In one of their most desperate acts to date, the bullion traders at the CRIMEX persuaded the markets board of directors to raise the margin requirements on Silver by 30%. This single act was the cause of today's 10% crash in the price of Silver at precisely 1PM. The damage spilled over into the other Precious Metals markets as well.
Jim Sinclair said it best in his "Thought For The Day":
The ultimate proof of a bull market is the increase of margin rates.
They are a professional tool to cover shorts and dictated by the board of directors of the exchange, which means floor traders.
The CRIMEX goons have exposed themselves via this act. They have lost control of the price of Silver, and have resorted to this last ditch effort of raising margin requirements to slow the rise in the price of Silver, and quell demand.
What a farce!
Silver is traded around the world. Do these clowns really expect that by raising margin requirements on the CRIMEX that the rest of the world is going to stop buying Silver? The realization that these goons DO NOT possess, nor can they find the physical bullion to cover their naked ass shorts is upon them. The realization is there for the whole world to see. The race to accumulate physical Silver has only just begun.
An excellent buying opportunity is at hand.
Silver Margin Requirements to Change
CME Group, the operator of the New York Mercantile Exchange and Commodity Exchange (COMEX), on which silver futures contracts are traded, released a statement to clearing member firms, chief financial officers, back office managers, and margin managers notifying them of an increase in margin requirements “as per the normal review of market volatility to ensure adequate collateral coverage.”
Zero Hedge obtained a copy of the notice, which states that effective after the close of business on November 10, 2010, the maintenance margin requirement for COMEX 5000 Silver Trust Futures (SI) and COMEX 5000 Silver Trade at Settle (SIT) will increase from $5,000 to $6,500 per contract.
Speculation has arisen that this news is responsible for this afternoon’s significant negative reversal in the price of silver. While silver did tumble shortly before release of the CME’s notice, keep in mind that it had climbed considerably in recent weeks and may have anyways been due for at least a short-term correction. Nonetheless, the timing of the market’s response is somewhat suspicious.
http://www.goldalert.com/2010/11/silver-margin-requirements-to-change/
Tuesday, November 9, 2010
Monday, November 8, 2010
"Throwing money out of a helicopter doesn't do any good."
I returned this morning from a 5-day trip to Orlando, Florida to celebrate my 50th birthday with my family. What a blast!
I return with one overwhelming observation: If there is indeed a world economic crisis, you'd never know by walking around the theme parks in Orlando. There was no lack of patrons at any of the four Disney Parks, Universal, or Sea World.
The weak US Dollar is a boon for foreign travelers. The European Union was very well represented at all the parks, as was Australia. South America was represented by many visitors from Brazil, and quite a large number of Asians were spotted in the parks also.
Americans still find the cash for a pilgrimage to this entertainment mecca in Orlando, Florida, they outnumbered the tourists from overseas by a wide margin. But it is far, far cheaper for a visitor from Germany to visit the Magic Kingdom than it is for the locals.
It cost $82 for one adult to visit JUST the Magic Kingdom for ONE DAY. Our friendly visitor from Germany will pay just 59 Euros and change for the thrill of having their picture taken with Mickey Mouse.
Weakness in the US Dollar has put America on sale for the rest of the World...and it is only going to get cheaper.
When I last posted we were watching the dust settle on the US mid-term elections, and the Fed's QE2 announcement. The dust settled quickly as by mid-morning Thursday last, the Precious Metals were exploding in price as confidence in the Fed and the US Dollar began to evaporate globally:
Germany's Finance Minister Wolfgang Schauble: "It doesn't add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank's printing presses, artificially lower the value of the dollar." (Der Spiegel)
Brazil's Finance Minister Guido Mantega: "It is doubtful the Fed decision will produce any results. Throwing money out of a helicopter doesn't do any good." (WSJ)
Japan's Finance Minister Yoshihiko Noda: "I believe that it is necessary for us to watch developments regarding the U.S.'s economic conditions and monetary policy closely." (WSJ)
China knocks US plan to pump money into system
By Christopher Bodeen
BEIJING (AP) -- The U.S. Federal Reserve's move to pump hundreds of billions of dollars into the financial system will bring greater volatility to markets worldwide, a Chinese official said Monday.
The step will create new waves of cash sloshing in and out of countries in search of short-term profits, vice finance minister Zhu Guangyao told reporters at a news conference to discuss the Group of 20 meeting of major advanced and developing nations in Seoul, South Korea later this week.
The U.S. decision "does not recognize, as a country that issues one of the world's major reserve currencies, its obligation to stabilize capital markets," Zhu said, referring to the global use of the dollar as the currency in which nations store the bulk of their foreign reserves.
"Nor does it take into consideration the impact of this excessive fluidity on the financial markets of emerging countries," he said.
http://finance.yahoo.com/news/China-knocks-US-plan-to-pump-apf-3021594450.html?x=0&sec=topStories&pos=4&asset=&ccode=
The Feds Biggest Fear
By Greg Hunter’s USAWatchdog.com
Last week’s decision by the Fed to start another round of Quantitative Easing was met with only one dissenting vote by the Federal Open Market Committee. That does not mean everybody in the rest of the world thinks this is a good idea. Any country holding dollars is faced with a decrease in buying power. Some of the most powerful members of the G-20 are highly critical of the Fed’s money printing. Germany, Brazil and China all made negative comments about the Fed’s latest round of QE in a Bloomberg article over the weekend. It reported, “It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said. Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.”
Still, Fed Chief Bernanke is unwavering in the decision to print money to revive the economy. The same Bloomberg article quoted Mr. Bernanke, “Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States . . . A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.” The rest of the world is clearly not buying the idea that the Fed is saving the world economy. So what would make the Fed so defiant in the face of such global criticism? I think the Fed is really worried about mortgage interest rates and declining home prices.
http://usawatchdog.com/the-feds-biggest-fear/#more-2914
Bernanke Defends Bond Purchases, Predicts Stronger Growth
By Steve Matthews and Timothy R. Homan
Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.
“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said yesterday in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”
“We are showing insufficient stimulus,” Bernanke said yesterday in his remarks, mostly in response to questions. Asset purchases have “the goal of reducing interest rates, providing more stimulus to the economy and, we hope, creating a faster recovery and an inflation rate consistent with long-run stability,” Bernanke said to students.
An acceleration of U.S. economic growth would support the value of the U.S. dollar, Bernanke said.
“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said yesterday. “That is where the fundamentals come from. We are aware the dollar plays a special role in the global economy.”
Bernanke said additional easing will help the Fed achieve its two mandates set by Congress for ensuring full employment and stable prices.
“The unemployment rate, if at all, is coming down very, very slowly,” Bernanke told students at Jacksonville University. “Inflation is very, very low, probably below the level that is healthy for the economy in the longer term.”
