Saturday, December 18, 2010

silver and gold advance/open interest continues to rise/Moody's downgrades Ireland

Good morning Ladies and Gentlemen:

 

Before starting, I would like to introduce to you our latest entrants to the banking morgue having succumbed last night:

 

1.United Americas Bank,  Atlanta Georgia

2.Appalachian Community Bank, McCaysville GA

3.Chestatee State Bank, Georgia

4. Bank of Miami, Coral Gables FL.

5.community National Bank, Mino Lakes MN

6.First Southern Bank,  Arizona.

 

Gold closed today up $8.20 to $1378.60.  Silver rose by 36 cents to $29.12.  Most of the gain occurred in the last 30 minutes as the shorts scrambled to cover.  It seems that panic prevailed at the silver comex far more than in gold.  It was startling to see that even though silver was hit for the 3rd time in the last 30 days with increased margins, this did not stop investors from obtaining silver. Normally the damage would have caused silver to be in the doldrums for over two to three weeks. The strength of silver is causing nightmares to JPMorgan and friends.

 

Let us see how trading occurred at the comex yesterday.

 

First gold:

The entire gold comex open interest fall pretty hard yesterday by 9316 contracts as the weaker specs were flushed out. It is amazing to see this time and time again as the regulators allow this nonsense to occur.  The front delivery month of December saw its open interest fall from 765 contracts to 615 contracts for a loss of 150.  On Thursday, we had 170 deliveries so we actually got a few queue jumpers on Friday seeking gold.  The estimated volume on the comex was 120,535 which is on the low side.  The confirmed volume on Thursday's raid was a humongous  208,198.

 

Now for silver:

The entire silver comex open interest shockingly did not fall at all, it rose by 533 contracts.  This totally annoyed JPMorgan and friends.  With two consecutive raids they failed to shake any silver leaves.  They probably failed again on Friday. 
The front delivery month of December saw its open interest fall from 373 to 360 for a contraction of 13 open interest contracts.  We had only 6 deliveries so we lost 7 contracts or 35000 oz to cash settlements.

 

Here is a chart on the 17th of December for gold and silver comex inventory changes and deliveries.

 

 

 

Silver

Withdrawals from Dealers Inventory 

39,881 oz

Withdrawals from customer Inventory 

11,291 oz

Deposits to the dealer Inventory

 Zero oz

Deposits to the customer Inventory

1,520,585 oz

No of oz served  (contracts28

140,000oz

No of notices to be served..373

1,835,000oz

Gold

Withdrawals from Dealers Inventory 

201 oz

Withdrawals from customer Inventory 

 zero

Deposits to the dealer Inventory

  Zero oz

Deposits to the customer Inventory

9023 oz

No of oz served (contracts  33

3300 oz

No of oz to be served 582

  58200oz

 

 

Let us now begin with silver:

You can just imagine the turmoil again in silver.  Today 1,520,585 oz was deposited into registered warehouses.  It is hard to say if most of this silver came from Thursday's massive 1.3 million oz dealer withdrawal. If so, this will without a doubt be used in the settling process. Normally, the comex would immediately credit the customer on the same day.  It is very difficult to analyze when you get bad reporting like this.  We also received notice that there were two sets of silver withdrawals, 1). 11,291 oz leaving the customer and 2) 39,881 oz leaving the dealer.  We also had another of those famous adjustments.  This time a 5000 oz left the customer to arrive at the dealer in an obvious lease arrangement.  They would be paid handsomely for the privilege.
The comex folk notified us that 28 notices to deliver were served upon our longs for a total of 140,000 oz of silver.  To obtain what needs to be served, I take the open interest for December at 360 and subtract Friday's deliveries at 28 to get 332 notices left to be serviced or  1.66 million oz.  The total number of silver notices served so far this month total 1410 for a total of 7.05 million oz.
Thus the total number of silver oz standing in this delivery month is 7.05 million oz (already served)  + 1.66 oz ( to be served) =  8.71 million oz  ( we lost 35000 oz for cash settlements as I mentioned above)

Now for gold;

Note the tranquility in the gold comex in contrast to the violent activity in the silver comex.  The customer received 9023 oz of gold and the dealer withdrew only 201 oz and we are drawing near the end of the delivery notices.  How on earth are they settling? We did get another adjustment whereby 98 oz left the customer to enter the dealer in a lease arrangement similar to the silver situation above.

