Monday, February 28, 2011

US Dollar Hanging By A Thread

The Associated press reported today:

Oil prices fell to about $97 a barrel as worries over the global oil market eased after reports that some Libyan ports reopened to oil tankers and Saudi Arabia was boosting exports.

Has Saudi Arabia "really" boosted Oil exports, or have they just "said that they would boost exports" at the behest of the US Government to "talk Oil prices down"? Why so cynical? Hey, why believe anything the financial press reports these days.

Consider, for a moment, the precarious position the US Dollar finds itself this evening BELOW support at 77 on the US Dollar Index. Certainly the civil unrest in the Middle East is a cause for concern in the Oil Markets, but the effect a falling US Dollar could have on a rise in Oil prices over the next several weeks could make the cost effects of this Libyan fiasco on Oil look tame by comparison.

Should events in Libya escalate, or even spread to Saudi Arabia along with a continued fall in the US Dollar, we could see Oil approaching it's 2008 highs by Memorial Day. Heaven forbid such a scenario evolves, but today's pause in the rise in the price of Oil should not be considered a top just yet...particularly relative to a falling US Dollar's effect on a rising price for Oil.

For more on the potential near-term demise of the US Dollar, please see the piece posted below written by Toby Connor. It is an eye opener, and shines a spot light on the Dollar's weakness today, and it's implied effect on a further rally in Gold and Silver this Spring:

The gold bull is now on the verge of launching the most spectacular up leg of this 10 year bull market. This spring we should see the final parabolic rally of the massive C-wave advance that began in April `09...

The Silver market proved most resilient today as it attempted to break higher out of the Bullish Flag formation we showed yesterday. Whether today's late CRIMEX session take down was criminally endorsed, or just some last minute book squaring by legitimate speculators at month's end, is debatable. Suffice it to say, Silver took a lickin between 1:25PM est and 1:30PM est...and again in electronic trading between 1:30PM and 3:00PM.

Silver dropped 36 cents in the LAST FIVE MINUTES of today's CRIMEX market to close the month out....bounced and then fell another 44 cents to hit it's $33.35 low of the day at 3PM est...and then rose steadily into the 5:15PM est Globex Market close to finish out the month of February at 33.98...a new 30 year monthly closing high. What, if anything, was accomplished by today's late market CRIMEX raid remains a mystery.

Open Interest in the March contract dropped by 10,000 contracts Friday. All indications are that the final number of March futures holders left standing for delivery was 4250 contracts. At 5000 ounces each, those contracts amount to a total of 21.25 MILLION ounces of Silver. The CRIMEX claims to have 43 MILLION ounces of Silver in their vaults "available" for delivery. It is anybody's guess how many of those 10,000 contracts that disappeared Friday were cash settlements made by the criminal bankers to keep the CRIMEX game going another couple of months.

As for Wynter Benton's group of CRIMEX raiders: No word on if they have stood for metal, or cashed out their contracts at a premium. Regardless, the Friends Of Andrew Maguire were instrumental in the run up in Silver prices the past three weeks...and we can only hope that they remain united for another run at the CRIMEX, and a raid on the May delivery contract.

If in fact 21.25 million ounces of Silver have been demanded for delivery on the CRIMEX, the banking goons playing games over there would appear to be in big trouble as half of their supply of Silver is about to disappear over the next 30 days.

With 252 deliver notices sent out by the crooked bankers today, 3998 contracts remain to be served thru the end of March. The higher this number is as the month of March winds down, the more likely these bankers will be exposed as the fraudsters that they are, and another major squeeze of those short Silver will be unleashed.

Paper metals markets will blow up, Rickards tells King World News
Dear Friend of GATA and Gold (and Silver):

Market analyst Jim Rickards today gives a wide-ranging interview to King World News, remarking, among other things, that the oil market is heavily manipulated by governments, that governments use the paper gold markets to quash the gold price, that the International Monetary Fund has developed a detailed plan for global "quantitative easing" using Special Drawing Rights, that the Federal Reserve is "a large propaganda machine," that it's "just a matter of time" before the arbitrage between paper and physical precious metals markets blows up, and that precious metals investors can protect themselves against expropriation only by taking delivery. It's a great interview, about 23 minutes long, and you can listen to it at the King World News Internet site here:

Sunday, February 27, 2011

Silver Is Walking Tall

Looking ahead to this week we have the much anticipated First Notice Day for March Delivery Monday. Ed Steer in his Gold & Silver Daily blog Saturday reported the following regarding deliveries posted for Tuesday March 1st:

Well, the CME Delivery Report has deliveries posted for March 1st already. The report showed that 823 gold, along with 252 silver contracts, were posted for delivery on that date.

For first day notice in silver, I was expecting far more delivery activity than this.

Harvey Organ in his blog reported Saturday that, basis Thursday, open interest in Silver has continued to fall, but remains on the high side going into March Delivery:

The open interest for March declined from 28,275 to 14,259 pretty close to what I thought. My guess is that the OI for Monday will turn out to be around 8000 or 40 million oz.

The CRIMEX delivery warehouse only has about 43 million ounces in it. This could get very interesting. Keep a close eye on the number of delivery notices as the month of March progresses. The further we get into the end of March without these Silver delivery demands being met, the more likely we will see another short squeeze of these criminal bankers soon.

Silver is attempting to break from a Bullish Flag pattern this evening. According to Chart School :

Flags and Pennants are short-term continuation patterns that mark a small consolidation before the previous move resumes. These patterns are usually preceded by a sharp advance or decline with heavy volume, and mark a mid-point of the move.

Flag patterns generally occur around the halfway point of a major move up [or down]. This Flag has the potential to see Silver move up another $8 from here. Conservatively, a move to $37-8 Silver is not out of the question over the next couple of weeks. We must, however, remain wary, as this is the Silver market we are discussing here. But if 40 million ounces of Silver stand for delivery in March vs. a 43 million ounce supply of Silver, there could be quite a move higher in Silver soon.

Keep a very close eye on the US Dollar Index as the week opens. The Dollar is flirting with a breach of key support here at 77 on that index. The Dollar could get very ugly in a hurry should 77 support fall. In the Dollar's defense here, it does look poised for a bit of a small rally going into this week...but upside looks limited to it's 20-day moving average at 77.89 and/or it's 40-day moving average at 78.12 as it's weekly chart has turned decidedly bearish over the past two weeks.

Silver remains the leader in the Precious Metals at this time. Oil has assumed leadership in the commodities complex. And despite what the mainstream financial press continues to spew, Oil and unrest in the middle east are not the cause of Inflation fears...the two are just drawing attention to the Inflation everyone in the mainstream financial press has refused to recognize as the Fed continues to print money at a dazzling pace.

Silver is Walking Tall tonight.

Thursday, February 24, 2011

Magically Delicious!

So, at 2:14PM the thinness of Globex electronic trading mind you...the bottom suddenly falls out from under the Silver and Gold markets. WTF? Gold and Silver tank at 2:14PM, but Platinum and Palladium...both of which have been horse whipped the past two trading days...remain relatively flat.

Oh, Muammar Gaddafi has been shot. No wait, he hasn't...just a rumor. Priceless!

"Hey, let's tell anybody who'll listen that Gaddafi has been shot...that'll save the equity markets, and spook the Precious Metals investors at the same time."

Sadly, many weak handed longs fell for this claptrap from the all too gullible news media, and ran from the Precious Metals markets with their tails between their legs. Has ANYTHING changed? NO!

Why is there no light shining on the falling US Dollar as the geopolitical top in the middle east spins out of control? Isn't the US Dollar the go to safe haven in times of world crisis? NOT ANYMORE apparently. The Dollar was down today, treasuries were down today. Unrest in the middle east was up today. And the Precious Metals get taken to the woodshed? Does this make a damn bit of sense?

Oh, options expiration...that's right. Open Interest in the March Silver futures is a bit too high for our naked CRIMEX bullion bankers. Bahavioral Finance 101. Isn't America great!

So $37 Silver now looks unlikely by March 1st. Not too worry. A weekly close above 32.64 tomorrow will put silver at yet another 30 year weekly high close.

It continues to amuse me, the financial news media's sudden obsession with Inflation because of the rapid rise in the price of Oil. As if high Oil prices are the sole reason Inflation is a threat to the global economy. Inflation is not a is a fact, a reality that has far less to do with the recent rapid rise in the price of Oil and a whole lot to do with the smoking hot printing presses in the basement of the US Federal Reserve.

The Federal Reserve Is Causing Turmoil Abroad
In accounts of the political unrest sweeping through the Middle East, one factor, inflation, deserves more attention. Nothing can be more demoralizing to people at the low end of the income scale—where great masses in that region reside—than increases in the cost of basic necessities like food and fuel. It brings them out into the streets to protest government policies, especially in places where mass protests are the only means available to shake the existing power structure.

