Tuesday, May 10, 2011

CRIMEX Desperate, Have They TIghtened There Own Noose?

"It's true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process."
 -House Speaker John Boehner

If you read anything today, please find time to read this piece by Avery Goodman posted on Seeking Alpha yesterday.  The manipulative smashing of Silver prices last week has only made the short side situation for our criminal CRIMEX bankers worse.  Did these crooks really believe that marking down the paper price of Silver by 35% was going to destroy demand for this Precious Metal?  This is a MUST READ:

Anatomy of Silver Manipulation - How Low Can It Go?
By Avery Goodman
The so-called “spot” price is now largely irrelevant, but short sellers have still not acknowledged that fact to themselves. Intense physical silver demand continues. This is amply illustrated by continued backwardation. Dealers at COMEX and the LBMA may create fake prices at will, but the cash market is their achilles' heel. Short sellers have put paper silver on a fire sale at the futures exchanges. Yet they have not improved their position by doing so. They have, instead, insured a worse problem. Cash buyers put the fear of God in the hearts of silver manipulators. Cash buyers can put them into bankruptcy, destroy their power over the market, and discredit the futures markets, LBMA and the central bankers by inducing multiple defaults.

New “urban” myths about mysterious eastern billionaires buying up silver have spread quickly. On April 28, 2011, silver was selling for a high of $49 per ounce. The open interest had fallen to as low as 129,711 as short sellers slowly capitulated, and serious cash buyers took the bait. Allowing higher and higher fiat prices was effective in allowing open short positions to be closed, which is what short sellers must do before it is too late. On one day, for example, in early Asian trading, prices rose temporarily by over 10%. Asian short sellers were breaking ranks and buying back positions at any price. Then the bull-headed spirit of their European and American comrades awoke, and the current attack on silver prices began.

The market is NOT becoming dispirited or shell-shocked, as would have once been the case under similar conditions. Instead, we are seeing heavy buying by well capitalized long buyers who have probably read Andrew McGuire’s emails. They now know the score. They know that this is simply a manipulation event. As of May 5, 2011, the open interest had already risen to 134,804. The evil “Empire” is facing 5,093 new long positions. Two hundred sixty six of those are “same-month” positions, bought with a 100% cash, and need to be delivered this month.

Tens of thousands of other positions have changed hands. The trading “bots” managed to close most of their intra-day shorts into margin calls and stop loss orders, but have not accomplished much in terms of the level of open interest. Tens of thousands of existing contracts plus 5,093 additional hard long positions were unintentionally created by the trading bots, and all of these are now transferred from undercapitalized longs who would never have taken delivery, into much stronger hands.

The percentage of contracts, going forward, that will be forced into delivery as the months pass, will rise as a result of the transfer from weak to strong hands, and the silver short sellers’ problem is now bigger. New buyers have streamed in and bought at lower prices. That is the natural response of any bull market to a major manipulation event like this one. Silver is in a secular bull market. That has not changed as a result of a manipulation event. In fact, nothing has changed, except the unfavorable position of the silver short side manipulators, who are facing a much worse picture now than they did before they started this manipulation.

Price drop makes silver an even hotter investment in India

Chinese and Indian money "Buying the gold and silver bloodbath"

The "bloodbath" in Silver is, in the long run, clearly a bonus opportunity for Silver Bulls to buy Silver bullion "one more time" at fire sale prices.  We should not expect prices in Silver, or Gold, rise in a straight line back to their recent highs, but we should expect them to get there sooner, rather than later.

Gold goes into June delivery on May 30.  June is the second biggest delivery month of the year [December is number one].  Silver clearly has delivery issues this month of May, or we would not have had this severe manipulative take down in price in an effort to get longs to cough up their metal to meet demand.  I guess with the rise in demand because of the "sale price", the Silver shorts will have an even more difficult time meeting delivery demands in July.

The battle may have been won by the CRIMEX crooks, but the war rages on.  Success for our criminal bankers can only be measured by how long they can keep prices "down here".  Recent history suggests that no matter the initial success of criminal banker induced drops in Precious Metal prices, the resulting low price is short lived as rising demand for the metals on falling prices quickly overwhelms available supply.  The days of "long recoveries" to get back lost ground by the Precious Metals bulls are behind us.  The whole world knows the Precious Metals markets are rigged, and a quickly coming to the realization that the "jig is up".

James Turk - “Silver Will Hit New Highs in a Matter of Weeks”
So what is ahead for this current correction? Repeats of 2004 and 2006, or another 2008? My guess is none of the above. It took several months after these three previous corrections before silver climbed above the high price that preceded the correction. This time I expect silver will take only several weeks before exceeding $49.78, the 31-year high reached on April 25th. The reason?

As evidenced by silver’s backwardation, which began in January and continues to this day, the demand for physical silver has really accelerated. As a result of last week’s price decline, backwardation has roughly doubled in size. This is clearly a a signal of strong demand for physical silver, and further evidence of a point I have been making for some time, that the paper silver market is losing its significance as a price discovery mechanism.

Plenty of Dollar negative news this morning to put a smile on a commodity bulls face:

China trade gap widens to $11.43 billion in April
China's monthly trade surplus grew for the second month in a row, in April.

