Saturday, November 28, 2009

Nov 28.09 commentary.

Good morning Ladies and Gentlemen:

Gold closed down by $12.00 to $1174.00 and silver joined suit falling by 36
cents to 18.30.


The whole world was rocked with this announcement:


Dubai Debt May Be Higher Than $80 Billion, UBS SaysNov. 27 (Bloomberg) --
Dubai, the Persian Gulf emirate whose state-run companies are seeking to
defer debt payments, may owe more than the $80 billion to $90 billion in
liabilities assumed by investors, UBS AG
analysts said."Perhaps Dubai's
debt includes sizeable off-balance sheet liabilities that imply a total debt
burden well above the $80 billion to $90 billion markets have estimated so
far," Dubai- based real estate analyst Saud
xystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wn
nis&sort=date:D:S:d1> Masud wrote in a note. "This could imply that the debt
issued by Dubai in recent weeks is insufficient to meet upcoming
redemptions."...http://www.bloomberg.com/a

pps/news?pid=20601087&sid=aXGrvyOI6IWs&pos=3-END-









I have been reporting now for over a year that Dubai and its flagship state
owned real estate Dubai World was in deep trouble. We reported on empty
buildings and bridges leading to nowhere.

There were reports on buildings abandoned and many expatriates leaving their
cars at the airport never to return.



The losses to the banking sector will be huge. The citizens of the UK are
now the proud owner of much real estate in Dubai courtesy of its ownership
of Royal Bank of Scotland.

It is rumoured that the credit default swaps written on Dubai total around
600 billion dollars so this will again drive a nail through the heart of
the banking industry.



The big underwriters of this will be the insurers like AIG, and Ambac and
of course of favourite bank, JPMorgan.

You will see a lot of cross contamination from this default in the days to
come.

I would also like to report that Dubai has little oil compared to its more
conservative sister Abu Dhabi. Most of the oil in the United Emirates comes
from Abu Dhabi.



Here is Dave Kranzler's commentary on Dubai:




Friday, November 27, 2009


Eyes
html> Wide Open: How Significant Is The Potential Dubai Default?

The quick answer to that question is that we don't have enough information
to make a real assessment. We know that the Dubai World fund is looking to
restructure payment terms on $80 billion in debt. Dubai World is an
investment vehicle owned by the Dubai Government.

That's the devil we know. The devil we don't know is to what extent Dubai
World has off-balance-sheet liabilities. Even more consequential, we don't
know to what extent banks and hedge funds globally have engaged in Credit
Default Swaps tied to the debt issued by Dubai World. Like every other
financial accident that has happened - and the bigger ones waiting to happen
- the OTC derivatives abortion has the potential to magnify the damages by
many multiples and to inflict damage in places where we we least expect it
(i.e. U.S. investment and pension funds).

We also know that going back to Long Term Capital and Enron, when smoke
started billowing from these entities, it didn't take long for those firms
to disappear, incinerated by hidden, off-balance-sheet nuclear landmines.
The long list of financial firms that followed, often vaporized overnight,
included Bear Stearns, AIG, Washington Mutual, Lehman, Wachovia and many
hedge funds.

JP Morgan is out with a report that the U.A.E. has plenty of money available
to bail out Dubai. That may be the case and this crisis may blow over as
quickly as it surfaced. But these sovereign bailouts, led by the
multi-trillion dollar U.S. bailout schemes, will eventually become
ineffective, drown out by the flood of money printed in order to make them
happen.

One thing I do know, all the anti-gold critics and media morons have been
quick to point out that gold was sold off hard and thus was not performing
as a flight to quality instrument. What I would like to point out is that
gold has actually rebounded 4% off of its overnight lows and is unchanged
from where it was trading for most of the day on Wednesday (albeit a bit
below Wednesday's close). No doubt gold was affected by the knee-jerk
reaction of hedge funds who piled into gold's upward momentum and other
weak-handed holders. Hedge funds tend to sell anything not nailed down at
the first sign of downside volatility, and this would include gold futures
thereby exaggerating gold's sell-off.

Quite frankly, in the context of the dollar spike and the hard sell-off in
stocks globally, I think gold is holding its own quite well. Keep your eyes
wide open to what is happening in Dubai. Not so much for what is obvious,
but for the collateral effects that might not filter out thru CNBC,
Bloomberg News, et al. The event that triggers the next huge cliff-dive in
global equity markets is likely to come out left field with little or no
warning. Did anyone expect to wake up yesterday to see European bourses down
3-4% on the news of potential debt default from Dubai?

***



And then this story courtesy of Bloomberg and printed in the Wall Street
Journal:



Dubai Woes May Reach 'Sovereign Default,' BofA Says

Nov. 27 (Bloomberg) --
Dubai's debt woes
may worsen to become a "major sovereign default" that roils developing
nations and cuts off capital flows to emerging markets, Bank of America
Corp. said.

"One cannot rule out -- as a tail risk -- a case where this would escalate
into a major sovereign default problem, which would then resonate across
global emerging markets in the same way that Argentina did in the early
2000s or Russia in the late 1990s," Bank of America strategists
oxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=w
nnis&sort=date:D:S:d1> Benoit Anne and
=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&ge
tfields=wnnis&sort=date:D:S:d1> Daniel Tenengauzer wrote in a report.

A default would lead to a "sudden stop of capital flows into emerging
markets" and be a "major step back" in the recovery from the global
financial crisis, they wrote.


794&time=8>
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=HUI&sid=167
94&time=8

-END-





After the market closed, the CFTC ( the Nymex) released results on trading
in gold and silver.



I would like to give you my interpretation on what is reporting to us. I
would like to add that the

data has been very bad lately. I will do my best!



First let me give you Gold:

For those wishing to see the results yourself go to

www.nymex.com and press on gold and silver



and then press settlements.





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Trade Date
Friday, November 27 2009 Wednesday, November 25 2009 Tuesday,
November 24 2009 Monday, November 23 2009 Friday, November 20 2009
Daily Settlements for Gold Futures (FINAL)Trade Date: 11/27/2009
Month Open High Low Last Change Settle Volume Open
Interest
DEC 09 1192.8 1195.0 1130.1 1177.8 -12.8 1174.2 112,679
44,366
JAN 10 1192.7 1195.5 1139.1 1177.0B -13.0 1175.0 4,354 804

FEB 10 1194.6 1196.8 1135.8 1176.0 -13.1 1175.5 277,413
341,601
APR 10 1195.5 1197.5 1132.0 1180.4 -13.0 1176.8 4,514 45,352
JUN 10 1192.2 1199.0 1139.2 1180.8 -13.0 1177.9 3,130 20,772
AUG 10 1194.2 1198.8 1150.1 1179.1 -13.0 1179.1 198 11,379
OCT 10 1200.2 1200.3 1167.0 1177.7 -13.1 1180.3 32 3,894
DEC 10 1200.5 1200.5 1145.1 1179.5 -13.2 1182.0 1,433 22,928
FEB 11 - - - - -13.3 1184.3 - 2,833
APR 11 - - - - -13.3 1186.8 925 1,733
JUN 11 - - - - -13.5 1189.6 1,000 7,869
AUG 11 - - - - -13.7 1192.9 - 265
DEC 11 1201.0 1207.1 1181.0 1203.6 -14.1 1200.9 61 11,598
JUN 12 - - - - -14.6 1215.2 - 4,393
DEC 12 1250.0 1250.0 1250.0 1250.0 -15.1 1232.7 11 8,555
JUN 13 - - - - -15.7 1252.5 - 727
DEC 13 1282.0 1282.0 1282.0 1282.0 -16.3 1273.7 6 2,442
JUN 14 - - - - -16.9 1296.6 - 586
Total 405756 532097

Last Updated 11/27/2009 07:00 PM

Market
data explanation/disclaimer



end.


Lets go over the salient points:

1. Note that the open interest rose yesterday from 521213 to 532097 for a
gain of 10884.

2. The OI gain is basis Wednesday night and is accurate. (supposedly)

3, This is important: they always give OI figures 24 hrs after the fact.
Because Thursday was a holiday, we got in on Friday
afternoon but it is for Wednesday night's final figures!

4. Please note the ESTIMATED volume figure for Friday gold trading:
405756.

5.They always undestimate this figure by 20% so the final tally will
probably be 450,000 or greater.

