Good morning Ladies and Gentlemen:
Before proceeding, there are no new entrants into the banking morgue.
Yesterday, the banking cartel orchestrated a fierce attack on silver and gold as this was the last day before the longs put their money to take possession of their metals.
Gold closed the week's session at $1364.00 down $8.90. Silver was hit with massive amount of non backed paper and this metal finished the session at $26.72 down 82 cents on the day.
It seems that every rally for gold and silver was thwarted with new paper as the cartel did not wish to have these metals rise with so much turmoil throughout the world.
I would like to go straight to the comex trading and reveal what is going on here.
Let us first explore gold:
The total comex gold open interest closed the session at 607,664 down from Thursday's reading of 622,712 for a drop of a huge 15,048 contracts. Gold closed slightly lower on Thursday but rebounded from severe selling pressure to regain most of its losses. The extreme OI drop means we had marginal losses at the beginning from long liquidation but later, the banks were frightened by the rally and they covered some of their shorts. The front December month in gold showed the OI dropping from 170,040 to 103,310 which is to be expected. This is basis Wednesday night, so we will need today's data which he will get on Monday. The volume at the comex today was a huge 255,157. No doubt the real number will be huge higher. The comex did not provide confirmed data for Thursday's trading. The front options delivery month of November saw its OI remain at 20.
Now for the all important silver comex data:
The total comex silver open interest closed the session, Friday with a reading of 137,944 down a huge 9741 contracts. I do not believe we had any spec liquidation yesterday so it looks to me like the bankers got scared and covered some of their short positions. If you recall, silver had a stellar day and refused to buckle under the weight of the banker's supply of non backed paper. The front month of December saw a smallish roll of 14,000 contracts for a reading of 28,288 which is basis Wednesday night. This number is extremely high especially on the eve of the 2nd biggest holiday in the USA calendar .The front options exercised for a silver November contract saw its OI at 4. The estimated volume today was a very high 108,424. The volume on the front December month was an unbelievable 60,000 plus contracts. Nobody in their right frame of mind would day trade silver on the last day and nobody would be stupid enough to short sell and be caught offside. All I can tell you is this: stay glued for Monday's readings.
Now we shall see what happened to our deliveries and inventory changes:
Here is a chart on the 26th of November for gold and silver comex inventory changes and deliveries.
Withdrawals from Dealers Inventory
Withdrawals from customer Inventory
Deposits to the dealer Inventory
Deposits to the customer Inventory
No of oz served (contracts4
No of notices to be served..zero
Withdrawals from Dealers Inventory
Withdrawals from customer Inventory
Deposits to the dealer Inventory
Deposits to the customer Inventory
No of oz served (contracts 2
No of oz to be served 20
Let us start with silver:
The tranquility in silver is very noticeable whereby the only transaction for both is a tiny withdrawal of silver of 1,980 oz.
Somehow the comex had 4 contracts exercised in their back pocket and they failed to notify the public on this. On Friday, 4 notices were sent down for a total of 20,000 oz.
The number of notices left to be fulfilled is zero. Thus the total number of silver oz standing in this non delivery month is as follows:
906 notices x 5000 oz equals 4.53 million oz. I doubt if there will be any more silver standing.
And now for gold:
Absolutely zero on everything, non deposits, no withdrawals and no adjustments. However 2 notices were sent down for delivery for 200 oz.
There is still an open interest of 20 contracts that must be satisfied by Tuesday night midnight
The total number of notices sent down so far this month total 1149 or 114900 oz of gold. Since 20 open interest contracts remain to be served, that equals 2000 oz.
Thus the total number of gold ounces that are standing to delivery in this non delivery month of November is as follows:
114900 oz + 2000 oz (to be served) = 116900 oz or 3.4 tonnes of gold.
In our physical news, here are the NAV's of all our ETF;s we have been following. For the first time, I will be showing Sprott's silver fund:
First: the central fund of Canada CEF.a: premium to NAV 9.5% (basis November 26).
Second: Sprott silver fund with its call letters PSLV: 7.64% premium to NAV
Third: Sprott gold fund: PHYS:2.64% positive to NAV
The SLV inventory remained the same at 344 million oz. The GLD inventory remained constant at 1285.08 tonnes of gold.
From this day forth I will be reporting on these funds as to their premiums to NAV and the inventory levels at the SLV and GLD.
Now we shall see the big stories of the day.
I thought that this Jim Sinclair commentary on the speech Nigel Farage gave to the European parliament was something out of the ordinary. This will go down as one of the classic speeches anywhere on the shape of the global economy. First Jim Sinclair comments and then the video.
Jim Sinclair's Commentary
This is a total Western world currency problem whose basis is still not fully discussed. The essence of the problem is as much overspending and debt, but media forgets, facilitated by the national OTC derivative camouflage.
