Saturday, October 17, 2009

Oct 17.09 commentary..important

Good morning to you all:
Gold closed up 1.70 to 1050.70.  Silver rose by a penny to 17.40
On Thursday, it was disclosed by Rob Kirby that in an "Asian depository" , gold bricks were found to have been filled with Tungsten.
I will again  highlight that section for you to read:

I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows:


          “What can I tell you that you don't already know?


They are all scrambling big time since a number of large interests have demanded audits.  Independent auditors are NOW descending onto the various vaults to verify, validate and certify.


They can move this as many times in circles as they like to try to fool people.


In an Asian depository they’ve found “Good Delivery” bricks that had been gutted and filled with tungsten.


Soon, there will be xxxx hitting the fan all over place.”



by Rob Kirby





There are two foreign depositories for gold:


1. Bank of England

2. Bank of NY


There is no doubt that the source of the "tungsten" is the Bank of England.


Tungsten is unique and one of its chief characteristics is that it has the same density of gold.  Gold is very dense and so is tungsten.  Tungsten is also very cheap.

One of the oldest scams is making a brick of tungsten and covering the brick with gold, sealing all the edges and covering the whole surface with real gold.


A London Good Delivery Gold Brick is a 400 oz gold brick, stamped on the bottom with the assayer (e.g. Johnson Mathey).  The stamp would have the serial number and the weight of the bar to 3 decimal places.


If I were to buy gold from London and ship to say the bank of Nova Scotia, Scotia Macotta, the agent for the bank and for me would guarantee to me the purity and the weight.

For this I pay insurance, shipping fees and storage fees.  If the gold comes from their own inventory, they would not assay.  If it comes from another vault, then one or two bricks would be assayed.


The assay requires a hole to be drilled to make sure that gold is uniform.  The core and the brick is then heated and reweighed and stamped and that new brick would have Good Delivery Status.


It would be a nightmare to assay every brick that comes to a bank.


It now seems that the Chinese asked for an assay on some of their bricks and lo and behold, some were filled with Tungsten.  You can imagine the nightmare that this presents itself.


Here is Jennifer Barry's account on these findings by Rob Kirby:


Speaking of fraud and the grim reaper…doctored gold bars


Dear Bill,
That was quite the bombshell from Rob Kirby yesterday about the "good delivery" bars filled with tungsten. When I was a bullion dealer, I was always on the lookout for counterfeits and tampered bars. In the last PM bull market, some 100 oz silver bars were drilled and filled with lead. However, this can be easily detected by weighing with a decent scale, as lead has a different density than silver.

However, the tungsten filled gold bars indicate a very sophisticated fraud. Not only is tungsten cheap, it has the SAME density as gold - 19.3 g/cc. Assuming the ends are sealed smoothly, you can touch and weigh the bars all you want, you can't be sure they are pure gold without cutting into them. Panic is likely to break out among professionals as the news of this fraud spreads. If you can't trust the "good delivery" bars what can you trust? These are supposed to have a guaranteed purity and then never leave the custody of trusted individuals so that investors don't have to assay them. Who knows what will be found as more large investors demand full audits?

It's amazing how lately so many gold stories back up GATA research. GATA has pointed out repeatedly that swapping, leasing, and paper games were necessary to keep the gold price down as the central banks didn't have the metal they claimed. Here is yet another instance of investors believing they hold X amount of bullion but in reality owning a mere fraction. It's a Ponzi scheme just like the Madoff scandal, and will end just as badly.
All the best,
Jennifer Barry






And this, from Dave Kranzler on the Kirby findings:


Dave from Denver...

Some thoughts on Rob Kirby's GLD article Someone on my blog asked me if I had any more info/insight on the Rob Kirby/GLD scandal. This was my response:

I don't know any specifics on that situation other than what Rob Kirby has reported. I have exchanged emails with Rob about the delivery situation he reported last week. I know enough about how deliveries work and have experienced delays in silver from the Comex via HSBC to know that what he reported about the delivery situation with gold on the LME is most likely 100% authentic.

We also know that China has publicly announced that they are recalling ALL gold being safekept in London and other cities and moving it to Hong Kong. If there is a game of musical chairs being played with 400 oz. bullion bars, that may be related to the China situation. There is absolutely no doubt in my mind that a massive trend of legal owners of physical bullion are seeking to take actual physical possession of the gold they own, or at least move it to a depository they can monitor. Given the size of the "paper short" position vs. physical supply, I suspect we are on the cusp of seeing the massive shortage of physical vs. paper outstanding exposed, masssive defaults on paper obligations, and a MASSIVE move higher in the price of gold.

I also suspect that China's announcement that they may default on oil derivatives a few weeks ago may be related to the risk they feel they are exposed to of the UK and US banks defaulting on gold/silver contracts.





In summary,  we have learned that the Bank of England had  three types of gold in its foreign depository


1. London Good Deilvery bars

2. Gold of Coin Melt (.90000 gold ) received no doubt from Fort Knox

3. Gold bars filled with Tungsten and not .999 gold.(discovered by Chinese owners of gold at a foreign depository)



I can see gold auditors descending both of our foreign depositories and  I can assure you that French authorities are now descending into their vaults beneath the Seine River to conduct assays on every gold  brick that they have received in trade with other nations.



