Eligible to registered gold hits leverage of 46.
What’s even more stunning is that we see this weakness two months before the seasonally weak first quarter of 2016. So more weakness is about to come. The economies that are the most hit are the resource based economies like Canada, Australia, China, Brazil, Russia, Mexico and other emerging markets. These countries are hit so hard, people are giving them a new nickname: “submerging markets”.
To give an idea of the severity of the state of the resource sector, we can take a look at what percentage of the total market cap is still invested in resources (see chart below from Deutsche Bank). We can see that resources have almost become irrelevant in our society (15% of total market cap), going back to the low of the Nasdaq bubble in 2000.
With all of this in mind, we wonder why there is this glaringly obvious discrepancy between copper and the stock market (see chart below from StockCharts). It seems that this correlation has been broken. Many investors view the price of copper as one of the best indicators of global economic activity.
Go here to read the analysis.
The reason why we need to monitor this market is the following. The high yield debt market is a leading indicator for the direction of the stock market. Whenever investors leave the junk bond market, yields will spike upwards and the price of these bonds will decline in value. This will lead to less borrowing and consequently lead to less spending. What we then see is a stock market crash with typically a delay of a few months (see chart below from FRED). You can clearly see that the stock market (red chart) is overdue for a correction as the high yield bond market (blue chart) is declining in value.
Read the full analysis here.
According to the COT report the managed money shorts have all come back again and will support a higher price. So it is a good time to buy precious metals right now.
Demand has been very high in Q3 2015 at 1120.9 tonnes. Supply has declined year over year to 1100 tonnes. This created a rise in the gold price in Q3.
Demand will be subdued in Q4 because investors already bought their share in Q3.
Supply decreased due to lower mining production and lower recycling of gold. The majority of increase in supply was due to net producer hedging, which basically means that miners sell their future production to bullion dealers in exchange for cash. Bullion dealers get their cash from central banks who sell their gold into the market. So the bullion dealer actually borrows gold from the central bank and will return it in the future, when the mine produces it.
Of course, mines selling production now or selling production in the future has no net increase in supply eventually. A mine can only sell so much gold as its capacity allows. So basically, supply is drying up if we don’t take into account net producer hedging.
Bonus chart:
New lows in registered gold (blue) at 151384.629 troy ounces.
Record leverage at 45 eligible to registered gold.
On another note, repatriation of gold from the U.S. is gaining pace and gold imports to Asia are accelerating. Premiums have gone down a bit, but are still robust. U.S. mint silver sales are still on track to hit records. U.S. mint gold sales were weaker.
Correlation Economics (Backup) 
