Thursday, October 6, 2011

Eurozone QE Courtesy Of The US Federal Reserve

Shocking...  Prelude to a government sponsored Precious Metals massacre

CFTC lets Morgan get away with rigging silver market
By Ned Naylor-Leyland
On September 12th 2011, JPMorgan were served an explosive amended Class-Action lawsuit, detailing the individuals accusedof effecting the Silver manipulation and also the methodology used in doing so. The evidence within this document is exactly what the CFTC have sat on since the hearing of May 2010. With this incriminating evidence now in the public domain some very strange things took place. Firstly, the CFTC again decided to delay their vote on Speculative Position Limits, from October 4th2011 to October 18th. Then, on September 16th – 4 days after this lawsuit was served on JPMorgan - the CFTC released thefollowing on their website:

September 16, 2011
CFTC’s Division of Market Oversight Provides Temporary Relief from Large Swaps Trader Reporting for PhysicalCommodities
Washington, DC– The Commodity Futures Trading Commission’s (Commission’s) Division of Market Oversight(Division) today issued a letter providing temporary relief from the requirements of the Commission’s regulationsregarding large trader reporting of physical commodity swaps (§§20.3 and 20.4). Because this is the first time thatswaps data is being collected, this temporary relief is intended to provide sufficient time to enable both the industryand the Commission to develop and refine systems and processes that will be able to report these complextransactions.

On July 22, 2011, the Commission published large trader reporting rules for physical commodity swaps andswaptions. The rules require daily reports from clearing organizations, clearing members and swap dealers, andbecome effective on September 20, 2011. The letter issued today provides temporary relief from reporting, as long asparties are making a good faith attempt to comply with the reporting requirements, until November 21, 2011, forcleared swaps, and January 20, 2012, for uncleared swaps. Upon the conclusion of applicable relief periods, suchreporting parties must become fully compliant.

This extraordinary and inexplicable ‘free-pass’ from reporting by the CFTC allowed major players (such as JPMorgan)to go beyond speculative position limits so long as they ‘make a good faith attempt to comply with reporting requirements’. What this means in real terms is that the CFTC loosened reporting requirements – where previouslyany position beyond the concentration limit must be proven to be hedged elsewhere, no longer would this be thecase. Just 1 day after this ‘relief’ was granted, the Silver (and Gold) price went into a tailspin. How the CFTC thinks it is appropriate to continually delay the vote imposing the will of Congress with respect to position limits is anyonesguess, but to provide ‘temporary relief’ from reporting while the Silver manipulation is still under investigation ismalfeasance under any definition of the word. I look forward to seeing how higher Regulatory and Judicial authoritiesin the US deal with this behaviour by the CFTC, presumably the CFTC itself can look forward to being dragged infrontof Congress to account for itself.

Global QE is ALIVE & WELL

Load Up On Gold and Silver as Bernanke Dives Off the Deep End
By Martin Hutchinson, Global Investing Strategist, Money Morning
I first thought U.S. Federal Reserve Chairman Ben Bernanke was being deceitful when he denied the existence of inflation - but now I'm beginning to think he's simply delusional.

Anyone who watched or listened to Bernanke's Oct. 4 congressional testimony must have reached the same conclusion.

"Persistent factors continue to restrain the pace of recovery," Bernanke said. Then the Fed Chairman promised to consider yet more stimulus "to promote a stronger economic recovery in a context of price stability."

The irony, of course, is that we don't actually have price stability, but Bernanke refuses to believe this - thus the added stimulus. And that says nothing of the fact that the first $2 trillion of "stimulus" did little or nothing for the overall economy.

This is the same kind of delusion that led the Fed Chairman to proclaim in 2007 that the "the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained."

So, with a delusional central bank chairman, an anemic economic recovery, and every indication that prices across the board will continue to soar higher, there's really only one place to put any loose change you have lying around: gold and silver.

So far the only thing the Fed's loose monetary policy has succeeded at doing is pushing gold and silver prices steadily higher.

Gold has risen by more than 30% this year, and silver at one point in April was trading 300% higher than it was a year earlier.

These metals have stumbled lately, but with over-expansive monetary policy still intact, they are likely to experience a strong rebound.

Remember, it's not just Bernanke: The European Central Bank (ECB) also has stopped raising interest rates because of the Eurozone's problems. And the Bank of England (BOE) has indicated that it may well drop rates from their current 0.5% level - even though British inflation remains around 5%. The undeniable result will be a renewed surge in gold and silver prices, meaning the present pullback is an outstanding buying opportunity.

If gold matches its 1980 peak adjusted for inflation, it will hit $2,500 an ounce. If it matches its 1980 peak adjusted for the world economy's growth since then, it will hit $5,000 an ounce. Similarly, if silver were to match its 1980 peak adjusted for inflation, it could climb as high as $150 an ounce.

Ranting Andy makes it clear QE is not just Bumbling Ben Bernanke:

Today the Bank of England left interest rates at 0.5% this morning and announced a new 75 billion pound QE program, or roughly $120 BILLION. Given that England’s economy is just one-seventh the size of America’s, their announcement is the equivalent of the Fed announcing an $840 BILLION QE3 program.

Similarly, the ECB left rates unchanged at the piddling level of 1.5%, only doing so because it is compromised in trying to maintain Germany’s support of the PIFIGS banking system. Irrespective, under the radar it, too, announced another 40 Billion Euro, or $55 BILLION QE program to buy ECB sovereign bonds, and per comments all over the tape this past week (including from Germany), is ready, willing, and able to save any and all banks with more PRINTED MONEY BAILOUTS.

Yet Bumbling Ben assures that there is no inflation here in the US...

BOE King: UK Inflation Likely To Peak Above 5% Next Month
LONDON (Dow Jones)--Inflation will likely peak at above 5% in November, Bank of England Governor Mervyn King said Thursday.

"The number for inflation that we'll see published in two weeks' time is likely to be over 5%. But that, we think, is the peak," King said in a television interview with broadcaster ITV.

"We are past the worst. And from now on, we should be in a position where slowly but gradually living standards, real take-home pay, will be able to pick up. That's the world we want to get back to," King said.

The BOE's Monetary Policy Committee voted Thursday to expand the central bank's bond buying program by GBP75 billion to GBP275 billion, in an effort to aid the U.K.'s faltering economy. It also kept its key interest rate unchanged at 0.5%, a record low.

The central bank said the U.K. economy is threatened by a slowdown in global activity and the sovereign debt problems of the euro zone. Official statistics published Wednesday showed the U.K. economy expanded just 0.1% in the second quarter.

"I can't guarantee that the world economy won't change in a way that will make our position very difficult," King told ITV.

"But what I do know is taking this measure will make it better than it would have been otherwise. This is the right thing to do and it will improve the position of the U.K. economy."

QE goes global, and inflation is obvious...except to our delusional Fed Head.

Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street
By Robert Reich
Today Ben Bernanke added his voice to those who are worried about Europe's debt crisis.

But why exactly should America be so concerned? Yes, we export to Europe -- but those exports aren't going to dry up. And in any event, they're tiny compared to the size of the U.S. economy.

If you want the real reason, follow the money. A Greek (or Irish or Spanish or Italian or Portugese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008.

Financial chaos.

Investors are already getting the scent. Stocks slumped to 13-month low on Monday as investors dumped Wall Street bank shares.

The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That's no big deal.

But a default by Greece or any other of Europe's debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.

That's where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.

The Street's total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.

And it's not just Wall Street's loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe -- on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.

Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down.

That's why shares of the biggest U.S. banks have been falling for the past month. Morgan Stanley closed Monday at its lowest since December 2008 -- and the cost of insuring Morgan's debt has jumped to levels not seen since November 2008.

It's rumored that Morgan could lose as much as $30 billion if some French and German banks fail. (That's from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.)

$30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.)

But Morgan says its exposure to French banks is zero. Why the discrepancy? Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them. So Morgan feels as if it's not exposed.

But does anyone remember something spelled AIG? That was the giant insurance firm that went bust when Wall Street began going under. Wall Street thought it had insured its bets with AIG. Turned out, AIG couldn't pay up.

Haven't we been here before?

Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong. The fact no one seems to know Morgan's exposure to European banks or derivatives -- or that of most other giant Wall Street banks -- shows Dodd-Frank didn't go nearly far enough.

Regulators still don't know what's happening on the Street. They have no clear picture of the derivatives exposure of giant U.S. financial institutions.

Which is why Washington officials are terrified -- and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations.

Several months ago, when the European debt crisis first became apparent, Wall Street banks said not to worry. They had little or no exposure to Europe's problems. The Federal Reserve said the same. In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was "quite small."

Now we're hearing a different tune.

Make no mistake. The United States wants Europe to bail out its deeply indebted nations so they can repay what they owe big European banks. Otherwise, those banks could implode -- taking Wall Street with them.

One of the many ironies here is some badly-indebted European nations (Ireland is the best example) went deeply into debt in the first place bailing out their banks from the crisis that began on Wall Street.

Full circle.

In other words, Greece isn't the real problem. Nor is Ireland, Italy, Portugal, or Spain. The real problem is the financial system -- centered on Wall Street. And we still haven't solved it.