Rob Kirby is as sharp as they come.  His sources are impeccable.  Stay tuned to this story!!!



OK lets start with yesterdays events.


Yesterday concluded options expiry.  The precious metals OTC options expired at 11 o'clock and the stocks at  4 pm.  Gold was at 1049.50 at 11'oclock so all OTC options for 1050 or greater expired worthless.

Gold rose 10 seconds after the clock struck 11 up by 5 dollars.  London was still doing their physical gold sales but the London fix was already set at 1047.50.


After London was put to bed at 12: o'clock, the cartel members hit gold down again whereby it finished the day up by 1.70.

On Monday, gold will resume its upwards momentum along with silver.

If you remember, Thursday was a down day for gold, (down by 14 dollars plus) whereby the banker cartel members raided gold.  The revised estimated volume for Thursday was 132000 contracts.  The real total on that day was 165000

which is huge without the benefit of a switch.


With such a huge volume and a huge downdraft in price, one would expect some liquidation by the specs.  Nope! we got an increase in OI on  gold and a constant levelling of the OI in silver:


There were a number of reports stating yesterday’s selloff was due to profit taking … as the pundits couldn’t come up with any other solid reason for the decline since the dollar was steady. WRONG … the gold open interest went UP 639 contracts to 511,391. The silver OI only fell a trifling 33 contracts to 136,698. No, it was not profit taking. It was The Gold Cartel doing their thing.





If I was a banking cartel member I would be sweating by now.


Lets see the COT  (Committment of traders Report) released after the market closed and see how things shaped up:




No surprises in the gold Committment of Traders report...

*The large specs increased their longs by 18,335 contracts and increased their shorts by 4,048.

*The commercials increased their longs by 4,493 contracts, but increased their shorts by 18,555, as The Gold Cartel continues to pile on their positions.

*The small specs decreased their longs by 6,174 contracts and reduced their shorts by 5,949.







Note that large specs  (think China) increased their longs by a dramatic 18335 contracts.  Basically a continuation of the story from previous weeks.

Note that the major cartel members continue to supply the paper i.e. 18555 contracts.  However note that some commercials are increasing their longs.  The gold and silver arena is getting

too steamy for them and they have decided to jump ship.


My number 2 son Leonard has reported to me that these smaller commercials have been closing out their shorts and buying gold longs accompanying the large specs.

This is something that we are watching in earnest!!



OK lets start with economic numbers for yesterday:



The dollar rose .18 to 75.61. The euro fell .0059 to 1.4895. The pound was a little higher, the yen a little lower.

The yield on the 10 yr T note is 3.41%.

The CRB made another new high for the move, rising

Crude oil turned higher after a selloff early, finishing up 95 cents per barrel to $78.53, another high for the recovery move.

The DOW fell 67 to 9996. The DOG lost 15 to 2158.





Guys i am not making this up.  The SEC has just hired a 29 yr old to be the COO under Mary Schapiro.  Guess where he came from?  You are right...Goldman Sachs.  His name is Storch:

Here is the story:


Friday, October 16, 2009

Goldman Sachs Tightens Its Grip On Our System

SEC Said to Hire Goldman’s Storch to Be Chief Operating Officer here's the link from Bloomberg News:LINK

Call me cynical, but does anyone really believe that this 29 yr. old would ever go after his own firm? We see how much money Goldman will be paying its employees this year. What does this kid get in exchange for taking a Government job? How about the possibility that this kid shuts down operations at firms that compete with Goldman, for Goldman's benefit? Please tell me this is some kind of joke.

I'm sorry, but I have to believe that with all the public criticism that the Obama Administration has received for basically being seen as a lapdog for Goldman Sachs, I have to believe that the SEC's Mary Shapiro could have found another source for hiring a COO. 

Seems like everyday I wake up to find more news that blows my mind and further convinces me that a few firms on Wall Street are running our Government. Something is VERY wrong in our system and I am convinced now more than ever that we really have no idea who this person is that was elected on a platform of "Hope and Change," because I have yet to see anything that Obama has done for the benefit of anyone except Goldman Sachs and JP Morgan (for the record, I originally supported Obama but did not cast a vote for him).








The TIC report was released yesterday and an inflow of 10.2 billion was reported.  However, the outflow from the month before increased by 10.2 billion dollars.

Strange accounting!.  Here is the story:



09:01 Aug total net TIC flows $10.2B
Jul revised to ($107.7B) from ($97.5B). Net long-term TIC flows $28.6B vs. consensus $30.0B. 
* * * * * 

US August net capital inflows rebound to $10.2 bln 

NEW YORK, Oct 16 (Reuters) - Net overall capital inflows into the United States rebounded to $10.2 billion in August from a revised outflow of $107.7 billion the previous month, the Treasury Department said on Friday. 

The department originally reported outflows of $97.5 billion for July. 

Net long-term capital inflows, excluding swaps, rose to $28.6 billion from a $15.3 billion inflow in the previous month. 

