The Fed Will Re-Implement 'Quantative Easing' on a Massive Scale: Marc Faber

Well, dear reader, we've seen graphs similar to this quite a few times over the past three years... the last being on July 1st. After a yawner of a day in the Far East and early trading in London, the U.S. bullion banks pulled their bids at the Comex open... and that, as they say, was that. And, as per usual, the low of the day [$1,185.20 spot] was at the London p.m. gold fix. The gold price recovered about $8... but JPMorgan et al obviously had it on a short leash after its low was in for the day. Volume was pretty heavy.

The silver chart looks no different, of course. This is the metal that JPMorgan in particular is after. Silver's low of the day [$17.73 spot] occurred at precisely 10:00 a.m. in New York. Silver closed thirteen cents higher than its low at $17.86 spot. Silver volume was pretty decent as well.

Well, I guess you've already figured out that there was nothing free market about what happened in both the gold and silver pits yesterday. This was all collusively orchestrated by the big bullion banks. Platinum and palladium weren't spared either... with the bids on both pulled at the New York open as well. It took Ted Butler quite a number of years to pound into my brain that what happens anywhere else in the world as far as the precious metals are concerned, is totally irrelevant. The price is always set by the big bullion banks... let by JPMorgan in New York. I hope, dear reader, that you've got that figured out now, too.

The dollar hit its nadir yesterday morning minutes after 8:00 a.m. Eastern time... and by 1:00 p.m. had gained about 50 basis points. The time between the Comex open and the London p.m. fix is just under two hours. During that time, the dollar gained about a third of cent. So it's more than a stretch to say that the action of the U.S. dollar had anything to do with yesterday's price 'action' in gold. This isn't rocket science... this is price management.

With the futures already down hard... it should have been no surprise that the gold price was going to get killed. It's not good form for the price of gold to be advancing while the equity markets were getting hammered... and 'da boyz' made sure of that. The precious metals stocks gapped lower... and stayed down all day long... closing down 3.31% on the day.

The CME's Friday Delivery Report showed that 49 gold and zero silver contracts were posted for delivery on Tuesday. The link to what little action there was, is here. There were no reported changes in either GLD or SLV yesterday. But the U.S. Mint had another sales report. They showed that another 8,000 ounces of gold disappeared in the gold eagle program... along with another 3,000 24-K gold buffaloes... and another 171,500 silver eagles were sold. Month-to-date... 68,500 ounces of gold have been sold in the gold eagle program... 16,000 24-K gold buffaloes... and 1,648,000 silver eagles. And the month is only half over.

The Comex-approved depositories reported that another large chunk of silver was withdrawn on Thursday. This time it was 923,430 troy ounces. The link to all the action is here.

The latest Commitment of Traders report [for positions held as of the close of trading on Tuesday, July 13th] showed little change from the previous week... but what changes that were reported, were positive. In silver, the bullion banks decreased their net short position by 1,153 contracts... 5.76 million ounces of silver... which is nothing to sneeze at. In gold, the bullion banks decreased their net short position by a tiny 794 contracts... hardly a rounding error in the grand scheme of things. The link to yesterday's report is here.

The '8 or less' bullion banks are still short a grotesque 316.7 million ounces of silver... 171 days of world production. In gold, the '8 or less' bullion banks are short 28.9 million ounces... which represents about 137 days of world gold production. These are called 'concentrated short positions' for a reason... and that's clearly visible in these numbers.

Without a doubt, the bludgeoning of the gold and silver prices yesterday, certainly caused a lot more leveraged longs to throw in the towel. And, also without a doubt, the bullion banks were snapping up all these long positions as fast as they were being puked up... and this they did by covering their own short positions, or going long themselves... and ringing the cash register at the same time. Crime pays... and pays well, dear reader. Will CFTC Chairman Gary Gensler actually do the right thing and end it... or will he just do what he's told and do nothing? Ted is still very hopeful... and I'm still camped out in Missouri somewhere.

As usual, here's Ted's latest weekly interview with Eric King over at King World News. I urge you to take a break from this column and listed to what Ted has to say... as it's certainly worth it this week... and the link is here.

I'm going to take a few minutes of your time and walk you through the July Bank Participation Report. This report shows how many banks [both U.S. and foreign] are long and short the various markets... plus how many Comex contracts they are long and short. Silver and gold are the two commodities that are of interest here. Here's the link to the July report... with silver and gold being about two thirds of the way down the page... and it's ever so simple to follow... and I mean it.

In silver you will notice that 'X' number of U.S. bullion banks are long 257 Comex contracts and short a whopping 31,803 Comex contracts. As the numbers show... the 257 long contracts represent 0.2% of total Comex silver open interest which is stated here as 118,962 contracts. The 31,803 short contracts represents 26.7% of total open interest.

