Saturday, October 23, 2010

Gold and Silver Hold Steady...Ready for Nov 2-3 FOMC meeting..commentary Oct 23.2010

Good morning Ladies and Gentlemen:
Before commencing my commentary, I would like to bring to your attention our latest entrants to our hallowed shrine of commercial
failures into the banking morgue..may they rest in peace!!:

Bank Closing Information – October 22, 2010
These links contain useful information for the customers and vendors of these closed banks.

The First National Bank of Barnesville, Barnesville, GA
The Gordon Bank, Gordon, GA
Progress Bank of Florida, Tampa, FL
First Bank of Jacksonville, Jacksonville, FL


In one of my commentaries, I told you that I was writing to the Commissioner O'Malia of the CFTC.  He is the swing vote

and he is attempting to delay implementation of position limits due to lack of trading data.  Here is what I wrote to him

and the complaint is copied to Chairman Gensler and Commissioner Chilton.  I invite your comments:


Dear Commissioner O'Malia:
It is of great concern tonight, that I learned that you wished to delay the implementation of position limits so that you can obtain more
trading data from the hedge funds and swap dealers.
I know that you are requesting a delay on all commodities.  However the situation in the precious metals arena needs your attention urgently.
The investigation into the silver probe began in Sept 2008 and as of yet, the complaintants, including myself, have not received any answer to our question as how one or
two banks can accumulate such a massive shortage of unbacked silver comex contracts and how this action is not deemed manipulative!.
Mr Chilton stated that he was going to address this problem unilaterally, if the commission dilly-dallied any longer.
Commissioner O'Malia, in the CFTC hearings on March 25.2010, you asked me if I thought that there could be a default at the comex. I responded to you in the affirmative stating that I could forsee huge
demand for silver and gold developing from countries like Russia, China, and South Korea and their demand could, and probably would, drain all of the comex inventory as their demand for these metals
is unsatiable!!
South Korea announced this week that they were going to diversify their official reserves from usa dollar holdings into gold.
Russia has been accumulating metal monthly.  Today we heard that the enemy of the USA, Iran, has now achieved record levels of gold as official reserves.
Here is the official announcement on both of these stories:

Russia’s Central bank has reported adding 700,000 ozs (21.77 tonnes) to its FX Reserves in September. In a development certain to boost gold’s popularity in influential circles, the Iranian Central Bank Governor has boasted the country’s gold holdings are "unprecedented". See


It seems that the manipulative huge short position implemented by JPMorgan and HSBC has kept the price of gold and silver too low.  The resultant action is the accumulation of physical precious metals

by sovereign accounts and these countries then load the boat with the metal and move it onto their shores.

A default would be catastrophic but it looks to me like that is where it is heading.  You cannot say we did not warn you.


There is another subject that is deeply disturbing.

It seems that Judge Painter who is retiring from the CFTC handed over all of his cases and not one of these cases was the silver manipulation case.

Judge Painter is alleging that Judge Levine told him that there was not going to be any findings for a complaintant at any CFTC hearing. It seems that Judge Levine is handling the Silver probe case, and

I guess that explains why we have not seen any findings on the matter.

I urge you to clean this matter up immediately.


With the scandal at the MBS arena starting to pick up speed, I feel it is imperative that you set an example such that we have fair and non manipulative markets.  By delaying the implementation of position

limits, and the implementation of the  elimination of phony exemptions to JPmorgan and HSBC. you send a clear message to all of world that you encourage manipulation to continue on USA soil.  We need free and fair

 and fair markets.  It seems that we are getting just the opposite.

I encourage you to vote forposition limits on silver and gold and the elimination of all of those phony exemptions to the big banks with their massive unbacked paper shorts.



Harvey Organ




Gold closed yesterday at $1324.30 down 30 cents from Thursday's close.  Silver remained flat at $23.12.


Here are the summaries for the gold and silver comex trading yesterday:


For gold:

the total open interest for the gold comex closed at 614,117 for a healthy loss of 9333 contracts.  The bankers were somewhat successful in fleecing some of the smaller

speculators.  We have seen a contraction in OI from 638,000 to the present 614,000  and a corresponding drop in gold from $1384 to $1324.00 per oz.  This is very healthy and will provide

the platform for gold's continued meteoric rise.


The front month of December saw its OI fall to 412,375.  This is the area that the bankers watch and this is where the next physical delivery will occur.

The front delivery month of October has OI remain stubbornly high at 359 ie. 35,900 oz of gold are waiting to be serviced.

The total volume on the comex today was a healthy 159,859 contracts which is estimated.

The total volume on the comex on Thursday came in at 228,268 much higher than previously estimated.  You can see the determined actions of the bankers

in trying to remove the speculators from their long gold contracts.


In silver:


A little different story.

The total OI (open interest) for silver remains high and refuses to lower.  It came in at 151,279 contracts.  The day before we got 151,239 contracts, so

in essence we lost only 40 contracts.  This is a massive defeat for the silver banker cartel.

The front delivery month of December has an OI of 95,171, which is quite normal but still too high for our bankers.

The option delivery month of Oct saw its OI drop to 23 contracts.

The volume on the comex yesterday was a very strong 54,342 which is of course estimated.

Get a load of the final volume recorded on the comex at Thursday's session:  83,099.

The bankers again threw the kitchen sink, along with a washing machine, some elephants, some name it

they tried to shake the silver tree and no leaves fell!!


Friday night saw the release of the Committment of traders report.

we can see the results at Goldseek.

Here is a summary of that report and it is basis Tuesday night:


In the gold COT report:

those large specs that have been long gold lessened their holdings by a very healthy 5289 contracts.

those large specs that have been short gold also lessened their short holdings by a large 4652 contracts.


