*The large specs increased longs by 3,816 contracts and decreased shorts by 1,384.
*The commercials decreased longs by 462 contracts and increased shorts by 6,238. JP Morgan was salivating ahead of this raid they knew was coming.
*The small specs increased longs by 254 contracts and decreased shorts by 1,246.
As I pointed out to you during the week, this Tuesday is the last day for options and as is the cartel's custom, they will continually raid to force option holders to lose.
Most of the option holders held 1200 gold calls and now all of those calls are worthless. Expect that gold will remain below 1200 until Tuesday afternoon and then gold will rise as the
cartel banks cover their shorts which forced the gold and silver price down.
In the silver and gold inventories, nothing much as changed from previous commentaries. The open interest on the June front month of gold remain at a very high 260,000.
It is interesting in this raid, the SLV and GLD have either advanced a little or stayed constant. Nary an oz has been sold. Remember these funds are a proxy for demand
so it is quite clear, that the bombing of gold and silver is nothing but short sales designed to temper demand.
I would like to spend time on two big stories in the financial world. Yesterday we learned from the popular EconomicPolicyJournal.com that the Fed has secretly supplied
32 states with loans to cover benefits to unemployed. The bailout of these states means that these states are insolvent.
Here are the relevent stories on this front:
From Zero Hedge.com:
Adding to the lack of jobs, we see this announcement:
Where are the jobs?
The second big story is the revelation that the assets of the Fed has now reached 2.35 trillion dollars.
All central banks have similar accounting:
On the asset side of things, they have government debt purchased. This is how money is created.
The Fed has now 2.35 trillion dollars on its balance sheet (asset side) with 800 billion dollars of clean government debt but 1.55 trillion dollars of mortgaged backed assets
and other junk which we refer to as toxic assets.(800 plus 1.55 trillion = 2.35 trillion)
On the liability side, we have 2.35 trillion dollars of "currency" or current money outstanding. This is made up of 800 billion dollars of paper bills in circulation and
1.55 of excess reserves. The printed current money that the Fed has swapped with the banks in return for their garbage total 1.55 trillion dollars. And since collectively these banks
are not engaging in loans, these dollars are loaned back to the fed and the Fed has the chutzaph to pay these banks interest on that money.
Please recall that you have heard many times that the Fed was engaging in practice runs to contract the money outstanding. These announcements have been occuring off and on for the past
year and yet we do not see any contraction of the Fed's balance sheet. We also stated that it would be impossible for the fed to do so and we stand by that.
If the banks decide to use this money for loans (the 1.55 trillion dollars) and not loan the money back to the Fed, we will get inflation. If the velocity of this money circulates at great speed, then we will get
hyperinflation in a similar fashion as to Zimbabwe and Weimar Germany.
Here is a commentary on that subject from Jim Sinclair:
We now have clarification on the status of the FDIC. I reported to you on Thursday that the FDIC received 46 billion dollars up front from the banks which represent 3 years insurance
payments. Their DIF balance is negative 20.7 billion dollars. The FDIC has set aside 40.7 billion dollars as it expects that it will lose this much by year end Sept.
It also disclosed that troubled banks now number 775 banks.
The FDIC has disclosed that it has 63 billion in cash which is made up of 46 billion in upfront cash from 3 years insurance banks from the banks and 17 billion in cash. If you remove the loss provision
today the FDIC has a positive DIF of 20 billion What happens to the FDIC once this 3 year money has expired. The taxpayers will have to come to the rescue of the bankers again.
In a previous article, we learned that we can expect total losses from the troubled banks to be in the vicinity of 168 billion dollars.
Here is this story: