Saturday, August 30, 2008

correction on silver figures

The total number of oz of silver that are standing looks like 6300 contracts.  That represents 31.5 million oz. I put 31500 oz by mistake.

 

That may change in the month as we get queue jumpers wishing to get some silver.   This is probably at the outer limit of the comex to deliver upon.

extra commentary.

First of all, they announced late last night the 10th bank to default.  A Georgia bank with about 1 billion in deposits failed and were taken over by the FDIC.

 

It looks like the smaller banks are being liquidated first, then comes the bigger banks.

 

The big news came from the silver delivery.

 

The comex released data this morning on the delivery hits so far.

 

On the first day,  3398 contracts were assigned with Mocatta  and  Morgan taking all the contracts.  They took it for themselves to satisfy their shorts.

 

The OI for Friday rests at 4848  and the volume for Friday was 2091.

 

They always report their OI  24 hrs late so you must subtract the 2091 from 4848 to get the OI for Tuesday morning.

 

The new Oi for Tuesday will be 2757 contracts.  You must then add 145 contracts for August options exercised.  August is a non delivery month

 

 So the total silver standing for Sept is   3398  plus   145   plus  2757  or   6200 contracts of silver which represents 6300 contracts or  31500 oz of silver which is huge, higher than any delivery month in the history of the exchange!!!

 

Harvey

commentary August 29.08.

http://www.lemetropolecafe.com/

James Joyce table

Good morning Ladies and Gentlemen:

I have forwarded a complaint to the Inspector General of the CFTC regarding the massive fraud in the gold and silver shorts by two unnamed banks in silver and 3 unnamed banks in gold.

You will see correspondence between myself and Ted Butler:

Here is the correspondence and the complaint follows:

Harvey,

That's great. I'll be coming out with more soon

Ted




-----Original Message-----
From: Harvey Organ <harveyorgan@rogers.com>
To: Ted Butler
Cc: don jack <djack@lerners.ca>
Sent: Fri, 29 Aug 2008 11:10 pm
Subject: FW: OIG: report fraud, waste and abuse at CFTC..silver and gold massive short.

Hi Ted:

I sent this out a few minutes ago.

Let me know if there is anything I can do for you.

I am committed in exposing this massive fraud.

All the best

Harvey.


From: Harvey Organ [mailto:harveyorgan@rogers.com]
Sent: August-29-08 11:08 PM
To: 'oig@cftc.gov'
Cc: don jack
Subject: OIG: report fraud, waste and abuse at CFTC..silver and gold massive short.

Dear Inspector General:

My name is Harvey Organ and I reside in Toronto Ontario Canada. I have been an investor in silver and gold for over 50 years. I have been an active investor in these two precious metals on the commodity exchange for over 10 years.

Last Friday evening, I received a report from Ted Butler in which data is taken from a monthly report issued by the CFTC called the Bank Participation Report. The relevant data is found in the July and August sections of the report.

The data clearly speaks for themselves. As of July 1.2008 two unnamed US banks were short 30.9 million oz of silver. As of August 5, two USA banks were short 33,805 contracts of comex silver or 169 million oz, an increase of 138 million oz of silver. (5 x increase in 1 month). During this time the price of silver declined from a peak of 19.55 to a low of 12.22 and now trading at 13.60

For gold, three banks held 778000 oz of gold short and by August 5, 3 unnamed usa banks sold short an additional 8.639 million oz of gold or an increase of 7.8 million oz (11 x increase).

In silver the amt sold short equates to an amount greater than the comex inventory and an amount almost equal to the inventory at the SLV in London. The quantity equates to 20% of the production of silver for the entire year.

In gold, the 7.8 million oz represents 11% of the gold production. Gold fell 150.00 during this short raid.

The commissioner always pontificates that the commodity exchange is the discovery mechanism for price and the physical market dictates the price.

Somehow something has gone wrong. We now have massive shortages of metals and the price of these precious metals are down? My jeweller has just informed me that he gets silver at 18.00 per oz for making jewellery. The official price is $13.60. He is paying$ 5.60 over spot whereas before he paid 50 cents above spot.

