Tuesday, November 29, 2011

MF Global: The Straw That Breaks The CRIMEX Back?

Bill Murphy commented this afternoon in his Midas Report on these silly Precious Metals Markets:

A weaker dollar is usually given as THE reason for strength in commodity markets. Today it is given for early softness. Makes no sense at all.

With the DOW so much higher, the dollar weaker, and commodity markets higher, gold and silver should have followed through on the upside much better than they did. Why not?…

*The Gold Cartel capped the precious metals rally yesterday and was there again at the same levels.

*That said, it appears they were covering their positions extensively before the capping started once again. On yesterday’s surge the gold open interest went down 12,293 contracts to 426,181. The silver open interest dropped 5135 contracts to 99,056. Specs are getting out of long positions before tomorrow’s first notice day for December rather than rolling over their positions.

*Given the general news background, which is so gold friendly, this is a bit bizarre. Then again, there is the MF Global issue. Who wants to play in a casino that openly robs you and their regulators do nothing about it?

A number of us thought December could be quite the explosive month. The MF Global nightmare defused that possibility for sure. The open interest in both gold and silver has really tanked.

If all that is the case, then the potential for price explosions has grown substantially and still might be right around the corner … once the first notice day selling concludes. It all fits. The fundamentals are super bullish, the specs have fled the futures market on the long side, sentiment is TERRIBLE, and the gold/silver share investors are as demoralized as any time in the past decade.On that sort of note, James Mc…

Small spec shorts gone wild

Lost in the U.S. Thanksgiving holiday shuffle was another HUGE jump in the OI by the small spec gold shorts. They amazingly piled on another 12,993 short contracts as of the November 22nd report. Coincidentally (or not) the large commercial shorts reduced their short OI by a similar 12,246 contracts. This is very peculiar, and I can't ever recall such intense shorting of gold by (alleged) small spec traders. Since last Tuesday was nearing the bottom of the op. ex. gold raid they may be getting set up to get creamed this time around. If they manage to pull off another Hail Mary trade like the last time I'd definitely say there's something fishy going on. The next few days up to, and after FND may be their last chance to escape with their hides.

The small spec silver shorts also added a rather large 1,732 contracts. Keep in mind both of the additional gold and silver shorting was largely done AFTER the CME went back to full margins on all contracts. I guess the little guys are feeling flush and lucky after their last round of windfall trading profits. Hey, baby needs a new pair of shoes for Christmas. Either that or JPM Has found a new home for the ... "missing" MF client money. How bizarre would that be, stealing client's margin funds to use to go short against them?
James Mc

??? Yesterday both the AM and PM Fixes were the same at $1714. Today they were both $1717.

Gold ended higher and silver lower in a very choppy trading session.

In a blog post on Friday, November 18, 2011 I commented:

"DO NOT discount that the fallout from the MF Global fleecing of customer accounts is playing a very big part in the drying up of global liquidity. This MF Global fiasco is going to prove to be a long and pervasive story. Confidence in the "system" stands to take a huge hit because of this bankruptcy, and the SEC and CFTCs negligence in allowing it to occur."

Understand this:

The MF Global bankruptcy is no small tremor in the ongoing Global Financial Crisis...IT IS A SEISMIC EVENT!  Ultimately, "this crime", is going to lead to the complete unraveling of the CRIMEX and it's foundation of fraud. 

History will not be kind to MF Global and it's Goldman Sachs connected CEO John Corzine. 

Greek Debt Default may be the end of the beginning of the Global Financial Crisis, MF GLOBAL will be recognized as the beginning of the end of the Global Financial Crisis.  2012 WILL NOT BE PRETTY.

...a layman's explanation of the MF Global collapse by the producers of the "Silver Bears"...

No Laws Were Broken
By Greg Hunter’s USAWAtchdog.com
Last week, I wrote a piece called “False Narrative.” I was stunned by a comment from a guy named Jim that said, “It amazes me that you maintain the narrative of the “guilt” of private business that asked for consideration from Congress and the president and it was granted. Nobody has gone to jail because no laws were broken.” This is the most false of the false narratives. The 2008 meltdown is 70 times bigger than the S&L crisis of the 1980’s and early 1990’s. Back then, more than 1,000 financial elites were convicted of felonies. According to Professor William Black, the reason why we have “recurrent intensifying crises . . . is these epidemics of fraud from the C-Street—from the CEOs and CFOs.” Professor Black holds duel PhD’s in economics and law, but he is not just some run-of-the-mill academic. Professor Black is also a former bank regulator who spearheaded the cleanup of the S&L crisis. In a speech Black gave last week, he said, “In the Savings and Loans crisis, the inevitable National Commission said that fraud was invariably present at the typical large failure. In the Enron era, always frauds from the very top of the organization, and in this crisis the frauds came from the very top of the organization again. But what’s different in this crisis? In this crisis, the same agency that I worked with that made over 10,000 criminal referrals in a tinier crisis made zero criminal referrals. They got rid of the entire function. And so there are zero convictions of anybody in the elite ranks of Wall Street. And if they can defraud us with impunity they will cause crisis after crisis and they will produce maximum inequality. . . . And that’s why we have a crisis and it came from the very top of these organizations, and it went through—as the FHFA said in its complaint—the largest banks in the world were endemically fraudulent. It is not a few rotten apples. It is an orchard of one percenters who are rotten to the core.” (Click here to read his complete speech.)

