Ignorance

Commenting on today's price action in the Precious Metals would be a waste of time. The days price action, the past 10 days price action for that matter, are representative of nothing. The price action certainly is not representative of the fundamentals of the Precious Metals Markets, and is probably even less representative of of any reaction to price action in the US Dollar.

If the Hoods of the CRIMEX want to offer you the opportunity to purchase and take delivery of Gold and Silver at discount prices, ...oblige them, and grab as much as you can.

Gold falls toward $900 on dollar rise, weak commods
NEW YORK/LONDON (Reuters) - Gold futures fell toward $900 an ounce on Wednesday on a higher dollar and heavy oil losses, losing more than 2 percent as investors preferred the U.S. currency instead of gold as a safe haven in the face of economic uncertainties.


In spite of equities market weakness amid recession worries, bullion failed to rise because of lessened inflation concerns and as flight-to-quality buying was directed into U.S. Treasury bonds and the dollar.
http://www.reuters.com/article/hotStocksNews/idUSTRE56127820090708

Nothing like a steaming bowl of bullshit spoon fed to the waiting masses of financial media disciples. The Dollar was down today -0.06...IT WASN'T HIGHER. Oil prices fell, and the financial talking heads proclaim "inflation is under control". What a load of crap. Once again: HIGH OIL PRICES DO NOT CAUSE INFLATION, HIGH OIL PRICES ARE A SYMPTOM OF INFLATION. INFLATION IS CAUSED BY A RISING MONEY SUPPLY, NOT BY RISING OIL PRICES. If oil prices have fallen for any reason it is because there appears to be a glut of it on the market...buy the dip, Oil prices will be rising again soon enough.

It is far to obvious that something is not right with the markets right now. The fall in markets relative to the Dollar do not stand up to the stink test. The charts above make that abundantly clear. Never forget, the shorts can't cover and profit, if you don't sell to them. Now is the time to buy.

In A World Of Fiction, The TRUTH Is Cast Adrift

“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or today, it’s electronic equivalent), that allows it to produce as many U.S. dollars as it wishes, at essentially no cost.We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."
- Ben Bernanke


Obama Advisor: 2009 Deficit Likely Worse Than Planned
SINGAPORE (Dow Jones)--The U.S. government's budget deficit will likely be wider than expected this year, a top White House advisor said Tuesday.

Speaking at an economic conference in Singapore, Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said the U.S. economy faces a worse situation than previously believed, and the deficit - already the widest since World War II - may surpass a previous projection of around 12% of gross domestic product.
Tyson said, however, her remarks represent her own views and not the administration's official position.

"The government is taking (the economic crisis) as a war," Tyson said.

She said the current U.S. stimulus package is of an appropriate size and includes "a significant amount of investment in long-term growth." But a second stimulus package, with an emphasis on infrastructure, may be needed to put the U.S. economy on the right track, she said.

She added that the current stimulus package should create or sustain 3.5 million jobs, as planned, but its effect on unemployment will be less than previously expected because the crisis has had a greater impact on unemployment than anticipated.

"The question is whether the U.S. economy has reached a level of stabilization yet, but the recent unemployment numbers tell me it hasn't," she said. "Businesses are likely to rehire employees at a slower pace than in the previous two recessions, so unemployment is going to be a lagging indicator."
http://online.wsj.com/article/BT-CO-20090707-701541.html

And once again we were treated to a Precious Metals Market of PURE BULLSHIT. The mere suggestion of a "second stimulus package" should have sent the US Dollar reeling today, and Gold soaring as America's Debt Bomb explodes. It certainly dealt a blow to the equities markets as the traders there begin to see the handwriting on the wall:

"The green shoots are weeds".

The idea of another stimulus package affected the equities markets today as if it were a 10-gallon drum of Round-up. The realization that the much promised "second half recovery' was nothing but talk designed to assuage the public's confidence in the financial system has exposed the recent market rally for what it really was, a sucker punch.

The Great Lie of 2009: “A Recovery Is Around The Corner”
by Martin D. Weiss, Ph.D.
On March 15, Fed Chairman Ben Bernanke told CBS News’ “60 Minutes” that he detected “green shoots” in the economy. And every day since, economic soothsayers have been surveying the landscape, sifting through crops of weeds, trying to find those green shoots.

By late April, famous Wall Street gurus were lining up to declare “the end of the bear market,” and every day since, brokers have been cajoling you to buy the very same stocks they want to sell.