The inflows, however, were not enough to cover the U.S. trade deficit of $30.7 billion for the same month.




The usa needs a minimum of 31 billion for the trade deficit, another 30 billion dollars for the service sector deficit and also huge amts to fund their budgetary deficit

of around 1.8 trillion dollars per year.


It does not look like China is buying any paper from the usa.




This is encouraging:



U.S. industrial output up 0.7 pct in September 

WASHINGTON, Oct 16 (Reuters) - U.S. industrial production rose in September for a third consecutive month, Federal Reserve data showed on Friday, suggesting the economy closed out the third quarter with surprisingly strong growth. 

The 0.7 percent increase was much greater than the 0.2 percent advance that economists polled by Reuters had expected. The report also showed August's gain was revised up to 1.2 percent from the originally reported 0.8 percent. 

For the third quarter as a whole, output advanced at a 5.2 percent annual rate, the first quarterly gain since the first quarter of 2008 and the largest increase since the first quarter of 2005. 

The figures will likely reinforce the view that the longest recession since the Great Depression ended in the third quarter. Economists in a Reuters poll released on Thursday pegged the third-quarter growth rate at 3.1 percent. 

Capacity utilization, a measure of slack in the economy, rose to 70.5 percent in September from 69.9 percent a month earlier, although it was still 10.4 percentage points below its 1972-2008 average.



This is not very encouraging:


09:55 Oct Univ of Michigan preliminary figure 69.4 vs consensus 73.3
The final Sep reading was 73.5. 
* * * * * 

US Oct consumer sentiment falls unexpectedly-survey

NEW YORK, Oct 16 (Reuters) - U.S. consumer sentiment fell unexpectedly this month on persistent worries that the "dismal" state of personal finances would not recover quickly from the worst recession in decades, a report showed on Friday. 

The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for October fell to 69.4, from September's 73.5. 

That was below economists' median expectation of a steady reading of 73.5, according to a Reuters poll. 

"While consumers still anticipated gains in the general economy and now think that the unemployment rate is close to its cyclical peak, there has been no improvement in consumers' dismal assessments of their personal financial situation," the report said. 

"Indeed, personal finances have undergone the longest and deepest decline in the 60-year history of the surveys, and few consumers expect their finances to improve anytime soon." 

The report said diverging prospects for the general economy and personal finances would have a negative impact on the pace of the recovery, with consumers eager to increase their savings and pay down debts.



Paul Voelker is getting a little more vocal on what the usa should do:



Volcker: Fed can't wait too long for policy shift 

* No inflation threat now but if "wait, it's too late" 

* China unlikely to dump U.S. assets 

* Says China partly influenced by lack of alternatives 

CAMBRIDGE, Mass., Oct 15 (Reuters) - The enormous amounts of liquidity pumped into the U.S. financial system by the Federal Reserve are not inflationary "at the moment" but will become so at some point, Paul Volcker, the former Fed chairman and a White House adviser, said on Thursday. 

Volcker, now an economic adviser to President Barack Obama, said it was difficult, but necessary, to start draining the billions of dollars in liquidity even while unemployment rates remained high as the U.S. battles out of recession. 

"You have to act against what seems like common sense. If you wait, it's too late," Volcker said while answering questions after a speech on financial markets at Harvard University's Kennedy School of Government. 

Volcker is best known for bringing down raging inflation in the United States after he was appointed Fed chairman in 1979 -- chiefly by pushing the federal funds rate, the central bank's key policy tool, to a peak of 20 percent in 1981… 

Answering a question from the audience, Volcker said he doubted China would embark on a major reduction of its U.S. dollar-denominated assets, partly because the alternatives to the dollar, including the euro and the Japanese yen, do not look that great either. 

China has "a great interest in the stability of the 
dollar," he said…




Remember how in previous commentaries, we showed how the usa is buying their own debt and calling it "foreign" purchases.  The TIC data confirms this.


This from Garic:




In the month of August the Treasury just reported Foreign Official holders of Treasury Notes and Bills rose $13.9B.

During the month of August the Federal Reserve reported that Custodial Holdings of Treasuries for Foreign Central Banks and other Official Institutions rose $45B.

Over the past 12 months the discrepancy is now $200B. Between the fact that the Federal Reserve refuses to disclose information to the public and is fighting a Congressional audit, I think it is only prudent to believe the Fed is monetizing debt at a much higher rate than is commonly perceived.

In this morning’s Financial Times, Julian Robertson is asked:

“What is your economic outlook right now?” His answer: “ I prefer to run scared through here. I think that if the Chinese stop buying our debt, it is virtually the end of the financial world as we know it.” “How likely is a Chinese boycott of American debt?” “ The conventional thinking is that they will continue buying. But I don't think it's logical to assume somebody will continue to buy paper which declines in value. Our dollar is declining in value, and it's been pretty shocking over the last four or five months.”

