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Physical Gold Shortage Goes Mainstream

Tyler Durden's picture




 

While the topic of rehypothecation and the shortage of physical gold is well covered here at Zero Hedge (and the ever-changing COMEX gold vaults' inventories), it appears the concept of the exploding "leverage" or default risk of the COMEX has now hit the mainstream media. As BNN reports, veteran trader Tres Knippa, pointing to recent futures data, says "there may not be enough gold to go around if everyone with a futures contract insists on taking delivery of physical bullion." As he goes on to explain to a disquieted anchor, "the underlying story here is that the people acquiring physical gold continue to do that. And that’s what is important," noting large investors like hedge fund manager Kyle Bass are taking delivery of the gold they're buying. Knippa's parting advice, buy physical gold; avoid paper.

 

One of the problems...

That won't end well...

And the excellent summary from a veteran trader:

 

Knippa warns that if 1 entity asks for delivery of a position-limit-size long in gold, it will absorb 81% of COMEX's inventory... and if 2 entities were to do so... COMEX has a problem...

 

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Sat, 01/18/2014 - 19:22 | 4344776 localsavage
localsavage's picture

Selling something that you don't have is a crime right???????

Sat, 01/18/2014 - 19:32 | 4344784 GetZeeGold
GetZeeGold's picture

 

 

 

Not if you're Jon Corzine.

 

Pretty hard for someone to sell your gold if you have it in your hand however. If you don't hold it....you don't own it.

Sat, 01/18/2014 - 19:40 | 4344805 Say What Again
Say What Again's picture

You guys are confusing the physical gold from the futures contract.

If I buy a gold futures contract, I am buying a contract from a counter-party that promises to deliver a certain amount of gold at some time in the future for a specified price.

So the thing being sold is a contract, not the gold.  The aggregate nominal value of all the gold futures can, and does, exceed the physical supply most of the time, because at expiration, many of the contract cancel out (e.g., long against short).

COMEX limits the size of a single entity so that they can not corner the market.  They also try to maintain records of the available underlying commodity to reduce the chance of fail-to-deliver scenarios.

Sat, 01/18/2014 - 19:43 | 4344818 Manthong
Manthong's picture

"there may not be enough gold to go around if everyone with a futures contract insists on taking delivery of physical bullion."

http://www.youtube.com/watch?v=J6_1Pw1xm9U

..anybody with the need or enough capital to play that game knows its a cash only deal.

Sat, 01/18/2014 - 20:02 | 4344855 negative rates
negative rates's picture

Told ya so, it was the banker, in the pool room, with the document.

Sat, 01/18/2014 - 20:47 | 4344941 fonestar
fonestar's picture

Let's play Jenga with the modern world and pull another coin out!

Sat, 01/18/2014 - 21:45 | 4345043 Unpopular Truth
Unpopular Truth's picture

yeah... the goldcoin :)

Sat, 01/18/2014 - 23:25 | 4345228 Squid-puppets a...
Squid-puppets a-go-go's picture

Hey doeant COMEX have shareholders / owners, and isnt there a TRUSTEE of the organisation.

If so , doesnt that TRUSTEE have a legal obligation to pull the pin on the company given its 112 to one obligations

Sun, 01/19/2014 - 02:51 | 4345423 Pinto Currency
Pinto Currency's picture

Graphs for those who want detail.

http://jessescrossroadscafe.blogspot.co.nz/2014/01/comex-warehouse-potential-claims-per.html

 

Each day, the LBMA trades 900x the volume of daily global gold production from mines.

That's paper moving at the speed of light.  No wonder it burns up.

http://www.safehaven.com/article/32394/for-prime-minister-cameron-re-lbma-gold-trading

 

Sun, 01/19/2014 - 11:33 | 4345811 FranSix
FranSix's picture

Got Gold Report posted this same chart as well as others through Tocqueville Funds' pdf.  This is not the number of futures contracts vs. available physical, but the fractional reserve of gold.  I suppose the ratio of owners to physical gets a lot of attention, but the whole picture is very compelling.

One thing people are looking over is the importance of gold price fixing allegations since German regulators pulled Deutsebank.  Options expiry on derivatives contracts is Tuesday, and I believe most of the financial interest in the gold market has gone over into this type of trading.

http://www.gotgoldreport.com/2014/01/tocqueville-gold-strategy-investor-letter-year-end-2013.html

Sun, 01/19/2014 - 11:40 | 4345820 Bendromeda Strain
Bendromeda Strain's picture

But nobody ever actually say's "give me the gold".... do they?

https://www.youtube.com/watch?v=bZfyrIPw3wY

Sun, 01/19/2014 - 11:44 | 4345830 Bendromeda Strain
Bendromeda Strain's picture

The dude tells the truth about gold - which is why they make him wear a WACO sign (the one on his back says KIKME)

Sun, 01/19/2014 - 19:43 | 4346912 CMEtrader
CMEtrader's picture

 

I wear WACO on my badge because that is my trading symbol.  You get to pick.  Most people use thier initials but my initials are HCK.  If my symbol was HCK then everyone would call me HICK.  I challenge you to find a Texan who wants to be called HICK.   I chose WACO because I did my undergraduate at Baylor University in Waco, Texas.  

 

Tres Knippa

Sun, 01/19/2014 - 10:35 | 4345716 Black Swan 9
Black Swan 9's picture

@jbvtme

Excellent link, thanks for posting. PCR is THE best, clearly explains the convoluted economic/financial mess, or any issue he writes about..

"Default on delivery of purchased gold would terminate the Federal Reserve’s ability to manipulate the gold price. The entire world would realize that the demand for gold greatly exceeds the supply, and the price of gold would explode upwards. The Federal Reserve would lose control and would have to abandon Quantitative Easing. Otherwise, the exchange value of the US dollar would collapse, bringing to an end US financial hegemony over the world."

Sun, 01/19/2014 - 12:06 | 4345860 chubbar
chubbar's picture

One of you sharpshooters feel free to jump in but wouldn't the ending of QE send the interest rates soaring which would lead to an almost immediate default on the gov't debt, not to mention the possible sudden stop of the global economy? Does the dollar go up in value if the Gov't defaults on it's debt? In order not to default on it's debt it either needs to be forgiven OR print like a bastard. Not sure how debt forgiveness would impact the dollar. Pretty sure the print option would collapse the value at some point. I don't see a way out other than forgiveness and don't have a clue what that would mean or the impact it would have?

Mon, 01/20/2014 - 04:00 | 4347597 X_mloclaM
X_mloclaM's picture

Did you miss the... ummm... balance sheet expansion, that's not exactly set to roll-off anytime soon?

Did you simply ignore those dollars/liabilities, far, far, far in excess of good assets?

So with no dollar demand, yield volatility from an imploding China/Japan triggering a broader global depression, and you get higher rates from that?

 

What part of: higher supply of dollars, and lower demand, do people still not understand?

They must need another Japan as an example... looks like the monetarists will get all the examples they need to sort it out. lmaooo

Sun, 01/19/2014 - 10:54 | 4345743 SIOP
SIOP's picture

@vbvtme,   Thank you for that link on "The Hows and Whys of Gold Price Manipulation".  I learned stuff, Thank you.

Sat, 01/18/2014 - 20:30 | 4344915 Cognitive Dissonance
Cognitive Dissonance's picture

Told ya so, it was the central bankers, in the PONZI room, with the worthless fiat. :)

<Now that's motivation enough to destroy the world in order to temporarily save their asses.>

Sun, 01/19/2014 - 00:09 | 4345284 Scarlett
Scarlett's picture

Not for long, CD; not for long.

