Tuesday, June 1, 2010
CRIMEX Supply Shortage Revealed
Euro hits four-year low vs dollar on bad loan fears
(Reuters) - The euro fell to a 4-year low against the dollar on Tuesday as fears the euro zone's debt crisis could spread to its banking system hit the single currency, while deteriorating sentiment supported the greenback.
Rising Middle East tensions following Israel's storming of aid ships bound for Gaza fueled safe-haven demand for the dollar, with tepid Chinese data also hurting risk appetite.
"Disappointing Chinese data and Middle East tensions are favoring the dollar today," said Audrey Childe-Freeman, currency analyst at Brown Brothers Harriman.
The European Central Bank warned on Monday that euro zone banks faced up to 195 billion euros in a "second wave" of potential loan losses over the next 18 months due to the financial crisis, and said it had increased purchases of euro zone government bonds.
"We're seeing follow-though selling after the ECB warning," said ING FX strategist Tom Levinson.
This is news? Fears the euro zone's debt crisis could spread to its banking system hit the single currency... Like this wasn't already considered before today. Can you say "fear mongering"? This is the FOURTH time over the past two weeks that the Euro has probed these depths near 1.2100. This obviously is critical support for the common currency of Europe, but I'm not ready to stick a fork in her yet.
Gold is back over 1225 at 8:30AM est this morning. Now this is news! Gold rose steadily overnight in Asia and Europe, and began to accelerate higher going into the CRIMEX open at 8:20AM est. And right on cue, out came the criminal road blocks to a rising Gold price. This goes beyond the absurd. NOBODY is selling REAL Gold here. But CRIMEX fraud is what we've come to expect...on a daily basis.
When we take a close look at how the June Gold contract closed out last month and went into First Notice, today's CRIMEX sales in Gold become richly absurd.
The open interest in June Gold going into First Notice was 11,356 contracts at 100 oz. each. Every one of those contracts could potentially stand for delivery and that would entail the delivery of 1,135,600 ounces of gold by the last day of June. Adding in the 2040 Gold options [204,000 oz.] exercised in May [a non-delivery month for Gold] and we have a total of 1,339,600 oz of Gold potentially standing for delivery from the CRIMEX warehouses. As of Thursday May 27 the total CRIMEX dealer inventory of Gold stood at 3.24 Mozs. The amount of June Gold potentially standing for delivery by the last day of June is 42% of the CRIMEX warehouse total of Gold available for delivery. The CRIMEX can't afford to sell any REAL Gold.
These June delivery numbers also help put into perspective last weeks options expiration raid on the price of Gold. The CRIMEX goons backs are against the wall should a flood of "in the money" futures contracts stand for delivery. As it stands today, the CRIMEX faces losing 42% of their REAL Gold this month to delivery demands. They cannot afford to sell any REAL Gold as they have very little relative to demand. This in a nutshell is why the CRIMEX goons continue to sell Gold they do not own via naked shorts in the futures markets to meet demand. Absent this blatant criminal activity of selling something you do not own, the price of Gold would be soaring as there is obviously not enough REAL Gold to meet REAL demand.
In the Silver Market, the CRIMEX goons are in an even more dire supply shortage than they are in Gold.
Silver ended the delivery month of May with 23.73 million oz standing for REAL Silver. In the month of March a touch over 22 million oz. stood for delivery. In March and May a total of 45.73 MILLION oz. of Silver have stood for delivery. To date it appears that just a little over 5 million ounces have actually been delivered to the CRIMEX vaults to satisfy these longs. The entire month of March, by contract, should have been delivered by the last day of April. The entire month of May, by contract, is due delivery by the end of June. Is there a potential for default looming in the CRIMEX Silver warehouse? As of May 27, the CRIMEX Silver warehouse reportedly held 52.58 MILLION oz. of Silver. The Silver standing for delivery in March AND May combined equals 87% of the reported CRIMEX Silver holdings available for delivery. Making good on these contracts would effectively wipe out the CRIMEX ability to make a "legal" market in Silver. One can only imagine the consequences for CRIMEX Silver had they not successfully kept Silver under 18 for June options expiration.