We were informed yesterday that the biggest refiner in South Africa is out of Krugerrands for the first time in its history. The refiner sells on average 1.15 milllion oz of Krugerrands per year or 5700 oz per day.

They issued a press release to state that a Swiss buyer bought 5000 oz and cleaned them out. You mean to tell me that they keep only 1 days inventory for the world;s most popular investment gold coin.

These physical metals have been in short supply for months. It seems that the massive shorting by these two/three banks certainly caused additional shortfalls unforeseen by the banking cartel.

Mr Inspector General: for some strange reason, the two banks in question , I gather, leased the entire silver supply from the SLV over in England. The reason I state this is because it is the only inventory known to exist on the planet. The comex does not have this quantity of inventory. Somehow a negative 3.5% lease rate per annum was engineered by the bullion banks to these two unnamed banks to carry out their deed. The reason for the leasing of silver was to show the Commissioner that they had silver. The problem of course is that the silver does not belong to the two banks and belongs to the SLV owners for wish for a rise in silver. If they found that the operators leased the entire inventory I can assure you class action law suits will result.

It is obvious that a massive short in both silver and gold caused the fall in price which is contrary to the stated goals of pricing at the CFTC. The Commodity exchange must follow discovery of the pricing mechanism not create the price.

I understand that you are involved in sorting out the mess created by the massive shorting of oil by Sempro and we applaud you efforts in exposing this massive fraud on the public.

With respect to silver and gold, losses of hundreds of billion dollars were lost by small investors only to go to these two or three banks and this is terribly wrong. We must have free markets and not be subjected to manipulation of this sort.

I would like you to explain to me what is the real legitimate business that the two./three banks have for suddenly selling short such huge quantities of speculative instruments over a brief time period?

Do we want banks to be engaged in this type of activity? If the banks cannot cover their shorts, I guess the taxpayers will be called upon again to bail them out of another speculation gone bad!!!

Is this is in the interests of the public?

Do traders who lost money in the recent price collapse of silver and gold have a reason to believe that their money is in the pockets of these two banks? If so do I have recourse?

Mr Chilton wished me luck when I presented the case to him. This is flagrant manipulation identical to the oil situation.

The data on the Bank Participation report is so clear and compelling that it is hard to conclude anything but manipulation. There is no other explanation to cause the price of these metals to fall and stay low and yet both physical metals are scarce and cannot be bought because of their scarcity.

There is now no doubt that foreign entities will seize upon the moment as they are aware of the scarcity and they will pounce upon the last two known physical supplies at the LBMA and Comex.

How will you act if everyone takes delivery and the comex defaults?

Dear Mr Inspector General: please help me to understand how this happened. Markets must be free. It seems that the regulatory agency is responsible for this type of blatant manipulation and they turned a blind eye as it seems that they are feeding from the hand of the banks. I guess they forgot what their mandate really is!!

I thank you for your kind attention and again I applaud your great work in exposing the mess in the oil market.

Sincerely

Harvey B Organ

298 Russell Hill Rd

Toronto Ontario

Canada

Email: harveyorgan@rogers.com

Home phone 416 928 08 98\

There is a lot to tell you this morning.

First gold traded all over the map again on Friday. Gold closed down by 1.10 to 829.70. Silver lowered by 9 cents to 13.58.

Again the open interest diverged with gold Oi rising by 3000 and silver declining by another 2000. Gold’s OI is 385000 and silver is now resting pretty much at its low point of 118000.

Also almost 5000 or 25 million oz are standing. It will take the entire month to clear this quantity.

There are several newsworthy events. The biggest came from the usa regarding spending and income:

U.S. July consumer spending slows, inflation jumps

WASHINGTON, Aug 29 (Reuters) - U.S. personal income tumbled unexpectedly in July and spending slowed as the effects of government stimulus wore off and an inflation measure was at a 17-year high, a government report released on Friday showed.

Personal income fell 0.7 percent in the month, the sharpest decline since a 2.3 percent plunge in August 2005 after Hurricane Katrina, the Commerce Department said. Analysts were expecting July income to stay flat.