From this morning’s TICS data:

Major holders of U.S. Treasuries position over the last 4 months:

China, Mainland 797.1


776.4 801.5
**Japan 731.0 724.5 711.8 677.2
United Kingdom 2 225.8 219.9 214.0 163.7
Oil Exporters 3 189.2 189.2 191.2 192.8

**This is before the Japanese election which a logical person would be concerned about further support from.

I now believe the entire U.S. Bond market is a bubble. We have record public buying this year through mutual fund purchases. The Fed is promoting these purchases with their zero interest rate policy pushing unaware investors into an incredibly low reward high risk investment. The media is misleading the public about foreign participation. Wall Street is unloading their junk at a record pace. Total Credit Market Debt to GDP is approaching 400%. Between Julian’s warnings and my own analysis, I think it is time to watch all bond markets for the next bubble pop. For the sake of this nation it is time for Larry, Ben and Tim to resign and admit their errors so we can fix this country’s financial condition for our children’s sake.




Please note above,  what the famed writer of the Financial Times Julian Robertson wrote on his outlook for the economy.


Here is Bill Holter's commentary for today where he warns us that the USA may attempt another deflationary scare into the markets:



Deflation scare coming

To all; I must say that the rise in the stock market has gone higher and the time span of the bounce has lasted longer than I thought it could. That said, the risks involved in owning general equities at this point are higher than they were at this time last year. Last year we had plans A-Z introduced to "fix" the system. Other than inventory rebuilding which is a short term phenomenon, I don't see any improvement at all on a structural basis. In fact, the big difference now is that the Treasury is tapped out.

Last year we were told that the Fed and Treasury would ride to the rescue and life would shortly return to "normal". Fast forward one year and foreclosures are at all time record levels
, commercial real estate has begun to collapse, unemployment has set multi decade records, the banks are no more solvent than they were last year despite the bookeeping tricks they are using, and most importantly the Fed and Treasury have gotten to what I believe are tipping points.

The Fed is already monetizing massive amounts of Treasury and Agency debt yet the Treasury still has need for more, much more borrowed capital to keep the "recovery facade" alive Hyperinflation is a loss of faith or confidence in a fiat currency that occurs once investors figure out that the issuer cannot mathematically grow fast enough to make good on their promises. The U.S. is at this point now mathematically, it is only a matter of time before global investors connect these dots.

What I think we have immediately in front of us is the failure of the Treasury to attract enough capital to function. The only and last buyer of Treasuries is the Fed, I can only think of one pool of capital left that can "get us" another 3-6 month reprieve. The stock market! The Treasury will need to "dislodge" equity investors from their positions with some sort of panic in order to "scare" capital back into the "safety" of Treasury paper. Whether or not this works remains to be seen but I see this as the only alternative at this point.

This "necessary panic" as I see it will be VERY easy to achieve, what won't be easy is holding enough confidence together to keep the Dollar as a viable currency. There is again like last year a massive short position in the Dollar which may or may not be able to be spooked into covering. When all is said and done it does not matter. Whether the Treasury and Fed have "one last gasp" and can survive another 6 months does not matter because the end result will be a busted currency and a bankrupt Treasury. If the "con" of sell your stock and buy Treasuries can be pulled off, physical metal in massive amounts will be needed to be dumped on the market to keep the pesky loose ends from unraveling. Treasury CANNOT allow Gold off of the leash while "creating" a deflation scare.

Does this physical metal exist? I don't know. I do know that "monkey business" has been taking place on the COMEX judging by their lack of inventory movement despite contracts standing for delivery. I believe we will shortly find out that "inventories" from the COMEX to ETF's to Fort Knox etc., do not and have not existed for some time. If I'm right, THIS panic will not satisfy the Treasuries need to attract "scared capital". The "push to safety" may just backfire! Scary times these are if viewed with common sense. Regards, Bill H.






Harvard Professor, Niall Ferugson gave this TV commentary yesterday on the dollar's demise:


Dollar May Drop 20% More on Deficit, Harvard’s Ferguson Says

Oct. 16 (Bloomberg) -- The dollar will extend its drop versus the euro over the next two to five years, falling as much as 20 percent to an all-time low under a widening U.S. budget deficit, Harvard University’s Professor Niall Ferguson said.

Policy makers favor the dollar’s slide as a means of supporting a recovery from the worst economic slump since the Great Depression even as they voice support for a strong greenback, Ferguson said in an interview on Bloomberg Radio.

A weak dollar is “the simplest solution to most of America’s problems right now,” said Ferguson, author of “The Ascent of Money: A Financial History of the World.” “We are likely to see 1 percent to 2 percent growth unless exports take off, and that’s what everyone in Washington is quietly hoping: If the dollar keeps sliding, then maybe we can get some traction on exports.”...

‘Terrible News’

The weakening of the dollar is “terrible news for practically all of the rest of the world’s economies,” except the U.S. and China, said Ferguson. China, which manages the yuan’s appreciation, will “intervene to make sure the dollar does not weaken” relative to its currency, Ferguson added.

Treasury Secretary Timothy Geithner said on Oct. 3 after attending a meeting of Group of Seven finance officials that it’s “very important” for the U.S. to have a strong dollar.