The comex folk notified us that  33 notices were served upon our longs for a total of 3300 oz of gold.  The total number of gold notices sent down so far this month total 10,811 for a total of 1,081,100 oz of gold. To obtain the number of notices left to be served, I take the open interest for December at 615 and subtract Friday's notices at 33 to give the number of notices standing at 582 or 58200 oz of gold.
Thus the total number of gold oz. standing in this delivery month of December is as follows:

1,081,100 oz (already served)  +  58,200 oz (to be served)  =  1,139,300 oz  (we gained 2000 oz as queue jumpers badly needed some gold)

 

Herein is the ETF story for today:

Cannot quite figure this one out.  Today the GLD added 15.18 tonnes of gold or 588,200 oz of gold!!!

A) where did they get the gold'

B with this demand how in earth did the clowns raid over at the comex?

Total Gold in Trust

Tonnes: 1,298.94

Ounces:41,762,208.15

Value US$:
57,140,542,843.62

 

 

 

 

Surprisingly, the folk at the SLV decided to remove inventory to the tune of 1,955,000 oz.     The  total number of oz is now   350,550,455.00

Total number of tonnes:    10,903.3  friday night's closing level

 

Silver oz on Thursday was:   352,505,135 oz

 

 

Our ETF's that we follow still command a decent positive to NAV.

The Sprott silver fund PSLV registered a huge  positive to NAV of 14.03% reflecting silver's huge strength. Friday night's reading)

The Sprott gold fund PHYS registered almost the same positive to NAV as Thursday at 2.83%  (friday night closing )

The central fund of Canada which represents equal parts of physical silver and gold registered a positive to NAV of 10.0%  Friday night.

end.

 

Please note the huge premium at Sprott silver at 14.03%.  This is a pure silver fund whereas the Central Fund of Canada is approximately equal parts of silver and gold.

Looks to me like silver is mighty scarce judging from the high premium to NAV for Sprott's PSLV.

end.

 On Friday night, we got the COT report and it was quite revealing:
First the gold COT report.  Here is the release of the gold COT report courtesy of Goldseek.com:

 | Source: GoldSeek.com 

Gold COT Report - Futures

Large Speculators

Commercial

Total

Long

Short

Spreading

Long

Short

Long

Short

259,917

39,722

77,570

184,736

452,871

522,223

570,163

Change from Prior Reporting Period

-9,587

2,969

-1,569

3,585

-6,953

-7,571

-5,553

Traders

205

56

61

45

52

280

145

 

 

Small Speculators

 

 

 

Long

Short

Open Interest

 

 

72,429

24,489

594,652

 

 

 

-1,409

-3,427

-8,980

 

 

 

non reportable positions

Change from the previous reporting period

 

COT Gold Report - Positions as of

Tuesday, December 14, 2010

 

 

Those large speculators that have long lessened those positions by a rather large 9587 contracts.
Those large speculators that have been short increased their short positions by 2969 contracts.
Those commercials that have been long increased their longs by a rather healthy 3585.  These are your swap dealers and intermediate bankers.
And now for the all important commercials that have been perennially short, covered those positions by a healthy 6953contracts.
Those small speculators that have been long lessened those positions by 1409 contracts.  Those that have been short lessened their short positions by 3427 contracts.

 

and now for silver:

rge Speculators

Commercial

Total

Long

Short

Spreading

Long

Short

Long

Short

38,241

6,072

67,240

37,242

88,548

142,722

161,860

-2,910

-1,141

-3,271

22

194

-6,159

-4,218

Traders

95

41

69

36

45

162

128

 

Small Speculators

 

 

 

Long

Short

Open Interest

 

 

36,841

17,703

179,563

 

 

 

637

-1,305

-5,523

 

 

 

non reportable positions

Change from the previous reporting period

 

COT Silver Report - Positions as of

Tuesday, December 14, 2010

 

Those large speculators that have been long lessened those positions to the tune of 2910 contracts.
Those large speculators that have been short, lessened those shorts by 1141 contracts.

The large commercials that have been long silver added only 22 contracts to their longs.
Those commercials that have been short and subject to the many lawsuits (JPMorgan) increased their shorts by only 194.

The small speculator is just not in the game.

The COT report seems to suggest that JPMorgan is finding the massive short position a little too steamy for them. Maybe they are handing off the massive shorts to their fellow brethren banks.

end

 

The trading of silver this past week has been breathtaking. Silver is now the least leveraged on any commodity on the comex.  An investor needs a minimum of 20,000 usa dollars per contract. At 5000 oz at 29.00 per contract, if one were to take delivery, the total value of the contract is 140,000 USA dollars.  The leverage is 13:1.  For comparison gold is 22 to one; platinum is 17. to one;copper is 16 to one.  JPMorgan had to be in serious trouble asking the CME to initiate another hike in margins with silver already below the others in leverage.  They also initiated the margin requirements when silver was already hit instead of a few days ago when it surpassed 29.20.  I strongly believe that JPMorgan and friends are in serious trouble over at the silver comex.