Sun, 01/19/2014 - 09:19 | 4345657 Cap Matifou
Cap Matifou's picture

Actually this may equal a wake up blow into the shofar. Guess, how much of the lousy 37 tons of German gold returned last year was actually coughed up by the FEDz?

The whole truth about the gold of the Bundesbank
http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=...
300 tons of gold to be fetched from the cellar of the Federal Reserve in New York to Germany. Now explains the Bundesbank: Only five tons have arrived (in 2013, the rest came from Paris). Why is all this so difficult?

Sun, 01/19/2014 - 02:06 | 4345381 Tall Tom
Tall Tom's picture

You have the Clue. You have it right. SO YOU WIN...or...you lose?

 

Exponential Growth leads to Exponential Collapse. Comex Futures look like that they are just a little...INSOLVENT.

 

As for a Contract for Delivery from Comex? With that type of leverage I would not want that CONTRACT at any price. I cannot trust that they will STAND AND DELIVER.

 

So, COUNTERINTUITIVELY, you can EXPECT A PRICE DECLINE. Nobody in their right mind KNOWINGLY purchases NON PERFORMING CONTRACTS.

 

Why purchase a lawsuit???

 

(If you knowingly purchase a non performing contract, and it can be demonstrated that you did, then that is prima facie evidence that you have no valid claims. That is how CME Group's Attorneys will prevail as the lawsuits are dismissed as frivolous.)

 

So it will be the lawyer in a courtroom with case law and a judge.

 

FOFOA is correct. The price of Gold on Comex will go to ZERO as they have no Gold to Deliver. Now I understand it. It becomes clearer by the passing hour.

 

Fuck Jeffery Christian and CME Group.  Short Gold Futures, drain CME Group's capital, and purchase Physical Gold with the profits.

Sun, 01/19/2014 - 08:25 | 4345624 Quinvarius
Quinvarius's picture

They might go to zero.  But I suspect it will be more like some people will be allowed to default and others will not.  I think a lot of the hangers on who think they are selling paper for free are going to be surprised when they are forced to settle in cash at quite a bit higher prices, even if they have no gold.

Sun, 01/19/2014 - 11:58 | 4345852 swmnguy
swmnguy's picture

"Some people will be allowed to default and others will not."  There's the key.  And if you're wondering who will be allowed to default, it ain't gonna be you.

Sun, 01/19/2014 - 12:16 | 4345875 fockewulf190
fockewulf190's picture

When the COMEX can no longer deliver, the paper price dissolves and the physical price takes over.  The game moves to Shanghi and Singapore.

Sun, 01/19/2014 - 04:08 | 4345504 Oracle 911
Oracle 911's picture

"Knippa warns that if 1 entity asks for delivery of a position-limit-size long in gold, it will absorb 81% of COMEX's inventory... and if 2 entities were to do so... COMEX has a problem..."

 

And both are/will be Chinese proxy, problems ahead for the West.

Sat, 01/18/2014 - 21:04 | 4344971 Panafrican Funk...
Panafrican Funktron Robot's picture

http://www.cmegroup.com/trading/energy/nymex-delivery-notices.html

Link to track the gold stocks directly.  Registered gold is the only gold that can be used to settle a futures contract.  This is the gold that has been rapidly depleting.  It is now down to 370K oz.  That means that in the /gc contract, with 100 oz = 1 contract, a total of 3700 contracts represents the entire stock of gold available for settlement.  Roughly 120,000 contracts traded just on Friday alone.

Sat, 01/18/2014 - 21:40 | 4345036 dmger14
dmger14's picture

The guy from daytradeshow just made a video where someone asked him about this and he looked into it.  He says there 370k registered and that has fallen by about 90%.  BUT 9.8 MILLION eligible and that hasn't fallen much over the past year or so. He says the COMEX rep laughed when he inquired about a possible shortage because the rep says they could simply "flip a switch" and move inventory from eligible to registered.  But isn't eligible ENCUMBERED?  Also, don't people use COMEX for storage with no intention of ever selling?  Someone please enlighten me!

Sun, 01/19/2014 - 00:13 | 4345287 Scarlett
Scarlett's picture

Tungsten

Sun, 01/19/2014 - 02:55 | 4345430 Pinto Currency
Pinto Currency's picture

'Registered' gold is available for delivery on the exchange.

'Eligible' gold is privately held. 

Sun, 01/19/2014 - 10:34 | 4345714 Winston Churchill
Winston Churchill's picture

Tell that to MF Global customers.

I don't see this game going much longer.They are NOT going to run the gold down to nothing.

Only the truly insane would do that.

COMEX will default in the next few months. Buy phyz now while you still can.

Sun, 01/19/2014 - 12:08 | 4345865 youngman
youngman's picture

I would not put it past a banker when they are drowning to sell or deliver your eligible gold to someone...and hiding behind some wording in the agreement that their lawyers will fight over for years.....

Sun, 01/19/2014 - 00:17 | 4345295 Chuck Walla
Chuck Walla's picture

Satan, thy name is re-hypothecation.

FORWARD SOVIET!

 

Yell "HUI" as we slide down the chute!

Sun, 01/19/2014 - 08:45 | 4345635 Quinvarius
Quinvarius's picture

I don't believe any of the numbers, or any of the laws regarding segregation.  But at this point, I think it is about flow, not stock.  The West is running out.  And at some point the Fed/Treasury/cartel will come to a pint where they are unable or unwilling to put any more gold into the system.   And the US yearly mining suppy of 225 tons, even dropped all at once, will not be enough to stop the rise.  I don't put much faith in the COMEX data.  I think it is all encumbered and lies.  How hard can it really be to come up with 10 tons and double these figures?  But here it is:

Registered

http://www.24hgold.com/english/interactive_chart.aspx?title=COMEX%20WAREHOUSES%20REGISTERED%20GOLD&etfcode=COMEX%20WAREHOUSES%20REGISTERED&etfcodecom=GOLD

Eligible

http://www.24hgold.com/english/interactive_chart.aspx?title=COMEX%20WAREHOUSES%20eligible%20GOLD&etfcode=COMEX%20WAREHOUSES%20eligible&etfcodecom=GOLD

Total

http://www.24hgold.com/english/interactive_chart.aspx?title=COMEX%20WAREHOUSES%20total%20GOLD&etfcode=COMEX%20WAREHOUSES%20total&etfcodecom=GOLD

 

Mon, 01/20/2014 - 03:52 | 4347594 X_mloclaM
X_mloclaM's picture

CME Group rep is right, anyone can register gold for sale on their market, and with 170,000mt aboveground it's incredible only 10 or so want to do that....  Of course gold owned and eligible for registration could decide to turn to supply, selling at higher prices. But, that's the volume costructing the price move up, betcha delivery-volume-weighted price averages (DVWAP?) for the pM's are much higher as who is selling meaningful volumes of physical at $1,180.

Sun, 01/19/2014 - 13:40 | 4346073 mick_richfield
mick_richfield's picture

"Registered gold is the only gold that can be used to settle a futures contract."

Not true at all!  "Eligible" gold can also be used to settle futures contracts.

You just have to steal it.

Sat, 01/18/2014 - 19:52 | 4344837 OC Sure
OC Sure's picture

Is another way of saying this that for every buyer of a contract that is willing to take delivery of the purchase there is also a seller who is willing to make delivery of their sale? Otherwise, how can the contract exist? (That is of course if it goes to expiration.)