But what the silver numbers doesn't say is how many U.S. banks hold those positions. The CFTC used to publish them, but once Ted Butler discovered the Bank Participation report and started to write about it, the bullion banks screamed bloody murder, so the CFTC changed the report so that if there are less than 4 U.S. banks holding either a long or short position... the number is not shown. They don't show the number of non-U.S. banks either, because if they did... by the process of subtracting that from the total number of banks involved, you could figure it out all by yourself, dear reader... and we mustn't have that now, must we?

From past historical BPR data, the number of U.S. banks has pretty much always been two... and I see nothing in these numbers that indicate that this has changed. I can also pretty much say that 95% [or more] of that 31,803 Comex contracts held short... is held by JPMorgan... and the other 5% [or less] is most likely held by HSBC USA. So if you subtract 0.2% from 26.7%... you will see that JPMorgan and HSBC are short 26.5% of the entire Comex open interest in silver... and if you take out all the market-neutral spread trades... that shoots the percentage to well over 30% of the Comex silver market that is held short by these two banks. Any questions so far?

Looking at the six [8-2=6] non-U.S. banks' Comex silver positions... they hold 2,284 long positions and 614 short positions... for a net long position of 1,670 Comex contracts. This represents 1.9%-0.5%=1.4% of the total Comex open interest in silver.

Two U.S bullion banks are net short 26.5% of the total Comex open interest in silver... and 6 Non-U.S. banks are net long 1.4% of the total open interest. Who controls the silver price on the Comex, dear reader.

I'll leave gold up to you... which is a couple down from silver. There are 4 U.S. bullion banks here, so they show all the numbers. But even a cursory glance shows that the 4 U.S. bullion banks are net short 137,756 Comex contracts in gold [13.77 million ounces]... which represents 23.8% of the entire gold open interest on the Comex. And I'll bet you dollars to doughnuts, dear reader, that 95% of that 13.77 million ounces is held short by Morgan and HSBC. The 14 non-U.S. bullion banks are net short a whole 6,253 Comex contracts... which is 1.1% of total Comex open interest.

So, once again, 23.8% of the entire Comex open interest in gold is held short by two U.S. banks... the other two banks are virtually immaterial. But 14 non-U.S. banks are net short 1.1% of the total Comex open interest. Who controls the price?

This is a JPMorgan operation from one end to the other. But in all fairness, JPMorgan is only the executioner. They receive the order to swing their axe from either the Federal Reserve, the U.S. Treasury... or both. It's as simple as that. Then the boyz at Morgan pick up the phone, call the other bullion banks, set up the date and time... and then collectively pull the trigger... just like they did yesterday... and July 1st. That's all there is, dear reader... there's no more to it then that.

While on the subject of silver, my coin guy informed me yesterday that the Royal Canadian Mint is running two to four weeks behind on virtually all of their bullion products right now... especially the 0.9999 silver Maple Leaf. And, to top that off, Chris Powell sent me an e-mail from someone that had just contacted Kitco about purchasing silver coins and rounds... and this is the reply he got... "Good afternoon Sir/Madam, Thank you for your e-mail. Unfortunately, many of the Silver products we sell, are currently out of stock for Canadians. As such, the items are 'Only Shipping to the US '. Certain products are 'Only shipping to the US ' due to our inventory at our Vaults in Canada. In other words our inventory is too low (depending on the item) to accept any new orders from Canadian or International customers. As such, we would simply have sufficient inventory to sell the items to US customer[s] as we also have Vaults located in the United States from where our products are also shipped. The product will be once again available, when we receive a new shipment of inventory. In the mean time we suggest signing up for our ‘Bullion Alert Service' which provides an e-mail notification as soon as a shipment arrives for the item(s) selected." Here's a link to Kitco's product page. Except for the 1,000 ounce good delivery bar, they are completely out of all silver inventory for Canadian and international customers. Only if you live in the USA is there anything available at all.

I'm going to start today's commentary off with a couple of GATA releases. The first is a story from the July 7th edition of the Financial Times in London. Their headline reads "Puzzle over Banque de France's Lehman Role". Chris Powell's headline reads "FT stumbles into central bank admissions of market manipulation". The Governor of the Banque de France has an immediate response which appears in the July 8th edition of the FT... and that is included in the GATA release as well... and the link is here.

The second GATA release is a story posted at Reuters in the U.K yesterday. The headline there reads "BIS Footnote Unlocks Major Development in Gold Use". Chris Powell's headline reads "Reuters actually puts gold questions to BIS, which clams up". This is a story that just doesn't want to go away... and the link is here.

The next gold-related story is to be found in yesterday's edition of Canada's Financial Post. The headline reads "Can gold be a haven for all of inflation, deflation and stock crash?"... and the link to the story is here.

Here's a piece by Bullion Management Group's Nick Barisheff that appeared in the June issue of Resource World Magazine. It's rather longish, but it's a wonderful read with lots of excellent graphs... and Nick is a pretty good writer as well. The headline reads "Why Bullion is Outperforming Mining Stocks"... and you should give it your full attention. The link is here... and I thank reader L.G. for sharing it with us.

