Wednesday, May 26, 2010

Gold Cartel: "Up The Creek Without A Paddle"

Options on the June Precious Metals contracts expired last night at 5PM est. Today's surge higher in both Gold and Silver should be all the proof one needs that the recent reaction in the metals prices was tied directly to this option expiration period. Every effort was made by the crooks at the CRIMEX to bottle up Gold below 1200 and Silver below 18.00.

Well, there wasn't a snowball's chance in hell that the bullion banks were going to allow gold price to stay above $1,200 during the Comex trading session yesterday... and they didn't. The gold price edged over the $1,200 mark a couple of times during floor trading on Tuesday... but there was always a not-for-profit seller there to knock it gently down again. Gold did manage to close above $1,200... but that was in electronic trading after the Comex close... and that didn't matter, because option expiry had already passed. Once again it was "mission accomplished" for the bullion banks... as all those tens of thousands of call options expired out of the money.
-Ed Steer,

In spite of the Gold Cartel's limited success in capping Gold below 1200, options expired with Gold at 1196.97, several thousand contracts [30,000] still expired "in the money" yesterday. There were 18,000 contracts sitting between 1155 and 1195.

Harvey Organ's - The Daily Gold reports on the open interest remaining in the June gold contract:

In gold, in the front month of June there is 202,000 contracts standing with tomorrows reporting left to go. (remember we are 24 hrs back).

Adrian Douglas reports on this huge number of June contracts standing:

"There is a massive open interest in JUN gold of 202,208 contracts. There is only one trading day left before this is the front month. It will be interesting to see how much of this stands for delivery. This currently represents 20 million ozs which is exactly 10 times what the dealers have in their inventory!"

If the dealers do not get significant rolling they are in deep trouble.

Is the CRIMEX about to get nuked by BIG MONEY seeking Gold? The Gold Cartel according to CRIMEX inventory stats has 2.62 Million ounces of Gold in inventory. They have sold 20 Million ounces of Gold contracts. These knuckleheads have redefined "Up The Creek Without A Paddle". Gold prices have moved steadily higher since the June contract expired yesterday as the weeping CRIMEX goons seek Gold to cover their sorry asses.

In Silver, the CRIMEX remains on the hook for 22 Million ounces of March Silver deliveries, and 24 Million ounces of May deliveries. They may have succeeded in capping Silver below 18 for options expiration, but the CRIMEX currently owes Silver longs that have demanded delivery a total of 46 Million ounces of Silver. Very little of this Silver has reached those waiting for delivery...particularly those STILL waiting for 22 Million ounces of Silver that was due on demand by March 31, and has yet to be delivered. As of last night, the CRIMEX goons only had 52 Million ounces of Silver in their inventory. Making good on the 46 Million ounce claim of Silver on the Crimex for March and May would effectively WIPE OUT the CRIMEX.

In light of the obvious pressure on supply to meet demand in both Gold and Silver at the CRIMEX, it is reasonable to expect an explosion in the prices of both very soon. Gold will first meet resistance at 1217, and Silver at 18.90, before they make an assault on recent highs.

Taking a quick look at the US Dollar, all I see is the biggest joke in finance staring back at me. Present strength in the Dollar is the direct result of weakness in the Euro as 57% of the US Dollar Index is derived from the Euro's relationship to the Dollar. There is absolutely NO fundamental reason for the US Dollar's present strength.

Technically, the Dollar looks exhausted on the daily chart. The "Three Black Crows" strung together last week off the recent high are a major bearish reversal indication. Yesterdays high in the Dollar is beginning to appear to be a "double top" in the World's Tallest Midget. Clearly Gold is gaining strength as the World's Reserve Currency of choice here...despite efforts by the Gold Cartel to the contrary.

The Euro appears exhausted to the downside here, and a retest of last weeks lows looks to be in progress. Fears of a collapse in the Euro amplified by the naked shorts in European debt will be difficult for traders to maintain. Certainly the common currency will remain under pressure, reacting negatively to "events as they occur", but the worst for now in the Euro should be over. Next in line for attack will be the UK Pound and/or the US Dollar.

The uptrend in Gold and Silver should soon become relentless, and shock many of the talking heads in financial media.

