Wednesday, December 7, 2011

Gold and Silver rise/waiting for resolution from Europe on Dec 9/ Tomorrow testimony from MFGlobal's Jon Corzine

Good evening Ladies and Gentlemen:

Gold and silver had a good day today waiting patiently for news from Europe on how they can going to tackle their huge sovereign debts.  Thus we are just marking time waiting for news to emanate from the EU leaders.
Gold finished the comex session at $1740.90 up 13 dollars on the day.  Silver on the other hand was held back finishing the day down 11 cents to $32.56  Let us head over to the comex and see what happened to inventory movements of silver and gold and also delivery notices.

The total gold comex OI rose by 2565 contracts to 422,956 from 420,391.  The front delivery month of December saw its OI fall from 1223 to 1095 for a loss of 128 contracts.  We had 358 delivery notices yesterday so again we gained in gold ounces standing and lost nothing to cash settlements.  It seems that the bigger boys want their physical stuff.  The next big delivery month is February and here the OI rose a touch from 262,795 to 263,107.  The estimated volume at the gold comex today was very weak at 96,782.  The confirmed volume yesterday, the day of another mini-raid saw its volume swell a bit to 145,868.

The total silver comex OI saw its OI rise marginally from 95,479 to 95,684.  The OI remains very low due to the fact that many investors were thrown out of the window due to the MFGlobal scandal.  The front delivery month of December saw its OI fall from 434 to 419 for a loss of 15 contracts even though we had zero delivery notices yesterday.  We therefore had another round of cash settlements and lost some more ground on silver ounces standing.  The next big delivery month is March and here the OI fell marginally from 54,909 to 54,693.  The estimated volume at the silver comex is very low at 30,277.  The confirmed volume yesterday was still low at 40,012 despite the raid.

Inventory Movements and Delivery Notices for Gold: Dec.  7 2011:

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
225 (Manfra,)
Deposits to the Dealer Inventory in oz

Deposits to the Customer Inventory, in oz
No of oz served (contracts) today
367  (36700)
No of oz to be served (notices)
728  (72,800 oz)
Total monthly oz gold served (contracts) so far this month
17,925 (1,925,000)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month

Again, no gold entered as a deposit by the dealer and no gold was withdrawn by the dealer.
The only transaction was a tiny 225 oz withdrawal from the tiny vault at Manfra.
We had no adjustments and the total registered gold remains at 3.345 million oz.

It is extremely strange that we are in the biggest delivery month of the year, we are looking
at deliveries of 58 tonnes of gold this month coupled with 1.77 tonnes last month and yet no gold enters the dealer.  How on earth are the settling? Are they settling with paper GLD?   Are the CFTC/CME overlooking this criminal behaviour?

The CME reported that we had 367 notices filed for 36700 oz of gold.  The total number of notices filed so far this month total 17925 for 1,792,500 oz.  To obtain what is left to be filed, I take the OI standing for December (1095) and subtract out today's deliveries (367) which leaves us with 728 or 72800 oz left to be served upon.

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

1,792,500 oz (served) + 72,800 (oz to be served upon) =   1865,300 oz ( 58.01 tonnes)

coupled with last month's 1.77 tonnes we have a total of 59.78 tonnes of gold settled.
The registered gold total is 3.34 million oz or  103 tonnes of gold.
Thus the totals for the non delivery month of Nov plus the delivery month of Dec equate to  57% of the total dealer gold inventories.  Yet the inventory levels remain constant through the year at around 3.3 million oz or 103 tonnes.

And now for silver 

First the chart: December 7th

Withdrawals from Dealers Inventory45,982 (Brinks)
Withdrawals fromCustomer Inventory104,216 (Delaware, JPM,Scotia)
Deposits to theDealer Inventorynil
Deposits to the Customer Inventory302,204 (Brinks)
No of oz served (contracts)3 (15,000)
No of oz to be served (notices)416  (2,080,000,)
Total monthly oz silver served (contracts)711 (3,555,000)
Total accumulative withdrawal of silver from the Dealersinventory this month81,659
Total accumulative withdrawal of silver from the Customer inventory this month698,433

We had a little more activity in the silver vaults but still no dealer deposit in silver.
We did have a withdrawal by the dealer of 45,982 oz from Brinks.

The customer had one big deposit:

Into Brinks:  302,204 oz.

The customer had 3 separate withdrawals:

1. From Delaware:  1039 oz
2. From JPM:          47,860 oz
3. From Scotia:        55,982 oz.

total withdrawal by the customer;  104,216 oz.
we had no adjustments.
The registered silver remains at 34.214 million oz
The total of all silver lowers to 108.55 million oz.

The CME notified us that we had only 3 notices filed for 15,000 oz.  The total number of notices filed so far this month total 711 for 3,555,000 oz.  To obtain what is left to be served upon, I take the OI standing for December (419) and subtract out today's deliveries (3) which leaves us with 416 notices or 2,080,000 oz left to be served upon.

Thus the total number of silver ounces standing this delivery month continues to fall:

3,555,000 (served)  +  2,080,000 oz (to be served)  =  5,635,000 oz
we lost another 75000 oz of silver standing to cash settlements.


Before leaving, I have just been sent this interview with Jim Willie.

I know that many have asked me my thoughts on the addition of physical silver to JPMorgan due to the heist at MFGlobal.
Many of us believe that he has a point but it is not conclusive.

Here is the interview:

special thanks to Howard Brown for sending the interview to me.

(Courtesy BullMarketThinking/ author and interviewer: T DaSilva)

Exclusive Interview – Jim Willie: “The Public Will Not Wake Up Until At Least One Million Private Accounts Are Stolen”

December 5, 2011 | By Tekoa Da Silva 

I had the chance to speak with the “Golden Jackass” this afternoon out of Costa Rica, namely, Jim Willie, publisher of the Hat Trick Letter. It was a riveting interview, as Jim’s global information and news sources paint a blackening financial future for participants in the Western financial system.
According to Jim, US & European investors are at incredible risk. “The entire financial system of the Western world is imploding,” said Jim.“There is exponentially rising risks for individuals and their money…the risk right now–is people losing their entire life savings. I cannot seem to get people to understand this”
silver12As we began discussing the MF Global collapse, Jim articulated his belief in a financial slight-of hand originating from “notice to deliver” requests for gold and silver submitted through MF before the collapse, which had the potential to cause a Comex delivery default. “Comex was ready to default on gold and silver in November, and rather than honor the notices for delivery, JP Morgan stole the funds in the accounts that were calling for delivery…notices for delivery were replaced by stolen accounts.”The evidence of this according to Jim is that, “JPM increased the amount of silver in their registered vaults by precisely the amount that was suppose to be delivered…JPM effectively averted both a Comex default and a European Sovereign Debt implosion.
Before closing Jim provided a stark warning, saying, Several million private accounts may vanish–Brokerage accounts, Pension funds, Mutual funds, they’re all at risk. We are getting into the middle stages of implosion, where I believe the public will not wake up until at least one million private accounts are stolen, and completely vanish.
This was a truly sobering interview, and given the real losses borne by MF Global account holders in the past month, Jim’s comments cannot be taken lightly.
To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop:
To learn more about Jim and the Hat Trick Letter,


Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.