 

Now let us go to the big economic stories of the day.

 

This is very important.  The balance sheet of the Fed was now ballooned to over 2.368 trillion dollars. This asset side of the balance sheet is 800 billion of treasuries and 1.56 trillion of junk belonging to the banks.  On the liability side, there is 1.64 trillion of excess reserves of which the banks send back to the Fed.  The banks are not loaning anything.

Once this money is released into the market place, then hyperinflation will be upon us.  This story is courtesy of Reuters: 

U.S. Fed balance sheet swells on bond purchase

NEW YORK, Dec 16 (Reuters) - The U.S. Federal Reserve's balance sheet grew for a seventh consecutive week to a record due to its purchases of Treasuries, Fed data released on Thursday showed.

Last month, the U.S. central bank started a second round of quantitative easing, known as QE2, to tamp down interest rates and help spur the economic recovery. The program is worth up to $600 billion in U.S. government debt purchases over an eight-month period in a bid to support growth.

The balance sheet -- a broad gauge of Fed lending to the financial system -- expanded to $2.368 trillion in the week ended Dec. 15 from $2.364 trillion the prior week.

Two weeks ago, the Fed's balance sheet surpassed the prior peak of $2.333 trillion set in May as it was about to end its first round of bond purchases that involved $300 billion of Treasuries and $1.425 billion in mortgage-related securities.

The Fed's QE2 program follows its use of proceeds from maturing mortgage securities in its portfolio, a move that started in August. Since that time, it has purchased about $196 billion in Treasuries.

The central bank's holding of U.S. government securities totaled $967.55 billion on Wednesday, up from $949.61 billion last week.

On the other hand, the Fed's ownership of mortgage bonds guaranteed by Fannie Mae , Freddie Mac and the Government National Mortgage Association (Ginnie Mae) fell to $1.009 trillion from $1.023 trillion a week ago.

The Fed's holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank system declined to $147.88 
billion from $148.18 billion a week earlier.

Meanwhile, the Fed's overnight direct loans to credit-worthy banks via its discount window averaged $22 million a day in the week ended Wednesday, slower than the $38 million daily pace last week and $191 million daily rate two weeks earlier.

end.

 

 

The SEC are now trying to get involved in the Mortgage Mess of 2010:

 

12:02 SEC expands mortgage foreclosure probe; sends new of round of subpeonas to banks--Reuters

Citing two sources, Reuters reports that the SEC is now asking for information regarding master-servicers, which are firms that oversee the selection and maintenance of the pool of home loans(collateral) in MBS. SEC is also seeking information about the role banks had in mortgage securitizations. Reuters also reports Bank of America, Citigroup, JPMorgan and Goldman had no comment. Wells Fargo said it is "always working with regulators and others who are interested in its servicing business" but declined to comment on whether the bank had received a subpoena.
* * * * *

 

END.

Moody's has lowered the boom on Ireland lowering their creditworthiness by 5 notches.  Here is this important article courtesy of Reuters:

 

Moody's slashes Ireland to Baa1, warns on future debt

* Moody's cuts rating by five notches from Aa2 
* Says may cut more unless Ireland stabilises debt situation 
* Irish bond yields rise, pressure on euro renewed

DUBLIN, Dec 17 (Reuters) - Moody's Investors Service slashed Ireland's credit rating by five notches to Baa1 with a negative outlook from Aa2 on Friday and warned further downgrades could follow if Ireland was unable to stabilise its debt situation.

Ireland's debt levels have quadrupled since late 2007 on the back of a banking sector meltdown, and it needs solid economic growth to ensure it can meet repayments and fiscal targets set down in the 85 billion euros EU/IMF bailout agreed last month.

Moody's downgrade followed Fitch's move last week to become the first ratings agency to strip Ireland of its 'A' credit status, cutting it by three notches to BBB+ following the debt-stricken government's request for an EU/IMF bailout.

S&P is the only ratings agency that still has Ireland in the top band but that may not last long as it has its A rating on review for a possible downgrade.

"While a downgrade had been anticipated, the severity of the downgrade is surprising," Dublin-based Glas Securities said in a note…

-END-

 

 

This gentleman reported on the CFTC hearings on Thursday which abruptly ended without a vote. Here is a great description of what happened in the final 10 minutes of the hearings.