Don’t believe the professor, then how about the “maestro” Alan Greenspan. The former Fed Chief admitted the system was fraudulent and needed to be cleaned up last November. He said, “If you cannot trust your counter-parties it won’t work and . . . it didn’t.” He was sitting on set with Ben Bernanke when he said it. Look at the video below, and watch Mr. Bernanke’s face when Greenspan dishes the dirt.

Look at the latest blowup with MF Global. There is more than $1 billion of segregated customer funds missing and not a single criminal charge. Does anyone think Jon Corzine is going to get prosecuted? I’ll be shocked if he is because he has friends in high places including the White House.

Just because nobody has gone to jail doesn’t mean everything is going to be ok and we all get a free pass. According to Karl Denninger at Market-ticker.org, the markets will be the ultimate regulator. Denninger wrote last week, “Without enforcement of the law — swift and certain — there is no deterrent against this behavior. There has been no enforcement and there is no indication that this will change. It will take just one — or maybe two — more events like MF Global and Greek CDS “determinations” before the entire market — all of it — goes “no bid” as participants simply stuff their hands in their pockets and say “screw this.” It’s coming folks, and I guarantee you this: Whatever your “nightmare” scenario is for such an event, it’s not bearish enough.” (Click here for the complete Denninger post. It’s really good!)

You cannot have a thriving economy that is shrouded in fraud and mistrust. Crimes continue to go unpunished, and mistrust is growing. No bailout, no matter how big, will ever fix that.

You Cannot Build a Financial System on Rumors and Lies

This is not a monetary Crisis; it is a Crisis of values and morals. It is a Crisis caused by the notion that you can lie about virtually everything pertaining to a business deal (the quality of the assets, who owns them, whether they’re even legitimate, etc) and get away with it.

To review how we go into this mess, Wall Street and other industries lobbied Congress to loosen regulations. However, the secondary nature of those lobbying efforts was it trained Congress to see Wall Street as the hand that feeds, thereby making it unlikely for Congress to prosecute or pursue any criminal activity on the part of the bankers.

Take away consequence and rules and you have anarchy. And that’s virtually what we had in the Financial System leading up to the Crisis. Looking back on some of the more glaring situations (AIG, Goldman Sachs, etc) it’s simply amazing the whole mess didn’t blow up sooner.

The Federal Reserve and regulators then blew a one in 100 years opportunity to reform the system. We’re now finding out that instead of doing anything positive, Bernanke literally gave away TRILLIONS of Dollars to the banks.

In simple terms, the Fed engaged in the exact same business practices that blew up the mortgage lenders: giving money away without inquiring as to the borrowers real financial position or needs.

By doing this, the Fed spread the lies (and toxic debts) onto the public’s balance sheet, thereby compromising the Republic’s creditworthiness.

In plain terms, Bernanke extended the Big Lie: that those working in the financial sector are the smartest, most capable people on earth and that they know what they’re doing (even though they almost blew up the system).

Which brings us to today.

The whole system is now built on lies. The lie that banks are solvent. The lie that the Federal Reserve actually cares about regulating the financial system. The lie that crimes will be punished. The lie that Congress will reform Wall Street. The lie that we’ll get “change” at the ballot box.

And on and on.

You cannot build a financial system on lies. It simply doesn’t work. All it does is breed distrust and resentment. And as any businessperson can tell you, without trust business cannot work.

Just When You Think It CAN'T Get Uglier Out There...

Before I get started on what I had intended to post, I want to present two items of acute interest. First, I hope everyone - Democrat or Republican - is aware of just how tight Jon Corine is with President Obama and the Obama White House insiders: LINK Not that it will matter for the Presidential race because the leading Republican candidates are thoroughly unelectable, but I sincerely hope that the conservative media makes Obama wear Jon Corzine the way that Republicans made Michael Dukakis wear Willy Horton in the 1988 Presidential race vs. George H. Bush (everyone remember that?). I am sure that we are not seeing immediat investigative actions being taken on Corzine because of his inside connections to Obama. He's not even scheduled to appear before Congress until next month. If this were a drug-dealer busted in Harlem, this case would already be before the magistrate and the perp would be waiting for his trial in jail.