Sun, 01/19/2014 - 02:35 | 4345398 Tall Tom
Tall Tom's picture

If the Short Holder can prove that the long buyer knew beforehand that the seller had nothing to deliver the court will dismiss the case as frivolous and that there was no binding Contract.

 

It is just a matter of demonstrating that a prudent action on behalf of the buyer would have been to research the seller's ability to STAND and Deliver. Since Inventories are PUBLIC KNOWLEDGE and disclosed then it can be demonstrated that the Buyer knew that the Seller could NOT DELIVER.

 

Case Dismissed. No enforcable contract was offered or sold.

 

YOU CAN BET THAT THIS WILL BE HOW IT WILL GO DOWN IN US COURTROOMS.

 

If I am seeking DElivery I would SELL EVERY CONTRACT that I had with LBMA and CME Group and open contracts directly with the Miners.

 

You can bet that the Large Players have Lawyers whom are advising their clients to do the same. Thus with an abundance of contracts for sale on the Comex Futures Exchange the price of Gold will DROP as a result of this.

 

This is what happens when trust is eroded.

 

If you have Physical and think that you can sell it and then buy it back cheaper it is a MISTAKE. You would be foolish to divest of your Physical Gold.

 

This just means that CME Group's Futures Market becomes irrelevant as the method for Price Discovery.

 

First the London Fix is made irrelevant.

Then the Comex is made irrelevant.

 

We must remove the layers of the LIES to get to the Truth of the true Price, VALID PRICE DISCOVERY.

 

The plan is being unfolded before your eyes.

Sun, 01/19/2014 - 09:59 | 4345685 chindit13
chindit13's picture

I don't think you could possibly exhibit any less understanding of the nature, function, rules, and practice of futures markets.  You get yourself in a lather over something about which you know nothing, and form conclusions which are pure delusion.

At least being anonymous saves you the public embarrassment.

Enjoy.

Sun, 01/19/2014 - 11:01 | 4345750 SilverIsKing
SilverIsKing's picture

It can possibly go down the way he says it will but only if he is the judge in the case.

Sun, 01/19/2014 - 11:02 | 4345753 Tinky
Tinky's picture

Rather than launching an ad hominem attack – and an ironic one on that, given your anonymity – why don't you explain how his post is misguided, for the benefit of readers who are less enlightened than yourself?

Sun, 01/19/2014 - 11:40 | 4345821 chindit13
chindit13's picture

See my earlier post below.  Salvation, or at the very least enlightenment, lies within.

Sun, 01/19/2014 - 12:19 | 4345880 chubbar
chubbar's picture

I'm not an attorney so this may be incorrect but my understanding that in contract law each party must give "consideration" or something of value. The buyer is giving money for the contract. The seller, if naked selling, is giving no consideration. This argument actually prevailed in a case decades ago up in Minnesota (credit river). The plaintiff successfully argued that he didn't owe his mortgage because all the bank did was an accounting entry and therefore didn't give "consideration". The judge died of poisoning 6 months later and the ruling was reversed on appeal (imagine that).

Also, just because the inventories are published and that there is clearly more contracts than gold doesn't mean a particular seller has no gold. There is some gold being traded so some of the contract sellers do in fact have gold. Not sure of this point other than that. I've not heard a judge say that the scammer is innocent because the mark should have known the guy was a crook but I suppose anything could happen these days. Especially with the bought off judges we have witnessed recently. (cough-roberts-cough)

Sun, 01/19/2014 - 18:31 | 4346764 lewietheparrot
lewietheparrot's picture

There is no contract----only contract specs

The Board of Governors of the exchange ultimately decides delivery issues

We went all through this in 1980 with the Hunts

Read about----history is repeating

I can't believe that it playing out again two generations later

No one cares what any of us think or believe

It's in the bag----let it go and pretend your stack is just insurance---not a game for kids

 

Sun, 01/19/2014 - 11:49 | 4345837 jemlyn
jemlyn's picture

I read about buyers contracting with the mines.  Could this be why the mining equities are going up?  Will there be a divergence between the direction of the spot price and the price of equities?

Sun, 01/19/2014 - 13:55 | 4346117 dogbreath
dogbreath's picture

The miners have been consolidating because they cannot raise money to finnance exploration and costs for producers has gone up as the price of gold dropped to current levels.   Mining stocks are generally unpopular but the smart money seems to be coming  back into the market.  The junior miners are severely oversold and a quality comanies are a bargain

Sat, 01/18/2014 - 20:04 | 4344860 negative rates
negative rates's picture

How's that IOU gold workin out for ya?

Sat, 01/18/2014 - 21:09 | 4344979 Muddy1
Muddy1's picture

Why not ask Celente this very question?

"buy physical gold; avoid paper"

Sun, 01/19/2014 - 11:15 | 4345777 giggler321
giggler321's picture

You know he told everyone to buy physical while he had ETF's with a delivery option at 1425oz.  You gotta wonder why he's choose to say that and essentially buy paper?? esp. as he nevered ended up owning courtesy of MF

Sun, 01/19/2014 - 05:09 | 4345526 Central Wanker
Central Wanker's picture

COMEX limits the size of a single entity so that they can not corner the market.

 

Right... The position limit for gold is 3000 contracts? On December, JPM stopped more than 6000 contracts. Probably they would have stopped more, should there have been more gold available.

Did JPM corner the market?

Sun, 01/19/2014 - 09:24 | 4345658 jerry_theking_lawler
jerry_theking_lawler's picture

yes, yes, we all understand futures contracts...we are ZHers....but what gets all of us is that when all the contracts 'cancel out' and their is someone standing for delivery of an item that isn't available, then there's the rub.....

 

see, someone who wanted to make money (or worse manipulate or speculate in the market) made a promise that they could not fulfill, upfront, sometime knowingly. and it was all 'legal' by our standards. there is just something inherently wrong with this idea.

Mon, 01/20/2014 - 10:15 | 4347917 DOT
DOT's picture

Indeed, the proffer itself was fraudulent. We have both awareness and intent illustrated in the transaction. 

Both parties may be guilty; at least one must be.

 

Sun, 01/19/2014 - 13:20 | 4346020 disabledvet
disabledvet's picture

this is absolutely correct...and a basic problem with the "math" here. HOWEVER...if you change what the futures contract is based on..."gold coin" instead of dollars...in effect you're now creating gold backed money...which if in fact can be redeemed ("I have an unlimited supply of gold coming in for "x" amount of dollars") then it's all about "identity recognition" (I am who I say I am)....all with a credit card and an ATM...probably still need an actual Teller and an actual bank branch too. you could then rehypothecate your car, you trailer, etc...all for "gold coin", just not the actual gold itself. agree on a price...start setting a "terms of exchange" (value relative to actual dollars)...dollars could become very rare very quickly as "yield hungry savers" simply repudiate it.

Sat, 01/18/2014 - 19:33 | 4344793 knukles
knukles's picture

No, it's a "short"

He who sells what isn't hisn't pays the price or goes to prison.

Back in the good old days.

Today the taxpayer bails out the malcontent's loss to the business plus his bonus.

 

Sun, 01/19/2014 - 13:25 | 4346033 disabledvet
disabledvet's picture

problem of "leakage." easy to solve..."bank will not do business with you" since we (meaning the bank) know who you are. in other words "you will pay you Government people in this our digital currency" or you'll have to use another bank.

Sun, 01/19/2014 - 18:33 | 4346768 lewietheparrot
lewietheparrot's picture

try pop music when you wannbe popular

Sat, 01/18/2014 - 19:34 | 4344794 jballz
jballz's picture

No it is a short position.