Asked by a student if “skyrocketing” commodities prices may threaten his inflation outlook, Bernanke said rising commodities prices are “the one exception” to a broad reduction in inflationary pressures. Overall, excess slack in the economy will make it difficult for producers to push through higher prices to consumers, he said.
“Emerging markets are growing quite quickly,” Bernanke said. “Demand for those commodities is pretty strong. That is going to be a contributor to inflation in the U.S. because it will affect gas prices, for example, and so on.”
Asked by a student about rising gold prices and concerns over inflation, Bernanke said the Fed wouldn’t sacrifice price stability in an attempt to boost growth.
“Let me be very clear: We are absolutely committed to keeping inflation low and stable,” he said. “We have the tools to unwind and tighten policy at the appropriate time. We will honor both sides of our dual mandate.”
http://www.bloomberg.com/news/2010-11-06/bernanke-defends-fed-securities-purchases-says-growth-will-support-dollar.html
Ben Bernanke is a desperate man that is full of sh*t folks. His tools consist of BS spread evenly on sliced bread. The Bernanke Fed's plan for Americans is to force feed them a sh*t sandwich. It becomes more clear by the day that Bernanke's plan to get growth out of the economy is to force business and consumers to spend their savings to stay ahead of rising prices to give the world an "illusion" of a growing economy in America. Bumbling Ben is making a huge gamble that he can buffalo not only Americans, but citizens of the world, that inflation is "good for the economy" and that without it their can be no growth.
In essence Ben is confirming the lie that has been the American economy for the past 40 years: A steadily growing money supply leads to higher prices which lead to higher sales receipts and in turn the ILLUSION of growth. By hiding behind the "supposed" "dual mandates" of the Fed, stable prices and low unemployment, Ben makes the excuse that higher rates of inflation are good. This is pure unadulterated hogwash. The man should be jailed for high treason, along with his tax cheat pal Timmy Geithner.
Beware The Fed Tide
By: John BrowneSenior Market Strategist, Euro Pacific Capital, Inc.
This week, desperation became palpable at the Fed. In both the formulaic statement that accompanied its FOMC policy decision and Chairman Ben Bernanke's unusual (and clumsy) Washington Post op-ed follow up, the guardians of our currency expressed grave disappointment at the slow pace of US economic recovery and emphasized the continued threat of deflation. The Fed is now pledging to defeat this recession using any monetary means necessary. Unfortunately, their embrace threatens to smother our economy.
Despite its paternalistic rhetoric, the Fed really has just a few simple goals: allow for the perpetual expansion of the federal deficit, push up stock prices to create the illusion of wealth, and stimulate consumer spending. To do this, the Fed will hold interest rates near zero for the foreseeable future, and will buy some $600 billion of US Treasury debt by April of next year. Per capita, the commitment to quantitative easing comes to almost $2,000 per American. What's more, if this program fails to pull the economy out of recession, the Fed stands ready to up the ante. This amounts to little more than gambling; but instead of using their own accounts, the central bankers are wagering the nation's savings.
What the Fed is doing, essentially, is forcing consumers to spend their cash hoardings. Until the economic and financial policies of the government change dramatically, those who are tempted to invest their savings within the United States risk increasing regime uncertainty. So, much of our domestic capital is flowing into hard assets and overseas markets.
This will do nothing to help the festering wounds underlying the US economy.
http://news.goldseek.com/JohnBrowne/1288978543.php
The Precious Metals are loving this admission of fraud by Banana Ben's Fed. They have responded by exploding in price as we have long believed they eventually would. The US Dollar is going to pay a high price for this man and his banks treason. As the World, followed by US citizens, continue to lose confidence in Bumbling Ben and the US Dollar, the precious Metals will accelerate to heights unimaginable going forward. The Silver markets are on the verge of a calamitous detonation as we type.
From Harvey Organ this evening via his Daily Gold And Silver Report :
In silver we witnessed a huge 129 notices sent down for options exercised. This represents 645,000 oz of silver. The total number of silver notices sent down so far total 569 or 2,845,000 oz of silver. There are still 41 notices that still remain to be served for a total of 205,000 oz.
Thus the total number of silver oz standing in this non delivery month of November is as follows:
2,845,000 oz (already served upon) + 205,000 oz (to be served) = 3,050,000 oz (this number is rising)
Our banking cartel are getting quite nervous when they see over 3 million oz standing in a non delivery month. Can you imagine what is going to happen in December?
The shorts in Silver not only have their backs to the wall, and their butts in a sling...but their balls are in a vicelock, and about to be squeezed into oblivion. I don't care how well funded these bullion banks might be, they can not continue, and they can not be allowed to continue to sell unbacked Silver futures contracts into the markets to meet overwhelming demand. The Day Of Reckoning is close at hand.
Gene Arensberg analyzes the big banks in silver futures
Dear Friend of GATA and Gold (and Silver):
Gene Arensberg of the Got Gold Report today published a detailed analysis of the U.S. silver futures market and concluded that the two biggest commercial traders are so big that they indeed are likely manipulating the market at strategic moments, even as he doubts that they are "naked short" silver. Rather, Arensberg thinks the commercial traders that are short in the U.S. futures market are hedged in some way, with "offsetting corresponding net long derivatives in other markets or inventory, or future production/cash flows, or hedging more complex financial derivatives, or perhaps hedging something we have not thought of."
Of course hedging with derivatives might be a form a naked shorting, depending on the derivatives and their issuer. Maybe all this will be illuminated by the recent class-action lawsuits filed in U.S. District Court for the Southern District of New York accusing J.P. Morgan Chase and HSBC of manipulating the silver market.
Arensberg's analysis is titled "U.S. Banks in Silver Futures" and you can find it at the Got Gold Report's Internet site here:
http://www.gotgoldreport.com/2010/11/us-banks-in-silver-futures.html
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
--------------------------------------------------------------------------------
Ambac Financial Group Files for Chapter 11 Bankruptcy- Bloomberg
Fed official raises doubts over $600B aid program- AP
Crude oil increases to 25-month high - Bloomberg
I return with one overwhelming observation: If there is indeed a world economic crisis, you'd never know by walking around the theme parks in Orlando. There was no lack of patrons at any of the four Disney Parks, Universal, or Sea World.
The weak US Dollar is a boon for foreign travelers. The European Union was very well represented at all the parks, as was Australia. South America was represented by many visitors from Brazil, and quite a large number of Asians were spotted in the parks also.
Americans still find the cash for a pilgrimage to this entertainment mecca in Orlando, Florida, they outnumbered the tourists from overseas by a wide margin. But it is far, far cheaper for a visitor from Germany to visit the Magic Kingdom than it is for the locals.