Second, many of you have read this by now, but here's a textbook example of the ways in which the insider elite and those connected to the insiders are raping our system wholesale and stealing what they can, while they can:

"How Paulson Gave Hedge Funds Advance Word" LINK The article goes on to describe how Henry Paulson - then Secretary of the Treasury under George W Bush - met with several large hedge fund managers - many of them Henry Paulson cronies from Goldman Sachs - and revealed the Government plans for bailing out Fannie Mae and Freddie Mac - several months before the bailout actually occurred.

Some bird-brain professors are quoted in the article as saying that this is not inside information, but that is total horse shit. If I had possession of that information when Paulson doled it out to his buddies, I would have gone out bought up every single discounted Fannie Mae and Freddie Mac bond I could find and I would have leveraged those purchases with as much money as I could borrow. I'm sure the trading records of those at the Paulson insider trading pow-wow will never be investigated. What Paulson did was unequivovally illegal and he won't be prosecuted for it. Hell, Bush signed an executive order that gave all of his cabinet members a perpertual get of jail free card. Obama was supposed to repeal that EO but never did.

This shit just keeps piling higher and higher...quite frankly, I have become unusually doomish and gloomish in my outlook for what is coming our way. And the outright fraud, corruption, raping and pillaging and theft that is actually being enabled by our Government is an obvious signal to me that very bad things are headed our way...

In fact, I'm so disgusted by the information and implications of the two above articles that I'm going to abbreviate my original post. In short, the market yesterday was all giddy about the Black Friday sales estimates and the new home sales. However, everyone should know that when the real numbers are tallied, there will be substantial downward revisions of the Black Friday initial sales estimates. In fact, one of the widely reported sales reports is based on measured foot traffic at malls not based on anything concrete, like money going into the cash register. For those of you who didn't see it, here's a fantastic summary why the Black Friday initial sales numbers are nonsense: LINK Moreover, it was pointed out today that every year more and more stores participate in Black Friday. In fact, many of them open up either at midnight or before midnight. This makes year over year same-store-sales metrics - which are the relevant numbers if you want to see real growth - impossible. Furthermore, it is highly likely that the pervasiveness of sales deals and give-aways has "pulled" a substantial portion of holiday budget spending into Black Friday and the ensuing weekend, which means that it is likely that overall sales for the entire holiday period will be anemic at best. After all, we have seen that real monthly income for workers has been declining and consumers are cutting back on credit...who is left to spend?

Regarding my gloomy outlook - look at it this way: this country is not capable of dealing with the economic and standard of living plunge that would occur IF the Government were to implement the type of policies and spending cuts required to fix the system. Just think about the implications for joblessness and the massive increase in poverty that would occur if the Government were cut itself down by the at least the 50% required to start balancing real spending. This country would look like a 3rd world country on steroids. So that being the case, the people on top and inside know this so they are looting what they can, while they can. And no one is around to stop this because the people who were voted into office to enforce the laws - of the people, by the people and for the people - are the same ones who are engaged in the mass looting of our system.

Your best shot at seeing what "the other side" of what is coming will look like is to move as much of your wealth as you can into physical gold and silver - NOT GLD, CEF or PHYS (unless you have enough money to take delivery of 400 oz bars and a place to store them safely). This includes liquidating as many of your retirement fund accounts as you can (obviously if you have a 401k and currently work at your 401k provider, you can't liquidate that). Beyond that, sailing away from this country on a boat, the way my buddy did who introduced me to the precious metals 10 years ago, is your best option.

SocGen Sees $600 Billion QE3 Starting In March 2012 Sending Gold Up Between $1900 And $8500/Oz
From ZeroHedge
SocGen has released its much anticipated Multi Asset Portfolio Scenario/Strategy guide titled simply enough "Patience: bad news will become good news" where, as the insightful can guess, the French bank makes the simple case that the worse things get, the stronger the response by global central banks will be. Here is the key quote for those worried that : "A major liquidity crisis should not occur this time, as we think we are on the eve of major QE in the UK, US and (a bit) later on in the EZ." We don't disagree and if there is anything that can send BAC higher it will be the announcement of QE3. Of course, BAC will first drop to a $2-3 handle so question is who has the balance sheet to hold on to the falling knife. The next question is "How big will QE3 be"? Well, according to SocGen, the Fed will preannounce it in the January 2012 FOMC statement, the monetization will last from March 2012 until the end of the year, and will buy a total of $600 billion. We believe the actual LSAP total (not to be confused with the "sterilized" QE3 known as Operation Twist) will be well greater, probably in the $1.5 trillion range as the Fed will finally say "enough" to piecemeal solutions. As to what to do, besides going long some financial stock and hoping it is not the one that is allowed to fail, SocGen has some simple advice: "Buy gold ahead of QE3 as money creation has a strong impact on prices" - in other words just as we suggested yesterday courtesy of the Don Coxe correlation chart. Why gold and not BAC? Because, "Gold is highly sensitive to US QE, as every dollar of QE goes into M0, triggering the debasement of the USD. Gold = $ 8500/Oz: to catch up with the increase in the monetary base since 1920 (as it did in the early 80s). Gold = $1900/Oz: to close the gap with the monetary base increase since July 2007(QE1+QE2)." So go long a bank that may well go bankrupt and return nothing before it at best doubles, or go long a real asset, which will always have value and may quadruple in short notice? The answer seems simple to us...

