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INTRA-DAY NEWSLETTER ~ Nov 25 2014
Here Comes France: Right-Wing Leader Marine Le Pen Demands Central Bank Repatriate French Gold
Submitted by Tyler Durden on 11/25/2014
First Germany, then the Netherlands, perhaps Switzerland this weekend, and now the French right-wing Front National, which shockingly came first in May's European parliament elections, and whose leader Marine Le Pen is currently polling in first place in a hypothetical presidential election (in both a first and run off round), ahead of president Hollande, has sent a letter to the governor of the French Central Bank, the Banque de France, demanding that France join the list of nations which have repatriated, or at least tried to, their gold.
Nigeria Raises Rates, Devalues To Defend Collapsing Currency As Oil-Price Blowback Spreads
Submitted by Tyler Durden on 11/25/2014
Having exposed the demise of various oil-producing nations' currencies previously, it is noteworthy that Nigeria folded today and devalued the Naira peg to the USDollar by over 8% from 155 to 168 and widened its 'intervention' bands from 3% to 5% (the upper band is where the market is trading). Furthermore, the central bank raised rates from 12% to 13%.
(thanks to www.zerohedge.com for the above articles)
Gold Commentary
With options expiration out of the way and gold trading in a tight range near 1200 (as anticipated yesterday), the only thing left now is to rollover December to February futures and get Thanksgiving out of the way. Right?
Here is an excerpt from a very interesting piece written by Bill Holter. We should take it with a grain of salt as a default in COMEX gold has been in internet news for quite a while and each contract month ends up passing by. Odds favor the same will happen, but I thought this was worth a read just the same.
This coming Friday is the 1st notice day for both Dec. COMEX gold and silver contracts. COMEX in my opinion has a potentially huge problem where a default in both contracts is a distinct possibility! As of this past Friday, 61,763 contracts still open, this represents 308 million ounces of silver. The COMEX claims a registered (deliverable) inventory of just under 65 million ounces. With only four days left there are roughly 5 silver ounces contracted for every one ounce available!
The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold. The “registered” (deliverable) category at the COMEX inventory shows only 868,910 available to deliver! Do you see the problem here? There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available! I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday? This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, “FRAUDULENT” in capital letters!
Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory. Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is. It is also astounding that total open interest could have risen to these levels while the price dropped. For open interest to increase and the price to drop, the “initiation” to the opening of contracts has obviously been done by sellers. This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts …but now there is a problem. So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver. Put another way, COMEX gold and silver look like they have been cornered! Let me rephrase this, COMEX gold and silver are now “very cornerable.” We will know shortly if this is true and “who” did the cornering. I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds. I think we will find out they in fact did play by the West’s rules and it was the “sellers” of nonexistent metal who fell into their own price fixing trap. It has been a financial war, one that was declared by the West and looks to have been possibly won by the East.
You see, we have been in a “financial war” for years, the U.S. has trod heavily on the rest of the world financially. We settled our grotesque annual trade deficits by sending freely created dollars as payment. In order to support the dollar and keep interest rates low, we have suppressed the prices of gold and silver. Without low metals prices, none of the other markets could ever make any sense. PE ratios could never be at the current levels without low interest rates, interest rates could never be at these low levels if gold and silver were shooting upward …so the rest of the world has played the only card they could to prevent a World War, a financial card.
They “carried” us and let the game go on and on as they accumulated bigger and bigger stacks of gold. Much of this gold “was once” Western gold. They have legally purchased it and in many cases sent our own dollars back to us as payment. Now, we will sit with lots and lots of dollars while they have lots and lots of gold. I believe they have now cornered both COMEX gold and silver if they choose to stand for delivery. They will say “hey, we did not make up the rules, you did. You sold us contracts, we bought and paid for them. Now we would like the contract settled, please send us our metal”. This was all legal and they did not step up with the intent of busting the market, they simply “bought what we were selling.” If they do stand for delivery, can they be faulted if they ask for the contract they paid for to perform?