In early June, Obama labor officials declared “a big turnaround in nation’s job market,” proudly announcing that “only” 345,000 jobs were eliminated in May.

We immediately issued a report demonstrating these numbers were extremely deceptive. Even if you accepted them at face value, we said, “less bad news” and “slower disasters” are not exactly signs of a turnaround.

And now, with the new government data released Thursday, their thesis is already being proven dead wrong.

One week ago, California officials publicly declared that they would never default on their obligations, directly refuting the forecast of default I made in this column on June 22: According to the BusinessJournal, Tom Dresslar, a spokesman for state Treasurer Bill Lockyer told the press “Mr. Weiss’ analysis and recommendation, to put it kindly, is misinformed.”

Just two days later, California defaulted on its short-term debt obligations to countless vendors and taxpayers, unilaterally issuing millions of dollars in i.o.u.’s that no one wanted and few financial institutions accepted.

These examples barely scratch the surface of the misconceptions, distortions and outright deceptions that are being perpetrated by high authorities, flooded through the media and used to permeate the American psyche — all the while ignoring the elephant in the room …

The Giant Accumulation of High-Risk
Debts and Bets Called “Derivatives”

The nation’s mountain of derivatives is not a mirage on the future horizon. Nor is it merely a phenomenon of our distant past.

It’s real. It’s here. And it’s huge.

Just ten months ago, it reared its ugly head and shoved the U.S. and Europe to the brink of a global meltdown.

And just last week, the U.S. Comptroller of the Currency (OCC) issued its latest report showing that, despite all the talk of reducing risk and reforming the financial system, U.S. commercial banks still hold record amounts. The latest tally: $202 TRILLION in notional value derivatives. And even that pales in comparison to the global tally by the Bank of International Settlements, now at $592 trillion.
http://www.moneyandmarkets.com/the-great-lie-of-2009-5-34534

You can fool some of the people some of the time, but you can't fool all of the people all of the time. The Day Of Reckoning has arrived. "Less bad" is NOT growth no matter how you spin it and try to con the public. "Less bad" does not a recovery make. The bottom line is the financial crisis is STILL bad, and getting worse. All the "blah-blah" from Bumbling Ben Bernanke's mouth is NOT going to change that. "Hope" is NOT going to change it either. There will be NO recovery until ALL hope is lost, and the US Federal Reserve is destroyed. To suggest otherwise is only perpetuating the CON, giving life to the lie we call the US DOLLAR.

Dollar's Days of Dominance Are Over
By, Jeff Nielson
India commemorated the 4th of July by joining China and Russia in announcing they were seeking “alternatives” to the U.S. dollar (as “reserve currency”). With yet one more “prop” removed from the gangrenous greenback, this left only the submissive Japanese as the last major holder of U.S. dollars who strongly supports its continued status.

Bloomberg reported Saturday that the economic advisor to Indian Prime Minister Manmohan Singh has publicly and explicitly recommended that India reduce the U.S. dollar component of its currency reserves. “The major part of India reserves [totaling $264 billion] is in U.S. dollars – that is something that's a problem for us,” said Suresh Tendulkar.

These remarks come only one day after China's former Vice Premier, Zeng Peiyan stated, “There should be a system to maintain the stability of the major reserve currencies.”

Several comments need to be made with reference to this remark. First, China commonly uses “voices” of those associated to but not in the government to indirectly reveal its thoughts on issues. Thus the fact that Zeng is a former Vice Premier should not be taken to mean that his remark is not indicative of the position of the Chinese government.

Second, there were two subtleties which should cause Americans (and the Obama regime) serious concern. First, Zeng spoke of “major reserve currencies” - making it explicitly clear that he (and China) no longer consider the dollar the sole “reserve currency” today. The other point to ponder is Zeng's reference of a “system to maintain stability” in currency markets. The U.S. dollar was that system.

There is much more at stake here than economic prestige. As the Obama regime floods the world with trillions of dollars more in U.S. Treasuries, the Federal Reserve has already been forced to buy-up a significant part of those Treasuries (i.e. monetizing debt). Monetizing debt alone guarantees the steady decline of the U.S. dollar versus other currencies (with the exception of the British pound and Japanese yen) because other economies have not been weakened to the point of such desperation.

However, as major economies continue diversification out of the U.S. dollar, even as economic growth in these other countries produces growing budget surpluses once again, few if any of those surpluses will be channeled into U.S. dollars.