From SocGen:

A combination of weak Q1 2012 GDP and softening inflation could push the Fed to another round of monetary expansion.

SG economists look for a two-step easing process:

1) In January 2012, a major announcement with the Fed promising to keep rates at zero until unemployment falls below 7.5% or inflation moves above 3% on a sustained basis.

2) In March 2012, the announcement of another round of QE. We expect the next round of QE to be concentrated on MBS purchases and be worth about $600bn over six to eight months. This would increase the Fed’s securities portfolio from currently $2.65trn to $3.25trn by the end of 2012.sustained basis.

Currency Wars: The Anglo-American Century and Why the Financial Engineers Hate Gold and Silver
From Jesse's Café Américain
'Nominal GDP targeting' is a way of raising the Fed's inflation target without admitting to it explicitly.

Nominal GDP means that one can meet their growth target simply by inflating the money supply to make up the difference between 'real growth' and 'headline growth.'

NGDP targeting is so obvious and clumsy that I doubt that the Fed will try and hide their future monetization of the debt under such a small fig leaf, as Jim Rickards suggests. I think the monetization is already occurring in the Eurodollar markets, and an ongoing stealth bailout of European debt, in order to save the big money center banks at home.

John Williams: Hyperinflation Warning, Preserve Value with Gold
Source: JT Long of The Gold Report (11/28/11)
Among the specters lurking in ShadowStats.com's Editor John Williams' gloomy outlook for the U.S. are the demise of the dollar, hyperinflation and the ongoing lack of political will to take sound corrective measures. Still, as he tells The Gold Report in this exclusive interview, investors have options. Williams contends that turning to gold, silver and strong foreign currencies would protect wealth and position savvy investors to take advantage of extraordinary opportunities likely to flow out of the turmoil ahead.

The Gold Report: When we talked in May, you predicted that hyperinflation could be a reality as soon as 2014, something you addressed at length in your Hyperinflation Special Report. Have six months of euro debt crises, Middle East revolts and U.S. Treasuries' downgrading altered your outlook?

John Williams: Not a bit. We still seem to be moving down that road to a relatively near-term break toward hyperinflation. The most important thing that's happened since we last talked was the global response to the U.S. legislators' negotiations over the debt-limit ceiling and the deficit reduction problems at that time. Clearly, no one controlling the White House or Congress was serious about addressing the nation's long-term solvency issues. That sparked a panic selloff on the dollar against currencies such as the Swiss franc, and of course gold, which made the gold price rally sharply.

TGR: Did the politicos learn anything from those "negotiations," as you just described them?

JW: Not at all. In fact, I'll contend that everything that's happened since then has been just a playing out of what resulted in a complete collapse in global confidence in the dollar. The ensuing rapid shift of market focus to crises in the euro area was really more of a foil to distract the global markets from the dollar. Following that horrendous performance by Congress and the White House, the global markets indicated a major loss of confidence in the dollar that had been coming. I think that's now established and in place. The dollar is doomed to lose its reserve status eventually, and any day now, we may see things heat up again over the deficit negotiations.

TGR: What steps would we see on the way to the dollar losing its reserve status?

JW: Probably the biggest thing would be heavy selling pressure against the U.S. dollar, along with a spike in the stronger currencies such as the Swiss franc. The more the pressure builds for selling of the dollar, the more expensive and disruptive it will be for the Swiss National Bank to keep supporting the euro so I don't think that intervention will last long.

As heavy selling of the dollar develops against the Swiss franc, the Canadian dollar and the Australian dollar, and the gold price rallies, we'll see a very strong effort by those who are dependent on the dollar--such as the Organization of the Petroleum Exporting Countries (OPEC)--to have the dollar removed from the pricing of oil. Along with that will come a movement to change the dollar's reserve status.

TGR: If other countries start demanding payment in alternative currencies, how can investors protect themselves against a shift from the dollar standard?

