Supply and Demand Report July 14, 2013

“Gold went up every day this week,” is how most people would say it. This would be cause for great cheer. Of course, we say it differently “the dollar fell every day this week.” Expressing it this way makes it clear that there is no cause for celebration.  As we see from looking at the [...]



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5 replies
  1. Dave Littel says:

    Thank you for your analysis and for making it available to the public.

    Looking at the gold basis and cobasis chart, it appears that what we see in the last two weeks is very significant. It looks to me like the first significant, sustained dip into backwardation since you began reporting this data on the gold basis. Am I missing something?

  2. Gregory says:

    Keith,

    These charts are unique entries into the public discussion; thanks for posting them and please continue to keep us apprised of this news. Having read Fekete for almost 10 years, I still appreciate your “boiler-plate”. Theory alone did not convert NASE critics, but your down-to-earth treatment of the facts, and analysis of the news may open a new front in the battle to take the con out of economics.

  3. Keith Weiner says:

    Thanks for your comments Dave and Gregory.

    Dave: This is the same pattern we’ve been in for many a month now. The “reality distortion field” keeps moving forward, encompassing the next future and the next, each a little sooner than the last time.

  4. Greg Jaxon says:

    A dramatic (perhaps also imaginative?) retelling of this “gold withdrawing its bid for the dollar” story comes from Grant Williams via John Mauldin at http://www.mauldineconomics.com/ttmygh/what-if

    Their answer to how gold’s price can fall even in backwardation is still “manipulation”. This is a seductive argument in a world so brutalized by fraud and lies from the banking quarter; I find it hard to shake off. But appearances have deceived me before, so I’m still engaged by your NASE Reality-based analysis.

    The one fact Grant mentions is that bullion bank defaults are being papered over “in cash”. This complicates the story. Not all the cash recipients are going to put those proceeds on the bid for spot gold.
    Not every bullion bank is going to be bailed out. The cash needed to unwind the gold carry trade will constitute a serious demand for dollars from bullion banks, which seem to be in a position to bid with gold (even though doing so now exposes them as being on the wrong side of default).

    Interesting times!

  5. rkautry@bellsouth.net says:

    Your chart shows silver’s basis is declining and negative. Your heading comment for the chart is silver does not want to get scarcer. Your boiler plate says rising and positive basis means more abundance. So why isn’t a declining basis scarcity? Plus the Oct basis for gold is down and negative and you do say it is scarce. Again, “scarcity” in a severe market bear markets like we’ve been experiencing logically just says people don’t want to sell. But as you know, producers and retailers eventually have to sell.

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