2025 Lunatic Fringe - Market and Trade Chat

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Re the still-widening spread between spot and front month futures as well as EFPs, here's what I wrote for TFMR members a few minutes ago.
Maybe next week I can summarize this in a public post.

This is starting to get more attention and all you have to do is search X to find all sorts of analysis and possible explanations. Pending tariffs, supply issues, delivery delays....all of these things are mentioned. For now, let's just concern ourselves on the two things that we KNOW are true.

1. That wide of spread should never happen this late in the month. Never ever. Why? Because right now...right this very instant...you can buy spot at $2711 and sell a Feb25 at $2746 and then deliver your spot purchase to cover your short as soon as January 30. That's an easypeasy $35 profit (logistics, interest, etc notwithstanding). Each contract is 100 ounces so that's $3500. Do it on $100 contracts and you've to $350,000. But it's not happening...at least not in the size needed to close the spread.

2. The spread is going to close. It will. Just watch. Either the usual Spec washout and roll will dump the Feb25 price sometime in the next 5-6 days OR some sort of in between happens where futures fall and spot rallies as the arbs finally begin to take action. Either way, it's going to close. It will. It always does.

But then what? What does this all signify? This is the second consecutive month where this has happened. It shouldn't be happening but it is. My suspicion is that it's much deeper than just "current supply concerns" due to possible tariffs. The Banks have been playing the EFP game and profiting from the spread for years so none of this is new.

Eric told me to start watching EFP volume seven years ago...and I did. In fact, on a spreadsheet I have the EFP volume for EVERY DAY going back to November 24, 2017! Would you like to know what the total number of EFP trades is since that date?

It's 9,689,356.

So, if every EFP is for 100 ounces, that's 968,935,600 ounces for a theoretical 30,137 METRIC TONNES. That's an astonishing amount of "gold". Close to the sum total of ALL the gold held by the global central banks and here are The Banks passing it back and forth for a few bucks in spread arbitrage.

As such, do you think that EFPs signal real demand for real metal to deliver or are they just part of the paper game, which The Banks play for their profit and enjoyment?

Back to the current predicament...Why is this occurring now and for the second month in a row? For me, it's about trust and, right now, no Banker trusts the system enough to act and close the spread. If it continues, there will be delivery delays and the fraud of the pricing scheme will be exposed...and that's WHY it will close, one way or the other, most likely through a Spec flushing paper smash that forces the Feb25 end back down toward spot. That's what they were able to do last month and that's no doubt what they'll try to do next week, too.
Click to expand...

 
#EFP Alert and update

The following is a summary of the latest commitment of trader (COT) report and the 1/8/2025 and 1/16/2025 #Gold Stock reports

Bottom line. Someone(s) or some bank(s) have to be very nervous over the weekend.

Latest COT report saw a net increase in new short contracts from producers /merchants/swap dealers of 21,269 contracts or 2,126,900 oz equivalent. At the same time a wave of gold has been deposited into the registered category of about 2,178,362.97 ozs. This matches up as new short contracts are opened and gold is delivered to take advantage of the increased EFP or to settle against existing shorts.

However, we have a massive problem. With all this gold delivered, this should have eased the EFP. Instead the EFP went from +15 on 1/8/2025 to +42 this morning (1/17/2025).

We are only 10 days from the February delivery month and this EFP is priced as if we are 3 months away. Someone is taking serious losses.

Check out the highlighted sections which provide the details I mentioned above.
Click to expand...

 


I believe that the COMEX and NYSE are both closed in the USA today.
 
Stocks and cryptos looking like a bloodbath right now. Is China's DeepSeek really that big a deal?
 
Stock markets are going to be ugly today if overnight futures action is predictive.

 
Let me break down why DeepSeek's AI innovations are blowing people's minds (and possibly threatening Nvidia's $2T market cap) in simple terms...
...
1/ First, some context: Right now, training top AI models is INSANELY expensive. OpenAI, Anthropic, etc. spend $100M+ just on compute. They need massive data centers with thousands of $40K GPUs. It's like needing a whole power plant to run a factory.

2/ DeepSeek just showed up and said "LOL what if we did this for $5M instead?" And they didn't just talk - they actually DID it. Their models match or beat GPT-4 and Claude on many tasks. The AI world is (as my teenagers say) shook.

3/ How? They rethought everything from the ground up. Traditional AI is like writing every number with 32 decimal places. DeepSeek was like "what if we just used 8? It's still accurate enough!" Boom - 75% less memory needed.

4/ Then there's their "multi-token" system. Normal AI reads like a first-grader: "The... cat... sat..." DeepSeek reads in whole phrases at once. 2x faster, 90% as accurate. When you're processing billions of words, this MATTERS.