JW: I'm not a day-to-day timer in this. My outlook has been consistent that we're heading into U.S. dollar hyperinflation, and the effective purchasing power of the currency as we know it will disappear. If you're living in a U.S. dollar-denominated world, you don't want to be in dollars--you want to move to protect the purchasing power of your assets, your wealth.

To do that, I look very specifically at physical gold, preferably gold coins and silver, and assets outside the U.S. dollar. The currencies I like the best are the Swiss franc, the Australian dollar and the Canadian dollar. This is something you do for survival over the long haul because you're likely to see all sorts of volatility in the short term.

But once you ride through the storm, if you've been able to preserve your wealth and assets in terms of their purchasing power and to maintain liquidity--which the physical gold and the currencies will give you--you'll be in a position to take care of yourself and take advantage of some extraordinary investment opportunities that likely would flow out of the turmoil ahead.

In the interim, I wouldn't start betting that next week we're going to see the dollar do this or that. This is a long-term hedge strategy, an insurance policy against the hyperinflation that I view as inevitable due to the long-range insolvency of the U.S.

TGR: Is that long-range insolvency also inevitable?

JW: Severely slashing social programs such as Social Security and Medicare would be the only way it could be avoided. I don't have any problem per se with Social Security or Medicare, but you can't bring things into balance without addressing them. If you look at the U.S. annual deficit on a GAAP basis--generally accepted accounting principles--with accounting for the year-to-year change and the net present value of unfunded liabilities in Social Security, Medicare and such, you're seeing a federal deficit in excess of $5 trillion per year.

Putting that in perspective, if you wanted to raise taxes, you could take 100% of people's salaries and the government would still be in deficit. You could cut every penny of government spending, except for Social Security and Medicare, and you'd still be in deficit.

You can't escape the eventual hyperinflation if those programs are not addressed. Originally, I was looking for hyperinflation by the end of this decade. I've advanced it to 2014, and it may well come before that. I think we're already in the early stages of going through what has to happen for this to break.

TGR: But would politicians touch those entitlement programs in an election year?

JW: No one wants this, but the federal government and the Federal Reserve have backed us into a corner and there's no other way of escaping. There's no political will to address the long-range insolvency, so they kick the proverbial can down the road. They did that in 2008. They did everything they could to prevent a systemic collapse by creating, spending and guaranteeing whatever money they had to.

We're coming to another point where we face risk of systemic collapse, and we're likely going to see another round of quantitative easing (QE) as a result. That also could pull the trigger for massive dollar selling, moving us into much higher inflation. That will start the final process.

TGR: One of your recent newsletters showed that annual core inflation had risen for 12 straight months, ever since QE2. What would QE3 do to some of the indicators you watch--gold, silver, commodities?

JW: Gold tends to anticipate the inflation problems. All sorts of factors hitting gold create tremendous volatility, but generally it will continue to move higher as the broad crisis deepens. Then as we get into the high inflation, it will start soaring. People have to keep in mind that they're preserving the purchasing power of the dollars that they put into gold. If gold gets up to $100,000/ounce (oz) as you start breaking into the hyperinflation, and they bought gold at $2,000/oz, it isn't that they made $98,000 per ounce. Instead, they've maintained the purchasing power of the dollars they put into gold.

They've also lost the purchasing power of the dollars that they didn't put into gold or some other hard asset. That's a different view than most people look at with investments, but this is not a normal investment environment. Again, this is one where you batten down the hatches and look to preserve wealth and assets, as opposed to trying to make money day to day in the markets. Once you have your basics covered, then you take gambling money and go play Wall Street's casino.

As to core inflation, the Fed likes to ignore energy and food prices, using the rationale that those prices are too volatile and don't hold over time. Yet, oil is probably the most important single commodity in terms of domestic inflation. Not only does it hit basic energy costs, but it also affects the cost of transportation of all goods. Beyond what is defined as basic energy costs, oil is also the basic raw material for many products, ranging from chemicals to fertilizers to pharmaceuticals and plastics.

As oil prices rise, the Fed just takes out the energy component in so-called core inflation. But the inflation still spreads to the broader economy. When they started to jawbone on QE2 in October of 2010, year-to-year inflation on a core basis was at 0.6%. In the consumer price index reporting of October 2011, despite a drop in the gasoline prices, core inflation was at 2.1%. In response to QE2, gold rose against the dollar and the dollar weakened against other currencies. The weaker dollar, in turn, spiked oil prices. The higher oil prices spiked gasoline prices and broader inflation, which still is boosting consumer inflation in the U.S.

With the next round of Fed easing, the dollar problems will intensify again. That will put new upside pressure on oil and gasoline prices, further intensifying the spreading broad inflation pressures in consumer goods and services.