"No doubt about it; the global monetary system is facing a crisis of confidence...and for good reason. Most of the governments that funnel currencies into this system provide little basis for confidence. These governments spend what they do not have...year after year...and conjure currency out of thin air...year after year."
-Eric Fry, The Daily Reckoning

Seriously, how can more debt solve a debt crisis? Is Goldman Sachs a financial terrorist and an enemy of the state?

This 20-minute interview with Sprott Asset Management CEO Eric Sprott is the hammer hitting the nail on the head. This guy sees the financial system and the markets for what they are, a FARCE...and he minces no words with regards to them. I highly recommend you take the time to watch this must listen/watch interview here.

The essay he mentions: The Financial System Is A Farce can be found here:

Jim Rickards Discusses Financial Warfare
Some critical insight from Rickards in terms of European geopolitics is the following: "People get so hung up on economics, and efficient markets, and all that which has been largely discredited at this point. But these are NATO allies. Greece controls the ceiling of the Eastern Mediterranean and the Aegean, they have a very robust military budget. Same thing with Spain. Spain's been a very important NATO ally throughout the cold war, Italy etc. Can you imagine if during the cold war the Soviet Union had undermined all the countries, it would have been the start of World War III. And yet we are letting investment banks do the same thing. We are letting investment banks undermine the finances, cast doubt on the credibility, create civil unrest, riots, death. It's the kind of thing that in a military frontal assault would be repelled, but somehow we let Wall Street attack the countries and do nothing about it. I am glad that someone is finally standing up, and I expect that Merkel will be joined by others. I am not against speculation. Let speculators put up some money, let them do on an exchange, let the pricing be transparent, let them do variation margin... This no money down shadow credit default swap market is completely destructive."

Priceless Quote From Richard Russell
On Larry Summers: This doofus practically ruined Harvard when he headed it. I can't think of a worse choice to be chief economic advisor. I wouldn't trust Summers to manage a Starbucks franchise.

Bernanke Says Central Banks Must Be Free of Pressure
By Scott Lanman
May 26 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said central banks must be free from political pressure as they bolster regulation and try to prevent future financial crises.

“In undertaking financial reforms, it is important that we maintain and protect the aspects of central banking that proved to be strengths during the crisis and that will remain essential to the future stability and prosperity of the global economy,” Bernanke said today in a speech at the Bank of Japan in Tokyo.

"...protect the aspects of central banking that proved to be strengths during the crisis and that will remain essential to the future stability and prosperity of the global economy."? What a load of rubbish!

The Fed is at the root cause of the financial crisis. If they have nothing to hide, why do they vigorously fight an audit of their activities? If the Fed has so many strengths, why did they not see this crisis coming before it exploded in our faces? Home prices rose 100% while wages only grew by 2%, an economic 101 student could have seen disaster ahead in the housing market, and the Fed only encouraged further use of "derivatives" to "spread risk around". Brilliant! Protect the central banks? Close every damn one of them. A financial system based on perpetual debt is no financial system at all. It is a Ponzi Scheme.

Geithner to confer with European leaders
A senior Treasury official, who spoke on condition of anonymity because he was not authorized to speak publicly, said Geithner wanted to discuss with Trichet and Schaeuble "the package of measures designed to promote confidence in Europe."

"Measures designed to promote confidence in Europe". This is what is know as "pulling the wool over ones eyes". Once again, the first three letters in the word confidence spell --- CON! We can only imagine what insight an American tax cheat can offer the finance ministers of Europe. Judging by the rise in the price of Gold, confidence appears to be slipping with regards to the worlds fiat money system.

Greece -- What Just Happened
By Howard S. Katz
All central banks in the world today create money out of nothing. This has a set of consequences which transfer wealth from one group to another, as follows:

The most important task of any central bank is the manipulation of the rate of interest away from its free market level. Prior to the 1780s, charging interest was banned in all countries. (In 1786-87, it was legalized in the northern U.S. and Britain.) Since there are always many people who want to go back to the past, there is always a political force for zero interest rates, and it is the bias of all central banks to lower the (real) rate of interest below its free market rate (which was about 5% real for over a century during the period when the U.S. had little or no central banking).

