plenty of gold just not where it should but, also important, neither at this give-away price!!


Tue, 07/09/2013 - 18:03 | 3735444 Oldballplayer
Oldballplayer's picture

I checked my safe this morning. The gold is right where it should be.

Tue, 07/09/2013 - 20:30 | 3735755 Zadok
Zadok's picture

I'll strap on some tri-mix this weekend and see if it is still where I last lost it!

Tue, 07/09/2013 - 21:32 | 3736002 Spanky
Spanky's picture


For the mix reference...

Tue, 07/09/2013 - 18:33 | 3735509 DosZap
DosZap's picture

There's plenty of gold, it's just not in the places that it should be.


Yep, it's called middle Eastern hoarding, China is taking 50% of total world production now.And they are the largest miners of Gold on the planet(and they ain't selling).Add a dash of India(lol,largest holder on the planet as of today,and still piling it up,and we know they are selling-NOT), and Russia,and you quickly see where it is going.The folks liquidating treasuries and bonds are ramping up the interest rates on same.The Fed is taking 90.5%,of them as it is.

So we are going to see LESS QE?.

Tue, 07/09/2013 - 23:07 | 3736276 Scarlett
Scarlett's picture

this is the dollar... losing reserve currency status

Tue, 07/09/2013 - 16:00 | 3735048 SRSrocco
SRSrocco's picture

We had 120,000 ounces of gold withdrawn from the Comex yesterday, and another almost 100,000 taken off today, pushing the total down to 7.2 million oz.  At this rate, the Comex gets into real trouble by the end of the summer.

Now, at the Shanghai Futures Exchange, it looks as if nearly 50% of their silver stocks have been removed since the big take-down in the price of silver in April.

Shanghai Silver Stocks Fall Nearly 50% Since April

Tue, 07/09/2013 - 16:08 | 3735077 Kaiser Sousa
Kaiser Sousa's picture

thanks for the heads up...

and i will be removing some 'mo from my dealers shop tomorrow as well...

stupid fucking bankers....


Tue, 07/09/2013 - 16:22 | 3735135 Pladizow
Pladizow's picture

Could it be that this Comex physical is being moved to another exchange?

Tue, 07/09/2013 - 17:29 | 3735358 TheGardener
TheGardener's picture

"Could it be that this Comex physical is being moved to another exchange?"

Kind of five brothers banking happily on each continent
could restrain themselves from selling all their and their customers gold back and forth to each other a hundred fold for any desired quote at the end of the day ?

Tue, 07/09/2013 - 16:19 | 3735117 eclectic syncretist
eclectic syncretist's picture

China has already imported 20 million ounces so far this year alone, so the 7 million ounces at the COMEX shouldn't bring a feeling of comfort to anyone who has physical stored there.  It could all be gone in a hurry, and with Corzine getting away with stealing customers holdings, why shouldn't the COMEX and the Banksters?

Tue, 07/09/2013 - 16:23 | 3735138 Father Lucifer
Father Lucifer's picture

Picked up 2 Eagles yesterday, first time buyer. Waited almost a week for delivery, and if I wanted more I'd have to wait a week again.

Tue, 07/09/2013 - 16:44 | 3735217 pupton
pupton's picture

Don't forget to buy some silver.  It is only 1/65 as expensive as gold per ounce, and may offer a better return in an up market, if we ever see one again.

Wed, 07/10/2013 - 00:44 | 3736506 AT
AT's picture

Then why not buy copper?

Wed, 07/10/2013 - 04:25 | 3736733 aphlaque_duck
aphlaque_duck's picture

Very low value to weight means high storage and shipping costs. Insane premiums. Copper bullion exists, but it's a novelty.

That said, I have a nice stack of THHN in the garage that I'll be holding onto.  ;)

Tue, 07/09/2013 - 17:26 | 3735347 tao400
tao400's picture

Thats not long at all. But congrats on the purchase. Silver is real cheap. you should get a 100 ounce brick to add to your hoard

Tue, 07/09/2013 - 18:06 | 3735450 Tinky
Tinky's picture

Someone on this site, possibly Devine Wind, posted this related gem not too long ago:

There is a Chinese proverb that I love, and it applies to PMs as well.