It should be obvious to anybody that cares to look that the CRIMEX goons do not have the supply to make a legitimate market in Silver, and are struggling to do so in Gold. The fact that the bullion banks operating on the CRIMEX have to literally counterfeit Gold and Silver to meet demand exposes the true fraud this exchange is committed to. The ONLY reason one needs to hold both REAL Gold and Silver is staring you in the face: There ain't much of the REAL stuff left for sale.
This looming supply shortage at the CRIMEX should make for a very interesting, if not highly volatile, month of June for the prices of Gold and Silver. Toss in further "Euro fears", and a darkening geopolitcal horizon, and the potential for runs to new highs in Gold, and in particular Silver, may be just around the corner.
Silver has looming overhead resistance near 18.90. Clearing that could open the door for a sprint to $20 Silver. Gold broke thru the CRIMEX wall erected last week at 1217. A close above 1227 for a couple of days could put the CRIMEX goons far back on their heals as they dig in to prevent a run towards $1300 Gold.
"The world is still circling the economic, financial and monetary drain... and all the money [created out of thin air] that's being thrown at it, won't change the final outcome one bit... except to make matters worse and delay the inevitable."
-Ed Steer, Gold & Silver Daily, http://www.caseyresearch.com/displayGsd.php
Gold And the Budget Deficit
By Howard S. Katz
The estimated deficit for this year is $1.5 trillion. It gets smaller as we go further out. However, this is usually an attempt to manipulate public opinion. In almost all cases, the actual deficits turn out to be worse than the estimates. Let us assume an average deficit of $1 trillion each year for the period 2010-2014. This would mean the creation of $5 trillion dollars out of nothing.
The raises the question, what is the current U.S. money supply and how does the coming $5 trillion compare with it? In years past, that would have been an easy question to answer. Economists have known what money is for a long time. It is that economic good which is used to buy things. If you can buy typical goods which are for sale in our society with it, then it is money, and since its founding the Federal Reserve System has published data on the U.S. money supply. However, a few years ago the Fed changed its method of computing money. Certain demand deposits (which have always been counted as money) were reclassified as time deposits (which are not money). The owners of these deposits were told that they were still demand deposits, but the public was told they were time deposits. That is, the Fed has been caught red handed. However, they will probably rely on their ace in the hole to get away with it. When the Fed was created, the original gang around Paul Warburg and J.P. Morgan knew that they would have to make things as complicated as possible. Money is a very simple subject. Above I defined money as that economic good which is used to buy things. But modern “economists” will tell you that there are 13 different moneys (M-1…..M-13).
In an honest money system, the basic unit will be a physical quantity of some monetary metal, such as silver or gold. You have undoubtedly heard of the pound sterling. That is because a few centuries ago British money was a pound of sterling silver. Under the U.S. gold standard act of 1900, a dollar was defined in law as 25.9 grains of gold (about 1/20 oz.), 9/10 fine. When you exchanged money for an economic good, you gave a physical quantity of gold or silver for the good. No problem, no complications – and the money system which led to the greatest wealth the world has ever known.
Back in mid-2008, before the Fed began seriously lying about the money supply, it reported the money supply as $1.4 trillion. From that time to today, the monetary base has more than doubled, (from $0.9 trillion to $2 trillion). Prior to mid-2008, the monetary base had never been above the money supply. Indeed, since the monetary base is high-powered money, i.e., that money which is used to create additional money, it is impossible for the base to exceed the total money supply. So when the Fed reports that it does, it has to be lying.
Assume that the true money supply has more than doubled since mid-2008 along with the monetary base. That would put it at about 3 trillion today. If Obama increases it by another $5 trillion by monetizing deficits, as above, over the coming 5 years, then the U.S. money supply will multiply by a factor of 2 2/3. Since Obama is too busy making pretty speeches on the theme of it’s not my fault, he will not have time to create any additional economic goods. Therefore, the 2 2/3-fold increase in money will have to lead to a 2 2/3-fold increase in prices. A gallon of gas will cost close to $8. A cup of coffee will cost over $3.00. Perhaps we will have a national median home price of $500,000 (new homes).
With this idea in mind would it be surprising to see a price of gold at $3,000 to $3,500?