The process is already well underway. China alone has engaged in currency swaps and trade agreements which by itself, reduces the demand for U.S. dollars by hundreds of BILLIONS per year. Many other countries are also engaged in similar measures – with varying speeds.

Countries either indifferent or antagonistic to the U.S. (Russia, Iran and Venzuela) come to mind, are already well-advanced in practically eliminating the use of dollar in their foreign trade. However, even many of the U.S.'s “allies” (with the Western-dominated Persian Gulf countries coming to mind) are also well down the path of reducing the U.S. dollar to merely one of their major currency holdings.

Indeed, the combination of rapid, extreme dilution of the U.S. dollar, along with rapidly diminishing demand mean there is no “floor” visible for the dollar – at any price level.

Keep in mind that due to the success of the U.S.'s relentless propaganda-machine, most other countries are just beginning to comprehend the dynamics of the U.S.'s unsupportable debts. As that awareness grows, the decline of the U.S. dollar is certain to accelerate rapidly.
http://seekingalpha.com/article/147047-dollar-s-days-of-dominance-are-over?source=email

And yet, despite growing economic desperation, and a global call to seek alternatives to the Dollar, the Dollar clung to the all important 80 handle on the USD Index. Fueled by misguided "safe-haven" buying as the global equity markets rolled over exposing the fallacy of their recent rallies, the Dollar's strength once again supposedly blocked a rise in Gold.

How Long Can the US-Dollar Defy the Law of Gravity?
By Gary Dorsch, Editor, Global Money Trends
In the midst of the longest and deepest, post World-War II recession, America’s financial position with the rest of the world has deteriorated sharply. Three decades of massive trade deficits have turned the United States from the world’s top lender to the world’s largest debtor, - and dependent upon the whims of the so-called emerging nations, laden with huge foreign currency reserves, to finance the bailout of Wall Street Oligarchs, and President Barack Obama’s social programs.

Foreigners own roughly half of the US-government’s publicly traded debt, or $3.47-trillion, representing nearly 25% of the size of the US-economy, the highest level in history. If foreign lenders were to significantly reduce their purchases of US-Treasury notes, without even dumping their current holdings, US long-term interest rates could zoom higher, and the US-dollar could crumble.

That would deal a double whammy to the US-economy. Higher yields on Treasury debt could translate into higher mortgage borrowing rates for homebuyers, - weighing on the housing market, while a weaker US-dollar could lift the price of crude oil to above $70 per barrel, inducing an “Oil Shock” to the world economy. This nightmare scenario has been relegated to the den of doomsayers and fear mongrels, yet is starting to become an increasingly realistic proposition.

Increasingly, some of the biggest foreign lenders to the US Treasury, such as Brazil, China, India, Russia, and Qatar, are grumbling aloud, about the endless string of trillion dollar US-budget deficits projected in the years ahead. Lenders are crying foul over the Federal Reserve’s radical experiment with “Quantitative Easing” (QE) - the printing vast quantities of US-dollars, and monetizing the US-government’s debt.

“America, through this financial crisis, is accumulating a huge amount of debt. It’s a heavy burden on the US-dollar,” warned Jassem al-Mannai, chief of the Abu Dhabi-based Arab Monetary Fund on June 28th. “You have China and Russia proposing an international reserve currency other than the US-dollar. These developments could affect negatively the dollar, and you cannot just ignore them,” he warned.

“We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets,” warned Chinese PM Wen Jiaboa on March 13th. To speak truthfully, I do indeed have some worries. So I call on the United States to maintain its creditworthiness, and abide by its commitments and insure the security of China’s assets. We have already adopted a management policy of diversifying our ($2-trillion) foreign exchange reserves,” Wen warned.
http://news.goldseek.com/GoldSeek/1246993200.php

What can ever beat the gold and silver cartel?
By: Adrian Douglas
The forces that will bring down the precious metals cartel are the forces of supply and demand that have governed economics throughout history.

Paper supply can mimic real supply for quite some time but not forever. The price of gold and silver are set on the Comex futures exchange. The promise to deliver gold and silver in the future can easily swamp the future demand for gold and silver precisely because it is in the future. Investors cannot overpower the cartel in this quaint game of poker because the cartel always has enough fiat money to go "all in" and bluff the long investors.

However, the cartel cannot win this game in the physical market and the front month or cash market of the futures market. For no matter how much fiat money you can produce, it will never be real physical metal.

