Saturday, October 11, 2008

Oct 11.08 commentary.

www.lemetropolecafe.com

 

gold closed down by 32.10 to 851.00 and silver tumbled down to 10.49 for a loss of 1.37.  Silver in the access market fell to a low of 9.50 but it recovered and closed at 10.17.

 

The open interest on gold climbed by a huge 12000 contracts  to 333000.  Silver remained constant at 99800.

 

The gold ETF also rose in gold inventory by over a tonne of gold.  Everyone is escaping the criminal comex and the world knows it is run by thieves and is manipulated 100% of the time.

 

The crime at the comex will end with either the following events:

 

1. everyone takes delivery of gold and silver

2. a banking holiday commences.

 

The Group of 7 are meeting this weekend to solve the worlds financial problems.

England wishes to guarantee all loans between banks as a way of breaking the logjam of banks refusing to loan.  The USA is advocating more bailouts and more government intervention into the market.

 

However the international scene continues to worsen.  Yesterday, we saw Iceland nationalize all its banks and then create a banking holiday.  Rioting occurred on the streets and inventory disappeared off of shelves.

 

Hungary announced that its currency was backed by worthless CDO’s .  They could not  float more government debt and thus it became the third sovereign nation to default after Argentina and Iceland.


The Icelandic problem spread to England as the Icelandic government refused to honour foreign depositors.  England responded by seizing Icelandic assets in  England and the Channel Islands.

 

This is now becoming an international problem and it must be solved this weekend.  If it is not solved, markets will deteriorate rapidly as margin call after margin call brings down the global financial system.

 

I believe the only sensible thing to do is create a banking holiday and create a new financial system.

 

Regardless of the situation, the usa will cease to be the reserve currency of the world.

 

In other economic news, the first of the credit default swap  auctions were held and holders of the Lehman bond will get 8 cents on the dollars.  The dollar liability  will exceed 300 billion dollars. The 359 banks that sold this Collaterized Debt Swap  will be on the hook for this amount of money.

 

Remember, that we also have to hear from Fannie and Freddie  credit default swaps and from Washington Mutual. When the dust clears my bet is that we will see 3 trillion dollars of losses added to the banks, on top of the other losses.

 

Also AIG must pay out huge sums and yesterday  AIG announced that it needed an additional 37 billion because of credit default swaps.

 

It looks like the losses from this arena will exceed 3 trillion dollars which must be added to the 3 trillion dollars of losses from subprime, alt a and ARMS resets.  This is just from the usa side of things.

 

The losses from Europe will also exceed 3 trillion dollars.  The deleveraging  (massive margin calls) will be huge and this is why we are experiencing volatility.  (the VIX exceeded 50). The deleveraging is causing massive amounts of currency down a sink hole throughout the world.

 

The banks cannot endure such losses as their retained earnings collectively are only 900 billion. 

I can see no other way but a banking holiday and restructuring.

 

Yesterday, the Dow was down at one point by 657 points but rallied as the plunge protection team came in and tried to rescue the market.  It failed and the dow fell by 124 points.  It is noteworthy that the two investment banks  left, Morgan Stanley and Goldman Sachs both fell badly with Morgan Stanley falling to 9.48 and Goldman Sachs breaking the 100 dollar mark to close at 88.00

 

It looks like General Motors and Ford are heading for bankruptcy.  This morning it was announced that General Motors and Chrysler are in talks talking about a possible merger.

 

Lets wait and see what happens this weekend.

Harvey.

 

 

Thursday, October 9, 2008

Oct 9.08 commentary.

www.lemetropolecafe.com

Good evening Ladies and Gentlemen:

Gold closed in the regular session at 883.70 down by 19.70. Silver rose by 15 cents to 11.86.

The open interest on gold fell pretty sharply by 8500 contracts to a low of 321000. Silver’s OI remained constant at 99800. However gold rose in the access market and is now trading around 912.00

There is now no question that cartel members are nervous of a comex default.

We heard today that German banks are going to suspend gold sales to the public as supplies wane.

The Germans will just buy gold in London or on the comex.

In economic news, we had two sovereign nations basically default on the bonds:

  1. Iceland
  2. Hungary.

The central bank of Iceland took over the 3 major banks and suspended trading in the Krona.

Also today, the Icelandic stock exchange was halted and trading is not to be resumed until Monday.

Iceland is in a dispute with England on monies owed. England took possession of Icelandic bank assets in England. Over 440,000 Englanders have deposited money in Icelandic banks and they are not sure they are going to get their money.

You can bet that many derivatives will burst tonight with this situation and the default over in Hungary.

