NY Gold Traders Drowning in Glut They Helped Create -- May 27, 2020
MsMorrisine
Posts: 33,091 ✭✭✭✭✭
By Justina Vasquez
May 27, 2020, 7:40 PM EDT
- Almost 17 million ounces of gold arrived since end-March
- Supply flows in from refineries in Switzerland and Australia
The New York gold market has been flipped on its head in just a couple of months, with a scramble for the metal turning into a glut.
Earlier this year, traders who had sold contracts paid a steep premium to close positions after the coronavirus pandemic grounded flights, sparking worries about the ability to get gold to New York. That drove futures to the highest premium to the spot price in four decades, attracting a flood of metal to the U.S. from around the world. Now, contract holders are trying to avoid taking delivery from the massive inventory.
June futures sank to more than $20 an ounce below August this week, from a premium in mid-April. Notices to deliver on June contracts will begin to be filed Thursday. The June contract is also below spot prices, after fetching a $12 premium as recently as mid-May and $60 in March.
The steep discount echoes some of what oil traders saw earlier this year, when crude stockpiles surged after fuel demand plunged. In that extreme case -- which no one expects to be repeated in gold -- prices plunged below zero as traders who had bought futures but weren’t able to take delivery were forced to pay buyers to unload the contracts.
“It’s a little bit of a game of chicken,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “All of a sudden you get into a similar problem that you had in crude, but slightly different: for crude they literally didn’t have a place to put it -- whereas in this case speculative longs don’t want the logistical hassle of holding physical metal, which is why cost to roll has blown out.”
Since the end of March, 16.8 million ounces have flowed into Comex. That’s more than the total increase in ETF holdings last year, and almost equivalent to India’s annual jewelry demand. Inventories stand at a record 26 million ounces as of Tuesday, dwarfing the 9.6 million ounces worth of June contracts still open.
To be sure, the imbalance in the New York market is a localized phenomenon: gold remains in high demand around the world among investors concerned about the state of the global economy.
The seeds of the current glut were sown when the coronavirus shut down commercial flights earlier this year and forced some gold refineries to close. The shutdowns strangled the supply routes that allow physical bullion to move around the globe, and prompted banks to step back from arbitraging between the London and New York markets. At the same time, demand for gold as a haven grew amid fears of the pandemic’s economic toll.
The premium for New York futures over London surged as traders rushed to avoid delivering in April, instead buying back contracts they had sold short.
Traders trying to capture that premium were able to arrange physical delivery, swelling inventories. Key refining hub Switzerland shipped a record amount of gold to the U.S. in April, according to figures dating back to 2012. Australia’s Perth mint also ramped up production last month and shipped bars to the Comex.
“It is a seller’s market because of the premium and the buyers are stuck right now,” Peter Thomas, a senior vice president at Chicago-based broker Zaner Group, said in a telephone interview. “Do you want to deliver now, or do you want to deliver into the back, where the premium is high?”
— With assistance by Jack Farchy
Comments
does the futures premium right now indicate silver is in the same predicament as gold was?
But but but, @derryb said there was a massive shortage. ConspiracyHedge said so too. lol
The whole worlds off its rocker, buy Gold™.
If you had bothered to read the OP's link, ConspiracyBloomberg confirms there WAS a shortage. Too busy trolling to pay attention? LOL
But, but, but if you had read before you trolled you would have seen "To be sure, the imbalance in the New York market is a localized phenomenon: gold remains in high demand around the world among investors concerned about the state of the global economy."
Glut? Spot AND physical premiums remain high. I noticed that while Bloomberg posted a chart of NY vault's physical supply they didn't bother to chart for the public NY's infinite paper supply. You just can't print gold like you can print futures contracts.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
absolutely
Interesting, thanks for sharing !!!
Be leery of anything you read from Bloomberg, a parrot for the MSM. Imbalance or glut, either way gold is still headed to new highs in the not too distant future.
Gold once again closely followed the Martin Armstrong Economic confidence Model which had predicted decades ago the lows of 2000-2001, highs of 2008 and 2011, the lows of 2015, and now the highs of Jan 2020. Pretty much dead on for 20+ years. And the model was pretty darn close in the 70's through 90's as well. But it was deadly accurate the past 10-15 yrs.