It cost $82 for one adult to visit JUST the Magic Kingdom for ONE DAY. Our friendly visitor from Germany will pay just 59 Euros and change for the thrill of having their picture taken with Mickey Mouse.
Weakness in the US Dollar has put America on sale for the rest of the World...and it is only going to get cheaper.
When I last posted we were watching the dust settle on the US mid-term elections, and the Fed's QE2 announcement. The dust settled quickly as by mid-morning Thursday last, the Precious Metals were exploding in price as confidence in the Fed and the US Dollar began to evaporate globally:
Germany's Finance Minister Wolfgang Schauble: "It doesn't add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank's printing presses, artificially lower the value of the dollar." (Der Spiegel)
Brazil's Finance Minister Guido Mantega: "It is doubtful the Fed decision will produce any results. Throwing money out of a helicopter doesn't do any good." (WSJ)
Japan's Finance Minister Yoshihiko Noda: "I believe that it is necessary for us to watch developments regarding the U.S.'s economic conditions and monetary policy closely." (WSJ)
China knocks US plan to pump money into system
By Christopher Bodeen
BEIJING (AP) -- The U.S. Federal Reserve's move to pump hundreds of billions of dollars into the financial system will bring greater volatility to markets worldwide, a Chinese official said Monday.
The step will create new waves of cash sloshing in and out of countries in search of short-term profits, vice finance minister Zhu Guangyao told reporters at a news conference to discuss the Group of 20 meeting of major advanced and developing nations in Seoul, South Korea later this week.
The U.S. decision "does not recognize, as a country that issues one of the world's major reserve currencies, its obligation to stabilize capital markets," Zhu said, referring to the global use of the dollar as the currency in which nations store the bulk of their foreign reserves.
"Nor does it take into consideration the impact of this excessive fluidity on the financial markets of emerging countries," he said.
http://finance.yahoo.com/news/China-knocks-US-plan-to-pump-apf-3021594450.html?x=0&sec=topStories&pos=4&asset=&ccode=
The Feds Biggest Fear
By Greg Hunter’s USAWatchdog.com
Last week’s decision by the Fed to start another round of Quantitative Easing was met with only one dissenting vote by the Federal Open Market Committee. That does not mean everybody in the rest of the world thinks this is a good idea. Any country holding dollars is faced with a decrease in buying power. Some of the most powerful members of the G-20 are highly critical of the Fed’s money printing. Germany, Brazil and China all made negative comments about the Fed’s latest round of QE in a Bloomberg article over the weekend. It reported, “It’s our problem as well if the U.S. is no longer certain that the old recipes don’t work anymore,” German Finance Minister Wolfgang Schaeuble said yesterday in Berlin. The Fed’s injection of $600 billion was “clueless” and won’t revive growth, he said. Brazil’s central bank president, Henrique Meirelles, said “excess liquidity” in the U.S. economy is creating “risks for everyone.” In China, Vice Foreign Minister Cui Tiankai said “many countries are worried about the impact of the policy on their economies.” He also said the U.S. “owes us some explanation on their decision on quantitative easing.”
Still, Fed Chief Bernanke is unwavering in the decision to print money to revive the economy. The same Bloomberg article quoted Mr. Bernanke, “Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States . . . A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.” The rest of the world is clearly not buying the idea that the Fed is saving the world economy. So what would make the Fed so defiant in the face of such global criticism? I think the Fed is really worried about mortgage interest rates and declining home prices.
http://usawatchdog.com/the-feds-biggest-fear/#more-2914
Bernanke Defends Bond Purchases, Predicts Stronger Growth
By Steve Matthews and Timothy R. Homan
Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries.
“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said yesterday in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”
“We are showing insufficient stimulus,” Bernanke said yesterday in his remarks, mostly in response to questions. Asset purchases have “the goal of reducing interest rates, providing more stimulus to the economy and, we hope, creating a faster recovery and an inflation rate consistent with long-run stability,” Bernanke said to students.
An acceleration of U.S. economic growth would support the value of the U.S. dollar, Bernanke said.
“The best fundamentals for the dollar will come when the economy is growing strongly,” Bernanke said yesterday. “That is where the fundamentals come from. We are aware the dollar plays a special role in the global economy.”
Bernanke said additional easing will help the Fed achieve its two mandates set by Congress for ensuring full employment and stable prices.
“The unemployment rate, if at all, is coming down very, very slowly,” Bernanke told students at Jacksonville University. “Inflation is very, very low, probably below the level that is healthy for the economy in the longer term.”
Asked by a student if “skyrocketing” commodities prices may threaten his inflation outlook, Bernanke said rising commodities prices are “the one exception” to a broad reduction in inflationary pressures. Overall, excess slack in the economy will make it difficult for producers to push through higher prices to consumers, he said.
“Emerging markets are growing quite quickly,” Bernanke said. “Demand for those commodities is pretty strong. That is going to be a contributor to inflation in the U.S. because it will affect gas prices, for example, and so on.”
Asked by a student about rising gold prices and concerns over inflation, Bernanke said the Fed wouldn’t sacrifice price stability in an attempt to boost growth.
“Let me be very clear: We are absolutely committed to keeping inflation low and stable,” he said. “We have the tools to unwind and tighten policy at the appropriate time. We will honor both sides of our dual mandate.”
http://www.bloomberg.com/news/2010-11-06/bernanke-defends-fed-securities-purchases-says-growth-will-support-dollar.html
Ben Bernanke is a desperate man that is full of sh*t folks. His tools consist of BS spread evenly on sliced bread. The Bernanke Fed's plan for Americans is to force feed them a sh*t sandwich. It becomes more clear by the day that Bernanke's plan to get growth out of the economy is to force business and consumers to spend their savings to stay ahead of rising prices to give the world an "illusion" of a growing economy in America. Bumbling Ben is making a huge gamble that he can buffalo not only Americans, but citizens of the world, that inflation is "good for the economy" and that without it their can be no growth.
In essence Ben is confirming the lie that has been the American economy for the past 40 years: A steadily growing money supply leads to higher prices which lead to higher sales receipts and in turn the ILLUSION of growth. By hiding behind the "supposed" "dual mandates" of the Fed, stable prices and low unemployment, Ben makes the excuse that higher rates of inflation are good. This is pure unadulterated hogwash. The man should be jailed for high treason, along with his tax cheat pal Timmy Geithner.
Beware The Fed Tide
By: John BrowneSenior Market Strategist, Euro Pacific Capital, Inc.
