Saturday, May 31, 2008

May 31.08 commentary...important.

http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=6931.

 

Good morning Ladies and Gentlemen:

 

Gold rose  by 10.00 to 887.00.  Silver rose by 35 cents to close at 16.83.  The silver OI again remains comatose as the commercials are fleeing this arena as fast as they can.

Gold’s OI contracted again on Thursday, dropping a further 7000 contracts and it rests at 416000.  From my vantage point, it looks like 2.5 million oz will be eventually delivered upon:

 

  1. 1.9 million oz standing.

 

       2.    .5 million oz of gold from the May options delivery

 

3.       a possible .1 million oz from June options and queque jumpers..

 

 

The total OI will  come very close to this figure.  This will reduce the OI by a further  25000 contracts.  So the net OI is around 416000-25000 or 391000 which is extremely low as these are all in strong hands. As

Friday was first day notice, cartel members saw the extremely low OI  and figured that they had better cover some of their shorts positions and they did.

 

On the oil front, we saw that the Brent Oil contract traded at a premium to West Texas Intermediate.  When you see this you know the manipulation game is on.  The bankers decided on Wednesday and Thursday to whack all commodities because these markets were getting too hot to handle.    When the inventory levels of oil  were announced , they showed a huge withdrawal of  inventory. Oil shot up to 133.00 and then the cartel trotted out the CFTC to announce an investigation into the oil market.  Oil  fell on this news.  This is nothing short of blatant manipulation.   For what purpose did the CFTC serve by announcing the investigation into the pricing of oil, the investigation which got its start in Dec 2007?  Clearly it was to imply there is an upward bias in the pricing of oil.  Their goal:  to force the longs to liquidate their holdings.  It worked and oil fell by 4.00 dollars. The banks were the recipients (purchasers)   of all the longs liquidated.  The regulators just turn a blind eye.

 

Not only that, but the fall in the price oil was the cover for the cartel to rape the gold and silver holders of long contracts.

 

As the price of silver fell,  managers at bullion banks were perplexed as many investors arrived at their doorstep to buy the precious metal as rumours are now  widespread of its scarcity.  Many left empty handed.  One Vice President of a major Canadian  bank could not understand why his allocated silver was not in the banks vault.  He was paying storage costs and to his dismay, the silver was not present.

.

What we are witnessing is absolute fraud and theft.  Silver is being used by bankers who know very well that ownership does not belong to them.   The Perth mint on Thursday admitted that it leases out allocated silver for a profit.  They say that this is routine for the industry.  There are many who will go to jail on this one especially if one does not get their silver back.

 

The COT was released after the market closed on Friday and revealed some interesting aspects in the gold market.  The large specs continue to pile into gold in that they added to their longs by

4600 contracts and reduced their shorts by 4700 contracts.  The commercials  (the smaller banks) reduced their longs by 16400 contracts but also reduced their shorts by  13500.  It was the big banks that covered  some of their short positions.

Strangely, the small specs entered the fray and they reduced their longs by 228 contracts and went short by 3200 contracts.

 

The small specs always get it wrong so we can now assume the price of gold is on its way up.  Also our good friend Dennis Gartman had his entire long position in gold annihilated since his stop losses were triggered at 891.00. With gold falling on Wednesday and Thursday, he lost his entire position.  He also lost his position in copper.  Since Gartman announces to the world what he has done, the cartel does everything in their power to go after him and they always fleece him.  And this guy gets invited on CNBC all the time as the guru of the precious metals and commodities.  Give me a break.  This guy is a total moron!!

 

In other news, the purchasers management report  (Chicago) showed contraction of the economy in the Midwest.  The reading was 49.1 

Any reading below 50 is a major contraction.

 

The University of Michigan  Consumer  Confidence level showed a 28 year low of 59.8.  The April reading was 62.00 and that was a 28 year low.  The consumer is not in a happy mood!!

 

 

In California, we are seeing families sleep in the cars as they are evicted from their homes.  Police are guarding  private parking lots protecting citizens.  And these people have jobs.  They go to work and come “home” to their car.

 

In Ontario, California, we are witnessing tens of thousands people living in tents.  Again, these people have jobs.  They do not have a home.  Many are turning in their SUV’s as they cannot afford the gasoline prices.

 

The city of Vallejo declared chapter 9 bankruptcy and they will be followed by many cities.

The state of California is bust as well as their deficit is now 20 billion dollars per year. Nobody wishes to hold California bonds. Foreigners are cashing in these bonds as fast as they can!

House prices continue to fall and the state of California  will see the largest default in the Alt A mortgages.  The total Alt A jumbo mortgages is said to number in excess of 1.2 trillion dollars.