I mentioned here specifically back in the summer and fall of 2015 that a major low was getting close (Armstrong's model date extreme was Oct 1st 2015)....and that would be followed by generally rising gold prices into early 2020. Leading gold miners did bottom around July-Sept 2015, most of the others and the price of gold took one more dump into Dec 2015/Jan 2016. Now that a major 8-9 year high has occurred, gold could could easily take a rest for a while in a corrective wave 4. Gold has also been on a 21 month cycle since the first peak in 1999. And with this month it has traversed 21 months since the August 2018 low of $1160.
Interesting rr. Is there a similar model that somewhat accurately predicted silvers roller coaster ride for the last 30 years?
let volatility be your best friend
for those that would like to keep up with Armstrong's free posts, you can follow him here. You will have to change the month each month at the end of the address to get the next month's posts. He normally posts something every day.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Then why are the COMEX big players pulling out of COMEX?
Hint: Because they saw HSBC loose $200 million and Canada's CIBC lose $64 million in a single day of recent paper market turmoil. Hope they all take it in the shorts.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
While silver has a pretty good correlation to gold, it can burn you in these brief periods where it doesn't follow gold....such as 2000-2003. But eventually it catches up after often being a slow starter. Note how gold out played silver for nearly the entire 1970's It was only by late spring 1979 where silver started to outperform gold for that decade.....due mainly to it's mania performance into January 1980. Silver having that large industrial influence sometimes gets bogged down in recessions....while gold goes the other way. Generally though, silver has followed the Armstrong ECM model - being 80-90% correlated to gold over a period of years.
I hope gold tanks so I can buy it all and then buy some more.
Gonna be interesting to see what happens to gold Monday after this "storm the bastille" incident in DC.
I don't think this "glut" is gonna last.
"Pausing the smash and grab temporarily" is more like it..
Do we have this "Amstrong Model" in print from decades ago that predicted where gold would be 30+years into the future?
I want to see something from around 1990 that predicted what you say to be true--as you do state these predictions were indeed made.
His work and predictions could make for an interesting and useful educational piece.
Knowledge is the enemy of fear
Why there is a temporary glut in NY gold
World traders took advantage of an arbitrage trading opportunity:
"when planes were grounded and Swiss refineries closed in late March, traders were worried they wouldn’t be able to get gold to New York in time to deliver against futures contracts. That caused futures, which typically trade in lockstep with the London spot price, to soar to a premium of as much as $70 an ounce. That created an opportunity for enterprising traders: buy gold somewhere in the world at the spot price, sell futures, and benefit from the difference by shipping the metal to New York."
Hundreds of tons of physical gold rushed into NY. Yet price remains high.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
More physical gold available than you, I or anyone else on the PCGS message boards could ever afford to buy. Shortages are nothing but conspiracies dreamt up by the pumpers/manipulators.
The whole worlds off its rocker, buy Gold™.
It's not what one person (or even this one forum) can buy that determines world gold supply/demand. Most of the world's gold is locked up tightly in strong hands. There's a smaller amount of gold circulating among us "ruffians." Maybe 10,000-20,000 tonnes. Considering there's 175,000 tonnes total, that's not a huge amount. The US govt supposedly has 8000+ tonnes. If 10% of the world (780 MILL people) wants an ounce of gold that's 25,000 tonnes. Though not enough to go around at 1 ounce per every person (7.8 BILL). The 3,000 tonnes of fresh gold mined each year is a pittance vs. the world's above ground supply. Almost all of that new supply is spoken for before coming to market.
Look: at the North Pole no one is buying ice cubes, they are piling up. Look, in the Sahara everyone is buying ice cubes, we can not keep up with demand.
The commodity market tends to be looked at as one or the other of these polar opposites. The rest of the world is somewhere in the middle. It does not make good news unless it is extreme. Real people determine where the middle ground belongs.
Beware of Armstrong pumpers, Armstrong is a known fraud, scammer and charlatan...
Martin Arthur Armstrong (born November 1, 1949) is an American self-taught economic forecaster and convicted felon who spent 11 years in jail for cheating investors out of $700 million and hiding $15 million in assets from regulators.
https://en.wikipedia.org/wiki/Martin_A._Armstrong
The hypocrisy among some on this forum is unfathomable. Only on a PM forum would such a person be held in high regard.
For the newbies....beware the snake oil con-men selling "insurance".
Knowledge is the enemy of fear
I don't sell insurance, but I do buy it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
..
