Saturday, December 12, 2009
*The large spec long position fell by 6,360 contracts and their short position fell by 1,725.
*The commerical long position fell by 9,589 contracts, while their short position sank by 18,634.
*The small spec long position fell by 4,567 contracts, while their long position fell by 157 contracts.
Silver saw the same scenario play out..the commercials covering their short positions and selling their winning long positions, knowing full well, a concerted short attack was upon them.
I will include the entire COT at the conclusion of my report.
I would like to go into the big news stories of the day.
The first one is probably the most important as it concerns, Ron Paul and the audit of the Fed. The bill passed the HOuse of Representatives yesterday:
You will note that this bill was an amendment to a previous bill. The watered down version was defeated.
If the Fed is audited, it will take approximately 6 minutes to realize that fraud has occurred and that the entire gold supply at Fort Knox and other facilities have been sold or compromised.
Ron Paul has been talking with our key central administators over at GATA ( Bill Murphy and Chris Powell) lately. On December 3 2009 Ron Paul issued a statement that he was going to
include gold manipulation and order the treasury and the Fed to stop meddling into this arena:
December 3 - Gold - $1217.40 up $5.30 - Silver $19.10 down 19 cents
I happened to catch Congressman Ron Paul on C-Span this morning ahead of the Bernanke confirmation hearings. He was talking about the Working Group on Financial Markets being a secret operation, one which benefits the Wall Street few at the expense of the many. He also emphasized the importance of getting the Fed audited via his bill before Congress. For the first time he specifically mentioned it was important for Americans to know what the Fed was doing in the gold market . mentioning that some of America's gold many be gone due to gold "lending" operations.
This occured Friday afternoon by Ron Paul:
This is the second time that this has been introduced. The first time was in 2002 where nobody believed that the Fed/Treasury could do such a thing.
Times have changed. If this legislation is passed, and the world discovers that the usa's gold supply is gone, you will proably see bankers face treason charges.
Watch out for this!!
Here is Bill Murphy's commentary on the Ron Paul bill BEFORE IT WAS PASSED:
Ron Paul's Fed-Bashing Wins Over Lawmakers Wary of Bank's Power
Dec. 9 (Bloomberg) -- For U.S. Representative Ron Paul, the ninth time may be the charm.
After fighting for decades to increase scrutiny of the Federal Reserve or abolish it, the Texas Republican's proposal requiring audits of the central bank's interest-rate decisions is getting traction.
The long-shot 2008 presidential candidate whose anti-tax, anti-government politics struck a chord with a swath of voters is again channeling public frustration with big government, bailouts and rising federal debt. And as Paul trains his sights on his favorite villain, the Fed, many in Congress are listening.
"We live in the age of the people demanding more transparency, and that came out of the failure of Congress to monitor the bailouts," Paul, 74, said in an interview. "I was able to tap into that."
Paul's message, once delivered mostly from the political margins, has found broader acceptance as many lawmakers blame the Fed for failing to curtail excesses that led to the financial crisis.
These lawmakers say that as the Fed's role has expanded, it hasn't sufficiently accounted for putting taxpayers' money at risk, including aid to companies such as Citigroup Inc. and American International Group Inc., both based in New York.
"He's ready with an argument that fits the moment," said Bruce Buchanan, a political scientist at the University of Texas in Austin. "It's an argument that used to seem extreme, but now seems reasonable given the view the Fed contributed to the financial meltdown by failing to exercise due oversight."
The House is to start debate today on broader legislation overhauling U.S. financial rules. Included in it is Paul's proposal to remove the shield on congressional audits of monetary policy
The usa issued two reports on the state of the usa economy and both were extremely good.
The first was on retail sales:
U.S. retail sales rise strongly in November
WASHINGTON, Dec 11 (Reuters) - Sales at U.S. retailers rose more than expected in November as consumers spent more on gasoline and a wide range of other goods, data showed on Friday, raising hopes of a self-sustaining economic recovery.
