Jim’s Mailbox

Posted at 2:36 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

I’ve been relaxing while my best friend keeps an eye on the enemies of the gold market.

Best Regards,
CIGA Gene

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Jim,

The real question is WHY? Why does it take, for example, 365 days to make a delivery of aluminum from the warehouses. It appears to me that shortages may exist, outside of gold and silver.

Hoarding of hard assets?  Naked shorting to keep prices low?  You pick. When fear REALLY strikes, there is only one thing that will calm the savage beast in you…

GOLD!

CIGA Wolfgang Rech

FOCUS: Proposed LME Metal Warehouse Changes Likely to Affect Physical Premiums
By Debbie Carlson of Kitco News
Tuesday July 16, 2013 12:27 PM

(Kitco News) – Proposals by the London Metal Exchange to improve warehouse withdrawal times could have several implications for the base metals markets, with curbing physical premiums one of the most visible.

Earlier this month the LME, the world’s largest metals exchange, laid out a plan to improve delivery of stored metal from its network of warehouses. Metals users have complained for a few years now about waiting times to access stored metal, as some waits exceed 100 calendar days. Users said the delay in deliveries have pushed up premiums, particularly for metals like aluminum and copper.

Among the proposals are that warehouses must ship out more metal than they take in, based on a formula, the LME said in its proposal. The exchange is meeting with market participants now through Sept. 30 and the LME’s board of directors will discuss the plan in October. If approved, the new plan would be effective as of April 1.

The LME has a network of 765 warehouses, but several are heavily backlogged in moving out metal, particularly aluminum, analysts said. For instance, the line to move aluminum out of the LME warehouse in Vlissingen, Netherlands, is 365 days.

“The LME believes its latest set of proposals will shrink existing queues in the medium term and prevent sustained long queues from forming in future. In theory, we agree, but in practice we are not so sure and this proposal could have unintended consequences,” said Robin Bhar, Head of Metals Research at Societe Generale

More…

Jim,

(hat tip to Ed Steer; but I think this is the most important news item in the PMs space in weeks, so I wanted to flag it.  The re-titling above is my doing; I thing it’s more accurate and to the point)

See: http://implode-explode.com/viewnews/2013-07-16_JPMGoldmanchasedoutofmetalstoragebizasHKownedLMEtocrackdown.html

It looks like the LME’s new Chinese-based owners are kicking ass and taking names in the metals warehousing sector, with the LME ownership itself serving as leverage to influence the warehousing practices.

To any who needs the dots connected, PMs warehousing, with its anomolous lengthy delays (100+ days to withdraw metal, as recently reported),  has become a key manner in which the wholesale PMs market has been kept dysfunctional, with delay and shortages "developing" to keep overt price impact muted and prevent a feedback loop of wholesale (and downstream retail) demand from (rightly) boosting  the main PMs price benchmarks.  And of course, this practice would tend to boost the apparent warehouse stocks as well.

If there were any questions about whether the Chinese would be content to sit back after purchasing the LME and let the game be played as it was before, with the Western banking cabal continuing to distort and exploit virtually every corner of the precious metals market, this should answer it.  I have rarely seen anything like this — the top two trading banks, JPM and GS, fleeing with their tails between their legs, as an exit from a sector after a mere three years represents.

This heartens me very much.  History is being made, friends!

Key excerpt below:

"The LME has cratered the valuations of these companies," said one rival trading house executive.

The LME’s proposed rule change takes aim at bottlenecks that slow the delivery of metal out of their sheds.

Regards,
CIGA David Madisonstyle

 

Jim,

This shows that once Germany asked for their gold back. My guess is so did others, especially once they heard 7 years. So we may get lower price as these people try to loosen and pry more metal. Sure looking like they have exacerbated the situation and also most likely GOFO has been negative much longer than they have reported, probably at a higher nominal number as well. We are very close. When I first saw the German piece. I wrote "This May Be The Camel That Breaks The Straws Back !" I still believe once this all unfolds. History will show it to be correct .

Regards,
CIGA David Madisonstyle

Dear David,

The evidence that no gold exists in the USA and other coffers is getting overwhelming.

Leased gold has all been sold in the marketplace and could easily be hiding central banks sales meaning the gold is gone and will never be returned.

David, your comments are meaningful.

Regards,
Jim

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Le Metropole Members,

(MIDAS note: perhaps a more establishment Grant Williams, a very smart guy whom I know, is waking up the clueless John Mauldin up. Heck, next time I meet John at a cocktail party in Dallas, as per a few weeks ago, he might not run away from me again.)

Grant Williams ties pounding of gold to shortage triggered by Venezuela, Germany 

Submitted by cpowell on 07:53AM ET Tuesday, July 16, 2013. Section: Daily Dispatches 
10:50a ET Tuesday, July 16, 2013

Dear Friend of GATA and Gold:

In his new "Things That Make You Go Hmmm" letter, gold fund manager Grant Williams attributes the recent pounding of the gold price to Western central bank efforts to recover enough real metal for repatriation of the Venezuelan and German gold reserves vaulted abroad, what with so much Western central bank gold long having been leased and then sold into the market to suppress the price. Williams cites all the recent developments noted by GATA and construes them pretty much as GATA does as part of a scheme of market rigging. Williams’ letter is headlined "What If?" and it’s posted at the Mauldin Economics Internet site here:

http://www.mauldineconomics.com/ttmygh/what-if

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.