From Jesse


While both precious metals ‘leaked’ higher this week, the action was by no means indicative of a breakout or the beginning a return to supply/demand fundamentals. In other words, we remain restrained. The good news is that the price actually did move through a couple of technical resistance points. Nevertheless, the price remains well-correlated and controlled with the rest of the global financial sector.

Perhaps the big surprise this week was the gold price action given that it was an options expiration day on Thursday, where the vast majority of days like this feature significant downside pressure in order to force options to expire out the money – benefiting the (bullion bank) option writers.

Big meetings on tap for next week. While these meetings tend to be characterized as ‘economic’, in truth they have become strictly monetary in nature – more a legalized version of what amounts to the LIBOR scandal. Decisions will be made that effect practically everything and everyone. Central planning at it’s highest level.

As we’ve pointed out, the technical trading structure (for silver) remains consistent — with the big bad bullion banks well positioned for higher prices, as the hedge-fund-oriented or speculative traders piled on the short side. A move through $28 would likely spark enough short covering to propel the price through $29. If the price were ‘allowed’ to pass through $30 — it could very easily trigger a much more robust move up as new (hot money) longs would very likely pour in. Sounds like a perfect storm set up.



Ten Italian cities at risk of bankruptcy, schools may not reopen

The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press. “The situation is becoming worse by the day,” said Graziano Del Rio, the president of a national association of municipal councils. The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default.

Sceptics abound as Mario Draghi’s ECB bond ‘bluff’ electrifies global markets

Mario Draghi, the ECB president, vowed to do “whatever it takes” to save the euro within limits of its mandate. “Believe me, it will be enough,” he said in London. Picking codewords instantly understood by traders, Mr Draghi said the violent spike in bond yields in recent days was hampering “the functioning of the monetary policy transmission channels” – the exact expression used to jusfify each of the ECB’s previous market interventions. Yields on Spanish two-year debt plunged 72 basis points to 5.47pc in barely an hour, with comparable moves on Italian debt – easing the pressure before a string of debt auctions in Rome over coming days. The MIB index of stocks in Milan surged by 5.6pc. Madrid’s IBEX rose 6pc, the biggest jump in two years, led by an explosive rise in bank shares.


Schauble Just Says Nein Again: German FinMin Denies Rumors Of ECB Bond Buying | ZeroHedge

For days, it is speculated that the European Central Bank (ECB) is planning, together with the bailout fund EFSF Spanish government bond buy – so come back to Spain to cheaper capital. The “Sueddeutsche Zeitung” According to the euro countries willing to support this approach . Federal Finance Minister Wolfgang Schäuble (CDU) has now dismissed the reports in an interview with the newspaper “Welt am Sonntag”. ”No, at this speculation is not true,” Schäuble said the newspaper. The Finance Minister said it was already a sufficiently large aid package for Spain have been laced. The 100-billion-euro package to recapitalize Spanish banks also close an emergency aid of 30 billion €. “The short-term financial requirements of Spain is not so great”, said Schäuble, “the painfully high interest rates – but the world will not, if you have to pay for some bond auctions a few percent more.”Why will Germany, which Schauble says himself is in a very difficult position, and has already been very helpful to Spain, not provide more funding? Simple – unlike all other broke globalist neo-socialists, he believes that the market is actually right in punishing profligate spenders, and having bonds trade above 7% is not the end of the world. Of course, he is absolutely right.

And this means they will print..which also means we are likely to follow.

UK sinks deeper into recession

Britain’s economy shrank far more than expected in the second quarter of 2012, battered by everything from an extra day’s holiday to budget austerity and the neighbouring euro zone crisis.Chancellor George Osborne said the country had “deep-rooted economic problems”.The Office for National Statistics said Britain’s gross domestic product fell 0.7 percent in the second quarter, the sharpest fall since early 2009 and a bigger drop than any of the economists surveyed in a Reuters poll last week had expected.The figures confirmed that Britain is mired in its second recession since the financial crisis, with the economy shrinking for a third consecutive quarter.It will add pressure on Osborne to get the economy growing again after a crisis that has left many Britons poorer as rising prices and higher taxes ate up meagre wage increases.

The ban on short selling is intended to keep the vultures away. The effect, of course, backfires in removing volume and therefore creating more volatility. But it makes for good politics, so there you have it. As you know, this is much different than short selling in futures and on the COMEX where the silver price is discovered. The main issue with the ‘silver shorts’ is the fact that there are only a few of them ‘selling’ versus a diversified many who are buying.

Debt crisis: Spain and Italy ban short-selling

“The situation of extreme volatility across the European markets could interfere with their smooth functioning and the normal course of their activities,” the Spanish regulator said in a statement. Spain has banned short selling for three months until October 23 to “maintain stability”. The ban could be shortened or increased, as necessary, the regulator said. Italy reintroduced a temporary ban on the short selling of financial stocks for this week.

