Wednesday, June 30, 2010
But I thought we were in the midst of a recovery? The President said so. The Fed chairman said so. The Treasury secretary said so. CNBC says so every morning.
Only in The Land Of Oz grasshopper.
Treasuries Have Best First Half in 15 Years on Risk Aversion
By Lukanyo Mnyanda and Wes Goodman
June 30 (Bloomberg) -- Treasuries headed for their best first half in 15 years, with two-year yields near a record low, as tumbling stocks drove demand for the safest securities amid concern the economic recovery is stalling.
Two-year securities were little changed today after rising in each of the previous three days. A U.S. report today will probably show business activity expanded at a slower pace, according to a Bloomberg survey of economists, while an employment report in two days is forecast to show more than 100,000 job losses. Treasuries returned 5.8 percent in the first six months of 2010, Bank of America Merrill Lynch indexes show, while the MSCI World Index of shares plunged 10.4 percent.
“The market is starting to become more pessimistic about the growth outlook next year, probably not yet playing double- dip, but at least quite a weak economic scenario,” said Kornelius Purps, a fixed-income strategist at UniCredit SpA in Munich. “It will depend very much on the labor market report whether we will keep these low yield levels.”
Risk aversion? How is buying the debt of a completely bankrupt nation considered an aversion to risk? Buying US debt might just be the riskiest investment available to investors today.
ADP Employment Report Disappoints
Private sector jobs increased less than expected in June signaling that there is little hope for a turnaround in employment in the near future for the millions of American out of work following the recession.
According to the ADP National Employment Report, nonfarm private employment increased 13,000 this month, after a revised increase of 57,000 in May, which was previously reported up 55,000.
Economists were looking for a much brighter increase of 60,000 this month.
The rise in June was the fifth consecutive month of gains for the report, but the increase have average a minimal 34,000 over that time, as the ADP suggests that private employment may have decelerated heading into the summer months.
The ADP report includes only private sector jobs, while the Bureau of Labor Statistics will release its payroll data on Friday, which includes government workers.
The BLS report is expected to show a drop of 110,000 jobs, as the government lays off the hundreds of thousands of workers hired to conduct the census. The June unemployment rate is expected to inch up to 9.8 percent from 9.7 percent in May.
Fed officials see high unemployment for years
CHICAGO (Reuters) - Unemployment is likely to stay high for a long time, two Federal Reserve officials said on Wednesday, suggesting the U.S. central bank is in no rush to raise its ultra-low interest-rate policy.
I guess interest rates will remain low if these jobs prognostications prove accurate. Hmmm...low interest rates bad for US Dollar...good for Gold. Or so one would think. Perhaps barring the Gold Cartel's persistent manipulation of the price of Gold. Oh, what am I thinking, Gold actually be allowed to perform in a free market based purely on fundamentals?
Dollar Faces Perfect Storm
By: Rick Ackerman, Rick's Picks
China Makes Good on Flexibility Vow – Yuan Falls”. As if any of the central banks actually support flexible markets. If it had been Hitler’s invasion of Poland that was being reported, the headline might have read, “Hitler Makes Good on Vow to Seek More Room for Germany”.
Recall that U.S. stocks got barely any lift from the news. Abetted by short sellers caught on the ropes last Sunday night, DaBoyz and their pigeons were able to pretend for only a few hours that China’s decision to let the yuan rise was good news. Stocks all around the world rallied sharply if fleetingly, but by Monday morning most traders seem to have figured out that a pricier yen would subject global financial markets, particularly the U.S. dollar, to killing stress. The Dow Industrials fell steadily for the rest of the week, failing to attract even one decent short-squeeze rally the whole way down. Ominous.
And here’s why: Imagine everything the U.S. and the rest of the world buys from China costing more. Then imagine China’s exports falling as a consequence, leaving the country with far fewer dollars to buy U.S. Treasury debt. Well, it is no longer something that needs to be imagined, for that is exactly what China intends. With the nation’s foreign currency reserves edging toward $3 trillion, most of that in U.S. dollars, it was time for China put an end to a greenback-support operation that had long since grown beyond the bounds of sanity. That is not to say, however, that Chinese support for the dollar has outgrown its usefulness, for the arrangement has given the U.S. Treasury the appearance of solvency, freeing up easy credit for U.S. consumers with an insatiable hunger for Chinese goods.
All of that is about to change, though, and with it the status of the dollar as the world’s reserve currency. We find it remarkable under the circumstances that, a week after China’s decision, the dollar has yet to implode — nor Gold to erupt, presumably with sufficient force to leave the $1300 threshold behind in a cloud of dust. It is difficult to think that both of these things will not occur, although it may take a shift in the sheep-like behavior of money managers, since they are deeply conditioned to believe that the dollar and Treasury paper are “safe havens” even though a U.S. without recourse to printing-press money would look far worse than that supposed financial basket case, Greece.
With both Europe and Japan abandoning deficit spending as means of spurring their moribund economies, the U.S. dollar can only fall, and gold rise, as the former confronts a perfect storm of tough comparisons and bad tidings. This will happen even with the support of a dying coterie of money managers who may pretend for yet a little while longer that black is white and that 1 + 1 = 3. It is predictable that they will all have their epiphany at once. When that day arrives, investors who are hedged with gold will be able to ponder the consequences with serene detachment.
The Chinese Yuan revaluation story is being ignored by the financial news media. Probably because they misunderstand the implications of it. A revaluation higher in the Yuan is very bad for the US Dollar...AND VERY GOOD FOR GOLD. The markets initial positive reaction to the "news" that China would allow it's currency to rise was Euphoria. This Euphoria quickly turned into a Bronx Cheer as the realization that this Chinese currency move is not the financial panacea that US politicians proclaim it will be.
China Yuan Up Late At Modern-Era High On Banks' Demand
SHANGHAI (Dow Jones)--China's yuan rose to another modern-era high against the U.S. dollar late Wednesday afternoon because of strong demand from banks for their corporate clients, while month-end dollar demand waned.
The yuan rose despite the People's Bank of China setting a slightly higher dollar-yuan central parity rate for the third consecutive session. The dollar-yuan fixing is the daily mid-point around which the spot rate is allowed to trade up or down by as much as 0.5%. Traders said lingering hopes for yuan appreciation against the dollar in the near term and a small rebound in the euro against the dollar partly drove demand for the local currency.
On the over-the-counter market, the dollar was at CNY6.7814 around 0930 GMT, representing the yuan's strongest settlement level in the onshore spot market against the dollar since the 1980s, before the currency was allowed to be traded as part of China's market-oriented reforms. The dollar settled at CNY6.7977 Tuesday. It traded between CNY6.7801, a modern-era intraday low, and CNY6.7981.
The central bank set the dollar-yuan central parity rate at 6.7909, up from 6.7901 Tuesday and 6.7890 Monday, after the dollar rose against the euro overnight.
The euro fell to $1.2196 in late New York trade Tuesday, down from $1.2276 Monday. But the currency had risen to $1.2264 around 0930 GMT.
"The dollar selling was quite heavy," said a Shenzhen-based trader at a local bank. "People anticipate a certain degree of yuan appreciation in the medium term, and they feel that it's a good level to sell dollars against the yuan today because the dollar-yuan central parity rate is well above 6.7900."
Yuan demand intensified late in the afternoon, when state-run banks were seen bidding for the yuan in heavy volume, said a Guangzhou-based trader at a local bank. But traders said unlike last week, there weren't obvious signs of central bank-guided flows in the market.
"We saw mostly large state-owned banks selling dollars," a trader said, "but they could have been selling on behalf of their clients."
It is important to point out the proven implications to the Gold market in lieu of a Chinese Yuan revaluation. In June of 2005, China announced a revaluation higher in the Yuan. Gold's reaction was not only positive, but astonishing.
In June of 2005, Gold was trading at $435. The Gold price had been capped at $450 since February of 2004. Upon announcement of the Chinese Yuan revaluation in June 2005, Gold responded with a surge through $450 in August of 2005...and NEVER looked back.
Gold's rise did not pause until it's Spring 2006 correction at $650. Gold continued to rise until peaking in January 2008 at $975. China repegged the Yuan to the Dollar in June of 2008, whereupon Gold corrected by $225. The recent runup in Gold from the $681 low in the Fall of 2008, to $1265, has occured with the Yuan pegged to the Dollar. Gold bulls should be licking their chops at Chinese easing of the Yuan's Dollar peg.
Financial Markets React to G20 Confusing Conclusion
We’re going to cut those deficits… As soon as we’re done spending more money!