The world is moving into Weimar-style fiat money creation and the leading culprit is the United States. In this environment investors will take no substitute for gold and silver. They want the real metal. Even foreign central banks such as those in China, Russia, Brazil, and Venezuela are buying physical gold.

The cartel has been using some real gold to leverage its paper gold sales. This is like fractional reserves in banking, where you hope that no more than 10 percent of customers ask for their money.

In the futures and derivatives markets 1 tonne of gold can back 100 tonnes of paper gold sales because only 1 percent of these sales require real metal to be delivered. The market price responds as if 100 tonnes of gold have been sold, not just 1 tonne.

But as more investors want real metal, the leverage of paper becomes impotent. From my work and much of the work of others in GATA there are strong indications that we are getting close to a default in providing real metal. At that point the game will be over, the physical shortage will be clear to everyone, and the price will rocket.
http://news.goldseek.com/GATA/1246860420.php

Oil, Gas Market Speculation May Face Restrictions
July 7 (Bloomberg) -- U.S. regulators say they may clamp down on oil and gas price speculators by limiting the holdings of energy futures traders, including index and exchange-traded funds.

The Commodity Futures Trading Commission will hold hearings this month and next to explore the need for government-imposed restrictions on speculative trading in oil, gas and other energy markets, Chairman Gary Gensler said today in a statement.

“Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities such as crude oil, heating oil, natural gas, gasoline and other energy products,” Gensler said in the statement. “This will include a careful review of the appropriateness of exemptions from these limits for various types of market participants.”

“The CFTC currently sets and ensures adherence to position limits with respect to certain agriculture products,” Gensler said in the statement. “For energy commodities, futures exchanges set position limits and accountability levels to protect against manipulation and congestion. The exchanges are not required to set and enforce position limits to prevent the burdens of excessive speculation.”

Gensler said the CFTC is reviewing exemptions from position limits for “bona fide hedging,” after seeking public comment on whether the exemption should continue to apply to traders who are in the market for financial reasons, rather than those that actually use the commodity.

The chairman also said the agency was going to improve its weekly commitment of traders’ reports by separating out swaps dealers and hedge funds from the larger category of “commercial” traders. The agency will continue to collect and report data from swaps dealers and index investors, extending a “special call” from last year, Gensler said.

“Enhancing the quality of information in these weekly reports will better inform market participants and the public about the positions of the various types of traders,” he said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQkKJvVJLVP4

Goldman May Lose Millions From Ex-Worker’s Code Theft
July 7 (Bloomberg) -- Goldman Sachs Group Inc. may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said.

Sergey Aleynikov, a 39-year-old ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, a citizen of America and Russia who joined the bank in 2007, is charged in a criminal complaint with stealing the trading software. Teza Technologies LLC, a Chicago-based firm co-founded by a former Citadel Investment Group LLC trader, said it suspended Aleynikov, who started there on July 2.

At a court appearance July 4 in Manhattan, Assistant U.S. Attorney Joseph Facciponti told a federal judge that Aleynikov’s alleged theft -- the largest breach at Goldman Sachs -- poses a risk to U.S. markets. Aleynikov transferred the code, worth millions of dollars, to a computer server in Germany, and others may have had access to it, Facciponti said, adding that New York-based Goldman Sachs may be harmed if the software is disseminated.

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public yesterday. “The copy in Germany is still out there, and we at this time do not know who else has access to it.”
http://www.bloomberg.com/apps/news?pid=20601103&sid=axYw_ykTBokE

GATA urges SEC, CFTC to probe Goldman trading program
by: CHRIS POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.

GATA today urged the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission to investigate the Goldman Sachs Group Inc. computer trading program that, according to a federal prosecutor, the bank acknowledges can be used to manipulate markets.

GATA's complaint referred to the Bloomberg News story reporting the arraignment in U.S. District Court in New York of a former Goldman Sachs employee accused of stealing the program. The prosecutor, Assistant U.S. Attorney Joseph Facciponti, was quoted as telling the court: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

In letters to the SEC and CFTC, GATA wrote: "The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair. The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades."

GATA asked each commission "to investigate Goldman Sachs' trading program urgently and report its findings publicly."

The text of GATA's letters is appended.

