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A 7% down week...



S.

The Federal Reserve should reverse a decade-old ruling
- that lets banks trade physical commodities, Commodity Futures Trading
- Commission member Bart Chilton said.

“I don’t want a bank owning
- an electric service, or cotton, corn or feedlots,” Chilton, a Democrat, said in remarks prepared for delivery today at a conference of U.S. cotton growers in Lake Tahoe, California.

“I don’t want banks owning warehouses, whether they have aluminum,
- gold, silver
- or anything else in them.”
The Fed “can and should reverse” the policy, he said.

Banks including Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS), all based in New York, have been permitted to expand into commodities markets under a 2003 Fed decision and subsequent ones.

The central bank said last month that it’s reviewing the policy amid Senate scrutiny of whether such involvement
- allows Wall Street firms to control prices.

......................................................................................................................



CFTC Chairman Gary Gensler, declining to comment on specific investigations,
- said at a Senate hearing on July 29 that his agency has legal authority to pursue manipulation of markets
- for metals and other commodities.

The CFTC has sent letters to companies asking them ......not to destroy documents
- relating to warehouses registered by exchanges such as
- the London Metal Exchange or Chicago Mercantile Exchange,
- according to a copy of the letter obtained by Bloomberg News.

How tiny the - physical market is :-

The ReserveBank of India’s January 2013 report “Report of the Working Group to Study the Issues Related to Gold Im-ports and Gold Loans by NBFCs.”

On page 58 is the following data sourced from the CPM Gold Yearbook 2011:

Gold Futures and OTC Market Vs Physical Market for Gold (million ounces)

Instrument 2010
Physical market................... 120.8

Futures & Options ET vol..... 6438.8
LBMA (OTC) clearing volume 4727.7

Total 11287.3

Source RBI


Interestingly enough - the article I posted a day or so ago ....suggested "the physical"
- that actually moves via the LBMA - is only a minute... 1% ....of it's clearing volume

If we assumed only 1% on Futures and Options "volume" too,
then - the two combined = 11,166.5...x 1%
= ...111.6

Physical market above quoted at...... 120.8
(The two figs are fairly close)

The other 99%......of the gold ...of the futures & options market
- and the ....LBMA

- would therefore perhaps seem....all smoke and mirrors

The CFTC’s Bank Participation Report on trader positions on COMEX
- for June 2013

- showed that the US bullion banks
- had moved to a net long position of nearly..... 30,000.... contracts (3 million oz.)
- from a huge net shortposition of 106,000 contracts (10.6 million oz.)
(when gold peaked in October 2012)
– an overall swing of about $20 billion in - fiat - terms – into a declining market.

The July 2013 data
- shows that the US bullion banks
- increased their .....net long position
- to almost...... 45,000..... contracts, while speculators (hedge funds?) increased shorts and reduced longs.

And that is a Bullion Bank ........50% increase - in net longs.....in just one month

Are the banks (finally) getting ready to squeeze the funds,
- or are they preparing for another big raid ?

Furthermore, Rabobank has followed in the footsteps of ABN Amro
- in suspending delivery of physical bullionto its clients.

*****With rumours circulating *****that a MAJOR bullion bank is ....also
- preparing to change - its delivery agreements,
- the implication being that it too .....will suspend or curtail..... physical delivery.

We are wondering whetherthe breakdown in the physical versus paper gold markets is approaching
...leading to price discovery for physical gold itself.*****

(source - "Thunder Road Report"....Monument Securies)

Does the GLD ETF Holdings broadly tracking.... the drop in the Gold Price, suggest
- A - As the price falls - people are cashing in their holding
Or
- B - As the price falls - the big holders.....are taking advantage ....and redeeming baskets of shares...to grab ....real physical





The fact (posted previously) - that 10% of toal GLD shares have been...borrowed
- doesn't seem (imo) to suggest....a surplus of people.... selling them

So I tend to favour......option ...B


And the top 8 holders, by shares held ...of this GLD ETF (of the barborous relic), who "may" be playing the option B....