In the commerical sector:

those intermediate bankers and swap dealers that are close to gold and are generally on the long side of gold increased those long positions by 296  contracts.

those commercial bankers that are always short on gold ie. JPMorgan and HSBC  decided to shed some of their shorts to the tune of 6644 contracts.

and now for our small specs sector:

the small specs that have been long increased those positions by 1546 contracts.

those small specs that have been short gold increased those shorts by 2364 contracts.


We did not glean much information from the COT report as the raid occurred on Wednesday.

In the silver COT report:

those large specs that have been long silver lessened those positions by a strong 3337 contracts.

those large specs that have been short silver also decreased those positions by 1282 contracts.


In the all important commercial category:

the commercials ie. intermediate bankers and swap dealers that have been long decreased those positions by a tiny 296 contracts.

those commericals that are always short and the subject of the silver probe ie. JPMorgan and HSBC decreased their shortage by a very large 6644 contracts.

the small specs in silver are generally not important but for completeness:

those small specs that have been long increased those positions by 1546 contracts and those that have been short increased their positions by 2364.


Now we shall go to the inventory changes and delivery notices at the comex:


Here is a chart on the 22th of October for gold and silver comex inventory changes and deliveries.
Withdrawals from Dealers Inventory   65,472 oz
Withdrawals from customer Inventory  86,935
Deposits to the dealer Inventory n/a
Deposits to the customer Inventory 900,971 oz
No of oz served  (contracts=20 )    100,000 oz
No of oz to be served  23  contracts)  115,000 oz
Withdrawals from Dealers Inventory 
Withdrawals from customer Inventory   zero oz
Deposits to the dealer Inventory 5000 0z
Deposits to the customer Inventory  1708 oz
No of oz served (contracts = 34  3400 oz
No of oz to be served (contracts=359  35900 0z


In the silver notices and inventory changes:


please note the withdrawals of 65,472 oz from the dealer without going into the customer. This is silver fleeing the comex

from a dealer. We saw also another sizeable removal of silver from the customer to the tune of 86,935 oz.  Again we are seeing massive

movements of silver from all directions.

The total number of notices served upon our option holders in silver was 20  or 100,000 oz of silver served upon.

The total number of notices served thus far this month total: 100 or 500,000 0z of silver.

The total number of notices or OI remaining to be served total 23 or 115,000 0z of silver.

Thus the total number of silver oz standing in this delivery month is as follows:


500,000 oz (already served)  +  115,000 ( to be served)  =   615,000 oz .  (as promised to you..this number is increasing as we conclude October)

This is a sure sign of the difficulty that the bankers have in acquiring the silver metal.  They are even having trouble during a non delivery month to service the option holders.


And now for the all important gold comex:

Again, no withdrawals of gold from either the customer or dealer and a very small deposit of gold into the dealer and customer

of 5000 oz and 1708 respectively. Generally I would expect to see big deposits enter the vaults to service the long which has not happened as of yet.

The comex notified us that 34 notices were served on our longs for a total of 3400 0z of gold.

The total number of gold notices sent so far this month has been updated to 6335 or 633,500 0z of gold

The toal number of gold remaining to be served equals a very high 359 or 35,900 oz of gold

The total number of gold standing in this delivery month of October is as follows:


633,500 0z (already served)  + 35,900 (oz to be served)  + 70,800 0z (prev options month of Sept)  =  740,200 0z or 23.06 tonnes of gold.

Please note:  the gold ounces are increasing.  Somebody is in need of gold as well!!


This Tuesday we will see options expire on both silver and gold.  Expect another volatile trading day on Monday and Tuesday.

Also keep in mind that November is neither a delivery month for gold or silver so only options will be execised and I will report on that.

All eyes will then focus on the biggest of all delivery months for gold and silver and that will be December.

I will report extensively on that.


In other physical news, our two ETF's had their premiums reduced due to the raid by the banking cartel. The premium to NAV on the central fund of canada

slipped to 4.2 % and our PHYS fell to4.29  %.  The previous day had the CEF ad 8.2% and PHYS at 4.62%

Here is John Brimelow:

The bullion vehicles were downcast: CEF dropped to a 4.2% premium to NAV and PHYS to 4.29% (8.2% and 4.62%).



Interstingly enough, GLD shed another .9115 tonnes of gold.  This has been the 3th straight day that they have shed the same exact amout of gold:


John Brimelow:


The GLD ETF, curiously, shed exactly 0.9115 tonnes for the third day running - 29,300 ozs. Is someone inside sending a message? In the past 5 business days, GLD has shed 6.0768 tonnes to 1,298.26556 tonnes:



The SLV saw no change to its inventory where it remains at 328 million oz.


And now for the big economic stories of the day.


Professor Black, who has been very vocal and accurate on the mortgage mess gave an interview on Bloomberg yesterday.(I have referred to Prof Black on many occasions in my previous commentaries)

He basically he stating that the securitized mortgage instruments are ALL fraudulent. The Fed is holding a huge amount of these mortages and they are valueless and the author of these instrument are criminals.

you can view at the following link:


and here is JIm Sinclair on this very important interview:


Jim Sinclair’s Commentary

Bloomberg had an interview this afternoon with Professor Black who is the author of The Best Way to Rob a Bank is to Own One.

He could not be silenced. Professor Black said, amongst other javelins in the heart of MOPE, the following:

1. Securitized mortgage instruments are all fraudulent.
2. The Fed is holding a huge amount of these as collateral.
3. They are valueless.
4. The manufacturers of these are, under commercial and criminal statute and law, criminals.