The consumer-price index in Egypt rose to more than 18% annually in 2009 from 5% in 2006, a more normal year. In Iran, the rate went to 25% in 2009 from 13% in 2006. In both cases the rate subsided in 2010 but remained in double digits.

Egyptians were able to overthrow the dictatorial Hosni Mubarak. Their efforts to fashion a more responsive regime may or may not succeed. Iranians are taking far greater risks in tackling the vicious Revolutionary Guards to try to unseat the ruling ayatollahs.

Probably few of the protesters in the streets connect their economic travail to Washington. But central bankers do. They complain, most recently at last week's G-20 meeting in Paris, that the U.S. is exporting inflation.

China and India blame the U.S. Federal Reserve for their difficulties in maintaining stable prices. The International Monetary Fund and the United Nations, always responsive to the complaints of developing nations, are suggesting alternatives to the dollar as the pre-eminent international currency. The IMF managing director, Dominique Strauss-Kahn, has proposed replacement of the dollar with IMF special drawing rights, or SDRs, a unit of account fashioned from a basket of currencies that is made available to the foreign currency reserves of central banks.

The turmoil in Iran is reminiscent of another period when the Fed was on an inflationary binge, the late 1970s.

About the only one failing to acknowledge a problem seems to be the man most responsible, Federal Reserve Chairman Ben Bernanke. In a recent question-and-answer session at the National Press Club in Washington, the chairman said it was "unfair" to accuse the Fed of exporting inflation. Other nations, he said, have the same tools the Fed has for controlling inflation.

Well, not quite. Consider, for example, that much of world trade, particularly in basic commodities like food grains and oil, is denominated in U.S. dollars. When the Fed floods the world with dollars, the dollar price of commodities goes up, and this affects market prices generally, particularly in poor countries that are heavily import-dependent. Export-dependent nations like China try to maintain exchange-rate stability by inflating their own currencies to buy up dollars.

Yes, put two and two together, and it's clear that the US Federal Reserve is at the root of the present turmoil in the mid-east. They can deny it all they want, but actions speak louder than words. The US is exporting inflation, and it is only a matter of time before it begins to import that inflation as the flood of US Dollars that has been unleashed upon the globe begin to find there way home to roost.

The Silver market bore the brunt of this afternoon's Globex trading nonsense. This was clearly a raid by the bullion banks in an effort to shake some longs off the tree, and collapse the massive Open Interest numbers in the March Silver futures. Trader Dan Norcini summed up this raid concisely with this 4-hour chart of Silver pictured here:

It looks as though Wynter Benton's gang is going to have to put up their cash and demand delivery, or shut up, as the likelihood of a move in Silver to $37 the ounce by March 1st appears now to be remote. Hey, there is always the May delivery month to go after...

Never-the-less, a major supply squeeze in CRIMEX Silver is developing by the day. Efforts by the criminal bullion banks to hide this obvious fact from the public are ongoing. But word is spreading faster than they can sell paper Silver: "There is no more Silver!"

Huge COMEX Silver Supply Squeeze Developing
By Patrick A. Heller
February 28 is the first day of notice for delivery of the March contracts. Normally, parties not wanting delivery would have closed out their contract long before then. At the COMEX close on February 22, there were still 50,848 open March 2011 silver contracts, representing a potential liability to deliver 254.24 million ounces of silver by the end of March. The COMEX registered silver inventories available to cover deliveries totaled only 41.91 million ounces. Even including customer inventories that are stored at the COMEX, which are only eligible to deliver against COMEX contracts if the owners so choose (and most do not), the total is only 102.35 million ounces.

During COMEX trading hours on February 22, there were 124,000 March 2011 silver contracts traded—almost 2-1/2 times the number of open contracts! This is almost unprecedented volatility!

Here’s what I suspect happened to cause such a huge trading volume that day. The price of silver had been rising significantly for the past several trading days, reaching successive 31-year high price records (ignoring inflation). The US markets were closed on February 21 for Presidents’ Day. In trading in Asian and European markets early on February 22, the price of silver passed $34.00. If this price were maintained, then a large number of short sellers would get margin calls when the COMEX market opened on February 22. That could have forced leveraged short sellers to put up additional cash, physical silver, or to buy long contracts to close out their short positions. Any of these actions would likely have the effect of pushing silver prices up even higher.

It appears that a massive effort was mounted to drive drown COMEX silver prices on February 22 in order to avoid or reduce the margin calls to leveraged short sellers. This strategy was successful to a degree in that the price of silver dropped to just below $33.00 at one point on the COMEX. The temporary drop encouraged some owners of long positions to liquidate and take profits, further helping to push the price down.

However, the price suppression effort was not successful at pushing down the silver price below the February 18 COMEX close. Once it became clear that the manipulation was losing steam, buyers jumped back into the market on February 23. During COMEX trading hours, the price of silver reached as high as $33.75. Trading was extremely volatile, with 1% swings up and down occurring within a matter of minutes.

Several hedge funds, seeing how easy it was to make a short-term profit in silver squeezing COMEX short sellers last November and December, are likely to repeat the tactic with the maturing March contracts—but on a greater scale.

If the price of silver from now through the end of March were to rise by 30% again, that would put the price around $43. But, if there is a larger supply squeeze underway, the price could go much higher.

Please bear in mind that our crooked CRIMEX traders have until the end of March 2011 to make delivery on delivery "demands" posted on Monday, February 28. The further into the month those standing for March delivery must wait to be served, the more likely we are to see a powerful rise in price as these naked bankers go in search of metal to accommodate those standing for delivery. Keep a close eye on the number of ounces of Silver leaving the SLV ETF as the month of March progresses, as this could signal how dire the global supply of Silver may actually be.

Royal Canadian Mint Now Saying It’s Difficult Securing Silver
Eric King,
With continued reports of booming sales and tightness in the silver market, today King World News interviewed Dave Madge director of sales at the Royal Canadian Mint. When asked if the RCM is having trouble acquiring silver Madge responded, “Demand right now for silver is through the roof and it shows no signs of slowing at this point. Sourcing silver is becoming very difficult. We are competing with a great many players when it comes to purchasing silver and many of these players are bidding the price higher.”

The Open Interest numbers to be revealed Monday as those standing for delivery come forward will be quite revealing. It will be interesting to see where the FOAM group stands in this que. Consider this afternoon a "Blue Light Special" on Silver. Despite the drop, Silver remains above it's current uptrendline. Support rests at $32.25 / $31.75 / $31.25.

Joke Of The Day

Palladium, Other Metals Fall on Inflation Fears
By The Associated Press
Palladium is falling as skyrocketing oil prices renew worries about inflation hurting sales of automobiles and other products in fast-growing countries.

China, India and other countries are already trying to rein in inflation rates that have been rising in part because of higher prices for commodities such as food and oil.

Traders are worried inflation may force consumers in those countries to conserve spending on automobiles and other products to pay for essential items. In turn, that would hurt demand for metals.

Platinum and palladium, which are used in catalytic converters in automobiles, settled lower Wednesday.

What a feeble explanation for the obvious. Unable to explain Palladium's sudden and unexpected leap from a very tall building, the Associated Press chimes in with the assertion that "renewed worries about inflation" have caused the Precious Metal to plunge.

Funny that. I thought the Precious Metals AND commodities in general were rising because of global worries over "inflation". Now they are falling because of them? Palladium fell today because somebody pushed it over the edge and NOT because of worries over inflation. Is it just a coincidence that Palladium gets ambushed in the midst of a falling Dollar AND an expiration of March options on futures? Not likely.

Silver and Gold gave the finger to the CRIMEX goons today as options on futures expired. It is very unusual to see Palladium [and Platinum] down on days when Silver and Gold are up, particularly if the US Dollar is getting beat down. This has bullion bank chicanery written all over it.

Silver was capped today at $33.75, Gold at $1415. The CRIMEX bullion banks have got to be pitching a fit this evening...their little victories over Platinum and Palladium small potatoes in the big picture.

Harvey Organ reports in his Daily Gold & Silver Report on the Open Interest numbers in Silver:

All eyes are on the front month of March. The total open interest declined from 50,848 to 39,528 but most of that was due to the margin limits. Most did not roll so they left. The remainder are strong and willling to take on Bylthe and company. The front month of February mysteriously saw its open interest rise from 114 to 118 despite 13 contracts served on Friday. Again someone was badly in need of silver in a hurry.

The estimated volume at the silver comex was nothing short of astounding. The estimated volume today was a superb 118,542. The confirmed volume on the comex on Friday was get of load of this ; 180,614.

In oz this represents 903 million oz of silver or one and 1/3 years of all mines annual production of silver.

Recall in our post yesterday, an Open Interest number to close out the month between 8,000 and 10,000 could potentially drain the CRIMEX of what little Silver they have in their vaults.

This has all the excitement of an Ali vs. Frazier hoedown. Keep those seat belts cinched up tight. A move through $33.75 in Silver could vault us up quickly to test Monday's high of $34.33. A breach of that high could put Silver on the fast track too and possibly through 35 before Friday's close. Gold has $1420 to contend with before it can look to take on December 2010's $1430 high.