If we are discussing ways of keeping the system alive for a bit longer, the issue is how to create new money or print. Austerity will obviously never work. Again, it comes down to a political matter, not an economic matter. All paper currencies are broken. It is just a matter of time and ultimately a race to debase. Once the writing on the wall is clear, it is almost a miracle that the system has not collapsed already or that we face impending doom any day now. That may be true, but you can see from these stories that the struggle can play out for some time. The ship can take on a lot of water before sinking.

Blaming the Spanish victim as Europe spirals into summer crisis

The financial credibility of Spain is close to zero. Fiscal credibility is zero. Political credibility is zero. The new government of Mariano Rajoy has squandered the advantages of its absolute majority in a matter of months, and completely lost the confidence of Europe’s institutions. That is the verdict of unnamed EU officials and sources in Brussels cited by El Pais, following the twin crash of the Madrid bourse and the Spanish bond market on `Black Friday’. The claims are self-serving spin by Europe’s incompetent policy elite. Once again, they are blaming the victim for the consequences of their own scorched-earth monetary, fiscal, and regulatory policies.

Spain financial woes worsen on day bank bailout approved as Valencia seeks help with debt

Spain’s financial woes deepened ominously Friday after a heavily indebted region asked Madrid for help and the government predicted more recession next year, prompting investors to dump stocks and government bonds.Just as European ministers approved a rescue of Spain’s troubled banks, the region of Valencia revealed it would become the first to tap a new, week-old fund designed to provide liquidity to the country’s 17 semi-autonomous regions.

Debt crisis: Greek economy is in a ‘Great Depression’ says Samaras

Mr Samaras’s comments come two days before a team of Greece’s debt inspectors arrive in Athens to push for further austerity measures if the debt-laden country wants to qualify for further rescue payments and avoid a chaotic default. Athens wants to soften the terms of a €130bn bailout agreed last March with the European Union and the International Monetary Fund, to soften their impact on an economy going through its worst post-war recession. Greek GDP is expected by the end of this to have shrunk by about a fifth in five consecutive years of recession since 2008, hammered by tax hikes, spending cuts and wage reductions required by two EU/IMF bailouts. Unemployment climbed to a record 22.6pc in the first quarter.

Debt crisis: Greece to run out of money by August 20

The beleaguered country will have to refinance billions of euros worth of government bonds in less than a month and requires international assistance — which may not be forthcoming — to repay the money.International inspectors arrived back in Greece on Tuesday to assess the country’s austerity programme with European officials warning that it was “hugely off track”.David Cameron is now receiving daily written updates on the deteriorating situation and was warned earlier this week that a Greek bankruptcy in the next month is now a serious possibility.

Can you say Rehypothecation?

Fund managers to lose securities lending profits

European fund managers will have to return all profits made from securities lending transactions to their investors according to new rules announced on Wednesday by the European Securities Markets Authority (Esma). Securities lending – where shares or other assets held in a portfolio are lent, typically to a hedge fund or other short-seller, in return for a fee – is common practice across the fund management industry.

Debt Crisis: Economists Warn of Euro Catastrophe

A panel of respected European economics experts are ringing the alarm bell this week over the euro crisis — direly calling on all European leaders to move swiftly to deploy the most powerful tools available to halt the currency’s downward spiral. OAS_RICH(‘Middle2′);”We believe that as of July 2012, Europe is sleepwalking toward a disaster of incalculable proportions,” the New York-based Institute for New Economic Thinking (INET) stated in a report warning leaders they need to move faster and more decisively to save the common currency. Otherwise it could very well disintegrate. The study’s publication on Tuesday couldn’t be any timelier, given the recent dramatic developments in the euro crisis. Greece’s recession is proving to be far worse than previously expected, it is getting tougher for Spain to raise money on the markets (on Tuesday, interest rates on 10-year Spanish bonds rose to an unsustainable 7.6 percent) and Germany’s top triple-A rating is also at risk.


Electronic bread lines…

46.5 Million Americans, Record 22.3 Million US Households, On Foodstamps; 8,753,935 On Disability

America’s transition into a welfare state continues, as May saw a new all time high number of American households, 22.3 million to be exact, enter technical poverty and collect foodstamps. At the individual level, 46.5 million Americans lived off foodstamps, a 222,157 increase in the month, or nearly three times the number of people who found jobs in June according to the BLS. Next month this too will be a record, as it is currently just 17,367 before the previous all time high set in December of 2011. The good news, and we use the term loosely, is that the average benefit per household rose from all time lows of $275.82 to $276.76. Surely, the bottom is in and just like housing, there is on blue skies ahead.

You will certainly not read this story anywhere…It’s complicated and open to interpretation. The implications are ludicrous and scary – yet it makes rational sense. If you believe the current system should remain in place. This is something that will be sold to you for your own good.