It goes: "The best time to plant a tree is 20 years ago. The second best time is now."


Tue, 07/09/2013 - 17:24 | 3735341 Go Tribe
Go Tribe's picture

My head is spinning. Does this mean the Chinese are selling silver to buy gold?

Tue, 07/09/2013 - 16:21 | 3735112 Silveramada
Silveramada's picture

zero contango bitchez .... short squeeze coming soon in this theatre!


 updates later:

Tue, 07/09/2013 - 15:49 | 3735009 The Thunder Child
The Thunder Child's picture
"An ongoing bullion bank failure with or without an associated allocated gold bank run"

I'm going for this one BoP because of the COMEX drainage, but let's hope we're both right!
Tue, 07/09/2013 - 15:49 | 3735022 fonzannoon
fonzannoon's picture

I said the same below Thunder, If this is really taking place right now I'd expect the banks getting stiffed have a gun to their head and are being told to take cash and stfu about it.

Tue, 07/09/2013 - 16:02 | 3735060 The Thunder Child
The Thunder Child's picture

Great minds think alike! You'll do very nicely off those mining shares one day that I am sure of. I don't always post but I almost always read the comments.

Tue, 07/09/2013 - 17:27 | 3735350 reload
reload's picture

Only if miners can keep their assets out of the clutches of creditor banks. For that they need much higher metal prices imminently.

Right now I have a feeling creditor banks are plotting all manner of equity splits, debt for equity swaps etc designed to wipe out any value holders of common stock currently have left.

Tue, 07/09/2013 - 16:04 | 3735066 disabledvet
disabledvet's picture

i do agree Chinese Banks have been a notorious under performers...pretty much forever now. it remains to be seen whether or not Citigroup has learned it's lesson about being a State Actor as well. How about those "ruthless English Banks." (cough, cough...RBS, Lloyds, Northern Rock etc...cough, cough.) eh. Switzerland? friggin TOOL comes to mind on that front. even Goldman seems to be all in on "Sychophancy" these days. "we set our gaze upon the various 50 States now" for cold, ruthless and heartless lenders i'm afraid. everything else is nothing more than a made for tv movie. the irony that they exist to profitably support state and local workers is not lost on me "with an occasional railroad" (that doesn't lie about turning the brakes off) or "wildcatting oil concern" (that really does pump out the goo) thrown in just in case. why do i feel like something really stupid is about to happen? that the internal (control) fraud detector should be set to maximum alert? i can't wait to read about it AFTER it happens of course...

Tue, 07/09/2013 - 15:48 | 3735014 Stuart
Stuart's picture

when exchanges default and opt for cash settlement, what's the reported price of gold then?  What is Kitco going to show?  It's certainly not the exchange price, they don't have any as per the cash settlement.   AM/PM spot will be meaningless if deliveries are in cash, so again, what's going to be the reported price.  Can't be the COMEX if they default.  Shanghai?

Tue, 07/09/2013 - 15:58 | 3735052 NotApplicable
NotApplicable's picture

I would assume they have no visible effect upon the spot price, as settlement occurs after the fact.

Now, in a rational world, more would pile into the trade in order to earn these premiums (as reported by Harvey Organ, Jim Wilie, et al.).

But here in reality land, those people get Corzined (ask one Mr. Celente).

Tue, 07/09/2013 - 16:06 | 3735072 disabledvet
disabledvet's picture

the exchange still needs access to credit. the fact that they have NEVER had any cash is still consequential. I DEMAND CHICAGO AS COLLATERAL!

Tue, 07/09/2013 - 16:51 | 3735239 malikai
malikai's picture

Don't bother. Unless you plan on kicking out half the population and all the politicians, it aint worth it.

Tue, 07/09/2013 - 22:21 | 3736131 disabledvet
disabledvet's picture

fine. i'll just take the women then...

Tue, 07/09/2013 - 17:05 | 3735285 Captain Benny
Captain Benny's picture

Chicago would be great collateral if you can manage to acquire all those "illegal" guns they seem to have there!  Its not so great if you dislike bloody corpses...