Marc Faber is at it again. In this Bloomberg interview, Faber states that he believes that the Federal Reserve will re-implement 'quantative easing' on a massive scale... probably early in the fall.... before the elections in November. The video clip is less than two minutes long... and is worth your while... and the link is here.

Here are a couple of short NBC videos that were sent to me by reader Doug Beiers shortly after midnight. They're posted on NBC25's website connectmidmichigan.com. It's wonderful to see stories like this pop up in America's heartland. There's hope for us yet! It's a 2-part special entitled "Competing Currencies". They are definitely worth watching... and the link to Part I is here... and Part II is here.

Here's a story that was filed late last night in The Telegraph over in London. I must admit that the headline was a real surprise. I'm sure that this will be all over the media in the U.S. this weekend and early next week. It reads "US banks paying more than half of Britain's £2.5bn bonus tax windfall". America's three largest banks have paid more than £1bn in taxes on the bonuses of their UK-based staff, highlighting the bumper windfall the Government received from the one-off levy. Reader Roy Stephens slid this into my in-box in the wee hours of Saturday morning... and the link is here.

My last story... and long read of the day... is this Bloomberg essay... and, once again, it's courtesy of reader Roy Stephens. It may come as a shock to some [but not to this writer] that most large U.S. and European banks... plus a lot of other large banks scattered throughout the world... are major conduits for drug money. It's one of the few growth industries out there... along with oil and weapons. This essay... headlined "Banks Financing Mexico Drug Gangs Admitted in Wells Fargo Deal"... barely scratches the surface. Remember those two stories I ran about the $3 billion in cash that has left Kabul for Dubai and other countries in the Middle East... in boxes, suitcases, bags, pallets, etc. Sooner or later it ends up in a bank somewhere. And the really big banks that cater to this kind of clientele, certainly do it very quietly and very discreetly... but it gets done, as there's big dollars involved... really big dollars. The link to this must read story is here.

In periods where “black swans” are no singular occurrences, but are practically coming in flocks, the status of gold as a safe haven has yet again proven its worth. - Nassim Nicholas Taleb

Today's 'blast from the past' is one I stumbled on quite by accident. I'd forgotten that I even knew this song, as you don't hear this group's music played much anymore... so turn up your speakers and click here.

Well, after spending most of the week 'failing' to close above their respective 50-day moving averages... JPMorgan et al pulled the pin on gold and silver yesterday morning. As Ted Butler said in his interview earlier in this column, there's no way of knowing how much further down we can go... silver's 200-day moving average is 20 cents below Friday close... but gold's 200-day moving average is $50 and change lower. Is that what they're really gunning for? Only 'da boyz' know for sure. Here's gold's 1-year chart. It shows the bullion bank-controlled failures at the 50-day moving average... and then the waterfall at the Comex open yesterday morning.

In private commentary to his subscribers yesterday, Ted had this to say about silver... "The one thing I am not concerned with in the least is whether the silver manipulation is going to end soon, regardless of CFTC involvement. Everything I look at says the time is nigh; physical market conditions being at the top of a long list. So convinced am I or the silver manipulation's demise that let me advance an idea I don't mention very often. It's not just a question of the timing, but more in the nature of how the silver manipulation will end. By definition, all manipulations end suddenly and violently in price. I am convinced that the silver manipulation will end with the most violent move to the upside in history. I see no other way. It will be, quite literally, almost an overnight affair, with the silver price moving higher in the shortest time ever. Of course, I can't tell you which night, just that it feels real close to me. Therefore, this a time for maximum exposure; including [if you've taken complete leave of your senses] call options." Ted's website can be found by clicking here.

Before I sign off on this column, I've got one last thing to lay on you. The time has come when you have to stop saying your going to do something... and actually do it. The situation is now so dire in the Western world... particularly in the United States... that I seriously doubt that the world as we know it will exist by the end of this year. You must internationalize your wealth... and you must start immediately! Doug Casey et al have been going on about this for years. Well, time is almost up. The Casey team has spent the last couple of months putting together a comprehensive Special Report for investors who want to protect themselves and their families by “going global.” So please make sure to read this – I can’t emphasize enough how critical it is to start making your preparations as soon as possible. Learn all about this Special Report by clicking here.

As a personal note to the above, I can tell you that I will be long gone from Canada shortly after this whole thing blows sky-high. I was born here back in '48... and I love my country... just as much as you love yours, dear reader. I'm 61 years young... and pulling up stakes will not be easy. But the writing is on the wall for us here in Canada as well... and I must admit that Uncle Sam is just a little close for comfort. So, if I'm still writing my daily commentary at that time, it won't be from my family room in Edmonton. It will be someplace far, far away... and from a country that's a lot warmer in the winter time!

My passport is current... and I'm just waiting. How prepared are you? That's why I urge you to check out the Special Report linked above.

Enjoy the rest of your weekend... and I'll see you here on Tuesday.