QE will go to infinity and the race to the bottom is going to get UGLY. Although Nigel Farage is correct, he has no concept of what doing the right thing will result in immediately.
There is no practical way out of this. I have told you that for 8 years and nothing has changed.
Gold is the only currency that is going to survive this, defined as the preserving of buying power, as it always did throughout monetary history.
'The Euro Game Is Up! Who the hell do you think you are?' – Nigel Farage MEP
this important video is a must see. click on the blue below
The FDIC released the number of problem banks and they are increasing:
List of Problem Banks Grows Despite Solid Net Income
Published: Tuesday, 23 Nov 2010 | 10:25 AM ET
By: Reuters with CNBC.com
The number of banks on the Federal Deposit Insurance Corp's confidential "problem" list grew over the summer even while the overall industry posted solid net income.
The FDIC says its list of troubled banks rose to 860 in the July-September quarter from 829 in the previous quarter.
At the same time, the FDIC says banks earned $14.5 billion during the third quarter. That was a decrease from the previous quarter's result of $21.4 billion, but well above the $2 billion banks earned a year earlier.
The FDIC says banks set aside less money to cover future loan losses than at any time since the October-December quarter of 2007, before the financial crisis. Fewer borrowers were behind on payments for credit cards and construction loans.
U.S. bank industry earnings fell by almost $7 billion in the third quarter but were far better than a year ago as the industry continues to recover from the financial crisis.
"The industry continues making progress in recovering from the financial crisis," FDIC Chairman Sheila Bair said in a statement. "Credit performance has been improving, and we remain cautiously optimistic about the outlook."
The banking industry has been setting aside less money to guard against losses, helping to boost earnings.
The amount of bad loans, those 90 days or more past due, declined for the second consecutive quarter, the agency said in its latest quarterly report. The balances for these loans declined by 2.1 percent, or $8.3 billion, in the third quarter.
Nearly 19 percent of institutions were unprofitable in the third quarter, however, and almost 36 percent had lower quarterly earnings then a year ago. As of last Friday, 149 institutions had failed so far in 2010.
The number of banks on the agency's "problem list" grew from 829 to 860, which is the highest number since March of 1993 when there were 928 institutions on the list.
"As we continue to emerge from this devastating financial crisis, building capital must remain a priority for insured banks so that they can maintain ready access to funding and continue to serve as credit intermediaries even under adverse conditions," Bair said.
This hit the street yesterday afternoon. The author, Charles Penty of Bloomberg is correct when he states that the Euro will be dead once the vigilantes attack Spain. The bailout needed is just too large.
Here is this important article: (courtesy James Sinclair and Bloomberg.com)
European Banks 'Nearly Bust' If Euro Collapses, Evolution Says
By Charles Penty – Nov 25, 2010 3:31 AM MT
The European banking system would be "nearly bust" if the euro were to be abandoned which means the 16-member currency "cannot and should not go," Evolution Securities Ltd. said.
"If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately," said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a "great buying opportunity." Devaluations mean write-offs "of a size that would render the whole European banking system completely insolvent."
Contagion from Europe's sovereign debt crisis is spreading to Spain, sparking concern that the European rescue fund set up in May isn't large enough. French, German and U.K. banks could lose 360 billion euros ($479 billion) if the euro collapsed, assuming a 30 percent devaluation in the wake of the restoration of national currencies, said de Frias.
The damage caused by the abandonment of the euro would be such that such an outcome is impossible and the "only way forward" for Europe is fiscal union, he said.
"It is simply too late," he wrote. "There are too many cross-border investments in Europe to go back to national currencies."
This hit Thursday night where the politicians in Hungary has started to nationalize all private pensions.
(courtesy of Jim Sinclair and Bloomberg.com)
Hungary Follows Argentina in `Nightmare' Pension-Fund Ultimatum
By Zoltan Simon – Nov 25, 2010 4:37 AM MT
Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
"This is effectively a nationalization of private pension funds," David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. "It's the nightmare scenario."
Hungary is rolling back pension changes implemented more than a decade ago as countries from Poland to Lithuania find themselves squeezed by policies designed to limit long-term liabilities by shifting workers into private funds. Now the cost is swelling debt and deficit levels at a time when the European Union is demanding greater fiscal discipline.
This report was received early today and it highlights the mess inside Spain. The author is Harry Wilson of the UK Telegraph:
Spain could be forced to seek a bail-out within months, warns Barclays
The weight of bank debt needing refinancing next year could threaten Spain's solvency and force it to become the next European country to seek a bail-out, according to a report from the investment banking arm of Barclays.
8:30AM GMT 27 Nov 2010
After Ireland was finally forced this week to ask for financial help from the European Union and International Monetary Fund, Barclays analysts now say it is possible that a similar fate could await Spain.
In the first four months of 2011, the Spanish government and the country's banks must raise about €70bn (£59.2bn) in the bond market, which Barclays said would be a "big test for investor appetite", adding that it was concerned with the "execution risk".
