Wednesday, December 1, 2010

False Hope For The Economy

Extended unemployment benefits begin to run out today for 2 MILLION Americans, and the DOW is up 261 points. What a great country we live in, eh?

Fed survey: Economic growth picks up in most of US
Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- The U.S. economy improved in most parts of the country this fall as factories produced more and shoppers spent more money.

A new survey by the Federal Reserve finds that 10 of the Fed's 12 regions reported economic growth picking up.

Five regions -- Boston, Cleveland, Atlanta, Dallas and San Francisco -- said growth increased at a "slight to modest" pace. Another five -- New York, Richmond, Chicago, Minneapolis and Kansas City -- said economic activity was increasing at a "somewhat stronger" pace. Only two regions -- Philadelphia and St. Louis -- reported business conditions as mixed.

All told, the new survey offered a marginally brighter picture of the economy over the past six weeks.

In the Fed's previous survey, for instance, three regions -- Philadelphia, Richmond and Cleveland -- had reported economic activity as mixed or steady. Two regions -- Atlanta and Dallas -- suggested growth had slowed.

Stronger production at factories helped propel growth in most parts of the country, the new survey said. Makers of fabricated metals and autos and related goods saw the biggest gains.

Retailers also reported better sales in most parts of the country, the Fed said. However, merchants in the regions of Boston, Cleveland, Richmond and St. Louis said results were mixed.

Is it just me, or does this "story" of growth sound just a little bit vague? Desperate to believe any "signs" of growth, the financial news media spins this morsel of growth into a huge scoop of hope, and ignores the two MILLION consumers that just received their pink slip from the unemployment office. Yep, that sure is great news! What a joke...

As we suspected, the CRIMEX is in a world of hurt. Making good on the contracts standing for delivery is going to all but empty the CRIMEX delivery warehouse. These are some colossal delivery demands being laid at the feet of our criminal adversaries.

From Harvey Organ's Daily Gold & Silver Report:

The total number of [SILVER]oz standing in this delivery month of December is as follows; 280,000 oz (already served) + 26.86 oz (to be served) = 27.14 million oz.
I think everyone has now the idea of oz standing so I will not add the Oct and November totals from now on. However these guys still have to be serviced with a true delivery slip. For those who forgot, the October silver options exercised for metal was 1.5 million oz and November saw a total of 4.53 million oz. It was the most that I have ever seen in November and it will become a dagger to the bankers. They were probably baffled at the huge number of oz being served in a non delivery month of November to be followed by the biggest delivery month in silver and gold...December!!

The total number of gold oz standing in this delivery month of December is 1.0179 million oz +.5016 million = 1.5195 million oz. or 47 tonnes of gold.
For completeness, the November options exercised for gold in tonnage came in at 3.63 tonnes. If you add the November options to the Dec standing number we get 50 tonnes of gold which is very very large. It looks to me like a sovereign nation is standing for gold.

Comex Open Interest Update...
The Golden Truth
Yesterday saw a bigger liquidation of December gold/silver than I would have expected given that gold/silver were pretty strong, relatively speaking. With that said, the open gold o/i for December now stands at 15,195 contracts or 1.51mm ounces. Given that the total available-to-deliver amount of gold stands at 2.6mm ozs, if even half of the open contracts take delivery, it will stress the Comex and likely push the price of gold higher.

In silver the open interest is 5,428 contracts. This is 27.1mm ounces vs. the 48mm ounces available to deliver. This is 56% of deliverable silver. Again, if even half of the contracts demand delivery, the Comex will feel stress and the price of silver should squeeze higher.

Just for the record, many of us believe that the Comex is fraudulently reporting its actual amount of physical inventory in gold/silver. Ted Butler has pointed out that SLV had a 6 million ounce withdrawal of silver last week and is speculating that this silver may be possibly intended to help cover silver deliveries on the Comex. JP Morgan, not coincidentally, is the custodian (safekeeper) of the silver in SLV and just happens to be the largest short interest in paper silver on the planet, both via Comex futures and OTC derivatives. You can make your own assumptions there. It also just so happens that only 56 delivery notices were posted in silver yesterday - about 1% of the open interest - compared to gold notices which totalled 5,016 - about 33% of the open gold interest.

Again, the banks who are on the hook for deliveries have until the end of December to deliver. Typically most of the deliveries occur early in the delivery period. There's really not any good reason to not deliver the goods as soon as possible - that is, unless you don't have it in hand.

As we can see by these credible reports, The CRIMEX goons are staring some very serious demand numbers in the face. The pace of delivery notices going forward will determine Precious Metals sentiment going forward. If delivery notices are dragging, and not forthcoming, this is very bullish for the Precious Metals markets. Keep a look out fro stories of traders settling the contract for cash AT A PREMIUM. Nothing says "metals shortage" like a cash settlement of a futures contract.

It should be noted that Gold and Silver both closed the month of November at new ALL-TIME HIGHS. This fact should not be lost on all the top callers in the market media right now. The Precious Metals are NOWHERE near a top here.

Gold has taken out key resistance at $1381. This now becomes the first line of support...with $1365 below that.

Silver has taken out the early November swing high at $28.18. This now becomes support...with $27.90 below that.

Those of you waiting for a "big" correction in Silver have already seen it come and go. From it's November 9 high of $29.34, to it's November 16 low of $25, Silver "corrected" by 14%. Gold during the same time frame dipped 6.5%.

December and January are annually the strongest months for price gains in Gold and Silver.

Be right, and sit tight.

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