 

No question about it..there was turmoil in the meetings.  Judge for yourself: (from Terry reporting to Lemetropolecafe.com)

 

By the way:  everyone should join lemetroolecafe.com  as GATA, Bill Murphy and Chris Powell are doing a yeoman's job in exposing the criminality behind the bankers short positions in the precious metals.

 

CFTC Hearings

Bill,
I did not mean to imply there was something which happened at the CFTC meeting which was newsworthy. Or anything we could have expected to happen which would be. But it seemed to me there was a significant amount of tension building and that the meeting was terminated early and in unexpected fashion. As best as I can recall, here are my impressions of how the CFTC meeting ended:

After covering and voting on several other issues, the commission got to position limits. After presentation of staff recommendations, the commissioners asked questions. Chilton was last and he very carefully and tactfully extracted from counsel corroboration that the new legislation, in fact, actually gives the authority to the commission to take action against concentrated position-holders beyond the traditional methods of jawboning the exchange and the holder of that position. Then he very carefully sought confirmation that the staff would be presenting monthly reports to the board which would show concentrated position holders. But that was not the point he was getting to. He was, in my opinion, beginning to make the point that the board receiving the reports meant nothing unless they would commit to act on the information. He either alluded to or insinuated that had been the long-term history of the board. Gensler interjected that the staff had done exemplary work in the past and that there was every reason to believe that they would file the reports to the board. (As if Chilton's point was to reiterate that the staff would be able to produce the reports.) Chilton attempted to tactfully take the discussion to the point that it was not the reports that were needed but that the board would act on the information once it was in hand. At least three times Gensler played stupid and reiterated his faith in staff to produce the reports.

Exasperated, Chilton said words to the effect that. "Well, I'll let this go for now." Then, I'm pretty darn sure that Chilton, with a flushed face, looked at Gensler and mouthed the words "For now!" which was caught on camera.

The conversation moved to another commission member who asked a question of a person testifying. I missed the exact question and answer, but heard the commissioner reply "Well, that seems problematic." There was subsequently an awkward pause and then Gensler said they would take a 10-minute recess. When people acted surprised he said maybe just 5 minutes. One person spoke up and said to Gensler "I have another meeting I need to go to. As you are aware, you have my proxy. I suggest you use it wisely."

The recess was held and all commissioners came back to the table except Chilton. In his absence, Gensler asked for votes on authorizing that some procedural errors in staff presentation would be corrected. I was away from the TV for a couple minutes but saw Chilton return to the table and I expected the meeting to resume. Why would you adjourn the meeting on the heels of a 10 minute recess? But before I got back to the TV, perhaps 2 minutes after Chilton had returned, the commission had voted to adjourn.

So perhaps I missed something in those brief moments to explain. Maybe they had completed the agenda. It sure did not seem that way to me!!!

Anyway, I'm sure you'll find out what happened if it was truly out of the ordinary. Just thought you might be interested in my observations.
Terry

 

end.

 

 

I have highlighted the Senator Harken letter to you yesterday night.  This letter was received by the commissioners and it basically states that the commission is mandated to proceed with position limits and not just permissive.  Please read each line slowly to understand its significance.  I got it Wednesday night but Bart asked me not to forward it until it was released at the hearings.  (see www.harveyorgan.blogspot.com)   Friday Dec 17.2010

 

 

end.

 

As many of you know, I look at two very important reports to gauge how the economy is faring, the TIC report which shows how much incoming dollars are entering the economy and the Baltic Dry Index which is a measure of costs of shipping dry goods (as opposed to oil).  If the index is faltering, then the economy is faltering and the measure is very accurate:

 

Here is zero hedge on this important index;

 

Baltic Dry Dips Below 2,000

  

·          

 

 

 

Does anybody else notice the very close correlation between the Baltic Dry and the stock market/myths of economic recovery? Neither do we. Oddly enough, the BDIY did predict the late August S&P surge by about a month. And incidentally, we are back to early August levels all over again. Just as incidentally, the market was about 15% lower back then. Then again, our advice is to pay no attention to this index which tracks nothing relevant, and has no bearing on the world economy (and certainly not markets) whatsoever. And ignore the data on the Bberg chart: the value of the BDIY as of this morning is 1,999.

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end.