Now it gets interesting:


6. Note the OI for Dec 09 at 44356. It is probably accurate but remember
that this is basis Wednesday night.

7. However note the huge volume for Dec 09 trading at 112679 which is almost
3 times Dec 09 OI.

8. No doubt that these are options that were exercised into a contract and
traded or rolled to a future month.

9. Since these contracts are given to option traders there is no purchase
side so the sale or roll is one sided.
By this, I mean in the volume side of things, there is no purchase side due
to options exercised, only the sale side.

10. Thus options exercised contract total around 68000 or 6.8 million oz. We
get this figure by subtracting 112679 from 44356.

1l. There is no difference in price btw a Dec 09 contract and a Feb 10
contract, so I doubt if any of the trading in
dec 09 were day traders. You can safely say that the 68000 contract trading
in the Dec 09 was options exercised
and rolled into a Feb.10 or later month

12. There was probably 20% of options exercised that will stand for a Dec
09 gold contract and that figure
will be in Monday's OI report. (remember we are always 24 hrs after the
fact)

13. Thus expect around 20,000 contracts from Options exercised to be
included in OI on Monday.

14. Thus add 20,000 plus 44,345 and you get 64345 contracts standing.

15. Generally, on the last day we see 30,000 contracts rolling.

16. Thus expect 34,345 contracts to stand and that could cause a comex
default.




OK lets go to silver:


Silver Futures
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*
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html> Time & Sales
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Trade Date
Friday, November 27 2009 Wednesday, November 25 2009 Tuesday,
November 24 2009 Monday, November 23 2009 Friday, November 20 2009
Daily Settlements for Silver Futures (FINAL)Trade Date: 11/27/2009
Month Open High Low Last Change Settle Volume Open
Interest
DEC 09 18.845 18.900 17.700 18.240 -.466 18.302 29,225 10,386
JAN 10 18.820 18.820 17.720 18.290B -.466 18.314 1,353 351

MAR 10 18.900 18.950 17.720 18.335 -.465 18.335 49,292 86,651
MAY 10 18.775 18.895B 17.745 18.380 -.465 18.355 736
9,589
JLY 10 18.735 18.740 18.025 18.320 -.465 18.372 123 7,075
SEP 10 18.120 18.480 17.970 18.415 -.465 18.388 62 2,603
DEC 10 18.980 19.000 17.815 18.350 -.465 18.415 664 9,357
JAN 11 18.000 18.000 18.000 18.000 -.465 18.424 1 1
MAR 11 18.620 18.620 18.620 18.620 -.466 18.442 1 48
MAY 11 - - - - -.467 18.460 - -
JLY 11 18.690 18.690 18.690 18.690 -.468 18.479 1 2,860
SEP 11 - - - - -.469 18.498 - -
DEC 11 18.800 18.800 18.100 18.480 -.470 18.527 243 5,162
JLY 12 - - - - -.473 18.610 - 846
DEC 12 - - - - -.475 18.650 - 170
JLY 13 - - - - -.488 18.721 - 103
DEC 13 18.900 18.900 18.900 18.900 -.498 18.775 5 290
JLY 14 - - - - -.498 18.904 - -
Total 81706 135492

Last Updated 11/27/2009 07:00 PM


end.

Note the small decrease in OI from 136162 to 135492 or a loss of 670. Thus
in gold we got an increase of OI and in
silver a decrease. Thus the commercials see a huge threat in silver and are
abandoning the ship in greater numbers.


Again, note the rather large OI for Dec 09 at 10,386 but this is basis
Wednesday.

Note the large volume of trading for Dec 09 at 29225 which is again options
exercised for a Dec 09 contract.

Probably around 19000 contracts were exercised and rolled into a March
contract.

maybe around 5000 option exercised contracts remain and stand for
delivery.This must be added to the 10,386 standing

Probably 3000 contracts will leave the last day, thus:

Looks to me like there will be around 12,000 contracts for silver or 60
million oz.

The comex claims that it has 102 million oz. This one will be close.


Here are two reports on gold and silver trading so you can compare what I
have been reporting to you on: (op-ex means options exercise day)


First from Dave Kranzler:


Today's Action in the Metals

Opex was Monday. The big position in Dec calls was 1200. Those were most
likely not exercised. Hard to say how many in the moneys would have been
exercised and held w/a stop vs. exercised and sold right away to book the
profit.

The selling in gold could easily have been hedge funds shooting first, then
asking questions about the Dubai thing. I have yet to find anyone with a
view about the significance or potential collateral damage associated with
this Dubai thing.

In terms of gold, I'm looking forward to seeing the size of the o/i after
today's session. That will tell us a lot about what is going on in terms of
longs vs. comex cartel.

At any rate, in terms of the number of contacts in the money and exercised
and held after Monday's opex, it was a significant number in relation to the
volume we're seeing today in the December cart.



and this from Adrian Douglas:



There are still 94,544 contracts of OI in DEC gold which is very high this
close to first notice day. Just 20% of these standing for delivery would
wipe the COMEX dealers out of all their gold. There are still 20,816
contracts of OI in DEC silver; It would require 50% of the silver open
interest to stand for delivery to clean out the dealers so gold is certainly
the one to keep a close eye on as there is only 1 trading day before first
notice day in the December contract.

Another day and another record high. Has anyone seen the cartel's cavalry?
M.I.A.! Every short is underwater and every long is making money. And new
highs were made in the ACCESS market. What a way to go into a Thanksgiving
holiday. By Monday there will be a lot less turkey birds, but there will be
a heckuva a lot more turkeys in the gold world! Is there a Law of
Conservation of Turkeys? No! There should be, because we are going to need
it next week! Happy Thanksgiving everybody!
Cheers
Adrian





Please note when Adrian wrote this they did not update the Dec OI until
late in the day!


On Wednesday night, Dave Kranzler commented on a possibility of a default at
the comex:
(Note that he expected volume to be light on Friday. so did I and boy were
we surprised)



Wednesday, November 25, 2009


Is
.html> A "Commercial Signal Failure" Upside Explosion Coming In Gold?

A commercial signal failure occurs in the commodities market when the amount
of demand for physical delivery of a commodity - in this case gold - exceeds
the ability to physically deliver the available supply by those obligated to
deliver. In this case that would be the parties who have sold short the
Comex December gold futures contract (primarily Goldman Sachs, JP Morgan,
HSBC and Deutsche Bank). If this does indeed occur, the price of gold and
silver will do a veritable moon-shot in price.

The situation in December gold on the Comex could get quite interesting. As
of today's trade date, there are 94,544 open December gold futures
contracts. Anyone holding one of those contracts who does not or can not
take delivery (1 contract = 100 ozs, or roughly $118,000) of Comex gold
needs to have that postion sold by the end of trading Friday. Tomorrow the
Comex is closed and Friday will be a low volumn day. The reason for this is
that Monday is what is known as "first notice day," which means that anyone
long a gold contact (or silver) can be tagged with a delivery notice.

Now, the amount of gold being reported by the Comex as "registered" (not
that we trust that number) - which is the amount that is available for
delivery - is a little over 2.1 million ozs. If o/i (open interest) on
Monday is any where over 21,000 contracts (2.1 million ounces), December
could be a very interesting month for gold. In other words, if the open
interest at the close of trading Friday is greater than 21,000 contracts,
the Comex has a delivery problem. The price will go parabolic.

With the open interest at 94,000+ right now, and with Friday being a very
low volumn day, we can expect that the number of contracts that potentially
stand for delivery will far exceed the amount of gold available for
delivery. Now, contracts can be tendered for cash instead of gold, and
someone holding a contract can sell it after 1st notice day. But, anyone
holding after Friday must have an account fully funded to accept delivery
because, in theory, every single long position on Monday could be tagged
with a delivery notice (this never happens but theoretically it is
possible). We'll have to wait until Friday afternoon to know for sure, but I
suspect the relentless move up in gold prices this week are sniffing out the
possibility of a delivery issue as described above.

Two more interesting items of note, and events which confirm the growing
demand for physical delivery and possession of gold. First, it was announced
today that the Central Bank of Sri Lanka purchased another 10 tons of gold
from the IMF. They said it was a move to diversify reserves, which means
they are dumping U.S. dollars. Here's the link:
DCMg> Sri Lanka Buys More IMF Gold. And India has expressed an interest to
buy the rest of the IMF gold for sale:
-india-may-buy-more-447> India Interested In Rest Of The IMF Gold.