Dec 7.2011:

Total Gold in Trust



Value US$:72,273,637,041.64

Dec 6.2011:




Value US$:71,245,010,793.71

We lost a huge 2.12 tonnes of gold today.  With gold rising today my bet is that gold left the B. of England through authorized participants to anxiously waiting investors in London England.  (see commentary yesterday re: Anglo gold)

And now for silver Dec 7.2011:

Ounces of Silver in Trust311,750,133.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,696.51
Dec 6.2011:

Ounces of Silver in Trust311,944,660.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,702.5

we  lost 149,000 oz of silver from the SLV vaults. Again this probably went to put out fires in London England, the dominate center for physical.

And now for our premiums to NAV for the funds I follow:

1. Central Fund of Canada: traded to a positive 2.6 percent to NAV in usa funds and a positive 2.7% to NAV for Cdn funds. ( Dec 7.2011).
2. Sprott silver fund (PSLV): Premium to NAV remained constant at  17.06% to NAV  Dec 7/2011
3. Sprott gold fund (PHYS): premium to NAV rose to a 4.12% positive to NAV Dec 7.2011).

It is good news to see the Sprott silver fund regain its luster rising to a premium of 17.06% despite his prowling the globe for more additional silver and a slight dilution for shareholders.  The Sprott gold continues into the 4% handle and finally we are consistently seeing the Central Fund of Canada return to positive's in NAV,
It looks like investors are seeking out companies that have physical silver in inventory and not a hint of paper silver.


Let us now see some of the big news of the day:

Before delving into some of the more important stories, the following is something that the bankers might expect to receive in the future due to their criminal behaviour these past several years:

(courtesy zero hedge)

Attempt Made On Deutsche Bank Head's Life: Explosive Package Addressed To CEO Intercepted, ECB Return Address Given

Tyler Durden's picture

It seems that popular anger at the banker minority will no longer be confined to tent-based vigils in public parks. In Germany, someone just escalated a bit to quite a bit. The irony, in this case, is that the package was addressed from the ECB. If it weren't for a potentially sensitive topic, the amusing implications could be severe. From Reuters: "A suspected parcel bomb addressed to Deutsche Bank chief executive Josef Ackermann was intercepted at a Deutsche office in Frankfurt on Wednesday, a senior U.S. law enforcement official said. The package was discovered around 1 p.m. Frankfurt time (7 a.m. EST/1200 GMT) in a mailroom, the official said. Initial analyses by investigators confirmed that it contained explosives and extra shrapnel, he told Reuters. A spokesman for Deutsche Bank in New York declined to comment. After receiving reports about the package, the New York Police Department stepped up security around Deutsche Bank's offices in New York and also notified corporate security executives around the city, the law enforcement official said. The official said the suspected bomb carried a return address from the European Central Bank, which is also headquartered in Frankfurt."


Here is a great paper written by Swiss citizen Egon von Greyerz as to why we should own physical gold:

(courtesy Egon von Greyerz)


December 6th, 2011 by Egon von Greyerz


by Egon von Greyerz – December 2011
With most of the world’s major economies as well as the financial system bankrupt, there is only one solution that can save the world economy. Like in the Greek tragedies, Deus ex Machina is now the only way that the world can avoid a total economic collapse. This would involve God being lowered down onto the world stage and miraculously saving the plot.

For those few who believe in this, may God bless them. But since this is a very unlikely solution most people will instead rely on governments and central banks to save us. But how can anyone possibly believe that totally incompetent and clueless politicians and central bankers could solve anything. They created the problem in the first place and are therefore totally unsuitable to play the role of Deus. The main objective of governments is to stay in power and thus to buy votes. Therefore they are incapable of taking the right decisions. And the opposition, aspiring to power is even less suitable since they will lie through their teeth and promise the earth in order to be elected. (We know that there are exceptions like Ron Paul, but the voters will most probably find his medicine too strong to swallow.)
What about central bankers, can’t they save us? Unfortunately any sensible person who becomes a central banker loses all his senses and becomes a prisoner of the political system.