 

The Fed, seeing that defaults are rising faster than a speeding bullet announced on Thursday that they were going to increase the TAF auction facility at the Fed to 75 billion dollars X 3 times a month or for a sum of 225 billion dollars in June.

 

The Fed on Thursday also announced 16.4 billion dollars of a separate auction.  They rejoiced on the low 16.4 billion figure as they were set to auction off 25 billion.

Many banks are afraid to show their hand that they went to the window as this would cause their stock to fall. During the week, we heard that Lehman Brothers  totally lied to the regulators and filed false statements to regulators and to the media.  A top analytical firm addressed the Empire club in NY and showed that Lehman has billions of undisclosed losses from subprime, Alt A and other level 3 assets.

The losses if revealed would wipe out its entire retained earnings as they are basically bankrupt.  Meridith Whitney disclosed to Bloomberg that Citibank will not get out of its mess for at least 3 years.  It has massive level 3 assets.  Not to be undone, Citibank disclosed that AIG will need greater than 20 billion dollars to mend its balance sheet.  And the granddaddy of them all, Goldman Sachs has over  70 billion dollars of level 3 assets which are on their books at par.  And the regulators turn a blind eye.

What is most amazing, is that the chairman of the CFTC and the chairman of the SEC are on the Presidents Plunge Protection Team  (Working Committee on the Economy).  They see manipulation, corruption and fraud  everywhere and sanction it.  How they can sleep at night is a mystery.

In perhaps, the most revealing events of the day, it was announced that Moody’s Investors Services had created a new unit:   Moody’s  Analytics whose function it is to  investigate the credit health of various Wall Street firms by analyzing  credit default swaps. Credit Default Swaps are bets on the survival on the companies in question.  The higher the price, the worse shape these guys are in.   They rate independent of Moodys itself.  The implied ratings from Moody’s Analytics differed from the official ratings of Moodys Investors and generally the swap traders got it right.  Moodys Analytics are rating MBIA and Ambac as junk.  Moodys Investors, the parent, rate them as Triple A.

I can just see ligitation lawyers on this one!!  The Moody’s Analytic division works in a corner of  Moody’s  new world headquarters in Lower Manhatten , right around Ground Zero.

 

On Friday, the Vice Chairman David Kohn announced that he was hoping that Wall Street Security firms will get permanent bailout funds from the Fed.  He also said that foreign firms can apply for funds.

The printing press continues to roll in a similar fashion as the Weimar Republic’s printing of money back in 1923. The Fed now has greater than 50% of its assets tied to junk.  The Fed also has 91 billion of negative non borrowings on its balance sheet.  This means that all usa banks have no collateral  at the Fed.   Citizens capital have been wiped out!!

The news from England is also getting pretty horrific.  House prices are continuing to fall and many at Northern Rock are losing their jobs.  The British economy is faltering terribly.

The sovereign nation of Spain will probably default by the end of the June  as their reserves are now zero.  Euros are now being supplied by the ECB but their patience is running thin.  The failure of Spain will also bankrupt Portugal.  After these countries default, Turkey and Greece will be right behind them.  Even Italy is wavering!!   On Friday, the Finance Minister of South Africa announced that inflation is running at 10% and that he needs to raise interest rates by 2%.  Remember that there are rolling brown outs because of electrical shortages. The South African economy is contracting., as mining companies refuse to send their miners down shafts with questionable power. And they want to raise interest rates???

 

We are now heading  for a total global economic collapse unprecedented in modern history. I urge you all to go and line up at bullion bank headquarters and obtain physical  silver and gold if available.

My son Stephen informs me that the Willie radio broadcast is now on my website.  I urge you all  to hear it.  My site is:  www.harveyorgan.blogspot.com

 

 

Have a great weekend.

Harvey

 

Friday, May 30, 2008

Jim Willie radio interview

Here is a link to the Jim Willie radio interview. You need QuickTime installed on your computer to listen to it:
http://www.contraryinvestorscafe.com/broadcast.php?media=117

Thursday, May 29, 2008

FW: Fed to make fresh batch of bank loans: Financial News - Yahoo! Finance

Here is the link to the fresh loans by the Fed of 75 billion x 3 for each
month.

Bonds tanked on this news.

http://biz.yahoo.com/ap/080529/fed_credit_crisis.html?.v=3

May 30.08 commentary.

http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=6928.

 

The month of June comex gold is now officially at an end.  Tomorrow morning is first day for gold to be delivered upon.  The June OI remains at 43000 contracts.  We expect that 17000 will be removed from todays OI so approximately 2.0 million oz will be delivered plus the ½ million from May options.  The total we expect will thus be 2.5 million oz almost exactly the same as two months ago.