Troubled banks rise to highest level in 18 years- AP

Higher oil prices would hamper global economy- AP ...ya think?

Oil prices hit $100 per barrel- AP ...Oops!

Tuesday, February 22, 2011


What we may be witnessing in the Silver market is a "reverse" raid on the CRIMEX. What appears to be a massive short squeeze on our criminal bankers may in fact be a coordinated effort by a disgruntled group of EX-JP Morgan traders, and their hedge fund friends, to hold JP Morgan's feet to the fire, and extract a heavy price for these traders dismissal from the hive of criminal banking.

The Friends Of Andrew Maguire [FOAM] look to align themselves as a group to punish the CRIMEX and force them to either deliver a massive quantity of Silver to them in March, or pay a heavy premium to them to keep the rigged CRIMEX game going.

FOAM have a target price of $37 Silver set for First Notice Day February 28. FOAM began their assault on the CRIMEX when price broke through $31 last Thursday. Their intent is to run price up to, and possibly through, $37 by First notice Day. If they can achieve a price of $37 or higher they will settle their long futures contracts with the Crimex at 20% premium to spot. If they fail to break the $37 barrier, they intend to actually fund their positions and force the CRIMEX to deliver Silver that FOAM believes they do not have.

With the US markets effectively closed yesterday for President's Day, Silver was run up to $34.32 in electronic trading on the NY Globex. FOAM has stated that in their efforts to run the price higher they may have to resort to the tactics of the criminal banks, and short the market, at times, themselves. They state that their short sided efforts will be quick, and in the interests of driving the price higher by squeezing the shorts already in the market as these entrenched shorts sense an opportunity to exit this massive short squeeze still standing. Those stubborn enough to remain short this market will be shown great pain if FOAM can run the price towards $37.

Last evening I came across a series of threads by an internet thread poster using the name WYNTER BENTON. This chain of threads began with a post on a Yahoo message board on January 5th, 2011 [Silver @ $29.30] as the Precious Metals began their January descent. The "message" is being sent to Blythe Masters, current head of global commodities at J.P. Morgan Chase. The message is clear and direct:

The strategy is as follows. We know that Comex only has 105 million ounces of silver of which only 50 million ounces are availabe for delivery. (I personally don't believe the Comex numbers are anywhere near that high, but that is neither here nor there for now.) Well, all it would take is 10,000 contracts on the Comex to buy up all the "available silver" at the Comex and 20,000 contracts to deplete it completely. The current front month March OI is north of 78,000.

Watch the OI closely. Blythe's former traders are advising major hedgefunds and billioniare investors to buy up as many contracts as possible as March 1 approaches and deposit the cash needed to stand for delivery for the month of March. The purpose is not necessarily to bust the Comex but to force the Comex to pay a premium (some as much as 30 percent) for cash settlement. Think about it. If a group of hedgefund gets together and bankroll $1 billion, they can buy more than 30 million ounces of silver. Of course, the contract sellers like The Morgue cant deliver the silver so a cash settlement is the only recourse. So what's wrong with $200 million in profit on a $1 billion investment that takes less than 4 weeks total?

Guess what Blythe? Your former traders are advising everyone they know to put on this trade come the first week of February. Is this what happened in the Decemeber contracts? Is this why silver went from $22 on September 30 to $29 by December 1? How much do you think silver will spike in February as we approach March 1? The traders think silver will be north of $45. Heck it went over $9 as we approached December and everyone who got a pay off in terms of a premium cash settlement will be back for more. And they are all gonna be bringing friends to partake in the bounty.

This post was followed by another post on January 26, 2011 [Silver@ $29.40]. In this post Wynter Benton explains the efficacy and the possible outcome of their plan to "reverse" raid the CRIMEX. She even says exactly when their raid on the CRIMEX banks will launch. Remind yourself whilst reading this thread, it was posted on january 26, 2011. The market has played out exactly as it was laid out here in this thread post:

Assuming a silver price of $30 and the known fact that Comex only has 105 million ounces of silver of which allegedly 50 million ounces are available for delivery, this is what hedge funds can do to earn 20 percent like they did last December.

This hedge fund would purchase over 21,000 contracts and deposit 3.15 billion dollars ($30 X 105 million ounces of silver = $3.15 billion). Once March 1 comes rolling around, guess what happens?

You got it!! Comex doesnt have the silver to deliver.

Now what? You got it again!! Cash Settlement.

What happens after March 1st? I dont really know. All I do know is that between February 15 to March 1, hedge funds will be buying a huge amount of contracts because they know the Comex cant deliver and will be forced to pay a premium or default.

What happens to the sellers of contracts who "defaults" and cant deliver the silver? BANKRUPTCY and a seizure of all assets. Period.

Either deliver the contracts that were sold or negotiate a CASH SETTLEMENT. No other choice PERIOD!!

No matter what happens after March 1, the price of paper silver will skyrocket as March 1 approaches because hedge funds will be blackmailing silver contract sellers come March 1.

How do I know this with near certainty? Because it worked so well the first time around from October to Decemeber. And back then hedge funds didnt even know Comex couldnt deliver.

That is why silver went up 81 percent in less than 4 months. Remember silver was flat for the year as late as August 23. Yet it miraculously skyrockets 81 percent by December 31 with gold going essentially flat.

Major hedge fund traders are going to be buying hundreds of millions of dollars of March contracts during the last 3 weeks of February. The strategy is simple-force Comex to pay a hefty premium on contracts that CANNOT be delivered. Will this work? It worked like a charm in December. Those guys were all kicking themselves because they should have bought 10 times the amount of contract that they actually had in December.

This time around, they are getting everyone they know to get involved in this trade. They will pool their money together in order to get a large number of contracts so that Comex will not be available to deliver-thus forcing a hefty premium. These former traders are gonna pull a train on Blythe with all their hedge fund buddies and there is not a thing Blythe can do about it.


These traders have gotten word in the last 48 hours, that Blythe and The Morgue is about to undertake a major raid on GOLD in the hopes that silver will sell off too. Therefore, these traders are advising their colleagues to refrain from buying March silver contracts unless silver breaks $31 again. Their understanding is that Blythe cannot effectivley execute a silver selloff but Blythe and The Morgue can still execute an effective GOLD SELLOFF.

If and when this GOLD selloff comes, scheduled for this Friday or perhaps next week at the latest, Blythe is hoping that gold will break $1300 and go as far down as $1250. Blythe will be short selling intermitently in the silver pit but her main goal is to cover as many silver contracts as possible.

Once this Gold induced selloff is done watch for the mother of all rally in the silver pit. The hedge funds will be buying like crazy, but the MAIN assault will not take place until February wheren these former traders expect a rise of at least $10 (which was what happened to silver from October going into December).

December was just a dry run (RAID) on the Comex. The success and ease of that RAID has emboldened these traders to re-try the same scheme with a lot more money this go around (March delivery). The only defense Blythe has is to engineer a GOLD SELLOFF in the next two weeks in order to suppress silver so that she can cover her SILVER contracts.

On February 9, 2011 [Silver @ 30.20] another series of thread posts by Wynter Benton are posted explaining the FOAM groups "reverse" raid on the CRIMEX in further detail. As you recall, in late January I suggested that by Feruary 4th the lows "for the year" in Silver and Gold would be in. I was only speculating based on chart technicals at the time. It would appear that the charts support the claims posted here by Ms. Benton:

But rest assured Blythe, we are coming after you in March. And we are confident that we can raise money a lot faster than you can find physical silver.

How high will you push the price of silver in February? Anthing under $40 and we might be able to bust Comex ourselves.

What we are also hearing is that shorters like The Morgue and others of their ilks are playing games with silver right now. They are slamming the paper price of silver in the pits while actively buying PHYSICAl silver all over the world. That is why you are seeing the dichotomy between the paper price and the slam down in contango. Blythe is trying to buy all the physical silver that is available while slamming the paper price so The Morgue can pick up as much as possible as cheaply as possible.

While the suck out rate has been somewhat impressive on the US Mint, the ETFs (primarily the SLV but others as well), we do not believe that she can suck out enough to prevent the raid that is about to occur on March 1.

If Blythe and The Morgue are accumulating this vast amount of silver, then you can bet everything you've got that the price of silver phyiscal or paper will be much higher as March 1st approaches. Think about it.

Blythe is buying physical silver so she can deliver to our raiders come March 1st, right? The last thing you would want is a lower silver price when you are making deliveries come March 1st. I mean why buy silver here at $27.50 and deliver the silver at a lower price. Surely you can see why the price of silver will be much higher as March 1st rolls around. A higher price will make the coming raid more difficult to execute and Blythe can actually profit on the physical silver that she must deliver on. It's so clear that this is a phony paper selldown. The physical market is signalling the beginning of backwardation.

As for our group, we will begin to accumulate in size the week of February 8 through the end of February.