The Commerce Department said total retail sales increased 1.3 percent last month, the largest advance since August, after rising by a downwardly revised 1.1 percent in October. It was the second straight monthly gain. Sales in October were
Analysts polled by Reuters had forecast retail sales gaining 0.7 percent last month. Overall sales in November were boosted by strong receipts from gasoline stations, increased purchases of motor vehicles and parts, building materials and electronic goods among others. Gasoline sales surged 6 percent, the largest increase since June.
Compared to November last year, sales were up 1.9 percent, the first year-on-year gain since August 2008, a Commerce official said.
The data should help to ease concerns that the economy's recovery could falter because of lackluster consumer spending.
The economy resumed growing in the third quarter, fueled mostly by government spending.
With the labor market starting to stabilize and household wealth rising, there is growing optimism that consumer spending will soon pick up.
Excluding motor vehicles and parts, retail sales increased 1.2 percent in November, the largest increase since January, after being flat in October. Economists had expected a 0.4 percent increase.
Core retail sales excluding autos, gasoline and building materials rose 0.6 percent, advancing for a fifth straight month.
Sales of building materials climbed 1.5 percent last month, the biggest gain since April 2008, after falling 1.8 percent in October. Purchases of electronics and appliances jumped 2.8 percent, the largest increase since January.
Many people have written to me asking that I include both sides of the debate as to whether the economy is rising or going into the doldrums.
I do just that. Now that I have reported to you on the strong Nov. sales items, how do I explain this:
Tax receipts in Texas are plummeting and they announce a huge usa surge?
How about this in California? They are only in their 4th month and already they are in a budget shortfall of 800 million dollars. Remember a state cannot have a shortfall:
Thursday, December 10, 2009
A couple of weeks ago, I covered the topic of default as it pertained to California, Marko's Take: California's Crisis Deepens... Part 2. I did not, at that time, examine the history and likelihood of default of the debt of other countries. The information is STUNNING.
The idea for this piece originally occured as the result of a report by David Faber on CNBC yesterday. What was most interesting about his report was how often soverign defaults occur. For example, in data presented going all the way back to 1800, there have been 4 separate periods in which "the percentage of countries either in default or restructuring their debt" has risen to as high as 40%!
Despite the world's current economic woes, that figure stands at a "mere" 20% today. But, that number is rising, especially in light of problems reported regarding Dubai, which I believe are far more significant than they originally appeared.
Moody's, a very highly recognized credit rating agency, has published a study as to various statistics regarding sovereign defaults, which primarily covers the period from 1983-2006. It also provides some limited information going back to 1949. The study covers 103 countries from the 1949 starting date. The information revealed is STARTLING.
For example, in 1983 there were NO nations assigned a "junk" status. But, by 2000, that number had reached 38%! In 2006, the number remained high at 36%.
According to Moody's, one country has even defaulted TWICE. Ukraine defaulted in both 1998 and 2000.
Historically, sovereign issuers, assigned a non-investment-grade rating, have a 25% likelihood of defaulting within 10 years of issuance. As to corporate issuers, which ought to possess a MUCH higher probability of default, the corresponding probabiltiy is barely higher at 32.6%.
Finally, once a country does default, the loss suffered by the holder is calculated by Moody's to be about HALF of the original value.
So, if you're thinking about investing in sovereign debt, all I can say is "caveat emptor" or, buyer beware!
I hope you found this essay useful and informative. If you have any comments, pro or con. or have additional information of relevance, I'd love to become aware of it in the comments section immediately below this piece.
I will again be covering Gold tomorrow, given that the sharp correction has caused many people to declare the so-called bubble has burst.
Please take the reporting by Fed officials with a grain of salt.
Speaking of phony numbers, here is a great article on the misreporting of last weeks job's numbers:
Here is the second economy newsworthy story and it shows confidence extremely high:
U.S. consumer mood improves in early December [
NEW YORK (Reuters) - U.S. consumer sentiment improved in early December on signs of stabilization in the labor market and widespread discounts to entice holiday shoppers, a survey released on Friday showed.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for December rose to 73.4, just a touch below the year's high set in September.
