Welcome To The Golden Minerals HUB On AGORACOM
Golden Minerals is a junior silver producer with a strong growth profile, listed on both the NYSE Amex and TSX.
Message: Ed Steer this morning
Central Banks Are Engaged in a Desperate Battle on Two Fronts
"We are living in very dangerous times. It matters not whether the whole system collapses before Hallowe'en...or before Christmas...we're pretty much done for anyway."
¤ Yesterday in Gold and Silver
The gold price didn't do much at all on Wednesday, with the New York high coming shortly before the equity markets opened in New York yesterday morning. At that high, gold was up about five bucks from Tuesday's close...but then began a long, slow slide into the close of electronic trading at 5:15 p.m. Eastern time. Gold closed at $1,642.70 spot...down $12.40 from Tuesday's close. Net volume was pretty light at around 107,000 contracts. By the way, for you newbies out there, a gold contract on the Comex futures market is 100 ounces of the stuff.
The silver price was somewhat more 'volatile' during the Wednesday trading day. Like gold, silver headed south shortly before 2:00 p.m. during the Hong Kong afternoon...and was down about seventy cents by 10:00 a.m. in London.
Then, the price rallied into the London silver fix at noon local time...and the New York high came at the same moment as gold's...minutes after 9:00 a.m. in New York. It was all down hill from there...with the New York low coming in the very thinly traded New York Access Market at 3:30 p.m. Eastern.
Silver rallied a bit from there, but still closed down 81 cents at $31.23 spot. With price movements like that, net volume was naturally pretty high at 42,000 contracts. A silver contract is 5,000 troy ounces....five Comex good delivery bars.
The dollar appeared to be a factor yesterday...but that doesn't explain the out-of-all-proportion drop in the silver price.
And if you're looking for some explanation for the slaughter in the precious metal shares yesterday...I don't have one...at least not one that I'm prepared to 100% hang my hat on. I was just as shocked and amazed as you were.
But, back in the bad old days five or ten years ago whenever we at GATA saw an out-of-the-blue price drop in the shares that was totally counter to what the metal price was doing, meant that it was a forerunner to a price smash-down by the JPMorgan et al...as the insiders unloaded their positions in preparation for what was to come. I'm not suggesting that is the case here, but it's the only explanation I can come up with.
We'll find out pretty quick if this theory holds any water this time...and I'd be delighted to be proven wrong. The HUI finished down a whopping 5.72%.
The same can be said for the silver shares, as Nick Laird's Silver Sentiment Index got clocked for 6.37%
(Click on image to enlarge)
The CME's Daily Delivery Report showed that 25 gold and a rather large 153 silver contracts were posted for delivery on Friday. In silver, the big short/issuer was Jefferies...and they, along with JPMorgan in both their proprietary and client account, were the big stoppers. The action is worth a quick look...and the link is here.
There were no reported changes in GLD and SLV yesterday.
The U.S. Mint sold another 2,500 ounces of gold eagles...along with another 1,000 one-ounce 24K gold buffaloes.
On Tuesday, the Comex-approved depositories reported receiving 636,985 ounces of silver...and shipped 402,140 ounces of the stuff out the door. Virtually all of the activity was over at Brink's, Inc...and the link to the action is here.
Here's an interesting chart that Washington state reader S.A. sent me yesterday. The only question to be asked is when will these companies fall the other 50% that's left.
Here's another chart. This one from reader Scott Pluschau. The chart pattern that was looking so positive last week has 'failed' at the breakout point. 'Da boyz' sure know how to paint 'em...don't they? As Scott said in the covering e-mail..."Not much to be bullish on in this chart."
Silver analyst Ted Butler's mid-week commentary was posted on his website yesterday...and there was so much about the CFTC and position limits, that I'd literally have to post the entire essay to do it justice. I just hope that he'll have it put up in the public domain next week...and I'll let you know if he does. But here's a free paragraph anyway...
