Maybe I’m jumping the gun in wondering what will happen in the February gold futures on COMEX. We are a week away from having a fairly good idea about how much will stand for delivery. Last year if you recall, 40 tons or nearly 1.3 million ounces stood for delivery. Could this year be a repeat? The open interest with a week to go is still nearly 14 million ounces…yet the registered category has (net after a completed Dec. delivery) less than 200,000 ounces.
“Not to worry” we are told because the “edible” category has over 7 million ounces and with the “flip of a switch” (or twist of an arm?) much of this gold can be changed to eligible and then delivered. “They” had better hope so because very little “new gold” entered the eligible vaults for ALL of last year.
Gold is up $25 today (the magical 2% number) and more than likely “stuck” for the rest of the day because 2% in a day has been a very big line in the sand for several years now. Zerohedge has suggested that gold is rising today because India may ease their import restrictions. I have also heard that the “taper whisper” out of Japan and the cross currency turbulence may have a part to do with. Of course you must keep in mind the German gold brouhaha and the potential (minor but very first) debt default out of China as potential movers.
I think that the most important event or “thing” currently and even over the last year has been that more people are hearing about the “manipulation story.” Manipulation is now an everyday word and not necessarily attached to the crazy “conspiratorialists” anymore. Yes of course the average person’s eyes glaze over when hearing this but they glaze over when they hear almost anything of any substance. The point is that what was once crazy is now thought of as certainly plausible and actually probable by more and more people. In other words, there is very little “shock” claiming that gold is manipulated or the Fed has sold our gold or even foreigners gold.
Think about this, the “shock” is gone because we have been “shocked to death” for well over 10 years. Almost everything today …”ain’t what it used to be” and almost nothing however foolish or ridiculous it might be is considered “shocking.” I went to Drudge Report to pull up “shocking” headlines as some examples and had more than a dozen but decided that even this was foolish after reading the headline, “Sperm donor in Kansas ordered to pay child support to lesbian couple.” Foolish? Shocking? Well, yes and no…In that order.
I know, I’m getting off track here but think about the very basic financial principles that existed 50 years ago that have morphed into today’s “normal.” Could “money” ever have been pieces of paper without any tie at all to gold or silver? How about debt? What would have been the reaction to the current $17 trillion (really closer to $200 trillion) of national debt? Or ANY number that had a “t” for trillion in it? I can still remember when Texaco was taken over in 1985 for about $13 billion…that was THE biggest deal ever done and is now considered chump change. Or how about the Fed announcing rate policy or doing a press conference, this was all unheard of. Or better yet, how about the revelation that the Fed lent out “secretly” $17 trillion in late 2008 and more than half of that went to foreign institutions? Or now the use of the letter “q” as in quadrillion for derivatives?
It is not just America or her citizens; the lack of “shock” is a worldwide phenomenon. Why aren’t German citizens going crazy regarding their gold? Because no one cares anymore. Our lives have become so rigid and regimented that as long as a paycheck (private, public, retirement or entitlement) comes in the mail …cashed …and spends; no one gives a rat’s tail about anything. Oh, some crazy nun had a baby and named it after the Pope you say? Our gold is gone? Doesn’t matter…what’s the difference? Nothing matters.
In reality a “lot” really does matter. The scary thing is that people today are simply no longer equipped (mentally, physically or spiritually) to go through many of the trials and tribulations that our grandparents and earlier generations went through. I think that what will end up being “the shock” is when “control” is lost. People today say to any negative scenario “the government will never let that happen,” can you imagine the shock when it turns out that there are no more easy solutions and no, governments did let it happen because they couldn’t stop it? Markets have ALWAYS been bigger than governments and it is still so (more so) today, this fact in my opinion will not only be a shock but the majority of thought processes will be altered by this reality.