Too Big To Fail – Fed Proposal Allows Banks To Seize Your Money

The New York Fed has introduced a framework to give banks the right to suspend account withdrawals at will to defend against financial panic.The shadow central planners have proposed new contigency plans to prevent the Great Depression style bank runs that are hitting Europe from spreading to America.Their solution is the creation of a framework that consists of “capital controls” which allow financial institutions that find themselves in hot water to limit or outright suspend customer account withdrawals.Our beloved regulators seem not to care the slightest that these institutions put themselves in hot water in the first place by taking up certain financial positions that put their customers’ money and the global financial system at risk.

It will certainly be interesting to see this map a year from now. My guess is that it will look much more complicated.

Mapping The Mounting Muni Meltdown

The map above shows all municipalities filing for Chapter 9 bankruptcy protection since 2010, along with local governments voting to approve a bankruptcy filing. Cities, towns and counties are shown in red. Utility authorities and other municipalities are displayed in gray.

This is unbelievable – yet why should be surprised. These are the stories that should be on the front pages. Or perhaps it is yet another of a ‘thousands cuts’ to confidence.

Peregrine Trustee Says 11 Clients Have Returnable Assets

The trustee liquidating PeregrineFinancial Group Inc. said only about 11 of 24,000 futures customers have “specifically identifiable property” eligibleto be returned to them. Peregrine founder Russell R. Wasendorf Sr., 64, admitted stealing at least $100 million from the Cedar Falls, Iowa-basedfirm, according to an FBI affidavit accompanying a criminal complaint unsealed upon his July 13 arrest. The National FuturesAssociation reported July 9 that Peregrine appeared to bemissing at least $200 million in client funds. Wasendorf attempted suicide outside the firm’s headquarters that day.

They are going to need to apply some serious hedonic adjusting to these figures. Folks are liable to become concerned.

US 2Q GDP +1.5% As Consumer Spending Slows

U.S. economic growth pulled back further during the second quarter of the year as consumer spendingslowed–a reading that suggests domestic fiscal worries are becoming a more significant drag. The nation’s gross domestic product–the value of all goods and services produced–grew at an annual rate of 1.5 between April and June, the Commerce Department said Friday. The reading is down from the upwardly revised 2.0% growthrate during the prior three months and a 4.1% rate in the fourth quarter of 2011. Economists surveyed by Dow Jones Newswires had expected 1.3% annualized growth during the second quarter. The numbers are a potential blow to President Barack Obama’s reelection campaign.

Why does this seem almost too absurd to be true? Will LIBOR become the ultimate distraction – in effect giving (undeserved) credibility to central banks with their army of economists who were unable to identify the issues leading the Great Financial Crisis, yet are now charged with managing the ‘recovery’?

Libor arrests ‘imminent’ as US authorities close in

US prosecutors and their European peers are understood to have contacted defence lawyers representing traders at banks such as Royal Bank of Scotland, Barclays and UBS to notify them arrests are imminent. Prosecutors in Washington DC are understood to be furthest advanced towards making arrests. In the UK the Serious Fraud Office has said it will investigate the alleged manipulation of Libor and other interest rate benchmarks but has yet to make decision over whether there is enough evidence to prosecute.

U.S. poverty heads toward highest level in 50 years

The ranks of America’s poor are on track to climb to levels unseen in nearly half a century, erasing gains from the war on poverty in the 1960s amid a weak economy and fraying government safety net. Census figures for 2011 will be released this fall in the critical weeks ahead of the November elections. The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965.

REVEALED: Corzine’s MF Global Was Client of Eric Holder’s Law Firm

Those wondering why the Department of Justice has refused to go after Jon Corzine for the vaporization of $1.6 billion in MF Global client funds need look no further than the documents uncovered by the Government Accountability Institute that reveal that the now-defunct MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s former law firm, Covington & Burling.There’s more.Records also reveal that MF Global’s trustee for the Chapter 11 bankruptcy retained as its general bankruptcy counsel Morrison & Foerester–the very law firm from which Associate Attorney General Tony West came to DOJ.

Douglas Keenan: My thwarted attempt to tell of LIBOR shenanigans

In 1991, I began trading for Morgan Stanley, the investment bank, in London. I was trading bonds, derivatives, and related securities. One of those securities was based on the three-month Libor rate: the interest rate at which banks can borrow money for three months from each other. Morgan Stanley does not trade on the interbank market so I could not directly borrow or loan money at Libor rates. What I could do, however, was trade a futures contract on the three-month Libor rate. As an example of how a futures contract works, consider the following. Suppose that we are concerned about three-month Libor rates increasing in the future; in particular, we are concerned about what the three-month rate will be in September. If that rate is, say, 1 per cent, we can agree today to effectively lock it in. If, come September, the actual three-month rate is 2 per cent, then our contract will ensure we can still borrow at 1 per cent. Futures contracts on three-month Libor were — and are — traded on the London International Financial Futures Exchange (Liffe, now part of NYSE Euronext). There was a standard contract for the month of September. That contract had its rate settled on the third Wednesday of the month, at 11 o’clock.