It should be clear to anyone paying attention to what is going on in the
gold (and silver) market that there is an aggressive movement by central
banks, investment funds and wealthy individuals to take physical custody of
large quantities of gold. There is also a massive imbalance between the
actual supply of physical gold available for delivery and the enormous
amount of paper liabilities for gold. These liabilities include Comex
futures, OTC derivatives, leased gold and, of course, the high likelihood
that GLD is largely a massive gold leasing operation. The paper Ponzi scheme
in gold is starting to unravel and this is being reflected by the price
behavior in gold, despite tame inflation numbers coming out of the
Government.

Have a great Thanksgiving break - GOT GOLD?





end.



I will briefly discuss economic news:


This caught everyone for surprise as the week before commercial paper was on
the rise. I reported to you during this past wee, that M3 has had zero
growth and that treasury bills had negative yields.
And now a contraction on commercial paper, the lifeblood of the business
world or Main Street:


US commercial paper market shrinks in latest week-Fed

NEW YORK, Nov 27 (Reuters) - The U.S. commercial paper market contracted in
the latest week, Federal Reserve data showed on Friday, adding to hints that
a three-month expansion of the market might be stalling amid a feeble
economic recovery.

It was the third weekly contraction in four weeks. For the week ended
Wednesday Nov. 25, the size of the U.S. commercial paper market, a vital
source of short-term funding for companies' daily operations, fell by $10.7
billion to $1.257 trillion outstanding.

-END-





This is not good: utilities are asking for rate increases because of rising
costs. The poor consumer:



23:46 Utilities across US request rate increases - WSJ
The article specifically cites Northeast Utilities System (NU), Xcel Energy
(XEL), Duke Energy (DUK), and Pepco Holdings (POM), and says that to
generalize, utilities are seeking returns on equity of 10.5-11.5%.
* * * * *

The usa mint has now stopped all production on USA eagle silver coins and
gold as they cannot come up with supply:





Gold rush forces U.S. to clip Eagle sales

Submitted by cpowell on 03:03PM ET Thursday, November 26, 2009. Section:
Daily Dispatches By Javier Blas
Financial Times, London
Thursday, November 26, 2009

http://www.ft.com/cms/s/0/393e551e-daaa-11de-933d-00144feabdc0.htmlThe rush
by retail investors into gold has forced the US government to suspend sales
of the world's most popular bullion coin, the American Eagle, after running
out of inventories.

The shortage, the second since the start of the financial crisis in August
2008, is the latest sign of investors seeking a safe haven into bullion amid
the US dollar woes. Safe-haven buying spurred by concerns about the health
of Wall Street and a spike in inflation due to a lax monetary policy have
also benefited gold sales.

"The US Mint has depleted its current inventory of 2009 American Eagles
one-ounce bullion coins due to the continued strong demand," the mint said
in a statement late on Wednesday. It added that selling will resume "once
sufficient inventories ... can be acquired to meet market demand."

The stoppage helped to push gold prices yesterday to a fresh all-time high
of $1,194.90 a troy ounce, up 0.5 per cent on the day. Bullion later pared
gains to trade at around $1,185 a troy ounce as the US dollar strengthened.

The mint suspended sales last year after the collapse of Bear Stearns and
Lehman Brothers triggered a wave of buying that depleted its stocks. Coins
dealers have reported ocassional shortages of other popular coins.

Philip Newman, director at London-based precious metal consultancy GFMS,
said that physical gold demand in North America had picked up in the last
two months.

The US Mint has sold about 1.19m ounces of American Eagles so far this year,
up almost 75 per cent from the same period last year and on track to be the
highest annual volume in ten years, according to official data. Sales of
American Eagle silver coins have hit 26 million ounces, the highest level in
at least 23 years.

Although gold and silver coins account for a relatively small fraction of
the precious metals market, analysts see them as a good proxy of retail
investor appetite.

Gijsbert Groenewegen, managing director at New York-based precious metals
hedge fund Silver Arrow Capital, said that investors were shifting from
paper assets to physical assets. "Bullion is the only asset without
counterparty risk," he said.

The scarcity of American Eagle coins ahead of the Christmas-period, which
usually sees strong demand for bullion, pushed coins premiums higher.

FideliTrade, a major US-based coins bullion dealer, quoted the American
Eagle at almost $60 above spot gold prices, much higher than quotes for
other coins.

Traditionally, the American Eagle and its sister, the American Buffalo, are
the world's best-selling gold coins, followed by the the Canadian Maple
Leaf, the Austrian Philharmonic, and the South African Krugerrand.Turkey's
local gold coins sell even more that its American counterpart but trade is
limited to within the country.

* * *

Here are some numbers for the abbreviated session on the NYSE:



US Treasuries were as the yield on the 10 yr T note fell to 3.21%.

At post time...

The dollar only rose .19 to 75 on the nose.

Crude oil is down $1.33 per barrel to $74.90.

The CRB fell 5.47 to 272.94.

The DOW was last down 146 to 10,318 and the DOG was off 29 to 2146.





end.





I would like to leave you with this letter from a silver and gold trader to
Bart Chilton commissioner of the CFTC,

It is self explanatory:



Further to my letter of the 11Nov. 2009

Dear Mr. Chilton,
I was a little disappointed that you had not acknowledged my letter to you
on 11th Nov.I realise you are busy but it would be nice to at least know you
were taking my information into consideration and looking into the questions
I raised.

You must be aware of the concentrated positions evidenced in your own
published data. This information has most certainly been in your hands for a
year now. Since that time the concentration has increased to record levels.
I realise that you inherited this criminal situation BUT THIS IS NOW
HAPPENING UNDER YOUR WATCH.

As you know I am a metals trader based in London and am fully aware how JP
Morgan et al is able to move the silver market at will. Indeed I am able to
profit from such activity as we are given clear signals by them when they
intend to instigate a sell off. If you cared to contact me I would be able
to give you information on just how these signals work. You may wonder why I
would want to expose such a profitable activity? It is because I want to
trade in a fair market and think of my profession as honourable. I believe
all human beings should act with integrity and when I look around in church
on a Sunday realise that I am deceiving and robbing ordinary hard working
god fearing human beings.

It makes me very uncomfortable to stay silent as I witness traders I know
profiting from insider information. It is bad enough that a so called
respectable bank is allowed to act in a criminal manner but I suggest you
check into and audit the personal positions traders acting for a 'certain
bank' take around the orchestrated sell offs.

I have been asked questions on how traders can justify such large bonuses
this year. I think the press will have a field day now that these questions
come into focus. Especially when we make them aware that it is not just
through legal trading, and that the CFTC is fully aware this is going on.

You and I know that JPMorgan is acting as an agent for the Federal Reserve.
It is common knowledge to all professional traders. I can only deduce that
your lack of action in tackling this blatantly obvious manipulation because
your hands being tied due to pressure from above. The CFTC's lack of action
is threatening to blow up the precious metals market.

This brings me to my main concern. Do you realise that the massive short
paper positions are HANGING BY A THREAD? There is simply not enough physical
metal available for delivery for the December delivery contract.

Over this Thanksgiving we saw another supposedly marked to market Derivative
position blow up causing ripples through the market. Yet this default is
just a fraction of what is threatened within 4 weeks in the physical market.
I have been just one more voice trying to warn you this is going to end
badly no matter how much you are reassured by JPMorgan the positions are
hedged. All they can do is now take a MASSIVE risk in adding to the short
positions in order to instigate a selloff. Unfortunately Gold will not
oblige in assisting this telegraphed action. Are you willing to allow this
king of risk to escalate?

Please acknowledge my letter.

Respectfully yours
Andrew T. Maguire

Silver remains one of the most rigged markets in history. The CFTC should be
ashamed of itself. The way things are going, silver isn't going anywhere
until JP Morgan's silver position blows up ... which could come at any time
in the weeks and months ahead.



Monday will be a huge day as we face first day notice on both silver and
gold.

I will report as usual, on Monday night when all the data is in.

It is only then, that I can get a true picture of what is going on. However
judging from the attempted raid committed by our bankers, you

can safely say that they are in trouble.



I wish you all a grand weekend and see you on Monday

Harvey.

Wednesday, November 25, 2009

Nov 25.09 commentary..extremely important.