PAULSON & CO INC
JPMORGAN CHASE & CO
BANK OF AMERICA CORP
NORTHERN TRUST CORP
MORGAN STANLEY
CREDIT SUISSE AG
UBS
BLACKROCK ADVISORS LLC

Coincidentally.......

Predominantly - Banksters Inc :o)

Just Interesting

Silver
- July kicked off, that by July 11,
- JPM
- had absorbed nearly 90% of the July Comex silver deliveries,
- and.....primarily for their own or “house” account.

By the entire delivery month end
- and when the totals were finally tabulated,
- JPM had stopped 3,040 of the 3,444 deliveries for July.
- That’s 88.27% ......of the total !!!

But - It gets even better. - Of the 3,040 that JPM took down,
- 2,824 went into their own house account.
- That’s 12,140,000 ounces of silver
(In my speak 377+ Metric Tonnes)
- and in my speak....... 82%.... of all Comex silver deliveries for July.
- To JPM.......&.... Into their own house account.


Gold
- So now here we are into the delivery period for August gold.
- In just the first two days,
- there have already been 1,963 total contracts delivered.
(3,960 stood on First Notice Day - and there will likely be at least another 3,000-4,000 more that will show up during the month).

So how's JPM doing on the gold front ??

Well
- Of the 1,963 contracts delivered last Thursday and Friday,
- JPM has stopped 1,466 .........or 74.7%.
- Additionally, of these 1466,...... 1,206 have gone directly into the JPM house account.
So, if you’re keeping score at home,
- JPM has stopped..... to their own account
- 61.4% of the August deliveries…and
- the month has only just begun.

Now of course
JPM may not.... continue to stack the smack - and may not stash even just a single further oz into there house account for the remainder of the month, but....

(back in a mo - there a flying pig just caused an eclipse of a rare blue moon)

- I somehow doubt it



And...... by coincidence
(Per the option B game....I considered in the previous post)

The GLD “inventory” had been steady at 927.35 metric tonnes..... for over ..a week,
- Then, .......on Thursday and Friday of last week,......... it fell..... 280,000 ounces.

Now, let’s see…

- August Comex delivery also began....... on Thursday and continued Friday.
- So far, there have been 1,963 contracts delivered
- for .......196,300 ounces.

I’m sure that’s just a coincidence…

(Gotta go again - apparently a pair of flying pigs are now doing their aerial ...mating courtship)

Well it looks like Wall Street are heading towards the standard zenith...of sucking the sheeple......into US equities
(same old rinse & repeat)
- moms & pops likely to be fleeced (again)....... on the near horizon

Worldwide - the flow into...equities



So out of the worlwide flow into equities above
- how much is Wall Street managing to suck in to.....US Equities
- VS - how much is going into...non US Equities




So how does the...flow (tidal wave ?) into...... US Equities
- compare to the flow into.....other asset classes




So - it seems.....on balance.....ALL - IN on the US equities front so far !

So is it the pro's..... or as usually the case.....the sheeple
- being sucked in at the top
- who will ..as..usual.....be left holding the bag
(when they pull the plug)





And what about the - really big money....the hedge funds
- are they... increasing their exposure to equities
- or unloading...to the willing incoming.....sheeple




Overall therefore
- Equity investment is flying in.....at volumes...... not seen since around 2000/01
- US equities, have the lions share of the worlwide .....flow into equities
- US equities are "top 3" of flows..... into asset class

As to split
- Retail sheeple are ....the net buyers
- and the pro's are the ...net sellers
- with the hedge funds....willingly offloading


Perhaps Kyle Bass was on to something...
...the Fed's policies are forcing..... mom-and-pop.... to
- "put their money in....
- the wrong place at the wrong time."
- There will be consequences for that... there is only one way this will end...

"and investors should be really careful.....
- doing what the central bankers want them to do."

Miners gapped down from the opem.

See if the 61.8% Fib line offers support...



Notice the similar pattern to $Gold...



S.

The skewed Inv 'H&S' could be in play still...



S.