The latest figure was higher than the 67.4 for November. It was also higher than economists' median expectation of a reading of 68.5 according to a Reuters poll.
The survey's gauge of current economic conditions jumped to 79.1 in early December from 68.8 in November. This was the highest since March 2008 when it was 84.2.
The barometer on consumer expectations rose to 69.7 from 66.5 in November.
"Confidence improved in early December mainly due to widespread price discounting by merchants attempting to spark holiday sales as well as somewhat more positive expectations for economic growth and employment," Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers, said in a statement.
It seems that the huge discounts at shops influenced consumers that everything is A OK!
The next story is also quite revealing. The usa wants to increase the Debt Ceiling by a huge 1.8 to 1.9 trillion dollars to 14 trillion dollars:
US debt limit to rise by $1.8 to 1.9 trillion -Hoyer
WASHINGTON, Dec 11 (Reuters) - The U.S. House of Representatives will vote to raise the national debt limit by $1.8 trillion to $1.9 trillion as part of a must-pass defense spending bill next week, House Majority Leader Steny Hoyer said.
The House also will vote to extend unemployment benefits for six months before the end of the year, Hoyer said at a news conference.
This news story sruck early in the session. It seems that Moscow has changed course and will not sell an oz of gold out of the country like the Americans.
The state owned agency Gokhran which is reponsible to state sales of Gold, Palladium, Platinum and Diamonds has now been ordered to sell 30 tonnes of gold to the Russian central bank:
Russia c.bank to buy Gokhran gold next week -source
* State repository to sell 30 tonnes to c.bank
* Gold worth $1 billion at market price
* President signed sales decree Dec. 7 - source
* Replaces previous plan to sell to market
* C.bank wants more gold, no price pressure
MOSCOW, Dec 11 (Reuters) - Russia's state repository will sell 30 tonnes of gold worth $1 billion to the central bank next week, a source at the body said on Friday, keeping the metal inside Russia after rethinking a plan to sell it on the market.
Central banks worldwide are building up their gold reserves as the metal trades near record highs. Gokhran, the Russian repository, cancelled plans to sell the gold on the open market after information about the sale leaked.
"The primary aim is to make sure this gold doesn't hit the market and influence prices," said Olga Okuneva, metals and mining analyst at Deutsche Bank in Moscow. "It's also a way for the Russian central bank to diversify more into gold."
I pointed out to you on Thursday, that the Russian central bank has accumulated 20 tonnes of gold per month. This is not going unnoticed. China also is purchasing massive physical quantities of the metal.
Very shortly all of the above ground physical gold will not be available for purchase.
You will note that the ECB has for the past 4 months shed less than 10 tonnes of gold.
I won't comment on any trading as generally all trades are manipulated.
However this is very noteworthy, the huge drop in price of the 30 yr bond:
The bond closed at 117.84.
You will recall that I told you months ago that 116.00 would probably be the line in the sand for the bankers.
JPMorgan has huge derivatives on the bonds and this derivative dwarfs all others.
In essence, they have down a futures swap (they call these interest rate swaps) whereby, they own trillions of dollars of long bonds in the future
and shorted short term treasury bills with zero yield in the future.
Thus it is essential to keep interest rates low to prevent these derivatives from blowing up.
You can get a better understanding on this trade by going to Rob Kirby's paper on the "Elephant in the Room"
published last year. He is perfectly correct in his analysis.
Last night 3 bank failures occurred. Losses to the FDIC will be slightly less than 1 billion dollars:
We will get complete details on Monday and I will report them to you.
However this was reported by the FDIC as well. The loss at Colonial has now been upped by a huge 3 billion dollars.
The FDIC is now in urgent need of money:
The FDIC also released this on the state of banks inside Maryland. The big K bank has reserves below the standard 10%. They received from the FDIC cease and desist orders:
As you saw above, the Feds released data to suggest that the economy is rolling along as evidenced by the huge increase in retail sales.
How do you explain this?:
Here is another story on the health of Greece, and Ireland. The author Bo Neilson states that these countries will have to leave the Euro because of non compliance:
(both countries are basket cases0