Good morning Ladies and Gentlemen:
Gold closed down by 4.30 to $878.50 even though it fell in the lightly traded access market. Silver however rose by 20 cents to 11.47. It basically remained the same price in the access market.
The gold comex OI rose by 6000 contracts to 306000. There are many players looking to gold in this economic environment.
Silver’s OI rose fractionally to 8600.
The big news is in the silver deliveries.
First of all, the entire 385 contracts that stood in January stood for delivery of silver (approx 1.945 million oz) To boot, there are additional January options exercised for contracts that are standing for delivery. The total is around 450 contracts. (2.25 million oz)
There have been zero oz of silver enter the comex. Yesterday almost 900,000 oz left the comex and this reduced the registered category.
However, there is still no sign how the 32 million oz of silver deliveries for December are going to be settled.
In gold, we have the same story. There have been 1150 contracts exercised on options standing for delivery. (115000 oz). There have been zero oz of gold added to the comex and only 300 oz gold removed.
The registered category remains the same as Dec 31.08. I will keep you informed on future developments.
However, the IShares have seen a big increase in paper gold at the comex. It now stands at 2.0 million oz of paper gold out of 8 million oz.
I sense trouble here!!
Libor rates went down slightly to 1.41%. What is more disturbing is the contraction in commercial paper. Here is the link:
US commercial paper outstanding falls on week-Fed
NEW YORK, Jan 2 (Reuters) - The U.S. commercial paper market shrank in the latest week, marking the second consecutive week of contraction, data from the Federal Reserve showed on Friday.
For the week ended Dec. 31, the size of the
Asset-backed commercial paper outstanding rose by $400 million after falling by $6 billion the previous week, leaving the total outstanding in this sector at around $733.3 billion, the Fed said.
Unsecured issuance by financial firms outstanding fell by $5 billion in the latest week, after rising by $6.4 billion the previous week.
The credit lines are completely frozen.
This will explain why gold purchases to
We are beginning to see agricultural products rise in price like cocoa and other grains, not due to higher demand but due to lack of credit. Farmers cannot get money for fertilizer so they cannot grow. No money is available for harvesting.
The Manufacturing sector in the
U.S. manufacturing sector tumbles in December-ISM
The Institute for Supply Management said its index of national factory activity fell to 32.4 -- the lowest since 1980 -- from 36.2 in November.
A reading below 50 indicates contraction in the sector.
Economists had expected a reading of 35.5, according to the median of their forecasts in a Reuters poll. Their 69 forecasts ranged from 32.0 to 40.0.
Ford sees sharp drop in U.S. sales, no Q1 rebound
DEARBORN, Mich (Reuters) - Ford Motor Co expects industrywide December U.S. auto sales to drop by some 35 percent from a year earlier with no sign of a turnaround in the first quarter of 2009.
Ford, the No. 2 U.S. automaker, expects that full-year industrywide sales of light vehicles in the world's largest market will drop to near 13.2 million for 2008, down from near 16.2 million in 2007, Ford's chief sales analyst George Pipas said on Friday.
The only other time the
"We're not looking for the first quarter to be much different from what we saw in the fourth quarter," Pipas said in a briefing with reporters.
The auto industry needs to recapitalize.
The formula sought is a reduction in wages from 150,000 dollars per worker to about 75000 equal to what non-unionized workers get in the south. The bond holders are to take a haircut of about 2/3. They would receive shares for their debt. The current shareholders will see their equity drop to less than $1.0 per share.
We are also seeing problems in
As for Europe, expect that interest rates in
Also expect to see
We are witnessing a total global meltdown.
We are also witnessing countries issue debt in
Original Sin’ Returns as Emerging Markets Plan Bonds
Dec. 31 (Bloomberg) -- Developing nations plan to sell the most dollar-denominated bonds since 2005, reversing a shift into local debt, as commodities prices fall, foreign reserves diminish and emerging-market currencies weaken.
International sales may rise 68 percent to $65 billion next year, according to estimates by ING
Governments are growing more dependent on international markets after the six-month drop in raw materials reduced earnings from exports and caused budget deficits to widen. Dollar borrowing will increase foreign-exchange risk, a pattern that led countries across Latin America to default in the 1980s, said Ricardo Hausmann, director of the Center for International Development at
"Countries will be forced to issue in dollars," said Hausmann, a former Venezuelan planning minister who called developing nations’ reliance on foreign markets the "original sin" in a 1998 article in Foreign Policy magazine. "Debt structures will deteriorate again."
Dollar bond sales fell 43 percent in the past three years from $68 billion in 2005 as a 134 percent surge in commodities, as measured by the UBS Bloomberg CMCI Index, helped countries repay foreign obligations, according to Amsterdam-based ING. Local-currency debt offerings rose 23 percent annually since 2005, according to the Bank for International Settlements in
Expect to see huge volatility on the markets once everyone returns from the Christmas-New Years break.
The Dow does not belong at 9000 due to the financial mess.
See you on Monday.