8,753,935: Workers on Disability Set Another Record in July; Exceed Population of 39 States

The number of workers taking federal disability insurance payments hit yet another record in July, increasing to 8,753,935 during the month from the previous record of 8,733,461 set in June, according to newly released data from the Social Security Administration.The 8,753,935 workers who took federal disability insurance payments in July exceeded the population of 39 of the 50 states. Only 11 states—California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Michigan, Georgia, North Carolina and New Jersey—had more people in them than the number of workers on the federal disability insurance rolls in July.

No Housing Recovery In These Three Charts

One day, we hope, the broader public will realize that just as the Libor scandal was largely precipitated by the fact that it was a self-reported number and thus open to collusion and manipulation by the same people who set it, so any data coming out of the National Association of Realtors – an organization that by definition benefits from high prices and frenzied real estate activity – is total manipulated garbage (in fact courtesy of the massive 2011 restatement from the NAR several months ago we know just that). In fact, when it comes to the NAR, it is worse: as a reminder, US real estate transactions are nothing but glorified and perfectly legal money laundering, which is the main reason why the NAR has a waiver from regulation for anti-money laundering.

“This market isn’t real. The two percent on the ten-year, the ninety basis points on the five-year, thirty basis points on a one-year – those are medicated, pegged rates created by the Fed and which fast-money traders trade against as long as they are confident the Fed can keep the whole market rigged. Nobody in their right mind wants to own the ten-year bond at a two percent interest rate. But they’re doing it because they can borrow overnight money for free, ten basis points, put it on repo, collect 190 basis points a spread, and laugh all the way to the bank. And they will keep laughing all the way to the bank on Wall Street until they lose confidence in the Fed’s ability to keep the yield curve pegged where it is today. If the bond ever starts falling in price, they unwind the carry trade. Then you get a message, “Do not pass go.” Sell your bonds, unwind your overnight debt, your repo positions. And the system then begins to contract… The Fed has destroyed the money market. It has destroyed the capital markets. They have something that you can see on the screen called an “interest rate.” That isn’t a market price of money or a market price of five-year debt capital. That is an administered price that the Fed has set and that every trader watches by the minute to make sure that he’s still in a positive spread. And you can’t have capitalism if the capital markets are dead, if the capital markets are simply a branch office – branch casino – of the central bank. That’s essentially what we have today.” -…David Stockman; former budget director Reagan Administration July 2012

Fed’s Raskin: No government backstop for banks that do prop trading

Banks that trade for their own accounts should not benefit from the implicit backing of taxpayers, and Wall Street’s opposition to new rules curbing such activities is unfounded, a top Federal Reserve official said on Monday.Federal Reserve Governor Sarah Raskin, a former Maryland financial regulator, said the notion that derivatives markets enhance firms’ ability to raise capital was questionable.”I view proprietary trading as an activity of low or no real economic value that should not be part of any banking model that has an implicit government backstop,” Raskin told students at the Graduate School of Banking at Colorado in remarks made available in Washington.

Sandy Weill’s Untimely Second Thoughts

In their 1998 megamerger, Citicorp and Travelers Group execs clinked flutes over the advent of the financial supermarket: one-stop shopping for investment banking, certificates of deposit, proprietary trading, and the subprime falafel that wound up poisoning the entire economy. Sanford “Sandy” Weill, the architect of that deal, went on to have a hellish decade. In 2002, his name featured prominently in Eliot Spitzer’s conflicted equity-research investigations. Weill stepped down as Citigroup’s (C) chief executive officer a year later and relinquished his chairman title in 2006. By 2008 and 2009, with his collapsed supermarket having received more government bailout money than any other bank, Weill became above all a cautionary tale of hubris that led to the meltdown. (Time magazine named him one of the 25 people to blame for the financial crisis.)On Wednesday morning, the 79-year-old Weill, one of the 20th century’s most acquisitive bankers, stepped up to the mic to endorse … breaking up the banks. “What we should probably do is go split up investment banking from banking, have banks be deposit-takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” he remarked on CNBC.Essentially, Weill was calling for the resurrection of the Glass-Steagall Act, which for 66 years separated pure deposit banking from other financial services until it was repealed in 1999, much to the Street’s glee. (The 1998 merger that built Citigroup required the Federal Reserve to temporarily waive the Act.)

When I despair, I remember that all through history the ways of truth and love have always won. There have been tyrants, and murderers, and for a time they can seem invincible, but in the end they always fall. Think of it–always.

First they ignore you, then they laugh at you, then they fight you, then you win.”