Good evening Ladies and Gentlemen:


Gold closed up by $20.90 to 1186.50 Silver closed up by 31 cents to 18.76


First of all I would like to send to you todays trading in gold comex:


Gold Futures
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Contract Specifications |

Performance Bonds / Margins |

Product Calendar |
Learn
More



*
Quotes
*
ml> Time & Sales
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Volume
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About
this Report
Futures
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Options


Trade Date
Wednesday, November 25 2009 Tuesday, November 24 2009 Monday,
November 23 2009 Friday, November 20 2009 Thursday, November 19 2009
Daily Settlements for Gold Futures (PRELIMINARY)Trade Date: 11/25/2009
Month Open High Low Last Change Settle Volume Open
Interest
NOV 09 - - - - +21.4 1186.9 - 44
DEC 09 1169.6 1192.8 1166.8 1187.0 +21.2 1187.0 205,061
94,544
JAN 10 1171.2 1193.5 1168.0 - +21.2 1188.0 689 694
FEB 10 1170.9 1194.4 1168.4 1188.0 +21.2 1188.6 124,442
283,977
APR 10 1170.0 1195.5 1170.0 1183.5 +21.3 1189.8 6,259 44,030
JUN 10 1172.6 1196.0 1172.6 - +21.3 1190.9 2,052 19,627
AUG 10 1185.9 1190.4 1184.3 - +21.3 1192.1 456 11,464
OCT 10 1181.3 1193.8 1181.3 - +21.3 1193.4 57 3,933
DEC 10 1175.0 1200.5 1175.0 1187.5 +21.4 1195.2 2,028 22,444
FEB 11 1191.4 1191.4 1187.4 - +21.4 1197.6 2 2,832
APR 11 - - - - +21.4 1200.1 - 1,733
JUN 11 - - - - +21.4 1203.1 - 7,869
AUG 11 - - - - +21.4 1206.6 - 265
DEC 11 1211.4 1211.4 1211.4 - +21.5 1215.0 351 11,323
JUN 12 - - - - +21.5 1229.8 - 4,393
DEC 12 - 1241.1B - - +21.5 1247.8 250
8,326
JUN 13 - - - - +21.5 1268.2 - 727
DEC 13 - 1283.1B - - +21.5 1290.0 -
2,442
JUN 14 - - - - +21.5 1313.5 - 586
Total 341647 521253

Last Updated 11/25/2009 04:30 PM

Market
data explanation/disclaimer

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The volume today was simply astronomical in all months


The volume recorded is only an estimation

The OI recorded is basis yesterday (Tues Nov 24) as they

are always 24 hrs behind:




































Here are the 4 major pieces of information:

1, please note todays volume of 341647 (this is estimated. Final volume
will be probably around 360000 contracts

2. please note the huge OI for Dec 09 at 94,544. This represents 9.45
million oz of gold standing for delivery

3. please note the huge volume in the Dec 09 trading today at 205061.
Something really strange here. It traded more than 200% greater than its OI

4. please note the huge drop in total OI of around 28,254. contracts.



explanation: the commercials have totally bailed out and massively covered
their shorts.

It would not surprise me to see the sovereign wealth funds enter the Dec 09
buys and sell the Feb 10 gold in a disguise
move to throw off the bankers.



end




Now lets go to silver:

Here is todays summary:


Silver Futures
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Trade Date
Wednesday, November 25 2009 Tuesday, November 24 2009 Monday,
November 23 2009 Friday, November 20 2009 Thursday, November 19 2009
Daily Settlements for Silver Futures (PRELIMINARY)Trade Date: 11/25/2009
Month Open High Low Last Change Settle Volume Open
Interest
NOV 09 - - - - +.318 18.766 - -
DEC 09 18.520 18.860 18.520 18.730 +.313 18.768 46,694 20,816
JAN 10 18.570 18.850 18.560 - +.311 18.780 241 359
MAR 10 18.565 18.890 18.555 18.800 +.306 18.800 33,075 76,889
MAY 10 18.640 18.900 18.640 - +.307 18.820 2,639 11,337
JLY 10 18.795 18.930 18.665 - +.309 18.837 2,005 5,380
SEP 10 18.775 18.775 18.775 - +.309 18.853 40 2,592
DEC 10 18.650 18.965 18.650 - +.309 18.880 326 9,309
JAN 11 - - - - +.309 18.889 - 1
MAR 11 - - - - +.309 18.908 - 48
MAY 11 - - - - +.309 18.927 - -
JLY 11 18.965 18.965 18.895 - +.310 18.947 2 2,860
SEP 11 - - - - +.310 18.967 - -
DEC 11 18.900 18.995B 18.850 - +.310 18.997 16
5,162
JLY 12 - - - - +.310 19.083 - 846
DEC 12 - - - - +.310 19.125 - 170
JLY 13 - - - - +.310 19.209 - 103
DEC 13 - 19.150B - - +.310 19.273 - 290
JLY 14 - - - - +.310 19.402 - -
Total 85038 136162

Last Updated 11/25/2009 04:30 PM





Here are the important salient points:

The volume today was huge at 85038

The open interest declined by a massive 8343 contracts

The OI for December remains at a huge 20816 or 104 million oz of silver.

As with gold, the commercials bailed.

I would like to also add that the options exercised for silver and gold
contracts do not get added to
the OI figure until Nov 30.09.


Because of the actions of gold and silver by our commercials along with the
huge OI contraction,
can only signify that we have a potential failure on our hands.



As I have indicated to you yesterday, I will need the data on Monday to
verify.
Also remember that the OI totals are basis yesterday.

I will get todays closing OI figures on Friday.



end.


In conclusion, my take on the situation is that JPMorgan threw in the towel.

This is very ominous indeed!!

Here is Bill Murphy's commentary on the subject:


All year Adrian and I have been touting a coming Commercial Signal Failure
in which the commercial shorts get so buried by the price rise, they are
forced to cover. Well, it is at hand. The gold open interest fell a stunning
28,254 contracts to 521,253. This means that commercial shorts, other than
The Gold Cartel, are throwing in the towel. However, for gold to come off
its highs like it did yesterday, it means The Gold Cartel was selling even
more, further isolating their position.

I REPEAT… there is a massive physical SHORT position out there. Those
shorts, outside of the bums, are trying to cover and attempting to do so
with physical demand surging by the big boy investment crowd. A Commercial
Signal Failure is not a one day event. Today was the beginning of one.

That notion is confirmed by the silver action. Its open interest fell a
steep 8,343 contracts to 136,162, which is the largest drop I can recall and
it occurred on a modest down day. Morgan must have been selling like crazy,
while other commercial shorts covered. It certainly wasn’t spec longs
getting out.

YES, there ought to be an investigation of the CFTC!


end



And from our reliable Dave Kranzler from Denver:


Dave from Denver…

The outstanding December o/i is quite large given that Monday is 1st notice
day. Anyone who does not want, or is not capable of taking, delivery needs
to be out of December by end of trading Friday. We'll know a lot more about
what's happening in December when today's activity is updated (not sure if
it will be updated last this afternoon or on Friday morning). My hunting-dog
nose is telling me that we may well see an inordinately large amount of
contracts holding for delivery, and we'll know for sure Monday morning.

The amount of gold being listed as "registered" (not that we trust that
number) is a little over 2.1 million ozs. If o/i on Monday is any where over
21,000 contracts, December could be a very interesting month for gold.




end.


The USA mint has run out of eagles again. Demand is simply outpacing supply
by a wide margin:

US Mint to suspend American Eagle gold 1-oz coins

NEW YORK, Nov 25 (Reuters) - The U.S. Mint said on Wednesday it will suspend
sales of the popular American Eagle one-ounce bullion coins as strong demand
depleted its inventory.

The Mint said that November sales to date were at 124,000 ounces, higher
than the 115,500 ounces sold in each month of September and October.

The Mint said it expects to resume sales in early December.

end



Ok here are some numbers for today:


The dollar is off .62 to 74.46. The euro has risen .0131 to 1.5137. The
pound has gained .0131 also to 1.6710. Make it a dollar rout. The yen is up
1.25 to 87.35.

The yield on the 10 yr T note has sunk to 3.29%.

Crude oil is up $1.46 per barrel to $77.48.