Jesus you are dense.

Sat, 01/18/2014 - 20:54 | 4344954 tmosley
tmosley's picture

Actually, a short requires that you borrow the contract from someone else.

He is talking about naked shorting.

Pot calling the fine china black here.

Sat, 01/18/2014 - 23:22 | 4345221 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Problem is that the "lender" in most cases has no idea that (s)he is a lender...

Sun, 01/19/2014 - 01:10 | 4345343 chindit13
chindit13's picture

Perhaps Tyler will run a remedial class for those who are eternally confused between spot markets and futures markets, since your post, plus those who upvote you, indicates confusion.

"Naked shorting" applies only to spot markets such as equities.  If I wish to short, for example, AAPL, I need to locate actual APPL stock from somewhere---usually a Prime Broker---so that there is no failure to deliver.  I pay a borrowing cost for that APPL stock.  Borrowing costs vary among equities, depending on how much there is available to borrow.  In a heavily shorted stock, the vig can be excessive, whereas on equities with a low short ratio and a large float, the costs are minimal.  If the registered owner of the stock is a large fund, it will share in the vig with the Prime Broker.  That juices the yield for the long term holder, which might be a pension fund, mutual fund, insurance company, corporate treasury, etc.

Futures markets are a totally different beast.  There is no need to borrow anything.  One side of a trade merely creates, in essence, a bet with the other side of the trade regarding the future price movement of the underlying commodity.  The exchange exists as both a marketplace and as a sort of referee between the two parties in the bet.  In theory, one who holds a position to expiration assumes the responsibility to either pay the seller in full for the underlying commodity (the long pays) or else deliver the underlying good (the short delivers) to the buyer.  Many futures markets have a cash settlement feature.  The vast majority of contracts are liquidated well before expiration, and generally before the first notice of delivery.

The whole point of a futures market is to create a venue where speculators can unintentionally serve the purpose of providing liquidity.  For example, General Mills is a natural buyer of wheat for its breakfast cereal.  Archer Daniels Midland (or even a medium sized wheat farmer) is a natural seller.  Those two opposing entities may come to an understanding of their production (farm side) or demand (cereal side), plus each side's respective cost structure, at widely different times in the growing cycle of the wheat.  Without the specs providing liquidity, General Mills might show up understanding their own production side when the farmer as yet has no idea of the yield or even his costs.  Without the specs, some side would be making an uninformed trade.  As the specs liquidate into delivery and expiration schedule, contracts cancel each other out, and GMills ends up on the other side of the remaining contract with ADM.

Futures markets have existed for thousands of years.  Nobody ever had a problem with them until the PM crowd decided the whole world was out to get them.

The best trick for "manipulating" markets, though it only works on a short term basis, is to either move arounds stores, or else change its classification (such as from "eligible" to "registered", or vice versa).  These tricks can fool the uninformed, who apparently don't know who they are.  Price suppression also could only work short term, because sellers would simply ignore spot and not sell.  None of that has happened from $1921 all the way down to $1200, nor $48.50 all the way down to $20.  If anything, UPSIDE manipulation is much easier, because once prices get rocking, people climb out of the woodwork hoping to catch the rocket ship to the moon.

The same lack of understanding of the nature of futures markets and the brokers who deal in them was behind the fantasy of "Crash JPMorgue" (I believe a former ZH member has relinquished all copyright claims to that, and doesn't mind letting Gilbert Gottfried, or rather Max Keiser, take credit for it).  JPM hedges both miners and large scale physical holders.  Those would tend to be short futures positions.  JPM might also have jewelers and other end users on the long side of the market.  While CTRs might give some insight into the positions (com'l vs. spec), these are not always accurate.  PM Promoters have used this confusion to do a lot of business.

While I'm here, I'll add a point that is only peripherally related, but which also causes confusion and leads to foolish conspiracy-type views.  Regarding silver, most large holders of silver hold it in the form of 5000 oz good delivery bars.  I've had the pleasure of visiting a private vault where a massive holder has a literal underground warehouse, with stacks of pallets of 5000 oz ingots.  There is a fork lift inside the vault for moving pallets.  A lot of them have been moved in the last few years, especially when Ag was in the $40s.  For the retail crowd to be able to get the coins they desire, the fork lift has to be gassed up, pallets moved out of the vault, shipped (maybe to another continent or country) to a smelter/stamper/whatever where the giant ingots are melted down, then cast into one ounce coins.  All of that involves costs, which are included in the coin price.  Add to that the rent on the local coin shop plus the dealers' staff salaries and such, and there's your spread over spot.  Just as a diner cannot expect to pay Pork Belly Settlement Price for his side of bacon at IHOP, a retail coin buyer should not expect to pay spot for his Ag coin.  That process---taking a pallet of 5000 oz ingots to the mint---also takes time.  When retail gets excited about Ag and scoffs up the existing inventory of one ounce coins, a coin shortage develops.  Buyers should not assume that means there is an Ag shortage, but rather that there is just a shortage of retail-level Ag products.  Of course Promoters are not averse to taking advantage of that misunderstanding.

Gold tends to be held in smaller sizes (100 oz to 400 oz bars).  Most of the costs associated with turning these bars into one ounce coins are less, so the spread at the retail level between spot and coin offer price is less than for silver.  Even a mid sized Au buyer can pay about spot plus $5 if he buys, say, 400 oz Au bars on line.  Go to a large Middle Eastern dealer and he can pay even less of a spread.

PMs may well re-ignite their bull market (Mohammed Aboud al Amoudi, Abdul-Aziz al-Suleiman, the al-Rajhis, etc. could try to force COMEX delivery and make up for April 1980 and what Henry Jarecki did to them), but the same sort of incredulousness people bring to MSM or Govt pronouncements should be brought to the musings of the Promoters.  Otherwise, they're just somebody else's Sheeple.

Sun, 01/19/2014 - 07:19 | 4345581 29.5 hours
29.5 hours's picture

Thanks for this post. It is an example of why many of us subject ourselves to the incessant spittle drenched "buy bold bitchez!" posts in the effort to understand a process foreign to our experience.

 

 

 

 

Sun, 01/19/2014 - 10:18 | 4345703 lunaticfringe
lunaticfringe's picture

I like your post mostly- except that you tend to be a little on the naive side. Which is to say, the most credible guy in the room is not necessarily the guy who presents himself that way.

That's how I felt as I read your post.

It ignores the one great immutable truth of PM markets and the Presidents working group on financial markets. They must suppress the price of gold in a concerted fashion. If they fail to do so, a banker/dollar catastrophe follows.

I get the feeling that you are the kind of guy who might have said libor rigging was not possible- even foolish- as you positioned the dunce cap on my head. I mostly focus on the large pic rather than worrying about the costs of producing ingots.

Sun, 01/19/2014 - 10:46 | 4345725 chindit13
chindit13's picture

Libor is a completely different animal, has fewer players involved (so it's easier to manipulate), and is infinitely more important to bank balance sheets and derivative positions than gold, which---as much as folks around here believe otherwise---is not of particular importance to many in positions of authority.

Relative to bank assets, planetary GDP, etc., gold is barely a rounding era.  The likelihood of it ever being a backing for a currency again is pretty close to zero.  As an asset, I suspect it will have its day again, as all assets do, and folks who champion themselves as "stackers" might one day want to consider moving to China or India where they are more likely to get the value and respect they think they deserve for owning it.  As for the West, which as we are told ad nauseum is letting gold slip to the East, it is unlikely that it will care a bit if China and India suddenly announce they own all of it.  India has pretty much always owned more than any other country, yet it hasn't done a heck of a lot for them.  I'm there a lot, and I've yet to see the cutting edge of human civilization about which we should all be envious.  I thus conclude folks can get by just fine with intellect and ambition, rather than a shiny metal.