5/ But here's the really clever bit: They built an "expert system." Instead of one massive AI trying to know everything (like having one person be a doctor, lawyer, AND engineer), they have specialized experts that only wake up when needed.

6/ Traditional models? All 1.8 trillion parameters active ALL THE TIME. DeepSeek? 671B total but only 37B active at once. It's like having a huge team but only calling in the experts you actually need for each task.

7/ The results are mind-blowing:
- Training cost: $100M → $5M
- GPUs needed: 100,000 → 2,000
- API costs: 95% cheaper
- Can run on gaming GPUs instead of data center hardware
...
9/ Why does this matter? Because it breaks the model of "only huge tech companies can play in AI." You don't need a billion-dollar data center anymore. A few good GPUs might do it.

10/ For Nvidia, this is scary. Their entire business model is built on selling super expensive GPUs with 90% margins. If everyone can suddenly do AI with regular gaming GPUs... well, you see the problem.
...
Click to expand...

More:
threadreaderapp.com

Thread by @morganb on Thread Reader App

@morganb: 🧵 Finally had a chance to dig into DeepSeek’s r1… Let me break down why DeepSeek's AI innovations are blowing people's minds (and possibly threatening Nvidia's $2T market cap) in simple terms... 0/ first of...…
threadreaderapp.com threadreaderapp.com
 

Nvidia sheds almost $600 billion in market cap, biggest one-day loss in U.S. history​

  • Nvidia shares plunged 17% on Monday, resulting in a market cap loss of close to $600 billion, the biggest drop ever for a U.S. company.
  • The sell-off, which hit much of the U.S. tech sector, was sparked by concerns about increased competition from Chinese AI lab DeepSeek.
  • Data center companies that rely on Nvidia chips also plummeted, with Dell, Oracle and Super Micro Computer all falling by at least 8.7%.
Nvidia lost close to $600 billion in market cap on Monday, the biggest drop for any company on a single day in U.S. history.

The chipmaker’s stock price plummeted 17% to close at $118.58. It was Nvidia’s worst day on the market since March 16, 2020, which was early in the Covid pandemic. After Nvidia surpassed Apple last week to become the most valuable publicly traded company, the stock’s drop Monday led a 3.1% slide in the tech-heavy Nasdaq.

More:

 
What if DeepSeek is just a propaganda message?

What proof is there that it even exists? Yeah, there is an app, but I have this fantasy...

What if everyone downloading the app creates a HUGE nural network across the globe and the computing power of several billion phones is what DeepSeek is using to function?

About 20 years ago you could help analyze space noise by downloading an app that would run in the background using your processor's idle power to crunch numbers that would auto upload to a central location.

The program was SETI@home (Search for Extraterrestrial Intelligence at Home).

They were looking for signs of life in space using patterns, or some such and the combined computing power of all these computers across the globe was bigger than any super computer. All one had to do was leave their computer on 24/7.
 
Goldhedge said:
...
What if everyone downloading the app creates a HUGE nural network across the globe and the computing power of several billion phones is what DeepSeek is using to function?
...
Click to expand...

You are now describing the Theta EdgeCloud:

Voodoo

Theta Network (THETA and TFUEL)

Have you looked into Theta at all? Bix has that as pretty much his main holding and talks about it a lot. It has also moved quite a bit the last few days.

  • Thanks
 
The SGE/SFE are closed for Chinese New Year holiday until Feb 5:
...
Spring Festival: SGE will be closed from January 28 (Tuesday, Chinese New Year's Eve) to February 4 (Tuesday). It will be closed as usual on January 26 (Sunday) and February 8 (Saturday). There will be no night session on January 27 (Monday). SGE will resume normal operations on February 5 (Wednesday).
...
Click to expand...

https://en.sge.com.cn/eng_news_Announcement/10002127
 


Bob Coleman said:
For all those who are trying to understand the tariff issue, let me blow your mind.
There is an assumption that Chinese Gold bars do not leave Mainland China and the existing USA tariffs on Chinese gold does not matter.

The GLD ETF contains Chinese Good Delivery LBMA bars made by Chinese refiners.
Shenzhen Point Gold Refinery Co LTD is located in Shenzhen, China. The Bars held by JP Morgan Vault in London on behalf of GLD ETF contain 235 bars from Shenzhen Point Gold Refinery.

If these bars were ever delivered to the USA or used to settle short positions on the Comex, they would incur a 25% tariff.

This is squeezing available hallmarks for banks and market makers to use to settle commitments.
Click to expand...
 
SCOOP: China Continues Making Covert Gold Purchases in London

Jan Nieuwenhuijs January 27th, 2025

While the gold space has been obsessed over the gold streaming from London to New York in reaction to President Donald J. Trump’s tariff threats, even as it had little effect on price, the bigger story is that the People’s Bank of China (PBoC) is quietly stockpiling gold at a frenetic rate.

