Sunday, July 18, 2010

The Run On The Bullion Banks Has Begun

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake up homeless on the continent their fathers conquered."
-Thomas Jefferson, 1802

Isn't it amazing that the price of Gold only falls $10-20-25 in a matter of hours on the CRIMEX in New Yok, and never does it collapse in this fashion in ANY OTHER market around the world?

What happened Friday? Clearly it was the epitome of fraud, and quite possibly the pinnacle moment in the manipulation and suppression of the prices of the Precious Metals.

Friday's "shocking" crash in general equities revolved solely around the expiration of stock options for the month of July. It was imperative that gold not be allowed to rise during such a market "event".

GLD and SLV, the Gold and Silver ETFs, are stocks traded on the NYSE. Options are available on both. Being that it has become common knowledge that "despite their claims", neither ETF holds the physical bullion they claim to. And both hold ONLY paper proxies that give the investing public the illusion that they not only hold physical bullion to back up the shares in each, but that this "paper bullion" is part of the global "supply" of bullion. It only stands to reason that in order to maintain control of the price of Gold and Silver, these paper vehicles...just like the futures contracts available on the CRIMEX...must be rigged lower to prevent the rise in the price of the Precious Metals.

As I surmised in my last post, the cap on Gold and Silver prices the past 10 days was tied to the expiration of options on the GLD. The last thing the Gold Cartel wanted to see was a massive call option turn into a possession of GLD and then turn that into an obligation to get metal. The Gold Cartel does not have the metal to back up all their paper shorts on the CRIMEX, let alone the $50 BILLION worth of paper Gold funding the GLD.

Friday the Gold Cartel got to kill two birds with one stone. The stifled the Gold price in the face of a panic sell-off in general equities, and they stole millions from GLD options investors in the same way the steal millions from futures investors every month at the CRIMEX.

The Gold Cartel's worst nightmare has been exposed via the revelation of the BIS Gold swaps...they do not have access to enough Gold to cover their mountain of Gold derivatives, paper Gold, on the CRIMEX AND in the GLD. A default in the paper Precious Metals markets is imminent. Silver will be the first to go into default as the book on the September Silver contract closes. Gold will default in December. The World Financial System will collapse in January 2011.

The run on the banks has begun. The events of the past month surrounding the Precious Metals, despite their bearish nature, could not be more bullish. Be right and sit tight. Do not attempt to trade the markets, BUY WEAKNESS. It is a gift.

Ed Steer in his Gold & Silver Daily report comments on the July Bank Participation Report:

I'm going to take a few minutes of your time and walk you through the July Bank Participation Report. This report shows how many banks [both U.S. and foreign] are long and short the various markets... plus how many Comex contracts they are long and short. Silver and gold are the two commodities that are of interest here. Here's the link to the July report... with silver and gold being about two thirds of the way down the page... and it's ever so simple to follow... and I mean it.

In silver you will notice that 'X' number of U.S. bullion banks are long 257 Comex contracts and short a whopping 31,803 Comex contracts. As the numbers show... the 257 long contracts represent 0.2% of total Comex silver open interest which is stated here as 118,962 contracts. The 31,803 short contracts represents 26.7% of total open interest.

But what the silver numbers doesn't say is how many U.S. banks hold those positions. The CFTC used to publish them, but once Ted Butler discovered the Bank Participation report and started to write about it, the bullion banks screamed bloody murder, so the CFTC changed the report so that if there are less than 4 U.S. banks holding either a long or short position... the number is not shown. They don't show the number of non-U.S. banks either, because if they did... by the process of subtracting that from the total number of banks involved, you could figure it out all by yourself, dear reader... and we mustn't have that now, must we?

From past historical BPR data, the number of U.S. banks has pretty much always been two... and I see nothing in these numbers that indicate that this has changed. I can also pretty much say that 95% [or more] of that 31,803 Comex contracts held short... is held by JPMorgan... and the other 5% [or less] is most likely held by HSBC USA. So if you subtract 0.2% from 26.7%... you will see that JPMorgan and HSBC are short 26.5% of the entire Comex open interest in silver... and if you take out all the market-neutral spread trades... that shoots the percentage to well over 30% of the Comex silver market that is held short by these two banks. Any questions so far?

Looking at the six [8-2=6] non-U.S. banks' Comex silver positions... they hold 2,284 long positions and 614 short positions... for a net long position of 1,670 Comex contracts. This represents 1.9%-0.5%=1.4% of the total Comex open interest in silver.

Two U.S bullion banks are net short 26.5% of the total Comex open interest in silver... and 6 Non-U.S. banks are net long 1.4% of the total open interest. Who controls the silver price on the Comex, dear reader.

I'll leave gold up to you... which is a couple down from silver. There are 4 U.S. bullion banks here, so they show all the numbers. But even a cursory glance shows that the 4 U.S. bullion banks are net short 137,756 Comex contracts in gold [13.77 million ounces]... which represents 23.8% of the entire gold open interest on the Comex. And I'll bet you dollars to doughnuts, dear reader, that 95% of that 13.77 million ounces is held short by Morgan and HSBC. The 14 non-U.S. bullion banks are net short a whole 6,253 Comex contracts... which is 1.1% of total Comex open interest.

So, once again, 23.8% of the entire Comex open interest in gold is held short by two U.S. banks... the other two banks are virtually immaterial. But 14 non-U.S. banks are net short 1.1% of the total Comex open interest. Who controls the price?

