The gold price didn't do a thing yesterday...and chopped around between $1,770 and $1,780 spot for most of Friday. Gold closed in New York at $1,770.50 spot...up $3.30 on the day. Despite the lack of price action, the volume was an immense 204,000 contracts...down about a third from Thursday's volume.
It was pretty much the same story in silver. A price spike at 10:00 a.m. Hong Kong time got hammered flat in short order...and the silver price didn't do much after that. It finished the day at $34.68 spot...the same price as it closed on Thursday. Volume was a very chunky 55,000 contracts...down substantially from the 94,000 contracts traded on Thursday.
The dollar index opened at 79.27 on Friday morning in the Far East...and it was all down hill from there. The low of the day [$78.62] came at 10:00 a.m. Eastern time right on the button...and the index recovered a bit from there, closing the week at 78.85...down 42 basis points from Thursday's close.
That's about the same amount the index fell on Thursday but, as you can see, this dollar index decline had no affect on the precious metal prices at all...or wasn't allowed to.
The gold stocks gapped up once again at the opening of trading yesterday morning...and reached their zenith just minutes after 10:00 a.m. Eastern time. From there the stocks chopped sideways...and the HUI closed the trading day up 2.83%.
For the most part, the silver stocks had a pretty decent time of it as well...and Nick Laird's Silver Sentiment Index closed up another 3.71%.
(Click on image to enlarge)
The CME's Daily Delivery Report showed that only 5 gold contracts were posted for delivery within the Comex-approved depositories on Tuesday. Nothing to see here.
The GLD ETF took in more gold yesterday, as an authorized participant deposited 290,865 troy ounces of the stuff...and it came as no surprise to me that there was no silver deposited in SLV. It boggles the mind as to how much silver must be owed to this particular ETF.
The U.S. Mint had a decent sales report yesterday. They sold 9,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 100,000 silver eagles. Month-to-date the mint has sold 29,500 ounces of gold eagles...4,000 one-ounce 24K gold buffaloes...and 1,139,000 silver eagles. Based on this sales data, silver is outselling gold by a factor of 34 to 1...and I sure do hope that you're getting your share, dear reader.
The Comex-approved depositories reported receiving 617,909 troy ounces of silver on Thursday...and shipped a smallish 34,493 ounces of the stuff out the door. The link to that activity is here.
Yesterday's Commitment of Traders Report, for positions held at the 1:30 p.m. close of Comex trading in New York on Tuesday afternoon, was not happy reading this week, either.
In silver, the Commercial net short position increased by another 2,352 contracts, or 11.8 million ounces. The Commercial net short position now stands at 236.4 million ounces of silver. Ted Butler informed me that the '5 through 8' traders went short an additional 700 contracts, the raptors sold another 200 long contracts at a profit...and the 'Big 4' went short an additional 1,400 contracts...of which, Ted says, about 1,000 were JPMorgan. According to Ted, that puts JPM short about 27,000 Comex silver contracts...or 135 million ounces. A back-of-the-envelope calculation shows that JPMorgan is short [on a net basis] a bit over 27% of the entire Comex futures market in silver all by itself.
As of the cut-off on Tuesday, the 'Big 4' are short 217.9 million ounces...and don't forget that approximately 135 million of that is held by JPM. The '5 through 8' traders are short an additional 44.2 million ounces. In total, the 'Big 8' are short 262.1 million ounces of paper silver.
As a percentage of the entire Comex futures market in silver on a 'net' basis...the 'Big 4' are short 44.1%...and the '5 through 8' traders add another 8.9 percentage points to that. In total, the 'Big 8' short holders are short 53.0% of the entire Comex silver market. JPMorgan holds half of that position. Is that outrageous, or what???
In gold, the Commercial net short position increased by another chunky amount. This time it was 1.77 million ounces, or 17,705 contracts. The total Commercial net short position is currently 23.71 million ounces. Ted said that the '5 through 8' traders went short another 1,000 contracts...and the raptors increased their net short position to a new all-time record high by going short another 4,000 odd contracts during this reporting week. Reader E.W.F...who provides me with a complete set of COT charts based on the Disaggregated COT report, had this to say..."Butler's Gold Raptors are net short 55,181 contracts, their largest net short position in the data going back to January 15, 1986."