Sun, 01/19/2014 - 12:40 | 4345887 SWRichmond
SWRichmond's picture

Can capital be printed?

What is money?  This is not merely a semantic question; it is central to the entire financial system.

If gold doesn't matter, why do the central banks behave as if it mattered?

All of your arguments are very nice and academic, but they assume orderly, open and functioning markets, which we do not have.  Do we?

Sun, 01/19/2014 - 13:37 | 4346066 disabledvet
disabledvet's picture

you can use diamonds too...which have almost zero "carrying cost." the key is a "license" to print...meaning someone to validate the claim of authenticity and then account (by literally counting) the holdings in the bank. everything else is just an interest rate and "confidence in value" of the "digital currency." either way somebody has to have the physical goods...a car is a great one. start melting it down "piece by piece"...then see what if is "worth."

Sun, 01/19/2014 - 14:39 | 4346246 tip e. canoe
tip e. canoe's picture

If gold doesn't matter, why do the central banks behave as if it mattered?

or the IMF for that matter.

reading that line, got a flashback to BB's snarky off the cuff remark to RP.

"Tradition."

also recall some random utube where Volker got all bent out of shape when asked a very pointed but intelligent question about the shiny on camera.

somethin's not adding up.

Sun, 01/19/2014 - 14:48 | 4346275 CognacAndMencken
CognacAndMencken's picture

 

 

What is money?

Money is a token which helps facilitate commerce, and settles debts.  Period. That's it. It used to store wealth, but it doesn't do that very well anymore. Blame Nixon. Blame the Cold War.  Blame the military and its need to bulk up for the Cold War.  Blame whomever you wish, but the quicker you come to terms with this, the better off you'll be.  Some of you have a fiat money axe to grind, and it's totally pointless.   

Gold does NOT facilitate commerce very well.  It's massively heavy and bulky, and generally very inefficient in the modern world of international commerce.  Perhaps during the "Gunsmoke" days, it worked well, but not in modern society when the daily value of the Fx market is $4T, all by itself. Paper money that's exchangeable for nearly ALL goods and services, is recognized as the world's reserve currency, and is backed by the most powerful military on Earth is a very good choice.   

Yes, everyone is aware of the textbook definition of money, but in the modern world the need to facilitate commerce has trumped the need to store wealth. Besides, no one other than the simplest minded people ever actually relied on a box of cash for their retirement.  You have all sorts of choices to create/store wealth.  You can convert your US$$ into any currency you wish, if you think those currencies are a better choice.  You can convert your US$$ into gold, silver, land, houses, bonds, equities, a new business, technology, medicine, art, collectible cars, oil wells, sea shells, etc.... whatever you think will create the most value over time.  In fact, all the survival of the fittest, dog-eat-dog libertarians should embrace this choice because it further separates the strong from the weak.  Who makes the better choice?  The richest on Earth have chosen to create businesses and technology, so that they can profit from your daily labor.  Then they invest in more businesses to profit from MORE of your labor, and your neighbor's labor.  They also buy lots of equities because then they get a cut out of the collective labor of the entire country. Choosing gold which yields no dividend and just sits in a box doesn't seem very innovative, and perhaps that's why the forces of survival of the fittest have rewarded others who innovate and make intelligent, calculated risks. Converting your money into a metal and then burying it in your backyard will never make you rich; social darwinism will make sure of it.    

 

Sun, 01/19/2014 - 13:35 | 4346051 NickVegas
NickVegas's picture

I like it. It is kind of old school. Sure, I will take your intellect and ambition, and pay you with fiat I print out of thin air, fractionally reserve a little, and purchase assets to rehypothecate. Never look behind the curtain, you might see the monster. Good societal design in my opinion. Slaves and rabbit holes, I can't get enough.

Sun, 01/19/2014 - 14:05 | 4346112 fockewulf190
fockewulf190's picture

What do you think would happen if the Fed came out publicly and said; "We have just leased out the last gold remaining in our vaults....but don´t worry, relative to bank assets, planetary  GDP, etc, gold is barely a rounding error!"?  I´ll tell you what happens.  First off, the gold price in dollars goes to the moon and then to Mars.  Second, all trust in the United States and it´s dollar instantly evaporates. The United States becomes the biggest theif the world has ever known and alliances dissolve. Heads of state, wheather they were secretly complicit with the Fed´s games or not, will have to publicly demand repatriation of their gold.  When again the US says it cannot deliver, US assets abroad will be siezed. The petro-dollar concept vaporizes, as well as the dollar being the world´s reserve currency. Then the Great Reset is triggered as the entire credit default swap market explodes in a titanic fiscal fireball. 

The United States will then face the biggest political and economic crisis since the Civil War.

It´s not just the monetary value of gold itself what makes gold so important,  it is the TRUST that has been emplaced in the United States to safeguard it that is so important.  Without trust, or more specifically, once trust is lost, the dollar enters the history books as yet another fiat currency that has gone to zero.

Sun, 01/19/2014 - 14:49 | 4346146 CognacAndMencken
CognacAndMencken's picture

 

 

Chindit - 

Another fantastic post from one of the ZH All Time Greats.  Hopefully TMosley can learn a few things from your reply.  

Gilbert Gottfried... *LOL*

By the way, isn't hilarious how people were actually fighting about who gets credit for Buy Silver, Crash JP Morgue, despite the fact that it was absolute, total BULLSHIT, and did nothing but prove how utterly ignorant people are about futures markets?  "No! I'm the one who started carnival barking about some stupid conspiracy theory that cost everyone money! It was ME, damnit! I'm responsible for that lunacy!"  *LOL*

See you around, my friend.  

My warmest regards,

M.

 

Sun, 01/19/2014 - 21:30 | 4347140 BigJim
BigJim's picture

You type pretty well for a man with a cock in his mouth.

Sun, 01/19/2014 - 23:53 | 4347399 chindit13
chindit13's picture

One might suspect that a guy who calls himself "BigJim" would know a thing or two about that.

Sun, 01/19/2014 - 10:33 | 4345713 SAJ
SAJ's picture

Very nice post, chindit.  Informative and accurate, as opposed to many of the rantings that appear here on ZH.  Props to you!

Just btw and fyi, the famous/infamous CME Frozen Pork Belly contract became extinct in 2012, joining such sainted contracts as eggs, iced broilers, Chicago rye, silver coins, flaxseed, western natural gas, and Maine white potatoes (great story available about that last, if you'd care to read it sometime).

Best regards,

 

Sun, 01/19/2014 - 10:51 | 4345735 chindit13
chindit13's picture

The wait staff at IHOP never ceases to remind me of that fact when I contest the bill, but I just like to use it as an example, as it has a better ring to it than using something like a corndog or a chapatti.  For me, pork bellies always were, and always will be, the quintessential futures contract.

Sun, 01/19/2014 - 16:43 | 4346563 trader1
trader1's picture

you eat regularly at IHOP?

that's only forgivable after all-night benders...

 

Sun, 01/19/2014 - 11:38 | 4345818 Tinky
Tinky's picture

A very good expostion, in many ways, but problematic in others. To imply that gold's decline over the past year (or so) was somehow a natural reflection of price discovery is naive to the extreme. Had it been a simple supply/demand issue, then the decline would have been much more orderly, rather than hinging on two or three blatently manipulative smackdowns. To imagine that timing of Germany's request for repatriation was merely coincidental with the first major takedown also strains credulity.