The interviewer almost swallowed her tongue.

Gold will trade at and above $1650. QE to infinity is not a choice, it is all that is left.




This weekend we have a G20 summit meeting but already there are major disagreements between the nations:

Here is this article from Bloomberg:


G-20 Nations Split Over Geithner's Trade Plan as Talks Near End

Group of 20 finance chiefs are struggling to agree whether to set targets for their current account imbalances as a way of defusing tension over currencies before it sparks a trade war.

G-20 finance ministers and central bankers began talks in Gyeongju, South Korea, today after weeks of wrangling over whether nations from the U.S. to China are relying on weaker exchange rates to spur growth.

Seeking a solution, U.S. Treasury Secretary Timothy F. Geithner proposed G-20 members pursue policies to reduce trade gaps "below a specified share" of their economies, according to an Oct. 20 letter obtained by Bloomberg News. That suggestion today split the emerging and industrial countries…





The only real number worthy to report is the private ECRI report showing leading indicators falling flat on its face:

here is this important Reuters report:


Economic growth gauge falls to six-week low: ECRI

NEW YORK (Reuters) - A measure of future U.S. economic growth fell to a six-week low in the latest week, while the index's annualized growth rate rose to an 18-week high, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 122.1 in the week ended October 15 from 122.2 the previous week.

That was the lowest since September 3, when it stood at 121.9.

The index's annualized growth rate rose to minus 6.8 percent from minus 7.0 percent a week earlier. That was the highest since June 11, when it stood at minus 6.1 percent.

Occasionally the index level and growth rate can move in different directions, because the growth rate is derived from a four-week moving average, the research institute said.



The very prestigious forum the :The Financeand Economics.Org came out with this paper on the problems facing the big commercial banks are their shortage of gold.

They are basically indicating what I have been telling you that the big banks are short 20,000 tonnes of gold.


Here is this paper in  full for you to read:


Where can we find 20,000 tonnes of gold?

Having broken out convincingly into new high ground, gold and silver have now paused for breath. Despite the sharpness of this week’s reaction, their performance indicates good underlying strength. 

This is not to say there is no speculative froth – of course there is.  Rather, speculators play a distant second fiddle in this market.  Bullion is still doing what it has been doing for the last year: when the commercials on Comex hit the price it backs off rapidly on little volume, until someone very big takes the opportunity to clean the market out. It becomes another ratchet on the torturer’s rack for the commercial shorts, who find that every time this happens they end up being stretched further.

On last week’s rise there were early signs of panic, as the commercials attempted to reduce their exposure. However, the commercials’ net short position on Comex is still a very high 933 tonnes.  Convention suggests that the commercials know best, and even if they have an extreme position, they will still crush you.  And indeed, the big commercials, being too big to fail and with the comfort of the Fed’s antipathy to gold, could increase their short positions even further.  This is now developing into the biggest game of chicken the markets will probably ever see.

However, the TBTF commercials are not having things all their own way.  Ten years of bull market must have pretty well exhausted the central banks’ bullion supplies, but parting with the physical has not been the only way gold has been suppressed.  The very structure of the market might have been designed to neutralise speculative demand: on Comex physical settlement is little more than token, and in London forwards and leases are rolled or closed out by matching transactions.  These markets encourage users to avoid delivery of the physical. True demand has been siphoned off into side-bets.

Investors may have been unaware of this, and while wheeling and dealing in these derivatives, they will be unaware that the truly wise long-term players have been quietly hoarding the physical, upon which this house of cards rests. In the ‘80s and ‘90s, central banks leased gold to the market that was then bought and accumulated by oil producers in the Middle East, and when it was ridiculously cheap large amounts were converted into jewellery. In this last decade the central banks themselves in aggregate have begun to accumulate bullion.  It is important to understand that none of these earlier buyers will resupply much to the markets at higher prices.

The entry of China, Russia, India and a growing list of other politically-motivated nations into the market as limitless buyers of gold has created enormous difficulties for the old guard of interventionists, and a solution is desperately needed.  It has developed into a power-struggle between this old guard, which is trying to manage a way through a crisis of its own making, and the new which so far has not managed to acquire enough bullion.  Furthermore the new is building up excessive amounts of fiat paper issued by members of the old; paper which they know is loosing value at an increasing pace.  On this basis gold is simply underpriced in paper currency terms.

The struggle between the old and new guards is illustrated by the IMF’s gold sales, the stated purpose of which was to raise funds to help smaller nations through the credit crisis. The inner circle at the Bank for International Settlements must have been tearing its hair out to see these Keynesian clots gift half this invaluable ammunition to India. And why is the IMF selling bullion to Bangladesh and Sri Lanka, when their policy objective is to provide “concessional finance” to these struggling nations? (These sales were agreed for this purpose at the London G20 summit chaired by none other than Gordon Brown - second time unlucky.)

But what must have really got under the skin of the BIS is that it knows the real value of bullion is considerably in excess of the market price. It knows gold is underpriced, because the BIS and its senior members have been suppressing the price for the last forty years, which has resulted in an acute shortage of stock. But when they embarked on this course in the 1970s they would not have foreseen how gold would be made available to the masses through yet-to-be-invented ETFs; nor could they have foreseen the emergence of Russia and China from deep communism into aggressive capitalist-style development, generating hundreds of millions of new gold-loving savers.  Consequently the old-guard BIS members have lost embarrassing quantities of bullion and cannot confess this to the markets. Presumably they had hoped that by withholding this information they could bluff it out; and they might have succeeded had it not been for the very serious financial and economic deterioration in the global economy, which raises the possibility of a Fed-induced dollar crisis, triggering new demand for physical bullion.

