I wish you all a Happy New Year for a successful 2012 blogging year.See you in 2013 and here is me playing a medley from Final Fantasy XIII-2 I just arranged for this occasion from my favorite composer Masashi Hamau...
Monday, 31 December 2012
It's official, registered gold and silver is being dumped. That means that open interest is declining in the COMEX. Why this is you can find out here: http://katchum.blogspot.be/2012/12/comex-gold-stock-keeps-declining.htmlWith that also the manipulation will end. And look who is transferring this registered silver and gold bullion into eligible assets. Yes, J.P. Morgan.J.P. Morgan's vault has 40% less physical gold and 16% less physical silver...
Saturday, 29 December 2012
The total foreign exchange holdings have grown 2% quarter over quarter to 10.8 trillion. Annualized it amounts to 8% per year (which matches the MZM increase of money supply as pointed out by Michael Pento). That also means that gold should go up 8% per year at least to match foreign exchange holdings.Table 1: COFER Q3 2012What's interesting to note is that people have dumped the euro ($1459 billion to $1451 billion) and bought the USD ($3613 billion...
Friday, 28 December 2012
It's safe to say that the worst is over in the gold market as lease rates have just made a new high since the dip in the beginning of December. The COT reports also show that the large commercial silver shorts have now been covered for a small part to the extent of the number reported on November 2012. Open interest declined with it.Chart 1: Gold Lease RatesI'm not sure what the status is on the silver lease rates, but that trend line should follow...
I came across an interesting chart on King World News and want to store it on this blog. It can come in handy later on.As I talked about central banks accumulating gold, apparently it's mostly the Asian economies that are the ones accumulating gold and the Western economies that are selling gold (Chart 1).Chart 1: West/East Gold ReservesBut as you can see, even the Western banks are now buyers of gold since the eruption of the 2008 crisis.The top...
Thursday, 27 December 2012
Capstone Mining (CSFFF.PK) just announced a share buyback, let's take a quick look at the numbers.Capstone mining had 382 million shares outstanding on September 30. Cash was at $510 million, assets were at $1.5 billion and equity was at $1.4 billion.Market capitalization was considerably lower than equity: $874 million. So it is a very good idea of management to announce a share buyback on 27 December 2012.In this share buyback program, Capstone Mining can buy approximately 10% of all outstanding shares or 34,014,871 shares ($80 million over a...
This week, the copper contango remained high, but the copper price fell. So I still expect the copper price to go higher as we move to backwardation. The copper contango theory will not be wrong.As I write this post, I see the copper price go up from $3.53/lb to $3.59/lb.The next step to extend this copper contango theory is to identify the tops and the bottoms of the contango. What are the upper limits of contango and lower limits of the backwardation?...
Wednesday, 26 December 2012
I decided to add Kyle Bass to the list of gurus on this blog.He seems like a smart guy, knowing a lot about debt. And he is pro-gold.Most important is that he says Japan is going to have a bond bubble crisis as early as next year (2013). I talked about this here and it shows that revenue of Japan is quickly going down, while interest expense is just being kept low by printing yen to buy government bonds. But, the interest payments as a percentage of tax revenues is rising, even when rates are being kept low. I said there is a point where it...
Monday, 24 December 2012
Just to be sure that I have this picture (and correlation) logged onto this blog, here is the famous Zero Hedge bonds Vs. gold chart.Chart 1: Bonds Vs. GoldAnd here is my updated version based on the charts GOLDAMGBD228NLBM and DGS10:Chart 2: Bonds Vs. GoldThe decoupling of the two charts seriously went into overdrive from 2008 onwards. Guess what, that year marks the start of the QE programs to keep interest rates low. I wonder which one of the...
Sunday, 23 December 2012
UBS recently put out a number for the cost of producing an extra ounce of gold. As you can see on chart 1, the cost has skyrocketed from 2008 onwards to today. Costs almost doubled in 2 years time.It shows us that if the gold price were to go to $1500/ounce, nobody would go out and search for gold as it would be unprofitable.Chart 1: All-in Cost of Gold MiningChart 2 gives an operating cost of $700/ounce for gold, but it's important to notice that...