The administration of President Barack Obama pushed the nation’s marketable debt to an unprecedented $6.78 trillion in an effort to spur economic growth and support the financial system. The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.






Earnings reports from GE and Bank of America were not good at all:


-General Electric -  3rd Quarter earnings down 44 percent; the Financial Unit’s profit dropped 87 percent in the 3rd quarter 
-Bank of America – $9.6 Billion in credit losses for 3rd quarter; Net Loss $1 Billion 
-Halliburton – 61 percent drop in Quarterly Profit

Did someone say "Green Shoots"?


How on earth did CNBC let this guy on TV?


Recession Will Be ‘Full-Blown Depression’: Strategist 
Published: Friday, 16 Oct 2009 | 8:03 AM ET

This global recession will turn into a "full-blown depression," Nicu Harajchi, CEO of N1 Asset Management, said Friday, adding that global stimulus hasn’t come down to Main Street.

Wall Street is making money, while consumers aren’t, Harajchi told CNBC.

"We have seen the G20 coming out with cross border capital injections of $5 trillion this year… But a lot of this money hasn’t really come down to Main Street," he said.

"When it comes down to corporate America, corporate Europe or even in Asia, in Japan, we are not seeing Main Street making any money," he said. "Consumers are losing their jobs. They are struggling with their mortgages, with their credit. And we are just seeing this continuing."

The $5 trillion injection is "monetary expansion," according to Harajchi. "At some point, which we believe to be 2010/11, some of the central banks are going to recall some of that money and that will turn from monetary expansion to monetary contraction."


In another strange development, there were no bank failures reported yesterday.  I guess the FDIC has no money to bail out depositors so the failed banks just keep on ticking

like that bunny with the battery.


I hope you all have a grand weekend,


see you on Monday.



Thursday, October 15, 2009

Oct 15.09 commentary.

Good evening to you all:
Gold closed today down by 14.00 dollars to 1049.40.  Silver was hit for a loss of 43 cents to 17.37.
Early this morning, gold was trading around 1066.00 and silver had penetrated 18.00.
However at 2 o'clock the English bankers showed up for work and hit gold down to 1055.00 by the time the comex
opened.  Then gold started to rally and the volume started to escalate.  The comex stopped estimating volume at 9:44 am this morning once a figure
of 132000 contracts were bought and sold.  As I pointed out to you on previous occasions, I have totally lost faith in any comex reporting.
At precisely 12:01 London announced to the world that it was closed.  Gold had reached a price of 1059.00 by that time.
Within 10 seconds from there gold started to tumble by dollars at a time until it reached its nadir at 1049.50.
Everybody started giving their explanations as to what happened.  The dollar was doing nothing but oil was up.
The answer is very simple.   Our banking cartel members had to sell gold because of option expiry on stocks and OTC gold which expire tomorrow.
End of story!.
The open interest on the gold comex closed at record territory today up by 6500 contracts to 510752.  The silver comex Oi rose another 700 contracts to
The huge OI on the comex gold and silver invited a raid and a raid they got.  The question tomorrow will be how many contracts were liquidated or if the OI increased.
Lets go to the news of the day and there are a few newsworthy stories:
First from Japan, Sumitomo Bank thinks that by next year the yen/dollar level will be 50.00 yen to the dollar.
Dollar to Hit 50 Yen, Cease as Reserve, Sumitomo Says 

Oct. 15 (Bloomberg) -- The dollar may drop to 50 yen next year and eventually lose its role as the global reserve currency, Sumitomo Mitsui Banking Corp.'s chief strategist said, citing trading patterns and a likely double dip in the U.S. economy. 

"The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger," said Daisuke Uno at Sumitomo Mitsui, a unit of Japan's third- biggest bank. "The dollar's fall won't stop until there's a change to the global currency system." 

The dollar last week dropped to the lowest in almost a year against the yen as record U.S. government borrowings and interest rates near zero sapped demand for the U.S. currency. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, has fallen 15 percent from its peak this year to as low as 75.211 today, the lowest since August 2008…
This next story is very damaging to the usa dollar as Russia is now ready to drop the dollar in energy related products with China:

Russia ready to drop dollar in energy trade with China, Putin says

Submitted by cpowell on 06:23AM ET Thursday, October 15, 2009. Section:Daily Dispatches

From RIA Novosti, Moscow
Wednesday, October 14, 2009

BEIJING -- Russia is ready to consider using the Russian and Chinese national currencies instead of the dollar in bilateral oil and gas dealings, Prime Minister Vladimir Putin said on Wednesday.

The premier, currently on a visit to Beijing, said a final decision on the issue can be made only after a thorough, expert analysis.

"Yesterday energy companies, in particular Gazprom, raised the question of using the national currency. We are ready to examine the possibility of selling energy resources for rubles, but our Chinese partners need rubles for that. We are also ready to sell for yuans," Putin said…







This definitely confirms the Robert Fisk story of last week.


The next story is the big story of the day and is brought to you by Rob Kirby.