But in my opinion, the low in silver has now been reached. I base this conclusion on the fact that Blythe could not puncture yesterday's low point. Not even close. Gold got blasted right through 1322 like a hot knife through butter yet silver stubbornly clung to the $27 level and was no where close to the $26.50 level. Believe me, if Blythe wanted silver to crack $26, she has the firepower to do it easily.

The reason that she didnt was because she must somehow realize that the people she was selling her Mar contracts to were going to be standing for delivery. Believe me she knows when these people are buying.

Which gets me to my original post. This whole slam down in precious metalsm was all about silver. Gold was just the unfortunate mechanism and instrument by which Blythe worked her magic. She slammed down gold because she knew eventually traders would not be able to stand for delivery in Feb. The gold market is just too big. But you can buy every ounce that the comex CLAIM to have with a mere $2.8 billion. Blythe has access to that type of money in the folds of her couch at The Morgue's HQ.

You can see clearly now why she needs to suppress the price of silver and force traders to cough up the Mar contracts. Once the slam down in gold no longer has the desired effect than it is time to abandon that strategy. My guess (and it is only that for now) is that we have seen the low for silver.

If she is at all competent, then she will be sending the price of silver up by at least $2 by Feb 8 to make it more difficult for hedgies to raid the Comex. But we'll have to see. Either way as long as hedgies and big investors cough up about $5 billion in Feb, then Blythe and The Morgue will be in a world of hurt.

I want to clear up another point. Some people are interpreting that I am predicting a default in March. That is definitely NOT what I am predicting. All I am predicting is that there will be massive contracts that will be standing for delivery and each one of these contracts will be offered a huge premiums which will be settled in cash. You see, it is always more profitable to buy the Mar contracts settle in cash and then buy the May contracts and do it all over again.

It is as if you buy $1 billion worth of silver, sell it for $1.2 billion and buy the exact same position for $1 billion again. You really don't lose anything and someone automatically gives you 20 percent and you get to keep your position exactly as it was before. Well not exactly because the equivalent May contracts are slightly more than the corresponding Mar contracts. It's up to you what you want to do with your money but since it was so easy in December, why not do it again in March and then again in May?

It's as if you show up with 1 ounce of silver, The Morgue pays you 120% of the value of your holding, and you go back into the pits and buy it back at face value. Nothing could be easier and they are defenseless to stop it.

I know for a fact that the silver shorters are desperately trying to come up with physical silver from anywhere they can get it--from the SLV, the US Mint, foreign ETFs, anywhere they can get physical silver. Too bad it still won't be enough.

So watch for February and see how high silver spikes up. This whole slam down was The Morgue trying to get people to stop hoarding silver, so keep buying physical silver and they will fail. Good luck to all physical silver holders. Our time is close at hand


Which gets us back to what will happen as March 1st approaches. The last thing that Blythe wants is for the Comex to show anywhere near 10,000 (or 20,000) contracts standing for delivery come March 1st. Even if she managed to pay enough people off and make physical delivery on a few thousand contracts, it would signal to the world that the Comex had to pay people off because they couldnt deliver the physical. That is what happened in December as Comex started paying people off in order to show only 5,200 contracts standing for delivery instead of a much bigger number. Of course, Comex only delivered on 1,845 contracts, so how would it have looked had 10,000 contracts stood for delivery?

The other way to pay people off is to spike the price of silver as March 1st approach thereby enticing people to sell and making it that much more difficult to raise the cash and stand for delivery.

In a final thread post on Feruary 18, 2011 [Silver @ $32.65], Wynter Benton lays bare the FOAM groups plans to run Silver higher after is surpasses $31 in price. She also warns of the volatility that this could create in the Silver market and that her group may actually play the role of JP Morgan at times and be in the market with "quick shorts" in an effort to enhance their position. Bottom line: If 10,000 futures contrcts stand for delivery in March, the CRIMEX will be in a world of hurt:

The general plan is to allow the public to take silver over $31.20 by itself, and then we support the move by buying underneath that move AFTER the public has taken silver above the old highs.

Our traders are NOT the ones that will be taking silver past $31 initially. However, we are buying and pruning as we approach $31 which may explain why $31 has not been breached yet.

I can say that once we break $31, it is our intention to drive the price as far away from the old highs as possible and hold it there as we approach $31. As we approach March 1st, you are correct when you say that we might short the further month contracts depending on the price. We might even stand for delivery if the price is not "high enough".

Regardless we believe that the price of silver will be much higher in the coming months, thus if you hold physical silver, our interests will always align.

Good luck to us and I hope things work out as we had hope. And another thing when I said 5 days, I meant 5 trading days so it is certainly my expectation that the supernova event will happen by Friday if all goes according to plan.

The Comex is playing rope a dope right now over-inflating the number of Mar OI (currently) and after the deadline Comex will under-report the actual number of contracts standing for delivery. This way Comex can hide the depth of its delivery problem. A poster says that Comex would bust if 8,535 contracts stood for delivery. I would arugue that closer to 6,700 contracts need to stand for delivery to bust Comex since there will be close to 9 million ounces from the Jan and Feb options that will also be standing for delivery.

What if Comex only reports say 4,000 contracts are standing for delivery come March 1 when the reality is something far higher? By doing this, Comex can fool the public into thinking that it does not have a delivery problem in March and use the month of March in order to extract physical silver to make its delivery. Either that or secretly settle for a lesser cash premium since it has convinced enough people that there isnt a delivery problem.

What is the remedy to this problem? Our group is thinking of taking delivery if the price of silver is not above $37 in March. This is the exact scenario that Comex wants to have. A game theory problem among multiple participant with imperfect information. Even if there are many hedge funds like us, if Comex can pretend that it doesnt have a problem, then it cant be blackmailed into settling for a hefty premium even though it is still in dire straits. The only remedy is for everyone to stand for delivery no matter what, either that or gain 20 plus percent on the value of the contracts in which case silver must be above $37 in March.

Our group is seriously thinking of standing for delivery if the price of silver is not over $37.

In the run up to $37 or $40 or whatever, we may at times be massively short contracts to shake out the average investors. Yes indeed, we may be taking on Blythe's role from time to time. Nothing serious, of course. Our shorts will be quick to see if we can take out some stops. From here on out, it will be very volatile and we may be in a position to take out your stops before we go long again so please be careful when setting stops. Everyone must be at their all time highs so please think of an exit strategy.

Take the time to read each thread post in it's entirety. Their predictive accuracy is astonishing. There appears to be a serious group of traders and hedge funds looking to "take advantage" of the situation at the CRIMEX regarding it's [lack of] supply of Silver. The "reverse" raid this group is attempting is purely motivated by profit, and less about actually taking delivery of physical Silver. This could appear as a game of chicken between the Silver Bears and the Silver Bulls. The Bulls appear poised to win no matter what the Bears try and/or throw at them.

In the overnight market last night, Silver peaked at 34.33 early, and a 5.5% raid was engineered by the criminal bullion banks to erase all of yesterdays electronic Globex market gains as price returned towards Friday's closing CRIMEX prices. Today is Tuesday, and the CRIMEX will be gunning to paint the Open Interest numbers today as well. It is clear that the bullion bank(s) short this Silver market are staring at themselves in the mirror and wonder how they got in this mess. Perhaps they should stare a little longer and look a little closer...arrogant SOBs.

For a brief synopsis of the trouble JP Morgan and CRIMEX banksters are facing this morning, take the time to watch this brief "fly-on-the-wall" video taken in Blythe Masters JP Morgan office:

The area between $33.25 and $33.50 is acting as a wall this morning since prices slipped overnight courtesy of our nefarious bullion bankers. The battle has raged, the war may be about to breakout here at this level. Should Silver climb back through $33.50, our JP Morgan lead bankers will be sitting on a bomb with a short fuse. The mother of all short squeezes will be upon them. Buckle up tight and reach for the sky.

Tuesday, February 15, 2011

No Surprise

Stocks fall after surprisingly weak retail sales
NEW YORK (AP) -- A surprisingly weak retail sales report drove stocks lower on Tuesday, giving the Dow Jones industrial average its second straight day of losses.

The Commerce Department said Tuesday that retail sales rose just 0.3 percent in January, the smallest increase since June and half of what economists had predicted.

Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group, said higher prices for gasoline and raw materials are beginning to be passed along to consumers. That's hurting retail sales and spending, she said.

"Without wage gains," she said, "people are going to buy less."

Surprisingly weak. Why didn't I find it surprising? Kim is brilliant. Why didn't the President bring her in as his economic adviser?

World Bank: Food prices at "dangerous levels"
ST. LOUIS (AP) -- Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

The bank released a report Tuesday that said global food prices have jumped 29 percent in the past year, and are just 3 percent below the all-time peak hit in 2008. Bank President Robert Zoellick said the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.

"Food prices are the key and major challenge facing many developing countries today," Zoellick said. The World Bank estimates higher prices for corn, wheat and oil have pushed 44 million people into extreme poverty since last June.

