SLV Database 5 - Dark Bullion

Dark, I'm feeling Dark. Go ahead, bite me.

This is the fifth major article in the series of SLV bar list data analysis. I've become so obsessed with this bizarre niche topic that between the pills and the lingering after-effects of the last round of mystery drinks at GM's country mansion, not an hour goes by where my reprehensible soul* is not pondering what mysteries can next be pulled from the darkness of the void.

The concept of dark bullion was first written about in analysis #2 where it was noticed from the SLV data that some of the bars appearing as 'new' inventory had actually been listed some time prior. In analysis #3 and #4, we progressed the investigation and now we know that bars can go dark and resurface, sometimes reappearing in different vaults (and we can track their movement from London to Australia, for example). Hidden, juicy secrets! Exactly what are those bars are doing when they are not represented on an ETF's bar list? While we will never know, at least we can describe what we can't see!!

Let's start with a premise. The "Dark Inventory" concept in commodities is not a new one ¹ but it is fair to say the area is difficult to study because of the general lack of quality information. However, the silver and gold inventories provide an interesting opportunity to track inventory because (conveniently) each bar has a serial number. So ... what is available to find, and how do we find it?

An example of the Dark Bullion Effect (GLD)

The GLD inventory the other week had a small uptick of inventory - just 96 gold bars - not much in the scheme of things but enough to do an analysis of 'where did those bars come from?'.

I consider the dark bullion effect significant because it invalidates more than one general thesis out there (about the metals). For anyone new to the discussion, I am defining dark bullion as 'A bar previously known and registered, re-appearing on a list after an absence.' I stand resolute on this topic simply because the signal (of the dark bullion effect) is unmistakeably clear and provides a different view of metal inventories - I have been pursuing this ever since I first detected the effect in 2011, and I want to talk about it more, with the hope that with enough discussion we might be able to squeeze some secrets out of the data.

Stockholm Riots

Posting this as it unlikely to appear anywhere in American media. It's not just Spain, Greece etc.

Been down so long

 Ray Manzarek, RIP

Gold is (dead) Money

Let's update Monday's charts, shall we?

Two charts

 Two charts that go back 15 to 20 years.

Is Google Evil ? Open Forum

Artwork from cover of
'Screwtape Proposes a Toast'
by C.S. Lewis.

A few interesting observations from the previous thread, in relation to how Google harvests data and whether anything online is safe at all. I recently had an epiphany regarding my bank statement information: that the information is effectively 'owned' by whoever has access to it - this is a brave new world where most information is just a password away.

My own theory about Google is that 'being evil' is just a matter of size, i.e. that any central concentration of power and commerce will invariably be distorted by its own 'gravity', stepping on the toes of individuals in it's own insatiable quest for expansion. Additionally there would be cycles; companies previously evil find themselves becoming the underdog and must make a move to more trustworthy business practices or go out of business. Today the younger generation do not know of, nor appreciate the freedoms their parents saw, and so we hurtle towards an evolution of 'some-thing-or-other'.

Ultimately though, every information network can be expressed in terms of inputs, information usage, storage and configuration/implementation so the only unpredictable and unknown thing about our new technologies is how they all act in aggregate (e.g. there is nothing sinister about a digital camera, but there is concern about how it can be abused). Interpretations will also vary but is ultimately limited by the observers paradigm. Is it truly possible to provide a penultimate authoritative interpretation on our modern complex world? Only if you're vain.

Please feel free to use this thread to talk about Google or other technology giants - this thread is not precious metals related so venting your spleen about society's progression into orwellian decline is completely on topic, only request is to be civil to each other and to yourself. If you have a conspiracy theory, be prepared to test it yourself in terms of a framework/theory which can be falsified. This is a placeholder article while we prepare other content.

On Estimating Population of Gold Bars

I owe reader Michael H an answer to the question of "how many of the 200,000 bar signatures we see, are from GLD?". The answer is 158,289 i.e. roughly 80% of all bar signatures we know about, have appeared in GLD at least once, the other signatures are known from 18 other ETF's. Now I need to explain why I thought this worthy of sharing in a post.