As well as these problems there is growing evidence of disruptive intent behind the gold policy of the ex-communist nations. I recently covered this in an article that tied in the relationships of the Shanghai Cooperation Council. In that article I pointed out that the substantial majority of today’s gold-buying nations are members of, or are associated with this organisation. As if to confirm these fears, in the last few days Iran, which is an associate member of the SCO, announced it is now buying gold. Furthermore, China is restricting the export of rare earth metals, which with the energy policies emanating out of the SCO membership, has the appearance of a coordinated attack on the Western economic system. If such a conspiracy exists, gold is central to it.

The result of forty years of gold price suppression is not only the disappearance from the markets of unquantifiable amounts of physical into the firmest of hands, but also an accumulation of claims for physical bullion through the growth of unallocated accounts at the bullion banks; and the secret we would all love to know is how large this commitment has become.  In the absence of hard facts, we have to make a reasonable estimate.

The only major bullion bank that declares its bullion holdings is HSBC, which at the end of 2009 held gold valued at $13.757bn (392.6 tonnes)[i].  We shall assume that this bullion is held against HSBC’s unallocated accounts and we shall further assume a reasonable fractional reserve multiple of 10, which gives us net uncovered liabilities of 3,533 tonnes for HSBC alone.

However, there are 35 banks listed as full members of the LBMA, and it can be assumed that nearly all of them offer unallocated account facilities[ii]. It is also possible, even likely, that the fractional reserve multiple for many of these banks is higher than 10, because banks have been generally reluctant to hold the one reserve currency that pays no interest.[iii] Furthermore, some of these banks are among the largest in the world.  Taking all this into account, it is possible that LBMA members are short of over 20,000 tonnes on their unallocated accounts.

This liability is unlikely to be hedged, because it is difficult to see who would take the other side of such large amounts. And this brings us back to the theme of this article: the key market participants are desperately short of bullion.

As a result, the ratio of turnover in forwards futures and options to the underlying physical has become improbably high, and is still rising.  The deteriorating economic outlook for the US, Europe, the UK and Japan is now beginning to generate new hoarding demand all over the world.  And all this is before portfolio investors have even begun to invest: the statistics indicate that portfolio exposure is amazingly low at less than 1%, so the point where more hoarding triggers market dislocation cannot be far off. Indeed, a small bullion bank worried about its unallocated exposure would be wise to cover its position on Comex, and demand for long futures from these sources may soon become a market factor.

So, before any pundit makes a price forecast, and before anyone lucky enough to own gold thinks about selling, they should dwell on this important question: in this extraordinary market where the central banks are at war, where the devil and at what price are we going to find 20,000 tonnes of gold?

22 October 2010





All eyes will now focus on the big FOMC meeting on Nov 2 to Nov 3.  The usa election is on Nov 2 so the results of that meeting will occur after the election.

The stock market is telling us that QE II will be upon us and that 1/2 trillion to one trillion dollars will be earmarked for spending.  If that figure is lower then the stock market will tank

and gold will see another of their big raid jobs.

The lone voice of disapproval of QEII is Thomas Hennig of the Kansas City Fed.  He correctly is asking his fellow board members to exercise caution in approving this next level of spending:

here is this report courtesy of James Sinclair:

More Fed easing would risk another bubble: Hoenig
Oct. 21, 2010, 11:56 p.m. EDT
By V. Phani Kumar

HONG KONG (MarketWatch) — The U.S. Federal Reserve should refrain from easing its monetary policy further as that would increase the risk of another economic bubble, Kansas City Federal Reserve’s President Thomas Hoenig said on Thursday, according to reports. Hoenig, a voting member of the Federal Open Market Committee, said he was "very unhappy" with the high level of unemployment, but added that more asset purchases could threaten the U.S. economic recovery. "If you try and bring [unemployment] down too rapidly, you are in danger of creating the next problem," Hoening said, according to Reuters. He made the remarks at the New Mexico Economic Forum in Albuquerque.





It looks like Fannie and Freddie may need to pump over 300 billion in the housing crisis:


Fannie, Freddie May Draw $363 Billion, FHFA Says
By Lorraine Woellert – Oct 21, 2010 5:13 PM PT

Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, could draw a total of $363 billion in Treasury Department aid through 2013 if the housing market worsens, the Federal Housing Finance Agency said.

The FHFA, which oversees the government-sponsored entities, offered the estimate today as the worst-case in an analysis modeled on the stress tests conducted on the nation’s biggest banks last year. The actual total cost to taxpayers under the regulator’s most dire scenario would be $259 billion, because almost 30 percent of the funds would come back to Treasury as dividend payments on its holdings of senior preferred stock.

Under the best-case scenario, which assumes a strong near- term recovery in the housing market, the total cost to taxpayers would be $221 billion, or $142 billion after dividends. A middle-ground scenario would require total aid of $238 billion, or $154 billion after dividends. So far the companies have drawn $148 billion and returned $13 billion in dividends to Treasury.

“These projections are intended to give policy makers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” FHFA Acting Director Edward J. DeMarco said in a statement released with the report. “The results reflect the potential effects of a limited set of hypothetical changes in house prices.”