"Our view is that the challenges facing Spain remain substantial – with the likelihood of a positive outcome poor until at least the sovereign and the banks have successfully navigated their way over the funding hump facing them both in Spring 2011," said the analysts.
The situation facing Spain is in some respects similar to that which led to the implosion of the Irish banking system, with international investors reluctant to buy the country's bonds as fears remain over the risks contained within the financial system.
While the Irish government repeatedly insisted it was fully-funded for the next year, the funding position of the Irish banks made the bail-out inevitable as they faced redemptions of €25bn in government-guaranteed debt they had issued.
"The funding crisis for the Irish sovereign was in fact a funding crisis for the Irish banks, triggered by a massive bank issuance calendar and renewed concerns over asset quality,
"Simply put, the Irish sovereign has been dismembered by its banking system," said Barclays.
Portugal and Italy each face similar issues. However, neither country faces the same huge refinancing schedule that Spain does, with bond redemptions more evenly spread out over the course of next year.
The Spanish government has set up an €99bn fund to help its banks, however only €12bn of this is pre-funded and €11bn has already been drawn down, meaning the country will have to borrow more from the bond market to fund the rest.
Spanish pensions funds could be leaned on to buy some of the bonds, but not enough to cover the entire amount the government will need to raise.
This caught my eye. Today I noticed that gold rallied by dollars in the last 3 or 4 minutes before closing. Then in the after-hours, the volatility on gold index plummeted.
Usually this means someone is unwinding a long volatility on Gold with a short on Gold. The unwinding may signal that someone is standing for huge amounts of gold:..
from zero hedge:
Surge Of Inexplicable After Hours Selling Takes Gold Volatility Index To All Time Low
Submitted by Tyler Durden on 11/26/2010 20:07 -0500
In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. TheCBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.
A trader whom we managed to reach late in the day had this to say on this stunning move:
Typical course of action for HFT and other commodity pranksters is to shake out new contract holders. They did it with absolute gusto today, shorting thousand of contracts into thin markets. That didn't work. Gold held up. Now, taking into account that peripheral EU spreads are hitting new highs, hedge funds are getting redemption requests etc, why would you go home long ES and short GC? So what they did is they sold ES into and after the close. After that ES/SPY close they can't run these 'start arb' HFT strategies any more that go long S&P and short Gold as well. Gold's closing time is 1:45pm. They had to cover shorts.
If the short covering in paper persists, perhaps the world won't even need the Krieger/Keiser physical PM campaign to destroy Blythe Masters.
And a bonus observation of the gold curve is the Gold February contract, where in the last minute someone bought 2k contracts, which represents 200,000 ounces or about $272MM worth of gold. Not a bad purchase for the last trade on the slowest day of the year.
As usual, we welcome our readers' perspectives on this largely unexpected move.
The story that I released to you on Monday is getting more attention. I can summarize the drama for you this way. Tropos, an American company. The elders who reside in Taiwan had accumulated great private wealth over the past several decades and collectively they decided that this money, denominated in USA dollars(, 700 billion dollars), was to have the Chinese people as the beneficial owners. Also there was great progress in starting the unification of Taiwan with Mainland China. The elders decided to send the money through a trustee, Mr Hryniak to Tropos at the account at Wachovia. Many large sums of money of this sort must travel through an ACAT which is an electronic transfer of funds.
The BIS, as central bank to all central banks provides the Clearing Payment and Settlement Systems that assists in the clearing of the funds as the sole Transfer Trustee. In this case, it seems that the USA Federal Reserve kept the funds for themselves and called upon its ally, the BIS to state that the BIS function is not clearing but only of supervision. There have been many lawyers on both sides of the border that have seen and verified that the ACAT was true and real. The BIS and the Federal Reserve have had their lawyers call the Tropos lawyers but the Fed and BIS lawyers refuse to put in print what they discussed on the phone. You will see in one of the correspondence, a file number has been instituted by the American authorities. The November 2nd letter to the BIS official, Corunna, is very interesting. The letter to Obama in June 2010 describes in detail, the ACAT from Taiwan to NY and how the proceeds have been kept for their own use instead of the beneficiary's.
The above letters were widely distributed to members of the G20 during their last meeting. Originally, Mainland China at various times accused Taiwan and the trustee with malfeasance but have now realized that it was the UNITED STATES FEDERAL RESERVE who has absconded with the money. Here are the letters sent to the various parties and from the body of the letters you can deduce that the other side did engage in various conversations.
You can imagine what China would do if they found out what that the USA did something with their money. Maybe buy up all of the gold and silver at the comex?
Anyway, he are the letters for you to read and I leave it up to you to decide.
Well that wraps up the week. I hope you have an enjoyable weekend and I will see you Monday night where we should see some fireworks.
all the best