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

* * *

GOLD ANTI-TRUST ACTION COMMITTEE INC.
7 Villa Louisa Road, Manchester, Connecticut 06043-7541

July 7, 2009

Gary Gensler, Chairman
U.S. Commodity Futures Trading Commission
3 Lafayette Centre
1155 21st St., N.W.
Washington, D.C. 20581

Mary L. Schapiro, Chairman
U.S. Securities and Exchange Commission
100 F St. N.E.
Washington, D.C. 20549

Dear Chairman Gensler / Dear Chairman Schapiro:

I'm enclosing a copy of a report distributed July 6 by Bloomberg News Service about the U.S. government's prosecution of a former employee of Goldman Sachs Group Inc. involving the purported theft of a Goldman Sachs computer trading program. The report quotes Assistant U.S. Attorney Joseph Faccipointi as saying in U.S. District Court in New York City: "The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways."

If the report quotes the assistant U.S. attorney correctly, and if he was characterizing Goldman Sachs' position correctly, then Goldman Sachs claims to have possession of a computer trading program that can manipulate markets. The assistant U.S. attorney's comment can be construed to suggest Goldman Sachs considers its own manipulation of markets to be fair, while such manipulation by others would be unfair.

The court proceeding described in the Bloomberg News story would seem to impugn all markets in which Goldman Sachs trades. On behalf of the Gold Anti-Trust Action Committee Inc., I ask your commission to investigate Goldman Sachs' trading program urgently and report its findings publicly.

Thanks for your consideration.

With good wishes.

CHRIS POWELL
Secretary/Treasurer

As I Was Saying Last Friday...

So You Think Gold Fell Due To A “Strong Dollar”? Don’t Make Me Laugh
By Andy Hoffman
Just a month ago, the Dow Jones Industrial Average was completing a bizarre run from 6,800 to 8,800, following the monster decline from 14,000 less than a year ago. Aside from the obvious “dead cat bounce” phenomenon, the market (helped, of course, by the omnipresent PPT) was aglow with dreams of “green shoots of economic recovery”, a propagandist platform created by a combination of Washington, Wall Street, and scheming media outlets such as CNBC.

There was no real evidence of such a recovery (even in “massaged” government figures), other than that the freefall of economic activity that commenced last autumn had started to slow to a more normalized decline, hardly what I would call reason for excitement. And given the major bankruptcies of General Motors and Chrysler that have occurred since then, as well as continued declines in real estate prices and rising unemployment, I find it laughable that anyone would entertain such a ridiculous idea that the economy is “bottoming.” But that’s another story altogether.

At that point, on roughly June 5th, the stock market peaked following the “bombshell” (facetious) news that May U.S. non-farm payrolls had “only declined by 345,000” compared to the 530,000 estimate. Never mind that the government’s favorite new fudging tool, the employment “Birth/Death model”, added a miraculous 220,000 phantom jobs, its highest level ever by a large margin (except for April, when it added 226,000), preventing the real number from being reported as 565,000. Nor that the ADP employment report, released days earlier, claimed that 473,000 jobs had been lost. All that mattered to the public is that the U.S. government said it was just 345,000, and as we all know, the U.S. government is always truthful.

By the way, yesterday’s reported 467,000 June job loss included a 185,000 phantom job gain from the aforementioned Birth/Death Model, meaning the real number was closer to 652,000. In fact, I’d argue that, if anything, the amount of unreported jobs is going DOWN, not up. Does anyone know someone that just lost their job, and as a result is starting their own business in this environment?

Yeah, right.

In the backdrop of the above stock market scenario, gold had quietly crept up to $980-$990, where over a two-week period in late May/early June it mysteriously was blocked at least a half dozen times in its attempt to yet again reach the important psychological $1,000 level, all at a time when “inflation expectations” were soaring yielding surging interest rates and commodity prices.

However, as you can see below, gold’s rise was finally put to rest the day of the June 5th “better than expected” employment report, with the newspaper headlines gleefully shrilling “gold falls due to strong dollar, end of safe haven trade” because the dollar happened to rise that day. Of course, I challenge anyone to find even one piece of evidence to support the assumption that gold demand was falling (in fact, to the contrary), not to mention that the dollar, even after that day’s rally, was still sitting near its lows after a painful 10% correction (10% is a HUGE MOVE for a major currency).

But that’s how the Gold Cartel game works.
http://news.goldseek.com/GoldSeek/1246776300.php

This Smells Worse Than Fish

If the month of June now passed coughed up anything of value to the Gold/Silver Bugs it was more proof that their markets are a scam.

We learn early in our Gold Bug apprenticeship that Gold is "the inverse of the US Dollar". Silver Bugs recognize early on that Silver is more often tied to Oil's hip, or Coppers leg, than it is to the US Dollar.