Consumer spending, which accounts for about two-thirds of national economic activity, rose 0.2 percent, as expected, the slimmest gain since February, after gaining 0.6 percent in June. However, inflation-adjusted spending dropped by 0.4 percent, the sharpest slide in four years.

Inflation, as measured by the year-over-year rise in the personal consumption expenditures index, rose 4.5 percent, the steepest since February 1991, the government said. When volatile food and energy costs were stripped out, the core PCE rose 2.4 percent, the biggest since February 2007.

-end

As you can see, spending fell off the cliff in July as the 168 billion stimulus pkg given to usa citizens wore off. Personal income fell by .7 percent the sharpest decline in other 2 years and that event was Hurricane Katrina. Consumer spending rose only by .2% percent the slimmest gain since Feb. However if you adjust inflation spending dropped by .4%..the sharpest slide in 4 years.

The economy in the usa is in serious trouble.

The Dow did not like the news and it tanked by 171 points.

Then came news from the private firm the ECRI:

G auge of yearly US economic growth at fresh 28-yr low-ECRI

NEW YORK, Aug 29 (Reuters) - A measure of future U.S. economic growth fell to a more than five-year low and its annualized growth rate hit a fresh 28-year low, sign that a business cycle recovery may not happen in the near future, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 125.5 in the week to Aug. 22 from 125.8 in the previous period, revised from 125.9.

Its annualized growth fell to negative 11.8 percent to match its lowest mark since the week to June 13, 1980. The previous week this gauge was at minus 11.5 percent, revised from minus 11.4 percent.

The index declined due to slower money supply growth and lower stock prices, its fall partly offset by lower interest rates and jobless claims, said Lakshman Achuthan, managing director at ECRI, told Reuters.

"With growth in the forward-looking WLI falling to a fresh 28-year low, prospects for a business cycle recovery remain bleak."

-END-

Future usa economic growth looks dismal and it fell to a more than 5 year low.

The news out of England is simply staggering!!

We had two important people stand up and gave interviews on the deteriorating conditions in England.

First, we have David Blanchflower, a member of Mervyn King’s Monetary team. Normally, before the monetary team meets there is silence and then a decision is made by the team.

Blanchflower decided to bolt from the pack and state that 2 million Englishers are going to be unemployed. He predicted that 330,000 more soles will lose their jobs in the next few months.

I have highlighted the section for you:

England

Bill,
The BBC's flagship late night news programme Newsnight just ran a report (thursday night) that one of the Bank of England's MPC members(Monetary Policy Committee, which sets the UK's interest rates), David Blanchflower, has taken the apparently rather unprecedented step to 'break ranks' and go public, in a Reuters interview on thursday, with a prediction of two million unemployed by Xmas (currently at about 1.67mn*) and effectively called Britain on the verge of a deep slump if the BoE doesn't cut rates drastically:

http://uk.reuters.com/article/businessNews/idUKLAC00291720080828?pageNumber=1&virtualBrandChannel=10174

Nothing however beats the next piece: the Chancellor of the Exchequer, decided to give an interview and he dropped the bombshell that the English economy is in turmoil. He also predicted that 2 million Britishers will be unemployed and get this: he stated that homes will fall by 30%.

In essence, he is saying that the British banks will fail because their collateral will be insufficient to cover the values of loans.

Here is the highlighted section for you to read;

Hi Bill,
The Chancellor of the Exchequer has dropped a bombshell by giving the interview covered in the link below. He is calling it the worst down turn for 60 years which sounds like the worst since WW2. Politically this is quite likely to cost his job and will scupper the government's attempts to persuade us that things are getting better.

http://www.guardian.co.uk/politics/2008/aug/30/economy.alistairdarling

Hope you have a great weekend.
Best wishes,
Bob

I urge everyone to go to www.guardian.co.uk/politics/2008/aug/30/economy.alistairdarling for the interview.

During the week we have seen Spain borrow a record level from the ECB as they cobble their toxic non occupied commercial properties and hand them over to the ECB for fresh notes.