But it was the 'Big 4' that were the big movers in gold, as they went short another 12,000 contracts.
In percentage terms on a 'net' basis, the 'Big 4' are short 29.4% of the entire Comex futures market in gold...and the '5 through 8' traders are short an additional 12.7 percentage points. Adding it up shows that the 'Big 8' are short 42.1% of the entire Comex futures market in gold on a 'net' basis. That's not as grotesque as the 53.0% short position that these same eight traders hold in silver...but it's an eye-watering number nonetheless.
This is Price Management 101...and it's amazing the number of people that can't see it...and if they do, won't acknowledge it...even with the chart posted below staring them in the face.
Here are all the gory details as portrayed by Nick Laird's "Concentration of Traders in the CFTC COTs" chart of all the physical commodities traded on the Comex. Silver is the standout...and it has always been the standout. It has occupied the position on the far right-hand side of this chart for as long as this chart has been around...and that's more than ten years.
(Click on image to enlarge)
Without question the Commitment of Traders Report for next week will show even more deterioration, as the open interest and volume numbers from the CME on Friday morning showed that there was little, if any, short covering on the Thursday rally...unless it was well hidden by spread trades, which is a possibility. There's also an outside chance that JPMorgan et al were going long themselves. There are several ways that 'da boyz' can cover what they're doing...and those are two of them. Whatever the scenario was, we won't find out about it until next Friday...and as I said in this space yesterday, that's a lifetime away in a market such as this.
One can only fantasize what the prices of the precious metals would be if JPMorgan et al weren't standing in as short sellers of last resort.
I got an interesting e-mail from reader "Jan in Denmark" yesterday. Here's a lightly edited version of what he had to say..."The attached report [in Danish, of course! Ed] come from one of the major Danish banks, Jyske Bank. They recommend gold, expect it to test USD$1,800 and if broken, then USD$1,900. But also, they anticipate a bumpy ride ahead. This is the first time I have seen a recommendation on gold from a Danish bank." ...or any bank for that matter, Jan!
Here's an updated "Transparent PM Holdings" chart courtesy of Nick Laird. It's a new all-time high in ounces...and nearly there in dollar terms as well.
(Click on image to enlarge)
Since this is my weekend column, I have quite a few stories for you today, as I've been saving some all week for today's missive...plus there's lots happening in this world of ours. I hope you can find the time to read the ones that interest you.
Well, they did it again. These guys must have gonads the size of church bells to tweak Uncle Sam's nose once again. Of course, if it had been me, all U.S. paper would be downgraded to it's intrinsic value, which is junk. I thank Marshall Angeles for today's first story, which was posted on the zerohedge.com Internet site late yesterday afternoon...and the link is here.
The cost of living in the U.S. climbed in August by the most in more than three years, reflecting a surge in fuel costs.
The 0.6 increase in the consumer-price index was the biggest since June 2009 and followed no change in the previous month, the Labor Department reported today in Washington. The median forecast of 85 economists surveyed by Bloomberg News called for an advance of 0.6 percent. The core index, which excludes volatile food and fuel costs, climbed a less-than- projected 0.1 percent for a second month.
“I think inflation will remain benign for some time,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report. “The consumer’s still very, very price-sensitive, and rightfully so because the unemployment rate’s high, wage growth is barely keeping up with inflation.”
This Bloomberg story showed up on their website early yesterday morning...and I thank West Virginia reader Elliot Simon for sending it. The link is here.
Not surprisingly, John Williams over at shadowstats.com has a few things to say about QE3.
The Federal Reserve is talking about “unlimited QE,” or money printing, to boost employment. Economist John Williams says, “That’s absolutely nonsense...as the Fed is just propping up the banks.” Williams says, “You’re likely going to see a dollar sell-off...and that should evolve into hyperinflation.” Williams, “Doesn’t see the current system holding together without hyperinflation beyond 2014.” He contends the real annual deficit is “$5 trillion per year” and says, “That’s beyond containment."
Williams predicts, “Hyperinflation is virtually assured because the Fed doesn’t have any options left.” Williams says people should get prepared because we are facing a “man-made disaster.”
The interview with Greg Hunter over at USAWatchdog.com was posted over at the jsmineset.com Internet site on Thursday...and I thank London, U.K. reader Iain Doherty for sharing it with us. The interview runs for 17 minutes...and the link is here.
