Good morning Ladies and Gentlemen:
The gold and silver comex inventory levels are very interesting to say the least. The silver OI for December rests at 6,500 contracts. The amount of silver hit was about 3,040 contracts. It looks like the minimum amount of silver that will stand will be 33.5 million oz. The volume on the last day of trading at the comex registered 15,500 contracts or 2.5 x OI for the last OI for Dec which is totally unusual.
The lease rate and libor rate are identical at 2.22%. The difference in the December to March silver is around 5 cents. It does not make sense for traders to buy the Dec silver when they can buy March for a few pennies. The amount of silver that eventually will stand can be anywhere from 33 million to 50 million oz. If future traders sense trouble they will try and queue jump.
In gold, the OI for the Dec gold rests at 1.6 million oz. The amt hit was .8 million oz and the trading for the last day was about 4.5 million oz.
We still do not know how many contracts were exercised through the option side of things. All will clear on Monday. However I believe that the comex data is all suspect.
In economic news, as I have indicated above Libor rose to 2.22%. The banking channels are still clogged.
We are also witnessing a huge rise in price for the 10 year treasury. The yield has come all the way down to 2.94%/ With default rates on these bonds rising by 4 basis points (54 from 50), there is certainly no flight to quality. Not only that but the stock market rallied this past week.
There is no doubt that the Government is buying its own debt and they are ready to release the billions of printed dollars used to buy these bonds. The monetizing the debt is identical to the printing press going full tilt.
This is the biggest news of the day yesterday:* * * * *
The Associated Press
November 27, 2008 at 1:56 PM EST
WASHINGTON — The full scope of the U.S. housing meltdown isn't clear and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts across the country.
Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from
That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies' credit.
"We're probably in the first inning of the commercial mortgage problem," said Scott Tross, a real estate lawyer with Herrick Feinstein in
That's bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.
Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.
But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.
"It's a toxic drug and nobody knows how bad it's going to be," said Paul Miller, an analyst with Friedman
Unlike home mortgages, businesses don't pay their loans over 30 years. Commercial mortgages are usually written for five, seven or 10 years with big payments due at the end. About $20-billion (
This will cause massive unemployment and loss of taxes for municipalities.
This is scary: big problems in
The leading think tank group ECRI has come out and stated that the
ECRI Leading and Coincident Indicators
This is why the Fed and Treasury stayed in panic mode after the massive, opaque Citi bailout.
The monetization of mortgage debt helps all those ARMs that are scheduled to reset in the coming months. Unfortunately, many Americans will not qualify for new mortgages because they have lost jobsor have negative equity in the homes. End
The economy continues to falter as the Treasury and fed have no option but to buy its own debt with paper money.
This will eventually hyperinflate the economy and send us into a depression because of the high prices and low economic activity.
Speak to you on Monday.