"The meeting itself was a bit flat (as I think was intended) and if you missed witnessing it live, please allow me to furnish the highlights. The vote, 3 to 2, followed along strict partisan political lines, with the two Republican commissioners objecting strongly to the measure. Commissioner Dunn provided to swing vote, joining Chairman Gensler and Commissioner Chilton to approve the staff’s proposed formula for position limits. There was some disappointment in the final ruling, but there was much more for which to be encouraged. One quick note – I don’t know what the short term impact might be on the silver market, as I’m sure both the regulators and the manipulators of silver want no big short term effect on price as a result of the vote. It would not surprise me if silver was kept under price pressure so as not to draw a connection to the vote. Then again, it would never surprise me if silver were to start to fly. That said, the long term implications for silver are exceedingly favorable because of the vote."
The stories just keep on coming. By this time of the week, things have normally slowed down a bit...but, as you know, these aren't normal times. As always, I just post them, the final edit is up to you.
¤ Critical Reads
SubscribeCitigroup to pay $285 million to settle fraud case
The SEC said the bank's Citigroup Global Markets unit misled investors about a $1 billion collateralized debt obligation by failing to reveal it had "significant influence" over the selection of $500 million of underlying assets, and that it took a short position against those assets.
It said one experienced CDO trader called the portfolio "possibly the best short EVER!" while an experienced collateral manager said "the portfolio is horrible."
In a statement, Citigroup said the SEC did not charge the unit with any "intentional or reckless misconduct" and that the settlement "resolves all outstanding SEC inquiries into those activities."
If you get the distinct impression that this fine was just a licensing fee to continue screwing the average investor...you would be right about that. I thank Florida reader Donna Badach for sending me this Reuters story...and the link is here.
Bank of America Bosses Find Friend in the Fed: Jonathan Weil
One of the reasons so many Americans are ticked off at the Federal Reserve is a lingering sense that it puts big banks’ interests above those of ordinary taxpayers. The news that the Fed is taking Bank of America Corp.'s side in a dispute over where to park some of the company’s holdings only reinforces that impression.
Here’s the gist of the story, broken two days ago by Bloomberg News. Bank of America, which got hit with a credit- rating downgrade last month by Moody’s Investors Service, has moved an undisclosed amount of derivative financial instruments from its Merrill Lynch unit to its biggest commercial-banking subsidiary. The latter is loaded with insured deposits and has a higher credit rating than Merrill or the parent company.
The Federal Deposit Insurance Corp. is objecting to the transfers. That part is easy to understand: More risk for the retail lender means more risk for FDIC-insured deposits, which ultimately are backstopped by the U.S. government.
I posted the story about it in this column yesterday...and Jonathan's op-ed piece on this was posted on the Bloomberg website yesterday evening...and is an absolute must read. I thank Washington state reader S.A. for bringing it to my attention...and the link is here.
QE3 'Certainly a Possibility': Boston Fed President
Another round of quantitative easing by the Federal Reserve is "certainly a possibility" if there is a "bad economic shock," Boston Fed President Eric Rosengren told CNBC Wednesday.
"It depends on what you think is the likelihood of what a bad economic shock is," he said. "So if you think there’s a shock from Europe, or you think that some of the fiscal discussion is gonna break down, those might be the types of incidents…[that] might affect how likely you think it is that we’ll have additional quantitative easing."
Deflation would be another condition "under which it would make sense to have additional quantitative easing," he added.
He might as well have said that it's just a matter of when...not if. I thank West Virginia reader Simon Elliot for sending me this cnbc.com article/video...and the link is here.
Ron Paul: Blame the Fed for the Financial Crisis
To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.
Ron really lets it all hang out here in this piece posted over at The Wall Street Journal in the wee hours of this morning. I thank Washington state reader S.A. for providing this rather short read...and the link is here.
Bud Conrad: U.S. Collapse Predicted
Casey Research Chief Economist Bud Conrad believes the United States is acting as a late-stage empire, acting aggressively on the world stage, lowering its moral standards and debasing its currency. In this exclusive interview with The Gold Report at the Casey Research/Sprott Inc. "When Money Dies" Summit, he explains the options for how the inevitable collapse will occur.
This interview, posted over at The Gold Report website last week, is well worth the read...and the link is here.
Police clash with protesters outside Greek parliament
Greece’s parliament gave initial approval on Wednesday to a new round of belt-tightening needed to avert default, despite violent protests during the biggest rally in two years against the bitterly resented measures.
Hours after Greek police clashed with black-clad demonstrators outside parliament, all 154 of the ruling Socialist PASOK party’s lawmakers voted in favour of the measures, which must secure a second vote on Thursday before the new wave of austerity is enforced.