We are witnessing a huge deluge of loans initiated by central banks throughout the world. In all 100 billion dollars of loans are coming in every week and no loans between banks.

The libor rates are still high and yet they are still not reflective of the true rate. It should be 2 full percentage points higher.

Banks will not lend to each other because they know they are broke.

The epicentre of this mess is still the usa. We are now entering Sept and this is the month for the Alt a’s and the ARMs to be in full bloom. Expect banks to report warnings to earnings this month as the quarter ends on Sept 30.08. Expect 3 rd quarter earnings to be worse than 2nd quarter etc.

In all the entire losses from the banks will probably be in excess of 2 trillion dollars. The deleveraging effect of these losses will collapse the credit balloon and send the world into turmoil. Willie states that the deleveraging is 60 to 1. Even at 10 to one, the entire credit system collapses.

As for the precious metals we are witnessing a huge disparity in price and scarcity.

The major refiner in SAfrica who is responsible for the making of the gold blanks and the marketing and sale of Krugerrands, announced that it is out of coins. They stated that a Swiss order for 5000 coins totally obliterated their inventory.

The refiner has over the last 40 years averaged 1.1 million oz of Krugerrands each year or 5700 oz per day. It is hard to imagine that they keep only 1 days worth of inventory for the worlds most collectible investment gold coin.

Ted Butler is going to release a paper on Monday and I will forward that to you.

I am going on a holiday and I will not be reporting. However my No 2 son on occasion will report and my No 4 son will put relevant articles from GATA on our website.

I will report on Butlers paper on Monday.

Harvey.

Thursday, August 28, 2008

Hoy cow!!! please read this

Anybody now doubt that Russia is the purchaser of huge amts of gold contracts at the comex?

 

PlBy Ambrose Evans-Pritchard
The Telegraph, London
Thursday, August 28, 2008

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/29/cnruss...

Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of European Union sanctions and NATO naval actions in the Black Sea.

Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets.

Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert.

"They have been told to be ready to cut off supplies as soon as Monday," a high-level business source claimed, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.

Any evidence that the Kremlin is planning to use the oil weapon to intimidate the West could inflame global energy markets. US crude prices jumped to $119 a barrel yesterday on reports of hurricane warnings in the Gulf of Mexico, before falling back slightly.

Global supplies remain tight despite the economic downturn engulfing North America, Europe, and Japan. A supply cut at this delicate juncture could drive crude prices much higher, possibly to record levels of $150 or even $200 a barrel.

With US and European credit spreads already trading at levels of extreme stress, a fresh oil spike would rock financial markets. The Kremlin is undoubtedly aware that it exercises extraordinary leverage, if it strikes right now.

Such action would be seen as economic warfare but Russia has been infuriated by Nato meddling in its "back yard" and threats of punitive measures by the EU. Foreign minister Sergei Lavrov yesterday accused EU diplomats of a "sick imagination."

Armed with $580 billion of foreign reserves (the world's third largest), Russia appears willing to risk its reputation as a reliable actor on the international stage in order to pursue geo-strategic ambitions.

"We are not afraid of anything, including the prospect of a Cold War," said President Dmitry Medvedev.

The Polish government said yesterday that Russian deliveries were still arriving smoothly. It was not aware of any move to limit supplies. The European Commission's energy directorate said it had received no warnings of retaliatory cuts.

Russia has repeatedly restricted oil and gas deliveries over recent years as a means of diplomatic pressure, though Moscow usually explains away the reduction by referring to technical upsets or pipeline maintenance.

Last month deliveries to the Czech Republic through the Druzhba pipeline were cut after Prague signed an agreement with the United States to install an anti-missile shield. Czech officials say supplies fell 40 percent for July. The pipeline managers Transneft said the shortfall was due to "technical and commercial reasons."

Supplies were cut to Estonia in May 2007 following a dispute with Russia over the removal of Red Army memorials. It was blamed on a "repair operation." Latvia was cut off in 2005 and 2006 in a battle for control over the Ventspils terminals. "There are ways to camouflage it," said Vincent Sabathier, a senior fellow at the Centre for Strategic and International Studies in Washington.