That’s the conclusion of the G20 summit this weekend as the official statement says:
While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels and the social impact of the crisis is still widely felt. Strengthening the recovery is key. To sustain recovery, we need to follow through on delivering existing stimulus plans, while working to create the conditions for robust private demand. At the same time, recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, properly phased and growth-friendly plans to deliver fiscal sustainability, differentiated for and tailored to national circumstances.
Those countries with serious fiscal challenges need to accelerate the pace of consolidation. This should be combined with efforts to rebalance global demand to help ensure global growth continues on a sustainable path. Further progress is also required on financial repair and reform to increase the transparency and strengthen the balance sheets of our financial institutions, and support credit availability and rapid growth, including in the real economy. We took new steps to build a better regulated and more resilient financial system that serves the needs of our citizens. There is also a pressing need to complete the reforms of the international financial institutions.
There’s 26 pages of this nonsense but the gist of it is: We promise to keep bailing out the economies but as soon as that’s done then we are right on top of this deficit thing. Of course, the underlying assumption there is that the bailouts are working in the first place - something that is difficult to convince the World’s 500M unemployed workers, who would rather have jobs than a robust banking system. From a global perspective, our short-term outlook is less than robust so far:
Could these buffoons have come up with a more POSITVE Gold statement? Unlikely. Gold's response to this nonsense was precise Sunday night in Asia and Europe. The Gold Cartel felt otherwise, and quickly shut the door on the price of Gold as it hit an ALL-TIME high in the London PM Gold Fix Monday. Gold fell hard through the CRIMEX trading day Monday and into the CRIMEX open on Tuesday
The CRIMEX Gold bulls wouldn't have any of the Gold Cartel's rebuke, and promptly bid Gold off it's Tuesday morning lows in what may be another major reversal of another attempted takedown by the Gold Cartel.
After rising overnight from Tuesday into Wednesday, the Gold Cartel felt it necessary to try and chop Gold once again. But the Gold bulls stuffed them with vigor. The CRIMEX goons are out of sinks to toss at the market, and the Gold bulls appear to be herding for a stampede. If you are short this Gold market, in this environment, step aside or prepare to become part of the pavement.
Tuesday, June 29, 2010
What a load of crap!
Dan Norcini at JS MineSet [http://jsmineset.com/] said it best and I believe spoke for everyone that watches these Precious Metals markets:
Hourly Action In Gold From Trader Dan
Monday must now be the new “Friday” when it comes to gold. Those of you who have been watching the gold price action over the last decade know what I am referring to. For those of you who are a bit newer to the gold game, Fridays, particularly after a payrolls report, have typically been the day on which gold was taken down by the bullion bank crowd to mess with the weekly chart and the technical picture.
Last Monday saw gold put in a horrendous bearish downside reversal day which the bulls managed to negate the rest of the week by a sheer gritty determination not to run. Today (another Monday) we have an exact repeat of the same bullion bank tactic that they employed 7 days ago; to wit, a takedown after price took out last Friday’s session high while gold mining stocks were also moving sharply higher. The result – an exact repeat of last Monday technically – another bearish outside reversal day on the daily chart. This coming on the heels of a brand new record high in Dollar terms at the London PM Fix ($1,261).
It is quite evident that the perma-bears at the Comex are determined to cap gold at $1,260. No one hits bids with the intensity that I saw this morning unless they are trying to take price lower. The reason is obvious – a closing push through $1262 and gold goes immediately to $1,280 – $1,285 garnering all the more headlines and casting more doubt upon the integrity of world’s current monetary system, which is under extreme duress. What the bullion banks are attempting to do is to form a double top on the daily price chart – it really is that simple.
Some are pointing to the stronger dollar as the culprit behind the weakness in gold, but that is denying the obvious and grasping for an explanation. Bonds are shooting sharply higher today and even the Yen is stronger as once again risk is back in focus and investors are moving to safe havens. Under such a scenario, the very notion that gold would be sold off as a “risky” asset is laughable for its stupidity.
The fact is gold was sharply higher after the conclusion of the meaningless G20 summit which was nothing but a group of yakking heads talking to hear themselves saying something. Investors rightfully interpreted that as further confirmation that nothing serious was going to be done that would restore confidence towards paper currencies. They then bid the yellow metal higher which held its gains from overnight as it moved into New York trading and even added some. We are then to believe that investors had a sudden change of heart so much so that they immediately became convinced at mid-morning that gold was no longer worthy to be held but instead US paper Treasuries were much more to be desired? Based on what news, what report? Come on already – are there actually people out there who are so damn dense that they believe this nonsense? This is what an orchestrated takedown looks like, pure and simple.
My own view is that this will meet with as much success as the previous Monday’s. Not a thing has changed in regards to the world’s monetary system – nothing. We always have to respect the technical price action because today’s markets are dominated by techies but those same technicals worked in favor of the bulls last week based on the price action Tuesday through Friday last week. They have to repeat their performance once again.
Let’s see how support levels function tomorrow and Wednesday. Chalk up today for the history books and forget about it. What is more important now is whether the bulls will hang tough and refuse to run. If they do not run, bears will be forced to cover as they did last week. As I mentioned in this past weekend’s analysis of the COT report, bears will have to force price down below $1233 on a closing basis to induce long side liquidation.
Jim Sinclair followed up Trader Dan's comments with some concise commentary of his own regarding Monday's Gold Cartel shakedown:
Debt Crisis Cannot Be Manipulated Away
If the market for gold had not done its runaway/runaway common to overleveraged long morons, it would have broken out of the neat cup and handle formation going on to $1650. It will definitely break out of that formation.
The short term bullies that manipulated today’s market cannot manipulate the reality of the debt crisis away.
Today was the do or die takedown in gold by the mega hedge fund traders using the gold banks as beards for maximum effect. It was that because of the cup and handle formation. I know because I used to do the same thing on the other side.
Back in the 70s when the Middle East was the major buyers of gold they used a certain German bank as their broker constantly. When I wanted to run a large short position into oblivion, I used the same bank as buyers that represented the Middle East.
Nobody wants to buy or sell, only manipulate price, when they bid ten times what the offering is or offers ten times what the bid is in an open outcry market.
You have witnessed a pure operation by the bear hedge fund, just the same ones that are short of the junior and intermediate gold shares.
What has been painted in the gold market is also being attempted in the gold sharers. In time the futility of this will be very evident.
Dave Kranzler of The Golden Truth offered succinct commentary on the CRIMEX raid and charts worth 1000 words identifying yesterday's raid and last Monday's raid as well. Is the CFTC freaking blind?
A Comex Paper Manipulation Price Raid: In A Picture and Reader Comments
How come moves like this NEVER happen outside of the COMEX traing hours?
The physical demand for gold/silver - and the demand for delivery - is starting to take its toll on the attempt by the Fed/Treasury to hold down the price.
Sell your Gold? Why would ANYBODY sell their Gold? No Gold was sold yesterday...the Gold Cartel has none to sell. Gold that doesn't exist was sold to "affect" price lower, but no Gold was actually sold yesterday.
RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve
By Ambrose Evans-Pritchard
Entitled "Deflation: Making Sure It Doesn’t Happen Here", it is a warfare manual for defeating economic slumps by use of extreme monetary stimulus once interest rates have dropped to zero, and implicitly once governments have spent themselves to near bankruptcy.
The speech is best known for its irreverent one-liner: "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost."
Bernanke began putting the script into action after the credit system seized up in 2008, purchasing $1.75 trillion of Treasuries, mortgage securities, and agency bonds to shore up the US credit system. He stopped far short of the $5 trillion balance sheet quietly pencilled in by the Fed Board as the upper limit for quantitative easing (QE).
Andrew Roberts, credit chief at RBS, is advising clients to read the Bernanke text very closely because the Fed is soon going to have to the pull the lever on "monster" quantitative easing (QE)".
"We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable," he said in a note to investors.
Roberts said the Fed will shift tack, resorting to the 1940s strategy of capping bond yields around 2pc by force majeure said this is the option "which I personally prefer".
A recent paper by the San Francisco Fed argues that interest rates should now be minus 5pc under the bank's "rule of thumb" measure of capacity use and unemployment. The rate is currently minus 2pc when QE is factored in. You could conclude, very crudely, that the Fed must therefore buy another $2 trillion of bonds, and even more if Europe's EMU debacle goes from bad to worse. I suspect that this hints at the Bernanke view, but it is anathema to hardliners at the Kansas, Richmond, Philadephia, and Dallas Feds.
Societe Generale's uber-bear Albert Edwards said the Fed and other central banks will be forced to print more money whatever they now say, given the "stinking fiscal mess" across the developed world. "The response to the coming deflationary maelstrom will be additional money printing that will make the recent QE seem insignificant," he said.