The report comes a day before Finance ministers and central bank chiefs from the Group of 20 leading economies meet in Paris. Zoellick said he's worried some countries might react to food inflation by banning exports or implementing price controls, which would just aggravate the problem.

Nice call, way to stay ahead of the curve Robert... "I'd say 'ol chap, looks like the horse is already out of the barn. A bit late to be closing the door, wouldn't you say old man?" Bumbling Ben bernanke's monetary policy is what's really aggravating the problem...though he refuses to admit it.

Global Demand for U.S. Assets Declined in December
Global demand for U.S. stocks, bonds and other financial assets fell in less than forecast in December as the outlook for the economy brightened, figures from the Treasury Department showed today.

Net buying of long-term equities, notes and bonds totaled $65.9 billion during the month, compared with net buying of $85.1 billion in November, according to data released today in Washington. Purchases were forecast to decline to $40 billion, according to the median of five estimates in a Bloomberg News survey.

A polished turd is still a turd...

COMEX silver inventories at 4 year lows
The gradual drain of COMEX silver inventories seen in recent months continues and COMEX silver inventories are at 4 year lows. Total dealer inventory is now 42.16 million ounces and total customer inventory is now at 60.68 million ounces, giving a combined total of 102.847 million ounces.

The small size of the physical silver market is seen in the fact that at $30 per ounce, the COMEX silver inventories are only worth some $3 billion. The US government is now paying some $4 billion a day merely on the interest charges for the national debt. It is also the same value as Twitter’s new venture round of financing or Ford’s debt pay down in the first quarter.

Talk of a default on the COMEX is premature but the scale of current investment demand and industrial demand, especially from China, is such that it is important to monitor COMEX warehouse stocks.

Current Silver Definition Move Not Like the Others
By Gene Arensberg
Please consider the following.

•In the 2004 DM the Big Sellers of silver futures, the combined commercial traders, were willing to take the short side of silver futures to as high as 91,212 contracts (456 million ounces in December 2004 or more than 75% of all contracts open).

•In the 2006 DM the combined COMEX commercial traders were willing to take the short side of a net 87,195 contracts (436 million ounces peaking in December of 2005 and more than 60% of all contracts open).

•In the 2008 DM the Big Sellers were confident enough in lower silver prices to take the short side of up to 75,790 COMEX contracts (379 million ounces in February of 2008, but then only a little over 40% of the total open interest).

Today, with silver at the highest price yet for this silver bull market on a COT reporting Tuesday, the combined commercial futures traders are “only” willing to take the short side of 51,117 contracts (255 million ounces February 8 and “only” about 37% of all contracts open even though silver is near 30-year highs). Compare to the three DMs above.

Even with silver trading at $30 the ounce the largest futures sellers are not willing to sell nearly as much paper silver into the futures markets as they were in any of the prior three DM examples. One could argue that part of that could be simply that silver is at a higher price now. However, do we need to point out that the same sellers of silver are also the sellers of much more expensive gold futures? And, do we need to point out that with gold near all time highs recently those Big Sellers of precious metals had taken the short side of near-record numbers of gold contracts (Sept 2010, 302,740 contracts net short). And, do we need to point out that in the previous three DM rallies for silver, which all answered rallies for gold that the Big Sellers were then LESS net short gold in each of those rallies than they were in September – the exact opposite of the silver Big Seller story?

The point is that this particular DM is different. It is historic in size, it is definitely telling us that SOMETHING HAS CHANGED in the tiny silver market and it behooves all of us to pay attention to just how well bid any future dips in price are. If we intend to game the next leg higher for silver metal, we’d probably better think in terms of being willing to pay a bit more than we’d “like” at least for the initial tranche.

Silver Is on the Brink of a Breakout by Hyperinflation

Why Silver Backwardation Matters by Hard Assets Investor

Watch the Gold/Silver Ratio
By James Turk
February 12, 2011 – In precious metal bull markets, silver outperforms. Its price climbs at a faster rate than gold’s price. The reverse happens in bear markets. Silver’s price drops at a faster rate than gold’s price. The following chart of the gold/silver ratio illustrates this phenomenon.

Monday, February 14, 2011

Wishful Thinking Behind 2012 Budget Proposal

Obama Unveils $3.73 Trillion Budget for 2012- AP
President Barack Obama is sending Congress a $3.73 trillion spending blueprint that pledges $1.1 trillion in deficit savings over the next decade through spending cuts and tax increases.

$1.1 TRILLION in deficit savings over the next decade... Sounds impressive, until you do the math. The financial headlines are already claiming that this budget plan "curbs the deficit".

Pure bull shit...

A decade is 10 years. To claim that this years budget plan will save $1.1 TRILLION over ten years time is absurd, but it makes great headlines. Simple math tells us that $1.1 TRILLION spread over 10 years amounts to ONLY a $110 BILLION deficit savings per year. LOL! The treasury sold $72 Billion of debt JUST LAST WEEK!

Read that again: The treasury sold $72 BILLION of debt JUST LAST WEEK!

$110 BILLION of deficit savings in one year is CHUMP CHANGE. Never mind that Treasury / IRS revenue last fiscal year was (only) $2.16 Trillion, and the Congressional Budge Office is projecting a record spending deficit of $1.5 Trillion this fiscal year. This annual savings in the deficit would disappear faster than a local bank on a Friday afternoon. IN FACT, this deficit savings would not even have covered the $185 BILLION net interest expense on US debt that was just paid in 2010. Worse yet, the net interest expense on US debt is projected to TRIPLE to $554 BILLION by 2015.

Geithner Quietly Tells Obama Debt Expense to Increase to Record
By Daniel Kruger and Liz Capo McCormick
Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits.

Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010 with the government forecast to run cumulative deficits of more than $4 trillion through the end of 2015, according to page 23 of a 24-page presentation made to a 13-member committee of bond dealers and investors that meet quarterly with Treasury officials.

While some of the lowest borrowing costs on record have helped the economy recover from its worst financial crisis since the Great Depression, bond yields are now rising as growth resumes. Net interest expense will triple to an all-time high of $554 billion in 2015 from $185 billion in 2010, according to the Obama administration’s adjusted 2011 budget.

“It’s a slow train wreck coming and we all know it’s going to happen,” said Bret Barker, an interest-rate analyst at Los Angeles-based TCW Group Inc., which manages about $115 billion in assets. “It’s just a question of whether we want to deal with it. There are huge structural changes that have to go on with this economy.”

The amount of marketable U.S. government debt outstanding has risen to $8.96 trillion from $5.8 trillion at the end of 2008, according to the Treasury Department. Debt-service costs will climb to 82 percent of the $757 billion shortfall projected for 2016 from about 12 percent in last year’s deficit, according to the budget projections.

Geeze Timmy, like this is a secret. The cost of US debt is going to be a far worse problem than that of Portugal, and that is all the financial press was interested in reporting on last week. Of course Portugal faces their debt crisis "today", but tomorrow comes sooner than we think when the cost of our debt comes due.

President Obama's budget is painfully inadequate when it comes to addressing the US deficit. I wouldn't even qualify it as wishful thinking in terms of deficit reduction, not at the rate this country continues to add to it's debt irrespective of the increasing costs to service that debt. When you are issuing $72 BILLION of debt in a week, a $110 Billion "annual" cut in spending almost seems disingenuous.

If the President, the US Treasury, and the US Federal Reserve were serious about deficit reduction, and balancing the nation's books, they would seriously consider ending the true global financial farce that they are behind: The suppression of the price of Gold and Silver. It is this now 40 year suppression of the Precious Metals, Constitutional money, that is at the root of this global financial crisis.

Since President Nixon took the US off of the "gold standard" completely in 1971, the value of the US Dollar has fallen by 95%. This was achieved primarily via the gradual decent in interest rates from their peak in October 1981 as the cost of money fell encouraging ever greater deficit spending by not only the US Government, but by business and consumers as well.

Cheap money over the past 40 years fueled spending that gave rise to the the illusion of America as this mammoth global growth machine. This in turn supported the US Dollar despite falling interest rates. The fact that the US Dollar became the de facto world reserve currency also supported the US Dollar as all trade in Oil and commodities were globally settled in US Dollars. The Dollar was cheap to borrow, and everybody wanted as many of them as they could afford.

It was believed at the time Nixon closed the Gold Window that the full faith and credit of the US Treasury, with an independent Fed as guardian of the currency, would force the Dollar to act as though it were still externally constrained, as in the case of a gold standard. As Greenspan said, the Dollar works as long as it acts as though it were on a gold standard.

Unfortunately, today the Dollar no longer acts as if it were on a Gold standard. Interest rate swap derivatives at JP Morgan, and the purchase of US Treasury debt through the back doors of the "primary dealers" in the treasury market have seen to the US Dollar's demise.