So if there is no Deus ex Machina and if governments or bankers can’t rescue the world, who can and what is the solution. Let us return to the wise von Mises to look at the options available now:
Ludwig von Mises
Mises is absolutely correct: “There is no means of avoiding a final collapse of a boom brought about by credit expansion”. Whatever politicians, bankers, economists or others experts say, there is no solution to this crisis.We have reached the end of the road and are now staring into the abyss.
The credit manufacturing system that started in 1913 when the Fed was founded, began its terminal phase in 1971 when Nixon abolished gold backing of the dollar. It has been clear to us for at least 20 years that the outcome was inevitable. It was never a question of “if” but only “when” it would happen. It is now clear to us that the false prosperity that the world has experienced by printing unlimited amounts of money will very soon come to an end. Thus the “if” and “when” conditions are now satisfied so the remaining question is HOW?
To try to answer this let’s return to Mises: “The alternative is only whether the crisis should come sooner as a result of voluntary abandonment of further credit expansion ….”
To stop the money printing and credit creation would be the only sensible way of ending the failed quasi-capitalist, socialist experiment which is in the process of destroying the structure of the Western world. For almost 100 years we have lived on a system based on debt. This has created a false prosperity as well as false values. The transfer of capital from private enterprise to government by massive taxation is approaching 50% in many countries (see table). The average for 18 industrialised countries is almost 40%. This means that on average 40% of the productive economy is transferred to a non-producing entity (government) which wastes most of the money in the process of redistribution. But not only that, since the state has taken over up to 50% of the economy in these countries, the desire to work, to strive, to take risk and to invent has been taken away from a major part of the population.
For a great many people it is now totally natural to rely on the state for their needs rather than on themselves. And the state needs to borrow/print ever increasing amounts to perpetuate this economy based on an illusion. This situation is totally untenable. Since any additional money printing will only exacerbate the crisis and make the final collapse so much greater, the swiftest solution would be let the financial system implode now. We need to reset the world to a level which is sustainable. The consequences of this implosion would be a collapse of the financial system and a reset of debt to zero. Although this is unthinkable to any government or politician, it would be by far the quickest way to get the world back on its feet with no major debts, minimal government interference, and no central bank that can print money. It would be like a forest fire getting rid of all the dead wood. Out of that would rise masses of green shoots in the form of strong unchequered growth. The transition will of course be traumatic and the current generation will experience enormous hardship. But not voluntarily abandoning the money printing now will just delay the inevitable and the consequences will be dramatically greater and affect many future generations.
Anyone who has followed my articles will know my view that governments worldwide are totally incapable of stopping the money printing. This is their only means of staying in power and buying votes. But not only that,this is the only method they know. This has been their patent solution to all economic problems in the last decades. Not that this is new in history. Most empires have resorted to diluting the value of money by reducing the gold/silver content of coins or printing paper money. But as far as I know it has never before been done by so many countries simultaneously to such an extent.
Since there won’t be any voluntary abandonment of credit creation what will the likely outcome be? Again let’s use Mises words: “…… a final or total catastrophe of the currency system involved”. The problem this time is that we are not talking about one currency or one country. No, we are talking about most of the world’s major currencies. We have been used to measuring currencies and economies on a relative basis i.e. against each other. But this is a total fallacy since all major currencies have been in a race to the bottom for the last 100 years. Most currencies have lost between 97% and 99% against real money –GOLD – since 1913. And since 1999, most currencies have lost 80% or more against gold. So paper money has been a very poor measure of wealth in the last 100 years. Governments are creating credit and paper money and consequently through their fraudulent actions “stealing” from the people whilst at the same time increasing the people’s dependence on the state. And the people does not understand that the value of paper money is declining continuously. But gold reveals the deceitful destruction of paper money. This is why governments do not like gold and try to suppress the gold price.

Endless Money Printing – QE

And how will the currency system collapse? The answer to this question is very simple – through endless money printing. There will be no lasting austerity programmes in any country that can print money. Governments are incapable of sticking to austerity measures since in the end that is a guaranteed way of losing power. As power is the main purpose of all governments, they will use any method to retain it. Within the Eurozone, individual countries can of course not print money but the ECB and the IMF will take care of that. So whilst world leaders are procrastinating and bickering in G8, G20 and all other “summit” meetings, it is absolutely guaranteed that the final outcome will be one QE package after the next. Governments and central banks know that without limitless money printing there would be a deflationary collapse of the banking system and world economy.
The table below shows the financing requirements of the PIGS countries in the next few years. Just Italy and Spain will require €1 trillion in the next 4 years and of that 1/2 trillion Euros in 2012. Only printed money will take care of that.
For many years it has been absolutely crystal clear to some of us (sadly a very small minority) that many major sovereign nations are bankrupt as well as the world financial system. Banks are only surviving because they, with the blessing of governments, are allowed to value trillions of dollars of toxic and worthless assets at full value. And on top of that there are more than $1 quadrillion outstanding in derivatives. These are outside the banks’ balance sheets and there are virtually no reserves against them. The banks are netting the value down to virtually nothing and then applying a miniscule reserve against this net amount. First of all, the netting is only valid when the counterparty pays. When there is a counterparty failure, which is very likely in the coming financial collapse, gross remains gross and the $1 quadrillion remains $1 quadrillion. Secondly, a major part of the derivatives are worthless or not protecting the investors as we have seen with for example Freddie Mac, Fannie Mae, Lehmans and lately MF Global. MF Global had bought CDs to hedge their investment in Greek debt. But they hadn’t understood what they had bought and it turned out it offered no protection at all.


The “final or total catastrophe of the currency system” will occur as a result of the QE or unlimited money printing that will very soon start in the EU, USA, UK, Japan and many more countries. And this currency destruction will lead to hyperinflation as I have stated for many years. Throughout history, substantial government deficits leading to money creation or printing have always been the cause of hyperinflation. Because hyperinflation is always the result of a collapsing currency and not of excess demand.
To any thinking individual, it is totally incomprehensible that governments and central banks believe that an insolvent world can be saved by debt issued by bankrupt nations and then bought by the issuers themselves as there is no other buyer. This is the perfect recipe for self-destruction and “total catastrophe of the system.”

IMF, EU and other failed monstrosities

Time and time again, the world creates massive costly, bureaucratic and unaccountable structures that have idealistic and totally unrealistic objectives.
Take the IMF for example. This is what their mission statement states: “The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”
If financial stability, high employment, sustainable economic growth and reducing poverty are the objectives of the IMF, then they have failed on every single point. So here we have an organisation that receives/borrows money from mainly bankrupt states and then lends the money to countries that cannot or will not ever repay the funds. And in order to carry out this totally futile task, the IMF takes a major cut in between to finance its costly and failed operation. The world does not need monstrous and costly structures that totally fail in their mission. Thus, the IMF should be closed.
Turning to the EU, they state on their website: “The main objectives of the Union are now to promote peace, the Union’s values and the well-being of its peoples”. There are other stated objectives such as: “sustainable development, based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment.”
The EU or the EEC as it was first called was created in the late 1950s. This was a prosperous period in the world economy based on real growth (not debt). As often is the case, politicians with illusions of grandeur create superstructures which only function in good times. The EU’s main objective of creating peace and well-being of the people is now being severely tested. If we for example asked Spanish youth (50% unemployed) about their well-being or Greek people or the Portuguese etc, we would get a tirade of abuse and complaints about the EU. Instead of “creating peace”, we are seeing major tension within the EU that could lead to serious conflicts. And as to “balanced economic growth and full employment”, this has all come to an end. The false prosperity, mainly based on debt, has also come to an end and the EU can only survive intact with the aid of endless money printing. But even that would only be a temporary reprieve. The EU is a failed experiment which is extremely costly and inefficient. The economic ruin of Ireland, Greece, Spain, Portugal, Italy, France etc would not have happened to the same extent without the EU. Like all artificial fiat currencies, the Euro was doomed to fail. Without the Euro, countries like for example Ireland, Spain or Greece would have recovered much faster.

