Friday, September 24, 2010

More chaos at the comex..Sept 25.2010

Good evening Ladies and Gentlemen:
Before going into gold and silver matters, here are the latest entrants to the banking morgue:
2 banks:  North County Bank and Haven Trust Bank both of Florida.

Failed Bank List -

Bank Name




Closing Date

Updated Date

North County Bank Arlington WA 35053 September 24, 2010 September 24, 2010
Haven Trust Bank Florida Ponte Vedra Beach FL 58308
Today the banking cartel did everything possible to keep gold from closing above $300.00  They succeeded but had to use a lot of ammunition.
Gold closed at $1296 up by $1.70.  Silver closed at $21.39 up by 20 cents.  Silver's highest ever recorded price other than the time it ran up to $50.00 in Jan 1980 was
on March 17.2008 where it hit $21.44.  The previous high close for silver before this week, was $20.83 so we are now in record closing price of silver in over 30 years.
Silver mus take out $21.44 to have clear sailing.
The gold comex registered tonight a very high open interest of 603,961 up by 2671 contracts. ..  The silver comex OI also rose to close tonight at 147778  up by 1244 contracts.
Let us now go to the Committment of Traders report:

Gold COT Report - Futures

Large Speculators

















Change from Prior Reporting Period


















Small Speculators






Open Interest















non reportable positions

Change from the previous reporting period


COT Gold Report - Positions as of

Tuesday, September 21, 2010



In the gold COT report we witnessed that the large speculators that were long gold increased their positions by a smallish 331 contracts.

Those large speculators that were short gold increased those short positions by a tiny 579 contracts.


In the all important commercial sector, those commercials that were long increased their positions by 2221 contracts.

And now our big commercial bankers,...they increased again their short position for the umpteenth time to th tune of 1590 contracts.


The small specs that were long increased those positions by a tiny 411 contracts and  those that were short increased those shorts by  794 contracts.



In summary them, the large specs continued to pile onto their longs with the large bankers continually supplying unbacked paper.



Silver COT Report - Futures

Large Speculators

































Small Speculators






Open Interest















non reportable positions

Change from the previous reporting period


COT Silver Report - Positions as of

Tuesday, September 21, 2010



In the silver COT, those speculators that were long silver increased those positions by a large 1317 contracts.

Those that were short increased those short positions to the tune of 737 contracts.


Those commercials that were long silver lessened again their long positions to the tune of 791 contracts.


However the large commercials started to feel the heat and they lessened their shorts but by a tiny 549 contracts.


The small specs are not in the game.


In summary, then large speculators entered the fray but the commercials were not active in supplying the paper.

Thus we saw the huge advance in the silver price.




Now let us see what happened in the delivery notices and the inventory changes at the comex:


First:  a summary from yesterday's chart:


Sept 23.2010
Withdrawals from Dealers Inventory   518,191
Withdrawals from customer Inventory  674,774
Deposits to the dealer Inventory   n/a oz
Deposits to the customer Inventory n/a oz
No of oz served  (contracts 6 only 30,000 oz
No of oz to be served 231  contracts)  1,155,000oz
Withdrawals from Dealers Inventory 
 3,000 oz
Withdrawals from customer Inventory  354 oz
Deposits to the dealer Inventory  n/a
Deposits to the customer Inventory  n/a
No of oz served (contracts 30)    3000oz
No of oz to be served 72  7200 oz
Sep 23, 2010.
Here is the chart for Sept 24.2010
Withdrawals from Dealers Inventory   n/a
Withdrawals from customer Inventory  25,069 oz
Deposits to the dealer Inventory   n/a oz
Deposits to the customer Inventory 639,170 oz
No of oz served  (contracts 10 only 50,000 oz
No of oz to be served 231  contracts)  1,155,000oz
Withdrawals from Dealers Inventory 
 zero oz
Withdrawals from customer Inventory  129 oz
Deposits to the dealer Inventory  zero oz
Deposits to the customer Inventory  zero
No of oz served (contracts 40)    4000oz
No of oz to be served 74  7400 oz
Quite a day in the comex today.
First off, I would like to report more of these famous internal transfers.  Today we
got notice in both gold and silver.
In gold: there was a   transfer of 200,000 oz as a lease from the customer to the dealer. (the dealer leased gold from a customer who was paid handsomely)
In silver:  two transfers:   1. a return of 4783 oz of silver from the dealer back to the customer as a leased silver return.
                                        2. another lease of 4852 oz of silver from another customer back to the dealer.
     thus a net 69 oz of silver transfered from the customer to the dealer in the form of a lease.
Let us now begin with the gold comex.  Remember September is a non delivery month for gold.
We got very little activity except a withdrawal of a tiny 129 oz of gold from a customer. Nothing exciting.
The lease of 200,000 oz is important as it shows the banking cartel are having problems with gold in a non delivery month.
The number of contracts issued to our patient longs totalled 40 today for a total of 4000 oz of gold.
The total number of notices to deliver sent so far this month total 588 or 58800 oz of gold.
The number of notices  remaining to be served  total 74 or 7400 oz of gold.
The total number of oz of gold that will probably stand for delivery this non delivery month of September is as follows;
7400 oz (to be served)  +  58800 oz (already served)  =  66,200 0z or  2.06 tonnes of gold.
Now we shall see what is going on in the volatile silver comex.
There were two transactions within the customer inventory of silver.
a) there was a huge deposit of 639170 oz of silver
b)there was a small withdrawal of 25,069 oz.
thus the net deposit of silver into the customer inventory equals  614,101 oz.
There was no deposit of silver into a dealer inventory.
the comex announced that 10 contracts were served upon the longs today for a sum total of 50,000 oz of silver.
The total number of notices sent out so far this month total 2324 notices or  11,620,000 oz of silver.
The total number of notices or OI remaining to be served total 231 contracts or 1,155,000 oz of silver.
The total number of oz of silver standing in this delivery month is as follows:
11,620,000 oz (already served)  + 1,155,000 (to be served) + 115,000 (options exercised previous month)=   12.89 million oz
The October gold goes off the board on Tuesday morning and all options expire Monday night.
For the front month of October, we still have an OI  of 23,501 contracts which is very small.
The month of December has a whopping 411,197 and this number will  grow over the next few months.
The cartel have until Wednesday night to fulfill all of the 231 contracts that remain open. 
The number of notices per day for the past week have been averaging around 10 per day.  Makes you wonder what happened to the missing 2.4 million oz of silver yesterday!
In other physical news, our NAV in our two physical models remain relatively the same as yesterday.
The central fund of canada which is 44% silver and the rest gold saw its NAV climb to 8.8% from 8.5%.  The PHYS which is strictly gold
saw its NAV climb to 3.5% from 3.1%.
However in disturbing news, again the holders of the GLD decided to shed some of their gold to the tune of 2.72 tonnes.
With demand for physical that record levels, it is difficult to understand what these operators are doing.  It is possible that the 2.72 tonnes of gold
was needed in some other jurisdiction like the  LBMA.
And now for the economic news of the day.
This is the first bit of news that greeted us this morning: (from Reuters)

US durable goods orders fall, business spending up

WASHINGTON, Sept 24 (Reuters) - New orders for long-lasting U.S. manufactured goods fell more than expected in August to post their largest decline in a year as bookings for aircraft and motor vehicles tumbled, but business spending rebounded strongly, a government report showed on Friday.

The Commerce Department said durable goods orders dropped 1.3 percent after a revised 0.7 percent increase in July. Markets had expected orders to fall 1.0 percent from a previously reported 0.4 percent gain.

The decline last month reflected a 40.2 percent plunge in non-defense aircraft orders after a 69.1 percent surge in July.

Boeing Co received only 10 orders for civilian aircraft in August, a sharp slowdown from 130 bookings in July, according to information posted on the plane maker's website.

Orders were also weighed down by bookings for defense aircraft, which fell 2.7 percent, and a 4.4 percent drop in motor vehicle orders.

Excluding transportation, orders rose by a more-than-expected 2.0 percent after falling by a revised 2.8 percent in July, previously reported as a 3.7 percent fall. It was the largest rise since March.

Markets had expected a 1.0 percent rise in orders excluding transportation.

Durable goods orders are a leading indicator of manufacturing, a sector which is leading the economy's recovery from the longest and deepest recession since the Great Depression as businesses replenish inventories.

But manufacturing is slowing as domestic demand remains tepid, with households grappling with high unemployment and falling wealth.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded 4.1 percent in August after a 5.3 percent drop in July.

Markets had expected a 2.0 percent rise.

Durable goods inventories rose 0.4 percent after increasing 0.6 percent in July. Shipments, which go into the calculation of gross domestic product, declined 1.5 percent last month, while unfilled orders dropped for a second straight month.


and then we got this news report:

US Aug new home sales unchanged, supply at 42-yr low

WASHINGTON, Sept 24 (Reuters) - New U.S. single-family home sales were flat in August, but the supply of houses on the market tumbled to the lowest level in 42 years, government data showed on Friday.

The Commerce Department reported August sales at a 288,000 unit annual rate, unchanged from July's rate, which was revised up from a previously reported 276,000 unit pace. Analysts polled by Reuters had forecast new home sales rising to a 290,000 unit pace in August.

The housing market is starting to stabilize after a downward spiral following the end of a homebuyer tax credit in April. Data this week showed home construction rose last month and sales of previously owned homes crawled off 13-year lows.