Central bankers are “counterfeit money printers” and Federal Reserve Chairman Ben Bernanke should resign for messing up the U.S. economy so badly, Marc Faber, author of the Gloom, Doom and Boom, told CNBC on Friday.
He said Bernanke was one of the main proponents of an ultra-expansionist economic monetary policy that was to blame for the latest financial crisis.
“If I had messed up as badly as Bernanke I would for sure resign. The mandate of the Fed to boost asset prices and thereby create wealth is ludicrous — it doesn’t work that way. It’s a temporary boost followed by a crash,” Faber said.
This CNBC story, with the 4-minute video interview with Dr. Faber, was filed on their Internet site early yesterday morning. I thank Nitin Agrawal for sending it along. It's worth the read...and the clip is definitely worth watching. The link is here.
I’ll state what others hesitate to admit: this week our central bank took a giant leap from radical to virtual rogue central banking. If Bernanke’s plan was to leapfrog the audacious Draghi ECB, our sinking currency – even against the euro – is confirmation of his success. If his goal was to provide markets a Benjamin Strong-like “coup de whiskey” – he should instead fear the dangerous instability central bankers have wrought on global markets and economies. And I am all too familiar to the adversities of being a naysayer in the midst of Bubble mania. I’ve read about it, I’ve lived it and I’m ok with it – and actually am motivated by it. I highlighted last week the ominous divergence between world fundamentals and the markets. And this week, well, global markets enjoyed just a spectacular time of it. Away from the Bloomberg screen, it sure seemed like a less than comforting week for the world at large.
As an analyst of Bubbles, I often quip that they tend to “go to incredible extremes - and then double.” Timing the bursting of a Bubble is a very challenging – if not nearly impossible – proposition. Yet this in no way should cloud the harsh reality that the longer a Bubble is accommodated, the more devastating the unavoidable consequences. It is, as well, the nature of speculative manias for things to turn crazy in the destabilizing terminal-phase. The past few weeks – with more than ample Bubble accommodation and craziness - really make me fear that eventual day of reckoning.
I was waiting for Doug's Credit Bubble Bulletin with eager anticipation yesterday evening...and he certainly didn't disappoint. This is a must read for sure...and it's posted over at the prudentbear.com Internet site. The link is here.
The New York Stock Exchange is paying $5 million to settle federal civil charges that it gave some customers an unfair head start by providing them with trading data ahead of the wider public.
It marked the first time the Securities and Exchange Commission ever imposed a fine on an exchange.
The NYSE and its parent NYSE Euronext also agreed in the settlement to hire an independent consultant to review their systems for delivering market data. They neither admitted nor denied the SEC’s allegations.
As is the case with all 'fine'...they are just licensing fees...and this incident with the NYSE is probably no exception. As soon as everyone's head has turned away, they'll most likely be back at it...just like the big banks.
This story was filed on The Washington Post Internet site mid-morning yesterday...and I thank Donald Sinclair for sending it. The link is here.
Officials from the Department of Justice along with representatives from other government agencies met with Former MF Global CEO Jon Corzine last week, according to people familiar with the matter, marking a potentially critical development in the government’s investigation into the failed firm and its subsequent misuse of customer funds.
Officials have been trying to build a case against Corzine and other former MF Global executives since the brokerage firm declared bankruptcy last fall – the fallout of which resulted in massive transactions which improperly siphoned money out of customer accounts.
Roughly 10 months after the firm’s collapse, there remains a $1.6 billion shortfall in these accounts, according to bankruptcy trustee James Giddens. No one at MF Global has been formally charged with any wrongdoing to this point.
This CNBC story was reposted at the hereisthecity.com website on Wednesday...and I thank reader Bill Busser for bringing it to our attention. The link is here.
Does anyone remember when National Public Radio was an independent voice?
During the 1980s NPR was continually on the case of the Reagan administration. NPR certainly had a Democratic slant, and a lot of its reporting about the Reagan administration was one-sided. Yet, NPR was an independent voice, and it sometimes got things correct.
In the 21st century that voice has disappeared, which was the intention of the George W. Bush regime. Bush put a Republican woman in charge who made it clear to NPR producers and show hosts that the federal part of their funding was at risk.