Final or total catastrophe

So we are heading to the final stage or as Mises says a “final or total catastrophe of the currency system involved”. I don’t think that even Mises envisaged at the time that this could involve a major part of the world rather than just one country. This is why this catastrophe will be unprecedented in world history and have consequences that will affect the world economically, socially and geopolitically for a very long time.

Wealth Preservation – Gold

Since 2002 we have advised investors to put up to 50% of their assets into physical gold, stored outside the banking system. Gold has appreciated between 15% and 20% per annum since 2002 depending on the base currency. And most stock markets have declined 70-85% against gold in the last ten years. In spite of this most major investor groups (institutional, funds, asset managers or individuals) own no gold. Gold is money and reflects the total destruction of paper money. But most investors do not understand gold. Common arguments I hear is that “you can’t eat gold” or that “gold pays no return.” It seems that these investors prefer to eat paper money. And as to the argument that there is no yield on gold, who needs yield on an asset that has massively outperformed all major asset classes in the last 11 years. And if we look at 2011, gold has greatly outperformed stock markets in most major countries. Whilst stock markets are down between 1% and 24% in 2011, gold is up more than 20% against all major currencies. So in real terms (gold) all stock markets are doing very badly but still investors persist in riding these falling trends.
Stock markets will benefit temporarily from QE but it is still our view that they will fall another 90% against gold in the next few years.
The correction in the precious metals is now likely to be over and we should see the metals going to new highs in 2012. I had the pleasure of becoming acquainted with Alf Field at the recent Gold Symposium in Sydney where we were both speakers together with Eric Sprott, John Embry and Ben Davies amongst others. Alf is one of the few in the world, if not the only one, who knows how to apply the Elliott Wave principle successfully to gold. Alf’s next intermediate target is at least $4,500 and the ascent to this target could be rapid. That would probably mean a silver price of $150. These technical forecasts certainly confirm the fundamentals as outlined in this article.
The world is in a total mess and there is absolutely no solution to this unprecedented crisis. The hyperinflationary depression that we will experience in the next few years will totally destroy the majority of the credit based wealth that has been created in the last few decades.
In order to preserve wealth and keep capital intact, it is critical to keep a major part of investment assets in precious metals held outside the banking system. But for investors who continue to follow conventional wisdom, they will sadly find that their investment strategy was merely conventional and contained no wisdom.
6th December

Gold Switzerland - Matterhorn Asset Management


The big news of the day is the number of European banks that sought USA dollars as they went to the feeding trough to bail themselves out of a mess:

We had 3 entities comment on this:

first GATA  (who quotes from Jack Farchy of the London times)

Banks step up gold lending for dollars

"'It's hard to understand,' said one New York-based bullion banker." No, it's not hard at all to understand in the context of the need of governments, central banks, bullion banks, and commercial banks to suppress the gold price during a crisis.
* * *
By Jack Farchy
Financial Times, London
Wednesday, December 7, 2011
A dash for cash by European banks in a little-watched corner of the gold market has accelerated this week, highlighting the continued scarcity of dollar funding even after a co-ordinated intervention in the market by the world's largest central banks.
Gold dealers said that banks -- primarily based in France and Italy -- had been actively lending gold in the market in exchange for dollars in the past week.
The rush has pushed gold leasing rates -- the implied interest rate for lending gold in the market in exchange for dollars -- to record lows, according to Thomson Reuters data. The one-month gold leasing rate fell to a low of -0.57 per cent on Tuesday, suggesting that a bank lending gold for one month w"People are lending gold out to raise dollars," said one senior metals banker.
Edel Tully, precious metals analyst at UBS, said banks were "looking to offload metal either for balance-sheet reasons or funding, or both."
Large bullion-dealing banks take gold on deposit from a range of customers such as investors, central banks, and other commercial banks.
Although they often lend out some of that gold around the end of quarterly reporting periods to reduce their liabilities, the moves have been unusually dramatic in recent months as the eurozone debt crisis has caused growing strains in the dollar funding market.
Banks do not, however, lend all their gold and some of it is held in accounts that preclude them from using it for trading.
The rush to exchange gold for cash began in September, when one-month leasing rates fell as low as -0.48 per cent.
Traders cautioned that few if any banks were likely to receive the published rates since they have been skewed in recent months by a widespread reluctance among bullion banks to take gold for dollars.
Bankers said they were surprised to see such heavy lending just after the Federal Reserve and other central banks announced measures to ease dollar liquidity to the financial system.
"It's hard to understand," said one New York-based bullion banker. "This wasn't supposed to happen with the dollar swap lines in place."
The gold leasing rate eased slightly in the wake of Tuesday’s European Central Bank annoucement that 34 banks obtained $50.7 billion in three-month dollar funding. One-month rates were at -0.52 per cent, as borrowing interest returned, according to Ms. Tully.ould have to pay to do so, at an annualised rate of 0.57 per cent.


The second is also from the Financial times from the Frankfurt head office of the London times:

(courtesy Frankfurt's London times/Ralph Atkins/ Tracy Alloway/ Financial times)
Demand for ECB dollar liquidity surges

By Ralph Atkins in Frankfurt and Tracy Alloway in London
Demand for dollar liquidity from the European Central Bank has surged after a price cut agreed with the US Federal Reserve.
Thirty-four banks obtained $50.7bn in three-month loans on Wednesday and five took $1.6bn in weekly dollar liquidity, the ECB reported. The offers were the first by the ECB since the world’s central banks’ co-ordinated action last week to cut the cost of dollar liquidity.
The level of demand highlighted the difficulties some eurozone banks have faced in obtaining dollar funding – although analysts said the figures were not so high as to suggest that serious problems were widespread.
""Thirty-four banks is quite an impressive number," said Alan James, Barclays Capital analyst. "It suggests by making the terms easier, the ECB increased expectations of use and reduced the stigma associated with using the facility."
"That’s a positive for European liquidity," he added.
Tensions in the eurozone banking system have escalated as the region’s debt crisis has worsened. Highlighting the stresses, the ECB reported demand for emergency overnight lending had risen again on Tuesday night. About €8.1bn was borrowed from the ECB’s overnight marginal lending facility, which incurs a penal rate.
That brought use of the facility back to the €8.6bn peak seen late last week and pointed to an acute problem somewhere in the system – although figures on use of the facility might have fallen by Thursday if the bank or banks concerned were able to obtain sufficient funds at Tuesday’s regular auction of weekly euro liquidity.
Use of the ECB’s dollar liquidity facilities – based on an agreement with the Fed – had been low because of the high interest rate charged. Last week’s move reduced the cost of borrowing dollars by half a percentage point to just under 0.6 per cent. The aim was to end the stigma of resorting to central bank funds by making dollar offers commercially attractive to eurozone banks.
Further measures to shore up the eurozone’s weakened banking system are expected to be announcedby the ECB after Thursday’s governing council meeting. Likely steps include offers of euro loans lasting as long as three years – compared with the 13-month maximum at present. The ECB could also broaden the pool of assets that banks can provide as collateral when obtaining liquidity – for instance by loosening the requirements on the use of asset-backed securities or of non-euro denominated assets.

