Gold For Delivery Please!

By: Chris Tell at capitalistexploits.at

Government corruption. Tautology.

“The extent of corruption in Europe is ‘breathtaking’ and it costs the EU economy at least 120bn Euros, annually the European commission says.”

There you have it. This statement comes directly from the European commission in a recently published report, almost certainly an incompetent bureaucratic nightmare itself , I’ll give credit to them for even publishing this…but it doesn’t go nearly far enough.

The real cost of corruption runs to multiples of what the European commission suggests. Why?

Because what is not included in this report is the corruption that exists with the revolving door between Government and bankers who have sucked trillions of dollars out of the world economy, and who continue to drive respective countries bankrupt, rape and pillage the man on the street and tell him it’s for his own good.

The corruption not mentioned in this report is that of the big banks gaming the stock market. They do this via their proprietary trading desks front running their clients. They do it by packaging up garbage mortgages and bribing the rating agencies to look the other way, rubber stamp said garbage and then flog it to the masses.

Then there is the blatant manipulation of interest rates, juicing the stock and bond markets. Yes this is a corrupt world. Thinking otherwise is like arguing that gravity doesn’t exist. The question isn’t whether manipulation is taking place, or whether the stinking pile of sinister, corrupt lunatics that are our “masters” should be fed to the nearest flesh-eating creature available. We, humble yet unapologetic market participants, can still choose how we interact in the market place.

On that note, today I present to you some interesting facts which I’ve nicked from a recent Trade Alert we sent to our subscribers. If you have yet to opt-in to this currently complimentary service, you can do so HERE, and get a copy of that alert immediately. We think it’s well worth the price… Oh, wait, it’s FREE.

Meanwhile, here’s the thesis we used to create it…

The first is a graph showing the expiring month of gold traded vs the next deliverable month for nearly 4 years.

seahorse

The traders amongst you will find the pattern here interesting. This is called an “inverted” situation, where gold for delivery in the front months trades at a premium to the back months. It is an unusual situation since there are costs associated with holding inventory. Unless the market participants believe there is an impending supply coming into the market you don’t usually see this setup.

The answer may well lie in something which Kyle Bass touched on in this interview at the AmeriCatalyst conference. He explains succinctly why he advised the University of Texas to take delivery of $1B in gold from the COMEX.

Here’s a snippet of his conversation with the head of deliverables at the COMEX:

Kyle Bass: What if 4% of the people want delivery?

Comex: Oh Kyle that never happens, we rarely get a 1% delivery.

Kyle Bass: Well what if it does happen?

Comex: Price will solve everything

Kyle Bass: OK, give me the gold

Now I’d like to show you another chart which is excerpted from the full Trade Alert

inventory

This is a graphical representation of the amount of gold in Registered Comex inventory. What is evident from this chart is that the amount of physical gold inventory at the Comex is going down. According to the latest numbers registered inventories are now at just 402,000 ounces.

At $1,200 per ounce this represents $504 Million in available gold for delivery.

We feel there is a trading opportunity where shorts make sure they’ve gotten out before settlement arrives. This has been happening for 4 years at least. All well and good. Traders take notice.

For long term investors the evidence is clear. TAKE DELIVERY, you’ll be no worse of for doing so. If this eventuates in a short squeeze paper holders will be left holding…well, paper. Running the math here, if just one small player in the gold trading game got nervous and like Kyle Bass, demanded delivery of a position limit size (equal to 3,000 contracts or 300,000 ounces), the Comex would empty fully 71.9% of its deliverable supply. But don’t worry, price will solve everything! Really?

The actual trade which our own Brad Thomas presented in the Alert is a gold miner. The company he is targeting has enjoyed a spectacular 76% collapse from its highs. The entire trade is too long to post here, so again, if you aren’t already getting our Trade Alerts go and sign up HERE and get all the sordid details.

Meanwhile, I’m reminded of some other soothing facts our friend Mark Schumacher from ThinkGrowth.com recently shared with us, and deserve repeating, when contemplating buying a stock that has done nothing but go down:

Average 3-year nominal returns when buying a down sector (since 1920s):

Down Avg. Annual Return

60% = 57%

70% = 87%

80% = 172%

90% = 240%

Average 3-year nominal returns when buying a down industry (since 1920s):

Down Avg. Annual Return

60% = 71%

70% = 96%

80% = 136%

90% = 115%

Average 3-year nominal returns when buying a down country (since the 1970s):

Down Avg. Annual Return

60% = 107%

70% = 116%

80% = 118%

90% = 156%

I’ll leave you with those figures and facts. Choose to do with it what you will. If you wish to get Brad’s alerts complimentary for a limited time you can still do so HERE.