Saturday, 22 December 2012
I haven't looked at this possible correlation yet, but thanks to "goldbug" who reminded me here, I just decided to take a look at this possible correlation.Apparently, they do correlate. When open interest skyrockets it's mostly because of the increased net short position of large commercials.That makes life simpler, you just have to look at the open interest which is given each week on the 'GotGoldReport' site, and you will automatically know whether...
Friday, 21 December 2012
Andrew Maguire on King World News reveals a shocking truth about the dislocation of silver prices between Asia and London. I already warned in February 2012 that prices between Asia and the Western world would diverge from each other and that manipulation of prices in the U.S. and London will end because of the emergence of Asia and their Shanghai Metals Market, which just recently started trading in silver (in April 2012).Now, finally, the decoupling is happening and this should be an eye opener for everyone.Apparently, silver traded at $29.61/ounce...
Just wanted to share a video about silver with Geoffrey, the CEO of Pan American Silver and Peter Schiff. Apparently the inflation costs for mining silver has been going up as much as 100% in the past several years.Note the exuberant enthousiasm of Peter, it's like he is asking a Christmas present from Santa Cla...
Precious metals have been weak for the year of 2012 and investor sentiment is nearing an all time bottom, but I believe we haven't reached bubble territory yet.When roaming the precious metals forums, I found out that Brazil doubled its gold holdings in two months time (added 17.2 tonnes in October 2012 and 14.7 tonnes in November 2012. Total holdings now 67.2 tonnes), I just wanted to see if central bank gold buying correlated with the gold price.And surprisingly, there is a correlation (Charts 1 and 2)! If you look very carefully, you will see...
Wednesday, 19 December 2012
Zerohedge reminds us why gold has been falling the last several weeks.Paulson's Advantage and Advantage Plus funds were said to be dumped by Morgan Stanley. And because 30% of Paulson's portfolio is in gold (GLD) and another huge percentage in gold mining stocks, this dragged down the gold market and more importantly the gold mining market. To see a recent filing go here.I don't believe this is that significant though. Morgan Stanley clients only comprise $100 million of the combined $5.7 billion Advantage and Advantage Plus funds. That's 1.7%...
Thanks to Bob Garino, who commented on this article, I found out about the correlation between Industrial Production (manufacturing) and the CRB metals index.Let's see if this correlation is correct.I immediately see that from 1990 till 2000 the correlation doesn't fit. That period was a period where miners were in a bear market as metals prices declined and mining companies were getting worse and worse conditions for mining. Bonds were doing ok...
Tuesday, 18 December 2012
Just a few days ago, I reported that J.P. Morgan vault had a significant amount of eligible gold taken away. I didn't know what it meant.Today, another 175000 eligible gold was taken away, this time by HSBC and J.P. Morgan, who are seen to be the main manipulators in the precious metals market.This is all nice to report, but I still don't know what it physically means.But let's try to understand the CFTC market and COT data.First off, when...
For the people interested in my copper contango Vs. copper price experiment:Yesterday we saw that the copper turned a little bit back into backwardation. This means that we will see the copper price go up in the future. As the copper contango turns back below 0 (backwardation), copper price should go up.Let's see if this will happen, hopefully the contango theory is right. I'm still betting on a copper break out.Chart 1: Copper contango Vs. Copper...
As I warned everyone already in March 2012 in this article, it is finally happening. Japanese equities are indeed outperforming Japanese bonds and we can see this event starting in one of the most important equities brokers, Nomura Holdings (Chart 1). In my previous article I said that Nomura Holdings would flourish as it is the primary brokerage service in Japan.Nomura, which pays a dividend that's higher than the 10 year Japanese bond yield, has...