"They never say, 'We're going to cut off your oil because we don't like your foreign policy.'"

A senior LUKoil official in Moscow said he was unaware of any plans to curtail deliveries. The Kremlin declined to comment.

London-listed LUKoil is run by Russian billionaire Vagit Alekperov, who holds 20 percent of the shares. LUKoil produces 2 million barrels per day (b/d), or 2.5 percent of world supply. It exports one fifth of its output to Germany and Poland.

Although Russia would lose much-needed revenue if it cut deliveries, the Kremlin might hope to recoup some of the money from higher prices. Indeed, it could enhance income for a while if the weapon was calibrated skilfully. Russia exports roughly 6.5 million b/d, supplying the EU with 26 percent of its total oil needs and 29 percent of its gas.

A cut of just 1 million b/d in global supply -- and a veiled threat of more to come -- would cause a major price spike.

It is unclear whether Saudi Arabia, Kuwait, or other OPEC producers have enough spare capacity to plug the shortfall. "Russia is behaving in a very erratic way," said James Woolsey, the former director of the CIA. "There is a risk that they might do something like cutting oil to hurt the world's democracies, if they get angry enough."

Mr Woolsey said the rapid move toward electric cars and other sources of power in the US and Europe means Russia's ability to use the oil weapon will soon be a diminishing asset. "Within a decade it will be very hard for Russia to push us around," he told The Daily Telegraph.

It is widely assumed that Russia would cut gas supplies rather than oil as a means of pressuring Europe. It is very hard to find alternative sources of gas. But gas cuts would not hurt the United States. Oil is a better weapon for striking at the broader Western world.

The price is global. The US economy could suffer serious damage from the immediate knock-on effects.

While the Russian state is rich, the corporate sector is heavily reliant on foreign investors. The internal bond market is tiny, with just $60 billion worth of ruble issues.

Russian companies raise their funds on the world capital markets. Foreigners own half of the $1 trillion debt. Michael Ganske, Russia expert at Commerzbank, said the country was now facing a liquidity crunch. "Local investors are scared. They can see the foreigners leaving, so now they won't touch anything either. The impact on the capital markets is severe," he said.

* * *

Join GATA here:

Hard Assets Investment Conference
Tuesday-Wednesday, September 9-10, 2008
Mandalay Bay Resort and Casino, Las Vegas, Nevada
http://www.iiconf.com/

Silver Summit
Thursday-Friday, September 18-19, 2008
Best Western Coeur d'Alene Inn
Coeur d'Alene, Idaho
http://thesilversummit.com

Toronto Resource Investment Conference
Saturday-Sunday, October 4-5
Metro Toronto Convention Centre, Toronto, Canada
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Thursday-Monday, November 13-18, 2008
New Orleans Marriott Hotel
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* * *

ease read this:  Russia may suspend oil/natural gas shipments to Europe.

Hoy cow!!! please read this

Anybody now doubt that Russia is the purchaser of huge amts of gold contracts at the comex?

 

PlBy Ambrose Evans-Pritchard
The Telegraph, London
Thursday, August 28, 2008

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/29/cnruss...

Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of European Union sanctions and NATO naval actions in the Black Sea.

Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets.

Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert.

"They have been told to be ready to cut off supplies as soon as Monday," a high-level business source claimed, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.

Any evidence that the Kremlin is planning to use the oil weapon to intimidate the West could inflame global energy markets. US crude prices jumped to $119 a barrel yesterday on reports of hurricane warnings in the Gulf of Mexico, before falling back slightly.

Global supplies remain tight despite the economic downturn engulfing North America, Europe, and Japan. A supply cut at this delicate juncture could drive crude prices much higher, possibly to record levels of $150 or even $200 a barrel.

With US and European credit spreads already trading at levels of extreme stress, a fresh oil spike would rock financial markets. The Kremlin is undoubtedly aware that it exercises extraordinary leverage, if it strikes right now.