Money often over-rules principle, and when corporations added their really big money NPR collapsed. Today the local stations still pretend to be funded by listeners, but if you have noticed, as I have, there are now a large number of corporate advertisements, disguised in the traditional terms "with support from . . ." If you are not listening to classical music, you are listening to corporate advertisements.
Today the entire "mainstream media" is closed to truth-tellers. The US media is Washington's propaganda ministry. The US media has only one function–to lie for Washington.
The always-controversial Paul Craig Roberts is pretty much spot on in this September 5th commentary posted over at thedailybell.com website. Reader Carl Lindfors sent it to me last Sunday...and I've been saving it for today's column. I consider it a must read...and the link is here.
To ease worries among some of his biggest critics, European Central Bank head Mario Draghi has made the unusual offer to defend his decisions to Germany's parliament. Many Germans distrust Draghi, who wants to fight the euro crisis with unlimited bond purchases.
According to opinion polls, nearly half of Germans mistrust the ECB leader, a reality that hinders his work, Draghi told the paper. "I must do more to explain our measures," he added.
Draghi has encountered resistance from the Bundesbank, Germany's central bank, but also from leading politicians in the country, some of whom have criticized his recent decision to purchase sovereign bonds in unlimited quantities from crisis-plagued euro-zone countries to reduce yields. Critics argue that the purchases amount to state financing, which the ECB is prohibited from doing.
I'm surprised it's just half the German people don't trust this guy. If they only knew, the figure would be 100%. This spiegel.de story from yesterday is courtesy of Roy Stephens...and the link is here.
Several UK-based investment banks have been accused of mis-selling financial products to Italian cities and regions. Nomura, UBS and Deutsche Bank are among those accused by Italian prosecutors of mis-selling derivatives in deals worth 35bn euros (£28bn).
The banks deny wrongdoing, but refused to comment further because the matter is now before the Italian courts. BBC Newsnight discovered that London's financial watchdog was made aware of the mis-selling, but failed to act.
Now those swap derivatives look as if they could further damage the entire Italian economy - the third largest in the eurozone.
This story was posted over on the bbc.co.uk Internet site on Tuesday morning...and I thank 'David in California' for sending it my way. The link is here.
Cash-strapped officials in Europe are looking for a way to ease their financial burden by upending centuries of tradition and seeking to tap one of the last untouched sources of wealth: the Catholic Church.
Thousands of public officials who have seen the financial crisis hit their budgets are chipping away at the various tax breaks and privileges the church has enjoyed for centuries.
But the church is facing its own money troubles. Offerings from parishioners have nosedived, and it has been accused of using shady bank accounts and hiding suspect transactions.
Now, along come officials like Ricardo Rubio. Rubio, a city council member in Alcala, is leading an effort to impose a tax on all church property used for non-religious purposes. The financial impact on the Catholic Church could be devastating. As one of the largest landowners in Spain — with holdings that include schools, homes, parks, sports fields and restaurants — the church could owe up to 3 billion euros in taxes each year.
This story was filed on The Washington Post Internet site on Thursday...and I thank Donald Sinclair for sharing it with us. The link is here.
People often ask me why the West doesn’t attempt a Libya-style intervention in Syria. After all, things are going so well in Libya. Oil production is up. But oil production is merely a mirage, as is security in Libya, which was doomed from the day one PG (post-Gaddafi) because of the way it was “liberated”.
On Wednesday, US envoy to Libya Christopher Stevens was killed along with three other American diplomats in a rocket attack on the US consulate in Benghazi.
What about the oil, that global elixir? Well, the violence will not bode well for Libya’s production ambitions, coming at a time when the country looked prepared for a boost in output and was banking on this for economic growth.
Security was already dubious at best, and now international oil companies will be more reluctant than ever. Those that are already there—Germany’s Wintershall AG, Italy’s Eni and France’s Total—will be seeking to beef up security and have already started sending some of their workers home.
This is another must read story...and this one was posted over at the oilprice.com website very late on Thursday evening. It's all part of the "New Great Game". I thank Roy Stephens for digging it up on our behalf...and the link is here.
Once upon a time, during George "Dubya" Bush's "war on terra", the Forces of Good in Afghanistan captured - and duly tortured - one evil terrorist, Abu Yahya al-Libi.
