Thursday, March 4, 2010


Today's new jobless claims came in essentially flat when taking into consideration last weeks number was revised up, countering this weeks small drop. Tomorrow morning February's non-farm payrolls number will be released. We have already been warned by Sweat Hog Larry Summers that this number will be bad.

We can now expect some volatility in Gold thru the next 24 hours as the Cartel attempts to position the Precious Metals for a week jobs report. It is now important that Gold defend 1126 and establish 1135 as support. Silver has met resistance here at 17.22, and must defend 16.92 as support.

The Greek's have successfully floated a major bond issue this morning and it was over subscribed. Much of Greece's financial future rests with negotiations in Germany Friday and France on Sunday. If they are positive, the Ero rises and the Dollar falls. If there are issues, the Euro falls and Gold rises in the Dollar's face.

As if the Precious Metals weren't wacky enough already...

Don't blame snow: Feb. jobs data likely to be weak
WASHINGTON (AP) -- The February jobs report to be released Friday is likely to be bleak.

Blame the weather, the White House says.

That's because last month's snowstorms are expected to have artificially inflated job losses by at least 100,000.

Not so fast, private economists counter. The report can't just be dismissed. Once the snow effect is filtered out, they say the data will still signal weak hiring: Little if any job growth, and an unemployment rate predicted to rise to 9.8 percent or more from 9.7 percent.

Bill Holter at debunks the credit default swap mystery below. This is educational reading....

Credit default swap lunacy!
Dubai, Greece and the rest of the PIIGS, now Britain and next the U.S.. Speculators are pushing currencies and sovereign bonds and yields higher and lower almost at will using the CDS (credit default swaps) market. These rocket scientists hedge and or speculate (even attack) currencies with these CDS products and go to sleep at night with a clear conscience. They sleep tight each night not caring what destruction they have caused real people and the real economy and take mistaken solace that if say Greece were to fail "they are hedged".

I am going to tell you that NO ONE with any CDS product is hedged against anything! First you must understand that if sovereigns begin to default, there will be no end until the last, biggest and most egregious financial entity falls (the U.S. Treasury). These CDS products look good on the books but who can afford to lose and make the winners whole? What currency do you get paid in if you win? My point here is the "counter party risk". The only way a CDS product could be secure and iron clad is if it were written by a Gold depository and payable in Gold which has been authenticated, assayed and audited as to purity and it actually being there for payment.

We hear that CDS spreads widen for this country or that one. We have even heard this about the U.S. from time to time. But think about how stupid it would be to "insure" against a U.S. default with ANY paper product issued by ANY issuer. When the U.S. finally goes whether it be through default or hyperinflation, the Dollar will ultimately "go away". So what if you were right? Are you getting paid in Dollars that became worthless? Isn't this what you were insuring against in the first place? So you win but you receive bazillions of pieces of the very same paper you were insuring against and thus YOU LOSE?

Oh I insured against a U.S. default and will get paid in Euros. This makes all kinds of sense since a U.S. default certainly won't submarine Europe. This logic works forwards, backwards or in either direction! What I am saying here is that once ANY sovereign default occurs, IT"S OVER! EVERYTHING paper goes boom and in a puff of smoke so does ALL the "supposed" value. EVERYTHING paper blows away and ONLY assets that you can touch, feel and actually USE (manufacturing, farmland, mining) will have or retain value!

THE only true hedge against ANY sovereign default is either Gold or Silver, period. Gold and Silver are real money and will accrue ALL of the "printed" monies' value over the years. This is a difficult concept to understand but all the fiats that have ever been printed in the past and present really had no value other than "confidence" value. Each Dollar, Pound, Yen, Euro etc. that has come into existence will "spill" its value into the metals upon its demise. I can't believe that no one has yet (other than Jim Sinclair) publicly explained the stupidity employed in the "CDS protection" scheme.

Credit default swaps are not protection, they are nuclear land mines scattered across the land that will go off in succession after the first one is tripped. OR as Mr. Sinclair says, they will print to oblivion and wipe out all paper values through hyperinflation. Either way if you have wealth tied up in metal or mining shares, you will win in the end. Have you ever wondered why there is no such animal as a credit default swap on physical Gold? Could this be because Gold cannot default? Taking a leap forward, when everything else is defaulting (including and especially CDS products), doesn't it make sense that fear capital will seek that that cannot default? Now that's simple logic! Regards, Bill H.

No comments:

Post a Comment