– Chris

“Develop your own opinion. Go look at these numbers. Don’t listen to me… The key is to do your own work.” – Kyle Bass


    



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Why Warren Buffett Is Worried About Stocks

According to a 2001 Fortune interview, Warren Buffett believes that Market-Cap-to-GDP is "probably the best single measure of where valuations stand at any given moment." As Doug Short shows in the following charts, we suspect Warren is a little more than worried about the valuation of his portfolio (unless of course, it's different this time).

 

Via Doug Short of dshort.com,

 

The raw data for the "Buffett indicator" only goes back as far as the middle of the 20th century. Quarterly GDP dates from 1947, and the Fed's B.102 Balance sheet has quarterly updates beginning in Q4 1951. With an acknowledgement of this abbreviated timeframe, let's take a look at the plain vanilla quarterly ratio with no effort to interpolate monthly data or extrapolate since the end of the most recent quarterly numbers. Here is a chart I created using the Federal Reserve Economic Data (FRED) data and charting tool.

 

 

That strange numerator in the chart title, MVEONWMVBSNNCB, is the FRED designation for Line 36 in the B.102 balance sheet (Market Value of Equities Outstanding), available on the Federal Reserve website here in PDF format.

 

For those of you who may have reservations about the Federal Reserve economists' estimation of Market Value, I can offer a more transparent alternate snapshot over a shorter timeframe. Here is the Wilshire 5000 Full Cap Price Index divided by GDP, again using the FRED repository charting tool.

 

 

So… Both the "Buffett Index" and the Wilshire 5000 variant suggest that today's market is at lofty valuations, now above housing-bubble peak in 2007.

So, given the unprecedented beta (and very little alpha) of Berkshire Hathaway's stock price to the market…

 

We suspect Warren is worried…


    



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Purdue University Says First Amendment's Important, But Safety First!

oh snapThe
National Press Photographers Association has been pushing for
Purdue University to investigate on an incident that occurred on
campus during a shooting last month. The college newspaper’s photo
editor, a junior at the school, was
reportedly
slammed to the ground by a campus cop while taking
photos in a building that had not been closed to the public. Purdue
has
now responded
, telling the NPPA they would investigate the
matter. Legal counsel for Purdue wrote that the school agreed “in
principle” with the press association about First Amendment rights,
BUT:

At the same time, we hope there would be some
understanding, from even the most ardent protectors of our civil
liberties, of the extreme pressures and difficulties faced by first
responders whose first duty in such critical moments is and must be
the protection of students and other bystanders. Just as we share
your commitment to the principles enshrined in the First Amendment,
we are hesitant to second-guess the essential and often life-saving
judgment calls made on the spot by brave men and women who risk
their lives to ensure the safety of others in situations of high
stress and potentially great danger.

Read the full letter, via Poynter,
here
.

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Purdue University Says First Amendment’s Important, But Safety First!

oh snapThe
National Press Photographers Association has been pushing for
Purdue University to investigate on an incident that occurred on
campus during a shooting last month. The college newspaper’s photo
editor, a junior at the school, was
reportedly
slammed to the ground by a campus cop while taking
photos in a building that had not been closed to the public. Purdue
has
now responded
, telling the NPPA they would investigate the
matter. Legal counsel for Purdue wrote that the school agreed “in
principle” with the press association about First Amendment rights,
BUT:

At the same time, we hope there would be some
understanding, from even the most ardent protectors of our civil
liberties, of the extreme pressures and difficulties faced by first
responders whose first duty in such critical moments is and must be
the protection of students and other bystanders. Just as we share
your commitment to the principles enshrined in the First Amendment,
we are hesitant to second-guess the essential and often life-saving
judgment calls made on the spot by brave men and women who risk
their lives to ensure the safety of others in situations of high
stress and potentially great danger.

Read the full letter, via Poynter,
here
.