Mohandas K. Gandhi

Sales of New U.S. Homes Decrease From Two-Year High: Economy

Sales of new U.S. homes unexpectedlydropped in June from a two-year high, a sign the market is beingheld back by a lack of inventory after builders curtailedprojects. Purchases fell 8.4 percent to a 350,000 annual rate, theweakest since January, the Commerce Department reported today inWashington. The median estimate in a Bloomberg News survey of 74economists was 372,000. The decline was led by a record plungein the Northeast, where the number of properties available lastmonth was the fewest for any June.

These last two may need a new category (of the absurd).

Oregon Man Sentenced to 30 Days in Jail — for Collecting Rainwater on His Property

A rural Oregon man was sentenced Wednesday to 30 days in jail and over $1,500 in fines because he had three reservoirs on his property to collect and use rainwater.Gary Harrington of Eagle Point, Ore., says he plans to appeal his conviction in Jackson County (Ore.) Circuit Court on nine misdemeanor charges under a 1925 law for having what state water managers called “three illegal reservoirs” on his property – and for filling the reservoirs with rainwater and snow runoff.“The government is bullying,” Harrington told CNSNews.com in an interview Thursday.

Kid’s Hot Dog Stand Shut Down by City Officials Before It Even Opens – Hit & Run

This summer, 13-year-old Nathan Duszynski wantedto make some money to help out his disabled parents—his mom hasepilepsy and his dad has multiple sclerosis. So he decided to opena hot dog stand. He saved $1,200, mostly money made by mowinglawns and shoveling snow. He checked with the city to make sure hedidn’t need any licenses or permits, even going to city hall inperson with his mom. And then he bought a cart. (Yep, that’shot dogs from Nathan’s, for thosewho are keeping score at home.)


Fed Audit Bill Opposed by Bernanke Approved by U.S. House

The U.S. House of Representativesapproved legislation that would subject the Federal Reserve toan audit of monetary policy, including deliberations overchanges to the benchmark interest rate. The legislation, directing the Government AccountabilityOffice to conduct the audit, is sponsored by Representative Ron Paul of Texas, a candidate for the Republican presidentialnomination in 2008 and 2012 and author of “End the Fed.”

Federal Government’s Debt Jumps More Than $1T for 5th Straight Fiscal Year

By the end of the third quarter of fiscal 2012, the new debt accumulated in this fiscal year by the federal government had already exceeded $1 trillion, making this fiscal year the fifth straight in which the federal government has increased its debt by more than a trillion dollars, according to official debt numbers published by the U.S. Treasury.Prior to fiscal 2008, the federal government had never increased its debt by as much as $1 trillion in a single fiscal year. From fiscal 2008 onward, however, the federal government has increased its debt by at least $1 trillion each and every fiscal year.The federal fiscal year begins on Oct. 1 and ends on Sept. 30. At the close of business on Sept. 30, 2011—the last day of fiscal 2011—the total debt of the federal government was $14,790,340,328,557.15. By June 29, the last business day of the third quarter of fiscal 2012, that debt had grown to $15,856,367,214,324.44—an increase for this fiscal year of $1,066,026,885,767.29.

Extreme Drought Puts Even More Heat on Economy

America’s breadbasket is baking to a crisp – and the combination of extreme heat and expansive drought is likely to continue well into early August, further damaging corn and soybean crops that have already been severely compromised – and almost certainly pushing prices up higher. In the last five weeks, U.S. corn prices have surged more than 55 percent as crops continue to bake in the worst drought in the Midwest in more than 50 years, Reuters reported Friday. The scorching conditions will cause further damage to crops that already have been nearly decimated in some Midwest areas. On Friday corn and soybeans rose to record highs, extending the biggest gains in two-and-a-half years.

New Stimulus by Federal Reserve Is More Likely as Economy Lags

The question is expected to dominate the agenda when the Fed’s policy-making committee meets next week, with some members pushing for immediate action while others seek to delay a decision at least until the committee’s next meeting in September, so they can see a few more weeks’ worth of economic data. The Fed’s chairman, Ben S. Bernanke, told Congress last week that the options under consideration included a new round of asset purchases, or “quantitative easing,” often described as QE3. As part of any such program, officials increasingly favor expanding the Fed’s holdings of mortgage-backed securities for the first time since 2010.


Indians should reduce gold tributes to God – RBI Deputy Governor

Gold offerings at temples have come under the scanner of the Reserve Bank of India. Deputy Governor K C Chakrabarty has called for a reduction in demand for gold as an offering to the deities.”Ninety percent of the gold demand is jewellery or to offer to God. Both have to stop,” said the official of the apex bank. The deputy Governor noted that Indian society’s obsession with gold was an archaic idea of pre-historic times when India was a rich society of abundance.”Wearing gold as an ornament was a culture when you were a rich society, when you were contributing to 30% of the GDP of the world. Today, we have become a poor country, we need to change our culture,” he added.

The problem with a piece like this one is not simply the fact that they use a dollar price target. It’s that ultimately, the recommendation is underwritten by a storage program.