I hope you all have a grand weekend.  My new computer arrives today with better graphics etc so my reports should be a lot cleaner.


all the best



Thursday, October 21, 2010

Another Cartel Raid...Fundamentals still very sound for gold and silver

Good evening Ladies and Gentlemen:
Gold closed down 19 dollars to rest tonight at $1324.70.  Silver fell in sympathy to gold's fall to $23.12 down 72 cents.
The open interest on the gold comex fell 7170 contracts to rest at 623,480 basis yesterday.  The silver comex OI actually rose by 300 contracts
and its OI tonight  (basis yesterday) is 151,239 contracts.
Here are the results on the comex action today:
For gold:
the total OI as mentioned is 623,480. Since gold rose yesterday we saw some short covering but also some of the weaker  longs had a little fatigue so they exited as well.
This explains the contraction in OI.
The December Oi lowered by 11000 contracts to 421,744 much to the happiness of the banker cartel.
The front delivery month of Oct stubbornly remains high at 372 contracts.
The volume today was still quite large estimated to be at 187354.
The volume yesterday officially is 184,777.
In silver:
the total OI is 151,239 up a few contracts.  Silver did not follow gold's lead.
The front December month had OI registered at 96,453 pretty close to yesterday.
The front delivery month of Oct saw its OI remain at 33 ie. no notices sent down as there was no silver in the dealer inventory.
The estimated volume on the silver comex today was 68,525.  The official volume on the silver comex yesterday was 58,089 a rather normal volume day.
Let us now now to the comex notices and inventory changes.  I alerted you yesterday that the data coming from the comex has been rather fractured and delayed.
We now have almost complete data for both days and I will give them to you:
Here is a chart on the 20th of October for gold and silver comex inventory changes and deliveries.
Withdrawals from Dealers Inventory   zero oz
Withdrawals from customer Inventory  n/a
Deposits to the dealer Inventory n/a
Deposits to the customer Inventory 900,971 oz
No of oz served  (contracts=0 )    zero
No of oz to be served  33  contracts)  165,000 oz
Withdrawals from Dealers Inventory 
Withdrawals from customer Inventory   zero oz
Deposits to the dealer Inventory 4500 0z
Deposits to the customer Inventory  3087 oz
No of oz served (contracts = 45  4500 oz
No of oz to be served (contracts=388  38800 0z
The only number that has been updated is the notices sent down for delivery which total 45 or 4500 oz
I will add this number to today's number to get the total number of gold oz standing.
Note the very high number of OI still left to be serviced yesterday (388 contracts.)
And now for todays figures:
Here is a chart on the 21st of October for gold and silver comex inventory changes and deliveries.
Withdrawals from Dealers Inventory   zero oz
Withdrawals from customer Inventory  n/a
Deposits to the dealer Inventory n/a
Deposits to the customer Inventory 287,925 oz
No of oz served  (contracts=0 )    zero
No of oz to be served  33  contracts)  165,000 oz
Withdrawals from Dealers Inventory 
Withdrawals from customer Inventory   193 oz
Deposits to the dealer Inventory zero 0z
Deposits to the customer Inventory  zerooz
No of oz served (contracts =???   oz
No of oz to be served (contracts=372  37200 0z
I just noticed that the deliveries for both gold and silver are still at Oct 20.2010. In other words Oct 21 has not been updated.
In the inventory changes department note that again we see a massive amount of silver move into a comex vault. Today it was 287,925 oz.  Yesterday it was over 900,000 oz.
In gold only a paltry 193 oz was withdrawn.  There were no adjustments.
In silver the total number of oz standing remain identical to yesterday at 565,000 oz as there were no changes in the notices and no change in the OI remaining to be served.
In gold notices we have only the 45 served upon our patient longs yesterday.
The total number of notices sent down up to yesterday total:  6301, for a total of 630,100 0z of gold.
The total number of notices that remain to be serviced total 372 or 37200 0z of gold.
The total number of gold standing in this delivery month is as follows:
630,100 oz  +  37200 0z  + 70800 oz  =  738,100 0z or 22.99 tonnes.
(we are getting closer and closer to 23 tonnes of gold).
In other physical news, our ETF's remain at a very high premium to NAV:
The Central Fund of Canada has a premium to NAV of 8.2% and the PHYS went down to 4.62%.
From John Brimelow:
 CEF picked up to close at a premium to NAV of 8.2% (Tuesday 5.2%) but PHYS dipped to 4.62% (5.07%).
The GLD folk announced another .9113 tonnes of liquidation for the 4th day in a row.
John Brimelow:
 The GLD shed 0.9115 tonnes, reporting holdings of 1,299.17704 tonnes – this was the 4th decline in a row.
The big news today was Russia.  They put another huge 21.7 tonnes onto their shores:
John Brimelow:
Russia's Central bank has reported adding 700,000 ozs (21.77 tonnes) to its FX Reserves in September. In a development certain to boost gold's popularity in influential circles, the Iranian Central Bank Governor has boasted the country's gold holdings are "unprecedented".
Obama does not like to see this development.  The Iranian central bank has now seen its gold  reserves reach record levels: (Iran does not tell the world how much gold it owns)
John Brimelow reports:
Iran's Central Bank Governor Mahmoud Bahmani says despite the recent global economic crisis, the country's gold reserves have hit a record high.

"Iran's gold reserves have hit unprecedented levels and the country has supplied its domestic gold market for the next ten years," Mahmud Bahmani said on Wednesday
I wouldnow like to go to the big economic stories of the day:
The first set of stories seem to indicate that the usa economy is starting to gain traction:
This is the big economic story (courtesy of Reuters)

U.S. jobless claims fall 23,000 last week

WASHINGTON, Oct 21 (Reuters) - New U.S. claims for unemployment benefits fell more than expected last week, government data showed on Thursday, pointing to some
improvement in the labor market.

Initial claims for state unemployment benefits fell 23,000 to a seasonally adjusted 452,000, the Labor Department said.