And the first to report on the big increase in dollars sought by European banks, zero hedge:

European Banks Dash For Fed Cash As Dollar Swap Usage Soars, Funding Squeeze Now Shifts To Euros

Tyler Durden's picture

As expected, virtually everyone, or a total of 39 banks (compared to 2 the week prior), scrambled to receive dollars from the ECB following the cut in the USD swap line rate from OIS + 100 to OIS + 50. Specifically, $50.7 billion in 84 day swaps (34 banks asking for dollars at a new and reduced rate of 0.59%) and $1.6 billion in 7 day swaps (5 banks at 0.58%) was just opened for a total of $52.3 billion. The expectation had been that just about $10 billion would be demanded, indicating how close to the cliff Europe's banks had been. This compares to just over $2 billion in the week before, and demonstrates the severity in the funding market that threatened to topple European banks like dominos last week until precisely a week ago the global central bank cartel announced an emergency dollar funding band aid. Reuters confirms: "Banks took more than $50 billion from the European Central Bank on Wednesday in its first offering since slashing the cost of borrowing dollars, a sign that some euro zone banks have problems finding dollar funding as the region's debt crisis intensifies." Elsewhere dollar libor continued to rise, passing 0.54% for the first time in years. This will continue rising as the self-reported dollar funding cost closes down to the OIS+50 differential, or where European banks can borrow from the Fed. And now that the dollar funding squeeze has been confirmed, all eyes turn to the ECB's LTRO announcement tomorrow. "What really matters is what the ECB does tomorrow afternoon, and in that especially what they do with the long-term refinancing operations (LTROs) and on the collateral rules," Societe General economist Michala Marcussen said. "What would be extremely helpful right now is if we get longer maturity LTROs." The ECB is expected to announce ultra-long 2-year or even 3-year refinancing operations after its meeting on Thursday." Needless to say, all these are stopgap liquidity measure to fix what is increasingly a pan European (in)solvency crisis, and thus will achieve nothing in the long run. And what is worse is that the non-USD liquidity indicators have once again hit an inflection point and turned negative: 3-mo Euribor/OIS spread rose to 1.002 vs 0.999 yesterday, near last wk’s high of 1.006 which was most stressed since March 2009. In other words, as we have been saying, the funding squeeze has now managed to shift away from USDs and is impacting the EUR market itself, something the Fed has no control over.
Goldman's Jernej Omahan has more.
In total, 34 banks (previously two banks) tapped the facility for US$52.2 bn (previously US$2.1 bn). In our view, this is an encouraging development. [this is Goldman after all telling us central bank bail outs are good, so nothing new]
The cost of US$ liquidity offered to European banks through the ECB has recently (November 30) been reduced – the rate was cut to OIS+50 bp (previously OIS+100 bp) and the initial margin requirement to 12% (previously 20%). In our view, the current US$ facility provided through the central banks is more attractive when benchmarked against two major marketbased alternatives. As such, we anticipated this rise in usage.
We expect the key results of increased usage to be:
  • Some easing of extreme funding tensions. These have continued to build over recent weeks (rating downgrades, proximity of
    year-end) and US$ funding stress indicators reached a two-year high.
  • Eliminating the stigma. The market viewed the US$ facility as an emergency option and usage came with substantial stigma.
  • Consequently, the banks avoided it. The number of participating banks rose from two to 34. Broad usage is important as it reduces the stigma and is unlikely to result in a “hunt” for banks accessing the facility. Given renewed terms, it is commercially sensible for the usage to have risen, in our view.
Mechanics of the US$ funding facility with the ECB
The size of ECB’s US$ facility is unlimited and the price is capped at OIS+50 bp (with a 12% margin). The market for US$ unsecured
bond issuance has remained shut for European banks for a considerable period of time. The banks therefore have three basic
avenues to access US$: (1) via central bank facilities; (2) market US$/€ swaps; and (3) through a combination of the two. We lay out
our estimate of pricing for the three different facilities below:
  • ECB facility = 1.08%, inclusive of the margin. This cost consists of US$ OIS (currently: 9 bp) and a mark-up added by the central bank (currently: 50 bp). The cost of 12% initial margin (IM) needs to be added – we estimate this to be around 49 bp currently (though this has the scope to vary among individual banks). All-in cost, therefore, is around 108 bp.
  • Market rates for € funding and cross-currency swap = 1.71%. An alternative to the above is to access € funding through € LIBOR and obtain US$ through a cross-currency basis swap. The all-in cost here is 1.71% at current market rates. In line with risk perception, this source of US$ has been rising in price, and currently stands meaningfully above the cost of the ECB US$ facility.
  • ECB repo for € funding and market rate for cross-currency swap = 1.48%. An alternative to the above is for banks to access € funding via the ECB repo rate of 1.25%, and use the market for the US$ cross-currency basis swap. Currently, this amounts to 1.48%, lower than the second option but still above the cost of ECB’s US$ facility.
And visually:


At around 2: 30 this afternoon we got this announcement from S and P:

14:44 European Union 'AAA' rating placed on CreditWatch negative by S&P
* Recall S&P placed 15 of the 17 EU member nations on CreditWatch negative on 5-Dec 
* * * * *

From zero hedge on this announcement:

S&P Warns It May Cut Most European Banks, European Union Itself

Tyler Durden's picture

Not sure why the market is surprised by this, but it is.
  • S&P PLACES LARGE BANK GROUPS ACROSS EUROZONE ON WATCH NEG - BNP, SocGen, Commerzbank, Intesa, Deutsche... pretty much everyone.
  • EUROPEAN UNION'S AAA RATING MAY BE CUT BY S&P - you KNOW Barroso, Juncker and Gollum are going to take this very personally
  • In short: Commerzbank AG, Natixis S.A., Credit Agricole S.A., Eurohypo, Deutsche Bank L-T counterparty credit rating, Deutsche Postbank AG, Intesa Sanpaolo,Societe Generale L-T counterparty credit, UniCredit SpA, Credit Du Nord L-T counterparty credit, Comapgnie Europeenne de Garanties et Cautions, Credit Foncier de France, Locindus S.A., Rabobank Nederland, CACEIS, Banca IMI SpA, Ulster Bank, Banque Kolb, Bank Polska Kasa Opieki S.A. ratings may be cut by S&P.
Basically, S&P just told Europe it has two days to get the continent in order or else. Said otherwise, it just called Europe's bluff. The problem is Europe is holding 2-7 offsuit...
And now is the time for the FT to eviscerate the bears with the latest groundless rumors.
From the S&P's downgrade of the EU:
  • On Dec. 5, 2011, Standard & Poor's placed the ratings on 15 of the 17 member states of the European Monetary and Economic Union (EMU or eurozone) governments on CreditWatch with negative implications. As a result, the ratings on 17 European Union (EU) member states are now on CreditWatch with negative implications.
  • We are therefore also placing the 'AAA' long-term rating on the EU on CreditWatch negative. At the same time, we are affirming the 'A-1+' short-term rating on the EU.
  • The CreditWatch placement on the eurozone member states was prompted by our concerns about the potential impact on these member states of what we view as deepening political, financial, and monetary problems within the eurozone.
  • Eurozone members directly contribute approximately 62% of the EU's total 2011 budgeted revenues. Our CreditWatch review will focus on the financial ability of eurozone member states to support the EU's debt service should the institution face a period of financial distress.
  • We expect to conclude our review as soon as possible after the European summit on Dec. 9, 2011. Depending on the outcome of our review of the ratings on eurozone member governments, we could lower the long-term rating on the EU by one notch, if any.
LONDON (Standard & Poor's) Dec. 7, 2011--Standard & Poor's Ratings Services today placed its 'AAA' long-term issuer credit rating on the European Union (EU) on CreditWatch with negative implications. At the same time, we affirmed the 'A-1+' short-term issuer credit rating on the EU.
The CreditWatch placement is prompted by similar CreditWatch placements, which we made on 15 eurozone sovereigns on Dec. 5, 2011. The CreditWatch on the EU is an expression of our concerns about the potential impact on the future debt service capacity of eurozone sovereigns, and therefore also the EU, in the context of what we view as deepening political, financial, and monetary problems within the eurozone. Eurozone members account for 62% of the EU's total 2011 budgeted revenues. For 2011, budgeted revenues from Germany and France were 32% of total EU revenues, at 16% and 14%, respectively. In total, 'AAA' rated member states account for just over 49% of the EU's 2011 budgeted revenues, with only the U.K., Denmark, and Sweden retaining a stable outlook (together they contribute 13% of the EU's 2011 budgeted revenues). Given the EU's dependency on such revenues from national budgets, and our recent CreditWatch placements on the 'AAA' ratings on Germany and France, among others, we will concurrently review the 'AAA' long-term rating on the EU with the ratings on the eurozone member states.
We expect to resolve the CreditWatch placements on the eurozone member states as soon as possible after the European summit on Dec. 8 and 9, 2011. Following this, we then expect to resolve the CreditWatch on the EU. We typically resolve CreditWatch actions within 90 days, although we will attempt to resolve the CreditWatch placements on eurozone sovereigns and therefore the EU sooner, if possible and appropriate.
We could lower the long-term issuer credit rating on the EU by one notch if we were to lower the current 'AAA' ratings on one or more member states, with a special focus on the largest contributors, France and Germany. Conversely, the ratings could be affirmed at their current levels if we were to affirm the member states' 'AAA' ratings following the respective sovereign CreditWatch review.

And from the bank downgrade:
--Standard & Poor's Ratings Services said today that it has placed its ratings on some of the largest rated banking groups in the eurozone on CreditWatch with negative implications (see ratings list below). Similar rating actions on other large banks in the eurozone will follow soon. This follows the placement of the sovereign credit ratings on 15 members of the European Economic and Monetary Union (EMU or eurozone) on CreditWatch with negative implications on Dec. 5, 2011 (see "Standard & Poor's Puts Ratings On Eurozone Sovereigns On CreditWatch With Negative Implications").

We believe that the ratings on Austria, Belgium, Finland, Germany, The Netherlands, and Luxembourg could be lowered by up to one notch, if at all, and those on Estonia, France, Ireland, Italy, Malta, Portugal, Slovak Republic, Slovenia, and Spain by up to two notches, if at all.

We intend to resolve the CreditWatch placement on these banks soon after the resolution of the CreditWatch placement on the related sovereign.

We will publish individual research updates on some of the banks identified below including a list of ratings on affiliated rated entities. The research updates will be available and on RatingsDirect on the Global Credit Portal. Ratings on specific issues will be available on RatingsDirect on the Global Credit Portal following release.


From GATA/KingWorld News and James TurK:

Banking system near collapse, Turk tells King World News

12:40p ET Wednesday, December 7, 2011
Dear Friend of GATA and Gold:
GoldMoney founder and GATA consultant James Turk today tells King World News that the European banking system nearly collapsed last week under the weight of withdrawals, that national overindebtedness is always followed by currency devaluation, and that gold and silver still seem to him to be poised for a breakout. An excerpt from the interview has been posted at the King World News blog, under the headline "The Banking System Is on the Verge of Collapse," here:
Note that King World News does many more interviews with financial market figures than GATA calls to your attention and that you can check out the recent list at the bottom of the Turk interview page.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

This is scary as the German finance minister Schauble is ready to do a TARP program with German banks. 
I guess the German banks are also teetering due to their indigestion of PIIGS bonds:

(courtesy zero hedge)

EuroTARP Cometh: Germany's Schauble To Pull A "Paulson" Will Force Banks To Take Bailout Funds, Handelsblatt Says

