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The Rats and The Sinking Ship
The Rats and The Sinking Ship
Posted with permission and written by Turd Furguson of TF Metals Report (CLICK FOR ORIGINAL)
Yes, what we are about to show you is simply a collection of anecdotal data points. Taken separately, perhaps they can all be written off and marginalized. Taken collectively, however...well, maybe there's something to consider here.
This site has been around for over five years now and, for most of that time, we've preached about how fractional reserve bullion banking is a scheme that is destined to fail. By pricing a physical commodity upon the oversupply of paper derivatives, shortages become inevitable. The market recognizes the value of the mispricing and drives up demand. At the same time, the lower price affects supply as producers of the commodity limit or shut down production due to the economics and declining/negative margins.
What eventually happens is a physical supply shortage that manifests itself in smaller global stockpiles. This is evident in the increasing abundance of stories about the tight global gold market, particularly in London. This has also become apparent in silver as, just this week, Thomson Reuters GFMS released their latest Silver Interim Report, which projected the third consecutive year of a global shortfall in the supply of physical silver. Check these links for details:
- http://www.cpifinancial.net/news/post/33686/mine-production-stagnates-as-silver-coin-demand-hits-record-high
- https://srsroccoreport.com/official-release-world-silver-deficits-12-years-running/
- https://smaulgld.com/silver-coin-and-bar-demand-2015/
As we all know, the global "price" of physical gold and silver is largely derived by trading on highly-leveraged futures exchanges such as The Comex in New York. On these exchanges, a modern form of alchemy has been perfected, whereby a relatively small amount of metal can be leveraged multiple times in the creation of paper metal derivative contracts. If after five years we are, in fact, seeing the first realphysical cracks in the global paper metal bullion banking scheme, logic would compel us to expect those cracks to appear at The Comex first.
And that may be what we are seeing play out in real time. Below are those "anecdotal data points" mentioned above. Consider them independently but also take time to view them collectively, as well.
COMEX BANK LEVERAGE AT RECORD LEVELS
This site and others have been documenting this trend for weeks. What we're talking about here is notmargin leverage. Instead, this is The Banks' ability to lever their existing supply of readily-deliverable gold. On the Comex, this is gold classified as "registered" and it is this registered stockpile that has been at record lows for over two months. As of Thursday, the amount of gold shown in this category was just 151,384 troy ounces. When you divide this amount of available gold into the total amount of "paper gold" outstanding...as measured by a total open interest of 424,000 contracts (100 paper ounces per contract)...we get a historically high and unprecedented leverage ratio that is nearing 300:1. We've repeatedly written about this here and you can also see this displayed on the chart below from ZeroHedge:http://www.tfmetalsreport.com/blog/7249/bullion-bank-leverage-soars-near-3001
TOTAL COMEX GOLD STOCKS
However, it's not just registered gold on The Comex that is dwindling, it's also the total amount of gold held in the bullion bank vaults. The chart below was published yesterday by Dave Kranzler, at his excellent site called Investment Research Dynamics:http://investmentresearchdynamics.com/did-greshams-law-invade-jp-morgans-comex-gold-vault/ Note that over the past five years the total amount of gold held within the Comex vaulting system has declined from over 12,000,000 troy ounces to yesterday's new low of 6,436,404 troy ounces. Of course, this hasn't limited The Banks ability to create paper metal to meet occasional speculator demand, but that's a topic for another day. http://www.tfmetalsreport.com/blog/7214/inherent-unfairness-comex
THE GOLD HELD BY JP MORGAN
But let's dig even deeper and look at the gold held by individual Bullion Banks within the Comex vaulting system. Every day, the CME puts out a "Gold Stocks Report" which attempts to show the total amount of gold held within the Comex vaults, though the CME added a major disclaimer to the report back in 2013 (http://jessescrossroadscafe.blogspot.com/2013/06/caveat-emptor-another-level-of-risk.html)
On the Gold Stocks report below, dated July 27 of this year, note that JPM reported a total vault of nearly 1,398,215 ounces. In that vault were 115,755 ounces categorized as registered and 1,282,460 ounces listed as eligible.