The Fed's mandate from the government is to try and sustain reasonable economic growth and contain inflation. From the Fed's standpoint, however, those are secondary to maintaining the solvency of the banking system. Nothing in the outlook for the system has changed meaningfully since the crisis in September 2008. The banking system still is in a solvency crisis, the economy continues to worsen and we've had no real recovery. The stopgap measures to prevent collapse of the system did nothing but kick the crisis a little further into the future, and now, we're coming to peak period of crisis again.

TGR: You've repeatedly said that the global economic crisis is not Europe's fault but part of a pending systemic collapse that started with the manipulation of the U.S. financial markets--the moves you've been talking about. What countries or sectors will suffer the most if the crisis continues?

JW: The more closely they're tied to the dollar, the greater the inflation impact will be in other areas, but the runaway inflation I'm talking about will be largely in the U.S. and for people living in a U.S. dollar-denominated world.

That's from an inflation standpoint. Yet, it also will have an extremely negative impact on the U.S. economy, and problems in the U.S. economy indeed will have a global impact. The U.S. economy is still the largest in the world, and you can't push it deeper into a depression without having negative economic consequences outside the U.S.

But while the global economic problems will worsen, systems can ride out bad economies. We can't ride out a hyperinflation because the currency becomes worthless. That's an ultimate crisis that forces a resetting of the system.

TGR: Can Europe or China do anything to counteract what's going on in the U.S.?

JW: Dump the dollar. China needs to delink from the dollar, and it will be forced to do so. It's importing inflation. If China doesn't want that inflation problem, all it has to do is cut its link with the dollar, and oil suddenly becomes a lot cheaper.

TGR: But how practical would it be for China to sell off all the U.S. dollars and U.S. Treasuries it holds?

JW: In terms of insulating itself against U.S. inflation, all China has to do is delink its currency from the U.S. dollar. That's true of other currencies as well. The Swiss franc is artificially linked to the euro now, but because of the general weakness in the dollar, it's ironically also intervening to support the dollar against the euro.

Whenever major holders of dollar-denominated assets decide to sell those assets, that will determine how large a loss they will take on the U.S. currency.

TGR: Will the euro survive?

JW: I wouldn't bet on a long-term survival of the euro, but I think it will survive the current crisis as long as its survival is needed to prevent a systemic collapse in the U.S. The Fed will do whatever it has to do to keep Europe's problems from imploding the U.S. banking system. It can create whatever money it wants to do that.

Long term, I would not look at the euro as surviving in its current form. The loss of the dollar eventually will force a reexamination of the global currency structure. That might be a time when other currency disorders get resolved and we may see the euro break up. It was never practical to think that all the countries within the euro would be able to align their economic and fiscal policies in a way that would enable them to operate together. The euro was doomed from the beginning.

TGR: Let's go back to gold. According to your research, the September 2011 high of $1,895/oz gold was below the historic high of $850/oz in 1980, if the 1980 figure was adjusted for inflation. The $850/oz in 1980 would have equaled $2,479/oz in Consumer Price Index--all Urban consumers (CPIU)-adjusted dollars, or $8,677/oz Shadow Government Statistics (SGS)-alternate-CPI-adjusted gold prices in 2011. Is gold underpriced if you put it into that context?

JW: On that basis, yes, it is. It also depends on when you measure it. My hyperinflation report looks at what has happened to the dollar over a longer period. Since President Roosevelt took the U.S. off the gold standard domestically in 1933, the dollar has lost 98--99% of its purchasing power. People tend to forget that. But if you look at the gold price movement since 1933, it actually has moved a little more than the government-reported pace of inflation. My estimate of what inflation should be if we had consistent CPI reporting shows that the loss of the dollar's purchasing power against gold is the same as it is measured by the CPI.

So over time--and this is true over millennia--gold tends to maintain purchasing power, which means it holds its value net of inflation. Not that you'd break a piece of gold down to a small enough unit to buy a loaf of bread, but if you did, it also would have bought a loaf of bread in ancient Rome.

TGR: For the same amount of gold.

JW: Same amount of gold. Gold has a long tradition as store of wealth. That's why--globally--gold generally has been viewed as such. It only got bad press in the U.S. because private ownership of gold was outlawed after Roosevelt's action. It became legal for Americans to own gold again after Nixon abandoned the international gold standard. Yet, even today, some on Wall Street discourage investment in physical gold, largely because they cannot make a commission on it, as they do with stocks and bonds.

Given the gold ownership limitations after 1933, those in the U.S. who wanted to buy gold turned to buying gold stocks. But because of what happened in the 1930s--that's now two generations or so ago--gold as an investment and as a hedge to protect wealth lost some of what had been its commonly recognized value in the U.S. Outside the U.S., almost everyone views gold as a traditional hedge.