The Fed giveth and the ECB taketh away. Perhaps this is the real "threat" to the equity markets, and explains the attack on Gold. heave forbid the canary from singing the TRUTH.
Expiration of ECB Debt Facility May Disrupt Credit Markets
By Abigail Doolittle
Flying under the radar screen is Thursday’s expiration of the European Central Bank’s largest 12-month Long Term Refinancing Operation (LTRO). Considering, however, that it could prove to be the impetus for an increase in 3-month LIBOR and a general disruption to the credit markets, it should be flashing red for us all.
At 10AM est this morning the 10-year Treasury note has slipped below 3%. This is not a sign of economic recovery. The is a sign of impending economic Armageddon.
Gold too another hit this morning, but bounced on cue as the London PM Gold Fix was put in. It remains to be seen if the Precious Metals can follow through on this bounce as the Dollar is receiving it's usual "safe-haven" bid. The recent return to it's inverse relationship to the Dollar is appearing to hurt Gold, but in reality Gold is being manipulated lower, not reacting to a "stronger" Dollar. The US Dollar is anything but strong.
Gold has support at 1227. This is key support, and must hold to prevent the technical downdraft the Gold Cartel are trying to force in "price". Secondary support lies at the uptrend line of Gold current leg up from it's March low at 1084. This support presently rests at 1221. Below that the next key support level is at 1216. The Gold bulls were powerful last week, let's see if the really mean business in dealing with these CRIMEX crooks.
Silver as always is along for the bumpy ride. Every effort was made early yesterday to prevent a Silver breakout at 19.50. Key support in Silver lies at 18.31.
As suggested many time previously. The Gold Cartel has been completely unsuccessful in stopping the rise in the price of Gold. They have been entirely successful at offering investors opportunities to buy Precious Metal at discount prices however. Be right and sit tight.
Sunday, June 27, 2010
World leaders pledge to slash deficits in half by 2013, but leave themselves wiggle room
TORONTO (AP) -- Wary of slamming on the stimulus brakes too quickly but shaken by the European debt crisis, world leaders pledged on Sunday to slash government deficits in the most industrialized nations in half by 2013, with wiggle room to meet the goal.
They generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery.
"Serious challenges remain," they cautioned in a closing statement set for release later Sunday. "While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," according to the document from the Group of 20 major industrial and developing nations.
What a load of crap! Hell will freeze over before you see the USA cut it's deficit in half by 2013. Rising interest rates and increasing costs to service the country's debt alone will prevent this pipe dream from ever being smoked.
Interestingly, this entire plan rests on a growing world economy. LOL! The only thing that is going to be growing by 2013 are the costs of everything consumers will need just to survive. Of course you can count on government accounting to assure us that inflation is a "sign" of growth, and the deficits will have been cut in half "as a percent of GDP". This is better know as hyper inflating you way out of debt. A more Gold positive announcement could not have come from the mouths of these knuckleheads.
Geithner: Keeping recovery on track is top focus
TORONTO (AP) -- World leaders must work together to make sure the global recovery stays on track, Treasury Secretary Timothy Geithner said Saturday.
Geithner made his remarks as President Barack Obama has warned his counterparts from the Group of 20 nations to not reel in measures to stimulate their economies too quickly. The United States fears doing so could endanger the global recovery.
Some nations in Europe and elsewhere are shifting their focus on cutting deficits -- especially in the wake of Greece's debt crisis, which rattled world markets.
Asked if the global economy could slip back into another "double dip" recession, Geithner said the answer to that question hinges on decisions made by world leaders. "It is within the capacity of the people who are going to be in those rooms together in the next few days to avoid that outcome," he said.
One of the mistakes made in the 1930s was that countries pulled back their recovery efforts too soon, prolonging the Great Depression, he said.
Geithner said the United States doesn't want to see that happen again. "What we want to do is continue to emphasize that we are going to avoid that mistake," he said. "It's only been a year since the world economy stopped collapsing ... it will take some time to heal."
Although the world economy has recovered from the worst financial and economic crisis since the 1930s, many challenges remain, Geithner said.
"The scars of this crisis are still with us," Geithner told reporters. "If the world economy is to expand at its potential, if growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis."
It's been a year since the world economy stopped collapsing? Geeze, and I thought it was STILL collapsing. Well, Tiny Tim says it has stopped, so it must be collapsing at a breakneck pace.
If Geithner is running around the G20 telling everyone there will be an economic relapse if countries switch their focus to deficit reduction instead of continued unfunded spending, has there ever really been a recovery?
Obviously not. The "recovery" the US Government boasts about has been bought and paid for by government spending alone. Recoveries, genuine recoveries, are the result of private sector spending and investment, not by stealing from the private sector, and dumping money in the laps of criminal banking entities. If the US Government, and it's cohorts in the G8 must continue spending to "ensure" a recovery, then there never will be a recovery. Times like these prove that it is impossible to spend your way to prosperity.
The US government, along with the Europeans, have made a grave error in bailing out the banks and claiming to have "averted the next Great Depression". The private sector has been left bereft of capital because the banks are using all of their new found money to buy US Treasuries in an elaborate scheme to give the world the illusion that the US can endlessly spend money it doesn't have to keep the engine of capitalism going. In effect, the US government is pumping blood into a corpse with the notion that it will come back to life. Dead bodies stay dead. The US Government has destroyed the country far quicker than any enemy combatant could ever hope to.
Does ANYBODY really believe the Geithner drivel? If he and the messiah are serious about a recovery, they need to cut spending AND taxes NOW! Real recoveries come from the PRIVATE SECTOR, NOT from government spending on bank bailouts and legislative pork. But that will never happen, so again Gold is the big winner this weekend. The US will not officially default on their debt, they have opted to inflate it away instead. The US Dollar will be on life support by 2013.
Confidence Waning in Obama, U.S. Outlook
Americans are more pessimistic about the state of the country and less confident in President Barack Obama's leadership than at any point since Mr. Obama entered the White House, according to a new Wall Street Journal/NBC News poll.
The survey also shows grave and growing concerns about the Gulf oil spill, with overwhelming majorities of adults favoring stronger regulation of the oil industry and believing that the spill will affect the nation's economy and environment.
Sixty-two percent of adults in the survey feel the country is on the wrong track, the highest level since before the 2008 election. Just one-third think the economy will get better over the next year, a 7-point drop from a month ago and the low point of Mr. Obama's tenure.
Amid anxiety over the nation's course, support for Mr. Obama and other incumbents is eroding. For the first time, more people disapprove of Mr. Obama's job performance than approve. And 57% of voters would prefer to elect a new person to Congress than re-elect their local representatives, the highest share in 18 years.
The results show "a really ugly mood and an unhappy electorate," said Democratic pollster Peter Hart, who conducts the Journal/NBC poll with GOP pollster Bill McInturff. "The voters, I think, are just looking for change, and that means bad news for incumbents and in particular for the Democrats."
Mr. McInturff said voters' feelings, typically set by June in any election year, are being hardened by frustration over the economy and the oil spill. "It would take an enormous and seismic event to change the drift of these powerful forces before November," he said.
The sleeping giant called America is waking, and boy is she pissed.
U.S. Q1 GDP revised lower to 2.7% increase
WASHINGTON (MarketWatch) - U.S. real gross domestic product for the first quarter was revised down to an increase of 2.7% annualized from the earlier estimate of a 3.0% rise, the Commerce Department said Friday. Economists surveyed by MarketWatch expected first-quarter growth to be unrevised at up 3.0%. The revision to first-quarter GDP was largely due to weaker consumer spending and a widening trade deficit. A key measure of inflation was revised slightly higher but remained subdued. Core prices increased 0.7% in the first quarter, up from 0.6% reported earlier. Corporate profits increased a revised 8.0% quarter-to-quarter, compared with a 5.5% rise previously estimated.
This revelation should come as NO SURPRISE to anybody reading this blog. Government accounting is pure fantasy, and doubtless conjured up to meet the needs of the moment. Can you say "propaganda". I will predict here and now that 4th quarter GDP wil be NEGATIVE.
General Stanley McChrystal, a great American and bonafide leader [something our President will never be] was fired late this past week for his comments on Team Obama. When will the politicians ever learn that generals run wars, not desk jockeys in Washington. Afghanistan is now officially a quagmire. I highly recommend reading this entire story that came out in Rolling Stone Friday. It portrays a realistic view of the war in Afghanistan and US policy. The general should be applauded for his candour and realism. Unfortunately he speaks too much of the truth and fails to portray the fantasy the clowns in Washington believe in.