Many could point to the US Dollar Index and claim that the Dollar is not as bad off as it may appear. But in a period of Global Competitive Currency Devaluations, the Dollar is being measured in the US Dollar Index against a basket of other currencies that are also constantly falling in value. How can the measure of a falling US Dollar be accurate, if it is measured against other falling currencies? It can't be. To accurately measure the value of the US Dollar it must be measured against Gold.

The $Gold Chart is the ONLY True Comparison of Dollar Value

The only true reference point of value for the Dollar at this time is a comparison to Gold. Thus, the $Gold chart is that only true comparison of Dollar Value as it is viewed in a ratio to relative constant value Gold once Global Competitive Currency Devaluations are ongoing.

The US government could immediately square the US debt, if they would allow a revaluation in the price of Gold to a level that is equal to the nation's outstanding marketable debt. This would entail a MAJOR revaluation in the price of Gold, and though highly unlikely to occur, it would certainly back our debt with substantially more than "the good faith and credit" of the US Government that is now being called into question by our nation's creditors.

Consider that the amount of marketable U.S. government debt outstanding has risen to $8.96 TRILLION. IF the US Treasury still holds 280 MILLION ounces of Gold in it's reserves, Gold would have to be revalued to $32,000 an ounce to make that debt have full value to those that hold it. Clearly, at today's $1365 Gold price, the US Dollar is not working as a store of value for those holding our debt.

Once again, as Alan Greenspan said, the Dollar works as long as it acts as though it were on a gold standard.

Bernanke's Free Ride Is Over
By: Gary North
Ben Bernanke took over as Chairman of the Board of Governors of the Federal Reserve System on February 1, 2006. On February 9, 2011, his free ride ended. On that day, Paul Ryan's House Budget Committee grilled him.

Bernanke has yet to appear before Ron Paul's Subcommittee on Monetary Policy. Whether Bernanke will ever agree to testify before that subcommittee remains an open question. If the House does not compel him to show up, he may be able to escape stiff cross-examining. If the House refuses to compel him to testify, then the House once again has capitulated on a bipartisan basis. We shall see.

Bernanke is not used to tough questions.
Some of the questioning wound up on YouTube within hours.

You may not perceive the extraordinary nature of all this. You can be sure that he perceives it. For almost a century, representatives of the Federal Reserve have been dealt with deferentially by Congress. In theory, the Federal Reserve answers to Congress. In fact, Congress asks few questions.

The sign of the FED's operational autonomy is the absence of any independent audit by any agency of the United States government. This includes any audit of the gold that the FED legally has stored for the government since 1933. The last audit of the gold in Fort Knox was in 1953. There has never been an independent audit of the gold inside the vault of the New York Federal Reserve Bank (privately owned) at 33 Liberty Street, New York City.

Stiff the Fed
By David Bond
This leaves us with the Federal Reserve Bank, this mysterious beast in our midst, to whom for no reason known to God we are paying interest. Our interest payments to this weird ghost will in a few years' time consume all of our “discretionary” federal budget, and we won't have paid down a farthing.

Why cannot this nation, like so many millions of U.S. homeowners, simply walk away from the mess this cabal of greedy Fed banksters created? Hand 'em back the keys, and keep our pledges to Canada, Brazil, China, Japan and our own savers at the same time. The interest saved by stiffing the Fed would retire our foreign debt in short order. Besides, it's time Timothy Geithner and Helicopter Benjamin Bernanke got real jobs – like maybe in a Chinese coal mine.

This morning Gold and Silver would appear to be offering a vote of "no confidence" in the Presidents budget proposal. Silver broke higher after successfully testing the swing high support at 29.78 for a third day in a row. Gold is once again attempting to break through pivotal resistance at $1365. Expect our bullion banksters at the CRIMEX to make every effort to thwart the impending breakouts in the Precious Metals. The US Dollar is broken and that TRUTH rests with the Precious Metals.

Thursday, February 10, 2011

Stop The Spinning, I'm Getting Dizzy

Fewest requests for unemployment aid since 2008
Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- The number of people applying for unemployment benefits plunged last week to the lowest level in nearly three years, continuing a downward trend that suggests hiring could pick up this year.

Applications sank by a seasonally adjusted 36,000 to 383,000, the lowest point since early July 2008, the Labor Department reported Thursday.

Some analysts cautioned that severe winter weather that affected 30 states could have contributed to the sharp drop, closing some government offices and preventing people from filing applications.

Still, many analysts said the decline points to better hiring ahead.

Isn't it amusing... the greatest Winter Storm in the history of the nation makes it's way across the continent last week, and this reporter cannot put two and two together to see that this is why jobless claims were so low last week. Trust me, next week this number with be shockingly worse than expected, and somehow THEN the weather will be blamed. Thank God for Dave Kranzler's perspective on the BS behind this weeks "surprisingly good" jobless claims number:

More "BS" From The BLS
by Dave Kranzler
The media will no doubt grab onto today's jobless claims report as more evidence that the economy is improving. But recall that Bernanke stated clearly yesterday that high unemployment is going to persist for a long time. Also, not widely reported, is that for the second month in a row it was reported yesterday that job openings in December were lower again and that the metric fell to its lowest level since September. Not only that, but the number of employees hired also declined. Here's the report: LINK

So todays lower-than-expected jobless claims report has to be greeted with a high degree of skepticism and a real desire to see exactly how the Government creates its "seasonal" adjustments. I guess there could be a high correlation between new claim filings and the bad snow storms hitting a large part of the country. But shouldn't there be "adjustments" to normalize for that?

And actually, on an "unadjusted" basis, the number of claims actually were about 20k higher than expected. Even more troublesome, and something that will absolutely not be reported in most daily newspapers or local news broadcasts, was the fact that the number of claims for extended benefits - these are the people who are on the 2 1/2 year benefit roll (aka welfare) - increased by over 100,000 to 9.4 million. Let's put this number in perspective. The BLS reported that the labor force was around 63 million. With 9.4 million of those receiving jobless bennies, this means that a full 15% of the "labor force" is essentially part of the welfare expenditures. Here's the full report:

Also not widely pointed out was the fact that Obama has proposed a moratorium on interest payments for States which have had to borrow from the Federal Govt (that means you, the Taxpayer) in order to fund State unemployment benefit programs. IF this proposal becomes a reality, and States like California stop making payments to you and me, collectively the Taxpayers, how is this any different than a de facto debt default? This is indeed a default because it means that these States had the choice of not making payments under Federal claims OR not making payments to ALL creditors, including municipal bond holders like Pimco. THIS WILL BE A DEBT DEFAULT.

The only difference between this and a default is that Obama, on behalf of Us, has the authority to propose and legislate a "deferral, thereby technically circumventing a legal default. Of course, you can refer to money printing as "quantitative easing" so that it appears to be something other than that which it really is. And you can call "stronzata" a "rose," but it will still smell like stronzata.

It's getting worse by the day, not better like Bernanke and Obama and the media would have you believe. The reports of silver and gold bullion shortages in Australia, Asia, Europe and Canada are now proliferating and have a high degree of credibility, especially as reflected in the soaring lease rate for silver. This tells me that the rest of the world smells the stronzata eminating from Washington, DC and Wall Street...

January Deficit Grows by $50B
WASHINGTON (AP) -- The federal government's budget deficit grew by $50 billion in January and is expected to finish the year as the highest in history.

The Treasury Department said Thursday the deficit was one of the highest ever for the month of January, second only to the $63 billion deficit recorded two years ago. For the first four months of this budget year, the deficit totaled $418.8 billion, 2.7 percent lower than the same period a year ago.

However, this improving trend is expected to reverse in coming months. The Congressional Budget Office is projecting a record deficit of $1.5 trillion this budget year, which ends in September. The estimate was revised upward last month based on a tax-cut package brokered between the White House and Republicans that will add $400 billion to this year's red ink.

That will mark the third consecutive year that the government's deficit has been over $1 trillion, unprecedented imbalances that have been caused by the worst recession since the 1930s. That meant a sharp drop in government tax collections as millions of people lost their jobs while at the same time the government was boosting spending to stimulate the economy and stabilize the banking system.

...and the prices of Precious Metals waffled today? News reports claimed that Precious Metals prices rose today after news broke that Mubarak would leave office in Egypt today. This seems ridiculous on the face of it, as Precious Metals prices rose last week as violent protests erupted demanding he relinquish power. Wouldn't Gold prices "drop" on news of Mubarak's exit? Precious Metals prices rose off their lows because they reached support, and traders recognized what a farce today's unemployment claims number was. In short, financial headline writers will never tell you the real reason Precious Metals prices are rising. That would mean telling you the truth...

Ron Paul: QE2 Is a "Total Failure" and Bernanke Is Delusional About Inflation
QE2 is a "total failure," except for those folks who work on Wall Street," Rep. Paul says. "It hasn't done anything for Main Street; hasn't done anything to give us real jobs; hasn't done anything for people who are losing their houses."