Great stuff guys, thanks for updates and posts.

tick tock



Consulates and the Vatican in Chaos as HSBC tells them to Find Another Bank

"Diplomats in London have been thrown into chaos after Britain's biggest bank, HSBC, sacked them as customers and gave them 60 days to move their accounts."

"Their situation has been made far worse because other banks have been closing ranks and refusing to take their business."

"More than 40 embassies, consulates and High Commissions have been affected. Even the Vatican has been given its marching orders."

http://www.dailymail.co.uk/money/news/article-2384003/Consulates-Vatican-chaos-HSBC-tells-bank.html

That's old story, I suspect those involved knew this for a couple of weeks.

It will be sorted out soon, as many banks would love to offer them the service.

Seems to be bleeding to death cutting through everything with ease. ...



In hindsight I shoud have stayed on Friday afternoon and initiated hedges at the break of the triangle support line. Now I will have to scale out prior to the close if we don't see a recovery. I notice there is divergence on the RSI above.

One positive is $Silver is holding up quite well.

S.

$GOLD - Is holding on but needs to remain above its 20/DMA and break above the 50/DMA for the potential 'Bull Flag' to play out...



S.

Miners have tagged the first 'Gap' and may bounce from thee...



S.

Almost 10 'Dojis' and 'Hammers' in a row?/? On $Silver.

Look at the bollinger Bands how they are tightening. Something will give and probably with a jolt. This would be where a 'Strangle' Option trade would come in handy, that is where you hold both puts and calls for the same instument for the same maturity date, would only work out if there is a large enough move in one direction to offset the loss on the opposing option.



Don't ask me any more about options cos I NEVER GET THEM RIGHT.

S.

I will hold onto the miners to see if we can bounce from the Gap and perhaps plot a 'Triangle' ...



S.

Sahara - options could prove a sore point (come Dec), or possibly next time I see him :o)

If you recollect when my son discussed silver, as he left, I said (completely off the top of my head, with absolutely.... no info or figures...just plucked out the air as ..an option example, in effect)

oh - you could probably go the option route, pick up a Dec option to buy say 20,000 Dec silver contracts @ $27 for £3/400
- & if silver hit $30
- you would probably make around $60,000 ish.
- the words 60,000 made his eyes light up
- but, he has never bought a share in his life, and completes on his 1st house shortly
- so I thought he would have enough on his plate etc & and not even a few hundred pounds to play with.

The above straight option is about my limit of understanding options, and in hindsight
- I must pluck some more abstract figures out the air in future......as
- got a text from him tonight
"bought 20,000 dec $27 silver for.....£380....fingers crossed for Dec"
(nearly fell off my chair at plucking figures out the air, actually playing out)
- text back for more detail
- to cut the text exchange story down
- He bought some Soc Gen SY81

Looked them up - and saw "parity 1/10" which was a ???
- I gather it is the ratio of the option....to the underlying actual
- looked that up.......& the option he has is for 1/10th of an oz....not a full oz
(so he doesn't have an option on 20,000 oz ...only 1/10th ie 2,000 oz. So at $30 dollars expiry....a potential $6,000(ish) profit.....not erm...$60,000).

Now do I tell him.....??
(will sleep on it :o)

Mexico was forecast
- to increase... its silver production this year,
- however if present trends continue, total output could...... fall nearly 10% in 2013

the last two latest reports coming from Mexico’s INEGI, we can see that the majority of the declines have come from Zacatecas — the richest silver region in the country.

Retail investor - inflows into equities - really do seem ....
- to gather steam....at market tops
- being led in by the nose....to carry the bag
(when the boyz have offloaded)





The chart above shows the investor psychology cycle of investment behavior overlaid against the S&P 500 index.
- The bar graph in the chart is the 3-month average of net monthly inflows by retail investors into equity based mutual funds.

Any hint of what has really been driving up the stockmarket
- such as any correlation
- between the rise in the S & P
- and...the amount of QE pumped in by the FEDy
(indicated by the ....expansion of it's balance sheet :o)