More theft coming to a country near you

I have been tracking the Irish Banks for years. The level of corruption, incompetence and collusion is breathtaking in it's audacity. Most people have an idea of what's going on so I'll just point out the most recent and some of the more amusing.

Minister for Finance and beating up old ladies, Michael Noonan, assured the Irish people shortly after the Cypriots learned a lesson about trusting banks and politicians that "deposits of over 100,000 euros are sacrosanct" appears to be getting ready to either make good on that promise  or prove himself a liar once more.
a) The Irish banks have been putting out reassuring headline after headline that they are solid and "we only lost xxx million last year".
b) They appear to be trying to dump their UK mortgage portfolios or at least gouge their customers by hiking their mortgage repayments.
c) Blackrock audited them a couple of years back and reported a 24 billion shortfall. This was after the bailout which required the Irish people to be on the hook for their incompetence.
d) Because of the way property transactions in Ireland are conducted it is was entirely possible to pull multiple mortgages on a single property on the full value of the property. This means that it is possible to by a house for a million and borrow 5 Million against it or more. It just depends on whether you have the time to visit a 6th or 7th bank etc. So now the banks are fighting over ownership of houses that have been vacant for years. I could go on and on.  

For the last few months Reggie Middleton has been looking at the Irish banks and he doesn't like what he sees. Reggie is a great analyst but unfortunately his articles are horribly constructed with facts just randomly thrown on a page and links to more articles with links to more articles. The bottom line Reggie says "fraud".

Anyway, to my point. There are two articles that you need to read and it becomes blatantly obvious what is going to happen.

The first is this Ireland Agrees to Stress test ahead of EU Summit
"The Government has agreed the tests – aimed at gauging banks’ resilience to economic shocks – could take place ahead of a Europe-wide exercise, in line with the European Union and International Monetary Fund’s desire for the banks to be checked before the end of Ireland’s sovereign bailout deal in December.
Dublin had wanted the tests carried out in conjunction with a European-wide exercise, expected in early 2014."

Not terribly exciting except it points out the level of distrust is growing in the EU but then you have this today "Bank deposits of over 100K may be at risk"
"While the inclusion of large savers in future bank bailouts is now widely accepted, significant differences still remain between member states.
While the new rules governing bank resolution were first intended to come into place in 2018, since the Cypriot bailout there have been calls from senior EU figures such as European Central Bank president Mario Draghi and EU economics affairs commissioner Olli Rehn to introduce the new regime as early as 2015.
The Irish presidency of the European Council is hoping to reach a common position by the end of next month."

I read this as the next bail in outright theft will happen sooner than expected. It may happen across Europe in one shot because if this is just a gradual roll out then the smart people will be long gone.

Sunday pre-game, 5/5

Hello, friends-
I'm currently not trading the metals because I'm betting on the NBA playoffs. A much more even playing field - I don't think anyone gets calls in advance notifying them of what's going to happen. I've always done well with basketball. Sports like football and baseball i find nearly impossible -- too many variables. Betting successfully on basketball, especially playoff basketball (when you can assume that players actually care about winning), comes down to to the ~8 players on whom the outcome will depend 95% of the time, and a few other factors like home court advantage. Just using the golden rule "which team would be more okay with losing" (or if you're playing the spread, something like "how okay would team X be with being blown out") has led to more successful bets than failures. and then there's prop betting, which I've done even better at, but you'll have to subscribe to my newsletter to learn my secrets.

But, returning to the metals, as a gold bull, I'm convinced the ratio of the gold price to stocks is what's important right now. Simply put, a macro-environment in which stocks are shitting all over gold is not one in which gold can shine (there's a real stinker of a pun there - did you catch it??)

On that note, gold's ratio with the S&P500 recently broke through an important price level and hit a fundamentally important trend line (dotted blue) and (very) long term horizontal support. This needs to be watched closely. 

The huge three line break to close April on the monthly chart is not encouraging (note the last red bar is in still "in progress" -- where it ends up or if it disappears will depend on how May closes):