The view of the ancient Acropolis was obscured by smoke from burning piles of rubbish and a bank building was evacuated after being set on fire by petrol bombs as a strike called by Greece’s two main unions degenerated into violence outside parliament.
This Reuters piece was posted over at the france24.com website yesterday...and I thank Roy Stephens for providing this story. The link is here. A similar, yet different story on the same issue is posted over at spiegel.de...and the link to that piece is here.
Panic stations: Bank's unanimous vote on QE bodes ill
Crikey. Batten down the hatches. Stock the nuclear bunker. Don your hard hats. Britain’s economic prospects have worsened so much in the past month that eight of the Bank of England’s nine rate-setters, who were happy to leave quantitative easing (QE) unchanged at £200bn in September, were rushing to add another £75bn just 30 days later.
As if that wasn’t shocking enough, the minutes to this month’s Monetary Policy Committee (MPC) meeting showed it could have been even more.
“Some members” discussed a £100bn helicopter drop. One of the “some” was almost certainly Adam Posen, who had been calling for an extra £50bn for a year, but the others were - until very recently - happy enough with the status quo.
A unanimous one-month turnaround. If that doesn’t spell impending disaster, what does? Sir Mervyn King, the Bank’s Governor, sought to explain why at the Institute of Directors last night. “Without monetary stimulus – low interest rates and large asset purchases – there is a risk that growth will stall,” he said. There you have it. Britain risks falling back into recession.
As you know, dear reader, it no longer matters how much money they print, as it ain't going to help. This piece was posted over at the telegraph.co.uk website yesterday afternoon. It is, of course, another Roy Stephens offering...and the link is here.
Leveraging the Backstop: A Trillion Euro Insurance Policy for the Common Currency
Berlin and Paris appear to be close to an agreement ahead of this weekend's euro summit. Media reports indicate that the impact of the EFSF euro backstop fund is to be increased to as much as 2 trillion euros by leveraging the fund. Meanwhile, Greece may have found a vast source of new tax revenues.
With just days to go before European Union leaders gather in Brussels for a summit aimed at finding a way out of the euro zone's ongoing debt crisis, an agreement appears to be taking shape. But renewed concerns about the state of France's fiscal health are creating fresh hurdles in the effort to save the common currency.
The Financial Times Deutschland reported on Tuesday evening that euro-zone leaders have come up with a plan to increase the impact of the European Financial Stability Facility (EFSF) over and above the €440 billion ($608 billion) lending capacity it currently has. The paper said the leveraged EFSF will be able to martial aid worth up to €1 trillion. A similar in the British daily the Guardian indicated that the ceiling was to be even higher, as much as €2 trillion.
This story was posted over at the German website spiegel.de early yesterday...and is another Roy Stephens offering. The link is here.
France's Nicolas Sarkozy and Germany's Angela Merkel hold crisis talks
Eurozone chiefs met in Frankfurt for crisis talks on last night, as negotiations to draw a line under the region's debt crisis stalled ahead of this weekend's key EU summit.
The German and French leaders, Nicolas Sarkozy and Angela Merkel, gathered for a "working meeting" with Christine Lagarde, the head of the International Monetary Fund (IMF), and Jean-Claude Trichet, the outgoing ECB president, and other officials.
Europe is under increasing pressure to act, with the Group of 20 nations last Saturday setting the coming weekend's meeting of eurozone leaders as the deadline for them to "decisively address the current challenges through a comprehensive plan".
My, my...how things have changed since yesterday morning! Not that it matters, as the endgame is now fast approaching. I thank Roy once again for sending me this story posted over at The Telegraph just before midnight in London last night. The link is here.
Big revaluation of gold is path out of collapse, Paul Brodsky tells King World News
This is a GATA release from yesterday afternoon. It contains a couple of links. One is to the KWN blog mentioned...which is certainly worth reading...and the other is to an essay very similar to that published back in 2006. That piece is an absolute must read.
I'll leave the preamble to Chris Powell...and the link is here.
Silver Bear Market Seen Ending on Extended Europe Debt Crisis: Commodities
Silver, the best-performing and most-volatile precious metal of the past year, may rebound from a bear market as investors bet on growth in developing nations and an extended European debt crisis.