As for inflation, "I think there's plenty," Rep. Paul says, citing "skyrocketing" commodity prices and rising food prices. One problem is the Fed's reliance on core CPI, which famously excludes food and energy and relies on hedonic adjustments. "They rig that number," he says. "[Bernanke] looks at government stats that are fudged to reassure him he doesn't have to do anything."

Ted Butler: Silver soon may be the rarest earth

Wednesday, February 9, 2011


Republicans grill Bernanke over inflation threat Yahoo
WASHINGTON (AP) -- Members of Congress sharply questioned Federal Reserve Chairman Ben Bernanke Wednesday over whether the Fed's policies are raising the risk of higher inflation in the months ahead.

House Budget Committee Chairman Paul Ryan, R-Wis., said he is concerned that the Fed won't be able to detect inflation until "the cow is out of the barn" and inflation is already spreading dangerously through the economy.

Bernanke acknowledged that inflation is surging in emerging economies. But he downplayed the risks to the U.S. economy, even as lawmakers expressed concerns about rising gasoline and food prices.

Inflation in the United States remains "quite low," Bernanke said. He blamed higher prices on strong demand from fast-growing countries such as China-- not the Fed's policies to stimulate the economy, including buying $600 billion worth of Treasury debt.

Rep. Ron Paul, R-Texas, held a hearing on whether the Fed's bond-buying program and record-low interest rates can really help create jobs. Paul, an outspoken critic of the central bank, favors abolishing the Fed.

Lawmakers at that hearing also expressed concerns that the Fed's policies will spur inflation.

"If the Fed didn't see this mess coming, will they see the recovery starting in time to turn off the printing presses to stop inflation," asked Rep. Frank Lucas, R-Okla. "I am not sure their vision in the future will be any better than in the past."

Bumbling Ben Bernanke will one day pay a high price for his lies to the American public. He sits in front of these lawmakers with a straight face and tells them that he is buying $600 BILLION worth of US Treasury Debt to keep interest rates low...and stimulate the economy. AS INTEREST RATES ARE RISING IN SPITE OF THE FED'S PURCHASES! Inflation "remains quite low" he proclaims. POPPYCOCK!

Home loan demand drops, rates at 10-month high Reuters
(Reuters) - A jump in U.S. mortgage rates to their highest level in 10 months has highlighted the fragility of the housing market that will make it difficult for Washington to remove its backstop.

Data on Wednesday showed fixed 30-year mortgage rates averaged 5.13 percent in the week ended February 4, up from 4.81 percent the prior week.

It was the highest rate since the week ended April 9, 2010, the Mortgage Bankers Association said.

The increase sapped demand for mortgages as the MBA's seasonally adjusted index of mortgage applications, which includes both refinancing and home purchase demand, fell 5.5 percent in the week.

Higher interest rates could prove problematic for a market where weak demand remains one of the biggest challenges.

Yeah, Bumbling Ben has definitely got his finger on the trigger of economic growth. NO ONE, AND NO COUNTRY has ever gotten rich by spending money they don't have.

Bernanke says job growth, inflation still too low Reuters
Acknowledging renewed momentum in the economy, Bernanke said a drop in the jobless rate to 9 percent in January from 9.8 percent in November, the biggest two-month decline since 1958, was "grounds for optimism."

Grounds for optimism? Bumbling Ben is full of sh*t! He knows as well as anybody that the recent drop in "headline" unemployment is a lie, but he uses it to skillfully created a "sound bite" that can be used by the blathering financial media to pump up the confidence of the American people in their governments ability to "fix this".

9% Unemployment Rate is a Statistical Lie
By Greg Hunter
“More than half a million people found work in January.” How? The BLS reported there was only a tiny gain of 36,000 workers to the payrolls, and even that number is a statistical lie, according to economist John Williams of In his latest report (last Friday), Williams said, “Incredibly, despite ongoing regular overstatement of payrolls by the BLS, the BLS appears to have upped, not lowered, the excessive biases in its latest rendition. Without the higher bias, the reported January 2011 payroll gain of 36,000 would have been a decline of 52,000.”

As for the big drop in the unemployment number down to 9%, you can credit that with something the BLS calls “seasonal adjustments.” The government takes into consideration things like cold weather and snow when it puts together unemployment figures. Williams thinks these seasonal adjustments have been distorted by the dismal economy during the past few years. Williams says, “. . . the extraordinary severity and duration of the economic duress in the United States during the last three to four years has destabilized traditional seasonal-factor adjustments and the related monthly reporting of certain economic series. The unemployment rate rose in January 2011, not seasonally adjusted. The 0.4% decline reported in the headline January unemployment rate appears to be a seasonal-factor issue.” In other words, seasonal adjustment jobs are created out of thin air and are not really there for people. In reality, unemployment increased slightly. It did not decrease.

While we are on the subject of reality, after one year, the unemployed are no longer counted in government statistics. If unemployment was computed the way BLS did it prior to 1994, the true unemployment rate (according to would be 22.2%. I wonder why the mainstream media feels compelled to only do stories that support government statistics. There is bona fide analysis that can show government numbers are rigged to make things look better than reality.

Yesterday's surge in the Precious Metals was halted today as the Fed bought 71% of today's $24 BILLION 10 year bond offering by funneling some of it's monopoly money through foreign central banks to give the "appearance" of "strong foreign demand" for US debt. This strong demand for America's debt left the Gold market motionless today. As absurd as that may seem...

TREASURIES-Bonds rise after strong $24 bln 10-year auction
NEW YORK, Feb 9 (Reuters) - U.S. Treasury debt prices added to gains on Wednesday after yields near 9-1/2-month highs drew buyers to a $24 billion auction of 10-year Treasury notes.

A huge indirect bid, roughly correlating to demand from overseas, led to the robust results. Indirect bids took 71.3 percent of the sale, the U.S. Treasury said.

"There was a huge indirect bid, 71.3 percent versus a 44 percent norm," said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut.

The strong institutional demand for the sale left primary dealers, charged with underwriting U.S. auctions, with just $6.73 billion of the $24.0 billion sale.

"Yields have gotten to a point that are attracting some buying," said Thomas Roth, executive director in U.S. government bond trading with Mitsubishi UFJ Securities USA in New York.

The REAL Reason Ben Bernanke Leaves A PaperweightOn The "Print" Button When His Finger Gets Tired
By Graham Summers
Bernanke is printing money and funneling it into the Wall Street banks for one reason and one reason only. That reason is: DERIVATIVES.

According to the Office of the Comptroller of the Currency's Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION.

Five banks account for 95% of this. Can you guess which five?

Looks a lot like a list of the banks that Ben Bernanke has focused on bailing out/ backstopping/ funneling cash since the Financial Crisis began doesn't it? When you consider the insane level of risk exposure here, you can see why the TRILLIONS he's funneled into these institutions has failed to bring them even to pre-Lehman bankruptcy levels.

Ben Bernanke is a stooge and a fraud, but he is at least partially honest in his explanations of why he wants to keep printing money. The reason is to try to keep interest rates low. Granted he's failing miserably at this, but at least he understands the goal.

Of course, Bernanke tells the public and Congress that the reason we need low interest rates is to support housing prices. He doesn't mention that $188 TRILLION of the $223 TRILLION in notional value of derivatives sitting on the Big Banks' balance sheets is related to interest rates.

Yes, $188 TRILLION. That's thirteen times the US's entire GDP and nearly four times WORLD GDP.

Now, of course, not ALL of this money is "at risk," since the same derivatives can be traded/ spread out dozens of ways by different banks as a means of dispersing risk.

However, given the amount of money at stake, if even 4% of this money is "at risk" and 10% of that 4% goes wrong, you've wiped out ALL of the equity at the top five banks.

Put another way, Bank of America, JP Morgan, Goldman, and Citibank would CEASE to exist.

This evening, Harvey Organ in his blog, explains the threat to the financial system that these interst rate derivatives Bumbling Ben is hell bent on protecting are:

The 5 USA bankers have over 250 trillion of these derivatives.

In simplistic terms, the trade can be summarized like this:

JPMorgan and banker friends buy trillions of dollars of long bonds in the future and short equal amounts of treasury bills in the future. This is the swap. The long bond when initiated had yields as low as 3.7%. The treasury bills had yields of .09%.

So if you short the treasury bills, you are basically shorting at par.

But now look at the long end. If interest rates rise a full point then let us say collectively these banks have 250 trillion dollars in long bonds in the future. A 1% rise in yield will cause the bankers to suffer losses equal to 2.5 trillion dollars.

This is why interest rates must remain low or the banks obliterate themselves with a 1% rise. Also the huge derivatives initiated by the bankers caused the real bonds to be purchased in mass and this itself caused interest rates to fall as dealers needed to find real long bonds to match the derivative long.

Now the world is sensing rising commodity prices and also the less note-worthiness of sovereign nations. This is causing long bond yields to rise and this is putting the pressure on JPMorgan and friends.