You speak of there being sellers at lower prices, but who are those sellers? There were sellers in the early '70s as well, and it has now been confirmed that there was a clear conspiracy amongst central banks to sell into the market in order to suppress prices.

If you have a cogent explaination other than manipulation for why huge sales of gold have taken place at precisely the times, and executed in precisely the manner of how one would choose to manipulate markets, I'd like to hear them.

Cheers

Sun, 01/19/2014 - 12:02 | 4345857 Space Animatoltipap
Space Animatoltipap's picture

You're right Tinky. The gold market is illegally manipulated because of the vast interests to do it. The thing is these "you don't understand the markets" people just put up some story to try to impress. Nevertheless the "1984" WW $ ponzi scheme will blow up after a period of intense strain. And gold will again be valued properly.

Sun, 01/19/2014 - 13:57 | 4346121 BeanusCountus
BeanusCountus's picture

Good post.  Can't argue with Chindit's view of futures, but these paper contracts do seem to be "dumped" all of a sudden in a way that certainly minimizes proceeds to a seller.  And for the most part the physical price goes right down with the paper price.  But at the end of the day, China and the other large buyers of the physical at the reduced prices are taking delivery from SOMEONE.  So there are obviously many holders of physical that are choosing to part with it.  Who?

Sun, 01/19/2014 - 14:08 | 4346153 Tinky
Tinky's picture

Well, by reasonable deduction from available circumstantial evidence, it is clear that both the UK and US have been selling physical gold into the markets. How much in the recent past? That I can't answer, except to say a significant amount.

Sun, 01/19/2014 - 12:47 | 4345923 tip e. canoe
tip e. canoe's picture

Gilbert Gottfried, or rather Max Keiser,

that's funny shit.   nice one chindit.

Sun, 01/19/2014 - 15:29 | 4346388 saveandsound
saveandsound's picture

Thanks, Chindit. I've been saying zerohedge is selling the book for quite a while.

Looking at gold as an insurance, does a price of $1250 per once indicate things will be fine in the future? Given the ongoing monetisation of treasuries, could that lead to a similiar scenario as in the 70-ties?

I don't think the massive monetisation of bonds is unprecedented. Actually money-dilution has always been a popular way to finance war. Unprecedented might be that almost every important central bank on this planet is buying bonds. How is that going to solve problems? Will central banks ever be able to exit this path?

In my eyes the interesting question is, what is going to happen next? Are you convinced that the PM-bull-market is over? What do you think, where should we focus our attention to?

Sun, 01/19/2014 - 17:01 | 4346520 akak
akak's picture

I found Chindit's post, as usual for him, both informative and disingenuous.  He correctly points out the elementary errors and misunderstandings many here, and elsewhere in the pro-PM crowd, have regarding the gold and silver futures market, but implicitly suggests that those misunderstandings and erroneous conclusions are the sum total of the supposedly fallacious complaints that the pro-PM crowd, such as GATA, makes against the corrupt and manipulated gold and silver markets, ignoring the matters of bullion leasing, rehypothecation, and the multiple claims against bullion which are all but certainly rife within the putative physical bullion market, not to mention the official secrecy and obfuscation surrounding governmental dealings with and holdings of gold.

Chindit has consistently struck me as one whose income, livelihood and very self-identity is wrapped-up with the financial and monetary status quo, and one who clearly lacks the moral and/or intellectual fortitude to challenge or even meaningfully question the corrupt and tottering financial and monetary Establishment.  His consistent record here on ZH of defending and shilling for them is as insulting, and almost as laughable, in its dishonesty and clear bias as was that of Jon Nadler while he was the spokesman for Kitco, and very likely for similar reasons.

I have utterly no doubt that if one had gotten into a conversation regarding the future of gold with Chindit back in say 2000, he would have completely scoffed at any suggestion that the price of gold would ever rise even close to $1000 per ounce within the following ten years, dismissing any such claims as the daydreams and "conspiracy theories" of "wild-eyed goldbug extremists".  Yet here we are.

Sat, 01/18/2014 - 19:36 | 4344799 Mr Pink
Mr Pink's picture

So why wouldn't one of these "entities" demand delivery, break the Comex, and send their invest to the moon?

Sat, 01/18/2014 - 19:41 | 4344813 Say What Again
Say What Again's picture

Google "cost of carry" and then report back to us.

Sat, 01/18/2014 - 20:02 | 4344857 Mr Pink
Mr Pink's picture

Hmmm. let's see...If I owned enough gold to demand delivery and break the Comex, showing the world that 100 different people own the same ounce of gold and that the major banks gold vaults are empty, therefore sending the price of gold to $10,000/oz, I think I would just buy a fucking vault

Sat, 01/18/2014 - 21:57 | 4345067 holdbuysell
holdbuysell's picture

Solid interview at the link below that discusses the next monetary system with many references directly from China, IMF, Wikileaks. The selling of that vault in the ZH article to the Chinese is mentioned as part of the cooperation between the East and the West as both move to back a global currency with gold.

Tyler, can you post this interview?

The Big Reset, Part 1

http://www.ingoldwetrust.ch/the-big-reset-part-1

Sat, 01/18/2014 - 23:21 | 4345219 HardlyZero
HardlyZero's picture

Comex Gold options...is the market this is fractional 100:1.   If they start to delivery physical the Comex will be bust and must deliver paper only.   #FAIL

Sun, 01/19/2014 - 02:58 | 4345432 Tall Tom
Tall Tom's picture

CME Group will stop at some point and resort to the Cash Settlement option of the Futures Contract. Levered at 117 to 1 the Comex is already bust. That leverage has never been that elevated.

 

AS for the Cash Settlement option there will be cash. At the depressed price of Gold due to an abundance of contracts the Cash Settlements will even be easier to pay. (They have all bases covered.)

 

And even if that were to somehow fail President Obama declared that CME Group was Too Big To Fail back in 2010.

 

The one thing that Obama cannot declare by edict is TRUST. The people, the public, the players are INCREASINGLY LOSING CONFIDENCE IN THE ENTIRE FINANCIAL PONZI SCHEME SYSTEM.

 

That LOSS OF CONFIDENCE is what will bring about the subsequent Financial Collapse.

Sun, 01/19/2014 - 05:18 | 4345528 U4 eee aaa
U4 eee aaa's picture

Yes, they will settle in cash. That is their out. It is not the seller who has a problem when you stand for physuical gold delivery....it is the buyer....IF they are expecting to get pyhisical gold. The cupboards are bare and they will just print up some more monopoly money for you. If you think you are going to sqeeze these guys for gold, they already took care of the 'problem' years ago

Sun, 01/19/2014 - 15:07 | 4346327 fockewulf190
fockewulf190's picture

Indeed...TRUST is all that is holding this gigantic House of Cards together.  The loss of it is the number one national security threat, but even though our leaders know how dangerous the situation truly is, the fools do nothing but follow Jean-Claude Junker´s rule of diplomacy: "When it becomes serious, you have to lie."

Sun, 01/19/2014 - 15:17 | 4346357 Drifter
Drifter's picture

Gold isn't the issue, USD is the issue, and USD's value is maintained by US military bullyism around the world.

So there won't be any collapse long as US military bullyism continues.

When that bullyism stops, that's when you'll see the collapse of USD and PM/USD rocket spike up.

I believe Russia & China are preparing to put an end to US military bullyism.  I believe the elite know it's coming, which would explain their quiet asset moves from west to east.