Next is a chart from about two weeks ago. Note that JPM's total vault has been more than cut in half. Total registered gold has fallen to just 10,777 ounces and total eligible gold was shown to only be 657,721 ounces. Hmmm.
But now look at what has transpired in just the past week. The total amount of gold held in the vaults of JPM has been cut in half again! As of Monday, JPM showed a total of 668,498 ounces of gold in their Comex vault. After two separate withdrawals of nearly five metric tonnes, JPM's vault was down to just 347,898 ounces as of yesterday:
So, after including the massive withdrawals of just this week, the total amount of gold held by JPMorgan in their Comex vault has fallen by 1,050,317 troy ounces...or 32.7 metric tonnes...that's a cumulative 75.1%...in just the past four months.
SCOTIA MOCATTA'S GOLD AND SILVER VAULTS
And if you're beginning to feel as I do...that all of these points are connected...then what is going on at The Scoshe might be the most important as the Canadian bank, Scotia Mocatta, is the "oldest" gold dealer and bullion bank in the world.
One might think that, as the world's oldest bullion bank, The Scoshe is pretty well wired into what's going on in the global gold market. Additionally, you don't get to be the longest-tenured bullion bank without recognizing/anticipating change and then positioning yourself for future profits...and, as importantly, avoiding current losses.
We've detailed what appears to be a slow-burning "bank run" that is ongoing at Scotia Mocatta's Comex vault. We most recently wrote about the trend here: http://www.tfmetalsreport.com/blog/7170/comex-bank-run-scotia-mocatta Note that The Scoshe (or their clients) almost appears to be exiting the Comex system...similar to what we're now seeing at JPMorgan. As you can see on the report below, back on March 5 of this year The Scoshe allegedly held 3,066,169 troy ounces of gold in their Comex vault. (You might also note the total amount of gold held by all six banks at that time and compare it to the 6,436,404 ounces reported yesterday.)
Now let's look again at the CME Gold Stocks report from yesterday. Notice that The Scoshe currently shows just 79,096 ounces of registered gold and about 1,008,831 ounces of eligible gold for a total vault of 1,167,927 troy ounces. This means that, over the course of the past 8+ months, Scotia Mocatta has lost 77% of its registered gold and 60% of its eligible gold. As measured by its total vault, the drop has been 1,898,242 troy ounces...or 59.4 metric tonnes...that's a cumulative 61.9%...in a little over eight months.
And here's where the intrigue regarding The Scoshe gets even deeper. They're losing (moving?) silver, too.
Below is a CME Silver Stocks report from September of 2013. Note that the total amount of silver held with Scotia Mocatta's Comex vault was well over 22MM ounces or about 695 metric tonnes.
By May of this year, Scotia's silver vault was down to about 15MM ounces or about 468 metric tonnes:
And after yesterday's posted withdrawal of over 1MM ounces, Scotia's Comex vault held only 5,148,700 troy ounces of silver.
So, measuring from September of 2013, the drop in Scotia Mocatta's Comex silver vault has been 17,188,272 troy ounces...or about 535 metric tonnes...that's a cumulative 76.9%...in about 26 months.
SUMMARY
Again, we'll leave it up to you, the reader, to decide if something significant is happening behind the scenes OR if what has been displayed above is simply a collection of disparate data points. Maybe ponder these questions over the weekend, though:
- Is the world's most important bullion bank (JPMorgan) moving gold away from a Comex system that is leveraged to a degree not seen before in its history?
- Is the world's oldest bullion bank (Scotia Mocatta) relocating gold AND silver away from and out of the same Comex vaulting system?
- If they are doing so, are these banks signaling that they, too, understand that the days of the current fractional reserve and derivative-based pricing scheme are numbered?
- As gold and silver exit the Comex system...and as reports continue about physical tightness in London...and as the world continues to run physical silver supply deficits...it at safe to conclude that the system's ultimate collapse is, at a minimum, an eventuality?
I don't know about you, but I think I'll buy some more gold and silver today...and take immediate delivery. The current pricing scheme may not collapse next week or next month (as stated above, we've been writing about this for over five years), but it's not going to last forever, either. And when change does come...and a new system emerges that determines price on the trading of physical and not synthetic metal...I'm quite confident that the prices "discovered" are going to be a little bit higher than $1100/ounce for gold and $14/ounce for silver.