>
Threads and posters are getting bammed for these posts - may want to find another forum
You ought to read both sides of the story....not just what the FEDs and MSM came up with. The guy was never given a real trial, let alone a fair one.... just held in contempt for 7 yrs. They took him down much the same way the Hunts were in the 1980's. Armstrong new the details of the LTCM scams and the big banks involved....can't have that ever come to the surface in court....lol. I'm sure WIKI would also call the Hunts scammers and charlatans too. That is what they "officially" label you when you beat the Banker Boyz at their own game. They change rules, bankrupt you, toss you in jail if they can. Armstrong's pumping of his models is hardly a scam. He put those out there in the 1970's. They've held up quite well. When it comes to capital market flows, there aren't many doing it any better than he was (before incarceration) or after.
https://armstrongeconomics.com/international-news/rule-of-law/when-there-is-no-justice-it-is-time-to-turnout-the-lights/
How BS is Wiki on Armstrong? Look at this opinionated garbage they have posted.
**Predictions
Armstrong predicted that stock market will peak in 2015.75 ECM date[16], but it never came true.
Armstrong later predicted that bond market will peak in 2015.75 ECM date[17] (forgetting that he originally predicted stocks), but that never came true either.
Barron's noted the model called for a change in sentiment in June 2011.[4]
According to an editorial in The Guardian, Armstrong incorrectly predicted that a sovereign debt crisis, or "Big Bang" as he called it, would begin on 1 October 2015.[19] **
============================
Now let's look at what the calls really did.
Apparently Wiki doesn't even read into Armstrong's models very well. His ECM doesn't predict stock market peaks at all. He has stated that for decades. It's business confidence....not stock market pricing. If you check his ECM peaks and lows they do pretty much coincide with 8.6 and 4.3 cycles in confidence. The SM peaks and valleys tend to occur within 0-9 months of those points. His calls of June 2011 and October 1st 2015 were pretty much dead on for confidence extremes. Gold and PMs took advantage of both of those with a major 2011 peak (within 2 months) and then a major 2015 low (2 months). Back track all his confidence peaks by 4.3 and 8.6 yrs....they will coincide well with market events going back into the 1920's.
Anyone thinking he is predicting the exact day (rather than window) for something is an idiot. His call of a sovereign debt crisis is not inaccurate. Sovereign debt crisis has been on-going...and it shows up in market extremes and business confidence extremes. Note that he called for a confidence extreme in January 2020 decades ago. Dead on again. The SM actually peaked around then (and quickly dumped 2 months later)....he wasn't wrong - 2 extremes in one call....who saw that coming? Gold took advantage of that January 2020 confidence low with a peak into 2020. It took over 4 yrs for gold to make that move. Some dead on forecasts in my opinion. Here are some of the 4.3 and 8.6 yr cycle extremes. I've been watching this model closely since about 2004 when I first ran into it. It's been deadly accurate from my view....with the latest dates being the most accurate.
Jan 2020 (gold and SM peaking - then SM crashing)
Oct 2015 (gold bottoming, confidence high in business markets)
June 2011 (US debt/budget crisis propels gold from $1500 to $1900 - stock market takes 14% dive March-Sept 2011)
January 2007 (US SM peaks in Oct 2007)
November 2002 - (US recession coming to an end - stock market bottoms).
June 1998 - (first initial peak (wave 3) in 20 yr US SM mania - tech stocks continue to 2000. Asian currency crisis)
Feb 1994 ( US recession winding down - US stock market peaks again after 6 yrs - primed for rapid rise in 1995)
Dec 1989 (end of 1980's US boom in stocks and real estate - recession soon to start)
June 1985 (a mid cycle gold peak -80's boom in full swing - this marks the start of a 2 yr boom into the Oct '87 crash)
April 1981 (official start of 1+ yr US recession - SM hitting a final and multiple bottom before the 1982-2000 rally)
Jan 1977 (start of hard down phase of US stock market from 1977 to Nov 1982, gold taking off in a 3 year run, the great stag-flation of 1977-1980)
Oct 1972 (start of 2 yr recession - stocks will head down into the late 1974 bottom - PMs and coins like it).
June 1968 (so much going on here...pick your poison - silver and gold peaking - war - stocks heading down)
January 1964 (again, pick your poison there's so much going on - stocks are rallying into the Jan 1966 peak)
June 1955 (start of 52 yr real estate boom)
Dec 1946 (final stock market washout into summer 1949 before 16 yr rally begins).