‘Silver to hit $50/oz by year end, to outperform Gold in a few years’ | www.commodityonline.com | 3

The poor man’s gold, silver could easily reach as high as $50 per ounce by year end and even skyrocket to $100/oz over the next few years; significantly outperforming gold, said Stephen M Smith, Managing Member of Smith McKenna, LLC.The price of silver is largely undervalued right now. It is also the perfect time for silver investors to amplify their physical silver investment portfolios.The current spot price of silver has been relatively stable in the mid $20 range, with many analysts agreeing that it is substantially undervalued in its historic relationship and ratio to gold.

China to buy 870 tons of Gold in 2012 to overtake India

Gold bullion imports from Hong Kong into mainland China increased 600% in May 2012 when compared to May 2011,according to Michael Lombardi, lead contributor to Profit Confidential. Lombardi asserts that China is set to take the lead from India as the largest purchaser of gold bullion in 2012.“China to Become World’s Biggest Buyer of Gold in 2012,” Lombardi estimates that China will buy at least 870 tons of gold bullion in 2012.“Just to give an idea of how large these purchases of gold bullion are, in the first five months of 2012, China has imported over 300 tons of gold bullion from Hong Kong,” says Lombardi. “Just isolating this number alone would put China as the 17th largest holder of gold bullion in the world.”

GATA files new gold records requests with State, Treasury, Fed, and FOMC

Through its lawyer, William J. Olson P.C. of Vienna, Virginia (http://www.lawandfreedom.com/), GATA today filed federal Freedom of Information Act requests with the U.S. State Department, Treasury Department, Federal Reserve Board, and Federal Open Market Committee, greatly expanding upon GATA’s 2009 FOIA request to the Fed, which sought access to records involving gold swaps. The 2009 FOIA action elicited a revealing admission from the Fed that it has secret and highly sensitive gold swap agreements with foreign banks — an admission that the Fed, despite its many previous denials, is indeed surreptitiously active in the gold market. That FOIA action led to GATA’s lawsuit against the Fed in U.S. District Court for the District of Columbia, which last year produced both a judicial finding that the Fed has many gold-related secrets and a verdict enough in GATA’s favor that the Fed was required to pay court costs to GATA:

Barrick Costs Rising as Gold’s Charge Stalls

“We’ve seen gold prices flatline this quarter, so thatdoes kind of leave the emperor stripped bare in a sense thatthey really have to deliver on cost control,” said Jorge Beristain, a Greenwich, Connecticut-based analyst at DeutscheBank AG. Barrick will probably say the total cost to produce anounce of gold, excluding revenue from other metals, rose for thefifth consecutive quarter. The average of five analysts’estimates compiled by Bloomberg is for $569 an ounce, 28 percenthigher than a year earlier, while the average gold price in thequarter rose 7 percent versus a year ago. The company is expected to report second-quarter profitexcluding one-time items fell 16 percent to 94 cents per sharefrom a year ago, according to the average of 20 estimatescompiled by Bloomberg.

Gold last hope for Sudan to avert economic collapse

n his office in Khartoum’s gold market, central bank sales agent Mohamed Adam sips tea and watches while his staff load bundles of cash worth tens of thousands of dollars from the safe into four boxes.The government will use these piles of Sudanese pounds to purchase gold, which it plans to sell for the dollars needed to pay for imports of food and other essentials.”We buy all gold from local traders and people who search for gold,” Adam said. Outside his office, gold traders make deals in the busy market in a rundown downtown building, where paint is peeling from the walls.

Coin shortages = higher premiums = retail prices diverging and ‘discovering’ the real price dictated by supply and demand.

Expect Investment Coin Shortages Should Mass Market Demand Emerge

Expect shortages of precious metal coins worldwide should investment demand jump dramatically as a result of another financial crisis. According to The Perth Mint’s Bron Suchecki, probably less that 2% of people started buying precious metals during the financial crisis in 2008. The result was rationing of coins by mints! In a telephone interview with the Financial Survival Network, Bron questioned what would happen should serious, mass market demand like that seen at the end of the 1970s re-emerge. Despite better preparedness among mints generally for this possibility, Bron told Kerry Lutz there remains a huge potential production bottleneck problem that investors would do well to be aware of. While coining is a fairly straightforward process, he said, the manufacturing of precious metal blanks was a much more complex and time-consuming process. As a result, a lot of mints don’t have the scale or expertise to become involved in this aspect of minting and were therefore reliant on a handful of operations for supplies.

Always, always a must read. No one has been at it longer. Ted Butler.