Prepare accordingly.
Please email with any questions about this article or precious metals HERE
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I know I'm a little late coming back to the comments, but thak you everyone, especially Honestann & Squid, and enjoyed your comments too GDR
It seems there is an air of "we're screwed" and can't do anything about it about the future. I won't accept that. I'm still praying, and searching for an answer. That and prepping with what little I have.
Keep the faith.
Just some thought for ZHer's to use:
Albert Einstein defined what he called "modernist's snobbery". "Somebody who reads only newspapers (in his time) and at best the books of contemporary authors looks to me like an extremely nearsighted person who scorns eyeglasses. They are completely dependent on the prejudices and fashions of their times, since they never get to see or hear anything else."
That said, let's go back 165 years to the book "Sophisms of Free-Trade." Electronic version can be found here
https://archive.org/details/sophismsoffreetr032056mbp
Originally published in 1849 by Sir John Barnard Byles. Brackets [ ] are my comments
CHAPTER XXXVI. "Repeal the Bubble Act" [Similar to repeal of Glass-Steagall Banking Act]
So cried the experimentalists of 1825. And it was done. Here and there a warning voice was raised. Many a high-spirited, but ruined and broken-hearted man knows now, but too well, how wise that warning was.
The plague, the cholera, the black death, [ebola], the sweating sickness, are epidemics that have periodically devastated the earth. But mankind are subject to moral as well as physical epidemics. Ever and anon there stalk abroad palpable delusions that attack and prostrate the reason of whole nations. The wisest are sometimes the first victims. Such epidemics have been seen in our own time. They were no novelties, and as they were not the first, will doubtless not be the last.
The tulipomania broke out in Holland about 1634, and before 1637 had spread over a large part of Europe. The cultivation of the tulip had been carried to great perfection in Holland. Many of the roots were valuable. People found that by buying up particular sorts they could sell them again at very high prices. Then came the fever of speculation. . . .
Nay, Joint Stock Companies were formed, holding undivided shares in one root. People bought and sold tulips that existed; and were known by both buyer and seller not to exist. [today's precious metals market.]
As now, on the Stock Exchange, there are the different manoeuvres of putting on stock, differences, continuations, backwardations; so it was then, with tulip roots. . . .
At length the bubble broke and all the dealers were ruined. No, not all. In every delusion of this kind, long-headed knaves stand by, urge on the game, sell out in time [initiating the selling panic], sweep the stakes into their pouch, and leave the swindled public to gape and stare at one another. [today's precious metals.]
"There's nothing new under the sun." Ecclesiastes 1:9
And when it all falls apart, I for one won't be bowing at the alter of Sprott and Sinclair. They will be broken-clock right on that day. I won't forget how wrong they've been for five years.
Too bad, Eric, that you don't have enough cabbage to effect a squeeze on physical. You're right.Take delivery. In fact, take a page out of their cheating playbook and indicate to COMEX that you are going to take physical on all contracts held. See how fast that news gets out and watch the rocket go.
The miners should get in on this too. Start witholding production delivery. Just keep the pumps and the lights on for a quarter. That way, the lack of physical entering the system gets shut out...they can't do the sovereign state shim sham with the reserves...
Too bad, Eric, that you don't have enough cabbage to effect a squeeze on physical. You're right.Take delivery. In fact, take a page out of their cheating playbook and indicate to COMEX that you are going to take physical on all contracts held. See how fast that news gets out and watch the rocket go.
The miners should get in on this too. Start witholding production delivery. Just keep the pumps and the lights on for a quarter. That way, the lack of physical entering the system gets shut out...they can't do the sovereign state shim sham with the reserves...
It is Turd Ferguson's article, not Eric Sprott.
See, the vault you purchased silver from is empty, sorry, nothing for you, how about a cash settlement? What? That vault over there? That's where we keep silver other people already own.
Dood-Frank ==>> CASH SETTLEMENT, Argue and get nothing..