The emergence of a PM-backed currency from China is merely the icing on the cake.  Stopping US military bullyism is the cake itself.

Sun, 01/19/2014 - 15:34 | 4346403 saveandsound
saveandsound's picture

I believe Russia & China are preparing to put an end to US military bullyism.

Indeed, in syria they did.

Sun, 01/19/2014 - 20:17 | 4346974 Drifter
Drifter's picture

After getting shut down in Syria, the Obama regime has done a full about face on Iran, indicating Putin put his foot down there too, but more than that, perhaps threatening Obama with action against his regime if they don't drop sanctions against Iran too.

I've never seen an American president turn 180 degrees so quickly, indicating some sort of ultimatum was handed to Obama, with dire consequences if he doesn't cave in.   We'll never know the details of course. 

I hope this is the beginning of America being kicked out of the middle east.  It sure seems that way.

Sun, 01/19/2014 - 00:08 | 4345281 Kirk2NCC1701
Kirk2NCC1701's picture

To use a pop-culture analogy...

Because some MIBs would show up at your home and ask you to look into the iFlash, and you will decide that you DON'T want to take phyz delivery.

What naive simpleton thinks that TPTB will actually allow such a scenario to snowball.

I've become SO jaded by the lying gold shills (who were Pumping & Dumping during the Smackdown), that I'll only believe it when I see it happen.

Sun, 01/19/2014 - 03:05 | 4345450 Tall Tom
Tall Tom's picture

"What naive simpleton thinks that TPTB will actually allow such a scenario to snowball" ?

 

Housing Prices will NEVER DECLINE. They will never allow it. That would destroy the Economy. What naive simpleton thinks that TPTB will actually allow such a scenario to snowball?

 

Wait...It already happened? In 2008? How could they let that snowball?

 

Your GOD, TPTB, are NOT OMNIPOTENT. But you can continue to worship TPTB if you'd like. That is your choice.

 

LMAO

Sat, 01/18/2014 - 20:20 | 4344894 Mr Pink
Mr Pink's picture

I'm reporting back. I went to this "googly" thing you recommended. I typed in "cost NOT to carry" by accident.

It came back, related searches....pending Comex default

Sat, 01/18/2014 - 23:26 | 4345230 KickIce
KickIce's picture

Because most of them have a direct line to the Fed and would rather trade paper for real stuff than trade real stuff for real stuff.

Sat, 01/18/2014 - 19:37 | 4344801 Papasmurf
Papasmurf's picture

localsavage

Selling something that you don't have is a crime right???????
Selling something you don't have makes you someone else's counterparty risk.
Sat, 01/18/2014 - 21:01 | 4344968 BurningFuld
BurningFuld's picture

I think selling something you don't have to someone makes that person your bitch.

 

Sat, 01/18/2014 - 19:57 | 4344845 unwashedmass
unwashedmass's picture

not if you are JPM. 

Not if you own the regulators. 

It really is that simple. 

 

Me, quite frankly, I've spent the last two years wondering how much it pays to be blind, deaf and dumb, like Gary and Bart. What is the going rate? 

Sun, 01/19/2014 - 11:28 | 4345803 Keyser
Keyser's picture

I suspect they were made an offer that they could not refuse. 

Sat, 01/18/2014 - 20:18 | 4344890 Ban KKiller
Ban KKiller's picture

You must not be familiar with Wall Street accounting. Add Orwell with Bankster and you can get any number you wish to appear. Naturally you can "sell" anything mulitple times if you never deliver it. 

Arthur Anderson anyone? Anyone? 

Sat, 01/18/2014 - 20:35 | 4344927 negative rates
negative rates's picture

Why yes, the Anderson treaty. Which read that if there were 5 people in the room, one of them was guilty of committing a crime, carnival or not.

Sat, 01/18/2014 - 22:59 | 4345182 mt paul
mt paul's picture

Comex to control

we've got a problem here...

Sun, 01/19/2014 - 00:14 | 4345291 QQQBall
QQQBall's picture

No!

 

Signed, J Corzine, JR.

Sun, 01/19/2014 - 02:05 | 4345390 bronzie
bronzie's picture

He who sells what isn't his'n

Buys it back or goes to prison

~

That's how it works for us plebes anyway ...

Sun, 01/19/2014 - 11:31 | 4345809 SWRichmond
SWRichmond's picture

Selling something that you don't have is a crime right???????

The man that once did sell the lion's skin while the beast lived, was killed with hunting him.

- Henry V

Sat, 01/18/2014 - 19:27 | 4344780 Gunga
Gunga's picture

Trusting any counter party to deliver on a paper promise seems foolish nowadays.

Sat, 01/18/2014 - 20:22 | 4344900 Fred Hayek
Fred Hayek's picture

Especially considering that we now see with things like GM's bankruptcy that hundreds of years of legal precedent can and will be casually thrown out in favor of making completely political decisions.

Sat, 01/18/2014 - 19:30 | 4344785 ArrestBobRubin
ArrestBobRubin's picture

Tick tick tick....

BOOM!

Sat, 01/18/2014 - 19:31 | 4344788 Cycling Fish
Cycling Fish's picture

....But the contracts say you can settle by delivering paper in place of physical metal?

Sat, 01/18/2014 - 19:34 | 4344791 GetZeeGold
GetZeeGold's picture

 

 

In theory.....sure.

 

I double-dog dare you to try.

Sat, 01/18/2014 - 19:41 | 4344812 knukles
knukles's picture

Oh, there's a whole buncha options.  (Pun not intended)
Forced settlement for cash
Roll the contract
Walk,and betcha that the Clearing Corp don't pick up the tab (As is supposedly it's responsibility, "Standing between every buyer and seller"... so that nobody knows where the fuck the money went, a la MFGlobal)
Disappear.
Blame it on Bush
Bury it in the off book shenanigans and blame a junior AVP in Telluride during the High Bug Season
Just say "No" to borrow from Nancy R.
Stick the contract up Monica's thingamajig
Declare National Security
Do a whole bottle of 714s and enter a permanent drool mode
Blame it on your boss' orders.
Blame it on a fat finger
Blame it on your drug and alcohol dependency for which you're entering rehab at a $20,000/week facility.
Just say "What?"
The list just goes on and on....

Sat, 01/18/2014 - 20:08 | 4344865 negative rates
negative rates's picture

They wonder where they went wrong,

    but the list goes on and on.

Sat, 01/18/2014 - 21:47 | 4345049 Unpopular Truth
Unpopular Truth's picture

and, while confiscation of privately held gold will be difficult to enforce,
they can simply take it out of self-directed IRAs

Sun, 01/19/2014 - 00:51 | 4345335 WillyGroper
WillyGroper's picture

>>714s

That's funny!

Sat, 01/18/2014 - 19:34 | 4344792 Bindar Dundat
Bindar Dundat's picture

Going to be a good year for gold...

Sat, 01/18/2014 - 19:39 | 4344809 quasimodo
quasimodo's picture

Famous last words for how many years now?

 

Sat, 01/18/2014 - 20:22 | 4344824 akak
akak's picture

Only 11 out of the past 12.

 

EDIT: Or 14 out of the past 16, take your pick.

Sat, 01/18/2014 - 21:25 | 4345000 logicalman
logicalman's picture

Gold 1913 $19

Gold 2013 1250 and counting.

Or is it that gold is still worth the same and the dollar has gone down 6500%?

Just a thought.

Sun, 01/19/2014 - 11:04 | 4345756 juggalo1
juggalo1's picture

1250/19=6579% ^ (1/100) = Whopping 4.3% annual return.