In the last 3 weeks we have seen Argentina, Iceland and Hungary default.

There are rumours that Brazil is having major problems because of the deflationary spiral in commodities.

This just came in:

Just in LATE... rumour: CITADEL INVESTMENT GROUP is getting a margin call they CANNOT make.

Yikes..

Citadel Investment Group is huge. It they are getting a margin call…watch out..the Dow may tank a further 1000 points tomorrow.

Speaking of the Dow it fell badly today by 659 points and the Nasdaq followed suit with a loss of 98 points.

The libor rates continue to escalate with the usa 3 month libor climbing to 4.75%.

AIG is in need of another 37.5 billion dollars and the Fed is considering investing in banks in order to unclog the lending. Good luck to them.!!

Today, General Motors fell below 5.00 and it is trading below that which traded in 1929. Goldman Sachs traded at 101.50 a full 14.50 below Warren Buffets warrant strike price. There were rumours that he got a put at 115. in which he could put his entire purchase back to Goldman.

He may do so if Goldman still have the money.

The Federal Debt continues to climb exponentially every day. Today the Federal debt is 10.224 trillion dollars a rise of 100 billion dollars from yesterdays total. In 16 days a total of 590 billion dollars have been added to the federal debt. And guess what? They have not got to the 700 billion bailout yet.

It seems clear that we are experiencing an asset-debt deflation. However we definitely are not experiencing monetary deflation which is a contraction of the money supply. The fed is doing everything possible to grease this area. It looks like the Fed wishes to hyperinflate its way out of this mess.

Expect huge volatility tomorrow and I will speak to you on Saturday.

Harvey.

Oct 8.08 commentary.

www.lemetropolecafe.com

 

I have to write this quickly as our Yom Kippur holiday is commencing shortly.

 

Gold closed up by 22.30 to 903.40 and silver rose by 37 cents to 11.71.

 

The open interest on silver continues to collapse falling below 100,000 to 99883.  Gold’s OI rose by 4700 contracts to 329000 as many sovereign nations are ready to take on the comex.

 

The big news came from the ECB who have decided not to renew any leases on gold.  The lease rate on gold continues to climb above 3%.  The ECB  does not like the quality of the loan as all the banks in the usa are suspect.  Expect  all the leases not to be renewed and thus all the gold will have to be called back.

 

This no doubt will cause the default in gold and silver and end this game.  It will also end the Euro.  In all probability, the French will revert to French francs, the Germans to Marks etc.

 

The dollar will tank and Ben will start his helicopter engine.

 

Please read everything at Lemetropole café.

 

I have got to go now.

 

I will speak to you late tomorrow night.

Harvey.

Tuesday, October 7, 2008

Oct 7.08 commentary.

www.lemetropolecafe.com

 

Sorry for missing yesterday.

 

Gold today closed up by 18.80 to 880.70 and it is now trading at 885.00.  Silver rose by only 7 cents to 11.34. However during the day it flirted with 11.80.

 

The big news is the lease rate on gold climbing to 2.8%.  This means scarcity of gold metal and judging from news reports of mint shortages, the two events are noteworthy.

 

Today, on CNBC he heard a fellow by the name of  Jurg Keiener talk about the difference between paper gold and physical gold.

It saw the tape and this is the first time that I have heard this on CNBC.  I have going to send a copy of the tape to the commissioner of the CFTC,

 

The open interest on gold fell by 3000 contracts to 324000.  Gold rose big time yesterday even though gold shares fell.  Cartel members decided to lighten up on the shorts.

 

In economic news, the Fed has decided to supply paper to the commercial paper market.  It also decided to pay interest on its reserves

(900 billion dollars x 2% per year or 18 billion dollars ).

 

The Fed has been very active in supplying capital.  Everyday we hear about 300 billion, then 600 billion, then 900 billion.  It seems the money is going down a sink hole.  It looks to me that the Fed is bankrupt and is counting on the Treasury to supply the fuel for Ben’s Helicopter.

 

However, today the Libor rates rose sharply and this sent all markets around the world tumbling with the Dow finishing the day off by 500 points.

If I was a betting man, I will expect Europe to announce a one percent rate cut followed immediately by the Fed. \

 

 

Last night, Bank of America announced earnings of 18 cents a share.  They also stated that the outlook for the coming year was horrific.

They stated that they need to raise capital.

Today the stock fell by 30.00 to 22.50 and it was at the closing price that capital was being raised.  Also remember that Bank of America took over Countrywide but they still have not merged the two operations nor will they.

 

As promised expect a bumpy ride. 

Harvey.

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