John Ward – Crash 2 : Gold Repossession Close To Wiping Out JP Morgan – 12 June 2013

marchhareKarlsruhe ECB legality decision on a knife edge

“I’m late, I’m late, for an inescapable fate….”

The growing news in gold is that the pre-Crash rush to get out of bank vaults and into heavily guarded wall-safes elsewhere is on bigtime: and some of the banker promisory notes are looking a little crumpled. But as the stampede into private assets gathered speed, over in Germany the Constitutional Court held the power to finally put the euro to rest.

At close of play last night, the total gold held by JP Morgan had slumped to a new all time low of 550k ounces, down from 768K the day before: 268 thousand ounces in one day. This leaves them, however, not with 550k to dispatch, but only 136.4K of so-called eligible gold. Put simply, if the call-back rush continues at that rate, some time very soon JPM will be all ouda COMEX gold.

Since April 25th, the firm has seen a staggering 61.5% of its eligible gold go back to the owners. Yesterday, in one day 28.4% of all of its vaulted gold disappeared home….by far the largest withdrawal ever.

COMEX silver is seeing a similar syndrome. Since April 20th, the weight repossessed by clients amounted to just over 41m ounces. The total physical silver held throughout Comex has dropped 30% during that time. At that rate, there will be no physical silver held in Comex within five months.

I’ve been monitoring this asset-swoop at The Slog for roughly nine months now. For the first part of that period, the emphasis was on property – so-called glitz-bricks – as it became increasingly obvious from gold’s price eccentricity that the market was rigged. But in the last two months, there has been a sudden spurt in repossession of gold one already owns. The top-end property boom, meanwhile, continues on a near 1 in 3 rising slope: EA Shaw in central London, for example, reports that rich Asian and mainland European purchasing is still forging ahead strongly.

What this tells me is that my tingling bladder-meter of Armageddon (found itching away last week) was probably right: the inside track folks are getting ready to hunker down in the cellar. They have seen enough data and watched enough élite moves to know that warbling obese women will be within earshot before too long.

One move becoming ever more audible in the undergrowth is little Wolfie Schäuble’s shrill calls for people not be silly. He’s defining ‘silly’ as not doing anything that might stop him being Überstürmbannführerfiskalunion gemacht. Having tossed aside the wheelchair brakes in his hurry to get down to the German Court at Karlsruhe, the German finance boss is saying that “the central bank could be put into an impossible position if it were faced with conflicting rulings by courts in different euro zone countries” (not Karlsruhe’s problem) “inflation has been lower under ECB mandate”(Legally irrelevant) and  “the cost to Germany would be incalculable if the country left the currency union” (Ignoring the huge potential costs to Germany if stays in the eurozone, and also legally irrelevant).

The legal issue is remarkably straightforward: is anything Draghibank has done or wants to do going to mean the Bundesgovernment commits a constitutional crime if it takes part? The overwhelming majority of legal opinion says yes, it most definitely would. But in the world of Realpolitik, that’s not always how things pan out.

I’m told the Karlruhe judges are evenly split 4-4 at the minute. There’s more testimony today, and then we should get some white smoke tomorrow. It’ll be interesting to see what the eurobond market (what’s left of it) and the currency movers make of a decision against the ECB and Merkeschäuble. In the meantime, we all wait to see what the next piece of desperate nonsense is to be pulled out of the frightened rabbit’s hat. There’ll be more about that from the spoofatron in a little while, but first of all we’re going to take a short break….

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