Tue, 07/09/2013 - 17:21 | 3735330 Bullionaire
Bullionaire's picture

I was in CHI yesterday.  Didn't see any bloody corpses, but I DID see Jim Sinclair speak.  He made it clear that there will be no exchange defaults, just "alternate delivery methods" imposed (and he was part of the Hunt Bros. debacle).  He also mentioned several times that the timing of yesterday's event was propitious for anyone who hadn't already heeded his call to GOTS (get out of the system).

Tue, 07/09/2013 - 18:04 | 3735447 nope-1004
nope-1004's picture

what was yesterday's "event"?


Tue, 07/09/2013 - 18:09 | 3735462 Tinky
Tinky's picture

Cavaliers offered Andrew Bynum $24m for two years. 

Tue, 07/09/2013 - 21:52 | 3736063 Herd Redirectio...
Herd Redirection Committee's picture

GOFO going negative....

Tue, 07/09/2013 - 22:23 | 3736137 disabledvet
disabledvet's picture

cavalier indeed. any Demon Deacons in the House this PM?

Wed, 07/10/2013 - 00:32 | 3736481 Jam Akin
Jam Akin's picture

Yesterday's event was an afternoon with Jim Sinclair in person in downtown Chicago.  Seemed to be about 1000 people there.  Sinclair was more direct in his comments than he tends to be in his writing/site.  His main point was the bank derivative problem was never really cleaned up, merely covered over by easy money and favorable FASB rules.  She's gonna blow at some time in the next several years.  Thus: get out of the system or "GOTS".  I'm guessing most folks here are down with this message/program already.   He also expects a run up in metals starting this week until August 2014, then another crush down in prices (why this timing was not clear) before the final sprint to much higher price levels for metals and select mining shares.

Tue, 07/09/2013 - 16:52 | 3735241 debtor of last ...
debtor of last resort's picture

Stuart, that's where Gordon Gekko comes in:

Tue, 07/09/2013 - 16:42 | 3735212 pupton
pupton's picture

Too bad the LBMA bastards decided to hide the Silver Forward Rates late last year, or the world might know that paper game is already up.

Tue, 07/09/2013 - 17:52 | 3735420 Wile-E-Coyote
Wile-E-Coyote's picture

All of the above, fuck yeah!!

Tue, 07/09/2013 - 19:16 | 3735598 sgorem
sgorem's picture

can't find a damn can of gold spray paint anywhere in the NYC area & a friend said the same problem was happening in London area too. whats up with that i wonder? :)

Tue, 07/09/2013 - 21:52 | 3736064 Herd Redirectio...
Herd Redirection Committee's picture

The tungsten bars need a couple coats at least, I figure.

Tue, 07/09/2013 - 22:02 | 3736086 Groundhog Day
Groundhog Day's picture

When you have that many options on a multiple choice question/answer it is usually "all of the above"

Wed, 07/10/2013 - 06:14 | 3736775 Zoran
Zoran's picture

Need I remind anyone of the infamous Gold Bubble charts...

It's a long way down. Or up.

Tue, 07/09/2013 - 15:43 | 3734989 Legolas
Legolas's picture

The air is just thick with the smell of impending calamity.

Tue, 07/09/2013 - 16:13 | 3735093 Kaiser Sousa
Kaiser Sousa's picture

you aint never lied....

"Holdings in the SPDR Gold Trust, the world’s largest exchange-traded product backed by the metal, fell below 1,000 metric tons for the first time in four years, erasing more than $29 billion from the fund’s value this year.  In 2013, the assets have slumped 351.3 tons, or 26 percent, to 999.56 tons, the lowest since February 2009, according to data compiled by Bloomberg. Holdings reached a record 1,353.35 tons in December. Billionaire John Paulson is the biggest investor in the fund."

Tue, 07/09/2013 - 17:48 | 3735409 Al Huxley
Al Huxley's picture

As of today, 939.75 tons of inventory.

Tue, 07/09/2013 - 20:00 | 3735696 Legolas
Legolas's picture

Ahh, visions of an old fashioned stage coach robbery, or a great train heist come to mind. 


Tue, 07/09/2013 - 15:45 | 3734993 Buzzworthy
Buzzworthy's picture

GOFO is as manipulated as all the other metrics.  If you believe this is only happening now, FOFOA has a drone to sell you.  There is good reason to believe the GOFO has been negative for years already.  Edu-ma-cate thyselves.