Such action would be seen as economic warfare but Russia has been infuriated by Nato meddling in its "back yard" and threats of punitive measures by the EU. Foreign minister Sergei Lavrov yesterday accused EU diplomats of a "sick imagination."

Armed with $580 billion of foreign reserves (the world's third largest), Russia appears willing to risk its reputation as a reliable actor on the international stage in order to pursue geo-strategic ambitions.

"We are not afraid of anything, including the prospect of a Cold War," said President Dmitry Medvedev.

The Polish government said yesterday that Russian deliveries were still arriving smoothly. It was not aware of any move to limit supplies. The European Commission's energy directorate said it had received no warnings of retaliatory cuts.

Russia has repeatedly restricted oil and gas deliveries over recent years as a means of diplomatic pressure, though Moscow usually explains away the reduction by referring to technical upsets or pipeline maintenance.

Last month deliveries to the Czech Republic through the Druzhba pipeline were cut after Prague signed an agreement with the United States to install an anti-missile shield. Czech officials say supplies fell 40 percent for July. The pipeline managers Transneft said the shortfall was due to "technical and commercial reasons."

Supplies were cut to Estonia in May 2007 following a dispute with Russia over the removal of Red Army memorials. It was blamed on a "repair operation." Latvia was cut off in 2005 and 2006 in a battle for control over the Ventspils terminals. "There are ways to camouflage it," said Vincent Sabathier, a senior fellow at the Centre for Strategic and International Studies in Washington.

"They never say, 'We're going to cut off your oil because we don't like your foreign policy.'"

A senior LUKoil official in Moscow said he was unaware of any plans to curtail deliveries. The Kremlin declined to comment.

London-listed LUKoil is run by Russian billionaire Vagit Alekperov, who holds 20 percent of the shares. LUKoil produces 2 million barrels per day (b/d), or 2.5 percent of world supply. It exports one fifth of its output to Germany and Poland.

Although Russia would lose much-needed revenue if it cut deliveries, the Kremlin might hope to recoup some of the money from higher prices. Indeed, it could enhance income for a while if the weapon was calibrated skilfully. Russia exports roughly 6.5 million b/d, supplying the EU with 26 percent of its total oil needs and 29 percent of its gas.

A cut of just 1 million b/d in global supply -- and a veiled threat of more to come -- would cause a major price spike.

It is unclear whether Saudi Arabia, Kuwait, or other OPEC producers have enough spare capacity to plug the shortfall. "Russia is behaving in a very erratic way," said James Woolsey, the former director of the CIA. "There is a risk that they might do something like cutting oil to hurt the world's democracies, if they get angry enough."

Mr Woolsey said the rapid move toward electric cars and other sources of power in the US and Europe means Russia's ability to use the oil weapon will soon be a diminishing asset. "Within a decade it will be very hard for Russia to push us around," he told The Daily Telegraph.

It is widely assumed that Russia would cut gas supplies rather than oil as a means of pressuring Europe. It is very hard to find alternative sources of gas. But gas cuts would not hurt the United States. Oil is a better weapon for striking at the broader Western world.

The price is global. The US economy could suffer serious damage from the immediate knock-on effects.

While the Russian state is rich, the corporate sector is heavily reliant on foreign investors. The internal bond market is tiny, with just $60 billion worth of ruble issues.

Russian companies raise their funds on the world capital markets. Foreigners own half of the $1 trillion debt. Michael Ganske, Russia expert at Commerzbank, said the country was now facing a liquidity crunch. "Local investors are scared. They can see the foreigners leaving, so now they won't touch anything either. The impact on the capital markets is severe," he said.