Despite the drop, which also saw the unwinding of the prior week's administrative related-jump, claims remain perched above levels usually associated with a strong job market recovery, making it all but certain the Federal Reserve will ease monetary policy further next month.

Analysts polled by Reuters had forecast claims falling to 455,000 from the previously reported 462,000. The government revised the prior week's figure up to 475,000.

Last week's claims data covered the survey period for the government's October non-farm payrolls report. A Labor Department official said only the Virgin Islands' claims had been estimated in the most recent week and noted the prior week's claims number had been pushed up by administrative factors.

The Federal Reserve is widely expected to announce a second round of asset purchases, also know as quantitative easing, at its Nov. 2-3 meeting to keep interest rates low in an effort to combat high unemployment and boost demand.

The labor market has stumbled as the economy's recovery from the most painful recession 70 years fizzled, leaving the jobless rate at an uncomfortably high 9.6 percent.

Last week, the four-week average of new jobless claims, considered a better measure of underlying labor market trends, fell 4,250 to 458,000.

Claims for jobless benefits have moved sideways for much of this year and continue to hold below a nine-month high touched in mid-August.

The number of people still receiving benefits after an initial week of aid dropped 9,000 to 4.44 million in the week ended Oct. 9, the lowest level since the week ending June 26, from an upwardly revised 4.45 million the prior week.

Analysts polled by Reuters had forecast so-called continuing claims edging up to 4.41 million from a previously reported 4.40 million.

The number of people on emergency benefits increased 152,112 to 4.04 million in the week ended Oct. 2.




Then this report showing leading indicators are rising: (courtesy of Reuters)


U.S. leading economic index up again in September

WASHINGTON, Oct 21 (Reuters) - A key gauge of future U.S. economic activity posted a third successive increase in September, but at a pace so modest that it implied only lackluster growth ahead.

The independent Conference Board said on Thursday its Leading Economic Index rose 0.3 percent last month after a revised 0.1 percent gain in August and a 0.2 percent increase in July.

Five of the 10 separate measures of activity that are gauged by the index strengthened in September, led by a narrower interest-rate spread and lower unemployment insurance claims. But others, including building permit issuance and consumer confidence, weakened from August levels.

"More than a year after the recession ended, the economy is slow and has no forward momentum," said Ken Goldstein, a Conference Board economist. "The leading index suggests little change in economic conditions through the holidays or the early months of 2011."



Then we got the Philly Manufacturing Index and it was up: (courtesy of Reuters)


Philly Fed factory activity index rises Oct

NEW YORK, Oct 21 (Reuters) - Factory activity in the U.S. Mid-Atlantic region grew by less than expected in October, a survey showed on Thursday, though the reading suggested a slight improvement after two months of contraction.

The Philadelphia Federal Reserve Bank said its business activity index came in at 1.0 in October after minus 0.7 in September.

Economists had expected a reading of 2.0, based on the results of a Reuters poll, which ranged from minus 5.0 to plus 10.0.

The survey had shown a contraction in August and September.

Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.

It is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, which is due next on Nov. 1.



But lo and behold we got this story which puts the whole infrastructure of the usa economy rebound in jeopardy:


Fannie and Freddie may need another $215 bln - FHFA

NEW YORK, Oct 21 (Reuters) - Fannie Mae and Freddie Mac may need as much as $215 billion in additional capital from the U.S. Treasury through 2013 to offset losses and maintain a positive net worth, their federal regulator said on Thursday.

Cumulative capital needs of the two housing finance giants that were seized by the government in late 2008 will likely fall between $221 billion and $363 billion through 2013, the Federal Housing Finance Agency estimated.

The companies have drawn $148 billion in the form of preferred stock purchases by the Treasury through the second quarter of 2010. Dividend payments on the preferred stock are making up larger portions of the capital needs as time passes, the FHFA said in a statement.


Here is James Sinclair on the same subject:

Freddie Mac and Fannie Mae bailout 'to double'
The ultimate cost of rescuing Freddie Mac and Fannie Mae may double, their government regulator has said.
21 October 2010 Last updated at 11:32 ET

The US government has already given the two federal mortgage agencies $148bn (£94bn) in capital injections.

But because of continuing loan losses, that figure may increase to between $221bn-$363bn, according to the Federal Housing Finance Agency (FHFA).

Meanwhile, the FHFA has appointed a law firm to look at suing big US banks for mis-selling home loans to the agencies.

The regulator has hired the California-based litigation specialists Quinn Emanuel Urquhart & Sullivan, according to a report in the Wall Street Journal.

Ballooning costs

During the 2008 financial crisis, Washington put Freddie Mac and Fannie Mae into "conservatorship" – a quasi-nationalised status in which the federal government promised to maintain their solvency by injecting new equity on demand.




can you imagine another 215 billion dollars for Fannie and Freddie.  It shows you how bad the housing crisis is in.


Speaking on that topic, here is a big story: (from Washington Post)


If This Is True...... KaBOOM

I don't know.

Multiple people have told me this before.

Catherine Austin Fitts has talked about this for a long time. I get "whispers" all the time from people who I know actually are involved in securitization work related to this on occasion - and have for the last three years. We have the story from this morning from FDN talking about their software that has uncovered multiple sales of the same instruments.

But this..... if this is true it's not just systemic, it's not just common, it was the premise and basis of the entire securitization game - and "game" is the correct word for it, as the allegation made here is that the entire thing was a gigantic scam.





This has come to my attention and I am going to address this in an email to the CFTC.  The article is on my website for you to read it.