This is a JPMorgan operation from one end to the other. But in all fairness, JPMorgan is only the executioner. They receive the order to swing their axe from either the Federal Reserve, the U.S. Treasury... or both. It's as simple as that. Then the boyz at Morgan pick up the phone, call the other bullion banks, set up the date and time... and then collectively pull the trigger... just like they did yesterday... and July 1st. That's all there is, dear reader... there's no more to it then that.

While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our ‘Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.

Let's never forget for a minute that these CRIMEX markets are regulated by US Government regulators at the CFTC, a division of the SEC. Completely Fraudulent Trading Comission. Imagine if these markets were rigged to go higher by the bullion banks, the CFTC and the SEC would be all over these banks concentrated trading positions.

Sunday Quickie On Silver
By Dave Kranzler, The Golden Truth
A massive quantity of silver has been withdrawn from the Comex over the past month or so. On Thursday, the latest day for which data is made available, close to another million ounces was removed. Most of this silver is coming out of the "eligible" inventory. This is the inventory that belongs to private investors who are using the Comex as a depository. Some of these investors keep it there to make it convenient to re-sell on the Comex and some for convenience until they decide to take actual possession.

The total Comex silver inventory - at least the inventory which is being "reported" by the Comex - is down to 110 million ounces. I have seen the inventory this low, but it's been a long time. There is still about 3.5 million ounces worth of July silver contracts standing for delivery. This is an unusually large amount at this stage in the delivery cycle. There is no question in my mind that last week's massive paper manipulation of silver on the Comex was an attempt by JP Morgan, et al to try and shake loose a lot of those standing contracts. My bet is most the holders understand the drill and will take delivery anyway, because a year from now a $1 either way on the price of silver will be insignificant if silver does what a lot of us believe it will do.

Two questions come to mind: 1) Why are the Comex counterparties dragging their feet on delivering that 3.5 million ounces? 2) Why are an unusually large number of private investors removing their silver from Comex depositories? To be sure, in my mind these questions are strictly rhetorical. But I would suggest that anyone thinking about accumulating some silver for protection from what's coming should do so as soon as possible. To paraphrase Eric Sprott: One day you will wake up and decide to take delivery of your gold/(silver) only to find that it's not there to be delivered.

Silver – The Early Stages of Re-monetisation?
by MoneyMorning
In a recent article, we showed you how silver had become systematically de-monetised by governments over the past 150 years or so. These actions have seen the gold/silver ratio move from its long term historical average of around 15:1 to 66:1 today. In other words, one ounce of gold is now equivalent to 66 ounces of silver.

Today, we’ll show you why silver could potentially be one of the cheapest assets in the world right now. The silver market is not at all analysed by mainstream investors and for this reason remains very much overlooked as an investment opportunity.

As proponents of sound money, we believe precious metals, most notably gold, will have an increasing role to play as the current unsustainable system evolves to a more stable footing.

If gold’s role as money becomes increasingly recognised then silver will also come into the picture as a monetary metal. In the previous article quoted Milton Friedman as saying ‘the major monetary metal in history is silver, not gold.‘ This fact hasn’t been forgotten.

As you will see, investment demand for silver is beginning to grow very strongly and conditions are primed for this growth to continue. If this occurs, silver will effectively be ‘re-monetised’. As such we expect to see the gold/silver ratio to move heavily back in silver’s favour in the years ahead.

Fed's volte face sends the dollar tumbling
By Ambrose Evans-Pritchard
The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

With the US trapped in depression, this really is starting to feel like 1932
Warning signals of a double-dip recession flash across the world "The worm is turning," said David Bloom, currency chief at HSBC. "We're in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we're moving into a new phase because we're hearing alarm bells of a US double dip."

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. "The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not," he said.

The Fed minutes warned of "significant downside risks" and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

"The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," it said. The economy might not regain its "longer-run path" until 2016.

"The Fed is throwing in the towel," said Gabriel Stein, of Lombard Street Research. "They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months."

The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.

Why would anybody sell their Gold and Silver? They're not. The bullion banks just want you to think they are... It's now a game of chicken. Sell into the bullion bank take downs and the banks win. Stand for delivery on the CRIMEX, and the banks lose. It's as simple as that according Dan Norcini at JSMineSet .

Ending The Comex Gold Charade
By: Dan Norcini
The only way to end the charade that takes place at the Comex in the gold pit is to do what I have been saying now endlessly for years – STAND FOR DELIVERY OF THE METAL.

Until the longs get it into their heads to take the actual metal out of the warehouses and force the bullion banks to come up with the gold that they are selling in unlimited quantities, the farce will continue.

It remains a source of continued astonishment to me that the longs, which have it completely in their power to end the price suppression scheme, refuse to do the ONE THING that can end it all almost overnight.

That is the Achilles’ heel of the bullion banks and until exploited the Comex bears will sell with impunity.

Any entity attempting to do in wheat or cattle for example, what the bullion banks are doing in gold, would end up having their heads handed to them on a platter. Egypt would step in and buy all the wheat they wanted to sell or a large packer would end up getting a huge discount on cattle and looking forward to hearing all those Moo-moos bellowing in the rail cars that would be coming their way knowing that it is the sound of huge profits based on someone else’s brazen stupidity.

The large traders in the gold pit (hedge funds) are run by mindless dolts who could not trade their way out of a wet paper bag if their life depended upon it. What else explains their inability to break the hold of the bullion banks in the gold market except a failure to think apart from their computerized black boxes.

Be right. Sit tight. Or buy.

No comments:

Post a Comment