April 1938 (bottom 2nd US recession of the 1930's ('37-'38)....stock market is range bound until 1954)
Oct 1929 - KA BOOM - SM crash - Great Depression begins.
Jan 1921 - US recession from 1920-1921....essentially SM bottom.
Armstrong provides some of the best independent research out there - for those that can afford it.
Trailer for "The Forecaster."
IMBD Summary: “The story of finance whiz Martin Armstrong reads like a movie script: a man designs a model that can predict the future. He calculates developments in the world economy with eerie accuracy and even the outbreak of wars… Until the FBI is on his doorstep and he is sent to prison. A free man again, he shares his views on the financial crisis and offers his solutions to governments.”
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
How about a link to those alleged early (prior to 1999)models. And what happened to the $700 million that he cheated from investors? During his trial, Armstrong was imprisoned for over seven years for civil contempt of court, one of the longest-running cases of civil contempt in American legal history. In August 2006, Armstrong pleaded guilty to one count of conspiracy to commit fraud, and began a five-year sentence. He's your Demigod, not mine.
Nelson Mandela spent decades in the pokey. Criminal or Nobel peace prize material?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I can't believe you are comparing Mandela to Armstrong. Shame on you.
Armstrong's own site and many on line articles have dozens of pages for his defense and actions. Many links. Go read them. I read all that stuff years ago. Not my demi-god. Just some guy who posted a fabulous model, got a raw deal, that I happened to learn about 16 yrs ago. He correctly called the LTCM bust and Asian currency crisis of the same time. Like the Hunts, he was a dangerous guy to the govt's.....and they couldn't afford to have him identifying the role of all the big players, including TBTF banks. Some people have the fortitude to be the pawn for the 11 yrs and not make up a story to get released early. Armstrong beat them on that too. For a current case like that, look no further than Gen Flynn.
Armstrong's models were created in 1977 and first copyrighted in 1979. I've only tracked him the past 16 yrs through the last gold boom and bust. And his turning points worked very well.
economicconfidencemodels.com/
Interesting that when MA finally went to court after 7 yrs on contempt imprisonment, 23 of the 24 charges against him were dropped....to get him to plead to conspiracy to commit fraud (5 yrs). Either that, or spend the rest of your life in lock up. Interesting to that the many of the Republic witnesses against him were later found to be lying. When he refused to give his proprietary economic models to the the govt in 1999, that's when SHTF for him.
https://newyorker.com/magazine/2009/10/12/the-secret-cycle
It should be obvious that I'm pointing out that not all "criminals" are criminals. I would expect such a response from coho, please don't stoop.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I can absolutely believe it.
Knowledge is the enemy of fear
Still waiting for roadrunners prediction of 50 on the dollar index and $150 silver to come true.
We will never seen these alleged predictions because they dont exist.
Ever notice how roadrunner always has the longest comments?
Matthew Prior - They talk most who have the least to say.
https://www.brainyquote.com/quotes/matthew_prior_110255
Knowledge is the enemy of fear
"Kindness is the language which the deaf can hear and the blind can see." - Mark Twain
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Looks like the Amazon "bookstore" guy woke up today......a 900 pt up day in the stock market will bring them out of the wood work....lol. You'd think someone who was off by a factor of 10x in their AMZN predictions would have slunk away for good? World's worst ever prediction. Qualifies for a Lifetime Achievement Award.
Never predicted $150 silver EVER. Must have me confused with someone else you target. I don't actively do anything with silver. I'll still make gold predictions like I did back at the end of 2015, and GSR as well, but never Silver on its own. It's not the market leader....apparently something Coho hasn't figured out in his 35 yrs of following markets. Gold leads....silver follows....except for brief periods at the end of major runs. So follow gold.........not silver as Cohodok would suggest.
If Cohoho could visit the (closed) trading blog I'm on he would have seen my Dow Forecast of 18,800 back when it fell under 25K. And after the bounce off 18,250....my upside prediction coming back to 26,900 (H&S & gap fill)....both met today. I've made weekly chart updates on the Dow for my brother since April 5th when the IH&S fully formed up. He wanted some help. Today was the final end of week update for my target moves. The move charted very well, even that long and drawn out "wedgy" wave 4.