This week, desperation became palpable at the Fed. In both the formulaic statement that accompanied its FOMC policy decision and Chairman Ben Bernanke's unusual (and clumsy) Washington Post op-ed follow up, the guardians of our currency expressed grave disappointment at the slow pace of US economic recovery and emphasized the continued threat of deflation. The Fed is now pledging to defeat this recession using any monetary means necessary. Unfortunately, their embrace threatens to smother our economy.
Despite its paternalistic rhetoric, the Fed really has just a few simple goals: allow for the perpetual expansion of the federal deficit, push up stock prices to create the illusion of wealth, and stimulate consumer spending. To do this, the Fed will hold interest rates near zero for the foreseeable future, and will buy some $600 billion of US Treasury debt by April of next year. Per capita, the commitment to quantitative easing comes to almost $2,000 per American. What's more, if this program fails to pull the economy out of recession, the Fed stands ready to up the ante. This amounts to little more than gambling; but instead of using their own accounts, the central bankers are wagering the nation's savings.
What the Fed is doing, essentially, is forcing consumers to spend their cash hoardings. Until the economic and financial policies of the government change dramatically, those who are tempted to invest their savings within the United States risk increasing regime uncertainty. So, much of our domestic capital is flowing into hard assets and overseas markets.
This will do nothing to help the festering wounds underlying the US economy.
http://news.goldseek.com/JohnBrowne/1288978543.php
The Precious Metals are loving this admission of fraud by Banana Ben's Fed. They have responded by exploding in price as we have long believed they eventually would. The US Dollar is going to pay a high price for this man and his banks treason. As the World, followed by US citizens, continue to lose confidence in Bumbling Ben and the US Dollar, the precious Metals will accelerate to heights unimaginable going forward. The Silver markets are on the verge of a calamitous detonation as we type.
From Harvey Organ this evening via his Daily Gold And Silver Report :
In silver we witnessed a huge 129 notices sent down for options exercised. This represents 645,000 oz of silver. The total number of silver notices sent down so far total 569 or 2,845,000 oz of silver. There are still 41 notices that still remain to be served for a total of 205,000 oz.
Thus the total number of silver oz standing in this non delivery month of November is as follows:
2,845,000 oz (already served upon) + 205,000 oz (to be served) = 3,050,000 oz (this number is rising)
Our banking cartel are getting quite nervous when they see over 3 million oz standing in a non delivery month. Can you imagine what is going to happen in December?
The shorts in Silver not only have their backs to the wall, and their butts in a sling...but their balls are in a vicelock, and about to be squeezed into oblivion. I don't care how well funded these bullion banks might be, they can not continue, and they can not be allowed to continue to sell unbacked Silver futures contracts into the markets to meet overwhelming demand. The Day Of Reckoning is close at hand.
Gene Arensberg analyzes the big banks in silver futures
Dear Friend of GATA and Gold (and Silver):
Gene Arensberg of the Got Gold Report today published a detailed analysis of the U.S. silver futures market and concluded that the two biggest commercial traders are so big that they indeed are likely manipulating the market at strategic moments, even as he doubts that they are "naked short" silver. Rather, Arensberg thinks the commercial traders that are short in the U.S. futures market are hedged in some way, with "offsetting corresponding net long derivatives in other markets or inventory, or future production/cash flows, or hedging more complex financial derivatives, or perhaps hedging something we have not thought of."
Of course hedging with derivatives might be a form a naked shorting, depending on the derivatives and their issuer. Maybe all this will be illuminated by the recent class-action lawsuits filed in U.S. District Court for the Southern District of New York accusing J.P. Morgan Chase and HSBC of manipulating the silver market.
Arensberg's analysis is titled "U.S. Banks in Silver Futures" and you can find it at the Got Gold Report's Internet site here:
http://www.gotgoldreport.com/2010/11/us-banks-in-silver-futures.html
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
--------------------------------------------------------------------------------
Ambac Financial Group Files for Chapter 11 Bankruptcy- Bloomberg
Fed official raises doubts over $600B aid program- AP
Crude oil increases to 25-month high - Bloomberg
Wednesday, November 3, 2010
Stay On Your Toes
A rather anticlimatic Fed announcement. In their usual obfuscated Fedspeak, the Fed attempted to give the markets the cake they wanted, and allowed them to eat it too.
$75 BILLION a month in QE2 'sounded like" less than the $100 BILLION market participants were expecting. BUT, when you add in the MBS income they were already using to buy debt, the number quickly clears the $100 BILLION threshold. [And we won't even consider the debt they are buying, the stealth QE, through the back door of the banks.]
Be wary of a rise in the Dollar DESPITE the QE2 announcement as the financial media is sure to spin the Republican House victory as a sign of a "new austerity" in America. All together now, "yeah, right..."
Until the dust settles on these election results, and this quibbling QE2 pronouncement, it may be wise for traders to stand aside for a brief time to see how this shakes out in the near-term. Long-term there is no question that the Precious Metals have much. much further to run up before this bull retires.
Keep an eye on the Asian currencies, the Yen and the Yuan. Gold rises with them, and falls with them as well. The Euro is playing the decoy.
Text of FOMC Statement:
Press Release
Release Date: November 3, 2010
For immediate release
Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.
http://www.federalreserve.gov/newsevents/press/monetary/20101103a.htm
Fed will spend $600B in latest bid to help economy
Federal Reserve to buy $600 billion in bonds, but whether it will help economy is in doubt
Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- The Federal Reserve will sink $600 billion into government bonds in a bold plan that it hopes will drive interest rates even lower than they already are and start the chain reaction that finally creates jobs and invigorates the economy.
The Fed said Wednesday that it would buy the bonds at a rate of about $75 billion a month through the middle of next year. The idea is to encourage people to spend more money and stimulate hiring, both ways of accelerating economic growth.
The announcement helped push stocks, which have been rising for weeks in anticipation of such a move, to their highest close of the year. But the program was immediately met with worries that it would not help enough and could backfire by causing inflation, creating asset bubbles and further weakening the dollar.
Even some analysts who were not concerned about such a backlash said the plan was unlikely to do much good.
"Bottom line: The plan provides a boost to the economy's growth, but it is not going to solve our problems," said Mark Zandi, chief economist at Moody's Analytics. "Even with the Fed's action, we're going to feel uncomfortable about the economy in the next six to 12 months."
The announcement came a day after voters frustrated by persistent unemployment and the limp housing market handed control of the House to Republicans and gave the GOP a bigger voice in the Senate.
The split will probably make it harder for President Barack Obama to enact any major economic initiatives and could put more pressure on the Fed to get the economy back on firmer footing.
The program is smaller than what Fed policymakers called their "shock and awe" approach to fighting the 2008 financial crisis. At that time, the Fed bought $1.7 trillion worth of securities.