TGR: That's physical gold. What about exchange-traded funds and gold equities in the juniors? Will those investments also preserve wealth?

JW: I wouldn't count on the financial system working as it should. I look at physical gold, preferably sovereign coins, not only as a store of wealth, but also for purposes of liquidity.

Gold stocks also should preserve wealth over time, but I would look at them as longer-term holdings. There could be periods of systemic failure with resulting interim liquidity issues.

TGR: You talked about hyperinflation coming as early as 2014, or even before that. But 2012 is just weeks away. What can people expect next year in terms of the data you watch and maintain versus some of the government-issued statistics?

JW: I can tell you that the economy is weaker and will remain weaker than the government reports. We don't have an economic recovery in place. We'll tend to see higher inflation.

TGR: Something to watch out for. Thank you, John.

Auerback, Naylor-Leyland cite gold suppression; Turk expects silver blastoff

Submitted by cpowell on 08:15PM ET Monday, November 28, 2011. Section: Daily Dispatches

11:25p ET Monday, November 28, 2011
Dear Friend of GATA and Gold:

Interviewed this week by Kevin Michael Grace at Resource Clips, Pinetree Capital's Marshall Auerback says central banks are manipulating the currency and bond markets and possibly the equity markets, so they well may be manipulating the gold market too. Auerback says that without a lot of gold lending by central banks, the gold price would be much higher, and he suspects that central banks eventually will reclassify the gold loans as sales and write the gold off as lost.

GATA has maintained that only this sort of conversion of irretrievable gold loans to sales can explain gold's steady rise in price over the last decade despite constant announcements of sales by central banks. That is, no gold was really being sold at all and no new gold was hitting the market; rather, gold borrowers were being let off easy, allowed cash settlement on terms that essentially expropriated the publics to which the gold really belonged, because demanding return of the gold would have exploded the price and devastated the currencies of the central banks doing the lending.

Auerback also wonders whether U.S. market regulators allowed the MF Global brokerage to fail as a way of punishing investors in commodities.

His interview can be found at Resource Clips here:


Meanwhile, in a video interview today with Bloomberg News that has been posted at the Washington Post's Internet site, Cheviot Asset Management Investment Director Ned Naylor-Leyland, who spoke at GATA's Gold Rush 2011 conference in London in August, was allowed to mention gold price suppression, if in a very polite way. Bloomberg's reporters have yet to discover this story, but maybe it will be a little harder for them to ignore it now that it has slipped out onto their own video feed:


And interviewed today by King World News, GoldMoney founder and GATA consultant James Turk, who also spoke at Gold Rush 2011, said silver's price chart is foretelling a relatively quick doubling, even as gold also looks ready to break out again:

“What a great way to start the week, Eric.  This move is going to catch a lot of people by surprise as evidenced by the extremely low sentiment readings.  Those low readings are a clear indication that there is a lot of money on the sidelines that is waiting to jump on board.”


In any case, fiat justitia et ruant coeli -- and may they fall most heavily on Wall Street, the corner of 20th Street and Constitution Avenue in Washington, and Threadneedle Street in London.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Only skullduggery explains falling gold price amid turmoil, Embry writes

Submitted by cpowell on 09:07AM ET Tuesday, November 29, 2011. Section: Daily Dispatches

12:02p ET Tuesday, November 29, 2011
Dear Friend of GATA and Gold:

Sprott Asset Management's John Embry writes in his latest column in Investor's Digest of Canada that only surreptitious market intervention can explain the collapse of gold prices since September even as the world financial system has been teetering on the brink of collapse. But Embry also notes growing awareness of the market manipulation issue, as represented by the recent acknowledgement of GATA by the Financial Times. Embry's commentary is headlined "Collapse of Gold and Silver Points to Skullduggery" and you can find it at the Sprott Internet site here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Got Gold you can hold?

Got Silver you can squeeze?

Did JP Morgan Just Convert 614,000 Ounces of MF Global Clients' Silver into JPM Licensed Vaults?
From SilverDoctors
Blythe just tried to sneak a massive 613,738 ounce silver adjustment past the market this afternoon on one of the thinnest trading days of the year, but The Doc's all over it like white on rice- and WAIT TILL YOU SEE WHERE THE RABBIT TRAIL THE DOC JUST RAN DOWN LEADS!

The Morgue adjusted 613,738 ounces of silver from eligible vaults into REGISTERED vaults on Wednesday!
Not to be beaten, Scotia topped its 1.2 M oz deposit reported Wednesday, by receiving a massive deposit of 2,395,835 ounces!
Rather coincidental seeing Brink's had a nearly identical withdrawal Tuesday of 2,346,587 ounces!