I have the "longest comments" because I do considerable research and analysis. I actually do the hard work....been doing that around here since 2004....unlike our "full time trader" type who does next to nothing to educate or prove anything....just criticize and cut down others....a reason why so many don't even bother posting on the PMs side any more. Others must surely notice the lack of quality, depth, and analysis in Coho's posts? Hard to miss that fact. I do like the "ignore user" feature on the forum. Comes in very handy
The before and after charts of the March gold crash. Wedge line target of around $1445 gold pretty much nailed - it was out there over a week before the crash. Likely targets were 1500, 1444, 1400...with 1440 being the 12 squared "angel." Then GDX with multiple 5 wave wedges in play during its crash. 10 yr GSR showing the panic top....long overdue....via a 17 yr - 5 wave - expanding wedge....don't see that very often. These charts are my work alone. I find better results not letting others influence your charts. You could end up out of the "Bookstore" at $260/share.
I used to make fully detailed comments but no one listened. And now, almost a decade later, silver has been crushed, gold hasnt hit new highs, the stock market and economy are booming (save for govt mandated shutdown), home prices are hitting highs.
As one who is so emersed in cycles, toadrunner, you should have recognized that PMs were going to be dead and the dollar strong. You did better analysis when you kept things simple. Instead you searched for inane and esoteric models and formulas to justify your incorrect predictions.
Oh well, you were warned.
We've been "stacking" for a long time and now we are tired of waiting. All those supposed fundamentals havent amounted to squat.
We dont want lots of money when we die, we want it now so we can enjoy life and time. Because those are the most valuable and precious assets.
We just want you PM bugs to finally be right.
Knowledge is the enemy of fear
The only fundamentals that remain effective are those that dictate faith in the currency. FED has yet to figure out how to erase them. Likely one reason gold is nearing new highs.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
We have always been right. Reasons for the recent price rise confirm this. Unlike the FED, the only market influence we have is our decisions to buy.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Silver is the same price as it was in 2008, 2009, 2010, 2013, 2014, 2016, 2019.
But youve always been right. We're rooting for you derryb. We love underdogs!!
Knowledge is the enemy of fear
You still refuse to let volatility be your friend.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
But you told us all to stack. And we listened so well. Now you tell us we should be trading and selling. But then you tell us fundamentals are great and only getting better so we should be stacking. But then you boast of your selling.
We should have just listed to to that stupid, pompous arse, silver salmon guy.
Knowledge is the enemy of fear
You didn't listen so well. I told you to build a stack using profits from the volatility. Take the salmon out of your ears.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Still makes no sense to me to try to buy and sell something with such huge premium spreads then use the peanuts of my profits to add to my stack. I'd be FAR better off using profits off volatility from a no premium paper silver or gold to build my stack. Guess that's why I'm stacking monster boxes of AGEs while you are stacking cans of beans and boxes of gutter metal. Good luck to you, I guess that's all I can really say.
The whole worlds off its rocker, buy Gold™.
On many occasions I have recommended on the forum using profits from trading the volatility of paper silver to buy physical silver. I have gone on record many times of how to do this with ETFs such as USLV.
Congrats on the stack of $900K AGE monster boxes.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Because derryb uses paper to make money. The very instrument he vilifies. If snake oil was so good, he would keep it for himself, rather than trade it away for more paper.
Knowledge is the enemy of fear
Where's Baley? You guys could make it a toll tag team threesome. lol
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Hey. Hey guys. Psssst! check it out.
This article is when
people were still selling eagles at melt.
Inventories are empty. After the glut everyone was drowning in. 8 weeks ago. lmao. 17 million ounces plus however much since.
Steak's back on the menu, boys!!
....hahahahaha.
can you provide a link about them now being empty?
Yes. I was being absolutely literal and speaking for all gold and every seller in the history of ever and the number is 0. Party is over that's it the safe is empty.
My experience in the last 8 weeks had people loaded to the gills two months ago to item limits, minimum purchases, item scarcity all over again within the last two weeks, specifically.
For me, its seemed like all of the sellers and websites I have bought from have been running completely out. I stopped getting the gold I wanted and got bored so I loaded up silver. Now that's harder to find. Philharmonics, rubles, world gold is performing well. I'm running into more and more power bids on "basic" items. Eagles were going 25 to 40 and now 60, and climbing. A lot of websites only do calls now.
If there was a lot. Wouldn't they be cheap?
I've seen more and more precious metal subs on reddit with crickets when anyone asks for the most basic of common stuff. Refresh a page and everything is sold.
I really dont know what you want from me as I dont think anyone has digested that data, let alone these past two weeks specifically of going wild. So whatever man. You do you.
the article was talking about comex vaults.