The Runaway General
Stanley McChrystal, Obama's top commander in Afghanistan, has seized control of the war by never taking his eye off the real enemy: The wimps in the White House
Gold and Silver need to follow through on their thumping of the cartel bankers last week. A close above 1265 Gold, and 19.50 Silver, should open the door to 1300 Gold and 21 Silver. Caution is warranted as the CRIMEX goons are battered and bruised, and still holding record short positions in Gold.
The goons may capitulate here, and hope to regroup and attack on the potential profit taking that may result from a Gold strike at 1300. Gold support rests at last weeks 1224 low. Silver at 18.17. The Gold/Silver ratio is testing it's 50 day moving average at 65.60. 62 is major resistance, and we would most likely see this come into play should Gold run to 1300. We look to this week ahead with a cautiously aggressive posture...
Silver: "Looking Good Billy Ray - Feeling Good Lewis!"
Dave Kranzler: The Golden Truth
The bullish set up in silver (and gold) has turned insanely bullish. An astonishing amount of silver has been removed from the Comex warehouses over the past two weeks. Most of it from Scotia - who has unrefutedly been accused by many, including me, of operating a "fractional" bullion custodian operation - and from HSBC - who has by far the 2nd largest paper short position in silver, on the Comex and via OTC derivatives as per the latest Comptroller of the Currency's Q1/2010 Report on Bank Trading and Derivatives Activities.
Every day last week silver (and gold) traded up in the physical buying markets of Asia and India, only to undergo massive paper selling in London and on the Comex. What was incredibly bullish was the way silver recovered from repeated paper price attacks during the paper-only Comex trading sessions every day last week. I can't recall seeing price "snap-back" action like this in nearly nine years of trading silver. Silver closed the week slightly lower than a week ago, but closed nearly a dollar above it's intra-day trading low last week. This is an even more remarkable feat considering that the Dow and the SPX were demolished for the week.
The trading action I observed and participated in, combined with the amount of silver leaving the Comex, tells me that the paper shorts are having a hard time triggering any meaningful stop-loss selling, which is how the big Comex shorts (JPM, HSBC) have historically covered their short positions. Here is Ted Butler's comments from his weekly King News World radio interview:
There's not a lot of people out there looking to dump physical metal right now...and I can see situation developing where a lot people wake up and say they want to acquire big physical positions and that mismatch of no big physical supply and potential physical demand is what the doctor ordered for a big price explosion.
Here's the link to the entire interview - it's about 10 minutes and worth hearing: Ted Butler on silver
Thursday, June 24, 2010
The selling in Precious Metal began at 12AM est and surprisingly halted as the CRIMEX opened for business. Gold rose all morning until it peaked precisely at 11AM at $1247.50, it's high of the day. Silver rose along with Gold, yet did not reach it's peak, and high of the day, until 12PM at 18.80. Many had expected one last Precious Metals raid into the 1:30PM est options expiry, and then a powerful turn higher in the access markets after options contracts had expired. The Precious Metals had other ideas today...as in giving the one finger salute to the CRIMEX goons and their banking cartel buddies.
Follow through tomorrow with a close above 1250 Gold and 19 Silver for the week would represent a stunning kick in the groin to those opposed to the Precious Metals. The only thing soon to be left in the CRIMEX delivery warehouses are pieces of paper with ledger entries and I.O.U.'s on them. Your government is flat broke, and so is it's Gold and Silver suppression scheme.
Gold and Silver Price Conspiracies Earn Their Weight
By: Dr. Jeffrey Lewis
It has become a common battle cry among precious metal followers that large traders are manipulating the price to keep the COMEX going. Since the COMEX allows exchange-traded fund shares and other cash equities to be used as a deliverable vehicle for gold, investors believe that the COMEX could actually offer hundred times more gold and silver than actually exists. To keep that kind of leverage going, investment banks and the largest traders are tasked with the job of making sure that the price of gold and silver is kept at a price at which very little physical metal is actually delivered. A gold price of $1250 means far less options will be redeemed, so the markets will continue on, able to deliver just as much gold as is requested.
See it in Action
Investors who aren't yet sold on the idea should look to see the manipulation in action. The easiest way is to pull up a chart of either SLV or GLD (ETFs for “physical” gold and silver) and look at the week before options expiration. In the third week of these months, most often starting one week before options expiration, the price of both physical silver and gold drop like rocks, particularly when the price is near an important (and heavily traded) futures contract price. The trend is far more pronounced on gold, which is typically less volatile than that of silver.
Highlighting the Trend
The manipulation attempts have worked out very well in the past year, with only a few months able to sustain enough buying volume to fight back against aggressive and often naked short selling. Those months without a dip were often the ones in which gold performed the best, indicating that the naked short sellers can be overcome. All in all, in eight out of the last twelve months, the naked shorting has won out, and spot prices for gold took a nosedive in the last week leading up to options expiration.
Buying on the Dips
Whether you are a believer in the conspiracy theory or just see an excellently formed trend in the metals market, you have a great chance to turn it around for a profit. First is to center your purchases around the time when futures and options come to expire; that price is often the cheapest you'll find for that particular month.
The trend is clear that the large price movements appear only within the week, and they are strongest when the price of gold or silver is currently sitting on, near, or slightly above, a very important options figure. For example, $1250 or $1251 instead of $1225. Remember, open up new positions in your favored metals only during the week up until options expiration.
One of the biggest stories over the past week was the revelation that Saudi Arabia has DOUBLED it's Gold holdings since early 2008. This revelation most likely led to last weeks late surge in the price of Gold to $1265. This is a HUGE story. A story almost on the scale of China's revelation that the had increased their Gold reserves, or India's purchase of 200 tonnes of Gold from the IMF. Recall that Gold prices rose fast a furiously following the news out of China and India. Might we expect the same from the Saudi announcement. And let's not ignore the MONTHLY rise in Gold reserves of Russia...
Looking Behind the Saudi Gold Holdings Increase
Gold prices continue to march higher, hitting a new all-time high near $1,265 this Monday morning in London trading before settling down to the $1,250 to $1260 area. Reportedly, the catalyst to higher gold prices was the revelation that Saudi Arabia's central bank, the Saudi Arabian Monetary Authority (SAMA) had made a sizable addition to its official gold holdings in early 2008 but only recently chose to report this metal in its official central bank reserve accounts.
According to the latest statistics published by the International Monetary Fund reporting the foreign exchange and official gold holdings of its member countries – and publicized last week by the World Gold Council, a pro-gold marketing association of many of the world's top gold mining companies – the Saudi Arabian Monetary Authority increased its gold holdings by nearly 180 tons in the first quarter of 2008 from 143 tons to its current reported level of 322.9 tons.
In a footnote to its first-quarter 2010 report, the Saudi monetary authority said that its "gold data have been modified from first quarter 2008 as a result of the adjustment of the SAMA's gold accounts." It seems likely from the available evidence that the Saudi's bought all of this gold in the first quarter of 2008 -- but chose not to publicize or report the purchase until now, instead holding the bullion in a "non-reserve" account or possibly by the Saudi Sovereign Wealth Fund on behalf of SAMA.
We have long held the view that some of the oil-rich nations might be buying gold on the sly through their sovereign wealth funds that do not necessarily report their investment holdings. Why did SAMA choose not to report its gold purchases until now? We can only guess it feared aggravating relations with the United States since the U.S. Treasury and the Federal Reserve view gold accumulation by foreign central banks as a threat to the dollar's international reserve status. But with a number of other central banks either buying gold outright or surreptitiously and with U.S. policymakers already on the defensive, the Saudi's may no longer feel quite so obliged to tow the U.S. line.
The Saudi news is reminiscent of China's announcement in April 2009 that it had purchased some 600 tons of gold over the prior six years, more than doubling its holdings from 454 tons to the current reported level of 1054 tons. The Chinese have not reported additional gold purchases since then.
However, we (like many other gold-market observers) believe China's central bank continues to buy more gold month after month but chooses not to report these additions so as not to boost the market price as such an announcement would likely do. We would not be surprised to learn that SAMA continues to buy as well, but like the Chinese, chooses not to report its ongoing purchases in order to minimize the upward price pressure resulting from its gold-buying program.
Regardless, SAMA's golden revelation confirms our view that central banks around the world are adopting an increasingly favorable view of gold ... as their concerns about the U.S. economy and the U.S. dollar's long-term purchasing power continue to mount.