*Delaware had a small withdrawal of a single bar (999 ounces) from eligible vaults

*HSBC had a small withdrawal of 2,035 ounces from eligible vaults

*No Changes for Delaware

*Scotia Mocatta reported a massive deposit of 2,395,835 ounces into eligible vaults!

*JP Morgan adjusted 613,738 ounces out of eligible vaults and into REGISTERED VAULTS!
Don't forget this number, we'll get back to it at the end up the inventory update.

*TOTAL COMEX REGISTERED SILVER increased to 34,051,874 ounces
*TOTAL COMEX ELIGIBLE SILVER increased to 73,893,167 ounces
*TOTAL COMEX SILVER INVENTORIES increased to 107,945,041 ounces

Ok. Now back to the 613,738 ounce adjustment by The Morgue. This silver is the 613,738 ounces that was deposited into The Morgue's eligible vaults last Friday, Nov 18th.
Where might this silver have come from?
This is not an ignorant client depositing his phyzz at The Morgue, because it was adjusted today into REGISTERED inventory-meaning its silver that is available for Blythe's delivery needs.

We have been updating readers that 1,420,916 of registered silver is currently unavailable as it is nowhere to be found in the aftermath of the Corzine/ MF Global scandal.
With today's update from The Morgue, The Doc decided to break down the numbers of the unavailable/stolen silver .

Here are the numbers again:

*Registered ounces of metal currently not available for delivery
as of 11/4/11 due to MFGI bankruptcy. Included in above totals.

Brinks 210,320
Delaware 65,706
HSBC 793,734
Scotia Mocatta 351,156
Total: 1,420,916
Now I'm not sure why I never noticed this previously, but isn't it interesting that in the wake of the MF Global client silver theft, there is registered silver missing from EVERY SINGLE VAULT EXCEPT JP MORGAN'S!?!

The Doc decided to break the numbers down one step further, by removing the missing MF Global silver in the HSBC vault (HSBS is the other big bullion back allegedly manipulating the price of silver to the downside) from the totals.

Outside of The Morgue's manipulation buddy HSBC, there are 627,182 ounces of MF Global clients' silver that remain missing.

Now for the timeline:
MF Global is taken down on Oct 31st/Nov 1st. About a week later the CME begins reporting that 1.4 million ounces of registered silver is unaccounted for and unavailable for delivery-including 627,182 ounces from non-cartel banks.
Roughly 7-10 days afterwards, JP Morgan suddenly reports a deposit of 613,738 ounces into eligible vaults.
Exactly 7 days later, JP Morgan adjusts this silver into registered vaults.
JP Morgan has not had a significant silver deposit in MONTHS prior to this 613,738 deposit if my recollection serves me.

This is not an allegation:
Make your own conclusions, I've made mine.

Still think that your silver is safe ANYWHERE OUTSIDE OF YOUR OWN POSSESSION!?!
The F***ing Morgue can burn- this is BANKSTER WAR PEOPLE!

It's Official: Obama Is Now The Worst American President As His Approval Rating Plunges Far Below Carter's
From ZeroHedge
We doubt many will be surprised by the latest presidential polling update from Gallup, and certainly not the record nearly 50 million Americans on foodstamps, but here it is nonetheless, from US News: "President Obama's slow ride down Gallup's daily presidential job approval index has finally passed below Jimmy Carter, earning Obama the worst job approval rating of any president at this stage of his term in modern political history. Since March, Obama's job approval rating has hovered above Carter's, considered among the 20th century's worst presidents, but today Obama's punctured Carter's dismal job approval line. On their comparison chart, Gallup put Obama's job approval rating at 43 percent compared to Carter's 51 percent." One can only imagine what would happen to Obama's ratings if indeed the Iranian hostage situation escalated and the president was forced to get involved, in addition to oil spiking to "doomsday" levels of course as Pimco's worst case predicts: "Back in 1979, Carter was far below Obama until the Iran hostage crisis, eerily being duplicated in Tehran today with Iranian protesters storming the British embassy. The early days of the crisis helped Carter's ratings, though his failure to win the release of captured Americans, coupled with a bad economy, led to his defeat by Ronald Reagan in 1980." And while some may say this is merely a one time blip, a longer-term average shows otherwise: "Gallup finds that Obama's overall job approval rating so far has averaged 49 percent. Only three former presidents have had a worse average rating at this stage: Carter, Ford, and Harry S. Truman. Only Truman won re-election in an anti-Congress campaign that Obama's team is using as a model." On the other hand, neither Ford nor Carter has such erudite opponents as Herman "I did not sleep with those 999 women" Cain

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