The way it manipulates interest rates is by buying government securities, Treasury bills being a good example. A one-year T-bill is redeemed at par (100). It is issued at some price below par, and the interest consists of the difference between the issuing price (or current price) and par. For example, a T-bill may be issued for 95. It is redeemed at 100. Thus the interest received by the buyer is 5/95 = 5.26%. The current U.S. rate for the 1 year T-bill is 0.35%.

Modern central banks have no capital of their own (although historically central banks started out as ordinary banks and then got special privileges from the government). The only way that a modern central bank gets money is by printing it (although this is usually covered over with a collection of lies. For example, modern American money contains the words “Federal Reserve Note.” But a note is a credit instrument. It certifies that one party owes money to another, and all notes specify the interest rate which the borrower has agreed to pay to the lender.

It can be proven in economic theory and has been the case in every society in which money has circulated that notes (or other credit instruments) cannot circulate as money. This is because people will not use them as money. When a person has both a note and ordinary money and wants to buy something, he decides to keep the note (because it pays interest). He pays for his purchase with (non-interest bearing) money. Thus, it is the non-interest bearing instrument which circulates and acts as a medium of exchange. In other words, a “Federal Reserve Note” is not a note. And calling it a note was simply one of many lies which emanated from the group around J.P. Morgan at the time they slipped over the Federal Reserve System on a country which had regressed badly in its knowledge of economics.

In modern central banking, pieces of paper, which have been printed up by the central bank (emblazoned with all kinds of fancy words and symbols to impress the ignorant), are declared to be money by the government (in what is known as a legal tender law). This says that you must treat this fancy paper as though it had more economic value than similar pieces of paper. The original paper dollars issued by the Federal Reserve in 1933 were required to be treated as though they had the same value as 1/20 oz. gold. This value does not come from it being a note or a security. It comes because the government has “blessed” this piece of paper with the words “legal tender.”

It should be noted that, although the situation may differ from country to country, here in the U.S. the legal tender enactments by Congress are illegal, hence null and void. This is because we have two levels of law in the U.S. There is the government’s law, imposed on the people. And there is the people’s law, imposed on the government. The people’s law is the Constitution. This is the supreme law, and any statute law which conflicts with it is null and void. (Those interested may read the debates of the constitutional convention, Aug. 16, 1787, in The Madison Papers. The authors of the Constitution were very hostile to the paper money which had been issued during the 1770s and early 1780s and intended to ban it. The vote to ban paper money in America was 9 states to 2 states, and this has never been changed.) Thus, our current government is illegal. This is not a laughing matter because the Coinage Act of 1792 imposes the death penalty for debasement of the currency, a fact which should give Ben Bernanke, Alan Greenspan and Paul Volcker serious pause.

“SEC. 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of fine gold or fine silver therein contained, or shall be of less weight or value than the same ought to be… every such officer or person who shall commit any or either of the said offences, shall be deemed guilty of felony, and shall suffer death.”

Our current U.S. money has not only been made worse as to the proportion of gold therein contained. It has been made zero.

As the central bank buys Treasury Securities with its printed money, it forces their price up, and, as we have seen, this forces the interest rate down. But low interest rates are beneficial to borrowers (which are primarily the nation’s large corporations). They are harmful to savers (who are primarily the middle class). In this regard, the central bank is stealing enormous amounts of wealth from the nation’s middle class and giving it to the very rich.

As noted, as a side effect of the lowering of interest rates, the central bank acts like a counterfeiter, printing money out of nothing. This causes all prices to rise. However, they do not rise equally. The wages of labor rise more slowly than the prices of goods. Thus real wages go down. Because of this, real wages have been declining in this country since 1972 (one year after Nixon completed the abolition of the U.S. gold standard). Since real wages are declining, real corporate profits go up.

I call the people who benefit from the printing of money and easing of credit the paper aristocracy. The paper aristocracy always wants more paper money and is trying at all times and in all countries to urge the central bank to issue more money. To accomplish this, there have to be a continuous series of crises (real or imagined) to serve as an excuse.

Obama expected to boost offshore drilling oversight Washington Post

Now that's grabbing the bull by the horns!

1 comment:

  1. I always look forward to reading your comments Greg.

    I've never seen the gold /silver price suppression so obvious. Gensler does nothing. Chilton does nothing. The corporate media is silent. Their hubris is not only frustrating it is shocking.

    The only way to fight back is by purchasing physical precious metals, and participating as little as possible in their consumer goldfish bowl.