The CRB is up 5.87 to 278.13.

end.


please note the huge sell off in the dollar to 74.46 as the Euro climbed
past 1.5137.
The yield on the 10 yr note sunk to 3.29% indicating that the economy is
not performing like it should.
With gold rising to its highest ever close, it is strange that the GLD ETF
rose only by .9 of a tonne:

the GLD ETF 0.91474 tonnes to 1,122.37132 tonnes. The HGNSI was unchanged at
68%.



end



Yesterday's volume at the comex turned out to be 398000 contracts with
70,000 due to the switch effect.
That volume is a record!



OK lets go to economic news for today:



The jobless number came in pretty good. However it does not include those
poor souls who have run out of benefits.

Here is the jobless number:


08:30 Jobless claims for w/e 21-Nov reported 466K vs. consensus 500K
•Prior week jobless claims revised to 501K from 505K
•Continuing claims for w/e 14-Nov reported 5.423M vs. consensus 5.565M
•Prior week continuing claims revised to 5.613M from 5.611M
* * * * *

U.S. jobless claims dip in latest week

WASHINGTON, Nov 25 (Reuters) - The number of U.S. workers filing new
applications for jobless insurance tumbled last week by a surprisingly large
amount to the lowest level in more than a year, according to government data
on Wednesday that gave fresh evidence the battered labor market is
improving.

Initial claims for state unemployment benefits slid to a seasonally adjusted
466,000 in the week ended Nov. 21, from a revised 501,000 in the prior week,
the Labor Department said. Seasonal adjustments turned a
smaller-than-anticipated unadjusted rise in claims into a drop, a Labor
Department economist said.


end.


This next number is not good at all. We got durable goods which is
basically big ticket items. Last month it fell!:


U.S. durable goods orders fall unexpectedly in Oct

WASHINGTON, Nov 25 (Reuters) - New orders for long-lasting U.S. manufactured
goods fell unexpectedly in October, according to government data on
Wednesday that reinforced views of a gradual economic recovery from
recession.

The Commerce Department said durable goods orders dropped 0.6 percent after
rising by an upwardly revised 2.0 percent in September. New orders in
September were previously reported to have increased 1.4 percent.

Analysts polled by Reuters forecast orders rising 0.5 percent in October.
Durable goods orders are a leading indicator of manufacturing activity,
which in turn provides a good measure for overall business health.

-END-



This morning we got Personal Spending and it rose by .7% last month. This
is very encouraging!!

U.S. personal spending rises 0.7 pct in October

WASHINGTON, Nov 25 (Reuters) - U.S. consumer spending rose more than
expected in October as incomes increased, data showed on Wednesday, offering
some hope at the start of the fourth quarter for the nascent economic
recovery.

The Commerce Department said spending increased 0.7 percent, after a revised
0.6 percent fall in September.

Consumer spending in September was previously reported as slipping 0.5
percent. October's spending was above market expectations for a gain of 0.5
percent.

-END-

Other numbers released today were also on the good side:

1. New home sales increased

2. Michigan confidence number increased



Here are both stories:



09:55 Nov Univ. of Michigan Confidence final reading 67.4 vs. consensus 67.0
The Nov preliminary reading was 66.0
* * * * *

10:00 Oct New Home Sales reported 430K vs. consensus 404K
Sep figure revised to 405K from 402K.

* * * * *

U.S. new home sales rise sharply in October

WASHINGTON (Reuters) - Sales of newly built U.S. single-family homes in
October rose more than expected to their highest level in a year, data
showed on Wednesday, pointing to a stabilizing housing market after a
three-year slump.

The Commerce Department said sales jumped 6.2 percent to a 430,000 annual
pace, the highest since September last year, from an upwardly revised
405,000 in September.

Analysts polled by Reuters had expected new home sales to climb to a 410,000
annual pace from September's previously reported 402,000. The rise in sales
pushed the supply of new homes on the market last month down to 239,000
units, the lowest since May 1971.

end



This news event is not so good. The CFO of Ambac quit suddenly.

Generally when a CFO leaves, something ominous occurs. Here is the news
story:

Ambac says CFO resigns, effective immediately

Bill,

http://www.marketwatch.com/story/ambac-cfo-resigns-2009-11-24

QUOTE

Ambac Financial said Tuesday that Chief Financial Officer Sean Leonard
resigned effective immediately, a possible sign of continuing trouble at the
bond insurer.

Leonard is leaving Ambac "to pursue other interests," the company said.
Until a replacement is named, department heads will report directly to Chief
Executive David Wallis, it added.



end



Here is a story from the Canadian Mint. They have "solved" the mystery of
the missing 17.5 million oz of gold.

The forensic accounting firm did not sign off on the disclosure. I do not
buy this one bit. I disclose the story and I will let you decide:

(I have included Rob Kirby's comments)



Mint said to have double-counted gold, underestimated 'shrinkage'

Submitted by cpowell on 07:27PM ET Tuesday, November 24, 2009. Section:
Daily Dispatches

From CTV News, Scarborough, Ontario
Tuesday, November 24, 2009


91124/20091124?hub=TopStoriesV2> http://www.ctv.ca/servlet/ArticleNews/stor
y/CTVNews/20091124/mint_myster...

RCMP have solved a bizarre mystery: How did $15.3 million in gold vanish
from the Royal Canadian Mint? And while their report is still two weeks
away, CTV News has learned the answer.

"Senior government officials say there was a colossal error at the mint
itself," said CTV Ottawa Bureau Chief Robert Fife on Tuesday night.

Mint officials double-counted some gold bullion they sold, and
underestimated the shrinkage of the gold during processing.

The federal government had withheld bonuses for mint executives until the
mystery was solved. It's unclear whether those bonuses will still be paid
out.

Junior Transport Minister Rob Merrifield, who's responsible for the mint,
called in the RCMP on June 9 after he learned that an audit would not
"rectify the problem" of the missing gold. That's about 10 weeks after the
government first learned of the missing gold.

The Deloitte and Touche audit cost taxpayers $360,000.

Ottawa now requires the mint to report on inventory levels of metals every
three months.

Last month, Liberal critic for Crown corporations Joe Volpe said the
security, reputation and the quality of the Canadian Mint's product has been
compromised.

In early June, it was discovered that there was an unreconciled difference
between the value of gold on the mint's books and the physical count of gold
for the 2008 fiscal year.

* * *

this explanation does not cut it

From the GATA release Chris posted last night:

http://www.gata.org/node/8085

Junior Transport Minister Rob Merrifield, who's responsible for the mint,
called in the RCMP on June 9 after he learned that an audit would not
"rectify the problem" of the missing gold. That's about 10 weeks after the
government first learned of the missing gold.

The Deloitte and Touche audit cost taxpayers $360,000.

Ottawa now requires the mint to report on inventory levels of metals every
three months.

So let’s get our "ducks in a row" now: Deloitte and Touche conducted an
audit and billed the Canadian Gov’t 360,000 – according to their own press
release.

But there is NO MENTION of Deloitte and Touche stating that inventory was
"double counted" – only Senior Gov’t Officials saying there was a colossal
error:

"Senior government officials say there was a colossal error at the mint
itself," said CTV Ottawa Bureau Chief Robert Fife on Tuesday night.

Mint officials double-counted some gold bullion they sold, and
underestimated the shrinkage of the gold during processing.

Why doesn’t the press release say that Deloitte and Touche found the
colossal error? THEY CONDUCTED THE AUDIT!!

The explanation being put forward here REEKS OF COVER UP, it is not
credible.

There is something VERY UGLY going on here that’s being withheld from the
public.

Wonder what they might be hiding?

This DOES NOT PASS THE SMELL TEST.
Best,
Rob Kirby

end.





The financial scene in Europe does not look good.



Today, Dominique Strausse -Hand told the newspaper LeFigaro that banks so
far have only admittted to half of the 3.5 trillion dollars of losses.

Dominique Strauss-Kahn, the head of the International Monetary Fund, told Le
Figaro on Wednesday that banks worldwide have so far admitted to just half
of the $3.5 trillion (£2.1 trillion) of likely damage."

Best regards,
CIGA Christopher

end.





In a very disturbing article written by Ambrose Pritchard Evans, he
discloses that the German central bank, the Bundesbank, fears a relapse

as German banks face fresh loses of 90 million Euros. I urge you to read
this article:



Bundesbank fears relapse as German banks face €90bn fresh losses
The Bundesbank has told German banks to take advantage of renewed confidence
while they can to prepare for likely losses of €90bn (£81bn) over the next
year, warning that the delayed shock waves of the economic crisis still pose
a major threat to global recovery and bank finance.
By Ambrose Evans-Pritchard, International Business Editor
Published: 5:23PM GMT 25 Nov 2009

The venerable bank said in its Stability Report that the world had narrowly
averted a "virtually uncontrollable" collapse in the late summer of 2008.
While the credit system has partly stabilised, the underlying problems "are
still far from being overcome" and money markets are not yet functioning
properly.