We also learn early on that both Precious Metals are of finite supply, limited by their availability "in the ground", and that the US Dollar has an infinite supply, unlimited thanks to the invention of the printing press.

Therefore, in theory, if the supply of US Dollars rises unchecked, the price of Gold and Silver should rise. Too many Dollars chasing too few goods. Inflation.

But that "theory is only valid in a "free market" unhindered by derivatives and flim-flam. Enter the CRIMEX over at the New York Mercantile Exchange [NYMEX]. This is where the supply of Gold and Silver becomes infinite through the wonder of the "futures contract". This is where criminals, working for the US Government, create Gold and Silver out of thin air, and sell it to an, until now, unsuspecting public.

Supposedly, the NYMEX is regulated by the U.S. Commodities Futures Trading Commission [CFTC].

From the CFTC home page:

Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000.

In 1974 the majority of futures trading took place in the agricultural sector. The CFTC's history demonstrates, among other things, how the futures industry has become increasingly varied over time and today encompasses a vast array of highly complex financial futures contracts.

Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.
http://www.cftc.gov/aboutthecftc/index.htm

Too bad they don't practice what they preach. The CFTC is an utter failure. Today the NYMEX futures markets, in almost any commodity you chose to observe, hardly represent "price discovery". They are much more representative of a casino where the house rarely loses. The house being the the "big banks" financed by the US Government's unending supply of Dollars.

How is it then, if the CFTC is doing its job, that just in Silver alone, position limits are exceeded by as much or more than 100%?

According to statistics compiled by Ted Butler, "In silver, there are no hard position limits in force. There used to be, but the CFTC allowed the COMEX to replace hard position limits many years ago. Instead, now there is an “accountability limit” of 6,000 contracts. This limit is regularly exceeded by the big silver shorts, but rarely by the longs. Since there are 5,000 ounces in a COMEX futures contract, the accountability limit is equal to 30 million ounces."

Let's do a little math. [This is why, as much as we hated it in junior high school and swore we would "never need to know this stuff", we still payed attention.] As of last week, the number of open futures contracts in Silver was 105,699. If each contract represents 5000 ounces of Silver then these futures contracts "represent" 528,495,000 ounces of Silver.

Let's hop over to the COMEX Silver warehouse and see how much Silver they have in there to back up those 105,699 contracts. Oh my, look at this. There is ONLY 117,583,739 ounces of Silver in storage in the COMEX Silver warehouse. Doing some more math we can see that the COMEX futures contracts represent three and a half times as much Silver as there is available to cover these contracts. This smells worse than fish.

Ted Butler points out that "CFTC data show that the 4 largest shorts currently hold an average position of almost 12,500 contracts each, while the 4 largest longs hold an average long position of just over 3500 contracts each."

"The current Commitment of Traders Report (COT) for positions held as of June 23, indicate the 4 largest traders as holding a net short position of 47.2% of all COMEX futures contracts, as well as almost 38% of equivalent world silver production. Over the last year, the CFTC has reported, via its Bank Participation Report, that 1 or 2 US banks have held a net short position of more than 33% of all COMEX futures contracts and 25% of world production."

These large shorts [aka US Government funded Banks] are represented in the COT Report as "commercial". What is a commercial trader according to the CFTC? Glad you asked.

Commercial and Non-commercial Traders. When an individual reportable trader is identified to the Commission, the trader is classified either as "commercial" or "non-commercial." All of a trader's reported futures positions in a commodity are classified as commercial if the trader uses futures contracts in that particular commodity for hedging as defined in CFTC Regulation 1.3(z), 17 CFR 1.3(z). A trading entity generally gets classified as a "commercial" trader by filing a statement with the Commission, on CFTC Form 40: Statement of Reporting Trader, that it is commercially "...engaged in business activities hedged by the use of the futures or option markets." To ensure that traders are classified with accuracy and consistency, Commission staff may exercise judgment in re-classifying a trader if it has additional information about the trader’s use of the markets.

A trader may be classified as a commercial trader in some commodities and as a non-commercial trader in other commodities. A single trading entity cannot be classified as both a commercial and non-commercial trader in the same commodity. Nonetheless, a multi-functional organization that has more than one trading entity may have each trading entity classified separately in a commodity. For example, a financial organization trading in financial futures may have a banking entity whose positions are classified as commercial and have a separate money-management entity whose positions are classified as non-commercial.