GOLD OUTPERFORMS U.S. STOCKS
By: Jim Willie CB, GoldenJackass.com
Some extremely important developments have occurred in the gold market. The most significant and earth changing has been the recognition of Gold as a reserve asset alternative, not for commerce, but for foreign reserves asset management. Wealth is scrambling to find security, under siege. As the USDollar and Euro currency have undergone extreme shocks and have withstood the aftermath of stimulus, rescue, and nationalization, with all the attendant shame, Gold has emerged as nobody's counter-party risk, an asset free from debt. The gold rise continues to be resisted by illicit (if not illegal) methods, with naked shorting by the Big Four Banks. Consider the June Gold Call Options as they came due to expire three weeks ago. In predictable but corruptible fashion, vast naked short sales arrived just in time to ruin the value of call options whose predominant strike price was $1200 per oz. The CFTC and its commission Gary Gensler, true to form and loyal to the syndicate they serve, remained asleep at the wheel despite feisty independent cat calls out the window. Ditto for the Silver Call Options due to expire this week, as the silver price has suddenly fallen by $1.00/oz in three days, just enough to ruin more call options held by the idealists among us.
My firm belief is that every magnificent government or central bank Quantitative Ease program, or big bank rescue, or ongoing nationalized sewer payment, the potential price for gold rises $1000/oz and for silver rises $30/oz. The key is nothing is being fixed, no reforms put in place, no bank liquidations of substance occur, just more wasteful monetary creation to serve the syndicate. The cabal is vast, and covers far more than banks.
Individual investors should regard the stock market behavior as evidence of wreckage steeped with great deception. No nominal gains have been registered in ten years, which means a loss in purchase power is compounded at 5% to 7% per year. Almost no real gains have been registered in 40 years. Since 2001, gold has more than quadrupled in price, almost quintupled, while shills and sheisters ply their trade on Wall Street to denigrate it. The propaganda is unending by Wall Street and the USGovt about the nettlesome nature of gold. It pays no yield? Of course it does. Ask Warren Buffet, who earned gains from writing options on silver until he misjudged the rise, was called away, and lied to shareholders about selling too early. Some total knuckleheads actually claim that gold has not kept pace against inflation. They must not comprehend its 400+% gains in the last decade. Wake up, Karl!! In fact, they must be certified morons or genuine paid shills. Gold will continue to outperform all assets, since their trading activity is too deeply intertwined with the currencies and their national debts.
"I’ve told you so many times that the world hates gold and you’re never going to see mainstream Wall Street and the media that lives off it be bullish on gold. But, every time you hear one of them “pan” gold, just take out this chart and remind yourself that since gold became free trading it has greatly outperformed their favorite puppy – the stock market."
Ben Bernanke needs fresh monetary blitz as US recovery falters
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: they don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."
Mr Bernanke is so worried about the chemistry of the Fed's voting body – the Federal Open Market Committee (FOMC) – that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed's emergency policies. He was due to step down this week after 40 years at the institution, depriving Mr Bernanke of a formidable ally in policy circles.
The Fed's statement this week shows growing doubts about the health of the recovery. Growth is no longer "strengthening": it is "proceeding". Financial conditions are now "less supportive" due to Europe's debt crisis.
The subtle tweaks in language have been enough to set bond markets alight. The yield on 10-year Treasuries has fallen to 3.08pc, the lowest since the gloom of April 2009. Futures contracts have ruled out tightening until well into next year.
Yet the statement may understate the level of angst at the Board. New home sales crashed 33pc in May to an all-time low of 300,000 after the homebuyer tax-credit expired, confirming fears that the housing market has been propped up by subsidies. Unemployment is stuck at 9.7pc. Manufacturing capacity use is at 71.9pc. The Fed's "trimmed mean" index of core inflation is 0.6pc on a six-month basis, a record low.
"The US recovery is in imminent danger of stalling," said Stephen Lewis, from Monument Securities. "Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness."
Rob Carnell, global strategist at ING, said the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2pc of GDP in 2010 to a net withdrawal of 2pc in 2011. "This is very substantial fiscal drag. On top of this the US Treasury is talking of a 'Just War' against the banks, which will further crimp lending. It is absolutely the wrong moment to do this."
Kansas Fed chief Thomas Hoenig dissented from Fed calls for ultra-low rates to stay for an "extended period", arguing that loose money risks asset bubbles and fresh imbalances. He recently called for interest rates to be raised to 1pc by the autumn.
While he has been the loudest critic, he is not alone. Philadelphia chief Charles Plosser says the Fed has blurred the lines of monetary and fiscal policy by purchasing bonds, acting as a Treasury without a legal mandate. Together with Richmond chief Jeffrey Lacker they represent a powerful block of opinion in the media and Congress.
Mr Bernanke has fought off calls from FOMC hawks for moves to drain stimulus by selling some of the Fed's $1.75 trillion of Treasuries, mortgage securities and agency bonds bought during the crisis. But there is little chance that he can secure their backing for further purchases at this point. "He just has to wait until everybody can see the economy is nearing the abyss," said one Fed watcher.
Gabriel Stein, from Lombard Street Research, said the US is still stuck in a quagmire because Mr Bernanke has mismanaged the quantitative easing policy, purchasing the bonds from banks rather than from the non-bank private sector.
"This does nothing to expand the broad money supply. The trouble is that the Fed does not understand broad money and ascribes no importance to it," he said. The result is a collapse of M3, which has contracted at an annual rate of 7.6pc over the last three months.
Mr Bernanke focuses instead on loan growth but this has failed to gain full traction in a cultural climate of debt repayment. The Fed is pushing on the proverbial string. The jury is out on whether or not his untested doctrine of "creditism" will work.
"We are now walking on deflationary quicksand," said Albert Edwards from Societe Generale. http://www.telegraph.co.uk/finance/economics/7852945/Ben-Bernanke-needs-fresh-monetary-blitz-as-US-recovery-falters.html
Release the choppers!
Wednesday, June 23, 2010
Dan Norcini at Jim Sinclair's MineSet commenting on Tuesday's Gold market reaction to Monday's CRIMEX attempt to paint Gold as a bad investment:
In one of the more marvelous market displays I have seen in many years, gold was able to shrug off a major technical reversal sign and actually attract enough buying to not only minimize downside movement but actually bounce higher. Considering the extent of speculative long side exposure, and the nature of today’s computer algorithms, its ability to remain firm is astonishing and probably says more about the overall psychology towards the metal than any comments I could make. Investors and traders at the Comex are not panicking out of gold in spite of the formidable technical resistance that surfaced yesterday.
While the record high of yesterday’s session is serving as our new upside technical resistance level and holding price in check for right now, the fact is gold did not fall apart – that alone has to have unnerved those dwelling in their bear dens which is why we saw them begin covering when gold held yesterday’s session lows and refused to break down any further. One day does not a market trend make but for the sheer audacious of the bulls’ performance, you have to tip your hat to their gritty determination to stand firm and refusal to run.
As far as open interest readings go – yesterday’s sell off was accompanied by a rather mediocre drop of a bit under 2,200 contracts bringing the overall number down to 600,895. Considering the extent of the volume of contracts traded yesterday, it is evident that there was a determined selling cap shoved in place even as some of the weaker shorts were forced out on the initial spike into a new record high price. I am a bit surprised that volume yesterday came in where it did; I had expected to see something closer to 200,000. Perhaps that is also why we are seeing gold holding up so well today. Fear by the long side did not apparently materialize during the plunge. As a matter of fact, volume in today’s session is actually more impressive. This is an interesting development which bears further scrutiny over the next couple of trading sessions. If this is the best that the bears can do with all the technicals in their favor, they are in trouble. They will need to take the market down below yesterday’s low on better volume to tip the market convincingly in their favor. I still cannot get over the amazing resiliency being displayed by gold today. This is definitely not the same gold market as back in 2008.
It would appear that Gold traders AND investors are no longer falling for the dirty tricks of the CRIMEX goons. The numbers are not adding up for the goons...they don't have the metals to back up their short positions on the CRIMEX and as each day passes, more traders and investors are coming to that realization. The CRIMEX is a paper fraud, and this is no longer just conjecture, it is a FACT.
Harvey Organ of The Golden Truth comments on Monday's now obvious criminal activity at the CRIMEX:I remarked yesterday that if the open interest on the gold comex remained above 600,000 you could make funeral arrangements for our banking cartel.
The OI for the gold comex closed marginally down by 2199 contracts to 600,895.
No wonder gold catapulted higher at 8:20 this morning (the comex opening time) as the bankers get the OI number last night. We must wait until 1:30.
What must alarm them even more is the OI on the silver comex. It closed HIGHER yesterday despite the massive drop in silver price. The silver OI closed yesterday at 141,062 rising by 1852 contracts.