The War on Silver

The war against silver is not between producers and consumers, as these vital market participants interact in every market, as they must. All commodity producers want strong and consistent demand for their products from financially-healthy consumers who will continue to buy. While all commodity producers desire the highest price possible for their production, no producer wishes harm to the buyers of that production. There is no war between the actual commodity producers and consumers; both interact continuously under the law of supply and demand.The war has been waged against all silver market participants by a few well-connected financial firms and banks for the purpose of price control. This price control enables JPMorgan and others to capture profits on a variety of derivatives transactions, including COMEX futures and options contracts. This is exactly the same motive that caused Barclays to manipulate LIBOR; interest rates were manipulated for mostly short-term payoffs on derivatives contracts valued by the rates being manipulated. Likewise, JPMorgan and others manipulate the price of silver on the COMEX to capture short term profits on silver derivatives contracts.

If it weren’t trying to be rational, I would consider any and all recommendations for paper derivatives (at this juncture) to be a contrary indicator.

Time To Buy Silver? – Seeking Alpha

Silver production and output has increased in recent months with the expectation of more supply on the way, guiding silver downwards. As such, investors and analysts have been trying to call a bottom and a healthy entry point for some time now. “According to HSBC’s latest Silver Outlook report, silver prices are expected to move back above $30/oz by year end and remain relatively firm throughout 2013″ writes Geoff Candy. This short-term outlook may give a better view on silver’s future for those looking to make a speculative play. That being said, silver is also sitting well off of its historical high, so an entry point may be approaching (if it is not already here) sometime in the next year or so. The following chart outlines silver prices over the past two years.

Gold goes where The Money is

Ronald Stoeferle, who is a Chartered Market Technician (CMT) and a Certified Financial Technician (CFTe), was born October 27, 1980 in Vienna, Austria. During his studies in business administration and finance at the Vienna University of Economics and the University of Illinois at Urbana-Champaign in the USA, he worked for Raiffeisen Zentralbank (RZB) in the field of Fixed Income / Credit Investments. After graduating, Stoeferle joined Vienna based Erste Group Bank (http://www.erstegroup.com), covering International Equities, especially Asia. In 2006 he began writing reports on gold. His five benchmark reports on gold such as “A Shiny Outlook” and “In Gold We Trust” drew international coverage on CNBC, Bloomberg, the Wall Street Journal and the Financial Times. Since 2009 he also writes reports on crude oil.

The desire of gold is not for gold. It is for the means of freedom and benefit. ~ Ralph Waldo Emerson

This (below) was probably the biggest news story of the day – if not the oddest.

Seems we get an announcement like this once per quarter. Almost always it is Bart Chilton, the unofficial conductor of what must be a special (one man) division of the CFTC’s ‘public relations’ sub-committee.

The fact that it is so obvious and blatant that precious metals, among practically every other asset class, trade extremely disconnected from any semblance of reality (manipulation), somehow makes it acceptable to the great majority – who mainly have no interest, understanding or belief in these markets.

But apparently, the minority has made a (letter writing) impact, if not for the numbers, but for the fact that the story is so familiar, epic, and timely in this natural unwinding we are experiencing.

So the announcement was made. The probe will conclude. In conclusion, my bet is that the evidence was inclusive. How could it possibly be any other way?

CFTC’s Chilton Sees Silver Probe Concluding This Year – Bloomberg

CFTC’s Chilton Sees Silver Probe Concluding This Year By Silla Brush – Jul 22, 2012 9:00 PM PT Facebook Share LinkedIn Google +1 1 Comment Print QUEUE Q A four-year probe of potential price manipulation in the silver market may be completed as early as September, according to Bart Chilton, a member of the U.S.Commodity Futures Trading Commission. “I am hopeful and expect the silver investigation to conclude in the not-too-distant future, hopefully in September or October,” Chilton, a 52-year-old Democrat, said in an e-mail. “It has already taken way too long.” The enforcement division of the Washington-based agency,the main U.S. overseer of derivatives markets, began pursuing allegations of manipulation in the silver market in September2008. Investigators have analyzed more than 100,000 documents and interviewed dozens of witnesses, the CFTC said in a November2011 statement. Chilton, who didn’t say whether the probe has uncovered evidence of manipulation, said previously that there had been“repeated attempts” to influence prices.

Hong Kong’s Largest Bullion Vault Signals Rising Asia Wealth

The facility, located on the ground floor of a building within the international airport compound, has capacity for1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds,jewelry, fine art and precious metals, said Rotbart. The move in Hong Kong reflects increased demand for gold in Asia even as the commodity struggles to sustain its rally into a 12th year. Gold-demand growth in China, the world’s second-largest user after India last year, is slowing, according to the World Gold Council. Vault charges will depend on each customer’s operations, according to Rotbart, who declined to give a figure for the venture’s cost beyond millions of dollars.