This new program, including money that the Fed plans to reinvest from the portfolio of mortgages it has bought, should ultimately total $850 billion to $900 billion.
http://finance.yahoo.com/news/Fed-to-buy-600-billion-in-apf-3337980722.html?x=0&sec=topStories&pos=2&asset=&ccode
I'm going to Disney World for a long weekend, and will return here early next week. For the very near-term, proceed with caution traders.
$75 BILLION a month in QE2 'sounded like" less than the $100 BILLION market participants were expecting. BUT, when you add in the MBS income they were already using to buy debt, the number quickly clears the $100 BILLION threshold. [And we won't even consider the debt they are buying, the stealth QE, through the back door of the banks.]
Be wary of a rise in the Dollar DESPITE the QE2 announcement as the financial media is sure to spin the Republican House victory as a sign of a "new austerity" in America. All together now, "yeah, right..."
Until the dust settles on these election results, and this quibbling QE2 pronouncement, it may be wise for traders to stand aside for a brief time to see how this shakes out in the near-term. Long-term there is no question that the Precious Metals have much. much further to run up before this bull retires.
Keep an eye on the Asian currencies, the Yen and the Yuan. Gold rises with them, and falls with them as well. The Euro is playing the decoy.
Text of FOMC Statement:
Press Release
Release Date: November 3, 2010
For immediate release
Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.
http://www.federalreserve.gov/newsevents/press/monetary/20101103a.htm
Fed will spend $600B in latest bid to help economy
Federal Reserve to buy $600 billion in bonds, but whether it will help economy is in doubt
Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- The Federal Reserve will sink $600 billion into government bonds in a bold plan that it hopes will drive interest rates even lower than they already are and start the chain reaction that finally creates jobs and invigorates the economy.
The Fed said Wednesday that it would buy the bonds at a rate of about $75 billion a month through the middle of next year. The idea is to encourage people to spend more money and stimulate hiring, both ways of accelerating economic growth.
The announcement helped push stocks, which have been rising for weeks in anticipation of such a move, to their highest close of the year. But the program was immediately met with worries that it would not help enough and could backfire by causing inflation, creating asset bubbles and further weakening the dollar.
Even some analysts who were not concerned about such a backlash said the plan was unlikely to do much good.
"Bottom line: The plan provides a boost to the economy's growth, but it is not going to solve our problems," said Mark Zandi, chief economist at Moody's Analytics. "Even with the Fed's action, we're going to feel uncomfortable about the economy in the next six to 12 months."
The announcement came a day after voters frustrated by persistent unemployment and the limp housing market handed control of the House to Republicans and gave the GOP a bigger voice in the Senate.
The split will probably make it harder for President Barack Obama to enact any major economic initiatives and could put more pressure on the Fed to get the economy back on firmer footing.
The program is smaller than what Fed policymakers called their "shock and awe" approach to fighting the 2008 financial crisis. At that time, the Fed bought $1.7 trillion worth of securities.
This new program, including money that the Fed plans to reinvest from the portfolio of mortgages it has bought, should ultimately total $850 billion to $900 billion.
http://finance.yahoo.com/news/Fed-to-buy-600-billion-in-apf-3337980722.html?x=0&sec=topStories&pos=2&asset=&ccode
I'm going to Disney World for a long weekend, and will return here early next week. For the very near-term, proceed with caution traders.
Gold Cartel Desperate
With the forever insignificant CFTC once again asleep at the switch, the collusive bullion cartel tried to shoot Gold and Silver in the back this morning. If ever there was a blatant example of a market manipulation, this had to be it.
Both Precious metals held support at their shallowest uptrend lines in their current leg higher from their dual break of their bullish Flag Patterns.
The US Dollar remained under pressure this morning as the collusive CRIMEX crooks pulled their bids in the Precious Metals in a feeble attempt to shake as many longs loose from their positions so that the criminals could cover as many shorts as possible at a prices. The sudden move lower in both Precious Metals was completely unwarranted relative to the movements of the US Dollar this morning. It would not be surprising to learn that these crooks laid on a large number of "long" positions on this contrived pullback in Precious Metals prices ahead of the Fed's QE2 babble coming up at 2:15PM est.
This obviously desperate maneuver by the bullion banks all but guarantees that the Fed will not disappoint at this afternoons announcement regarding their plans for QE2.
Enjoy the show!
Both Precious metals held support at their shallowest uptrend lines in their current leg higher from their dual break of their bullish Flag Patterns.
The US Dollar remained under pressure this morning as the collusive CRIMEX crooks pulled their bids in the Precious Metals in a feeble attempt to shake as many longs loose from their positions so that the criminals could cover as many shorts as possible at a prices. The sudden move lower in both Precious Metals was completely unwarranted relative to the movements of the US Dollar this morning. It would not be surprising to learn that these crooks laid on a large number of "long" positions on this contrived pullback in Precious Metals prices ahead of the Fed's QE2 babble coming up at 2:15PM est.
This obviously desperate maneuver by the bullion banks all but guarantees that the Fed will not disappoint at this afternoons announcement regarding their plans for QE2.
Enjoy the show!
Tuesday, November 2, 2010
Enjoy The Show!
Come senators, congressmen
Please heed the call
Don't stand in the doorway
Don't block up the hall
For he that gets hurt
Will be he who has stalled
There's a battle outside
And it is ragin'
It'll soon shake your windows
And rattle your walls
For the times they are a-changin'.
-Bob Dylan, The Times They Are A-Changin'
History is in the making this evening. The next 24 hours could change the face of our nation for all of eternity. For a country that thrives on instant gratification, the clock may be about to stop. In the next 24 hours history may be made, or America may become history. These are exciting times to be involved in the Precious Metals markets. rest easy this evening knowing you hold the sole insurance that can protect you from the uncertainty about to be unleashed up our once great nation.
Gold and Silver remain in a holding pattern as we go into the mid term election results this evening and tomorrow's most anticipated Fed announcement. Yesterday's "weakness" following Friday's breakout was very constructive from a technical point of view as both metals tested and held support. Gold held support at old resistance at $1349, and Silver did likewise at $24.48. These support levels will be very significant tomorrow following the election results and the Fed comments about QE2.
Risk in the Precious Metals at this time is to the upside as the shorts in both Gold and Silver are naked as jaybirds. The Fed could surprise us with a "weak" QE2 announcement, but they risk imploding the economy AND the equity markets by spoon feeding the QE2 instead of shoveling it. QE2 appears to be a given. Only the quantity of it could affect the short-term move in the Precious Metals. Be that as it may, QE2 is ultimately a HUGE positive for the Precious Metals.