The metal may average $38 an ounce this quarter and rise to a record $42 by the final three months of 2012, compared with $30.89 at 12:21 p.m. in Singapore today, according to the median in a Bloomberg survey of 11 analysts. The gains will mean record profit for producers Pan American Silver Corp. and Fresnillo Plc, analyst estimates compiled by Bloomberg show.
China, the biggest emerging-market user, is expanding at more than five times the speed of the U.S., driving consumption of the precious metal most used in industry.
As usual, the main stream press only gets the story partly right, but it's still worth reading anyhow. This piece was posted over at Bloomberg yesterday...and I thank Washington state reader S.A. for sharing it with us. The link is here.
What's Next?
Despite the hazards, it seems like metal thieves will stop at absolutely nothing to steal copper, aluminum or other items they can sell off for money.
In one of the most recent — and most brazen heists — over 2,000 pounds of copper and 300 aluminum lightning rods were taken off the roof of Raleigh General Hospital sometime last weekend.
Yes, you read that right, stolen straight off the roof.
This story is a follow-up from the story I ran about stolen x-ray film in yesterday's column. West Virginia reader Simon Elliot dug up this July 22nd story from Beckley, West Virginia's newspaper The Register-Herald...for which I thank him...and the link is here.
As bunco artists go in the financial world, GATA is pretty small-time
Apparently Mr. Jeffrey Christian, the grand poobah over at CPM Group, had some rather disparaging things to say about GATA the other day.
Chris Powell...GATA's secretary treasurer...whose day job is senior editor over at Manchester, Connecticut's Journal Enquirer took great umbrage to that...and rightfully so.
As I've mentioned more than a few times in this column, one should never get into a fight with someone who buys their ink by the barrel...or its electronic equivalent.
Chris gently carves Jeff a new one...and the link to this must read GATA release, is here.
Don't know what a "bunco artist" is, you say? Well, neither did I. I guess I don't get out as much as I should, because this was the first time I'd ever even seen this word. Here's the only definition I could find using my computer's search engine.
The Perth Mint: Bron Suchecki speaks
Once in a while I get an e-mail from Bron right out of the blue...and I got one last night.
It's not often that you get to read about the internal goings-on inside a mint during a production shortage, but here's your chance. Bron is answering critics of the mint...and he does so with great patience, as the quality of some of the comments directed his way are far from mature.
His comments, posted over at the silverstacker.com website, begin at 19:01:36 on October 17th...linked here...and continue again about half-way down page 5, which you have to click on when you get to the bottom of page 4.
It's unfortunate that he has to put up with some of the crude and ignorant remarks that are posted on either side of his comments. I'm sure he didn't mind the debate and criticism, but I'm sure it was hard for him when he's obviously dealing with people who have no commercial production understanding...and aren't prepared to accept that it may not be as simple as they think. I'm sure the fine people that work at TPM aren't perfect, but I'm sure they're doing the best they can under the current circumstances.
World Money Supply Tied to $10,000 Gold Bow: Stephen Leeb
Here's a King World News blog that Eric sent me yesterday. It's a short read...and the link is here.
Conversations With Casey: Eric Sprott, Founder, Sprott Securities
At the Casey Research/Sprott Summit When Money Dies, Louis James spoke with Sprott Inc. founder Eric Sprott on the risk involved in holding money in banks, and the likely future of precious metals stocks.
When my friend Eric Sprott is talking, I'm always listening. The video runs 11:23...and is a must watch. The link is here.
| Sponsor Advertisement |
|
Trade Winds Ventures Inc (TWD – TSX.V, TWDIF – OTC) is developing the Block A (50/50) JV gold property in Detour Lake, Ontario Canada, a. For investors this is an opportunity to purchase a company currently receiving only $15/oz for gold in the ground relative to market cap. What makes Trade Winds unique is that the Block A property is right beside Detour’s mine block that contains over 14 million ounces and slated to go into production by 2013. This is one of the largest mines in North America. Highlights:
Ron Wortel, mining analyst with First Canadian Securities recently gave Trade Winds a 12 month price target of $1.50. For more information, please visit our website. |
¤ The Wrap
If I were a bond portfolio manager, I'd quit. - Jim Rogers...Saturday, October 15, 2011
It's a mad world out there right now. Almost any data you see these days is either misleading...or meaningless. I don't care if it's the world's stock markets, currency prices, interest rates, commodity prices...the lot. This particularly applies to the precious metals. There are, as Chris Powell said, no market anymore...only interventions.