In a nutshell then:

JPMorgan can blow up on a debt default caused by its huge derivatives in interest rate swaps

or it can blow up with a physical default by not providing the real physical silver and gold metal on the comex or LBMA.

And foreigners were lined up to buy US debt today? I don't think so... This is an illusion being created by the banks with money given to them by the Fed. It is the proverbial "house of cards". How the price of Gold and Silver can not already be circling the moon is the story of the day folks.

Consider that the US Federal Reserve chairman is sitting in front of a Congressional panel today, telling them he must continue to buy US Treasury debt to keep interest rates low to support a [nonexistent] economic recovery. When in fact he is funneling money into a black hole the Fed itself helped create [to suppress the price of Gold], in the hopes that he can prevent an interest rate swap time bomb from exploding and completely vaporizing the financial system as we now know it.

This is why Bernanke and Geithner are adamant that the Congress raise the debt ceiling. Failure to raise the debt ceiling, and interest rates explode. And so do JP Morgan, Bank Of America, Citi Bank, Goldman Sachs, and HSBC...and the entire financial system.

Precious Metals anyone? BUY THE DIPS!

Tuesday, February 8, 2011

Inflation Roars To Life

A funny thing happened this morning as the CRIMEX opened for Precious Metals trading this morning. After drifting lower off their overnight highs in Asia during the London trading period, the Precious Metals exploded in price at the 8:20AM est open this morning in New York. There was no pertinent US economic date released this morning. However...

China hikes interest rates again to damp inflation
By Tini Tran
BEIJING (AP) -- China's central bank raised interest rates for the second time in just over a month in a bid to dampen high inflation and guide blistering economic growth to a sustainable level.

The People's Bank of China announced Tuesday on its website that the benchmark 1-year deposit rate would rise by a quarter percentage point to 3 percent and the 1-year lending rate would increase by the same amount to 6.06 percent. The increases are effective Wednesday.

Its last rate hike came on Christmas Day, when the bank raised both benchmark rates by a quarter point. China's leaders have sought to cool surging inflation that could pose a threat to political stability.

Gold prices broke lower on the news of the Chinese rate hike around 5:30AM est., and drifted lower through the early morning until the CRIMEX opened in New York. Nothing unusual in that. Raising interest rates in China "should" result in a drop in Precious Metals first.
The explosive response to this news in New York this morning is a bit confounding on the one hand, but given the global inflationary expectations implied by the Chinese rate hike, probably justified on the other. However...

Shorter-Dated Treasurys Ease as Debt Sale Looms
NEW YORK—Treasurys maturing in 10 years or less fell as the market braced for $72 billion of new government debt supply over the week.

Shorter-dated notes led the selling ahead of the first leg of the auctions, a sale of $32 billion in three-year notes at 1 p.m. EST. The Treasury Department will sell $24 billion in 10-year notes on Wednesday and $16 billion in 30-year bonds Thursday.

The bond market has been hit hard over the past week as optimism on the U.S. economic growth fueled worries about inflation, which eats into bonds' fixed returns over time. But investors shrugged off the move by China, the world's second-largest economy, to raise key interest rates by 0.25 percentage point Tuesday in its own efforts to quell inflation. It was a third hike since October, and many market participants expect further tightening measures in coming months.

"Supply is the immediate theme," said John Briggs, U.S. interest-rate strategist at RBS Securities in Stamford, Conn. "Treasurys looked to see if risk assets would sell off [on the rate hike in China], then for the most part shrugged and moved on."

With a sale of $32 billion in three-year notes at 1 p.m. today, $24 billion in 10-year notes on Wednesday, and $16 billion in 30-year bonds Thursday, one might have expected a bit of a tighter leash on the Precious Metals this morning at the CRIMEX open. The run up in prices was quickly halted as Gold neared key resistance at $1365. You might say Precious Metals prices hit the wall as Gold reached the 50% retracement of the recent sell-off that began right after the first of the year.

At 10AM est as I write this, all the Precious Metals and the currencies look bottled up ahead of today's $24 BILLION three-year note auction. The Chinese interest rate hike should help push the Chinese Yuan higher, and the US Dollar lower moving forward, but with $72 BILLION of debt to sell, the Treasury and the Fed cannot allow the threat of inflation and a lower Dollar to impinge on this massive debt offering...even though we know who the buyer of this pile of horse dookie is for the most part going to be the Fed itself. Hey, even liars and thieves have to keep up appearances. It should be noted, however...

40-Year JGBs See Least Demand Ever Amid Yield Uptrend
By Megumi Fujikawa
TOKYO (Dow Jones)--Demand for new 40-year Japanese government bonds was as weak as it has ever been at an auction Tuesday as investors steered clear of buying superlong bonds on the back of the recent spike in yields.

Japan's Ministry of Finance sold Y299.6 billion worth of 40-year JGBs at an issue price of 98.96 yielding 2.24%. The 40-year notes were sold in a Dutch-style auction in which all successful bidders pay the lowest accepted bid.

The auction received Y616.5 billion in total bids for a bid-to-cover ratio of 2.06, sharply deteriorating from 4.15 at the last 40-year sale in November.

That also marks the lowest level since 40-year government bonds started being sold in November 2007. A higher bid-to-cover ratio is usually considered an indication of stronger demand.

Amid recent yield rises in the global bond markets, "it's not a condition in which players want to buy government bonds aggressively,", said Nobuto Yamazaki, executive fund manager at DLIBJ Asset Management.

The auction results show that top-heaviness in JGBs has spread to the superlong sector, which had resisted recent selling pressure compared with other zones, Yamazaki said.

Closely tracking movements in Treasurys yields, Japan's benchmark 10-year yield hit as high as 1.3% on Monday for the first time since May.

It will most interesting to see the results of this weeks US Treasury auctions considering this bond market slap in the face to this Japanese Government Bond offering. Recall also that Japanese Government debt was recently downgraded, and the same fate may await US Government debt soon.

Bottom line folks: The Inflation Genie is out of the bottle. The cork has been lost and would be useless even if found. The continued rise in Chinese interest rates confirms that the World is now staring down a global battle against Inflation that will not be won quickly or easily.

The rise in interest rates here in the US have been at the behest of the bond market, and not the Fed. This signals a growing fear of inflation here in the USA, and not a sudden belief that the economy is recovering rapidly as many in the western financial press would have you believe. ANY and ALL "signs of an economic recovery" here in the USA is because of a flood of monopoly money into the financial system to prop up the still failing banks. This flood of money has resulted in accelerating price increases which the Fed denies at every opportunity. These rising prices are then deemed to be a "sign of growth" as sales receipts have increased due to the rise in prices, and not an actual increase in the amount of goods sold.

The consideration of Precious Metals as a hedge against inflation has hardly been evident during this ten-year bull market in prices. Most of the run up in the prices of Precious Metals can be laid at the feet of the banking crisis, and a general uncertainty regarding the health of the global economy. Factoring inflation into the bullish fundamental equation for owning Precious Metals, and demand could soon be about to soar to levels only talked about previously. We may be looking back on today's Chinese interest rate hike as a watershed moment in this Precious Metals bull market. This could be seen as the last "phase transition" as the Precious Metals bull moves from the "smart money" phase into the "mania" phase as the general public seeks refuge in the Precious Metals to protect what wealth they have left from the ravages of global Inflation.

Gold Prices Pop Despite China Rate Hike
ByAlix Steel
Gold prices were unfazed by China's decision to raise key interest rates by 25 basis points, the third move since October 2010. China has been trying to take baby steps to fight rising inflation, which is currently 4.6%.

Typically an interest rate hike would drag on gold. As paper money gains more value, gold becomes a less appealing place to put money. Gold also does well in a negative interest rate environment, which is the interest rate minus the inflation rate. Using the one year deposit rate, even with the hike, China still has a negative rate of 1.6%.

China's New Year holiday ends today so it will be interesting to note if physical gold buyers in China will be deterred by higher rates or if rampant gold buying will continue. If today is any indication, Chinese buyers will jump into the market. Just by the mere fact that China is forced to raise rates because of inflation brings the buzz word into the foreground which is supporting prices.

The inflation validation "brought more funds to gold back after the $1,360 area was surpassed," says George Gero, senior vice president at RBC capital Markets.

Prices "aren't completely falling out which means there is some support in the market," says Phil Streible, senior market strategist at Lind-Waldock. "The 150 day moving average is holding strong ... I think the health of the gold investor has gotten a lot better over the last week."

Silver prices have broken higher here following the London Fix at 10AM est. I would have some reluctance chasing price here however. The 10 day moving average had a bullish cross of the 20 day moving average this morning. I would like to see a test of the 10 day moving average, and possibly a dip to the 20 day before jumping in. A test of either of these averages would go a long ways towards strengthening the next move higher in Silver. It is however significant that Silver has broken through resistance [$29.38] at it's 61% retracement of the January sell-off, and cleared it's January swing high of 29.78. This is indeed a very powerful move by Silver, buy the dips.