A break above $1360 in Gold, and $25 in Silver will trigger a short squeeze of these naked shorts like none we have ever witnessed before. Nothing the Fed says tomorrow can be interpretted as Dollar positive. Avoid caving into any knee jerk reactions to the downside in the metals should they occur. The Asians will welcome any discount in prices with wide open wallets.
Enjoy the show...
Fed Risks Its Credibility on Bowlful of Mush
By Caroline Baum
‘Violently Wrong’
Because Fed chief Ben Bernanke has been unwilling to admit the role low interest rates played in puffing up the housing bubble, he sees little risk from further easing, according to Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut.
At the same time, he says, the Fed’s output gap models, which measure the difference between actual and potential growth and were “violently wrong in 2003 and 2004,” reinforce the majority view that deflation is the real threat.
Then there’s the Fed’s stated tactic of raising inflation expectations to lower real interest rates, a flawed concept even though it has succeeded splendidly in the short term.
In the two months since Bernanke first hinted at QE2 in his Jackson Hole, Wyoming, speech, five-year inflation expectations, the Fed’s preferred measure extrapolated from the yield differential between nominal and inflation-indexed Treasuries, have risen from about 2 percent to 3 percent.
Tortured Logic
So taken is the Fed with the notion that higher inflation expectations are the route to salvation that it has commissioned research on the subject. Last month, three Fed Board economists published a paper claiming that with overnight rates near zero, an oil price shock would be a plus for growth.
The “burst of inflation” from an increase in oil prices stimulates interest-rate sensitive sectors of the economy, the authors claim. (Aren’t higher oil prices a relative price increase unless the Fed prevents other prices from falling?) “In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion,” they write.
Where are the speculators when you need them?
Ten years ago I wrote a column titled, “Fed Chairman Ali Naimi Has a Nice Ring to It,” referring to Saudi Arabia’s oil minister. The piece debunked the idea that oil prices can do the central bank’s job.
Maybe I was wrong. If you believe the research, we should be rooting for one of those old-fashioned oil shocks, circa 1973 and 1979, to fix what ails the U.S. economy!
http://finance.yahoo.com/news/Fed-Risks-Its-Credibility-on-bloomberg-3513520851.html?x=0&sec=topStories&pos=5&asset=&ccode
Politics of the Fed's easy money
By Emily Kaiser
WASHINGTON (Reuters) - While voters cast ballots on Tuesday in an election expected to shift Congress to the right, the Federal Reserve convenes what could be its most pivotal meeting since the height of the financial crisis.
The central bank was designed to be above political influence. But its policy decisions are not completely immune to the political environment.
A more conservative Congress would reduce the already slim chance that more fiscal support will come, putting the burden squarely on the Fed's shoulders to shore up a limp economy.
Douglas Holtz-Eakin, an economist who advised John McCain during his unsuccessful 2008 presidential campaign, said normally the Fed keeps quiet around elections to avoid any semblance of political involvement.
This time, the central bank sent a clear signal that it intended to take action, and investors are convinced the move will come this week in the form of relaunching asset purchases. This week's policy-setting meeting lasts two days, so the Fed's announcement will come on Wednesday, just after the election.
"It looks to me a bit desperate," Holtz-Eakin said, adding that he was not convinced another round of money printing would do much to stimulate the economy.
http://finance.yahoo.com/news/Politics-of-the-Feds-easy-rb-3233365846.html?x=0&sec=topStories&pos=4&asset=&ccode
Gold Never Has Been (and Never Will Be) in a Bubble
By Nathan Lewis
10/30/10 Binghamton, New York – Most serious gold investors follow a basic principle: that gold is stable in value. Changes in the “gold price” represent changes in the currency being compared to gold, while gold itself is essentially inert.
This is why gold was used as a monetary foundation for literally thousands of years. You want money to be stable in value. The simplest way to accomplish this was to link it to gold. Today, we summarize this quality by saying that “gold is money.”
From this we can see immediately, that if gold doesn’t change in value – at least not very much – then it can never be in a “bubble.” There may be a time when many people are desperate to trade their paper money for gold, but that is because their paper money is collapsing in value. It has nothing to do with gold.
Let’s take a look at some of the great gold bull markets of the last hundred years:
•From 1920 to 1923, the price of gold in German marks rose from 160/oz. to 48 trillion/oz.
•From 1945 to 1950, the price of gold in Japanese yen rose from 140/oz. to 12,600/oz.
•From 1948 to 1967, the price of gold in Brazilian cruzeiros went from 648/oz. to 94,500/oz.
•From 1970 to 1980, the price of gold in US dollars went from 35/oz. to 850/oz.
•From 1982 to 1990, the price of gold in Mexican pesos went from 8,000/oz. to 1,025,000/oz.
•From 1989 to 2000, the price of gold in Russian rubles went from 1,600/oz. to 8,120,000/oz.
Each of these situations was an episode of paper currency depreciation. Today is no different. The rising dollar/euro/yen gold price is simply a reflection of the Keynesian “easy money” policies popular around the world today.
We can also see that, if gold remains stable in value, then the supply/demand considerations that affect industrial commodities do not affect gold, which is a monetary commodity. This is why gold is used as money. If its value was affected by industrial supply/demand factors, we would not be able to use it as money.
Thus, “jewelry demand” or “peak gold,” or any other such factor, has little meaningful effect on gold’s value. Day-to-day money flows will affect the price at which currencies trade vs. gold, but this ultimately affects the currency in question, not gold.
None of these historical “gold bull markets” resulted from jewelry demand or mining supply.
Any attempt to attach a valuation to gold is mostly a waste of time. Concepts like the “inflation-adjusted gold price” or the “gold/oil ratio,” or a ratio of outstanding debt or currency to a quantity of gold bullion, are a distraction. An item that doesn’t change value is never cheap or dear. That’s what “gold is money” means.
The “price of gold” may reach five thousand, ten thousand, a hundred thousand, a million, or a billion dollars per ounce. The gold bubble-callers will be frothing at the mouth, until they finally have the realization that there was never a bubble in gold, but only a crash in paper money.
Gold is money. Always has been. Probably always will be. This time it’s different? I don’t think so.
http://dailyreckoning.com/gold-never-has-been-and-never-will-be-in-a-bubble/
KWN Source Says Asians to Squeeze Silver Shorts
Eric King, KingWorldNews.com
A King World News contact out of London has confirmed that, “Massive Asian buying is going to squeeze the shorts in the silver market. Any reactions in the price of silver will be heavily purchased, and these buyers will take delivery of physical silver.” The source who wishes to remain anonymous agreed with Eric Sprott that this squeeze could take the price of silver to $50 in a matter of months.
November 1, 2010
I have recently been discussing a coming commercial signal failure with John Embry, James Turk and Eric Sprott. As previously mentioned, this is an extremely rare event but when it occurs it is a sight to behold.