It seems that a retiring judge (Judge Painter) of the CFTC stated that a fellow judge  (Judge Levine) never ruled for the complaintant.

from Adrian Douglas of and MFA in a letter to the CFTC:


Commodity Futures Trading Commission judge says colleague biased against complainants

Dear Chairman Gensler,

I have read the Washington Post article covering the comments of CFTC Judge Painter who declares that his colleague Judge Levine has been responsible for covering up manipulation and has consciously and deliberately abused complainants in willful miscarriage of justice. If the Judge Painter's allegations are true, this is scandalous beyond belief.

But what shocks me most is the reported reaction of the Agency to this obstruction of justice, which as far as I know is a felony,


Asked to address Painter's notice, a CFTC spokesman declined to comment because, he said, the issue was a personnel matter.

An attorney adviser to Levine, Thaddeus Glotfelty, said that the official position of the CFTC press office was to decline comment and that "Judge Levine has determined to go along with that."


Could you confirm that the Agency's official position on this issue is that this is a "personnel matter"?

As you are aware myself and my colleagues at GATA along with thousands of precious metals investors have presented to the agency innumerable complaints about the obvious manipulation of the precious metals markets. When one of your own Judge's puts in writing that the Agency is covering up manipulation and preventing due process on behalf of complainants and the Agency thinks this is a "personnel matter" then the complete and utter dereliction of duty of the CFTC as a regulator is the only conclusion I can draw.

I look forward to your comments,
Adrian Douglas





This is what Bix Weir states in his commentary on the subject:



CNBC reported on the CFTC Judge Painter allegations on MAINSTREAM TV!!!
Here's the clip:
Think hard about this one... Judge Painter is retiring and handing over ALL his cases which he listed. Not one of them was the JP Morgan SILVER CASE which was said to be in the ENFORCEMENT DIVISION!
No wonder nothing has happened...YET!
I also sat through the webcast of the CFTC meeting where they talked about delaying the Dodd-Frank Act Position Limits.
Here's that link:
They REALLY need to hire some better ACTORS at the CFTC as this was all 100% scripted. Like I said before, the CFTC knows exactly what is going on in the battle between the good guys and the bad guys and they are playing their carefully scripted part. 
The Commissioners DON'T want the new rule change to be the cause of the Global Meltdown and they were very frank about "not wanting to cause market disruptions" which of course position limits would.
I find it interesting that although it was reported in the news as a "delay" it is clear that Chairman Gensler plans to SET THE POSITION LIMITS at the November meeting to comply with the law. It is only the implementation of those limits that is being delayed.
Clearly a 1500 contract limit set in November will send shivers down the spine of Blythe Masters over at JP Morgan who's sitting on a 30,000+ contract short!
My take: The global market meltdown will happen before the November meeting so the commissioners won't have to worry about disrupting the market because THERE WILL BE NO MARKET TO DISRUPT!
In this week's Friday Road Trip (for Private Road Members) I will discuss how it is part of the plan to have all fiat/electronic assets and debts destroyed in the coming meltdown and how that can easily happen. Then how we will rise from the ashes!
May the Road you choose be the Right Road!
I will publish my complaint on Saturday for you to read.  I will address OMalia and Mr Gensler.
ON the global front, it seems that currency wars are upon us as the usa will not be getting its way as far as others raising their currency values:
(courtesy of Reuters)

U.S. plan hits opposition at G20, FX accord remote
By Abhijit Neogy and Toni Vorobyova
GYEONGJU, South Korea (Reuters) – G20 officials are unlikely to reach an accord rejecting currency devaluations and capping current account balances, an informed source said on Thursday, after U.S. proposals ran into stiff opposition.

The swift rebuff of a U.S. call for numerical targets for "sustainable" trade surpluses and deficits underscored difficulties facing Group of 20 finance ministers gathering in South Korea to try to defuse tensions over currencies and economic imbalances.

The G20 source, who has direct knowledge of deliberations at the meeting, said the proposals had not found favor with India, China and other emerging economies, or even the likes of Germany, which has a large current account surplus.

In an interview with the Wall Street Journal, U.S. Treasury Secretary Timothy Geithner called for an agreement on exchange rate policy "norms."

"Right now, there is no established sense of what's fair," he told the paper. "We would like countries to move toward a set of norms on


I highlighted this to you on Tuesday but just in case you missed it here it is again:

Why California is About to Fall Off Into an Ocean of Unpayable Debt

Perry Wong, Director of Regional Economics at the Milken Institute is co-author of a new report,  Addressing California's Pension Shortfalls: The Role of Demographics in Designing Solutions. His conclusion:

We're talking about a perfect storm: more state services needed for an aging population, a workforce that will spend more years in retirement than they did contributing to the funds, and a smaller ratio of working-age taxpayers and contributing state workers to pay for it all.

Some of the key findings in the report include:

• By around 2012 or 2013, the three major state pensions' obligations will be more than five times as large as total state tax revenue.

• Not only will California's growing senior population depend on Medi-Cal and other state services, but public school enrollment is likely to rise in the coming years. The state can ill afford to fund pensions by cutting back on these services.

• In 2009, the pension liability came out to $3,000 per working-age adult in the state. By 2014, it will triple to over $10,000 per working-age Californian.

• Raising employee contributions alone will be less effective over time as the ratio of actively contributing members to benefit recipients continues to decrease.

• Currently, the average state employee contributes to the system for 25 years, but will receive benefits for 26 years — and the number of benefit-receiving years is increasing as longevity improve






This is a dandy!!!  Look what the guys who insure title are requesting: (from the James Sinclair commentary)


Here is a piece of evidence that shouts the mortgage debt mess is deep and permanent.