Abu Yahya al-Libi was, of course, Libyan. He slaved three years in the bowels of Bagram prison near Kabul, but somehow managed to escape that supposedly impregnable fortress in July 2005.
At the time, the Forces of Good were merrily in bed with Colonel Muammar Gaddafi in Libya - whose intelligence services, to the delight of the Bush administration, were doing their nastiest to exterminate or at least isolate al-Qaeda-style Salafi-jihadis of the al-Libi kind.
But, then, in 2011, the Forces of Good, under new administration, decided it was time to bury the oh so passé "war on terra" and dance to a new, more popular groove; humanitarian intervention, also characterized as "kinetic military action".
So al-Libi was back from the dead - now fighting side by side with the Forces of Good to topple (and eventually snuff out) "evil" Col Gaddafi. Al-Libi had become a "freedom fighter" - even though he was openly calling for Libya to become an Islamic Emirate.
The honeymoon didn't last long.
Here's the real scoop of what went on in Libya...and Pepe doesn't pull any punches. This is another must read for students of "The Great Game"...and I thank Roy Stephens once again. It's posted on the Asia Times website...and the link is here.
Anti-American rage that began this week over a video insult to Islam spread to nearly 20 countries across the Middle East and beyond on Friday, with violent and sometimes deadly protests that convulsed the birthplaces of the Arab Spring revolutions, breached two more United States Embassies and targeted diplomatic properties of Germany and Britain.
The broadening of the protests appeared to reflect a pent-up resentment of Western powers in general, and defied pleas for restraint from world leaders, including the new Islamist president of Egypt, Mohamed Morsi, whose country was the instigator of the demonstrations that erupted three days earlier on the anniversary of the Sept. 11, 2001, attacks.
After days of protests over an anti-Islam film, American diplomatic missions in the Middle East and North Africa were braced for further violence after Friday prayers. The US put its overseas missions on high alert.
The State Department confirmed that protesters had penetrated the perimeters of the American Embassies in the Tunisian and Sudanese capitals, and said that 65 embassies or consulates around the world had issued emergency messages about threats of violence, and that those facilities in Islamic countries were curtailing diplomatic activity. The Pentagon said it sent Marines to protect embassies in Yemen and Sudan.
This story showed up on The New York Times Internet site yesterday...and I thank Washington state reader S.A. for sending it our way...and the link is here.
After days of protests over an anti-Islam film, American diplomatic missions in the Middle East and North Africa were braced for further violence after Friday prayers. The US put its overseas missions on high alert.
Germany has closed its embassies in a number of Muslim-majority countries in fear of attacks. "We are observing how the security situation develops with great attentiveness and we have increased security precautions at a number of foreign missions," a spokesman for the German Foreign Office told SPIEGEL ONLINE. Embassies in North Africa, Afghanistan and Pakistan are believed to be among those affected.
The spokesman said that the missions would only close on Friday, though. Other German institutions such as aid organizations have also been urged to increase security precautions, he said.
The German press chime in on the Middle East violence against U.S. embassies. Marshall Angeles sent me this story from the German website spiegel.de yesterday...and the link is here.
Angry protesters in the Sudanese capital Khartoum attacked the German Embassy on Friday, setting fire to parts of the building. They also tore down the German flag and raised an Islamist banner. The violence was part of a wave of protests against an anti-Islam film across the Muslim world.
Following Friday prayers, thousands of protesters in the Sudanese capital Khartoum attacked the embassies of Germany and Britain, outraged by a film that insults the Prophet Muhammad.
Witnesses said that protesters threw rocks at the embassies, which are close to each other, and tried to storm their main entrances. Some demonstrators managed to get past security forces and enter the German Embassy.
This is another story from the spiegel.de website yesterday...and I thank Donald Sinclair for sending it along. The link is here.
MENA is on fire. The diffuse rage - even if manifested by a tiny minority - is distinctly anti-American. Protests in Cairo have reached Sanaa in Yemen and even Bangladesh. The administration of US President Barack Obama is perplexed beyond belief. There will be revenge. What's really going on?