Oh, and donate to the man too.  He needs more shekels.



Tue, 07/09/2013 - 15:49 | 3735017 Al Huxley
Al Huxley's picture

Yeah, I like what he has to say - great analysis of some pretty forward-thinking (or extremely well-informed inside info) from 15 years ago.  But I think this is still relevant, in that what's been going on behind the scenes for years has now flowed all the way down into the public paper markets.  I think this is significant - paper manipulation depends on a nominal amount of physical gold to give credibility to the excess paper claims.  When that credibility runs out, the paper manipulation falls apart.


Edit - if FOFOA is right, he won'tneed any donations when the revaluation comes...

Tue, 07/09/2013 - 17:52 | 3735422 Buckaroo Banzai
Buckaroo Banzai's picture

If GOFO is manipulated, and has actually been negative for years, what does it mean that it is now being displayed as negative? That they have deliberately stopped manipulating it? Or that they can't manipulate it any longer?

Tue, 07/09/2013 - 23:16 | 3736317 nope-1004
nope-1004's picture


Tue, 07/09/2013 - 16:03 | 3735063 Handful of Dust
Handful of Dust's picture

Good article. This would h lep expalin why gold is heading back up...among other reasons such as continued QE.

Tue, 07/09/2013 - 17:02 | 3735272 Bastiat
Bastiat's picture

And independent pricing in a true cash market in Singapore.

Tue, 07/09/2013 - 18:12 | 3735466 Tinky
Tinky's picture

and the best of all: *they* are really beginning to lose control.

Tue, 07/09/2013 - 16:35 | 3735170 Maestro Maestro
Maestro Maestro's picture

FREEGOLDERS say that only fiat or "worthless tokens" [in FOFOA's words] should be money.


FREEGOLDERS say that money cannot have intrinsic value.  According to FREEGOLDERS, money is only credit.


Now who says the same thing?


Bernanke, right [Mr. 'gold is just a tradition']?


Today's bankers, no? (Bernanke is JP Morgan's employee since JP Morgan is one of the owners of the Federal Reserve.)


Who else works for the bankers?






After all, why does FOFOA proclaim that only "worthless tokens" can be money and NOT gold?


If FOFOA likes gold; ask yourselves, why is he against gold as another form of money side to side with paper money?


FOFOA = Banker


Tue, 07/09/2013 - 16:48 | 3735228 AuEagleNest
AuEagleNest's picture

Maestro Maestro. Do you always double post? Do you always double post?

Tue, 07/09/2013 - 16:36 | 3735171 Maestro Maestro
Maestro Maestro's picture

FREEGOLDERS say that only fiat or "worthless tokens" [in FOFOA's words] should be money.


FREEGOLDERS say that money cannot have intrinsic value.  According to FREEGOLDERS, money is only credit.


Now who says the same thing?


Bernanke, right [Mr. 'gold is just a tradition']?


Today's bankers, no? (Bernanke is JP Morgan's employee since JP Morgan is one of the owners of the Federal Reserve.)


Who else works for the bankers?






After all, why does FOFOA proclaim that only "worthless tokens" can be money and NOT gold?


If FOFOA likes gold; ask yourselves, why is he against gold as another form of money side to side with paper money?


FOFOA = Banker


Tue, 07/09/2013 - 17:25 | 3735343 Bullionaire
Bullionaire's picture

Wrong.  Jim Sinclair said yesterday in Chicago that gold will not be remonitized.  Gold for savings, fiat for spending.

Tue, 07/09/2013 - 17:34 | 3735370 ATM
ATM's picture

Exactly. We aren't going to use gold to pay for things, it isn't currency. It is money - a store of wealth.

Tue, 07/09/2013 - 21:57 | 3736077 Herd Redirectio...
Herd Redirection Committee's picture

Gresham says, if there is still fiat alongside, the fiat will be used day to day.  People won't transact in gold while there is 'bad money' that can be used instead.

Tue, 07/09/2013 - 23:18 | 3736324 Scarlett
Scarlett's picture

1st it loses "store-of-value"  

then it loses "unit of account", as everyone flips and start re-measuring everything in terms of Au

Wed, 07/10/2013 - 00:39 | 3736497 Maestro Maestro
Maestro Maestro's picture

You're all full of shit.