In his classic essay "The Debasement of world currency: It is inflation, but not as we know it" published on April 9, 2001...British economist Peter Warburton laid it all out in three simple paragraphs...which I labeled the '3 most important paragraphs in the world' almost from the moment that I read them for the first time. I've posted them in this column several times over the years, but it's time to revisit them once more...and don't forget that this was written ten years ago. Needless to say, they're a must read.
Central banks are engaged in a desperate battle on two fronts
What we see at present is a battle between the central banks and the collapse of the financial system fought on two fronts. On one front, the central banks preside over the creation of additional liquidity for the financial system in order to hold back the tide of debt defaults that would otherwise occur. On the other, they incite investment banks and other willing parties to bet against a rise in the prices of gold, oil, base metals, soft commodities or anything else that might be deemed an indicator of inherent value. Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, their actions seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.
It is important to recognize that the central banks have found the battle on the second front much easier to fight than the first. Last November, I estimated the size of the gross stock of global debt instruments at $90 trillion for mid-2000. How much capital would it take to control the combined gold, oil and commodity markets? Probably, no more than $200 billion, using derivatives. Moreover, it is not necessary for the central banks to fight the battle themselves, although central bank gold sales and gold leasing have certainly contributed to the cause. Most of the world's large investment banks have over-traded their capital [bases] so flagrantly that if the central banks were to lose the fight on the first front, then their stock would be worthless. Because their fate is intertwined with that of the central banks, investment banks are willing participants in the battle against rising gold, oil, and commodity prices.
Central banks, and particularly the US Federal Reserve, are deploying their heavy artillery in the battle against a systemic collapse. This has been their primary concern for at least seven years. [That's since 1994 - Ed] Their immediate objectives are to prevent the private sector bond market from closing its doors to new or refinancing borrowers and to forestall a technical break in the Dow Jones Industrials. Keeping the bond markets open is absolutely vital at a time when corporate profitability is on the ropes. Keeping the equity index on an even keel is essential to protect the wealth of the household sector and to maintain the expectation of future gains. For as long as these objectives can be achieved, the value of the US dollar can also be stabilized in relation to other currencies, despite the extraordinary imbalances in external trade.
The link to the entire Warburton article is here.
Based on those three paragraphs, the price action in gold, silver, platinum and palladium these days, should come as no surprise.
Here's Ted Butler's graph "Concentration of Traders" from the current Commitment of Traders report. This shows that '4 or less' and '8 or less' traders in all commodities that are traded on the Comex futures market...and the number of days of world production it would take to cover their respective short positions. Note that the monetary metals have the largest short positions of all...and the lion's share of each is held by the U.S. bullion banks.
(Click on image to enlarge)
But, as I and many others have been saying over the last little while, the only way to save this sorry financial and monetary system of ours is to go back on a limited sort of gold standard which will probably only apply to back sovereign debt, but in the process will put us back on a defacto bastardized gold standard of some kind.
Even if such an announcement were to be made this weekend, the devil would be in the details...as our current situation is far beyond critical. The operation might prove to be a success, but the patient may die anyway.
We are living in very dangerous times. It matters not whether the whole system collapses before Hallowe'en...or before Christmas...we're pretty much done for anyway.
I note that there's a bit of a war going on in gold and silver as of 5:10 a.m. Eastern time. Prices are down at the moment...and I have no idea how this will all turn out by the time that the trading day is over.
Of course none of this price action has the slightest thing to do with supply and demand...or current financial or monetary conditions...it's just the relentless pounding by the bullion banks to keep people from pouring into the shares...or the metal itself. They're already dead men walking, as they can't keep this up forever.
It should be another interesting day in New York when Comex trading begins.
By the way, I want to apologize for the lateness of my Wednesday column. The nice lady [Hi Juli] that gets up at 5:20 a.m. Eastern time to post my daily rant, was having internal problems with the part of the Casey Research website where she does her magic...and that's the reason it was posted at that ridiculous hour yesterday morning. I filed it under the category of "stuff happens"...and I hope you understand.
See you on Friday.
New Message
Please
login
to post a reply