* * *

Join GATA here:

Hard Assets Investment Conference
Tuesday-Wednesday, September 9-10, 2008
Mandalay Bay Resort and Casino, Las Vegas, Nevada
http://www.iiconf.com/

Silver Summit
Thursday-Friday, September 18-19, 2008
Best Western Coeur d'Alene Inn
Coeur d'Alene, Idaho
http://thesilversummit.com

Toronto Resource Investment Conference
Saturday-Sunday, October 4-5
Metro Toronto Convention Centre, Toronto, Canada
http://goldshow.ca/ch_tor2008.html

New Orleans Investment Conference
Thursday-Monday, November 13-18, 2008
New Orleans Marriott Hotel
http://www.NewOrleansConference.com

* * *

ease read this:  Russia may suspend oil/natural gas shipments to Europe.

commentary August 28.08

www.lemetropolecafe.com

James Joyce table.

 

Good evening Ladies and Gentlemen:

 

Gold and silver were all over the map today.  Gold finished the day up by 3.00 to 831.00.  Silver was up by 13.0 cents to 13.67.

Gold at one point each in the morning session rose to 844.00.  Silver broke 14.00 but after the second fix, the cartel blasted both metals down.  They even tried to get gold below 825.00 but that was quickly rebuffed and gold resumed its upwards trajectory to finish positive on the day.

 

The big news of the day came from South Africa’s Rand Refiner, the manufacturer of the blanks for the Krugerrands.    The refiner manufactures the blanks and markets the Krugerrands minted by the South African mint in Jo’berg.  This is will be the first time that S.A. will be out of Krugerrands.    The initial gold coin was known as a “Pond” and the start date was right after the founding of the big gold basin in Jo’berg around 1893.  They have been minting gold coins from that time on.  The Krugerrand is the world’s most recognized gold coin and collectible.

This will be a shock to the world and finally the world will see that there are two markets:  a paper gold/silver market and a real physical gold/silver market.

 

It will not be long for enterprising individuals or sovereign entities to take on the LBMA and the Comex.  I suspect that December will be the month that speculators will try and take delivery of metals not unlike the Hunt brothers in 1980.

 

The open interest on both metals continue  to diverge with the OI rising in gold and falling big time in silver.  The new OI for silver is 120,000 and for gold it is 383000.  As the OI drops in silver, it will be extremely difficult for our cartel members to raid.  They have additional problems with the price of physical much higher than the paper price.

 

The news today that the usa will use in SPR to combat a major hit by “Gustav” has got to be laughable.  The SPR is made up of 2/3 sour and 1/3 sweet oil.  The sour requires greater refining skills.  And guess where the storm is heading.  Right were the usa has its major refining capacity.

 

In economic news:  the usa reported an increase in bankruptcy filings:  Bankruptcy filings surge to 1 million - up 29%

Number of bankruptcy filings in recent 12-month period rises to nearly 1 million.

By Ben Rooney, CNNMoney.com staff writer
Last Updated: August 27, 2008: 5:43 PM EDT
NEW YORK (CNNMoney.com) -- As things in the economy have gotten worse, the number of people and businesses heading to bankruptcy court has spiked.

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released Wednesday.

Total filings rose to 967,831 from 751,056 a year earlier.

Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009, up 28% from last year.

"As we continue to hear more bad economic news, we will continue to see bankruptcies spiral upwards," said Jack Williams, resident scholar at the American Bankruptcy Institute.



The bankruptcy group expects filings to reach 1.2 million this year, as problems in the housing market have "reverberated throughout the economy," he added…

-End

 

Finally, a gold bear turned bullish on the metal.  UBS  Mark O’Byrne reversed his earlier prediction and called gold higher because of physical shortages.

I attach the piece for you to read:

And then, a gold BEAR turns bullish…

Bill,
From Mark O’Byrne

http://www.marketoracle.co.uk/Article6014.html

QUOTE

UBS has issued a buy recommendation this morning due to substantial long liquidation on the COMEX, the belief that the dollar is overbought and will resume its bear market and due to "unprecedented physical gold demand".

End

 

This is very big;

 

http://news.yahoo.com/s/nm/20080828/bs_nm/cftc_dc

.....The senators, including senior members of the Energy and Natural Resources Committee, allege that the CFTC knowingly included "seriously flawed" data and the timing was "suspicious."

The Inspector General was taking the issue "very seriously" and was conducting interviews in a number of CFTC offices, the paper said citing a person close to the matter.