The world's second largest economy reported a whopping $11.43 billion surplus in April, up from its $1.68 billion surplus recorded in the same month last year, China's General Administration of Customs said Tuesday.

Exports rose 29.9% year-over-year to $155.69 billion in April, trouncing the December record, and imports rose at a 21.8% rate, to $144.26 billion.

U.S. import prices climb 2.2% in April
WASHINGTON (MarketWatch) — U.S. import prices climbed 2.2% in April, the Labor Department said Tuesday, marking the first time prices have climbed over 2% in consecutive months since June 2008.

The April advance follows the 2.7% jump in March and was stronger than the 1.6% gain that economists polled by MarketWatch had anticipated. Prices of imports are up 11.1% compared to April 2010.

Imported fuel, accounting for 80% of the April 2011 gain, shot up 6.7% on the month.

But excluding fuel, import prices also are up, rising 0.6% on the month and 4.3% over 12 months. Industrial supplies and materials accounted for most of that gain, the Labor Department said.

“We see the import price data as a clear and present danger on the inflation front — although it is a perspective that has not been shared by Federal Reserve Chairman Ben Bernanke,” said analysts at RDQ Economics. Bernanke has often said he expects the commodity price impact on inflation to be “transitory.”

Treasurys Prices Dip Ahead of New Supply
NEW YORK (Dow Jones)--Treasury prices edged lower Tuesday as investors positioned themselves for this week's sale of $72 billion in new U.S. debt.

Regional banks and hedge funds were among the sellers, traders said. As expected, three-year notes underperformed the market ahead of a 1 p.m. EDT $32 billion auction Tuesday. But their yields remain below 1%, leaving some market participants wondering whether a sufficient concession has been built to attract strong buying at the sale.

A concession is when market participants push down prices ahead of a debt sale, making the security more attractive at the auction.

"It's hard to love threes at 95 basis points...and we're less sure of outright interest with positions so neutral and yields so low," said David Ader of CRT Capital Group. The last four sales of three-year notes offered an average yield of 1.239%.

In early New York trading, the three-year was down 3/32 in price to yield 0.946%. Bond prices and yields move inversely.

Benchmark 10-year notes fell 7/32 to yield 3.168%, not far above the lowest yield level since December. The 30-year bond lost 10/32 to yield 4.320%. Both securities face their own batch of supply later this week, with $21 billion of new 10-years Wednesday and $16 billion of new long bonds Thursday.

Boehner opts for 'red meat' on debt ceiling
House Speaker John Boehner indicated Monday that he plans to hold a hard line in debt-ceiling negotiations.

Among his demands: Spending cuts in exchange for support to raise the debt ceiling -- and the cuts will have to be greater in magnitude than the ceiling increase.

"Without significant spending cuts and the way we spend Americans' money, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given," Boehner said in a speech at the Economic Club of New York. (Debt ceiling: What you need to know)

Boehner reiterated his stance that the spending cuts should be in the "trillions, not just billions" and that simply agreeing to spending and deficit goals for the future won't suffice.

"They should be actual cuts and real reforms to these programs, not broad deficit or debt targets that punt the tough questions to the future. And with the exception of tax hikes -- which in my opinion will destroy jobs --everything is on the table," Boehner said.

Import prices have now risen for seven straight months, how long is Bumbling Ben Bernanke going to continue explaining away obvious inflation as "transitory" [temporary]?  Where is the line when it comes to "temporary"?

The Chinese trade surplus is reported as a shock.  It should not be shocking at all.  It certainly is not going to be welcome by our conniving Treasury Secretary.  He will no doubt renew his demands for faster Yuan appreciation versus the US Dollar.  Of course should the Yuan rise, the Dollar will fall, and blow holes in Timmy Geithner's claim that the US supports a "strong Dollar".

There will be no strong Dollar as the US debt burden continues to escalate.  Another $72 BILLION of new debt will be added to the books in just this week alone.  And were it not for some "questionable" book keeping entries at the Treasury, this weeks debt offering will hurdle the current debt ceiling.

The debt ceiling debate is sure to bring serious pressure to bear on the US Dollar.  Recall the days leading up to the budget agreement that halted the threat of US Government shut down.  The debt ceiling debate will make that previous budget debate look like a carnival road show compared to what this coming Congressional battle royal over raising the debt ceiling is going to present.

The US Dollar may be technically due for a rally and strong bearish sentiment may support the need for that rally, but dead cats only bounce so far.

Silver and Gold have now both retraced close to half of their recent declines.  Selling pressure may resume here as overhead supply may begin to way on both in the very near term.  Do not be discouraged by a dip in price here.  A retest of recent lows would be beneficial to both Precious Metals moving forward, and help establish an interim low that the Bulls can build a base from, before moving higher in the weeks to come.

A dip towards $1480 in Gold should be bought vigorously if it holds.  A dip towards $35.50-36 should be bought vigorously if it holds.  Successful retests of recent lows should begin to clear some shorts from these markets, and invite the bulls back into the battle.  A base in Silver between $36 and $42 would be very constructive as would a base in Gold between $1480 and $1530.  That being said, a move above $42 in Silver and $1530 in Gold may signal a resumption of the long-term trend towards much higher prices in both Precious Metals.

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