In other words, the huge downdraft of gold and silver pricing was only paper induced. This has increased the risk to our bankers.
Expect another raid tomorrow and Thursday as the bankers have to get this monkey off their backs.
Gold rose overnight to 1246, the Asians and Europeans taking advantage of the CRIMEX's misguided sales prices of the Precious Metals. But wonder of wonders, as the 8:20 CRIMEX opening bell rang this morning, the prices of Gold and Silver begin to fall quickly as the CRIMEX crooks work their criminal trade in Precious Metals they create out of thin air.
Between 8:20AM and 9:20AM, in just the first hour of CRIMEX trading, the price of Gold fell $10 an ounce. This instantly wiped out all overnight gains in Asia and Europe, AND pushed prices below yesterday's close. In just ONE HOUR!
Over the same span of time the price of Silver fell 30 cents.
Two thirds of the world sees the Precious Metals as an opportunity, and the bullion banks in America see them as a bust? I guess if two thirds of the world wanted your precious metals, it would be a great idea to sell them. What a joke. American bullion banks are little more than poster children for the now flat broke American Government. That TRUTH can only be thwarted by the never ending efforts of the American Banking Cartel to diminish the value of the Precious Metals with their CRIMEX scheme of fraud and misdirection.
And let's not forget that today is FOMC interest rate day. The US Federal Reserve will once again come forward with doublespeak about the "growing" US economy, but the need to maintain interest rates near zero. This Precious Metals positive stance by the Fed cannot be allowed to blossom in the public psyche, so the bullion banks must give the illusion through weakness in "price", that the Fed is "doing the right thing", and Precious Metals are a bad investment.
This illusion is now time worn, and few are falling for it any longer. The bullion banks are out of bullets. Successfully shooting down the "price" of Precious Metals is no longer possible because now "demand" for the Precious Metals is no longer determined by price, but by availability. Precious Metals investors smell blood in these markets now. Supply can no longer satisfy demand. In fact, because of the CRIMEX, supply is now negative...and demand is grossly positive. An explosion in the prices of the Precious Metals may be only weeks away now.
As I type this "prices" have fallen further to retest Monday's lows in Gold, and to new lows in Silver. Has this fabricated drop in prices diminished demand for the Precious Metals. Not likely. As a matter of fact, falling prices will only increase demand for the metals. This is being proven out by the Open Interest numbers reported above by Dan Norcicni and Harvey Oragan. If demand were falling with price, Open Interest would be falling with price. So far it has not been. This shows that demand remains firm, and this firming demand poses the biggest threat to the bullion banks survival.
Revel in this absurd activity by the bullion banks at the CRIMEX, they are slitting their own throats by continuing to sell Precious Metals they do not own. Take advantage of their gift, and thank them for their pompous preening. Seriously, if Gold was such a bad investment, why does it NEVER go down in price $10-20 at a time in Asia and London? Only on the CRIMEX does Gold fall victim to these violent and manufactured swings in price. Use them to your advantage.
Monday, June 21, 2010
Many sinks were necessary. One to protect the Fed ahead of their FOMC meeting this week. Another was needed to protect the Gold Cartel shorts ahead of options exiry Thursday. And another was used to protect the US desire to promote MORE economic stimulus at this weekends G20 summit. Apparently, one sink was used to replace the sink thrown at the Gold market in vain last Friday.
This morning's take down in Gold on the CRIMEX is all the proof one needs to confirm the CFTC's complicity in the never ending attempt to suppress the price of Gold AND Silver. Gold rose overnight in Asia on the news that China has "signalled" a desire to release their currency peg to the Dollar. Gold rose through the London Gold market before drifting back to unchanged from Friday for the London PM Gold Fix. Following the London Gold Fix at 10AM est, the CRIMEX goons moved in for the kill pulling bids and sending Gold into a free fall until the CRIMEX closed up shop for the day a 1:30PM.
Completely unwarranted except for the rising Dollar, along with record Open Interest in Gold at over 603,000 contracts. The goons backs were against the wall from selling so much unbacked paper Gold into the market in an effort to meet demand. Fools. Yet, because they are allowed to act above and beyond the law to protect their "hedges", the CRIMEX crooks set out to steal the profits on countless contracts in the money with Gold above 1250, and Silver above 19.00.
If you needed proof that the traditional inverse relationship of Gold versus the Dollar has been re-established, look no further than today's currency market action. Of course one is left scratching their head to explain the US Dollar's bid today. NOTHING fundamental supports today's rise in the Dollar. The list of reasons for the Dollar to fall actually got longer today with China's currency announcement. Yes, the reaction to China's announcement was a bit over stated, but the Chinese currency DID move to a new modern era high versus the US Dollar. The Chinese currency announcement was NOT US Dollar positive. AND IT WAS NOT GOLD NEGATIVE.
I put together a monthly chart of the Chinese Yuan with the price of Gold overlayed on it. It was quite a revelation. In June of 2005, China last unhitched their currency from the Dollar. At that time Gold was trading at $434. China kept the Yuan free of it's Dollar peg until the global financial crisis exploded in June of 2008. As China chose to re-establish the Yuan's peg to the Dollar, the price of Gold had risen to $912. We should expect Gold's rise to accelerate as China follows through on it's decision to once again let the Yuan float in the currency markets, as a rising Yuan will make Gold purchases cheaper in China.
The Bottom line on today's CRIMEX take down of the "price" of Gold. Thanks for the sale prices you f***ing morons. Every time you attack the price of Gold, you give us little people the opportunity to buy the real thing on sale, and leave less for you to cover your foolishly huge short positions in Gold and Silver. Ignore this feeble effort by the Gold Cartel to stop the rise in the price of Gold. The price has closed higher for the last 9 consecutive years...so much for price suppression. Slowing the price of Gold has only given investors a longer opportunity to buy insurance for their wealth. And wealth destruction is just a few weeks down the road now.
Sunday, June 20, 2010
The CRIMEX beasts are not going to simply let Gold runaway from them...though the potential for just that to occur may be looming. The CRIMEX is facing the daunting task of meeting delivery on all-time record demand this month of June for 2,283,000 ounces. The CRIMEX has ONLY 3,255,000 ounces registered to use to meet delivery demands. 70% of The CRIMEX registered warehouse stocks face delivery demand as of the 30th of June.
Thursday of this week past, the CRIMEX goons threw everything but the kitchen sink at the Gold market in an effort to halt it's rise. Friday, they lost the sink.
On June 6th, Silver broke higher from an intra-day low of 17.18, and has been leading Gold higher ever since. Silver has a strong tendency to make powerful moves ahead of major peaks in the price of Gold. With several technical projections for this current leg up in Gold topping out between 1287 and 1304 we need to keep a sharp eye on the price of Silver and the Gold/Silver Ratio [GSR] in the very near-term.
A close above 19.50 in Silver will most likely force a very quick move up over 20. Resistance in the GSR sits near 62. A close above 19.50 in Silver will most likely coincide with a powerful move higher in Gold, pushing it nearer to 1300. A 1304 top in Gold with a 62 GSR equals a Silver price of 21.03. A 1287 top in this Gold leg with a 62 GSR would equal a Silver price of 20.75.
It is noteworthy also that Jim Sinclair's next "Gold Angel" sits at 1278. This is significant because the previous Gold Angel was parked at 1224, and the previous leg up in Gold topped out at 1226. A Gold price of 1278 with a GSR of 62 would equal a Silver price of 20.61.
July is a delivery month for Silver. With 46 MILLION ounces of Silver still standing for delivery from March and May, July delivery demands at the COMEX might literally break the bank. At present there is ONLY 52 MILLION ounces of Silver registered for delivery in the CRIMEX Silver warehouse. The potential for an unrivalled rise in the price of Silver as we enter July is in place. Physical Silver may literally become impossible to find at any price should delivery demands break the CRIMEX.
The Precious Metals are seasonally weak in the Summer from late June into August. Seasonality factors should be respected, but a number of fundamental factors, coupled with CRIMEX warehouse shortages, may be too much for "seasonality" to depress Precious Metal prices in 2010. Consider these fundamental factors together, and it may be difficult to project any near-term top in Gold at present...
Demand for imports helps widen trade deficit- AP
New jobless claims up sharply as layoffs persist- AP
Election-year deficit fears stall Obama stimulus plan Washington Post
Obama urges G-20 to continue stimulus Philadelphia Inquirer
Peg is dead as China vows yuan flexibility Reuters
Congress ready to tighten the screw on Iran - Financial Times
Recent headlines that all spell uncertainty, and Gold loves uncertainty. China's announcement over the weekend concerning "Yuan flexibility" is noteworthy, but should not be considered an "immediate' catalyst to the Gold price. It does lend substantial uncertainty to the Dollar going forward however as a stronger Yuan will most likely mean a weaker Dollar.
