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Saturday, January 18, 2014

Physical Gold Shortage Goes Mainstream - Bomb Bay Doors Open

Airdropped surrender leaflet
A short prologue to put this post from Zero Hedge in perspective with the fundamentals and the technicals:

From the McClellan Oscillator:


...One very interesting implication of this chart pattern analog is that it says that the equivalent of the Sep. 3, 1929 top is ideally due Jan. 14, 2014.  No one should take that Jan. 14 date literally, since I could have slid the pattern alignment fore or aft a few days and it would still look good.  And the market tends to only approximate the 1929 pattern rather than repeating it precisely.  In other words, expectations of precision are just not warranted.

The approximate Jan. 14 date is all the more interesting in light of a couple of independent pieces of analysis by some friends of mine.  Stan Harley, a former Navy F-14 pilot and author of the Harley Market Letter, has figured on Jan. 10 as an important top date candidate based on his Fibonacci cycle expansion work.

And another friend, Ed Carlson, is the current living expert on the works of the late George Lindsay.  Ed also targets the first half of January as the later of two likely ultimate top dates for this uptrend...

So here we have 3 wholly unrelated technical disciplines altogether pointing toward a big market top in mid-January.
And, as if junior silver mining stocks are another leading indicator, ours shot up 5.92% on Friday.

Physical Gold Shortage Goes Mainstream
Submitted by Tyler Durden on 01/18/2014 18:18 -0500
While the topic of rehypothecation and the shortage of physical gold is well covered here at Zero Hedge (and the ever-changing COMEX gold vaults' inventories), it appears the concept of the exploding "leverage" or default risk of the COMEX has now hit the mainstream media. 

As BNN reports, veteran trader Tres Knippa, pointing to recent futures data, says "there may not be enough gold to go around if everyone with a futures contract insists on taking delivery of physical bullion." As he goes on to explain to a disquieted anchor, "the underlying story here is that the people acquiring physical gold continue to do that. And that’s what is important," noting large investors like hedge fund manager Kyle Bass are taking delivery of the gold they're buying. Knippa's parting advice, buy physical gold; avoid paper.

One of the problems...
That won't end well...

And the excellent summary from a veteran trader:

Redirecting you to video source:

Knippa warns that if 1 entity asks for delivery of a position-limit-size long in gold, it will absorb 81% of COMEX's inventory... and if 2 entities were to do so... COMEX has a problem...