I find it difficult to believe that a "bank" is involved in the Silver Futures Market to hedge their business. I don't know of any banks that operate Silver mines, do you? Why would a "bank" then be hedging their production of Silver if they aren't producing any?

Oh wait, I get it. They are hedging their production of Silver that doesn't exist? That has to be it! The banks have "created" 410,911,261 ounces of Silver via their production of 105,699 futures contracts. Futures contracts that according to CFTC regulations they are not "legally" permitted to possess. [I understand these four or less banks don't own "all" the COMEX futures contracts, but for the sake of argument we will use the toal number of cotracts in our calculations because these banks hold such a high percentage of them.]

Does this strike you as an example of the CFTC "protect[ing] market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options"? No I didn't think it does either.

The CFTC itself is a fraud. The Gold and Silver Markets on the COMEX are a fraud as well. Need more proof? Let's go back to our opening observation that Gold trades as an inverse of the US Dollar. Consider the following statistics and tell me if you still believe that Gold trades in the inverse of the US Dollar.


June 1, 2009 / Close July 1, 2009 / % Gain / Loss

GOLD 975.30 / 940.80 / -3.5%

SILVER 15.60 / 13.77 / -11.7%

OIL 68.58 / 69.31 / +1.0%

USD 79.21 / 79.66 / +.005%

COPPER 231.90 / 233.05 / +.005%



The US Dollar was virtually unchanged during the month of June, yet the price of Gold dropped 3.5%. Silver, which trades in the shadow of Gold dropped dramatically, falling 11.7% in the month of June. Interestingly, the prices of two key industrial commodities, Oil and Copper, remained virtually unchanged in the month of June along with the Dollar. Something smells worse than fish.

We can only surmise that something nefarious is at work behind the scenes of the COMEX Gold and Silver Markets that negates the hugely bullish fundamentals that "should" be supporting both of them in these souring economic times. I have posted a continuous stream of essays on this blog that attempt to identify the manipulation of Precious Metals Markets, so I will refrain from trying to do so myself here. I just find these statistics from just the past month a bit "disturbing" and certainly revealing.

The frustration that we all feel because of this "obvious manipulation" is certainly beginning to feel like a weight we Gold / Silver bugs seem destined to bear. We have been rewarded with rising prices in these two Precious Metals since the inception of their Bull Market in 2001, but we haven't been fully rewarded. I still feel like I am being robbed each and every day by my government, and cheated by those that are supposed to be protecting my interests in these markets. I remain vigilant, and you should too. The TRUTH is out there. And in time, the TRUTH will crush the lies we are forced to endure. The TRUTH will eradicate the stench of Bullshit.

Let The Countdown Begin

World Gold Council welcomes clarity regarding IMF gold sales
“World Gold Council welcomes the news that the US Congress has passed the Military Supplemental Bill thereby finalising the process allowing the IMF to sell 403.3 tonnes of gold in a manner that will have no impact on the smooth running of the international gold market.

“This process began with the Crockett Report in 2007, which recommended that the IMF adopt a new income model, including the establishment of an endowment, funded by the proceeds of limited and structured gold sales. More recently at the G-20 Leaders Summit in April of this year, heads of state proposed to use additional resources from the gold sales to provide an extra US $4 billion for poor and indebted countries over the next 2-3 years. This will not impact either the total level or the manner of the gold sales.

“The IMF has stated publicly that its gold sales should be coordinated with current and future Central Bank Gold Agreements (CBGA), whereby signatories have agreed to limit their gold sales to no more than 500 metric tons annually.

“Aram Shishmanian, CEO, World Gold Council, said: ‘We are pleased to see that the IMF’s plan to sell gold in a structured and non-disruptive manner has gone through due political process without problem, which is a credit to the responsible behaviour of all parties involved in the process. These sales will not constitute any net addition to the amount of gold the market is already expecting from official sector sources as a whole, and therefore we anticipate zero market impact.’”
BusinessWire, June 19, 2009.

This Summer May Prove Hot for Gold Prices Despite the Seasonal Tendencies
P. Radomski, Editor Sunshine Profits
I am often asked at this time whether it is a good idea to be in the precious metals market during the summer period known as the Summer Doldrums, in which demand for gold dries up temporarily while farmers in India plant crops and wait for the Monsoon rains. When they harvest in the early September, demand for gold picks up again as they are anxious to convert their profits into gold. After looking at the seasonal effects on gold one might think it prudent to wait through the summer in hopes of entering the market at lower prices. However, after considering important fundamental factors such as the increase in the money supply, it is clear that it is not a good idea to wait until summer’s end to enter a market that rather sooner than later is heading higher. Naturally, there will be pullbacks along the way, but the potential cost of being completely out of the market is too steep.
http://news.goldseek.com/GoldSeek/1246284742.php

The Time Has Come
By Howard S. Katz
Well people, we are here. I am here. Gold is here.