No one at CFTC was immediately available for comment.......

Here is the article:

CFTC inspector starts probe into oil report: paper

Thu Aug 28, 1:55 AM ET

(Reuters) - The Inspector General for the U.S. commodity-futures regulator has officially begun an investigation into an inter-agency report on commodity markets, the Wall Street Journal said citing a person close to the matter.

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Earlier in the month four U.S. senators had sent a letter to Inspector General Roy Lavik questioning the Commodity Futures Trading Commission's role in an inter-agency task force interim report that said "supply and demand factors" were responsible for the surge in fuel prices.

The interim task-force report, which came out just days ahead of a Senate vote on the bill, said skyrocketing energy prices were the result of supply-and-demand fundamentals and not speculation.

The senators, including senior members of the Energy and Natural Resources Committee, allege that the CFTC knowingly included "seriously flawed" data and the timing was "suspicious."

The Inspector General was taking the issue "very seriously" and was conducting interviews in a number of CFTC offices, the paper said citing a person close to the matter.

No one at CFTC was immediately available for comment.

(Reporting by Sweta Singh in Bangalore; Editing by Greg Mahlich)

 

We now have the Inspector General Roy Lavik questioning CFTC officials on inter-agency task force.  USA senators have sent letters stating that it is not suppy and demand fundamentals in the speculation of oil.   The inspector General was taking the issue very seriously and was conducting interviews with a number of CFTC officials.

 

Wait till they get to the silver and gold massive short.

This morning on CNBC Chris Whalen noted that the FDIC needs ½ trillion to help shore conditions when many banks fail.

The commentary is attached for you to read:

is supply and more of dollars will be provided. When supply increases but demand remains the same the price declines. Now here is a massive manufacturing of what is already funny non-money.

Analyst: FDIC Will Need Half A Trillion Dollars

Chris Whalen, managing director of Institutional Risk Analytics, in an interview on CNBC, said:

“They need about a half a trillion dollars in borrowing authority, and they need a vehicle to own these banks while we triage them and sell them.”

The FDIC Deposit Insurance Fund currently has approximately $50 billion in assets.

He also said a big bank could go down:

“It depends on the loss rate. If we are way over 1990s levels, by say the third quarter, then I would tell you there’s going to be some institutions that may not be able to raise private capital and may need a bridge.”

More…

 

In Lemetropole cafĂ© at the Heminway table  Ron Kirby talks about the next big banking problem and that is the floating rate bonds that are maturing in the next 12 months.

They total almost 1 trillion dollars and they are priced already at 2 full points over Libor.  The banks now have an additional headache to deal with.

 

Actually, it is the Fed that will have to deal with this as they exchange for toxic junk for good treasuries.

 

I have pasted the article for you to read:

New credit hurdle looms for banks
Aug. 27, 2008 01:39 PM
The Wall Street Journal

U.S. and European banks, already burdened by losses and concerns about their financial health, face a new challenge: paying off hundreds of billions of dollars of debt coming due.

At issue are so-called floating-rate notes - securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so, at a time when banks are struggling to raise fresh funds. That's forcing banks to sell assets, compete heavily for deposits and issue expensive new debt.

The crunch will begin next month, when some $95 billion in floating-rate notes mature. J.P. Morgan Chase & Co. analyst Alex Roever estimates that financial institutions will have to pay off at least $787 billion in floating-rate notes and other medium-term obligations before the end of 2009. That's about 43 percent more than they had to redeem in the previous 16 months.

The problem highlights how the pain of the credit crunch, now entering its second year, won't end soon for banks or the broader economy. The Federal Deposit Insurance Corp. said on Tuesday that its list of "problem" banks at risk of failure had grown to 117 at the end of June, up from 90 at the end of March. FDIC Chairman Sheila Bair said her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. She said the borrowing could be needed to handle short-term cash-flow pressure brought on by reimbursements to depositors after bank failures.

More…

 

And you can find Kirby’s analysis at the Hemingway table.

 

Speak to you on Saturday morning

Harvey.

 

 

 

 

 

 

 

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