And of course we won't admit it, but that other vault is empty too. Per modern practice, anyone who lets others hold their goods... will never see them again.
Point: If you don't actually, physically hold (and hide/secure) the gold and silver you own... you will never get them.
A few lame brained questions on my behalf....
1. Are the TBTF orchestrating an economic crash in order to crush PM's so they can cover their shorts? (I assume they are shorting)
2. Can't they ask the gov to declare a crisis, and halt all trade in physical? (not the same, but similar to what was mentioned by stich above, re Roosevelt)
All they are doing is prolonging the apparent inevitable (repositioning in the mean time?). I truly believe the game is rigged, and their smoke an mirror games are slowly catching up to them. When (if?) PM's get crushed, there won't be any physical to "pick up" at a the low price.
Then BOOM to the moon, and we'll really know the "value" of PM's.
Stack on.
"1. Are the TBTF orchestrating an economic crash in order to crush PM's so they can cover their shorts? (I assume they are shorting)"
Ok, think of this in terms of a battle. Napoleon used to say that battle plans work perfectly until the first shot is fired, then you have to think on your feet. As much as we all like to think that the TBTF types have this all sorted out and are wizards of Oz behind the curtain, they too are human and they too can control only so much. They too hedge in case their plans don't go quite as planned.....which happens likely more often than we know. 2008 was a good example.
I actually believe that 2008 they thought it was over. I don't think, at the time, they believed congress would bend the American people over like they did and that the American people would take it....but here we are.
Think of it, The FASB (Financial Accountancy Standards Board) was threatened by Congress in 2008 to either change the accountancy standards to allow the banks to "mark-to'Fantasy" or Congress would do it by law.
Just stand by and let that soak in....YOUR (and I'm talking to all my American brothers here) elected representatives FORCED the FASB to accept that banks no longer had to mark-to-market assets but that the banks could value their assets at what ever they wanted the assets to be worth.
THINK ABOUT THAT! That is congressionally mandated fraud......
No protest, not a peep.
EVERY bank in the USA is insolvent, everyone.
So are JPM, Goldman and everyone hedging for a collapse? Your frigging right they are. Most of them can't believe they got away with the last one.....the next one it will come down. 98% of American's that have anything in the banks will lose it all. 10 Trillion in deposits are going to go poof. And unfortunately, this is required because things will not change until there is nation wide PAIN. Glass-Steagal got passed in 1934 because of wide spread pain.
Squid
true Squid - and aren't we, teh USA, still under Emergency Rule from 911 - operating under Continuity of Government, the Shadow Gov / Deep State .... the theatrics of our multi-billion dollar Prez Showdown merely distraction for teh sheeple and trickle down to the loyal STATE fan girls & boys ....PaTRIoTs All !
To teh Moon ! Red Dragons & Shnitzzles !
The problem with your question #1 is... the lower the predators-that-be collapse the price, the more PM is purchased (the opposite of what they hoped).
Oh yes, the predators-that-be will at some point do anything and everything they can to avoid the day of reckoning... or should I say "wreckoning"? And this means that someday their manipulation will end (explode in their faces) when delivery of physical cannot be made.
You can be certain the predators-that-be and their allies (and "enemies" like China and Russia) are buying and hiding physical gold and silver by the kiloton and megaton, because they KNOW that "failure to deliver" is near, and the prices will rocket past the moon.
Yes, the predators-that-be have kept the scam running longer than most observers expected, and that fact has disillusioned and worn out many people. And it has GREATLY HARMED many who bought physical circa 2011~2013 then had to cash out before the scam ended. But those who understand what's happening and have longer time horizons will be GREATLY REWARDED because they got to purchase gold and silver for 50% to 80% off the past 3 years or so.
The collapse is coming, but not just the collapse of the PM scam. Also the collapse of the world economy of fiat debt. At which point PMs might suffer one final downturn before everyone realizes they MUST get out of fiat and into "real stuff" like PMs.
"The problem with your question #1 is... the lower the predators-that-be collapse the price, the more PM is purchased (the opposite of what they hoped)."
Yes and no.
I don't think give a shit either way about us "the little people". They are greedy fuckers that just care that THEY have and what they want (not what they need, what they want).