"It is already clear that the financial system will be severely tested going
forward. Downside risks remain pre-dominant," said the report.

The danger is that a long phase of stagnation and rising job loses in the
West sets off "spiralling loan losses in both industry and in the
residential and commercial real estate markets. In such an unfavourable
scenario, negative feedback between the real economy and the financial
system could gain added momentum."

The Bundesbank said the next wave of bank write-downs will come from loan
book losses as the default rate on lower-tier companies tops 14pc in the US
and 12pc in Europe. German banks alone will have to write down €50bn to
€70bn of loans over the next year.

More…
ndesbank-fears-relapse-as-German-banks-face-90bn-fresh-losses.html>


end.



Today we got a look at USA bank lending or for that matter, the lack of
lending. It is at its lowest level in decades:



What recovery can be supported by restricted lending?

U.S.
lending in the dumps.
The FDIC said in its Q3 report for U.S. banks that bank lending fell by the
largest amount since the government began tracking such data, suggesting
that banks are still anxious, and that the recovery could suffer as a
result. Total loan balances fell by $210.4B, or 3%, the biggest decline
since data collection began in 1984. The FDIC also said that a wave of bank
failures pushed its fund to backstop deposits into the red (-$8.2B) for just
the second time in its history. In anticipation of this, the agency recently
approved plans calling for banks to prepay annual assessments through 2012,
which will add $45B to the FDIC’s coffers.


end.



My goodness, this just came in. Sri Lanka has just purchased 10 tonnes of
IMF gold.



iMF sells 10 tonnes of gold to Sri Lanka

WASHINGTON — The International Monetary Fund said Wednesday it had sold 10
tonnes of gold to Sri Lanka’s central bank for 375 million dollars, as part
of a restructuring of IMF financial resources.

It was the third IMF sale of gold in a month as the Washington-based
institution seeks to reduce its dependence on lending revenue and bolster
its finances amid the global economic crisis.

"The sale was conducted on the basis of market prices prevailing on" Monday,
the IMF said in a statement.

Gold prices had hit a record high that day, topping 1,170 dollars an ounce.
Since then, the price of the precious metal has soared higher to new
all-time peaks as investors seek a safe haven amid economic uncertainty.

The sale brought the total IMF gold sold to central banks to 212 tonnes.
India bought 200 tonnes between October 19 and 30 for 6.7 billion dollars
and Mauritius bought two tonnes on November 11 for 71.7 million dollars.

More…
DCMg>

end.



China is nowhere to be seen. It looks like Sri Lanka just wants to get back
the gold it leased out!!



Conclusions:



Today will probably turn out to be a very historical day as the cartel
basically threw in the towel.

Our regulators will have to answer to a lot of questions as to what on earth
were they regulating.

This may bring down the entire financial global apparatus.



I will not report tomorrow or on Friday.



My next commentary will be Saturday and it will be quite important as we
will get corrected COT figures.

To all our American friends, we wish you a very happy Thanksgiving Holiday.



Harvey.







.

tonights commentary

 
I will bring out tonights commentary at around 10: 15 est.

Tuesday, November 24, 2009

Nov 24.09 commentary..extremely important!!!!!!

IGood evening Ladies and Gentlemen:
 
 
 
 
gold closed today up by $1.20 to $1165.60.
 
 
 
Silver fell by 16 cents to $18.45
 
 
 
I am now going to give you the trading in comex gold today.
 
 
 
 
 
 
 
Daily Settlements for Gold Futures (PRELIMINARY)Trade Date: 11/24/2009
Month Open High Low Last Change Settle Volume Open Interest
NOV 09 1168.7 1169.8 1167.5 - +1.2 1165.5 26 62
DEC 09 1164.4 1171.7 1157.7 1166.6 +1.1 1165.8 239,421 193,663
JAN 10 1165.8 1171.9 1159.2 - +1.1 1166.8 582 704
FEB 10 1165.6 1173.0 1159.1 1168.2 +1.2 1167.4 115,939 212,520
APR 10 1167.7 1173.7 1161.0 - +1.2 1168.5 4,868 41,488
JUN 10 1164.0 1174.3 1162.3 1169.8 +1.3 1169.6 4,400 19,724
AUG 10 1173.0 1173.6 1168.7 - +1.3 1170.8 406 11,462
OCT 10 - - - - +1.2 1172.1 54 3,897
DEC 10 1170.0 1178.6 1166.0 - +1.1 1173.8 5,250 23,344
FEB 11 - - - - +1.1 1176.2 100 2,730
APR 11 1182.6 1182.6 1177.0 - +.9 1178.7 4 1,732
JUN 11 - - - - +.7 1181.7 1,801 9,970
AUG 11 - - - - +.6 1185.2 - 265
DEC 11 1194.5 1194.5 1194.5 - +.5 1193.5 273 11,481
JUN 12 - - - - +.1 1208.3 - 4,393
DEC 12 - - - - -.2 1226.3 100 8,320
JUN 13 - - - - -.2 1246.7 - 727
DEC 13 1275.0 1275.0 1272.0 - -.2 1268.5 3 2,439
JUN 14 - - - - -.2 1292.0 - 586
Total 373227 549507

 
 
Please note the huge estimated volume at 373227 contracts.  They always underestimate the true volume.
I am speculating that the true volume of trading is really 455000 which breaks the record by almost 130,000 contracts.
 
The OI basis Monday,  is accurate at 549507.  This went up by a huge 14000 contracts from friday.
 
Please note the huge OI remaining for the Dec 09 contract at 193993.  Tomorrow is really the last day before first day notice.
I do not expect much volume on Friday as everybody is off for the holiday.
 
From my perspective, the gold  cartel is  in serious trouble tonight.
 
Here is what Adrian Douglas commented tonight on seeing these figures:
 
 

There are still 193,663 contracts of OI in DEC gold which is remarkable this close to first notice day. Just 11% of these standing for delivery would wipe the COMEX dealers out of all their gold. There are still 39,941 contracts of OI in DEC silver; It would require 26% of the silver open interest to stand for delivery to clean out the dealers so gold is certainly the one to keep a close eye on as there are only 3 trading days before first notice day in the December contract.

Another day, and still no cavalry for the trapped shorts. Every short is underwater and every long is making money. The shorts are hoping against hope itself that the longs are going to blink first. What will happen is the shorts are going to get squeezed and make the biggest move in the gold bull to date.
Cheers 
Adrian

 
 
OK lets now go to silver comex trading:
 
 
Trade Date
Daily Settlements for Silver Futures (PRELIMINARY)Trade Date: 11/24/2009
Month Open High Low Last Change Settle Volume Open Interest
NOV 09 - - - - -.155 18.448 - 1
DEC 09 18.585 18.680 18.330 18.460 -.155 18.455 53,620 39,941
JAN 10 18.540 18.640 18.350 - -.156 18.469 640 340
MAR 10 18.690 18.715 18.360 - -.155 18.494 29,275 67,416
MAY 10 18.605 18.720 18.410 - -.156 18.513 627 11,149
JLY 10 18.660 18.680 18.445 - -.157 18.528 491 5,008
SEP 10 - - - - -.157 18.544 - 2,592
DEC 10 18.585 18.755 18.500 - -.158 18.571 1,410 8,439
JAN 11 - - - - -.158 18.580 - 1
MAR 11 - - - - -.158 18.599 - 48
MAY 11 - - - - -.159 18.618 - -
JLY 11 - - - - -.160 18.637 - 2,860
SEP 11 - - - - -.161 18.657 - -
DEC 11 18.700 18.700 18.650 - -.162 18.687 367 5,313
JLY 12 - - - - -.169 18.773 13 837
DEC 12 - - - - -.170 18.815 - 170
JLY 13 - - - - -.171 18.899 - 103
DEC 13 - - - - -.172 18.963 13 287
JLY 14 - - - - -.172 19.092 - -
Total 86456 144505

Last Updated 11/24/2009 01:32 PM
 
 
 
 
 
 
 
You will note that the OI increased from 143700 to 144500 for a gain of just over 800 contracts.
 