Examples Of Manipulation For Regulators

Those of you that cannot get the attention of the CEO of your PM shares to stand up and protect his stockholders from loss due to illegal activity in the shares, remind him that if he remains acting like a beaten victim he is legally liable to you for the losses you are experiencing. Defending you is not writing a letter to the exchange you trade on or the regulator of your company. It is hiring counsel to examine the violation of common commercial codes taking place in which the short sale is only the means of profiting from the illegal acts. Recent answers from regulators have asked those that that complained about manipulation for examples. There is not a precious metals share that has not experienced trades after the official close at significant price differences. These trades and the dates are good examples to give to answer the question. Please do not accept that it is product of index adjustment trades as that is the cover story for major manipulation of individual issues. The most recent one you are familiar with has been blamed on index adjustment, except the trade was a huge sell and the index event was the stock in question went into the index, replacing four that went out. The index balancing trades, if any, should have been a buy.

Always worth the read…

Doug Noland Comment

In commemoration of M2 surpassing $10.0 TN for the first time – not to mention the unfolding confrontation between ECB President Draghi and Germany’s Bundesbank – this week’s CBB will focus on Monetary Analysis.  It is worth noting that M2, the Fed’s narrow measure of “money” supply, surpassed $1 TN for the first time in 1975.  It made it past $2 TN in 1983, $4TN in 1997, $8 TN in 2008 and $9 TN in April 2011.  M2 has inflated another Trillion during the past 15 months.To set the backdrop, it is worth noting that early economic thinkers were obsessed with money.  These days, monetary analysis is little more than a footnote in contemporary economic doctrine.  Generations ago, great minds were trying to come to grips with monetary phenomena.  They came to appreciate that money and Credit had profound impacts on economies and societies, although throughout history even the most astute struggled with the complexity of it all.  These days, “monetary stimulus” is seen as good for the markets and, yes, good again for GDP.  Inflation, if it ever were to return, is not so good.  Today’s monetary analysis is not good but it is shallow.  Thinkers of things economic long ago appreciated that the functioning of economies was literally transformed by the introduction of money.  An economy dominated by barter operated altogether differently after units of exchange entered the fray.  They further understood that the introduction of bank lending – where new purchasing power and bank liabilities were created by the act of borrowing – added great complexities to how economies functioned.  Finance mattered and it mattered a lot.  Keen attention was paid to the role Credit played in economic cycles.


Study Finds About 20% of US Public Companies Cheat On Earnings Reports

“And yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered, because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply.Primarily, this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence…Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They only know the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…

About Those Excess Reserves At the Fed

The next time some economist says that paying interest on Excess Reserves does not matter, show them this newswire copied below, and let them argue it with Alan Blinder.   San Francisco Fed President John C. Williams made a similar argument about four weeks ago. And Bernanke concurs that this is a powerful weapon in his mad scientist’s toolkit.But then we see pieces in the financial press or on econo-chatboards like this, scornfully dismissing the notion that interest payments on excess reserves matter at all because the excess reserves don’t matter.  Base Money Confusion by Izabella Kaminska.

Rising Dollar Forces Bernanke’s Hand

Could it be that world governments and central banks are now taking drastic measures to re-inflate their economies because they don’t believe their own economic statistics? For example, China reported that GDP growth came in at 7.6% last quarter. That’s slower growth, but still not so bad. However, China’s electricity consumption has slowed much faster than growth in official GDP (electricity generation was unchanged in June from a year earlier at 393.4 billion kilowatt-hours), when they normally move in tandem. Turning to the U.S., the Labor Department announced last week that initial jobless claims fell 26k to 350k. Sounds great…but wait. Digging into the unadjusted data, there was actually an increase of 69,971 claims for the week — an increase of 19% from the week prior. Now that’s some seasonal adjustment!

The Libor Scandal In Full Perspective

The article about the Libor scandal, coauthored with Nomi Prins, received much attention, with Internet repostings, foreign translation, and video interviews. To further clarify the situation, this article brings to the forefront implications that might not be obvious to those without insider experience and knowledge.The price of Treasury bonds is supported by the Federal Reserve’s large purchases. The Federal Reserve’s purchases are often misread as demand arising from a “flight to quality” due to concern about the EU sovereign debt problem and possible failure of the euro. Another rationale used to explain the demand for Treasuries despite their negative yield is the “flight to safety.” A 2% yield on a Treasury bond is less of a negative interest rate than the yield of a few basis points on a bank CD, and the US government, unlike banks, can use its central bank to print the money to pay off its debts.

Here is what happens when the tax code becomes thousands of pages. An industry grows up around it designed to move capital everywhere except where it could be put to good use by rational individuals who strive to come up with efficient solutions for expensive problems.

£13tn hoard hidden from taxman by global elite

A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.

Ben Davies: Seeking value in a world of financial repression

“Unfortunately the criticisms leveled at capitalism’s supposed failings are not a function of failed free markets but of state intervention in the supply of money. The failing of the banking system is the product of meddling in the true or real rate of interest which has distorted all pricing mechanisms in the production of credit, resource availability, manufactured goods, and services. This has been a global phenomenon. …”The repressive nature of finance today deters us from observing true prices that signal to us the true time

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