You're all "freegolders".


You're all lying vermin.


As long as gold and silver are not money, we will suffer.  Period.


NOTHING man-made or man-decreed can be money.  Money must have intrinsic value.  That is, its value must not be determined by man.  If it is, then it will be FRAUD.

We are not the center of the universe.


We are not God.


As long as we think we are God, we will live in HELL.


Use gold as money and stop pretending you're God.


This has NOTHING to do with religion.


It's just good sense.




When was the last time you decided to think what you thought?


The answer is NEVER.


So you know SHIT.


STOP pretending that you know 'cause knowledge itself is a proposition that's in contradiction with its premise: that we must know before we can know.


No one decided that sugar is sweet or that fire is hot.


It's just reality.


Just like gold is money.



Wed, 07/10/2013 - 01:08 | 3736542 Jam Akin
Jam Akin's picture

You WERE on Seinfeld, weren't you?

Wed, 07/10/2013 - 01:57 | 3736543 Jam Akin
Jam Akin's picture


Wed, 07/10/2013 - 03:06 | 3736676 dwayne elizando
dwayne elizando's picture

You're mistaking the premise. "Freegolders" aren't necessarily promoting the theory. Another stated "If you don't like this system, you'll hate the next one!". The freegolders are a special breed of speculators. Their existance is similar to that of perpetual rape victims betting on how they'll get raped next and trying to manage the rape to the best of their ability! The god complex is that of the rapists, not the victims!

Wed, 07/10/2013 - 15:12 | 3738548 Maestro Maestro
Maestro Maestro's picture

I'm not mistaking anything.

The HEAD Freegolders like Another/FOA/FOFOA and ESPECIALLY the real people these work for, i.e., the biggest international bankers, are "rapists" and hence think they're God, as you say.

The "shrimps", as the sheeple/acolyte Freegolders refer to themselves, are the "victims" who are stupidly trying to manage their next rape.

BOTH groups are a bunch of despicable idiots.


Interestingly, the relationship between the leader class Freegolders and the "shrimp" Freegolders is very much like that which exists between highest 33rd degree etc. Freemasons and the "shrimp" Freemasons who become Freemasons for self-interested reasons.

Tue, 07/09/2013 - 16:55 | 3735247 Ignorance is bliss
Ignorance is bliss's picture

I sent clams his way last week. Discovered his site a couple months ago. Interesting logic.

Tue, 07/09/2013 - 15:44 | 3734995 IridiumRebel
IridiumRebel's picture

You know what this means, right?
It means gold is going to be bought and people. True.

Tue, 07/09/2013 - 15:47 | 3735013 Buckaroo Banzai
Buckaroo Banzai's picture

you mean unlike the stock market, where stocks are bought and sold... by machines?

Tue, 07/09/2013 - 15:50 | 3735024 IridiumRebel
IridiumRebel's picture

I apologize for forgetting my /sarc tag.

Tue, 07/09/2013 - 16:27 | 3735156 knukles
knukles's picture

none needed... why would anybody knock that, I wonder...

Tue, 07/09/2013 - 16:59 | 3735264 Ignorance is bliss
Ignorance is bliss's picture

I don't know, but manners are so scarce it's nice to see them every once in awhile. Makes me think we are civilized.

Tue, 07/09/2013 - 22:28 | 3736149 disabledvet
disabledvet's picture

stop it i'm gettin' misty.

Tue, 07/09/2013 - 18:05 | 3735448 TheGardener
TheGardener's picture

Gold being sidelined all the better for long term gold bugs.

Too much attention and it ain`t a hedge.

Be careful what you wish for : Fiat getting worthless ?
Why not revalue gold at 300 $ ? Ready for a great reset ?

Funny how people hell bent to better our current fully destructive path think anything has to move up instead of down. Gold is not exempted. It will hold great potential
as a means of exchange if plain robbery becomes out of
socialist Robin Hood fashion.

Means of exchange ? Maybe .

Means of storing labor and lifetime risk-taking ? Yes.

Plunge into gold at zero hedge and forget about it.