Let me finish by saying this, we very well may wake up after Thanksgiving “fat and happy” only to find out the entire financial system was a fraud. The East, by asking for delivery may in a “polite” way expose the entire game. This would accomplish much, first and most importantly, this will go almost all the way in ending the dollar as the world’s reserve currency. The U.S. will no longer be able to trade “something for nothing.” It will also hamper our ability to financially and militarily put our thumb on the rest of the world. If we became hampered financially, this would also make military operation much more difficult to fund or pay for.
In essence, if I am correct and we do see failure to deliver and a COMEX default …the world may be a safer place! This past week for example, President Obama secretly extended our stay in Afghanistan, how will this operation be funded by a bankrupt Treasury and a central bank that issues unwanted currency? The Chinese/Russians in my opinion may be on the verge of winning a war without ever firing a shot and playing the game by our own rules! We clearly have been the aggressors in both Syria and then in funding a coup in Ukraine. Could crashing our financial markets be a way to put us on a financial leash and thus lessen our abilities at aggression? I am sure this thought process has already been discussed.
Please do not call or write me Monday morning and say “see, nothing happened …again.” All I am saying here it that the COMEX is now “cornerable” and in a very vulnerable position. Maybe it will not be now, maybe it will? All I can say is history is rife with “bank runs,” sooner or later the longs will stand for the delivery of an inventory too small to satisfy them, this will be nothing different than a bank run when it happens.
(End of article. Our thanks to Bill Holter for the editorial) Gold Chart
The gold hourly chart shows resistance where we pegged it last night on the website at 1204-1212. Additional resistance is 1218-1222 and at 1232. Support is 1188-1195 and 1163-1173. The short term trend is till up but a close below 1185 would neutralize it. There should be strong support in the 1168-1173 area and it is not out of the question that gold can still mount a rally towards 1222. The one thing we don’t like is the price pattern look. It’s choppy and overlapping. While there are no absolutes, Odds most often play out to the downside on this type of pattern. They key is understanding that it may not be complete to the upside. And that’s the bottom line. We’ve expected a rally to 1199-1206 or 1218-1222 during this short term cycle and we’ve reached the 1st level. So we need to be cautious for a potential pullback towards 1170. If we keep holding the 1187-1195 area on a close, then by early Friday or next week, the odds will still be in favor of the upside maintaining. A close above 1206-1207 favors higher to 1218-1222 and possibly 1232.
 
Cycles
We’re at the 50 day moving average on the daily chart, and at a resistance line. The short term red cycle window closes after tomorrow’s trade and odds are 70% we move lower into the Dec 6th time frame. But we should take it with a grain of salt. As the chart shows, the MEDIUM TERM cycle is coming due and although it’s a bit early, we can eliminate the potential of a red cycle inversion as we have had during the last three medium term cycles. The best thing that could happen is a pullback to the 6th where we would make a blue cycle low and then another push higher in gold would be favored into the medium term cycle due Dec 23rd (plus or minus 2.5 weeks). As in the hourly chart, a close above 1207 would favor higher prices towards 1222-1242 on this chart view. Support on this chart is 11723-1182. In summary, we believe gold prices still have higher to go, but a pullback first is favored. A close above 1207 leaves the upside open. Keep in mind that volume becomes real light after today as the Thanksgiving Holiday in USA takes place on Thursday.
Silver
Silver finally pushed to the upper trend line and met its objective of 1660-1702 price target for this cycle. Resistance is 1675-1702 and support is 1619-1635 at the moving averages and then 1560-1585. If silver breaks above 1702, odds favor 1750-1775 as the next target. Any pulback into the 1560-1585 region is strong consideration for a trade if it develops the first week of December. We have now TOUCHED the upper red line 4 times. If we hit it again, odds favor silver would move to the next higher price level.
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