13 November 2014

New blog by an ex-RBA gold sale/leasing analyst

Steve Ellis, a fund manager for Baker Steel Capital Managers, just let me know he has started a new blog Gold Market Macro which will focus on "gold lease rates, physical gold premiums and the phenomenon of backwardation in gold".

Normally another blogger on gold would be a ho hum event, but given Steve "worked for the Reserve Bank of Australia (RBA) as a senior Bank Analyst and studied the sale and leasing of RBA’s gold reserves" from 1996 to 1998, I think this blog is a must add to your watch list. While I doubt Steve will be able to give any direct comment on the RBA's sale of two thirds of Australia's gold reserves, which happened during his time there (given central bank employment confidentiality agreements are probably signed in blood or something) it will no doubt give him a unique perspective on the gold market and you never know, he might inadvertently let something slip.


  1. If he "worked for the Reserve Bank of Australia (RBA) as a senior Bank Analyst and studied the sale and leasing of RBA’s gold reserves" ... Then he's probably just another Bankster Defender---You're Right---Ho Hum!

  2. Okay---I take back my post above---this blog is interesting and informative unlike your worthless blog Bron---His discussion on GOFO is excellent.

    Additionally, I haven't detected the smug, condescending, bankster-defending crap attitude you convey in your worthless crap blog.

    He actually acknowledges the notion that the gold market is showing a lack of trust among institutions and traders that physical supplies of gold into the future may not be satisfied. This, of course creates higher spot prices near term vs. lower spot prices farther out.

    He also acknowledges that backwardation concerns show that gold could be ready to show that price is not only out of order, but may be ready to (reset)?--(My term)

    Many in the so-called "gold-bug" community, as you call it, have been pointing this out including myself. Of course, worthless bloggers like you can't learn this.

    Frankly, I'm surprised you're recommending this blog. Are you acknowledging your past stupidity and coming around?

    In any case, I thank you for posting a link to this blog.

    You should read this blog---you might learn something---Of course, it's unlikely you will. Most idiots can't learn.

  3. On Backwardation, This quote from his blog is excellent:

    "Why it is happening now is due to one of two things. Either it means there is the sniff of panic around physical gold buyers, in so far as the gold inventory they require over the next two months may not materialise."

    Jake's Response---So why would gold buyers be concerned about actually getting the gold they were promised?---Well---it's because banksters have so over-leveraged gold with paper that there is not enough of it, as available gold to trade, to cover the paper shorted against it. Additionally, banksters are not regulated on how high their concentrated short positions can be. They readily use printed paper from the fed in order to keep shorting more and more to continually keep suppressing gold prices.

    He continues:

    "Or it means the demand to short the gold market has become so high that financial investors are prepared to borrow gold (to short it)"

    Jake's response---Who creates the "DEMAND" to short gold?---The Fed!---The demand to short and suppress gold is at an all-time high from the fed because they have stopped QE but are still printing paper and increasing debt at an unbelievable rate!---So, of course, contrary to what bankster-defending shills like Bron are saying, gold is suppressed in an on-going scheme to cover up paper-printing ponzi schemes. High gold prices would expose this to common zombie voters.

  4. Thanks Bron. I saw that his blog has a lot of info on backwardation. I don't get what all the backwardation fuss is about (by gold bulls) since gold prices have collapsed as backwardation has become more common over the last several YEARS. The price is the price and it has moved way down with backwardation in play.

  5. More From This Excellent Blog:

    He says, "a persistence of gold backwardation evidences that:

    "1. Gold hoarding is rife and universal;"

    "2. Participants prefer to be holding physical gold, rather than fiat money (paper money) earning interest “in the bank” together with a paper claim on future gold delivery;"

    "3. The steeper the backwardation, the larger the shortage of gold to trade against dollars or other currencies;"

    " 4. There can come a time when there will be no gold available at any price to trade against paper currencies (the “musical chairs” moment);"

    Jake's response: I currently chart a gofo-weighted average of rates from 1 month out to 12 months. This rate has now plunged into "uncharted" territory where it is now at -0.1536. This number is only negatively exceeded by a rate that occurred in 1999.

    He goes on to say, "If trust in the international financial system and, thus, in paper money, is disappearing, then no one will want to lease or sell gold. The futures contract holders (or even the Gold ETF holders) who ask for delivery in physical gold at the end of their contracts will not be satisfied. Futures markets like the COMEX could not survive in an absence of trust."

    This goes fits in with what I said yesterday:

    "...paper prices will continue lower until the trading volume is so low that it makes no sense to trade. When trading volume is so low that no trader (bankster) will take the other side of the trade, no more activity will occur.