It does not matter whether that infamous, crude, made-in-California anti-Islam and anti-Prophet Muhammad flick - actually financed/produced by an Egyptian Christian Copt and American protestants, instead of a non-existent Jewish real-estate developer - was just a pretext that led to the killing of the US ambassador in Benghazi and the protests in Cairo and beyond. Let's try to identify the consequences.
The strategic target of the Salafi-jihadis who killed the US ambassador in Benghazi was to torpedo the (already shaky) Obama-Muslim Brotherhood alliance.
Imagine if that had happened in Syria - or with a visiting US diplomat to Iran, for example; Pentagon-based revenge already would be in effect. US consulates were never attacked when Colonel Muammar Gaddafi was in power in Libya; it happened under the watch of a "NATO rebel" regime fully sponsored by Washington.
Libya is now militia hell - from neighborhood-watch outfits to mini-armies. They won't disarm. They refuse to be part of government security forces because their logic is tribal. They're fighting one another. No weak central government in car-bomb-infested Tripoli will rein them in.
This is the second commentary from Pepe in this column...and this one was filed from Hong Kong earlier this morning. It, too, falls into the must read category of anyone following the American Empire and it's "New Great Game". It's from Roy Stephens of course...and the link is here.
Russian President Vladimir Putin has announced his country’s pivot to the East, vowing to expand trade with Pacific Rim countries and to focus on developing resource-rich Far East.
“Development of regional economic integration is Russia’s strategic choice,” Mr. Putin said on Sunday winding up a two-day summit of the Asia-Pacific Economic Cooperation forum in Vladivostok.
The Russian leader called for upgrading the infrastructure of Russia’s eastern regions as “an uppermost task” for his government. He announced plans to build modern rail and motor roads, seaports and airports in order to develop sea and land transport corridors between Asia and Europe.
The Kremlin said Russian trade with APEC countries, which contributes less than a quarter of the country’s total turnover, in five to ten years is to surpass trade with Europe — Russia’s main trade partner accounting for half of its trade.
This story, filed from Moscow, was posted on thehindu.com Internet site last Sunday. I thank Marshall Angeles for sending us this short read...and the link is here.
The first is with John Embry...and it's headlined "We Are Seeing Mounting Shortages Of Gold & Silver". The second blog is with Egon von Greyerz. It's entitled "Silver To Surge 433% From Current Levels". The audio interview is with Felix Zulauf.
The National Union of Mineworkers has said that it will be making a submission to the Chamber of Mines to commence with wage negotiations, originally scheduled for June 2013, as soon as possible.
The union also called for the urgent establishment of a centralised bargaining forum for the platinum sector to consider conditions of employment regardless of existing wage agreements.
General secretary, Frans Baleni said that all unions, including the likes of AMCU, who have recognition status should be invited to participate in this forum.
The union's third proposal was for the establishment of a commission of enquiry into the conditions of service and living conditions of mine workers.
This Reuters story found a home over at the mineweb.com Internet site yesterday...and it's the first of three in a row form Ulrike Marx. The link is here.
No more illegal gatherings or incitement to violence would be tolerated, Intelligence Minister Siyabonga Cwele told reporters in Pretoria.
The ministers of police, justice, finance and intelligence were briefing the media on ongoing unprotected mining strikes across the country over the past few weeks.
Asked how authorities would control crowds without shooting, Police Minister Nathi Mthethwa only said: "We will do everything to ensure that peace will prevail."
This very short story, filed from Johannesburg on Friday, was also posted on the mineweb.com Internet site...and the link is here. Thanks Ulrike!
Protesting Lonmin mineworkers in Rustenburg plan to defy government's warning and continue with their unprotected strike which has crippled the mining sector.
“We have heard [Justice Minister] Jeff Radebe is going to send his police here because he says our gatherings are illegal," said a worker addressing the protesters on Friday afternoon.
"You must know that on Monday you should be ready for Jeff Radebe and his police to come and do what they normally do to us.”
The man was one of several workers who stood up and addressed a thousand-strong crowd in Marikana at sunset.
This story was filed from Rustenburg, S.A. early this morning...and is Ulrike Marx third offering in a row...and the last one in today's column. It's posted over at the news24.com website...and the link is here.
Stop Logic, a type of circuit breaker that pauses trading for between five and 20 seconds, was triggered at 12:14:47 EDT and at 12:31:20 EDT Thursday.