Direct gold exports from the U.K. to China—a proxy for PBoC purchases—remained impressively strong in November at 50 tonnes. As the Chinese central bank (PBoC) in 2024 has secretly bought approximately 600 tonnes with $50 billion U.S. dollars, it’s confident about where the dollar price of gold is going: UP.

An Exceptional Bull Case for Gold

Since February 2023, I have been publishing evidence of the PBoC buying significantly more gold than what it reports to the IMF. These purchases have broken the West’s dominance in the market by driving the price higher (see here and here).

I found the smoking gun of the PBoC’s secret gold operations in November 2024. As private demand in China declined and premiums on the Shanghai Gold Exchange (SGE) turned negative in September, Chinese imports remained robust.

DYODD and see if you believe the evidence he presents.

Remainder of article at link:
https://www.moneymetals.com/news/2025/01/2...ampaign=content
 
It's happening...

President Donald Trump said his 25% tariffs on Canada and Mexico are coming on Saturday, but he’s still considering whether to include oil from those countries as part of his import taxes.

“We may or may not,” Trump told reporters Thursday in the Oval Office about tariffing oil from Canada and Mexico. “We’re going to make that determination probably tonight.”
...
Click to expand...

apnews.com

Trump says tariffs on Canada and Mexico coming Saturday, and he's deciding whether to tax their oil

President Donald Trump says his 25% tariffs on Canada and Mexico are coming on Saturday. Trump also said he'll "probably” decide on Thursday night whether to include oil from those countries as part of his import taxes.
apnews.com apnews.com
 
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Voodoo said:
The highest on record you say... in an Odd Feb contract.

Shot Across the Bow me thinks.
Click to expand...

To add emPHAsis here... Does anyone think this is a coincidence. An odd Feb contract month has by Far the most standing contracts for delivery AND Trump happens to pick Feb 1 to implement new, large tariffs?
 
A little bit more info here from Yahoo. Now take them for what they are worth but at least one person says they are not only flying Gold around but Silver as well (first time ever to his knowledge).


"and the disparity has become so large that traders have started flying silver into the country. The precious metal is usually too cheap and bulky to justify the cost of airfreight, and one industry veteran says it’s the first time they’ve seen it happen."
 
White House press secretary Karoline Leavitt ... announcing new tariffs Donald Trump plans to impose on countries from Saturday, including:

“25% tariffs on Mexico, 25% tariffs on Canada, and a 10% tariff on China ...
...
Leavitt also said Trump had not made up his mind about a timeline for implementing tariffs against the European Union.

She declined to say whether any future tariff would be one-size fits all or different for each EU member state.
Click to expand...

www.theguardian.com

Trump tariffs live: US president says ‘something substantial’ with tariffs coming to EU and plans to tax chips, oil and gas

Donald Trump’s announcement sparked a stock market sell off as Wall Street fears a coming trade war
www.theguardian.com www.theguardian.com
 
White House officials announced that President Donald Trump has imposed 25% tariffs on Mexico and Canada and 10% tariffs on goods from China.

The tariffs will be imposed via three separate executive orders that have been signed for each country, according to a White House official.

There will be a 25% tariff on all Mexican exports to the U.S. as well as on all exports to the U.S. from Canada. However, Canadian energy products will be tariffed at a lower rate of 10%.

There is a 10% tariff on all China exports to the U.S.
...
Click to expand...

https://www.msn.com/en-us/money/oth...ariffs-on-canada-mexico-and-china/ar-AA1yfDzF

No exceptions for precious metals.
 
^^^^^

‘It doesn’t have to be this way’: Canada, Mexico and China respond to Trump’s tariffs​

  • U.S. President Donald Trump on Saturday signed an order imposing 25% tariffs on Mexico and Canada, as well as a 10% duty on China.
  • In response to Trump’s announcement, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs of 25% against $155 billion of U.S. goods.
  • Mexico also vowed retaliation following news of the tariffs, although President Claudia Sheinbaum did not reveal specifics. China, meanwhile, stopped short of an immediate escalation.
U.S. President Donald Trump on Saturday imposed long-threatened tariffs on imports from Canada, Mexico and China — and it didn’t take long for the countries to respond.

Trump signed an order slapping 25% tariffs on goods from Mexico and Canada, and a 10% duty on Chinese imports, due to start on Tuesday. Energy resources from Canada face a lower, 10% tariff to “minimize any disruptive effects we might have on gasoline and home heating oil prices,” according to a senior administration official.

In the executive order, Trump said that if the countries — the U.S.’s three-largest trading partners — retaliate, it could be met with an “increase or expand in scope” of the duties already imposed.

More:

 
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