    Once volume drops to near zero, paper trading will come to a complete halt. Meanwhile, physical prices may be relatively high. As a result, banksters will finally realize they can't make any more paper money trading metals, causing the big metals reset. Only then will we see real metals pricing."

    Additionally---Once physical can't be delivered, Comex activity will cease. This event will be, of course, anticipated before it happens. Backwardation and high physical premiums vs. paper spot will continue and despite Bron's denial of this phenomenon, decoupling must occur between physical and paper-priced gold. This also facilitates the depletion of GLD gold.

    GLD trading will halt and close at some point. I postulated that at holdings totaling 500 tonnes, anticipation of extreme backwardation and supply concerns might help shut GLD trading down. We are closer to that event now that GLD has only 722.67 tonnes left.

  6. Thanks for the link, interesting read so far. Wonder if there is a relation to Luci Ellis of RBA (Head of Financial Stability).

  7. Jake, If you simply want to be rude why don't you start your own blog and save us the nuisance of reading you here?

    Bron, can I ask an out of school question? I have some money invested in unallocated gold at the PM (steadily falling in value) but much more set aside in $US. Quite a considerable amount in fact.

    Where are my $US invested/deposited and what happens to my money if there is a bank bail-in?



  8. Like I asked in the other post, Jake, you dumbass, how much have you lost?

  9. Are you sure he is telling the truth about being ex RBA. Certainly wasn't senior.

  10. @bullion Baron
    You can ask but I think you will find the answer is no, and this Steve guy never lasted more than a couple of years in a very junior position, if he was ever at the RBA at all.

  11. Anon:

    Why is "losing paper value" important? When has that ever been important to someone who recognises that accumulating silver and gold is simply saving real money today to be spent on things that inflate in the long term due to paper-printing ponzi schemes?

    Gold bought today secures purchasing poer for things and services bought into the future. That's it---If you treat gold/silver as an "investment" or some trading vehicle, of course you lose. All traders lose. All traders also lie about their trades too.

    I've pointed out Bron's bankster defending ambiguous wrong nonsense and BS predictions in a number of posts here. No response to that except that he's a "sane voice"in the other thread?

    Try answering or responding to what I pointed out in my responses.

    He's on both sides of almost every issue. This shows he knows nothing about the subjects he talks about. Additionally, the subjects he brings up are meaningless BS---just like all the rest of these mindless, hypey blogs.

    He finally references someone who spent a lot of time interpreting the GOFO/backwardation and paper-printing insanity our govt is perpetuating, but you say Bron's bankster defending crap is an example of a "sane voice"?---and you focus on "losing paper value" holding gold/silver---What a Moron!

  12. Anon,

    We don't have any option but to hold US dollars with a US bank, JPMorgan in our case. I don't know how it would play out in a US bail in. The value of the US we hold I guess would be reduced but your claim is on us, not JPMorgan, so whether our liability to you is affected or whether we can claim our loss under the Government Guarantee I don't know.

  13. Gold GOFO in backwardation! Gold DROPS AGAIN! Gold GOFO in backwardation! Gold goes up. ERGO zero correlation! Don't believe the GOFO hype.

  14. Anonymous Idiot:

    Who said anything about correlating GOFO rates to paper-priced gold?

    Read what I said: Negative GOFO shows that there is a lack of confidence on the part of gold holders to let someone else hold their gold in exchange for payment, you moron.

    It also shows there is a lack of confidence on the part of physical gold holders that promises to return their gold will be honored, you idiot.

    This also shows your annoying obsession with paper-priced gold. Why are the anti-gold bankster-defending crowd so concerned with the paper pricing of gold?

    Do you all think you can trade a bankster-manipulated paper gold market?--ANSWER: probably yes.

    Are you all, liars by extension? ANSWER: yes

  15. FROM GATA: 11-18-2014

    "Lending gold pays record high as 400-oz bars are lost to insatiable Asian demand
    Submitted by cpowell on Tue, 2014-11-18 04:04. Section: Daily Dispatches

    Gold Lending Rate Most Negative Since 2001 on Longer Refining

    By Nicholas Larkin and Laura Clarke
    Bloomberg News
    Monday, November 17, 2014

    LONDON -- The rate at which gold is lent for dollars is the most negative in 13 years as refineries spend longer recasting bars from vaults to meet demand from Asia, where consumers prefer smaller ingots and jewelry.

    The one-month gold forward offered rate was at minus 0.22 percent today, the most negative since March 2001, signaling that dealers are paid to lend metal against cash, rather than paying for the privilege. It's also a form of backwardation, when earlier prices are more expensive than for later dates."