They collapse PMs so that THEY can buy more and 99.9% of the sheeple believe PMs are a bad investment and are too volatile. The TBTF don't care that 0.1% of the hoi polloi are onto their game and are also buying. If you can get away with screwing 99.9% out of all their wealth, then great! You and I are the 0.1%.
Brings to mind a conversation over dinner back in 2013. We were entertaining clients from the middle east after a successful FAT at one of my company's facilities in the USA, a small town. The guy in charge of the project, a youngish chap, degree in petroleum engineering and Geomatics thought we were all idiots for talking about gold. We, being, all expats that are working overseas and the client's consultant, an ex-royal navy weapons officer, and of course, the client, an arab. All, to the man, thought the present state of things was crazy and that gold was a prudent refuge, not a good investment, a prudent refuge to the madness. My over educated project manager, only 3 years out of a nice American university, has accepted the programming well. "Gold is a barberous relic, etc, etc...". Again, to the man, our response was, "but you CAN'T print it!!". Doesn't matter, the educated man had spoken. So at that stage, you change the subject.
And that dinner discussion is a microcosm of most of the Western world. The peasants/working class are going to get COMPLETELY wiped out. And, I hate what I am going to say but it has to be said, "They kind of deserve it".
We have demanded that every new politician tell us a bigger lie than the one before, else we don't elect them. So, the system has produced the best liars that America(Canada, Australia, UK, France, etc...) can produce. Why? BECAUSE WE ASKED FOR IT!!!! We don't elect honest men and women to congress, they are NOT allowed because we, as a people. are not interested in the truth. And it is these very people that 98% of America tusts their retirement funds to? Trusts to regulate the banks where all the assets are?
Think of it, America DEMANDS that only liars be allowed in Congress but expects the liars to be honest?
Sorry, people who think and act in that fasion deserve what is coming....its going to be very messy and very sad but there is simply no other way.
Glass-Steagal and gold will not come back until bankers and a good majority of congress are hanging from lamp posts and we're not there yet. When people lose everything, we will be there.
Squid
I agree with most of what you say, and I understand why you believe the tidbits where I disagree. Let me try a strange approach to this.
Why are the predators-that-be willing to pay so much revenue to create a monster police state rather than pocket all the money required to create, supply and train that police-state force?
The answer is fairly obvious... they want protection from the 99% if and when more than 0.0000001% of liberty or constitution advocates decide to physically retaliate (rather than just moan, groan and complain as they've done so far).
What is another way for the predators-that-be to protect themselves? To so utterly destroy the finances and morale of liberty and constitution advocates that... they can't afford much in the way of weapons, ammo, prepper goodies and so forth.
But yes, I think this is definitely only PART of the reason they took actions to crash the prices of gold and silver. Think about it a bit. Their primary scam and source of arbitrary power and control is what?
Answer: their fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-note system... hands down.
These predators-that-be know 100% clearly that every fiat scam in the history of history has gone belly up. Every. Single. One. And they know their current one will too.
Given that, look at the prices of gold and silver from 2001 to 2011... it looks precisely like the exponential rise that always happens when a fiat scam blows up. By 2011 more and more people were starting to notice, too... and even their fellow mainstream media liars couldn't hide this fact by 2011.
Which made them realize "we must trash gold and silver prices or soon massive numbers of people will abandon fiat and adopt gold and silver". And so they did.
It is my considered opinion that humans are a failed species. Humans are no longer what they used to be, due mostly to highly successful mass brainwashing via parents, families, friends, teachers and mainstream media. They have been intellectually disable to the extent they are impotent. You know, a human being only has to be slightly confused to stop them from taking serious actions that are major risks to their lives. So the endless twisted pile of BS and PR that spews from every direction only had to leave the vast majority slightly confused to prevent them from taking the obviously necessary actions against the predators-that-be.
That hasn't changed. They let the level of nonsense and aggression by the predators-that-be rise so far beyond the point of no return, they gave up everything.
Which is why I doubt humans will hang predators-that-be from lamp-posts even after they "lose everything". Besides, the predators-that-be have openly stated their plan is to kill off 90% to 99% of the world population... which gives a whole new meaning to "lose everything".