 

 

Jim Willie has also commented on the Tropos affair that I highlighted to you last week.  Here is his commentary on this subject:

 

$$$ CONSIDER THE TROPOS THEFT OF A CHINESE FORTUNE COOKIE FROMTAIWAN. THE USFED OPERATES WITH IMPUNITY IN GRAND LARCENY WITH PROTECTIVE COVER PROVIDED BY THE BANK FOR INTERNATIONAL SETTLEMENTS. THE USFED ANSWERS TO NOBODY AND STEAL WITH TARGETED VICTIMS, BUT ONLY FROM WORTHWHILE VERY LARGE TRANSACTIONS. A CASE IN POINT THAT REVEALS DEEP CRIMES BY THE USFED, AS PART OF THE FASCIST BUSINESS MODEL. $$$

Behind the curtain in the marbled world of high finance, fraud, deceit and government sanctioned criminal theft is common. Consider a recent $700 billion stolen in a single stroke, from a passive swipe. The license to steal comes by virtue of the fact that the funds in question are US$-based. Therefore, they must pass through the USFed system. At that juncture, at that filtered pit stop, it is stolen. Imagine a monopoly on a highway where at the tollgate the cars are robbed clean during examination of the currency in wallets and purses, but only the biggest cars since they hold the most money by the passengers. The Tropos Capital Corp of America is a Canadian based firm. In November 2004, an account transfer was facilitated by the Bank of Taiwan. The Automated Customer Account Transfer Service (ACATS) usually is a routine exercise. For this large transfer of $700 billion, the funds entered the US Federal Reserve but they never arrived at their proper destination, a Wells Fargo account #84113424. They were confiscated and stolen. The Bank For Intl Settlements denied any capability to assist in any resolution, and the office of the US Presidency was mum. Letters were exchanged again in November 2010. Appeals by Lerners LLP, a Toronto law firm, have fallen on deaf ears. The matter remains an open issue to this day. See the Scribd webpage, complete with letters to various parties in va in (CLICK HERE). A Chinese document provides other details on the transaction that never was completed (CLICKHERE).

A letter was sent on November 22, 2010 from Robert Hryniak of Tropos to Diego Devos and Liam Flynn, general counsel at the BIS in Basel Switzerland, by both email and standard mail.

In its conclusion, Hryniak wrote "Your failure to act, to inform and to invoke the relevant policing authority is an appalling abdication of your institution's Reason for Being. Why have you not contacted Interpol or the Swiss authorities about this apparent international financial crime, which includes mail and wire fraud? It would seem that the assurance of the fidelity and credibility of the international financial system would be the primary interest of the BIS, but this is apparently not true. Your letter and stark admission of impotence have elevated international level of financial risk for all parties immensely and exacerbated the existing crises in global banking stability." This is work of the US crime syndicate, basic grand theft in plain view.

Harvey Organ provided a summary of the Tropos controversial situation, which is highly charged but surprisingly has not generating much publicity. He wrote, "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), 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 & Settlement Systems that assists in the clearing of the funds as the sole Transfer Trustee. In this case, it seems that the US Federal Reserve kept the funds for themselvesand called upon its ally at 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 New York 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 G-20 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 US Federal Reserve who has absconded with the money. Here are the letters sent to the various parties. 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 United States did something with their money. Maybe buy up all of the gold and silver at the COMEX?" So the USFed, a crime syndicate nexus, has found a way to alleviate its grotesque insolvency, by direct theft.

 

end.

 

 

Recently, the USA received a letter from Tropos  demanding judgment under the Universal Postal Union against the Fed.  It is a very important document  in the process of the Tropos claim.

Previously, Tropos was told that the Fed system needed 24 months to "digest" the request for money.   When this failed, many methods were initiated trying to release the funds.

 

1.A notice by direct inquiry.

2.Requesting a Presidential review

3.Notice to the Office of the Comptroller

 

When all of these failed, they were noted in default along with the Bureau of Public Debt and the OCC.

 

Now a demand has been initiated under the UPU.  A failure to respond is a serious breach of obligations under international law. it is interesting that the USA does not respond.  They could have countersued saying the claim is bogus.

But they do not!!

 

Why are postal rules important?  Simple!! if any untruthful representations sent by mail constitute mail fraud.  It also crosses many borders.  Each claim is subject to a fine of 1 million dollars and a prison term of 30 years.

This is very scary!!

 

The current demand for judgment if the UPU confirms the above,  establishes the insolvency of the USA .  If the UPU does not do what it is suppose to do then nations will simply repudiate all of the USA debt.

 

I find it fascinating that the USA has not countered stating that these claims are nonsense.  They have decided to stay mute.

 

Here is the letter to the UPU from Tropos:

UPU Demand for Judgment December 9 2010

 

 

end.

 

 

 

In conclusion, next week will be exciting to watch as we close out the delivery month of December and enter the options expiry of January. Expect further margin hikes on silver until we reach zero leverage.

 

I will see you on Monday

 

Have a great weekend

 

Harvey

 

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