    "The gold lending rate has turned negative because refiners such as those in Switzerland are turning more bars typically weighing 400 ounces into smaller items such as 1-kilogram products. Indian third-quarter bullion imports more than doubled from a year earlier.

    "There's a lot of demand going into Swiss refineries, which are basically transforming those big bars into smaller bars," Bernard Dahdah, an analyst at Natixis SA in London, said today by phone. "The leasable stuff is only for big bars. Once those bars become small bars and they go into households, they become much harder to go back into the market into a leasable form." ... "

    In other words, BRON and TraderDan, China imported gold will never come back. GLD Holdings will not return to the levels seen last year even if the physical gold price rallies back to $2000.

    Again, paper prices are meaningless. Paper anything will eventually go to zero, but for the anti-goldbug crowd--there is an relative disconnect now when comparing GLD holdings vs. physical gold prices. We all know that "all the gold ever mined is still with us in some form", but contrary to the TraderDan BS, The depletion of GLD is a sign of available market trading gold supply. This just contributes to the lack of confidence gold holders have when asked if their gold can be taken from them for lease payments. This is also contributing to negative GOFO rates.

  16. More GOFO "Edumacation" For Anonymous Idiot:

    FROM BILL HOLTER---who I don't generally quote, although, I think he and the Miles Franklin Blog have the right mindset, even though I'll never forgive Andy for stealing my junk silver chart:


    "COMEX backwardation and inverted GOFO rates should never ever happen in a normal world for any reason ever, but they have. Why or how could this happen? First let me explain “what” has happened, later I will explain “why.”

    "...When these rates go negative it means that ... gold “supply” may be tight, in other words there may be difficulty in sourcing gold.

    "From another perspective, it can be viewed as too many are trying to exchange dollars into gold or that interest rates on dollars are too low (or could be too high for gold?)."

    "...The easy way to understand this is that there are simply not enough lenders willing to lend their gold out into the market place which is another way of saying that supply is tight. The risk to the borrower is that they might have to deliver higher priced gold while the risk to the lender is that they may never see their gold again."

    "OK, now let’s look at the COMEX and the futures market. Since you can lend gold out and receive interest for it, it then follows that “gold in hand” could (should) be worth more say six months down the line because it can be lent out and returned with an added 6 months interest attached to it. This is why “futures” prices are almost always above the spot price for gold and silver. This should ALWAYS be no matter what …because they are “money” that are not subject to droughts, floods or whatever that can affect the supply greatly. This is the case EXCEPT for couple of “mega sigma” events happening.

    "...The big point here is that “gold in hand” can never ever be worth more than gold in the future (IF you know for sure that it will be delivered) because you can earn interest on it."

    "...So how could this possibly be? How could gold have gone to any premium at all? How or why could it ever be worth more today than in the future?

    "...The delivery month will only get bid to a premium if enough buyers either question the available current supply to deliver or question the availability of future delivery. There can be no other reason than this, does or will the supply exist for delivery? Yes I know, it will be said that “short sellers” may have gotten spooked and bid the spot month to cover a position but why would you do this if supply was not a question and could “buy” your gold in a future month for less if you were 100% sure that you were going to get it?


  17. "...the lease rates are far more difficult to “fudge” than is “price.” What do I mean by this? “Price” can and is suppressed by the sale of more futures than there is real supply. The perceived supply is simply “watered down” by posting margin and selling “gold” which does not exist. Lease rates on the other hand involve actual and real weights of metal. This “real metal” cannot be faked or substituted by the financial machinations of posted margin. I am sure someone will point out the concept of “re hypothecation” which certainly does exist and very well may be a reason for the tightness ..."

    "...if the price of gold went down because so much of it was sold then why isn’t it available?” I would ask where did it all go? Why are there ANY signs of stress or tightness when theoretically you should be able to just walk the streets and pick it up like placer gold? What happened to the 40 tons of gold that was sold a week and a half back at 12:30 in the morning? Or was this just “paper?”

    "...this is really big news and a huge “tell” as to the state of supply in the gold market. Just add these two pieces together, negative GOFO rates and notices instantly being served in a very small delivery month… you get a picture of severe supply tightness. This in no way is compatible with weak pricing! Something has to give and since “delivery” in the gold market is a major part of the equation, the sale of derivatives will not cut it much longer. Just as machinery will not run on COMEX diesel futures, Eastern vaults will not be filled with derivative contracts!"

    That was a pretty good explanation--- eh---Anonymous Idiot?

    What else do you need to know?---Nothing was discussed or implied that low or negative GOFO rates mean gold prices are bottoming. Nothing implied that GOFO is "correlated" with gold prices---Okay idiot?

    Try reading first, before writing knee-jerk responses.