Right now, sentiment levels are nowhere near what we see at a top. Keep in mind that Rick Rule was recently discussing with KWN the possibility of future supply shortages in silver, and we are also not seeing the type of dealer activity that is suggestive of topping behavior. These factors are all supportive of a significant move higher in the price of silver.
While the price of silver on a short-term basis can gyrate, the important thing to be aware of right now is that these Asian buyers smell the kill. You can be assured that their intention is to put an incredible squeeze on the silver shorts before this is over.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/1_KWN_Source_Says_Asians_to_Squeeze_Silver_Shorts.html
Currency Swings Show Faith in G-20 Pledge Fading
By Matthew Brown
Traders are losing confidence in Group of 20 finance officials’ pledge to avoid foreign-exchange manipulation, less than a week after the leaders vowed to stop devaluing currencies to prop up their economies.
Volatility among Group of Seven currencies rose to about the highest level in four months since the G-20 meeting ended on Oct. 23, according to the JPMorgan G-7 Volatility Index. Euro- dollar fluctuations jumped 30 percent since Sept. 20, a day before Federal Reserve policy makers said they were prepared to buy bonds and pump more money into the financial system, data compiled by Bloomberg show.
While G-20 nations committed to refrain from “competitive devaluation,” officials from South Korea and South Africa said last week that they may consider currency controls. The reliance on intervention underscores the challenges finance officials face to keep their economies on track after injecting more than $2 trillion to spark growth following the worst financial crisis since the Great Depression.
“Volatility is the price of uncertainty,” said Richard Benson, an executive director in London at Millennium Asset Management, who oversees $14 billion of currency funds. “Volatility’s current elevated level is a function of the currency war issue.”
http://finance.yahoo.com/news/Currency-Swings-Show-Faith-in-bloomberg-388521909.html;_ylt=Apy.XkiJwaiDh62aJaTT_7e7YWsA;_ylu=X3oDMTE2NzZianJyBHBvcwMxMgRzZWMDdG9wU3RvcmllcwRzbGsDY3VycmVuY3lzd2lu?x=0&sec=topStories&pos=7&asset=&ccode=
The Changing Landscape in Gold and Silver
By: James West
Whereas the apparent robust performance of major indices around the world suggests the world is returning to something approaching normal, what we’re really seeing is a long line of traps being set to snag a fresh round of suckers who fall for the mainstream smokescreen. With another US$1 Trillion on the way from the Fed to further devalue the dollar, and with other nations thereby comforted sufficiently to follow suit, gold and silver prices can do naught but rise. Full Story
Please heed the call
Don't stand in the doorway
Don't block up the hall
For he that gets hurt
Will be he who has stalled
There's a battle outside
And it is ragin'
It'll soon shake your windows
And rattle your walls
For the times they are a-changin'.
-Bob Dylan, The Times They Are A-Changin'
History is in the making this evening. The next 24 hours could change the face of our nation for all of eternity. For a country that thrives on instant gratification, the clock may be about to stop. In the next 24 hours history may be made, or America may become history. These are exciting times to be involved in the Precious Metals markets. rest easy this evening knowing you hold the sole insurance that can protect you from the uncertainty about to be unleashed up our once great nation.
Gold and Silver remain in a holding pattern as we go into the mid term election results this evening and tomorrow's most anticipated Fed announcement. Yesterday's "weakness" following Friday's breakout was very constructive from a technical point of view as both metals tested and held support. Gold held support at old resistance at $1349, and Silver did likewise at $24.48. These support levels will be very significant tomorrow following the election results and the Fed comments about QE2.
Risk in the Precious Metals at this time is to the upside as the shorts in both Gold and Silver are naked as jaybirds. The Fed could surprise us with a "weak" QE2 announcement, but they risk imploding the economy AND the equity markets by spoon feeding the QE2 instead of shoveling it. QE2 appears to be a given. Only the quantity of it could affect the short-term move in the Precious Metals. Be that as it may, QE2 is ultimately a HUGE positive for the Precious Metals.
A break above $1360 in Gold, and $25 in Silver will trigger a short squeeze of these naked shorts like none we have ever witnessed before. Nothing the Fed says tomorrow can be interpretted as Dollar positive. Avoid caving into any knee jerk reactions to the downside in the metals should they occur. The Asians will welcome any discount in prices with wide open wallets.
Enjoy the show...
Fed Risks Its Credibility on Bowlful of Mush
By Caroline Baum
‘Violently Wrong’
Because Fed chief Ben Bernanke has been unwilling to admit the role low interest rates played in puffing up the housing bubble, he sees little risk from further easing, according to Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut.
At the same time, he says, the Fed’s output gap models, which measure the difference between actual and potential growth and were “violently wrong in 2003 and 2004,” reinforce the majority view that deflation is the real threat.
Then there’s the Fed’s stated tactic of raising inflation expectations to lower real interest rates, a flawed concept even though it has succeeded splendidly in the short term.
In the two months since Bernanke first hinted at QE2 in his Jackson Hole, Wyoming, speech, five-year inflation expectations, the Fed’s preferred measure extrapolated from the yield differential between nominal and inflation-indexed Treasuries, have risen from about 2 percent to 3 percent.
Tortured Logic
So taken is the Fed with the notion that higher inflation expectations are the route to salvation that it has commissioned research on the subject. Last month, three Fed Board economists published a paper claiming that with overnight rates near zero, an oil price shock would be a plus for growth.
The “burst of inflation” from an increase in oil prices stimulates interest-rate sensitive sectors of the economy, the authors claim. (Aren’t higher oil prices a relative price increase unless the Fed prevents other prices from falling?) “In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion,” they write.
Where are the speculators when you need them?
Ten years ago I wrote a column titled, “Fed Chairman Ali Naimi Has a Nice Ring to It,” referring to Saudi Arabia’s oil minister. The piece debunked the idea that oil prices can do the central bank’s job.
Maybe I was wrong. If you believe the research, we should be rooting for one of those old-fashioned oil shocks, circa 1973 and 1979, to fix what ails the U.S. economy!
http://finance.yahoo.com/news/Fed-Risks-Its-Credibility-on-bloomberg-3513520851.html?x=0&sec=topStories&pos=5&asset=&ccode
Politics of the Fed's easy money
By Emily Kaiser
WASHINGTON (Reuters) - While voters cast ballots on Tuesday in an election expected to shift Congress to the right, the Federal Reserve convenes what could be its most pivotal meeting since the height of the financial crisis.
The central bank was designed to be above political influence. But its policy decisions are not completely immune to the political environment.
A more conservative Congress would reduce the already slim chance that more fiscal support will come, putting the burden squarely on the Fed's shoulders to shore up a limp economy.