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Journalists, Politicians More Likely to Overdose on Heroin Than Junkies

In the wake of Philip Seymour Hoffman’s death, my
colleague Jacob Sullum has done great work in calling attention to
the flat and declining trends in heroin. The short version is that
somewhere around 0.1 percent of Americans ages 12 and older use
junk in the past month – a vanishingly small number that was
exactly the same a decade ago. When it comes to 8th, 10th, and 12th
graders, the numbers for annual use are tiny to begin with
(0.6 percent or less) and substantially lower than they were in the
1990s.

But what about Vermont, supposedly Ground Zero in the new heroin
epidemic? Here’s a snippet from
my latest Time.com column
, which should give much-needed
perspective on the matter:

Earlier this year, the Gov. Peter Shumlin of Vermont made news
when he devoted his annual “state of the state” address to what he
called “a full-blown heroin crisis.” Shumlin testified that “we had
nearly double the number of deaths in Vermont from heroin overdose
as the prior year.”

It’s certainly true that there can be regional spikes even if
national usage rates are flat. But according to Vermont’s
Department of Health, in 2012 there were just nine deaths
classified as “heroin involved” (a category that doesn’t mean
heroin was the sole or even the principal cause of death). Taking
the governor at his word, that means there were fewer than 18
deaths last year in Vermont in which heroin was a factor. (2013
data were not available.)

The Green Mountain State has about 626,000 people in it. It’s a
damn shame that anyone dies of a heroin overdose (I count one old
friend among the casualties), but nobody in their right mind should
be setting national or state policy based on a dozen-and-a-half
deaths.

But drug panics are
like no other in American life. Thirty years ago, the drug-related
death of an NBA hopeful ushered in a long national nightmare that
we’re only barely getting around to waking up from:

The history of crusades and legislation related to drug deaths
teaches us that lawmakers should proceed with caution and resist
overreaction. In 1986, liberal Democratic lawmakers used
the high-profile, cocaine-related death of Len Bias, a college
basketball star who had signed to play with the Boston Celtics, to
show that they could be just as tough on drugs as conservative
Republicans during the “Just Say No” era. The result was a series
of mandatory-minimum sentences that had no clear effect on drug use
or black markets but helped the United States become the
biggest jailer country on the planet.

Read the whole
Time.com piece
, which includes links to all the stats cited
above.

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WTF Chart Of The Day: Fun-Durr-Mentals Edition

Money on the sidelines? Em fixed? Expectations of a terrible jobs number tapering the taper? One thing we do know for absolute certain – this ramp in stocks has nothing whatsoever to do with fun-durr-mentals… as USDJPY 102 takes the S&P back to unch on the Taper and above its 100DMA.

 

USDJPY 102.000 Tagged…

 

It seems the so-called “market” liked the guilty verdict on Martoma?

Though we suspect the machines are desparate to get the S&P back to unchanged from the taper…

 

and above the 100DMA…

 

Charts: Bloomberg


    



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SAC's Matthew Martoma Found Guilty On All Charges

And so the most lucrative insider trading case in history has just resulted in a criminal conviction.

  • MARTOMA CHARGED IN MOST LUCRATIVE INSIDER SCAM IN U.S. HISTORY
  • MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG
  • EX-SAC FUND MANAGER MARTOMA FOUND GUILTY ON ALL CHARGES
  • MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG

Hopefully Steve Cohen’s alleged hush money which bought Martoma’s allegiance and silence will be worth it (and still there upon release) to make Martoma’s stay in Federal pound me in the ass prison – up to 25 years – more pleasurable… 


    



via Zero Hedge http://ift.tt/1ev44lp Tyler Durden

SAC’s Matthew Martoma Found Guilty On All Charges

And so the most lucrative insider trading case in history has just resulted in a criminal conviction.

  • MARTOMA CHARGED IN MOST LUCRATIVE INSIDER SCAM IN U.S. HISTORY
  • MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG
  • EX-SAC FUND MANAGER MARTOMA FOUND GUILTY ON ALL CHARGES
  • MARTOMA ACCUSED OF ILLEGAL TRADES TIED TO ALZHEIMER’S DRUG

Hopefully Steve Cohen’s alleged hush money which bought Martoma’s allegiance and silence will be worth it (and still there upon release) to make Martoma’s stay in Federal pound me in the ass prison – up to 25 years – more pleasurable… 


    



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