Also it is not possible to go down 6500% (excluding leverage).  The correct calculation is (1/6579%-1) = -98.5%.

Sun, 01/19/2014 - 13:52 | 4346108 James
James's picture

http://www.usinflationcalculator.com/

 

That 19 dollars in 1913 bought the same as $470.00 today

Sun, 01/19/2014 - 13:57 | 4346122 quasimodo
quasimodo's picture

oops,lol.

Forgot the sarc tag.......good grief where is the sense of humor these days? You would think I was fornstar

Sun, 01/19/2014 - 03:15 | 4345465 Tall Tom
Tall Tom's picture

I disagree. Although I will write DO NOT SELL YOUR PHYSICAL GOLD I can forsee declines in prices for the Paper Futures Market for the reasons I outlined in previous posts. My outlook is that as this will be the year that spells the end of the London Fix and the Comex Futures that it will be a very volatile period as a new mechanism for Price Discovery is sought out.

 

Hold on to your Physical Gold at all costs.

Sat, 01/18/2014 - 19:35 | 4344795 NoDebt
NoDebt's picture

Their inventories were depleted over a fairly rapid period of time and then.... they just leveled out and bounced along the bottom.  Almost like somebody knew not to break them and set off a panic.

Sat, 01/18/2014 - 19:36 | 4344796 cowdiddly
cowdiddly's picture

The comex is already in default on last Dec contracts  and the whole world knows it.

Sat, 01/18/2014 - 19:37 | 4344800 Mesquite
Mesquite's picture

Oops.....

Sat, 01/18/2014 - 19:37 | 4344803 jballz
jballz's picture

Comex has no problem. If too many longs take delivery they will just change the rules and only allow sell orders before the inventory goes negative. They did the same thing with silver in 81 and they will do it again.

May see a pretty good spike in gold right before they crush it into oblivion though.

Sat, 01/18/2014 - 19:48 | 4344827 IdeasRbulletproof
IdeasRbulletproof's picture

Didn't down vote you. Anyhow, things are a lot different than 81. And even if they are able to crush the price, it will not be able to keep more awakened people from taking physical off the table which puts them in a lose-lose situation either way. Just a matter of timing is what we're all trying to figure out at this point...

Sat, 01/18/2014 - 19:51 | 4344836 ArrestBobRubin
ArrestBobRubin's picture

I don't agree. Comex's shelf life is dwindling along with inventories of PM throughout the West. LBMA's too.  Soon there will be competing price discovery mechanisms that curtail the influence and exclusivity they've enjoyed up to now. They'll cause more pain before they're through but they no longer have the initiative- - they're just fighting a rear guard action.

Sat, 01/18/2014 - 20:09 | 4344871 unwashedmass
unwashedmass's picture

 

well then, i guess the market is frozen until hell freezes over, cause i ain't sellin,,,,,, and neither is anyone else i know who is holding bullion. 

this was a Cartel "operation" that ...discovered that the sheep are not quite as stupid as they were supposed to be.....and not quite as ignorant of the outright selling out of our country as they needed us to be. 

 

 

Sat, 01/18/2014 - 20:10 | 4344872 unwashedmass
unwashedmass's picture

 

well then, i guess the market is frozen until hell freezes over, cause i ain't sellin,,,,,, and neither is anyone else i know who is holding bullion. 

this was a Cartel "operation" that ...discovered that the sheep are not quite as stupid as they were supposed to be.....and not quite as ignorant of the outright selling out of our country as they needed us to be. 

 

 

Sun, 01/19/2014 - 03:21 | 4345472 Tall Tom
Tall Tom's picture

The 2% of us whom own Gold are not the sheep. The sheep have no Gold.

 

No. We are not stupid. That is the problem with Comex. They are fighting yesterday's War on Gold. They are fighting like it were 1976 through 1979 when many people were involved in the Gold Trade. They are fighting this as if it were a Bubble Market.

 

But that is yesteryear's war. They are failing to understand that.

Sun, 01/19/2014 - 13:25 | 4346034 Tinky
Tinky's picture

That's the elephant in the room that is so often missed in these discussions.

Confiscation? The very people who own the vast bulk of the gold (in private hands) are going to direct their minions to confiscate? How absurd.

It is true, of course, that in China and India (in particular) there is a great deal of gold in the hands of the average citizen. Nevertheless, as a percentage, the elite hold the lion's share.

Sat, 01/18/2014 - 19:43 | 4344817 ExploitedCitizen
ExploitedCitizen's picture

Germany got fucked on it's gold.  Who would have thought selling sombody elses gold would cause such a problem???

Sat, 01/18/2014 - 22:13 | 4345099 Teknopagan
Teknopagan's picture

The Germans are used to it.

Sat, 01/18/2014 - 19:49 | 4344829 kragsquest
kragsquest's picture

Those who have been trying to get physical gold have been told that supply is a long way off.  What happened to all those gold eagles, kruggerands, maple leafs, and other forms of gold that were so plentiful when gold was $400 higher?  The Chinese apparently have us by the cajones....

 

For those who stocked up on physical gold and silver, GET READY TO BE RICH!!!

Sun, 01/19/2014 - 03:26 | 4345475 Tall Tom
Tall Tom's picture

We will not be rich at all. WE will be POOR. The rest of the Nation will be DESTITUTE.

 

We will be a little bit better off than the vast majority. But we will NOT BE RICH.

Sat, 01/18/2014 - 20:48 | 4344843 MsCreant
MsCreant's picture

"there may not be enough gold to go around if everyone with a futures contract insists on taking delivery of physical bullion."

"there may not be enough money in reserves if everyone with a bank account insists on taking delivery of their physical cash."

"there may not be enough money to go around if everyone with an insurance policy has a catastrophic event at the same time."

"there may not be enough life to go around if every fucking soul in existence insists on taking up occupancy on planet earth now."

Fractional reserve everything, my fellow bitchez.

Edit:

"there may not be enough money to go around if everyone with a CDS tries to collect at the same time on a major credit event."

So much fun, we can go on and on...

Sat, 01/18/2014 - 22:10 | 4345092 holdbuysell
holdbuysell's picture

Spot on.

Amplifying others' wealth through leverage for the banksters benefit by siphoning off a small fraction is exactly what banksters do and have done since the beginning of time.

The beauty of alchemy: creating and capturing wealth out of thin air.

Banksters must giggle every day at how stupid the sheople are to go along with the sham.

Sat, 01/18/2014 - 19:58 | 4344848 Winston Churchill
Winston Churchill's picture

Moron is still playing gold to fiat with his trade.

Sat, 01/18/2014 - 20:02 | 4344854 Seasmoke
Seasmoke's picture

You all better buy my gold for $10,000USD before I start asking $20,000USD this summer.

Mon, 01/20/2014 - 04:19 | 4347610 X_mloclaM
X_mloclaM's picture

Getchorass a Cab like Don Melchor after all's said, fn pn snob

Sat, 01/18/2014 - 20:03 | 4344856 SweetDoug
SweetDoug's picture

'

'

'

'

Does that mean that somebody had their finger on the <Print> button too long?

 

What about GLD?

 

Not to worry! I'm sure the COMEX $?φ?@†$ will do something like raise the margins.

 

•J•
V-V

Sun, 01/19/2014 - 03:27 | 4345477 Tall Tom
Tall Tom's picture

Price will DECLINE.

Sat, 01/18/2014 - 20:10 | 4344874 resurger
resurger's picture

Bitchez always move from registered to eligible.... like Kyle Bass lol

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