Also note that for Dec 09 a huge 39941 contracts remain or approx 200 million oz of silver still remain standing which is
unprecedented at this late stage.
 
It looks to me that the boys from China, and other serious investors remain standing for precious metal contracts and will remove all of the silver and gold at the registered comex vaults.
 
This is just a preliminary guess.  I will have to see what transpires tomorrow and Friday.
 
Needless to say, the volumes are just plain into the stratosphere!!
 
 
This is Bill Murphy's commentary on the OI in both silver and gold :
 
 

As veteran CafĂ© members know, I met with Bart, the CFTC's senior counsel and two other CFTC members 11 months ago … and was told there was an ongoing CFTC investigation into silver way back then. What in the heck can they be doing or looking at. When silver blows up, and it will, there should be an investigation of the CFTC itself.

The gold open interest rose a steep 14,127 contracts to 549,507. The specs and physical buyers continue to take on The Gold Cartel … who is getting shorter and shorter. When will ANYONE in the mainstream gold world query as to who these shorts are … the ones who have been slaughtered the past few months? We know it's not gold producer hedging, as the ones still short are desperately trying to cover what they still have on their books … positions put on when gold was more than $700 lower.

JP Morgan and friends continue to protect that concentrated short position. The silver open interest went up 831 contracts to 144,505.

 
 
 
end.
 
 
We have noticed that the MAJOR commercials are starting to leave the ship.  Today the net commercial short position has declined from 300,000 contracts to
281,000 contracts in the gold complex,  in a huge rising gold market.
 
The commercials have blinked and they now know they are up against a sovereign nation.
 
 
The ECB today made their weekly commentary on gold sales.  This week they sold a net 0.136 of a tonne of gold.  This is the first sale of gold in 6 weeks.
I am convinced that this sale is a call on their gold and the buyer did not want cash.  He wanted the physical metal.  Here is the statement by the ECB:
 
 

The ECB weekly statement of condition was more complicated than usual:

"the net decrease of EUR 3 million in gold and gold receivables (asset item 1) reflected the sale of gold by one Eurosystem central bank (consistent with the Central Bank Gold Agreement that came into effect on 27 September 2009), as well as the purchase of gold coin by one Eurosystem central bank and a technical adjustment carried out by another Eurosystem central bank."

This means a net sale of 4,387 ozs – 0.136 tonnes – negligible, but the first outright sale in 6 weeks. Perhaps a call was triggered.

 
 
end.
 
 
 
 
I should also mention that the  Monday's comex gold volume that I postulated on yesterday, actually came true.  The final volume for Monday officially was announced today at 322926 pretty close to the figure we thought.
 
Here is the official release  (please note the postulated open interest gain for todays trading!!!!!!!)
 
 
The CME Preliminary indicates actual volume yesterday was an enormous 322,926 lots, 23.7% above estimate and at a glance only exceeded a couple of times, in the tumultuous conditions of last September. A measure of the forces at work defending the $1,200 calls. Preliminary volume seems to be usually accurate. Open interest is not: and gold's friends should hope not since it shows an increase of over 25,000 lots (77.8 tonnes). Such a number would raise concerns as to what sort of seller was present.
 
 
 
 
 
end.
 
 
I would also like to point what that the Chicago Merc has given an estimate that the OI increase today is over 25000 contracts.  If so, the FBI, the Mounted Police and just above any law enforcement
should invade the NY comex if that figure proves to be accurate!
 
Lets see what tomorrow will bring with the real OI number.
 
 
 
OK lets start with the economic news stories of the day:
 
First this alert from John Williams of www.shadowstats.com:
 
 

Commentary No. 260: Monetary Base and Contracting M3

November 22nd, 2009

JOHN WILLIAMS' SHADOW GOVERNMENT STATISTICS

COMMENTARY NUMBER 260
Monetary Base and Contracting M3

November 22, 2009

__________

Monetary Base Surge Stalls Near Record High

Annual M3 Growth Could Turn Negative in December

Continuing Liquidity Contraction Foreshadows 
Deepening Economic Downturn

Monetary Base Growth Takes a Breather. After six consecutive two-week periods of growth, the U.S. monetary base took a breather in the most recent reporting. The seasonally-adjusted St. Louis Fed Adjusted Monetary base eased to a level of $2.010 trillion in the two weeks ended November 18th, versus a record-high $2.024 trillion in the prior period ended November 4th, as plotted in the accompanying graph. Accordingly, the annualized rate of growth in the Fed's primary tool for adjusting money supply in the last three months, since the near-term trough of the two weeks ended August 12th, slowed to 96% from 126% in the period two-week period. On a straight November 14, 2009 versus August 12, 2009 comparison, the Fed has pushed the monetary base higher by 20%. The Fed has been behaving as though it still has a major systemic liquidity problem…-END-

 

 

 

end.

 

The two big stats that stick out:

 

1. the monetary base surge is stalling

2. and more alarming is that M3 growth is now beginning to turn negative in December.

 

this is a sure sign that the economy is in serious trouble.  There is virtually no growth as the banks refuse to lend and for that matter, nobody wishes to borrow.

Foreclosures are at record levels and we continue to sit shiva for the many banks that default on Fridays. I pointed out to you on Saturday that treasury bills in the 3 to 6 month

range is giving a yield of negative .05%.  In other words, you pay them to lend them your money.  Ladies and Gentlemen: the economy is in big trouble.

 

Speaking of banks, Sheila Bair gave her assessment on the FDIC today.  The FDIC has a negative balance of 8.2 billion dollars and the number of troubled banks

now exceed  552 banks from 431 banks in the second quarter..  Here is the story:

 

U.S. FDIC insurance fund falls into the red in 3rd qtr

* FDIC insurance fund fell to negative $8.2 bln balance 
* Banking industry has Q3 profit of $2.8 bln 
* FDIC's Bair optimistic earnings will improve in 2010

WASHINGTON, Nov 24 (Reuters) - The U.S. government insurance fund used to safeguard bank deposits dropped to a balance of negative $8.2 billion in the third quarter, the first time since 1992 that it had a negative balance, the 
Federal Deposit Insurance Corp said on Tuesday.

However, the FDIC has access to cash through a plan to have the banking industry prepay three years of assessments, and also has the option to tap a $500 billion line of credit with the Treasury Department.

The agency said in its quarterly banking report the decline in the insurance fund was due to an additional $21.7 billion the FDIC set aside in the third quarter for expected bank failures. At the end of the second quarter, the FDIC's insurance fund had $10.4 billion….

 

and this report from Jessica Holzer:

 

Number of Troubled Banks Rises to 552; FDIC Fund Sinks Into the Red 
NOVEMBER 25, 2009 
By JESSICA HOLZER

WASHINGTON — The government insurance fund that protects more than $4.5 trillion of U.S. bank deposits slipped into the red at the end of September, after fifty banks collapsed during the third quarter.

The deposit insurance fund dropped by $18.6 billion during the third quarter of 2009 to negative $8.2 billion, as the Federal Deposit Insurance Corp. set aside $21.7 billion in provisions for additional bank failures. This is the second time in the agency's history that the balance has fallen into negative territory.

The FDIC has already called on the industry to prepay $45 billion in assessments at the end of the year that will be set aside to cover the cost of bank failures in 2010.

Fifty U.S. banks failed in the third quarter, the largest quarterly total since 55 banks went bust during the second quarter of 1990. The FDIC's list of "problem" banks swelled to 552 at the end of September, its highest level in 16 years and up from 416 in June.

Despite the turmoil in the industry, banks posted a modest $2.8 billion profit in the third quarter of 2009, as their securities portfolios recovered and banks with less than $10 billion in assets saw margins improve. Bank profits were more than triple the $879 million they earned in the third quarter of 2008 and improved from a $4.3 billion loss in the second quarter of 2009.

More…


 

 

 

end.

 

 

Bill Holter offers hims commentary on the release of the FDIC report tonight:

 

Bill H:

"Most global banks are still unsafe, warns S&P."

://www.telegraph.co.uk/finance/newsby
sector/banksandfinance/6638922/Most
-global-banks-are-still-unsafe-warns-SandP.html

http://finance.yahoo.com/news/Banks-earn-28B-in-3Q-apf-3245300287.html?x=0&sec=topStories&pos=4&asset=&ccode=

To all; S+P says..."Every single bank in Japan, the US, Germany, Spain, and Italy included in S&P's list of 45 global lenders fails the 8pc safety level under the agency's risk-adjusted capital (RAC) ratio. Most fall woefully short." In the U.S. we know that the FDIC insurance fund has a negative cash balance and we heard from Sheila Bair today that "the number of banks on the FDIC's "problem list" rose to 552 from 416". So pardon me if I ask a few questions.