  18. So Jake, Are you claiming to be Simon Black's imaginary friend Jake Lawless?

  19. Anon:
    I've been mistaken for a number of different people.
    BTW---Cowards post stuff on the internet as "anonymous", but I digress.

    Here's another, article about GLD: (and it's interesting).



    Was GLD Gold Moved To The Dutch Central Bank?

    November 21, 2014Financial Markets, Gold, Market Manipulation, Precious MetalsDutch Central Bank, gold repatriation, LBMA, NY Fed

    "In a move that is much more significant and relevant than the Chinese interest rate cut news, it was revealed that Netherland’s Central Bank repatriated 120 tonnes of gold this year. The move was accounted for as a transfer of gold from the NY Fed to De Nederlandsche Bank (DNB). I say “accounted for” because I believe it is highly likely that the physical transfer took place from the GLD custodial vaults to the DNB."

  20. @Jake who seems unable to control his emotions:

    1. you wrote: "...This, of course creates higher spot prices near term vs. lower spot prices farther out."

    Where did I say "paper gold" anywhere? Stick with facts. How have spot gold prices or kilobar gold prices or ANY physical gold price behaved over the last 3 years DESPITE "long" periods of backwardation? Don't mix your emotions with the facts.

    2. you also wrote: "He also acknowledges that backwardation concerns show that gold could be ready to show that price is not only out of order, but may be ready to (reset)?--(My term)"

    hmmm, once again you are the one that mentioned backwardation and price (I assume you have some special secret non-bankster price you are referring to. Where has the mythical price you are referring to gone since the first spate of backwardation a couple of years ago through today?

    I seem to be able to buy physical gold at a much lower price than just last year. Backwardation = big whopdie-doo.

    3. Repasting what others may "believe" to have happened, doesn't actually mean any particular event actually happened. But then again, such beliefs make for better bedtime stories.

    4. Kindly refrain from your vulgarities even if you choose to believe the myths as facts. It's not necessary to make your view heard.

  21. Anonymous Coward:

    Your 1-4 points all point to the same argument you brought up previously--that "backwardation/negative GOFO" has not caused higher gold prices and can't be correlated with gold price movements.

    1. I responded to you by saying, "who said anything about GOFO/gold price correlation"?---Therefore, I was TELLING YOU that there is no correlation.

    2. Long periods of backwardation has not caused gold prices to rise and is also not correlated to gold price movements-- although negative GOFO shows that holders of gold would rather hold it than lease it unless rates rise high enough to entice them to allow their gold to be held by someone else.

    In both cases negative GOFO and backwardation have not caused a rise in gold prices because paper gold pricing has been manipulated by banksters operating as agents of the fed. This destroys the free market price discovery mechanism. It's as simple as that.

    However, paper printing that gooses paper markets and suppresses gold/silver markets, can not last forever.

    When will it end?---I am on record (a long time ago, in another blog) saying that this ponzi/paper-printing insanity perpetrated by bankster/govt criminals will end the day before a collapse occurs. In other words, the govt/bankster alliance will manipulate gold/silver/equity markets for as long as they can and until the last light is turned off at the last institution that collapses as a result of their actions.

    What does that mean?---It means that a financial/dollar crisis that dwarfs the 2008 mini-crash will eventually occur. Many people are trying their best to monitor the right fundamental indicators in order to measure how close this event, if it ever happens in our lifetime, materializes.

    For example, some people may be right when looking at the collapse of the "ability of the Comex to deliver gold to those who stand", as a good indicator of the first indicator. If holders of gold increasingly feel the need to hold their gold, no matter how much paper is offered to part with it, the system will become strained enough to cause people to anticipate collapse. If this happens, the desire for more paper in exchange for gold will increase. And, it will increase to the point where it won't matter how much paper is offered.


    And, of course, paper gold pricing at some insanely high level is meaningless, to me anyway, due to the fact that I won't have any interest in exchanging any amount of paper for my gold except to hold it only long enough to run to the grocery store and spend it before paper-pricing of goods and services increase again.

    Since I don't know, you don't know and no one knows what will trigger this event, all we can do is speculate and talk about what is being observed. Observing GOFO/backwardation is one of those phenomenons.

    Thus, to conclude my response:

    Although backwardation/negative GOFO has been materializing for long periods in some cases, it has not affected paper gold pricing because paper gold pricing is not real. It is manipulated by criminals.

    Additionally, I don't care what the current paper price of gold is, beyond the entertaining speculation that it creates when debating when our paper-printing ponzi scheme will collapse. All I care about is advocating the accumulation of physical gold with the mindset that it is a saving vehicle and not an "investment". Ok idiot?