I hope I'm wrong. I hope at some point people get so pissed off they rise up and hang every human predator on the planet from lamposts. But the predators-that-be know human nature and human psychology MUCH better than 99.99999% of the masses. Which is why they have plans to disable and/or kill-off virtually everyone BEFORE they take actions against the predators-that-be.
Given modern technology... even though the current descent into tyranny rhymes with history in many ways... this time is different. The vast majority of humans will be killed off before they take actions against those predators-that-be who arrange the killing. Very sad, but that seems almost certain to me, as surreal as this scenario obviously is.
As the COMEX is used primarily by traders, speculators and miners hedging inventory, (in otherwards entities that never take physical delivery), the amount of gold and silver on hand is meaningless and the ratio of contracts to gold on hand can be 1-1, 500-1 or even 1000-1 is also meanimgless. The PM dealers have done everything in the book to scare people tp purchase gold and silver. They proclaimed a total economic collapse, gold going $100,000oz, and now the COMEX is running out of gold and will go under. All total crap! Like the posted articles on the web site silverdoctors, June was when gold and silver would take off, June passes now it's July, then August, then it was the shemitah, the economic collapse in September, now the economic collapse is sheduled before the end of the year and gold and silver will rise again. The site has become a total farce but if you read the posts from readers, that's where the entertainment is. The reader's post are priceless ripping apart the posted articles.
jj
All your points are true of gold.
Not so of silver. Silver is being used up by industry and is nearly irreplaceable. Industry can pay double and triple premiums on a separate exchange for a while, but eventually the comex will be acknowledged as a casino.
Get phys.
And in his August interview with USAWatchDog, Sinclair was starting to sound like Lindsey Williams - "My insider elite friends tell me..." pathetic.
It's pretty clear that a LOT of gold and silver is movoing OUTSIDE of the established system. that means that other people are warehousing it, or storing it. forget the "pricing formula". The Western economic system cannot hold on to its gold. end of story.
Blah, Blah, Blah...
so long as no one demands physical and government puppets want taxes paid in FRNs, nothing changes.
That's right blah, blah, blah... things will stay the same until they don't... When the day comes that they change, look out it will be a blood bath in the metals markets.
Looks like the big boys may be positioning themselves as empty bag holders when the paper gold and silver markets burn.
If they already made the physical metals held by COMEX disappear in a couple of large institutional boating accidents, their 300 / 1 paper crashing and burning will not eat up all of their true wealth physical holdings.
Fucking bank cocksuckers musta been on Zero hedge watching the Silver Bears videos all through 2011 - 2014 !
On that day (and it will come) the "metals market" will be the very least of your concerns.
For me, only because I've been a long time collector of PMs
at what I humbly estimate is a deeply undervalued asset, I will have no concern
when tradition financial systems finally implode.
And also, if history is to serve any measure of possibilities to the future,
PMs might come back to prominance resetting global financial systems, under the applause of some other
political event.
"President Franklin D. Roosevelt had the Volstead Act amended in April 1933 to allow people to have a beer, or two, while they waited for the 21st Amendment to be ratified."
"Executive Order 6102 is a United States presidential executive order signed on April 5, 1933, by President Franklin D. Roosevelt "forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States"."
The timing of these two events is particularly interesting.
I could see something like the legalization of Marijuana while the debt of the US
is called in and recalibrated to a new global financial metric.
As disruptive as repegging PMs to global FX markets would seem,
Quite a few large countries seem very intent on benefiting from that
sort of reset and westen accounting fraud, as a foundation of economics it has become,
can not stand to that transparancy of balance sheets.
All just conjecture of course.
but when it does change, its a tsunami
The timing of systemic tipping points are nerely impossible to predict , but will happen.
However, as had been said before on ZH, it is important not to confuse inevitable with imminent.
Well said. Looks like Scotia's silver went right to JPM.
Damn I didn't think I bought that much Silver...
but i have been telling a LOT of people how Cheep it is :)
"cheep" "cheep" "cheep" birdman dragon Hawk; it is also inexpensive, bargain, fire sale; i say keep on manipulating boys; cheep cheep