Sunday metals pre-game, 8/25/2013

Hey folks, I'm back after a short misadventure. I owe Louis Cypher a big favor, as he kindly put me in contact with a young Thai woman whose generous ministrations expedited my getaway from Samphanthawong, where I had run afoul of some Chinese nationals. 

(Long story short, the phonemes "pu shay," which I uttered for reasons beyond my present recollection, apparently translate to "Death to your mother.")

Apart from all that, I confess to some metal fatigue setting in. Maybe some mental fatigue too, but luckily they make drugs for that.  Speaking of which, I did recently send a money order for Metalfinil, a new boutique drug that purports to trigger artificial excitement in gold and silver trading. It's endorsed by Eric King. But it hasn't arrived yet... I have to write to Gonzalo Lira, who is apparently behind the project.

Anyway, maybe fatigue isn't even the right word; it's more just confusion where to get dependable info. I think it's pretty clear JPM (to name just one example) is an agent of Fed policy, as well as a basically criminal enterprise operating in plain view. Central banks and bullion banks also obviously care about the price of gold (they buy and sell the damn thing, for starters). Means and motive for massive manipulation? Check and check. But, then, the people who have proven to actually know what they're talking about don't seem too concerned about this, basically playing along with (if not outright propagating) the view that the market is more or less fairly operated. 

Then, there's the GOFO/backwardation jazz that's been flooding the metals space of late, which means everything or nothing or something in between, depending on whom you ask. Big thanks here to Warren, S.Roche and Slow Loris Larry for keeping the ball in play, because I must confess: I haven't the slightest clue what any of it might mean. When I try to follow careful explanations proffered by others (see VtC's recent one here in the comments), my eyes slowly glaze over -- it all sounds like mumbo jumbo to me. (I refer, of course, to Dr. Mumbo Jumbo, the late Professor Emeritus of Economics at the People's College of Cameroon, whose work has been widely discredited since his death by crocodile under suspicious circumstances in 1978).

But all that said, the two charts I've been closely following since February worked like a charm.

GM's advice: Buy gold at three line break:

GM's advice: Buy silver at three line break: 

Facebook and Hyperinflation (observation)

Different Names,
Same Product.
Same as Countries,
in our Modern World.

Currently all the major platforms seem to be scrambling to 'Become Facebook' to the extent that it is starting to annoy me. Google+, LinkedIn, Yammer, Sharepoint ... (if I've missed any please add to the comments). Recently shared on g+ by Mr Hackswell was a recent Martin Armstrong article, I checked it out - titled 'Defining Hyperinflation - The coming new currency'. Being time poor, I haven't read any good hyperinflation debate for a while, but was incredibly disappointed because it brought nothing new to the table and in my mind muddied the waters of definition about key terms.

Many folk (especially Marty himself) keep returning back to Martin's 'the core economy does not hyper-inflate', which is a good observation but I really have to say I think his obsession with the United States is somewhat overdone. Although I'm influenced by my own special exposure to globalism, country boundaries are acting more like a 'brand' these days - I personally think the new core economy is the massive commerce transaction network which now spans the globe - you know, the one which allows you to use a Singapore-bank-issued credit card while you're in London from an American website to buy a product made in China and get it shipped to Australia. Having been involved in a work project recently I'm simply amazed at what's in place to allow a merchant to accept payment in virtually any currency. While I realize those networks don't necessarily constitute the big trade, the providers which make it all happen have their systems tuned and my observation is that they would function fine even with a hyper-inflationary collapse of a single node (in fact it would be really smooth because all the exchange rates would operate with split-second accuracy).

Of course, I'm no economist but I just wanted to point out what I see as a basic flaw in Armstrong's argument - if he's saying the 'The NEW CURRENCY will most like ... an electronic reserve currency whereby each nation will still retain its own currency' and 'This will eliminate the dollar as the reserve currency', then I'm scratching my head on that one because I'm left wondering what happens to all those dollar-denominated claims out there, it's my impression (under that scenario) they are subject to less demand and therefore get returned to the country where can be redeemed, reducing the purchasing power of that currency and forcing that local government to print more to maintain status quo, further devaluing that currency. Is Martin saying there would still be a debt market for the US-dollar? Is he saying that the USA will be able to still issue the new reserve country? What happens to pricing of oil? Lots of questions unanswered. If anyone has any clarifications, please let me know because I got even more confused when I read his article.

p.s. yes I realize each of those technology platforms each have their own point of distinction, my point is they are scrambling madly to remake themselves into all becoming Facebook to avoid being left behind. It's certainly a new evolutionary path, but I think it's as lazy as Microsoft copying Apple ... a false innovation.

A different view of GLD (part 2 of 4) updated

This is part 2 of a perspective on GLD's inventory you won't find anywhere else on the internet; an edutainment series using the ETF bar list data as a base. In Part 1 we looked at what occurs when we look at a specific set of inventory, here is the updated graph (using the data from July 2013). This time I have added some extra data points to help accentuate that the line indicates the measurement between two chosen points only. The additional measurements show bullion for a shorter 2-year range.

The last few months of removals has started cutting into GLD stock originally accumulated more than two years ago (i.e. this is shown where the corner meets the inventory curve), whereas that wasn't the case in February. For our 'overall' measurement, the dark yellow line has moved DOWN (from dotted line) since last month, so we can say that over 1,000,000 ounces of gold removed in the last month, was taken from stock present prior to June 2011. But while this is interesting, it is no particular conspiracy as it just reflects the fact a lot of gold is being de-listed.

Also bear in mind this chart summarizes a lot of detail. Don't read into the figures too much.