You are in the matrix, consider yourself being on earth.

Tue, 07/09/2013 - 15:45 | 3734997 Al Huxley
Al Huxley's picture

maybe it's caused by all those smarmy cocksuckers selling gold they don't have, and now having a hard time delivering.

Tue, 07/09/2013 - 15:46 | 3735004 IridiumRebel
IridiumRebel's picture

Al, babe, they're doing God's work....if God were Satan and completely evil.

Tue, 07/09/2013 - 15:49 | 3735023 Al Huxley
Al Huxley's picture

Demons in Armani suits and ties, no doubt.

Tue, 07/09/2013 - 15:54 | 3735037 IridiumRebel
IridiumRebel's picture

Devil dont wear Men's Wearhouse.

Tue, 07/09/2013 - 16:20 | 3735128 McMolotov
McMolotov's picture

I heard he wears Prada.

Tue, 07/09/2013 - 16:36 | 3735194 Father Lucifer
Father Lucifer's picture

The devil wears whomever is willing.

Tue, 07/09/2013 - 17:38 | 3735389 ATM
ATM's picture

Not Armani. The devils wear Henry Poole.

Tue, 07/09/2013 - 15:46 | 3735003 fonzannoon
fonzannoon's picture

"An ongoing bullion bank failure with or without an associated allocated gold bank "run"

That is an interesting one. Especially if it's without. So they just settle in cash and move along?

Tue, 07/09/2013 - 15:48 | 3735018 IridiumRebel
IridiumRebel's picture

Sure, Fonz. Nothing to see here....just your run of the mill "we can't satisfy orders cuz we've been lying through our fiendish teeth" mild collapse of a bullion bank. This is why phyz is the shizz.

Tue, 07/09/2013 - 15:56 | 3735045 fonzannoon
fonzannoon's picture

I'm gone Iridium. ZH could put out an article that UBS and DB are about to go tits up because JPM was storing their gold and lost it in a shipping accident and I would shrug.

I am going to drift along with jazz music playing in my head talking nonsense to myself until I actually see something happen.

Tue, 07/09/2013 - 16:10 | 3735083 IridiumRebel
IridiumRebel's picture

For the most part I've got my stuff in place. I await the cataclysm. I know I think I can handle it but we shall see when we hit the rocks.!you can't get emotional. Patience. We know where this leads. I've managed to stay even. I make no money and that which is made mitigates other areas of loss like miners. It is what it is! At least we are awake and will know before most others when the crumbling speeds up.

Tue, 07/09/2013 - 16:10 | 3735068 ekm
ekm's picture

No, if the bets are leveraged to 50 , 100 etc

They do not have enough stuff to sell to cover the bet loss


It's all and all about LEVERAGE

Tue, 07/09/2013 - 16:15 | 3735103 Al Huxley
Al Huxley's picture

Yeah, the magic of reverse leverage.  A real bitch, it can be.

Tue, 07/09/2013 - 16:18 | 3735118 fonzannoon
fonzannoon's picture

I sure hope at some point it turns into a real bitch. The suspense is brutal.

Tue, 07/09/2013 - 16:51 | 3735238 Seer
Seer's picture

"So they just settle in cash and move along?"

It worked at a pretty large scale back in 1971...

Tue, 07/09/2013 - 17:33 | 3735367 KickIce
KickIce's picture

If your talking jusy stiffing individuals it might work.  Not so much if a country is asked to take one up the tailpipe, especially if said country isn't so fond of the dollar.

Tue, 07/09/2013 - 22:46 | 3736212 Alexandre Stavisky
Alexandre Stavisky's picture

70's.  Petrodollar and consolidation of many global monopolies.  Opening of exploitation of 1 billion chinois trabajadors.  Unilateral, overwhelming war in SE Asia.

Now?  Stand and deliver, because all the big game pieces are off-table.

Printing.  The Big Fix. But the sheeple just aren't that stupid anymore, except maybe the dependent palm up and outers.

They're already dead and don't know it.

But besides printing and the manipulations that is its object?  Transparent Desperation.

Torches lit, sharpened edges, crowd gathered.  Objects of ire?  Still foolishly plotting the continuation.

Do NOT follow this link or you will be banned from the site!