But activity in the sector, which contributed to the worst recession since the Great Depression, remains subdued amid a 9.6 percent unemployment rate.

The number of new homes available for sale fell 1.4 percent to 206,000 units, the lowest since August 1968. Despite August's unchanged sales pace, the supply of new homes on the market dipped to 8.6 months' worth from 8.7 months' worth in July.

The median sale price for a new home fell 0.6 percent last month from July to $204,700, the lowest since December 2003.

Compared to August last year, the median price fell 1.2 percent.

With this very weak report, the Dow rose close to 200 points in the day and everybody were scratching their heads trying to figure out
why the market was up so high.  Seems that the government is in on most of the trades.  The entire stock market is manipulated by the plunge protection team.
Dave Kranzler in his Golden Truth give a commentary about the usa  passing new legislation labelling the Chinese as having "undervalued" currency.
What on earth is the usa trying to accomplish by irratating their chief banker?
Here is Dave Kranzler's terrific commentary;


Currency Wars Set Escalate

Between the idea
And the reality
Between the motion
And the act
Falls the Shadow...T.S. Elliot, "The Hollow Men" 
In what could be possibly the worst piece of legislation to move through Congress - after the healthcare catastrophe of course - during Obama's failing reign, a House panel is set to approve a bill which would deem China's currency, the yuan, as "undervalued" and allow the U.S. to slap import duties on Chinese goods coming into the U.S. Here's the link: Confederacy of Dunces

The aspect that I find most problematic with this legislation is how exactly can anyone determine the "correct" value for any country's currency?  Perhaps the U.S. dollar is substantially overvalued.  In the absence of free markets, there is absolutely no way to determine "fair" valuation for anything.  How about if China threatens to sanction the U.S. if the Fed/Treasury does not cease and desist from capping the price of gold?

If the U.S. were to succeed in forcing China to revalue its currency higher, however, two huge problems will result.  First, this will drive up the cost of imported Chinese goods for the U.S. consumer and fuel the already percolating price inflation.  Walmart has already raised prices on average by over 5% this summer.  Prices will escalate even more if Congress is arrogant enough to slap import duties on Chinese imports.

Even more problematic, at least for our borrow-and-spend Government, is the effect this will have on China's appetite for buying Treasury paper.  If China were to "artificially" revalue its currency higher vs. the dollar, the net effect would be to create massive currency translation losses on its holdings of U.S. Treasury bonds.  And perhaps this is part of Congress' motive.  Create a mechanism in which to repay large Treasury bond holders with "cheaper" dollars.  Of course, it's also a way to discourage further foreign participation in financing the the U.S. Government's rapidly escalating borrowing requirements.

Friday Music:  "U.S. Blues"  I'm Uncle Sam/That's who I am/Been hiding out/In a rock n roll band
However this is the big story of the day...Paul Volcker lashes out at USA/Fed policies:
(courtesy of Jim Sinclair commentary).
We were told that he ditched his prepared speech and then gave this off the cuff speech:

Jim Sinclair’s Commentary

Volcker goes ballistic. Resignations from the Administration invite a conclusion that something beyond what we know is awfully wrong.

Volcker launches into bankers, politicians, regulators. 
Former Fed Chairman Paul Volcker scrapped a prepared speech Thursday and delivered a blistering critique of nearly every corner of the financial system. While praising the financial overhaul, Volcker told attendees at the Chicago Fed the system is still at the risk of regulators being swayed by the relentless lobbying of banks and politicians. Volcker said central banks may have become, "a little too infatuated with their own skills and authority because they found secrets to price stability… I think its fair to say there was a certain neglect of supervisory responsibilities."

I encourage you to read the entire passage.
We are seeing more and more resignation from the administration.  The rats are jumping ship:

The Exodus Continues 

The metaphor of rats jumping from a shinking ship comes to mind. This clears the way for the new New Deal II.

Financial bailout chief announces resignation

Herb Allison, the head of the government’s $700 billion financial bailout program, announced on Wednesday that he would resign.

Allison said in a letter to his colleagues in the Treasury Department’s Office of Financial Stability that they had accomplished a great deal.

Lawrence Summers to leave economic council, return to Harvard

President Obama’s top economic adviser, Lawrence H Summers, will step down as director of the National Economic Council after the November elections and return to a teaching post at Harvard University, the White House announced Tuesday.

The departure of Summers, 55, will complete the turnover of three of Obama’s four top economic advisers as the administration struggles with the political fallout of a stubbornly weak economy.


That about does it for today.
Expect extreme volatility next week as we enter the last week of Sept.  Monday night we see options expire and the front month of October in gold
goes off the board.  On Sept 29.2010, we will see the last day for the notices to be sent down to our patient longs.  By high chicanery they will accomplish their goal.
I am not so sure that they can accomplish the same feat in December.
see you on Monday.

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