Thursday, June 24, 2010

Put That In Your Pipe And Smoke It

In the face of options expiration Gold closed up $10.90 today at $1244.70. Silver closed up $0.23 at $18.69. The CRIMEX goons can put that in there pipe and smoke it...and hack all the way to their grave.

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 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.

By: Jim Willie CB,
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."
-Peter Grandich

Ben Bernanke needs fresh monetary blitz as US recovery falters

By Ambrose Evans-Pritchard

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.

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.

Release the choppers!

Got Gold?

No comments:

Post a Comment