 

 

The cartel went into high gear today with word that many  of the 900 call options were taken up for delivery.  It will show up tomorrow and I have included some of these call options in my figures.

 

Gold closed down by 19.00  to 877.00.  Silver fell by 90 cents to 16.48.  The open interest on gold fell by 7000 contracts to 423000.  Silver remained constant.

 

With approximately 25000 contracts of gold being delivered upon, this total must be subtracted from the OI  beginning in June.  So the new OI will be around 398000 ..very low for the price of gold.

This should be the bottom and gold will once again rise.

 

On the economic front the long bond tanked to 112.70 from 114.05 today.  It is obvious that the bond vigilantes are smelling inflation. As many of you know, I are watching this like a hawk.  This is the cartel’s Achilles heel.  If the long bond reaches 106 then you safely say the 91 trillion dollars of credit derivatives at JPMorgan are toast.

 

The Fed announced that they were going to increase their TAC auctions to the tune of 75 billion in 3 tranches.  I pointed out to you yesterday that Libor rates were rising and now we see this.

 

Ambrose Pritchard Evans wrote in the UK Telegraph today that credit default swaps are rising again despite the fact that many of the non banks can go the Fed window directly.  Credit default swaps sold off after the Bear Stearns debacle as many thought it would be impossible for these guys to go under.

However as Evans has stated that the  Fed has already used up 50%  of its 800 billion dollars of treasuries.  He points out that the credit default swap for Lehman has doubled and that the Default swap for Citibank and Merrill Lynch has appreciated considerably.  It means that the Fed cannot bail out everyone. This is very ominous!!

 

Commercial paper continues to decline as the house prices continue to spiral into oblivion.  The collateral of the banks are thus falling.

 

With the bond market tanking yesterday , the cartel brought out Fisher to state that interest rates are going to rise sooner or later.   There is no chance that they will ever raise interest rates.  It will fry the housing and mortgage market.

 

 

S and P brought out a report stating that AltA mortgages have already started to default.  As I pointed out to you before this market is greater than the subprime.

The subprime market is 750 billion.  This market is 1.2 trillion dollars.  Also the derivatives on this is 10 x this level.

 

On the physical side of silver, I was informed that a Vice President of a Canadian bank, tried to get his delivery slip of silver into real silver and failed.  The bank told him that there was no silver to be found.

 

Do not be surprised to see a dual pricing structure for silver and gold.  Paper silver and gold will trade a lot less than the real stuff.

 

I will give a comprehensive review on Saturday.

Harvey.

 

PS.  My No 4 son Stephen and a contributor of my site along with my no 2 son Lenny, has posted a radio interview with Jim Willie.  He urges everyone to listen to it.

It is on my site at    www.harveyorgan.blogspot.com

 

See you on Saturday.

 

Wednesday, May 28, 2008

May 28.08 commentary.

http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=6925

 

Good evening Ladies and Gentlemen:

 

Gold closed down by 8.80 to a price of 898.00 .  Silver followed in sympathy closing down by  9 cents to 17.38.

It was revealed early this morning that many  900 call options were converted to a delivery of gold.  This certainly unnerved the cartel and they threw everything but the kitchen sink at the comex in order to drive the price of gold and silver down.  Today almost 260,000 contracts traded and even if you account for the switch effect, the net amt of contracts traded were 200,000.

Believe it or not but 300,000 contracts traded yesterday.  The net account after subtracting for switches was around 220,000 contracts.   And with gold down by 17 dollars, the comex OI only fell by 7000 contracts which is a very small for the volume traded.  The cartel members were not enthralled at seeing the following:

 

  1. 900 call options were exercised and many of these were converted into contracts.  We will know the volume of contracts on Friday.

 

  1. only 7000 long contracts left the arena.  The cartel were expecting over 30,000.

 

In silver, nobody left as the OI remained the same. 

 

I can tell you that the physical supply of silver has evaporated.  The gold and silver desk at the bank of Nova scotia has been swamped with calls.  Many are seeking the precious metals only to be turned back.

They even quoted a price for silver today at 10 cents higher than yesterday despite the early drubbing of silver.  They  admitted that silver was scarce.  They had no answer as to why silver dropped  in a market where the physical metal is scarce.  The front clerks are dumbfounded!

The price of physical silver on EBay is going at 25.00 per oz.  We have heard that some accounts in Switzerland are paying 30-35$ per oz for physical silver.

In Midas  we heard that commodity traders are offering 30 -40 cents higher in the silver comex per contract  than the prevailing price in order to get their contracts.  One gentleman had only 2 contracts yet they offered him 30-40 cents more than spot.  This has the mark of desperation!!