Douglas Holtz-Eakin, an economist who advised John McCain during his unsuccessful 2008 presidential campaign, said normally the Fed keeps quiet around elections to avoid any semblance of political involvement.
This time, the central bank sent a clear signal that it intended to take action, and investors are convinced the move will come this week in the form of relaunching asset purchases. This week's policy-setting meeting lasts two days, so the Fed's announcement will come on Wednesday, just after the election.
"It looks to me a bit desperate," Holtz-Eakin said, adding that he was not convinced another round of money printing would do much to stimulate the economy.
http://finance.yahoo.com/news/Politics-of-the-Feds-easy-rb-3233365846.html?x=0&sec=topStories&pos=4&asset=&ccode
Gold Never Has Been (and Never Will Be) in a Bubble
By Nathan Lewis
10/30/10 Binghamton, New York – Most serious gold investors follow a basic principle: that gold is stable in value. Changes in the “gold price” represent changes in the currency being compared to gold, while gold itself is essentially inert.
This is why gold was used as a monetary foundation for literally thousands of years. You want money to be stable in value. The simplest way to accomplish this was to link it to gold. Today, we summarize this quality by saying that “gold is money.”
From this we can see immediately, that if gold doesn’t change in value – at least not very much – then it can never be in a “bubble.” There may be a time when many people are desperate to trade their paper money for gold, but that is because their paper money is collapsing in value. It has nothing to do with gold.
Let’s take a look at some of the great gold bull markets of the last hundred years:
•From 1920 to 1923, the price of gold in German marks rose from 160/oz. to 48 trillion/oz.
•From 1945 to 1950, the price of gold in Japanese yen rose from 140/oz. to 12,600/oz.
•From 1948 to 1967, the price of gold in Brazilian cruzeiros went from 648/oz. to 94,500/oz.
•From 1970 to 1980, the price of gold in US dollars went from 35/oz. to 850/oz.
•From 1982 to 1990, the price of gold in Mexican pesos went from 8,000/oz. to 1,025,000/oz.
•From 1989 to 2000, the price of gold in Russian rubles went from 1,600/oz. to 8,120,000/oz.
Each of these situations was an episode of paper currency depreciation. Today is no different. The rising dollar/euro/yen gold price is simply a reflection of the Keynesian “easy money” policies popular around the world today.
We can also see that, if gold remains stable in value, then the supply/demand considerations that affect industrial commodities do not affect gold, which is a monetary commodity. This is why gold is used as money. If its value was affected by industrial supply/demand factors, we would not be able to use it as money.
Thus, “jewelry demand” or “peak gold,” or any other such factor, has little meaningful effect on gold’s value. Day-to-day money flows will affect the price at which currencies trade vs. gold, but this ultimately affects the currency in question, not gold.
None of these historical “gold bull markets” resulted from jewelry demand or mining supply.
Any attempt to attach a valuation to gold is mostly a waste of time. Concepts like the “inflation-adjusted gold price” or the “gold/oil ratio,” or a ratio of outstanding debt or currency to a quantity of gold bullion, are a distraction. An item that doesn’t change value is never cheap or dear. That’s what “gold is money” means.
The “price of gold” may reach five thousand, ten thousand, a hundred thousand, a million, or a billion dollars per ounce. The gold bubble-callers will be frothing at the mouth, until they finally have the realization that there was never a bubble in gold, but only a crash in paper money.
Gold is money. Always has been. Probably always will be. This time it’s different? I don’t think so.
http://dailyreckoning.com/gold-never-has-been-and-never-will-be-in-a-bubble/
KWN Source Says Asians to Squeeze Silver Shorts
Eric King, KingWorldNews.com
A King World News contact out of London has confirmed that, “Massive Asian buying is going to squeeze the shorts in the silver market. Any reactions in the price of silver will be heavily purchased, and these buyers will take delivery of physical silver.” The source who wishes to remain anonymous agreed with Eric Sprott that this squeeze could take the price of silver to $50 in a matter of months.
November 1, 2010
I have recently been discussing a coming commercial signal failure with John Embry, James Turk and Eric Sprott. As previously mentioned, this is an extremely rare event but when it occurs it is a sight to behold.
Right now, sentiment levels are nowhere near what we see at a top. Keep in mind that Rick Rule was recently discussing with KWN the possibility of future supply shortages in silver, and we are also not seeing the type of dealer activity that is suggestive of topping behavior. These factors are all supportive of a significant move higher in the price of silver.
While the price of silver on a short-term basis can gyrate, the important thing to be aware of right now is that these Asian buyers smell the kill. You can be assured that their intention is to put an incredible squeeze on the silver shorts before this is over.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/1_KWN_Source_Says_Asians_to_Squeeze_Silver_Shorts.html
Currency Swings Show Faith in G-20 Pledge Fading
By Matthew Brown
Traders are losing confidence in Group of 20 finance officials’ pledge to avoid foreign-exchange manipulation, less than a week after the leaders vowed to stop devaluing currencies to prop up their economies.
Volatility among Group of Seven currencies rose to about the highest level in four months since the G-20 meeting ended on Oct. 23, according to the JPMorgan G-7 Volatility Index. Euro- dollar fluctuations jumped 30 percent since Sept. 20, a day before Federal Reserve policy makers said they were prepared to buy bonds and pump more money into the financial system, data compiled by Bloomberg show.
While G-20 nations committed to refrain from “competitive devaluation,” officials from South Korea and South Africa said last week that they may consider currency controls. The reliance on intervention underscores the challenges finance officials face to keep their economies on track after injecting more than $2 trillion to spark growth following the worst financial crisis since the Great Depression.
“Volatility is the price of uncertainty,” said Richard Benson, an executive director in London at Millennium Asset Management, who oversees $14 billion of currency funds. “Volatility’s current elevated level is a function of the currency war issue.”
http://finance.yahoo.com/news/Currency-Swings-Show-Faith-in-bloomberg-388521909.html;_ylt=Apy.XkiJwaiDh62aJaTT_7e7YWsA;_ylu=X3oDMTE2NzZianJyBHBvcwMxMgRzZWMDdG9wU3RvcmllcwRzbGsDY3VycmVuY3lzd2lu?x=0&sec=topStories&pos=7&asset=&ccode=
The Changing Landscape in Gold and Silver
By: James West
Whereas the apparent robust performance of major indices around the world suggests the world is returning to something approaching normal, what we’re really seeing is a long line of traps being set to snag a fresh round of suckers who fall for the mainstream smokescreen. With another US$1 Trillion on the way from the Fed to further devalue the dollar, and with other nations thereby comforted sufficiently to follow suit, gold and silver prices can do naught but rise. Full Story
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