The answer is so simple: TARP - EuroStyle

EU Says It "Will Propose" Bank Recapitalization Action
BRUSSELS (Dow Jones)--The dire situation facing Dexia S.A. (DEXB.BT) and rising turmoil in financial markets have convinced European Union authorities that more forceful action is needed to shore up the bloc's banking system.

Just last week, European officials said the 24 banks that failed or came close to failing this summer's stress tests might need more capital--but that other banks are in good shape and shouldn't need more help.

One of the banks given a clean bill of health was Dexia, the Belgian-French lender that will almost certainly be broken up in the coming weeks. Dexia is facing a liquidity squeeze, sparked by a warning by Moody's Investors Service Inc. on Monday that the bank's heavy reliance on wholesale funding and its large euro-zone sovereign debt portfolio threaten its stability.

Dexia's problems, combined with levels of economic pessimism and fear not seen since the collapse of Lehman Brothers three years ago, have led officials to concede that governments will need to prepare to recapitalize banks beyond the 24 identified as shaky by the stress tests.

"There is a change of course," said an EU official. "The Dexia situation is not an isolated incident, as some would like to believe. We could have more Dexias in the short or medium-term."

The European Commission, the EU's executive arm, will propose "coordinated action" on the recapitalization of banks in the EU, a spokesman said Thursday.

The "commission will propose coordinated action on bank recapitalization to member states," a spokesman for the commission's President Jose Manuel Barroso said during a regular press briefing.

"We now need to take a step beyond [the finalization] of the process of cleansing balance sheets of impaired assets, which has been under way since 2008," he said.

It's still unclear what the commission's proposals will be. One option, the EU official said, would be for national governments to strengthen the "backstops" for banks that they are supposed to have in place. The commission is also seeking to improve coordination between governments over how to deal with problems at large cross-border banks that are common in Europe.

Fighting between Belgium and France over how much of Dexia's debt guarantees will be provided by each country shows the process still needs to be improved three years after the rash of EU bank failures following the collapse of Lehman Brother, the official said.

...and the price of Gold doubled following TARP - USA Style. 

Could the bottom be in for Gold and Silver prices as physical supply continues to disappear?

Physical silver running out because its spot price does not reflect true investment demand
By: Peter Cooper, Arabian Money
Several readers of ArabianMoney have written to us over the past two weeks to express their astonishment at the current price of silver because demand where they live is so high that stocks have run out.

Consider this comment: ‘I used to buy silver from a shop in Kobar in Saudi. From the last four weeks they said they ran out of silver. I cannot find anyone who sells silver in Saudi now. I asked them from where do they get their silver. They said the UAE. The problem is they only have 1kg bars…and I still cannot find any supplier.’

No stock

Well don’t bother coming to the UAE. Our information is that the 1kg bars mentioned here and featured in a video on the website last month (click here) are all sold out too. We’ve also had feedback about low or no stock in Texas and Australia from big private bullion dealers there.

Now what would normally happen when a commodity is in short supply is that the price would go up to encourage sellers to put some more into the market. That is presently not happening because the silver price is being artificially suppressed in the Comex futures market by the bullion banks acting on instructions from the Fed presumably, so why would you sell that silver cheaply if you happened to own some?

But something has to give and it is the price of physical silver rather than the Comex price of the shiniest of metals. If you can find any silver these days you will pay quite a substantial premium over the spot price. But pay it because that is probably still a bargain compared to where silver prices are going.

The truth is that silver is a rare metal, more rare than gold. Silver reserves have been estimatated at one-hundredth of gold reserves. Silver is after all consumed by industrial processes and reserves have dwindled over the years because the price has been kept so low for so long by market manipulation. Why is that?

Silver price fixing

This market manipulation dates back to the last silver boom of the late 70s and the spectacular $50 spike in the price in 1980. The central banks then saw suppression of the silver and gold price as a part of their war on inflation. They clearly lost that war but kept gold and silver prices down until this decade.

Thirty-one years later and we are still not back to those silver prices despite a seven-fold increase in the global money supply. On that reckoning silver ought to be $350 an ounce, not $30 today.

However, the snap back for silver prices now has the capacity to be sensational, and far beyond the mini-spike in the first few months of this year from $30 to almost $50 again. So those who go seeking out physical silver to buy at current prices are going to be very well rewarded and soon, not in 31 years!

1 comment:

  1. More people need to leave comments. This website is awesome.

    The cftc is a term I use to describe the front group for the greatest crime in progress of all time. The cftc isn't in the middle they are on the side of the shorts. Everything and I mean everything they have done and haven't done in the last few years should leave no doubt in any half way intelligent person that writing the cftc is useless and may put your ass on a watch list.