 

In other news, oil rebounded and closed higher by 2.18 to 131.05 per barrel. Gasoline roared another 6 cents and it is now selling for 3.44 per gallon.  Gasoline at the pumps in both the usa and Canada are rising.  Today in Canada we were seeing 1.29 per litre or 5.20 per gallon.

 

The big news of the day, is the price of the 30 year note.  The long bond fell to 114.75 as it broke the 115 mark for the first time in 6 months.  This is very bearish as it signals that inflation is lurking everywhere.

Even though government officials are buying the bonds with their own printed money, foreigners are abandoning dollars and bonds.  Nobody wishes to hold bonds yielding 4% when you are inflating at 12%.

 

You will now begin to see a dual pricing structure in the precious metals:  one for the physical metal and one for paper.  Eventually, the whole world will catch on and there will be a run at the bank.

If the bank fails to give you your physical gold/silver then they are in default….and the fun begins.

 

See you tomorrow.

Harvey.

Tuesday, May 27, 2008

May 27.08 commentary.

http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=6923.

 

Good evening Ladies and Gentlemen:

 

Gold closed today down by 18.60  to 907.40.  Silver was hit for 79 cents to close at 17.45.

 

The open interest on gold went surprisingly down by 1700 contracts to 438000.  Silvers OI went up by 2421 contracts to 126400 as investors started to react to physical supply problems.

 

As I promised you, today is options expiry day and as usual the cartel raid the comex to prevent option holders on gold from taking delivery.  This routine has been going on for at least 5 years and authorities turn a blind eye to this.  This is nothing short of criminal activity by the American bankers who fleece unsuspecting souls.

 

Today, we got the COT report a day late.  It showed that the large specs piled into the gold comex and  they covered a huge amt of their shorts.  The large specs increased their longs by a huge  18000 contracts and reduced their shorts by about 11000 contracts.  The commercials went the other way:  they reduced their longs by a huge 13000 contracts and increased their shorts by a whopping 24000.

The commercial bankers thus supplied all the gold paper last week.

The small specs were not in the picture.

 

Today, the volume on the comex  set an all time volume record.  By 10:30 this morning 165000 contracts traded and only 21,000 were switches.  Switches mean that they roll into the next  delivery month which is August.

 

By closing, the estimated volume was 250,000 contracts.  They always underestimate total volume.  It was rumoured that less than 70,000 were switches. 

 

Midas thinks that many exited and that will contract the open interest dramatically.  If  this is so, and I will know by 11:30 tomorrow, then you can load up on gold as the cartel will be wiped out.

However, if I am right, the OI will remain constant at 438000 as the cartel supplied paper at lower and lower prices and nobody left the arena.  We will have to have and see the switch effect, total volume and how many exited.  We will also see how many are standing for delivery.  However to get an accurate level on how many will stand, I will wait until June 3.08.

 

Today, oil fell by 4.60 for no apparent reason.  All base metals were down as well so it looked like another commodity raid by our cartel member banks.

 

In economic news, the Shiller report was released and it showed  house prices declined by a  huge 14.1% for the first quarter.  House prices continue to fall and this is the worst news for our bankers.

Why?   The  collateral used by banks are shrinking by the day.  The banks are in serious trouble.  We have read today that Goldman Sachs has purchased huge amount of oil contracts : around  10 million barrels of oil.  Also Morgan Stanley and other bankers need to repair their balance sheet and they all are purchasing oil  Many are purchasing warehouses to store their oil.  Many are storing their oil on tankers which float in the Gulf and on the Atlantic.  Expect oil to rise to 150.00 and then watch the bankers bail out of their oil.

 

It was reported that new home sales rose marginally in April up by 3.3% to 526000.  However, these donkeys do not take into account cancellations.   These are running  30% of the total and are not included in home sales.  In other words,  new home sales are really around 390,000 and not 526000.  The economy is weakening appreciably.

 

The USA confidence hit a 16 year low with the announcement  of the Conference Board that the  US confidence mood fell this month  to 57.2 from 62.8 in April.

 

The ECB announced that one captive bank sold 2.7 tonnes of gold and one captive bank bought gold on the market for coins.  The only European country that is engaging in gold coin minting is Germany.

And strangely with 3400 tonnes to its credit at the Bundesbank, they have to resort to buying 1 tonne of gold on the open market.   Maybe their vault is empty.

 

Libor continues to widen as bankers are still loathe to loan to each other.

 

Anyway, that is all for today,

I will speak to you tomorrow.

Gold should rise nicely tomorrow.

I will watch for the OI and report its significance to you tomorrow.

 

Harvey.

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