Fidelity National to Require Banks to Sign Foreclosure Warranty
By Danielle Kucera – Oct 20, 2010 2:30 PM PT

Fidelity National Financial Inc., the largest U.S. title insurer by market share, will require lenders to sign a warranty assuring their paperwork is sound before backing sales of foreclosed homes.

An indemnity covering "incompetent or erroneous affidavit testimony or documentation" must be signed for all foreclosure sales closing on or after Nov. 1, the Jacksonville, Florida- based company said in a memorandum to employees today. The agreement was prepared in consultation with the American Land Title Association and mortgage finance companies Fannie Mae and Freddie Mac, Fidelity National said.

"It's just the prudent thing to do," Peter Sadowski, executive vice president and chief legal officer for Fidelity National, said in an interview. "It is important for the servicers and the lenders to represent to us and to the people we are going to be insuring that there are no problems."

Bank of America Corp., the biggest U.S. lender, agreed to a similar contract with Fidelity National on Oct. 8, the same day it extended a freeze on foreclosures to all states amid concern by federal and state officials that lenders are seizing homes without properly reviewing documents. The bank plans to start resubmitting foreclosure affidavits next week. Attorneys general across the country have opened a joint investigation into foreclosures, saying they will seek an immediate halt to any improper practices at mortgage lenders and loan servicers.

Fidelity National, in separate announcements today, named a new chief executive officer and said that its earnings rose 13 percent in the third quarter.






Looks like the regulator to Fannie and Freddie are getting ready for major lawsuits: (from Jim Sinclair commentary)


This is a two trillion dollar bag of worms falling deeper and deeper into trouble; the results of which are going to rock the financial institutions one more time.

Regulator for Fannie Set to Get Litigious
OCTOBER 21, 2010

The federal regulator overseeing Fannie Mae and Freddie Mac hired a law firm specializing in litigation as the agency considers how to move forward with efforts to recoup billions of dollars on soured mortgage-backed securities purchased from banks and Wall Street firms.

The Federal Housing Finance Agency, which in July issued 64 subpoenas to issuers of mortgage securities, bank servicing companies and other entities, is working with Quinn Emanuel Urquhart & Sullivan LLP, a Los Angeles-based firm that specializes in business litigation, to coordinate its investigations.

In a statement, the FHFA said it is analyzing requested information and that "no decisions for future action have been made." Quinn Emanuel confirmed its hiring by FHFA but declined to comment further.

Since the financial crisis, 400-lawyer Quinn Emanuel has avoided building a banking clientele, making it a top suitor for plaintiffs pursuing banks. The firm has represented MBIA Insurance Corp. in several lawsuits against top U.S. mortgage banks alleging that the insurer was fraudulently induced to cover losses on mortgage-backed securities. Those cases are ongoing.

The FHFA hasn't disclosed the targets of its subpoenas, though some banks have acknowledged receiving them, including J.P. Morgan Chase & Co. The probe is focused on so-called private-label securities that were originated by mortgage companies, packaged by Wall Street firms and then sold to investors.








Last month we brought to your attention problems with Harrisburg PA,  Yesterday, we saw Pittsburg having pension problems and high budgetary deficits which will require

the state of Pennsylvania to rescue it.  Now we see the hometown of Obama gain the spotlight: (from Jim Sinclair commentary)


Chicago faces crisis over pension funding, how to pay for it
October 18, 2010 8:50 PM

Much has been made of retiring Mayor Richard Daley's plan to draw down reserve funds to balance next year's city budget and how it could burden his successor.

But the chairman of the Finance Committee, Ald. Ed Burke, today talked about a far larger problem. One in four pension funds for city workers will go broke in the next decade, if current funding levels continue and markets don't improve, and all will be belly up by 2032 if nothing gives.

"It's similar to watching the house burn down without turning on the fire hydrant," said Burke, 14th, during the first day of hearings on Daley's proposed $6.15 billion budget. "At the present time, the city pension funds are actually selling assets to meet obligations."

Stabilizing employee pensions long-term would require greater employee contributions, higher taxes, major changes to the pension systems or a combination of those steps. Without relief, the city would have to about double its property taxes for the next 40 years to cover its pension obligations, said Gene Saffold, the city's chief financial officer.

After his budget address last week, Daley told the Tribune editorial board that he will ask the General Assembly to apply pension reforms enacted this year for teachers and municipal workers to the city's police officers and firefighters. The changes reduce benefits for new employees and require them to work longer to collect their retirement checks.







This story is interesting.  It seems we had 3 gate crashers at the American Bankers Association meeting...just look at what was demanded:


Jim Sinclair's Commentary

Nice to see someone stand up to the Banksters.

The points of their demonstrations are logical, however bloodsuckers want blood, not logic.

Foreclosure-Gate Related Disruptions at American Bankers Association Annual Meeting
The first signs that Foreclosure-Gate can lead to problem protests for bankers came earlier this week in Boston.
Wednesday, October 20, 2010

Tuesday morning, three women dressed as bankers, from a group they identified as the "Alliance to Develop Power"– TC Eckstine, Jamie Sadiq, and Caroline Murray – took turns interrupting the plenary session of  American Bankers Association annual meeting.   Over 1,000 bankers were in attendance at the event which took place in the Hynes Convention Center in Boston.

The three demanded of  the ABA a somewhat contradictory set of items from the modification of current loans to demands that more loans be issued. Specifically, the three called on the ABA to:

Fix the foreclosure crisis and move millions of families into fair mortgage modifications with principal write-downs.

Invest responsibly and sustainably in community-led economic development projects to create jobs.

Stop bankrupting taxpayers and communities.







On Saturday, I will get my new computer and I should get it out faster with more detail.

I wish you all a grand weekend




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