You will all recall, that I have been stating all along that the GLD is nothing but a phony.  It is our assertion that one inventory of gold

is satisfying three or four entities.  Here is the latest in the 20 tonne gold  caper reported to you last week and today's story concerns the

strange entries on the GLD entry bar lists:


Blight on Humanity Addendum

Earlier this week, I wrote about possible "incongruities" in the gold bar registry of GLD. Specifically, here is what has happened to the GLD bar listwhich is published each Friday at approximately 4:30 pm EST. An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list:

- on Friday, Sept. 25 – the list was 1,381 pages long

- on Friday, Oct. 2 – the list was 208 pages long

- on Friday, Oct. 9 – the list was 195 pages long

- then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in chat rooms on the internet – the list was back up to 855 pages long

Something TRULY stinks here. No explanation has been offered for the DRAMATIC swings in this list. Where gold is concerned nothing happens by accident.

How Precious is Settled in London:

Loco London clearing is the daily paper unallocated transfers between London clearers; the transfers of gold and silver only across accounts held between clearers for their own accounts and third parties; and, as mentioned earlier, the clearing out of Z├╝rich for the platinum group metals. It avoids security risk and the cost of physical movement of bullion; has standard market practices…

[However] Both allocated and unallocated account agreements are available. There are allocations for credit purposes, bilateral credit agreements between clearers, and London good delivery….

Some short definitions: an unallocated account is an account where specific bars are not set aside, and the customer has a general entitlement to the metal. This is the most convenient, cheapest, and most commonly used method of holding metal. The allocated account, on the other hand, is an account opened when a customer requires metal to be physically segregated, and this needs a detailed list of weights and assays….

To Summarize:

- GLD gold bullion inventory is principally held in London

- I've already written about some large [allocated] physical transactions that were settled last week in London under VERY strange circumstances indicative of a shortage of physical gold bullion for good delivery.

- At the same time, significant irregularities appeared in the GLD bullion bar list


- is the correlated timing of these unusual events a coincidence???? Could GLD inventory have been utilized to effect these physical settlements, which in turn, would have required the "sanitization" or doctoring of the GLD bar list to avoid MANY obvious, easily detectable, duplications of bar numbers?

I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows:

"What can I tell you that you don't already know?

They are all scrambling big time since a number of large interests have demanded audits. Independent auditors are NOW descending onto the various vaults to verify, validate and certify.

They can move this as many times in circles as they like to try to fool people.

In an Asian depository they've found "Good Delivery" bricks that had been gutted and filled with tungsten.

Soon, there will be xxxx hitting the fan all over place."

These circumstances suggest that a VERY REAL physical short squeeze is in progress RIGHT NOW and a gang of fraudsters from "fiat-crack-houses" [Central Banks] are attempting to finesse their losing over-sold hand in an elaborate Three-card Monty. With reports of independent physical audits now being conducted and mysterious happenings with GLD's bar list – GLD has NEVER looked more suspect.

Hope you've all got some physical gold already.
Rob Kirby





Remember that the 20 tonnes came from the Bank of England.  I noticed no new gold leaving the ECB on their report this past Tuesday. We certainly did not see 20 tonnes leaving, only .09 of a tonne.

The GLD uses the Bank of England as depository for its gold and is the counterparty for GLD.  Now we see huge discrepancies with GLD gold bar lists.

We were told that the Gold served up to satisfy Chinese interests were of the coin melt variety.


What on earth is GLD using coin melt for gold inventory?  Something is seriously wrong here.

It is also earth shattering that the ECB did not come to the rescue of the LBMA.  The gold came from the GLD.  The only problem is that this gold is owned by someone else.

Fraud to the highest degree. I sent this email to Gary Gensler, Bart Chilton and Mary Schapiro tonight:


I bring your attention a commentary written by Rob Kirby which I have highlighted for you.

We were well aware of problems in London last week concerning 20 tonnes of gold.
It now seems that the GLD bar list is fabricated.
I have sent to the SEC and the CFTC countless complaints concerning the obvious fraud at the GLD but again
these complaints have found deaf ears.
I urge you to immediately look into this matter quickly and resolve these issues.
Harvey Organ

Blight on Humanity Addendum......






Here are some numbers for today:


The yield on the 10 yr T note rose to 3.46%.

The euro was only down .0004 to 1.4928. The pound ROSE a steep .0262 to 1.6267, as spreads were unwound against the yen. The yen fell 1.25 to 90.65.

The Dow did another Hail Mary and rose by 47 points.


Many are commenting on the earnings of JPMorgan and Goldman Sachs.  Please note that the only area they are making money is in the fixed income market.

Why?  they can borrow infinite dollars at zero and pocket 4%.  They are revising upwards their derivative losses as well.  Here are the two reports that really spell what is going

on with their "earnings":


First:  Goldman Sachs earnings:


Thursday, October 15, 2009

Re: Goldman Sachs Earnings:

Nothing more than JPM's BS redux...well, not completely redux. All the business lines at Goldman that DON'T benefit from mark-to-fantasy accounting were weaker , both year over year and 2nd qtr to 3rd qtr:

Looking at Q2 to Q3: Investment Banking 
-38%, Asset Management -6%, Trading and Principal Investments -7%. So where did they make this record profit you ask? Their FICC, or Fixed Income, Currency and Commodities unit generated all the profits, paper profits that is. 