Dave Kranzler of The Golden Truth has some excellent commentary this past week/weekend regarding the "seasonality" of the Precious Metals:
Gold set a new all-time weekly high close against the dollar this past week. The was preceeded by all-time highs in gold in the Swiss franc, British pound and euro. James Turk wrote commentary with some excellent charts to show how the price of gold is beginning to accelerate against global fiat currencies: Gold Starts To Gallop. Mr. Turk sent me the following comment in response to my Friday posting on silver:
A short squeeze is inevitable I believe, and this is a good time to expect one to happen. There seems to be an unusually large focus at present on the precious metal seasonals - summer is normally a weak period for the precious metals. It doesn't always happen that way of course (like in 1982). So a short squeeze could catch a lot of normal longs off-guard if they are waiting to buy the dip that never comes.
I have expressed to colleagues for a while now that I thought there was chance that gold/silver might, contrary to the typical seasonal pattern, stage a surprise move higher in June/July. Sensing that the physical demand in the market is starting to overwhelm the paper selling (just ask Russia), I have been thinking that the market would be set up to take advantage of a price correction that doesn't happen and scramble to re-establish long positions. We'll see how the next 6 weeks play out, but I always feel good about my views when they correlate independently with Mr. Turk's.
Silver: Is A Physical Squeeze Starting To Bubble Up?
The Comex had two large silver withdrawals this week. Yesterday's warehouse stock report showed 1.2mm ounces were removed, 900k of it from the "eligible" inventory, which is the investor inventory being "safekept" at Comex depositories but not available to be delivered. 480k of that 900k was removed from Scotia. With all the discussion and unrefuted (by Scotia) accusations about Scotia's depository safekeeping methodologies, it wouldn't surprise me to see even more gold and silver going forward being taken out of Scotia's customer inventory.
But here's an even more glaring issue: as of last Friday, the net commercial short position in silver, as per the COT report, was 55,329 contracts. At 5,000 ozs/contract, that's 276,645,000 ounces of silver sold short by the big bullion banks (Mostly JP Morgan, HSBC and BNS - and mostly JPM at that). What's the problem? The total silver inventory being reported by the Comex is 118 million ounces. But of that, 66 million is customer inventory not available for delivery, leaving 52 million ounces of silver that can be delivered vs. 276 million of short paper silver.
Let's break it down to just July silver. The July silver open interest is 47,921, which means that there is 239 million ounces of silver that has been shorted for July vs. the 52 million available for delivery. See the problem? Historically JPM could count on the longs to sell their position before first notice of delivery day or tender for cash. If the Comex silver longs start correlating with the trend in the actual physical market, the Comex will default on silver deliveries...
That the physical market in gold and silver is getting tight is not new news. But the above withdrawals from the Comex customer silver inventories this week, in the context of the anectdotal events as described above, can only lead one to believe that an enormous amount of pressure is being created by the trend of big investors demanding physical delivery into private depositories that are trustworthy and not connected to the bullion banks, who are likely leasing out some portion of the bullion in their depositories.
One more interesting development has to do with scrap supplies of gold. In the past, when gold breaks out to new highs, European bullion dealers report the emergence of a large supplies of scrap selling that hits the market. Last January (2009) the flow of scrap into the market was credited with causing the subsequent pullback in price. So far in this latest move, very little scrap supply is being reported.
Gold reclaims its currency status as the global system unravels
By Ambrose Evans-Pritchard
And are we any safer now that the EU has failed to restore full confidence with its €750bn (£505bn) "shock and awe" shield, that is to say after throwing everything it can credibly muster under the political constraints of monetary union? This is the deep angst that lies behind last week's surge in gold to an all-time high of $1,258 an ounce.
The World Gold Council said on Friday that the central banks of Russia, the Philippines, Kazakhstan and Venezuela have been buying gold, and Saudi Arabia’s monetary authority has "restated" its reserves upwards from 143m to 323m tonnes. If there is any theme to the bullion rush, it is fear that the global currency system is unravelling. Or, put another way, gold itself is reclaiming its historic role as the ultimate safe haven and benchmark currency.
It is certainly not inflation as such that is worrying big investors, though inflation may be the default response before this is all over. Core CPI in the US has fallen to the lowest level since the mid-1960s. Unlike the blow-off gold spike of the Nixon-Carter era, this rally has echoes of the 1930s. It is a harbinger of deflation stress.
Capital Economics calculates that the M3 money supply in the US has been contracting over the past three months at an annual rate of 7.6pc. The yield on two-year Treasury notes is 0.71pc. This is an economy in the grip of debt destruction.
U.S. Debt and the Greece Analogy
by Alan Greenspan
Don't be fooled by today's low interest rates. The government could very quickly discover the limits of its borrowing capacity.
An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.
Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.
The roots of the apparent debt market calm are clear enough. The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy. The very large contraction of private financing demand freed private saving to finance the explosion of federal debt. Although our financial institutions have recovered perceptibly and returned to a degree of solvency, banks, pending a significant increase in capital, remain reluctant to lend.
Beneath the calm, there are market signals that do not bode well for the future. For generations there had been a large buffer between the borrowing capacity of the U.S. government and the level of its debt to the public. But in the aftermath of the Lehman Brothers collapse, that gap began to narrow rapidly. Federal debt to the public rose to 59% of GDP by mid-June 2010 from 38% in September 2008. How much borrowing leeway at current interest rates remains for U.S. Treasury financing is highly uncertain.
The U.S. government can create dollars at will to meet any obligation, and it will doubtless continue to do so. U.S. Treasurys are thus free of credit risk. But they are not free of interest rate risk. If Treasury net debt issuance were to double overnight, for example, newly issued Treasury securities would continue free of credit risk, but the Treasury would have to pay much higher interest rates to market its newly issued securities.
Money As Debt[must view video]
This presentation explores how money is created and issued. Money used to be backed by Gold and Silver but today's money is backed by debt - your promise to pay back a loan and the government's promise to back up the currency.
The shocking TRUTH revealed...if you paid off ALL debt, there would be NO money. All money is directly related to the creation of debt.
Wednesday, June 16, 2010
WASHINGTON - The Federal Reserve scored a political victory on Wednesday as Democrats mulling financial reform backed off measures that would expose monetary policy to audits and make the head of the New York Fed a political appointee.
The U.S. House of Representatives had approved a bill in December that included a provision, championed by Texas Representative Ron Paul, that would have opened the Fed's interest rate policy to congressional audits.
But in a statement on Tuesday, House Democrats participating in negotiations over a final financial reform bill signaled a willingness to live with a narrower Senate audit provision that does not cover monetary policy.
Over two-thirds of the House Of Representatives approved Ron Paul's bill to audit the Fed. They did so because 80% of the US public wants the Fed audited. It would appear then that "Of the people, by the people, and for the people" is no longer in the lexicon of our democratic government. It's all about what the banks want. After all, they bought and paid for most of the people's Congress.
The US Congress created the Federal Reserve in 1913. The US Congress is therefore directly responsible for the theft of the wealth of our nation by a cadre of crony bankers that have been counterfeiting money for nearly 100 years and charging the government and the people interest on it. This is a capital crime. A crime punishable by death according to the US Constitution.
The Federal Reserve literally holds America hostage. They charge America interest to borrow money to pay the interest on already existing debt. It is a private for profit bank, owned by private stockholders purely for the stockholders profit. There is nothing "federal" about the Federal Reserve, AND it has NO reserves.
Is it any wonder then, that the Fed does not want to be audited? It is an evil and corrupt institution that has bankrupted the United States. Perhaps it is this fact that keeps Congress from exposing the truth about the Fed. Imagine the reaction of the general public were they to learn that a private bank was given control of the nation's checkbook by the Congress, and the Congress did nothing to stop this bank from looting America. If the Fed has nothing to hide, why fight an audit?
The Money Masters - How International Bankers Gained Control of America
"The powers of financial capitalism had a far-reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...Their secret is that they have annexed from governments, monarchies, and republics the power to create the world's money..." THE MONEY MASTERS is a 3 1/2 hour non-fiction, historical documentary that traces the origins of the political power structure that rules our nation and the world today. The modern political power structure has its roots in the hidden manipulation and accumulation of gold and other forms of money. The development of fractional reserve banking practices in the 17th century brought to a cunning sophistication the secret techniques initially used by goldsmiths fraudulently to accumulate wealth. With the formation of the privately-owned Bank of England in 1694, the yoke of economic slavery to a privately-owned "central" bank was first forced upon the backs of an entire nation, not removed but only made heavier with the passing of the three centuries to our day. Nation after nation, including America, has fallen prey to this cabal of international central bankers.