Monday, 17 December 2012
It's fascinating how many correlations there exist in the economic world. Today I found this one: Capacity Utilization Vs. Unemployment are inversely correlated. And the best part is: the capacity utilization rate is a leading indicator for unemployment, meaning the trend in the capacity utilization rate can predict the trend in the unemployment rate.For the U.S. the chart looks like this:Chart 1: U.S. Unemployment Vs. Capacity UtilizationFor the...
To forecast the trend in the price of base metals we have a lot of indicators to look at. Two of the most important indicators to look at in my perspective are capacity utilization and the China manufacturing PMI.Previously, I noticed that capacity utilization for mining in the U.S. was improving in November 2012, with the rate growing to 91.1%. Though, the problem is that the U.S. isn't that important anymore when talking about commodities. For...
Sunday, 16 December 2012
The last few months, we noticed that the euro had significantly outperformed the U.S. dollar since August 2012, right when QE3 was going to be announced (Chart 1). I see conditions in the Eurozone improving and soon the markets will focus on problems in the U.S. instead of the Eurozone. Therefore, I believe the uptrend in the euro will continue and I'll explain why.(click to enlarge)Chart 1: EUR/USDAs I pointed out earlier in this article, strong...
Saturday, 15 December 2012
The long awaited Sprott Physical Platinum and Palladium Trust IPO (SPPP) has finally come to exist, since we heard about it in February 2012. You can now subscribe to the 35 million units priced at $10/unit tradeable soon on the NYSE and TSX.The physical Platinum/Palladium will be stored at the Royal Canadian Mint. You can bet that I will put some money in this trust if I have some spare money left as platinum is still very cheap as compared to gold.More...
Friday, 14 December 2012
We have good news, capacity utilization for the total industry improved in November 2012, from 77.7% the previous month to 78.4% this month.What's even better news is that capacity utilization for the mining industry went up to 91.1%, the highest for several years and above the historic average.Utilities and manufacturing capacity utilization rates both went up significantly.This information can be very important as it points to inflation.For more information you can read my previous article on capacity utilizati...
Thursday, 13 December 2012
The media has always compared the U.S. to Japan because of its debt burden. Many analysts claim that Japan cannot be compared to the U.S. because Japan has a current account surplus as opposed to the U.S. (Chart 1 and Chart 2) and most of its government debt is held domestically. Still, there are a lot of similarities between the two countries. I will discuss several of them and present chart evidence on interest payments, budget deficits, outlay spending, current account, currency and bond yields.It's difficult to see the big picture here,...
Wednesday, 12 December 2012
As I pointed out earlier, copper is going to brace itself for a big move upwards. This week's contango report still confirms the uptrend.I still think this is the case because the copper contango is still widening with a rising copper price. If the copper contango turns to backwardation, we should see the copper price spike upwards.Chart 1: Copper Contango Vs. Copper Pr...
Sunday, 9 December 2012
Dan Norcini from KWN Metals Wrap has confirmed my bullish prediction on the copper price:"The copper market is in an uptrend. The copper market looks like it is going to break higher due to an improving economy in China and the improving housing market in the U.S. If copper is going to make a run higher, silver is going to go higher and the bears are going to have to cover."Let's see what the coming months will bring. If Dan and I are right about...
Saturday, 8 December 2012
Let's do a quick analysis on precious metals here.First off, I said yesterday that China lost interest in gold during the past months in this article.Second, we were expecting a drop in net shorters for silver when we saw a drop in the silver price, but this didn't happen.LCNS went back up, so that means there are still a lot of people with interest to get the silver price down.Chart 1: LCNS Silver Net Short PositionsThird, the declining lease rates...
Friday, 7 December 2012
China imported less gold from Hong Kong in October, the lowest since March 2012: 47.48 tonnes.The net imports of gold from Hong Kong to China were 47.48 - 23.6 = 23.88 tonnes. This is 23.88/47.48 = 50% of gross imports. The previous month we had 60% net imports from Hong Kong to China.So not only did China import less gold from Hong Kong, it also exported more of its gold back to Hong Kong compared to its gross imports. Looks like China isn't...
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