via Zerohedge - JP Morgan Accounts For Comex Dishoarding

Astonishing news this week has come out that spot markets in bullion were basically affected by dishoarding from one entity. JP Morgan Securities has sold almost all of the gold from its custodial accounts. ( - like the Canadian central bank, n'est-ce pas?)

The facts are very plain in this instance. They have sold so much gold in the ensuing weeks that they will never be able to recoup that amount in years. This might be due to serious concerns such as failures to deliver in treasury markets, thus they must sell everything easily liquidated.

ETFs will also be in a very serious deficit, since bullion based exchange traded funds will have to buy back all of the gold they sold. There was also a noted retirement fund that sold some of its bullion as well, which will have to be recouped now.

You have to wonder about JP Morgan Securities' clients who expect that bullion is being held on their account. They aught to be expecting delivery, wouldn't they? ETFs, retirement funds, coin dealers, jewellers, cell phone makers aught to be expecting delivery as well in a very tight market.

So the dire reality of a gold price 'crash' has come to nothing within a few trading days.

Zerohedge

$Gold Monthly

The gold monthly chart is not yet closed, since April ends on a Tuesday. Given the price range during April, you could not hope for a better outcome. Bearish notions that gold prices are too high and should be in the $900/oz. range have been eviscerated in the latest correction. We have had the largest correction in bullion prices in decades, and yet basically the whole price move has been retraced.

The market is setting the price after all, regardless of voluminious sales from the bullion desk of one entity. Zombie ETFs notwithstanding.

We also had dishoarding of the kind bears had warned about, yet it has come to nothing in the end.

Its as if the market doesn't yet believe it. You can look it up for yourself on May gold futures, where the spot price is just below gold calls with a strike price just above spot selling @10¢ a pop.

So where do you think it reasonable to expect to find the gold spot price for May's expiry? I think it reasonable to expect that gold prices will at least return to their previous level before the correction. 1500? 1550? Breaking out of the broadening pattern @~$1700+/oz.?

A monthly close above the 61.8% fibonacci retracement level of 1448.32 appears to be a lay-up for the recovery rally in May.

http://quotes.ino.com/options/?s=NYMEX_GC.K13

http://scharts.co/VSzZl0

GBN.V Weekly

The irony of price moves in bullion is that we have turned back the clock on gold miners. We are essentially where we were in terms of bullion prices when commercial production was first declared two years ago.

We are coming into the end of fiscal 2013, and barely in production. Production has been drastically curtailed since February of 2012.

Ore is being stockpiled, but very little is being processed, except for lower grade ore and below-cut-off grade material to hand. On the one hand, quarterly reports have become preposterously absurd, but on the other hand, implementing full production will cost very little as ore being stockpiled is already depreciated, and is of ore-grade material.

My expectations for GBN.V shares is that an upside capitulation should occur if treasury markets see an interim correction, since GBN.V is strongly inversely correlated with treasury prices.

http://scharts.co/161osFJ

-F6