Buying gold in June and July has been very profitable for years
Jonathan Kosares and Randall Strauss of Centennial Precious Metals in Denver have updated Centennial's annual analysis of the success of buying gold during its summer doldrums, in June and July, a practice that over the last 39 years has averaged a gain of 7.5 percent by the end of the year and over the last nine years has averaged a gain of more than 11 percent by the end of the year. The Kosares and Strauss analysis is headlined "Getting Gold: Seasonal Price Trends are Favorable for Summer Purchases" and you can find it at Centennial's Internet site, USAGold, here:
Tuesday, June 15, 2010
The 14 month Bear Market Rally in stocks is now OVER. In just eight days last month, 6 months of market gains were wiped out as investors exited stocks faster than oil from a broken pipe at the bottom of the Gulf of Mexico. Not that stock prices are an accurate representation of economic virility, but the recent plunge in stock prices certainly will have a negative effect on consumer confidence. It is interesting to note that the "green shoots" theory surfaced in the financial media at about the same time the equities markets bottomed in March of 2009. The only "recovery" we have witnessed the past 14 months has been a recovery in stock prices. On Main Street, there has been NO RECOVERY.
Phase two of a huge secular bear market has now begun. The past 14 months have allowed investors a "second chance" to exit the markets before the bottom falls out. Few will take advantage of the opportunity believing that the next bull market began in March 2009. Many will use the recent fall in equity prices as an "opportunity" to buy at a discount in this new bull market. These investors will be known as those "left holding the bag" as the markets plunge below the previous March 2009 lows.
Statistics are indicating that leverage in the markets today is actually higher than at the bull market peak in equities in 2007. Panic selling induced by margin calls could make the next leg down in stocks fast and furious.
And what has been done to reduce the markets exposure to derivatives? Absolutely NOTHING.
A story on housing last week from the Wall Street Journal said, “Bank repossessions hit a record monthly high for the second month in a row, totaling 93,777–up 1% from April and 44% from last year.” Do record home foreclosures sound like a recovery "gaining traction" as Federal Reserve Chairman Bumbling Ben Bernanke is proclaiming?
Commercial real estate prices continue to decline and are now over 40% BELOW peak values three years ago. Median sales prices of homes have fallen 9.5% further in just the past year to $198,400. Do falling real estate prices add momentum to an economic recovery?
Back in 2009, the White House insisted that the $800 billion government "stimulus" plan, otherwise known as "The American Recovery and Reinvestment Act" (ARRA), was desperately needed to "save" our economy. President Obama promised that the money would go out the door "immediately" and "go directly to job creation, generating or saving 3-4 million new jobs." He claimed that without such massive government spending the US unemployment rate would rise above 8%; implying, that with the ARRA, unemployment would be maintained at or below the 8% rate. Unfortunately, none of the claims Obama and the Democrats made were accurate.
Following the passage of the "stimulus" spending bill the country's unemployment situation got progressively worse. In August 2009 it reached 9.7% and by October 2009 it skyrocketed to 10.1%, the highest number in 27 years. By January 2010, almost a year after the passage of the ARRA, the national unemployment settled around 9.7%. As of April of this year, the rate climbed back up to 9.9%, even with the tens of thousands of temporary workers, 66,000 of them, hired by the government Census Bureau.
An $800 BILLION stimulus, a stimulus as big as a war, and what does America have to show for it? More debt, more empty homes, fewer jobs, and more fear about America's economic future.
And if $800 billion dollars didn't cause enough economic damage, how about several hundred billion dollars more:
Amid Unemployment Crisis, Senate Gridlock Leaves Jobs Bill in Limbo
This week, Senate Democrats will attempt to push through a jobs bill that has stalled in the chamber for seven weeks. Majority Leader Harry Reid (D-Nev.) filed for cloture on Monday afternoon, leaving just days before a vote on the American Jobs and Closing Tax Loopholes Act, or House Resolution 4213, a $23 billion bill to extend federal unemployment benefits and other emergency stimulus measures. The cloture motion signals that Reid believes he has the votes to pass the long-mired legislation. But there are still signs that the contentious, job-saving bill might not pass — leaving people on unemployment benefits, doctors and states in financial limbo.
What is at stake? If Congress does not pass the bill, hundreds of thousands will lose their federally extended unemployment insurance. Doctors will take a 21 percent cut in Medicare reimbursement rates, possibly causing them to drop needy patients. Starting in December, the federal government will provide less backing to the Federal Medical Assistance Percentages program, or FMAP, which provides states with money for Medicaid so that the “poorest of the poor,” in Reid’s words, can see doctors.
Obama pleads for $50 billion in state, local aid
President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.
In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party.
US money supply plunges at 1930s pace as Obama eyes fresh stimulus
By Ambrose Evans-Pritchard
Larry Summers, President Barack Obama’s top economic adviser, has asked Congress to "grit its teeth" and approve a fresh fiscal boost of $200bn to keep growth on track. "We are nearly 8m jobs short of normal employment. For millions of Americans the economic emergency grinds on," he said.
The White House request is a tacit admission that the economy is already losing thrust and may stall later this year as stimulus from the original $800bn package starts to fade.
$273 BILLION more on "stimulus spending"? Isn't the definition of insanity doing the same thing over and over and expecting a different result?
$800 Billion Dollars was supposed to "create or save 3-4 million jobs and KEEP unemployment below 8%". How is $200 BILLION more going to resolve 8 MILLION job losses?
The Obama administration is now proving beyond a shadow of a doubt that not only do they lack the experience in dealing with an economic crisis, but they have no clue how to solve an economic crisis caused in large part by the administrations very own economic advisers, Federal Reserve Chairman, and Treasury Secretary.
The private sector and Main Street are the engine of the economy. Unless, and until, the Obama administration wakes up to this fact and ceases their drive towards a socialist state here in America, we are doomed to follow Europe down the drain towards national bankruptcy.
Isn't it a bit disingenuous for the US Treasury Secretary to run around Europe espousing fiscal restraint and austerity while his own government at home prints money as fast as it can and distributes it freely not only at home, but around the World?
With the honeymoon beginning to wane, bullish sentiment for the US Dollar appears to be peaking as the TRUTH about America's own fiscal problems begin to fill the headlines. The pending bankruptcies of 33 states will make the European Union's woes look like child's play. The rush to the perceived safety of the US Dollar and US Treasury Debt will begin to be called into question shortly by investors seeking refuge from the global financial storm. With the US recognized as a more severe soverign debt risk than Europe, the Euro will catch a bid as Euro shorts cover and turn their sights on the shortcomings of the US Dollar. The race to the bottom of the fiat money barrel will slow for the Euro and accelerate for the US Dollar in the second half of 2010. Should the Chinese choose to revalue their currency higher later this year, the Dollar's woes will become exponentially worse heading into 2011.
As Gold bottomed in yet another bear raid Thursday morning at 10AM, an interesting turn in the recent Dollar/Gold relationship appeared to be reverting back to it's "normal" inverse relationship. For many weeks now, Gold has moved higher in price with a rising Dollar as the Euro's debt woes demolished it in the currency markets. Should currency traders do a 180 on the Euro here, the Dollar could be in for some magnificent weakness as the second half of 2010 approaches. This would be extremely positive for Gold and in particular Silver.
Silvers recent realtive strength versus Gold was very evident last week. Several weeks ago I suggested that it would be Silver that lead the next leg higher in Gold. We may be seeing the beginning of just such a reaction in the Precious Metals now. It is noteworthy that the Gold/Silver ratio peaked at 70 on June 4th, and has been falling since, as the price of Silver has steadied and begun to rise again relative to Gold. Just last week, Silver was up 5% to Gold's 1%.
The Dollar is testing key support at the 40 day moving average at 85.95. Should support give way here, a quick move to the 50% retracement of the mid-April to June leg up in the Dollar would be almost certain. Price support at 85.13 would lie below there as the last defense of the Dollar falling all the way back to it's May breakout at 82.22. I would consider a bounce in the Dollar near 85.13 likely, and a quick run back up to the 40 day moving average where the Dollar will be stopped cold and begin a decent that could last the remainder of 2010.
This scenario in the Dollar will prove critical if the men behind the curtain hope to maintain the illusion of a recovery going into the mid-term elections in November. A weaker Dollar is the only hope for these Money Masters to keep the equity markets afloat thru the Summer and into Fall.