But the question, dear reader, is are you here?

Gold is going to turn and punch through the $1000 barrier like it was not there. The U.S. dollar is going to drop like a stone. And yet, the vast majority of people are walking around in a daze. When I talk to ordinary Americans, they tell me that things are bad. This is their way of agreeing with the consensus media position of last fall which confuses falling prices with economic bad and buys the whole media line of that time.

You want to see bad? You are going to see bad. But it is not the bad of falling prices. By the time the current Administration is over, the average American will beg for falling prices.

The thing you have to keep firmly in mind is that there are many people in the world who want to steal your wealth. They go about it in many ways. The common thief is the most widely known, but he is not very successful. The police come and lock him away. As a result, more sophisticated methods of stealing are developed. For example, during the Middle Ages, the average person was reduced to being a serf. This meant that he had to go into the occupation of his father and was not allowed to quit his job. His feudal lord allowed him a bare subsistence and took the rest for himself. This was considered legal until, in the 17th century, the people rose up, established a democracy and voted in a Bill of Rights.

Ever since that time, a group of evil people have been trying to reestablish the hold which the medieval aristocracy had over their serfs. They have only been partially successful. Here in the United States, this group succeeded in obtaining the special privilege of printing money (i.e., of doing what would be called counterfeiting if anyone else did it). This was enacted on March 9, 1933 (The Emergency Banking Bill of 1933), the very first act of the new F.D.R. Administration. This gave the commercial bankers the privilege to create money. Savings banks got the privilege in the 1980s. And the banks’ big corporate loan customers benefit from the privilege indirectly (via lower interest rates). In a general sense, people who get special privileges from the government which enable them to steal your wealth are called a power structure. A power structure should be thought of as a watered down version of the medieval aristocracy. They are always dangerous. They want your wealth, and they want your freedom.

As noted, the power structure in the United States today operates by issuing paper money. They donate to both political parties and thereby get their agents installed as economic advisors. For example, Henry Paulson was the agent of Goldman Sachs, installed as the economic advisor to President Bush. It seems to run in the Bush family to know nothing about economics.

Greenspan, to curry favor with the power structure, eased credit from 6% in 2000 to 1% in 2003. At the same time he printed large amounts of money. This caused the housing bubble, which, for quite a while, made lots of money for Goldman Sachs and many other banks and Wall Street firms. It also made houses too expensive for the average American to afford. When there was finally a pause in the printing of money, housing prices collapsed. This caused what is called the sub-prime crisis and revealed Goldman Sachs and the other Wall Street houses for what they were – a collection of frauds.

It was the number one priority of Henry Paulson to prevent the collapse of his old buddies. They were in (a well deserved) crisis. So he ran to President Bush and shouted that the country was in crisis. Bush picked it up. The media picked it up. There was an atmosphere of hysteria created, and using this atmosphere of hysteria the power structure rammed through the bank bailout of October 2008.

This was called a taxpayer bailout of the banks, but there was no tax increase associated with it, and the media’s reference to it as a taxpayer bailout was another in a layer of lies. The average American did pay for the money given to the banks and Wall Street, but not via a tax increase. In fact, the money was created out of nothing by the Federal Reserve from Sept. to Dec. of last year as you can see in the above chart.

At the present time, it is better to use the monetary base as a measure of what is going on because the Federal Reserve is lying about the money supply. They are reporting the nation’s money supply as smaller than the monetary base when in fact the base is a part of the money supply.

Liar, liar, pants on fire.

So to sum up what is happening, the modern American power structure is trying to rob you. They squandered enormous amounts of wealth in the early years of this decade (because they are incompetent fools). They don’t want to pay for it. They want you to pay for it. That was the “crisis” of 2008. Their technique is to control both parties via campaign donations and get whoever is elected to steal from you for their benefit.

But their only method of stealing is via the paper money process. That is, they are counterfeiters, not conventional thieves. This is a weakness. It means that you can protect yourself from the depreciation of the (paper) currency by using gold as a store of value.
http://news.goldseek.com/GoldSeek/1246283054.php