Didn't governments worldwide just borrow and then "lend" (give) $ Trillions to the banks to shore up their balance sheets? We know that credit is still very difficult to obtain but weren't these "helping hands" to the banks supposed to "free up the credit markets" and save the world? Where did the money go? Stocks? Government bonds? More derivatives that are "off balance sheet" and shouldn't worry us because they are hidden from view? Actually the best question at this point is "when can we expect to have to bend over again for the next bailout"?

Here in the U.S. I wonder how smart it was to spread all this money around but let FDIC go into a negative cash position. Does anyone "feel better" when they go to the doctor and present their medical bills to their insurer who is in a "negative cash position"? Does this create that "warm and fuzzy feeling" of confidence that is oh so important to a Ponzi banking system that "guards" the life savings of people? Never mind that what these banks are guarding is a currency that has no backing, no intrinsic value and can be created at will! As a side note, I don't understand why anyone would rob a bank in the first place but why do they have to go to jail when they get caught? It's not like the Fed and Treasury can't fornicate some more and magically create more Dollars. So what's the harm?

And who cares about how many "troubled banks" are out there? They increased by roughly 1/3 over the last quarter but who cares? They close the bank on Friday, reopen on Monday, same people behind the counter and they give you the same paper when you make a withdrawal as you got before. So again, what's the big deal? Why bother to close them? Is this some type of "Roosevelt work plan" to create white collar jobs? I just don't get it, FDIC has no money to insure deposits that are denominated in pieces of paper with no backing and they call press conferences to keep us updated? Why? Just do what you need to do and don't bother us with minutiae! The people obviously don't care and have proved that already.

I'll try to not go off on a tangent here but what's going on with all the green shoots that were sprouting from the cracks in the facade? We heard about housing "going up" on CNBC today but haven't they looked at how many mortgages are in arrears and foreclosure? What's happened to all the inventory from past foreclosures? Did they pushed "off balance sheet"? And what about the above revelations of the banking system? How will any recovery take hold without the help of solid lenders actually lending? Sorry I'm all questions and no answers today but I'm not on the federal payroll so I get to ask the questions that aren't polite. That's all for today, gotta go drill some holes in my tin foil hat to make sure it isn't filled with tungsten, you can never be too careful! Regards, Bill H.

P.S. just one more question. How come the cabal couldn't hammer Gold and Silver going into yesterday's option expiration? The answer may surface within weeks.

 

 

 

end.

 

The 3rd quarter GDP was revised downward due to a surge in imports:

 

08:30 Q3 GDP reported 2.8% vs. consensus 2.8%
The first read on Q3 GDP had been 3.5% 
•Personal Consumption 2.9% vs. consensus 3.2%; first read 3.4% 
•GDP Price Index 0.5% vs. consensus 0.8%; first read 0.8% 
•Core PCE 1.3% vs. consensus 1.4%; first read 1.4% 
* * * * *

U.S. economy grows 2.8 pct in Q3, imports weigh

WASHINGTON, Nov 24 (Reuters) - The U.S. economy grew more slowly than initially thought in the third quarter, held back by strong imports and weak investment in nonresidential structures, according to data on Tuesday that hinted at a lackluster recovery.

In its second reading of third-quarter gross domestic product, the Commerce Department said the economy grew at a 2.8 percent annual rate, rather than the 3.5 percent pace it estimated last month.

It was still the fastest pace since the third quarter of 2007. The return to growth after four straight quarters of decline in output probably ended the most painful U.S. recession in 70 years. The economy contracted at a 0.7 percent rate in the April-June period.

The growth pace in GDP, which measures total goods and services output within U.S. borders, was a touch below market expectations for a 2.9 percent rate.

Surging imports, which outpaced the growth in exports, restrained the economic growth rate in the third quarter…

 

 

 

end.

 

The Case Shiller home price index basically remained the same indicating that house prices are still in decline:

 

09:17 Sep S&P CaseShiller reported 146.51 vs. cosnensus 146.90
The U.S. 20-metro area home prices (9.36%) vs. consensus (9.10%). On a sequential basis, the composite index of home prices in 20 metro areas rose 0.3% in Sep from Aug. The U.S. 10-metro area home prices (8.5%). 
* * * *

US home prices up 5th month, 2nd straight quarter

NEW YORK, Nov 24 (Reuters) - U.S. home prices rose for the fifth straight month and posted the second quarterly increase, but the pace of appreciation in September slowed and was less than expected, according to Standard & Poor's/Case-Shiller indexes on Tuesday.

The S&P composite index of home prices in 20 metropolitan areas rose 0.3 percent in September from August after a 1.2 percent rise the prior month, below the 0.8 percent rise forecast in a Reuters poll.

The 20-city index had an annual decline of 9.4 percent.

The national index for the third quarter increased 3.1 percent from the prior quarter, the same as in the second quarter, resulting in an 8.9 percent annual drop. That was a significant improvement from the 14.7 percent annual downturn reported in the prior quarter and 19 percent slump in the first quarter.

The 10-city composite index rose 0.4 percent in September after a 1.3 percent August gain. The annual drop was 8.5 percent.

"We have seen broad improvement in home prices for most of the past six months," David M. Blitzer, chairman of the Index Committee at S&P, said in a statement. "However, the gains in the most recent month are more modest than during the seasonally strong summer months.

-END-

10:00 Sep House Price Index reported 0.0% vs. consensus 0.1%
Aug reading was (0.3%). 
* * * * *

 

end.

 

Demand for oil is increasing throughout the world.  Last year demand was around 84 million barrels per day.  Next year it is projected to hit 85.9 million barrels per day.

This will put tremendous pressure on the Arab nations to pump out the much needed oil:

 

World oil demand growth to outpace supply in 2010

* World oil demand to rise 1.3 mln bpd to 85.9 mln in 2010 
* Non-OPEC supply to rise 0.2 mln bpd to 51.0 mln in 2010 
* Global inventories may fall by 150 million barrels in 2010

LONDON/NEW YORK, Nov 24 (Reuters) - Growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis.

According to a Reuters poll of ten top oil-tracking analysts and organisations, oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd.

At the same time, the rise in production from outside the Organization of the Petroleum Exporting Countries and output of natural gas liquids (NGLs) from OPEC members is seen growing by just 800,000 bpd in total.

 

 

 

end.

 

 

Late tonight, we heard that Kruggerands are sold out in South Africa.  This is the best selling gold coin in the world:

 

Krugerrands sold out

"For some time, I have been warning that apparently plentiful supplies of gold and silver bullion-priced coins and ingots could quickly evaporate. Last Thursday we saw the first signs of a looming shortage of physical metals when just about all U.S. bullion wholesalers were unable to accept orders for the South Africa Krugerrand. One primary distributor said they expected coins in a few weeks, which I think means that they are waiting for a shipment of freshly minted coins from the South Africa Mint. My own company had to discontinue accepting new orders until we could lock in a supply...."

http://www.numismaster.com/ta/numis/Article
.jsp?ad=article&ArticleId=8590

***

and this report:

 

Gold Krugerrands Run Out 
By CIGA Eric

Econ 101 teaches that when price is not a function of supply and demand that shortages will occur.  Alec Nevalainen, of http://www.coinflation.com suggests that we could quickly see a domino effect where other gold and silver bullion-priced products also become sold out. The paper price of gold and silver are simply too low to satisfy current demand. The frequency and duration of reported shortages are beginning to intensify. Spin, nevertheless, continues to ignore the message of the markets by telling us that the gold price is not manipulated.

"For some time, I have been warning that apparently plentiful supplies of gold and silver bullion-priced coins and ingots could quickly evaporate. Last Thursday we saw the first signs of a looming shortage of physical metals when just about all U.S. bullion wholesalers were unable to accept orders for the South Africa Krugerrand."

More…

 

end.

 

In conclusion, the key development will be the open interest on the gold and silver comex bourses.

If we have enough longs taking delivery instead of rolling, a commercial failure may be upon us.

 

I will now bid you adieu

 

until tomorrow night

 

Harvey.

 

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