"Stop Logic offers market participants the opportunity to provide additional liquidity and permits the market to regain its equilibrium," the spokesman said in the email.
That's just about all there was to this foxbusiness.com story that Washington state reader S.A. sent me on Thursday night...and the link to the hard copy is here.
Yesterday, when we first presented our calculation of what the Fed's balance sheet would look like through the end of 2013, some were confused why we assumed that the Fed would continue monetizing the long-end beyond the end of 2012.
Simple: in its statement, the FOMC said that "If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability."
Therefore, the only question is by what point the labor market would have improved sufficiently to satisfy the Fed with its "improvement" (all else equal, which however - and here's looking at you inflation - will not be). Conservatively, we assumed that it would take at the lest until December 2014 for unemployment to cross the Fed's "all clear threshold."
As it turns out we were optimistic.
This very long posting over at Zero Hedge yesterday is certainly worth your time, if you have it...and I thank Nick Laird for pointing it out. The link is here.
Peter Schiff, chief executive officer of Euro Pacific Capital, recently gave an interview discussing the prospects of gold. When asked how high the price of gold may reach, he responded that there is no ceiling for the precious metal, because there is no limit on how much money will be printed. The Federal Reserve’s latest announcement confirms this theory, and paves the way for much higher gold and silver prices.
This article showed up on the wallstcheatsheet.com Internet site yesterday...and I thank Elliot Simon for digging it up on our behalf. The link is here.
With another syringe of quantitative easing being injected into the U.S. economy’s bloodstream, Ben Bernanke is giving the markets their liquidity fix. The Federal Reserve’s action reaffirmed my stance I’ve reiterated on several occasions that the governments across developed markets have no fiscal discipline, opting for ultra-easy monetary policies to stimulate growth instead.
The government’s liquidity shot promptly boosted gold and gold stocks, as investors sought the protection of the precious metal as a real store of value. You can see below the strong correlation between the rising U.S. monetary base and growing gold value. Since the beginning of 1984, as money supply has risen, so has the price of gold.
What’s interesting is that currency decline was what Richard Nixon sought to avoid when he ended the gold standard in 1971 and announced that the country would no longer redeem its currency in gold. During his televised speech to the American public, Nixon translated in simple terms the “bugaboo” of devaluation, saying, “if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.”
As you can see below, more than 40 years later, a dollar is worth only 17 cents. This significant decline in purchasing power only strengthens the case of gold as a store of value, likely prompting Global Portfolio Strategist Don Coxe to propose making Nixon the “patron saint of gold investors,” during this year’s Denver Gold Forum.
This must read commentary from Frank Holmes was sent to me by Elliot Simon...and it's his last offering in today's column. The charts are worth the trip all by themselves...and the link is here.
Gold demand in India, the world's biggest consumer, rose sharply on Friday despite a record high price as jewellers and investors scaled up purchases expecting prices to climb further during the festive season.
Next week India celebrates the Ganesh festival, which will be followed by Dussehra in October and Diwali in November. Buying gold during festivals is considered auspicious in the country.
Spot gold price in India hit a record high of 32,558 Indian rupees per 10 grams on Friday, compared to previous session's close of 32,173 rupees.
"Buyers were waiting for a correction in prices for a long period. Now they think the correction is unlikely as the U.S. Federal Reserve announced stimulus," said a Mumbai-based dealer with a state-run bank importing the yellow metal. "Some buyers even think price may cross 35,000 rupees."
This Reuters story was filed from Mumbai at 1:34 p.m. India Standard Time on Friday...and I plucked it from a GATA release yesterday. The link is here.
Tosca Mining Corporation's goal is to acquire advanced stage projects that can be placed into production quickly. The company's primary asset is the Red Hills Molybdenum/Copper project located in Presidio County, Texas. A program to confirm, and expand the considerable size and potential of the project and evaluate various economic scenarios was completed in 2011.
Tosca recently received results from the 13 remaining holes from its phase two, 16,000 M (4,873 m) diamond drill program. Per Tosca’s Chairman, Dr. Sadek El-Alfy, “the drill program has successfully verified historic drill results of the shallow Copper-Molybdenum cap and confirmed the presence of a deeper, well mineralized Molybdenum Porphyry deposit.” The results of 21 holes drilled through the copper/moly cap in Tosca's 2011 drill program give a weighted average grade of 0.39 % Cu over a core length of 113 feet (34.5 m). Since the copper cap is subhorizontal, the average core length can be interpreted as being approximately equivalent to true width. The copper/moly cap is crescent shaped, approximately 4,000 feet (1220 metres) long and 400 feet (122 m) to 1000 feet (305 m) wide.