Let's break it down from their press release: Net revenues in FICC were $5.99 billion, significantly higher than the third quarter of 2008. These results reflected strong performances in credit products and mortgages, which were significantly higher compared with a difficult third quarter of 2008. 
Credit products and mortgages are GAAP-speak for "securities we hold, we can't sell, but we can mark them up to whatever profit number we want to report to make big bonuses." Notice the comparision to Q3 '08, which was when all these positions were marked down drastically. Now they are marking them back up and reporting the paper gains.

There's more: "Net revenues in Equities were $2.78 billion, 78% higher than the third quarter of 2008. 
These results reflected strong net revenues in derivatives, which were significantly higher than the third quarter of 2008." Same deal here. Marking up illiquid derivatives positions on a mark-to-fantasy basis, reporting the paper gains as fabulous net income, and paying them selves fabulous cash bonuses using cash that was funnelled thru to Goldman from the Treasury and the Fed via AIG. It's that simple.

Both JP Morgan and Goldman Sachs have generated massive paper profits which will translate into cash bonuses for the employees. This is grand theft in front of the world, with the cheerleaders on CNBC and Bloomberg happily waving their pom-poms, while the rest of the country suffers the consequences of policies implemented by Bernanke and Obama which are hijacking the nation's wealth and giving it to Wall Street.

What you might have missed in all of the hoopla in the media is that housing foreclosures hit a new record high in the third quarter, the Philly Fed Index plunged 21% from the September reading (the unemployment component fell from 14.3 to -6.8) and credit card charge-offs at Capital One, the poster-child of subprime credit card lending, soared in September.

Did JPM and GS really earn all the money, or was simply shifted from taxpayers to the bankers? Barack, what do you have to say about this, without a teleprompter or help from Rahm Emanuel?



Second, from the King report, earnings summary on JPMorgan:


From The King Report...

JP Morgan reported better than expected earnings due to fixed income revenue jumping to a record $5B (vs. -$3.6B). Earnings are $3.59B. Once again the usual suspects hailed JPM's "fortess-like balance sheet". Few on The Street or in government want to talk about JPM's humongous, $80 trillion notional value derivative book.

Did any Street analyst ask Jamie Dimon during the conference call: 'how much of earnings were derived from unrealized gains or marks on JPM's derivative book?'

JPM CEO Jamie Dimon: Credit costs remain high and are expected to stay elevated for the foreseeable future in the consumer lending and card services loan portfolios.

USA/Today: JPMorgan's loss provision to cover current and future home loan defaults rose to $3.99 billion, while its provision for credit card losses surged to $4.97 billion.

Credit card defaults and mortgage losses are likely to continue to creep higher and lag an overall economic recovery. Losses on credit cards typically mirror unemployment, which rose to 9.8% in September.

JP Morgan's losses on credit cards have already passed 10%. The bank said the percentage of credit card loans it wrote off as not being repayable in the third quarter reached 10.3%. Loan losses were also pushed higher by weakness in the portfolios JPMorgan acquired when it purchased the failed bank Washington Mutual a year ago.

Easy Al surreptitiously rescued the big banks in the early 90s via the 'carry trade'. But now, interest rates are too low to provide earnings via a 'carry trade'. So Benito and his ilk are rescuing the big banks via reflating financial assets and allowing them to manufacture earnings on crappy paper via mark to fantasy...



The jobless claims was a little better than last week:


New jobless claims fall to nine-month low 

WASHINGTON (Reuters) - The number of U.S. workers filing new claims for jobless insurance unexpectedly fell last week to the lowest level since January, according to a government report on Thursday that hinted at stabilization in the labor market. 

Initial claims for state unemployment benefits fell 10,000 to a seasonally adjusted 514,000 in the week ended October 10, the Labor Department said. New jobless claims have declined for five of the last six weeks. 

Analysts polled by Reuters had forecast new claims rising to 525,000 last week from a previously reported 521,000. 

The four-week moving average for new claims dipped 9,000 to 531,500 last week, declining for a sixth straight week. The four-week moving average is considered a better gauge of underlying trends as it irons out week-to-week volatility. 

Even more encouraging, the number of people collecting long-term unemployment benefits dropped 75,000 to 5.99 million in the week ended October 3, the latest week for which the data is available. That was the first time that the so-called continuing claims had dropped below the 6 million mark since late March. This measure has trended lower for four consecutive weeks. 

The fall, however, could be a sign that many jobless workers have exhausted their unemployment benefits. 

The four-week moving average of continuing claims fell 68,250 to 6.08 million, the lowest level since mid-April. The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, eased to 4.5 percent in the week ended October 10 from 4.6 percent the prior week. 





The problem  is that many jobless workers have now exhausted their unemployment benefits and the BLS is just not reporting this!.


This next report totally floored me:


NY manufacturing jumps to 5-yr high in Oct - NY Fed 

NEW YORK, Oct 15 (Reuters) - A gauge of manufacturing in New York State jumped unexpectedly this month to its highest in five years on surging new orders, shipments and employment in the sector, the New York Federal Reserve said in a report on Thursday. 

