Various thoughts
April 17...)
"Three things cannot long be hidden. The Sun, the moon and the truth." Budda
In financial news yesterday
Finally, yesterday the Fed chair said what the average gold trader had been thinking since Sunday evening December 4, 2023..."Godot is not coming". And a cut in the eponymous funds rate, being a mere .25 bps, is so insignificant its ability camouflage inflation trends is about as useful as a nipple pasty on a stripper. The long bond has gone full commando and the new new thing on TikTok is gold porn. However, it is what it is. BBG posted a nonsensical op-ed this morning, taking one for the team: "What If the Fed’s Hikes Are Actually Sparking US Economic Boom?" No further analyses or cynical commentary necessary for that one.
On to markets...
In gold trading yesterday a narrow range and low volume accompanied a modest increase of 5k in open interest. Usually, a market that clings to its highs implies unfilled buying below. KRW, BRL, JPY et al careened lower in weightless free fall as short sellers looked askance at the screen and said, "I wonder why gold is so strong."
In other markets stocks hesitated in light volume with little response Powell concession. Copper tracked horizontally on decelerating technical development and steady OI. The June/June heat to rbob spread made new multi-year lows. Rbob cracks made new contract highs and crude did nothing on stale war news and a silly narrative that Biden will sell more oil from the SPR to cozy up to voters. The long bond made new lows. Bitcoin ... you decide.
Volatility in ETF positioning continues apace with ETF liquidation trends solidly in force... except for a (temporary, imo) sizable inflow in XPD.
I think of ETF holdings like a one-sided form of open interest ... excess buying = creation = a decline in stock and increased ETF holdings. Excess selling = redemption = an increase in stock and a decline in ETF holdings.
Here's the chart that has been confounding the gold market for months. Total gold ETF holdings are down from 110 mm toz in 2021 to ca 82 mm toz now. Comex registered stock is down from 19 mm toz. to 7mm toz. in the same period. So based on the obvious correlation and the London EFP/ ETF arb, my guess is that newly created ETF shares draw metal indirectly from Comex and directly from loco LBMA inventories. Too well correlated to be a coincidence, imo. So why are inventories going down with 28 mm toz selling ETF selling?
The white line = ETF holdings. The blue line equals Registered Comex stock.
My vibe
Gold and greed walked out of The Garden hand in hand, and since Biblical Genesis every gram of gold has been scrupulously coveted and counted. Whether in a vault, comingled with molecules in the ocean, proven reserves in the ground, decorating the fingers and toes of the wife who said, "Not tonight, Honey"... or your sock drawer, I know, we know... where every ounce of it is. Somehow 1000 tons of gold (or more) have gone missing. Which I think is physically impossible. Or am I missing something?
It's not in London... and silver? Worse.
"If you eliminate the impossible, whatever remains, no matter how improbable, is the truth." A C Doyle
Entirely my thoughts / not investment advice.
This material is solely for informational and discussion purposes only. Various Thoughts in not a registered investment advisor or commodity trading advisor. This material should not be viewed as a recommendation or solicitation to enter into a particular position or adopt a particular investment strategy.
Charts and data CQG and Bloomberg