The 2011 program encountered numerous thick Molybdenum mineralized intervals including Hole TMC-25 wich intersected 1,189 feet (362.4 m) averaging 0.089 per cent Mo including 830 feet (253 m) of 0.1 per cent Mo from 359 feet (109.8 m) to the bottom of the hole. Hole TMC-29 cut 989 feet (301.4 m) averaging 0.09 per cent Mo including 139 feet (42.4 m) of 0.16 per cent Mo. The molybdenum grades are similar and in some cases higher than those of projects currently considered of potential economic interest."
Aggressive plans are in place for 2012 to conduct metallurgical tests, produce an updated resource estimate and Pre Economic Assesment. Tosca is operated by an experienced mine development team, operates in Texas, a mine-friendly jurisdiction and its property iseasily accessible with infrastructure in place to advance operations. Please visit our website to learn more about the company ad request information.
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring temporary prosperity; both bring permanent ruin. Both are the refuge of political and economic opportunists. - Earnest Hemingway
Today's 'blast from the past' was composed in 1904...and had a rather shaky early history.
Jean Sibelius originally dedicated his violin concerto to the noted violinist Willy Burmester, who promised to play the concerto in Berlin. For financial reasons, Sibelius decided to premiere it in Helsinki, and since Burmester was unavailable to travel to Finland, Sibelius engaged Victor Novacek, a violin teacher at the Helsinki Conservatory. The initial version of the concerto premiered on 8 February 1904, with Sibelius conducting. Novacek played poorly and the premiere performance was a disaster. However, Sibelius had barely finished the concerto in time due for the premiere, most likely because of his alcoholism.
Sibelius withheld this version from publication and made substantial revisions. He deleted much material he felt did not work. The new version premiered on 19 October 1905 with Richard Strauss conducting the Berlin Court Orchestra. Sibelius was not in attendance. Willy Burmester was again asked to be the soloist, but he was again unavailable, so the performance went ahead without him, the orchestra's leader Karel Halíř stepping into the soloist's shoes. Burmester was so offended, that he refused ever to play the concerto, and Sibelius re-dedicated it to the Hungarian "wunderkind" Ferenc von Vecsey, who was aged only 12 at the time. Vecsey championed the Sibelius concerto, first performing it when he was only 13, although he could not adequately cope with the extraordinary technical demands of the work.
However, Sarah Chang has no such problems with the technical demands of this virtuoso concerto...and tosses it off in this performance with the Dutch Radio Filharmonisch Orkest. Maestro Jaap van Zweden conducts...and the link is here.
Well, it's a sure bet that the safety catch is now off the world's economic, financial and monetary system. After reading [and posting] all of the above stories...and reading and deleting dozens of others...I'm just getting an ugly feeling that the whole world is about to float off the rails...as there are now forces unleashed in the world that cannot be stopped, let alone controlled.
It's at times like this that I think of what Doug Casey had to say in the first speech that I ever heard him give. He was, of course, talking about the upcoming 'greater depression'...and how he wanted it to be watching it on a flat-screen TV from Western Samoa. It sure got a laugh from the crowd, which was the whole intent, I suppose...but I never forgot it.
The Hemingway quote above is one that has graced this column many times in the past...and I always pull it out at moments like this. Of course, everything turned out 'fine' in the past but, as they say, this time I really think it's different. We'll find out in short order I would think.
As for the grotesque short positions held by JPMorgan et al in both silver and gold...I'm almost beyond the stage of caring about it. What can they do...really? They only have three choices...deliver, cover, or default. Any of those three separately, or in combination, will drive the price of the precious metals to unimagined heights. Sure, they can engineer a price decline of some sort, but in the current environment, that will only save them temporarily...and only delay the inevitable.
And as I said earlier this week, all we can hope for is that we've prepared ourselves for every eventuality...and pray that it's been enough.
See on Tuesday...Wednesday west of the International Date Line.