The New York Fed's "Empire State" general business conditions index rose to 34.57 in October from 18.88 in September. Economists polled by Reuters had expected an October reading of 18.00. 

The reading was the highest since May 2004, when it was 34.97. 

"The Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved significantly in October," the report said…






What? NY manufacturing 'doubled" in a month from 18.00 to 34.97.  How can that be?


OK lets see how their neighbours did, the Philadelphia manufacturing index:


Philly Fed factory activity below forecast in Oct 

NEW YORK, Oct 15 (Reuters) - Factory activity in the U.S. Mid-Atlantic region grew less than expected in October, a survey showed on Thursday, conflicting with a much more robust reading out of New York state earlier in the day. 

The Philadelphia Federal Reserve Bank said its business activity index was at 11.5 in October versus 14.1 in September. Economists polled by Reuters had forecast a reading of 12.0. 

Any reading below zero indicates contraction in the region's manufacturing sector. Above zero shows growth. 

The survey covers factories in a region encompassing eastern Pennsylvania, southern New Jersey and Delaware and is looked at closely as one of the first indicators of the health of the U.S. manufacturing sector.





Somebody in NY is fooling around with the figures. 


Lets see credit card delinquencies:] This one is a dandy:


Capital One credit card defaults rise in September 

NEW YORK (Reuters) - Capital One Financial Corp's U.S. credit-card defaults rose in September as more Americans lost their jobs, in another sign that consumers remain under stress. 

In a regulatory filing on Thursday, Capital One said the annualized net charge-off rate -- debts the company believes it will never collect -- for U.S. credit cards had risen to 9.77 percent in September from 9.32 percent in August. 

Accounts at least 30 days delinquent -- an indicator of future loan losses -- increased to 5.38 percent from 5.09 percent…




Note: accounts at least 30 days delinquent which is an indicator of future loans losses increased dramatically from 5.09% to 5.38% in one month.


This report from Equifax:

More Americans fall behind on debts: Equifax 
Wed Oct 14, 2009 3:31pm EDT 
By Nick Zieminski

NEW YORK (Reuters) – U.S. consumers are increasingly late paying off loans on their primary home, as the highest unemployment in a quarter of a century pushes up delinquency rates on home loans and most other types of loans, according to a monthly report by the Equifax credit bureau.

"Every major consumer product line, in terms of delinquency, is up again, except for (credit) cards," said Dann Adams, president of U.S. Information Systems.

Among U.S. homeowners with mortgages, a record 7.65 percent were at least 30 days late on payments in September, up from 7.58 percent the previous month. The rate of delinquencies is more than double the 3.55 percent rate in September 2007, according to Equifax (EFX.N).

The rate of subprime mortgage delinquencies rose slightly to 41.36 percent. Early-stage delinquencies are an initial warning sign of potential future defaults, which in turn drive home foreclosures. The large supply of bank-owned homes reaching the market has helped prevent a strong recovery in prices.

Home equity and auto loan delinquencies also rose, both sequentially and from a year ago, but delinquencies on student loans have held steady during the recession.



Remember this important statistic:  the usa consumer is 70% of GDP.  If these guys are not spending, the economy is in the doldrums.


This came in late today in a ruling by a Mass. Land  court on the foreclosure issue whether securitization of mortgages can show title to the property

or title to the mortgage itself.  Marie McDonnell is going nation wide with this:


Dear Jim,

Here it is! I couldn't be more pleased!

BREAKING NEWS:  Judge Keith C. Long of the Massachusetts Land Court, Department of the Trial Court has just issued one of the most important decisions to come out of a court – any court – with respect to residential mortgage foreclosures.

Click here to view the judgment…

Judge Long has just reaffirmed his March 26, 2009 decision in which he overturned two out of three foreclosures brought by Trustees of securitization trusts.

The first half of his decision recounts the history of these cases and ratifies his statements of fact and conclusions of law.  The second half, beginning on page 11, goes even further and discusses the "securitization paradigm" that I placed squarely before the Court on April 17th when I filed a Motion to Intervene In the Public Interest and submitted the first of two expert reports laying out the fatal flaws that permanently impair these securitizations.

The importance of this decision cannot be overstated.  This is monumental and it provides a roadmap – MY ROADMAP – for challenging standing and "real party in interest" rights as well as establishing how the Notes and Mortgages have been bifurcated through the securitization of residential mortgage transactions over the last decade.


Publicity regarding this decision, and my seminal role in articulately presenting these issues before the Massachusetts Land Court, is about to take the national stage.

CIGA Marie

Marie McDonnell 
Truth In Lending Audit & Recovery Services, LLC 
Mortgage Fraud and Forensic Analysts

30 Main Street, Rear 
P.O. Box 2760 
Orleans, MA 02653 


Tomorrow, the options end and gold will resume its northerly direction.  The comex will supply massive paper to try and halt its advance.This determined seller is coming in

contact with a determined buyer of Eastern persuasion.

see you on Saturday.


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