Tyler Durden's picture

In yet another confirmation of just who is driving policy in Europe, Handelsblatt has broken news that 3 years after Hank Paulson "forced" US banks to take cash, Germany will follow suit next, and "bailout" the German banking sector by stuffing it to the gills with cash soon to be made even more worthless courtesy of persistent and relentless devaluation as it is used for no productive purposes but merely stave off the inevitable collapse of a financial system so broken it now requires not monthly but weekly bailouts. From the German publication: "the German bank rescue fund Soffin will force ailing banks to recapitalize next year. That's at least out of the draft bill, to be released by the Handelsblatt (Thursday edition), and the Cabinet is to decide the next week. Finance Minister Wolfgang Schäuble (CDU) is following the U.S. example: The US distressed banks were temporarily distressed during the 2008 financial crisis. The banks have since there is significantly more stable than the euro-zone in which the institutions were saved only at their own request the European Banking Eba by the banks of the euro-zone by mid-2012 its core capital to nine percent increase. Institutions that make this not your own to get guarantees from the Soffin." Simply said, because it worked (courtesy of an additional $1.6 trillion in excess reserves used fungibly by banks to plug capitalization holes) in the US, the forced bailout will work in Germany, where unlike the US, the top banks account for about 200% of German GDP. In other words, Germany is about to proceed with an implicit nationalization of its banking sector. Which means that while we thought yesterday that the German AAA-rating is the safest of all in the Eurozone, following this development we will certainly reevaluate.
More from Handelsblatt, Google translated:
Creates a German bank recapitalization is not your own, they can apply for help from Soffin. The Institute is unreasonable, the German banking supervision BaFin force it to accept government money. Normally, the state then receives shares in accordance with the Institute. It remains possible, however, continue to provide assistance to a silent partnership - but then must agree to the Bundestag, says the bill, with the will of the rescue fund Soffin are now revived quickly. After the acute financial crisis it had been closed in late 2010. He should be able to redeploy by the end of 2012 up to € 400 billion of loans and guarantees over €70 billion.

A Cabinet decision creates even before the adoption of the federal law assurance that no systemically important bank to fail in Germany to the new capital requirements. This, it says coalition circles, confidence is expected by the markets to the eba-stress test banks to strengthen significantly affected.

As a candidate for aid is already partly nationalized Commerzbank. Their boss Martin Blessing previously insisted to ask again in no case to state aids to want. If the German Financial Supervisory Authority BaFin, however, the view would be that Commerzbank's capital increase alone could not establish that the state would give the money by force.
One wonders if Schauble, who is now the next "Honk" Paulson, has also advised German hedge funds to trade as is appropriate, to a broad banking sector nationalization, in keeping with the US SecTres's behavior before the US bailouts began in earnest.
We expect the answer is a resounding yes.
And for those wondering why Germany needs a preemptive TARP, and why its banks are in deep doodoo, here is a reminder:

Read This and Tell Me Germany Wants a Monetary Union

Phoenix Capital Research's picture

I’ve stated before that I fully believe Germany will be leaving the Euro. With that in mind, I want to draw your attention to recent comments from Germany’s finance minister, Wolfgang Schauble.

Wolfgang Schauble admits euro bail-out fund won't halt crisis

Europe's "big bazooka" bail-out fund is not ready and won't stem the debt crisis that on Tuesday pounded Italy and the European Central Bank (ECB), admitted Wolfgang Schauble, Germany's finance minister.

This is a pretty strong admission from the finance minister of the country that Europe looks to as a financial backstop. And the following is even more disconcerting for the future of the Euro:

      Seeing in Crisis the Last Best Chance to Unite Europe

MR. SCHÄUBLE said the German government would propose treaty changes at the summit of European leaders in Brussels on Dec. 9 that would move Europe closer to the centralized fiscal government that the currency zone has lacked. The ultimate goal, Mr. Schäuble says, is a political union with a European president directly elected by the people.

“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”

Critics say the spending cuts German leaders have demanded from other countries are hurting growth across the Continent, in the process making debts only harder to repay. And his proposals to give the European Commission far-reaching powers to enforce budgetary discipline have been likened by skeptics in Britain to an invasive new “super state.” Even some euro supporters fear that Mrs. Merkel and Mr. Schäuble are talking about long-term changes while panicked investors and practiced speculators are tearing the euro to pieces right now.

“There is a limited transition period where we have to manage the nervousness on the markets,” Mr. Schäuble said. “If it is clear that by the end of 2012 or the middle of 2013 that we have all the ingredients for new, strengthened and deepened political structures together, I think that will work.”

He sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.

Note that Schauble repeatedly emphasizes the goal of a “political union,” NOT a “fiscal union” or “monetary union.” Indeed, his one reference to a “fiscal union” is in the “short-term,” while stressing that in a “larger context” the EU needs a “political union.”

The message here is very, very clear: Germany is interested in the EU as a political entity, NOT the Euro as a currency. With that in mind, consider the following story which received almost NO attention from the media:

-German Chancellor Angela Merkel's conservatives on Monday passed a resolution at a party convention urging the government to establish rules in Europe that would allow a country to voluntarily leave the euro zone without giving up membership in the European Union.

The resolution reads:

"Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily--according to the rules of the Lisbon Treaty for leaving the European Union--leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro."

I fully believe that Germany is laying the groundwork for it to leave the Euro while still remaining a member of the EU. The alternative to this would be for Germany to demand other nations give up their fiscal sovereignty and make Germany a kind of monetary authority in exchange for additional bailouts. However, the likelihood of this option being presented is next to ZERO as ALL of Europe remembers WWII and the threat of German rule.

So I expect Germany to duck out of the Euro in the near future. It may happen in the next few weeks or it may happen in early 2012. But considering that the Federal Reserve had to step in to save the European banking system today I believe it will be sooner rather than later.

If you’re looking for specific ideas to profit from this mess, mySurviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

Best of all, this report is 100% FREE. To pick up your copy today simply go to: and click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers


Zero hedge discusses the rise in bond yields in Italian and Spanish bonds:

Spanish Spreads Jump Most Since July As Italy 10Y Breaches 6% Again

Tyler Durden's picture

Presented with little comment, except to say reality is returning as credit markets are starting to price in some disappointment. Italy 5Y is underperforming as the basis trades we mentioned yesterday are unwound and Italy 10Y has broken back over 6% as their curve remains inverted. Spanish 10Y spreads are up over 35bps today and 50bps from yesterday's tight print as Belgium and Italy follow suit. The swing in Spanish 10Y spreads, on a percentage basis, is massive, empirically,from a 4.5 standard deviation compression on Monday to a 2.5 standard deviation decompression today as today's widening in the biggest relative jump since July 11th - more small doors and large crowds?
10Y Sovereign spreads across Europe are accelerating wider today as reality sets back in.
On a percentage basis, Spanish 10Y spreads dropped over 17% (4.5 stdevs) on Monday and then jumped almost 12% today (2.5 stdevs). How is that going to help with asset allocation and risk budgeting?
Charts: Bloomberg


I will leave you tonight with this paper from Charles Hug Smith where he states that any EU fiscal union is tantamount to debt serfdom or debt slavery:

(courtesy Charles Hugh Smith of Two Minds/zero hedge)

Submitted by Charles Hugh Smith from Of Two Minds
EU Fiscal Union = EU Debt Serfdom
"Fiscal union" is a code-phrase for a highly profitable debt-serfdom: the banks profit, the EU bureaucracy flourishes and the people of the EU are imprisoned in a modern serfdom.
The stock and bond markets are gearing up to celebrate the EU's approval this Friday of "fiscal union," the necessary surrender of sovereignty that's needed to seal the bondage of the EU's hapless citizenry to the banks and the lapdog bureaucrats slavishly devoted to their dominance.
"Fiscal union" is the code-phrase for the EU nation agreeing to automatic sanctions (penalties) should their borrowing exceed what is deemed prudent. In this sense, it's little different from the 3% deficit limit that the member states agreed to via the initial treaty but conveniently ignored.
The "teeth" of automatic sanctions is supposed to force nations to "tighten up" their fiscal and tax policies (including collection)--"austerity" at the fundamental economic and governmental levels.
In other words, "Oops, we borrowed too much, default looms, let's paper over the insolvency by really really really promising to borrow less from now on."
The mechanisms of the overborrowing--overleveraged, politically dominant banks and the euro--are left untouched. Why? For the "obvious" reasons the mechanisms of EU governance has been captured by the banks and their apparatchiks, and as a result of the quasi-religious devotion of the Eurocrats to the single currency, a catastrophically wrong-headed fantasy that they cannot give up without losing face.
I described the systemic problem with "austerity and higher taxes" as a "solution" to crushing debts in It's Your Choice, Europe: Rebel Against the Banks or Accept Debt-Serfdom (December 5, 2011): it sets up a positive (mutually-reinforcing) feedback loop where diverting more of the national surplus to pay interest on old debt leaves less for productive investment, a cycle of indenturement to debt that ratchets the risk of default ever higher, which drives interest rates up which then increases the cost of servicing all that crushing debt which then diverts more of the national surplus (via austerity and higher taxes) to paying the higher interest.
Every euro shipped off to the banks and bondholders is a euro that isn't going to be spent in the national economy, which means the economy contracts from a dearth of investment, income and spending."Growing our way out of debt" is impossible in this indentured-to-debt positive feedback loop.
In a functioning democracy, then those who reaped the gain (the banks) would actually be exposed to the risk that accompanied their gain. But sadly, the EU is not a democracy except as a simulacrum propped up for PR purposes. The risk and the gain have been neatly separated by the Eurocrats and the toady figurehead leadership (Merkozy et al.).
As a result the gain remains safely private with the banks while the risk and losses are shifted to the taxpayers and citizens of the EU, who must now make good on those stupendous losses while remaining exposed to the risk of future default.
The same is of course also true in the U.S., another facsimile democracy in which the government and its proxies guarantee banks' profits and leverage while transferring the risk and losses to the voiceless taxpayers. (Go try to cast a vote over Fed policy. Serf, meet your Overlord, Ben Bernanke).
The banks and their lackeys in government prefer to use unaccountable proxy agencies to do the heavy lifting--the European Central Bank (ECB), the Federal Reserve, and the European Financial Stability Facility (EFSF), which is soon to be joined with other alphabet-soup agencies of oppression and predation, all in the name of "rescue."
Rescuing who and what? The banks and bondholders, of course. This requires avoiding not just democracy but also capitalism, which would require the clearing of bad debt via the discovery of price of both debt and risk, and also socialism, which would require wiping out the wealth of the banks and bondholders via nationalization, a process that would at least return surviving assets and control to an elected government.
It's not democracy, capitalism or socialism--it's all opacity and artifice to mask the imposition of a new, improved debt-serfdom on Europe, all in the name of "fiscal unity."
The eurocrats and the toady leadership would be more honest were they to simply declare: "We had to destroy democracy to save the banks. You are now serfs in our financial fiefdoms."


It is late tonight and I am a little tired so I had better say goodnight.
I will see you tomorrow night.


FunkyMonkeyBoy said...


I think all these numbers provided by the CME/COMEX are complete and utter junk. As you have stated, they just don't add up.

I think the mistake you make is that you seem to give certain part of the data (i.e. Open interest, figures for those standing in a delivery month) credibility, while, rightly, condemning other data (such as vault movement data) as suspect.

Ask yourself this, why would an organization, such as the CME/COMEX, which you have stated is a criminal organization. Why would they provide ANY REAL DATA? There is no oversight or audit. They can literrally state whatever they feel suits their criminal agenda, are they are.

I think we need to think of the COMEX/CME in the same way we think of 'fantasy sports' as compared to real life sport, i.e. like Fantasy hockey, or fantasy NFL, fantasy NBA, etc...

... so, i think you're commentating on a 'fantasy precious metals market', which has little to no bearing on the real physical metals market. Is this worth doing?

Why not concentrate on proving that 'cash settlements', 'COMEX is on fire', 'London vaults are on fire' is actually happening in the real world?

As far as i can see Venezuela has successfully got it's first shipment of physical gold from London, tonnes of. How is this possible based on what you have commentated on over the past couple of years? It's at odds of your 'the vaults are near empty' of physical view point.

If the COMEX is a criminal as is suspect there should be mountains of ACTUAL evidence instead of circumstantial evidence? And like i stated before, why does not one PROVE conclusively that this is the case?

Something needs to break this cycle of same old same old.

Harvey Organ said...

To FunkyMonkeyBoy:

I just report the facts that are provided to me. Yes, there are many days that I scratch my head in bewilderment. In the OI I feel that there are some honest guys over at the CME who try and give us accurate data. However when it comes to deliveries that is a whole different kettle of fish.

My goal is to leave a paper trail as to how this fraud was perpetrated for so long a period of time.

As for Venezuela. They got their first shipment of many to come, and yes it was from London.

However, they did not receive the full allotment from London which is 99 tonnes of gold.

You probably did not pay attention to what I said would happen once the London gold was repatriated.

I knew that London would supply correctly the number of oz Venezuela had registered in their name. London prides itself on providing the physical metal once it has been asked for.

The problem however is the huge balloon of derivatives left behind.
The London gold market is leveraged 50 to one and maybe 100 to one. When you remove 99 tonnes then you have at least 5,000 tonnes of derivatives that must be unwound. If it is not then more deliveries will certainly break the LBMA.

all the best

sierra_hpbt said...

Monkeybeatoffboy... how much Gold did Venezuela actually get? 1/3 of what is do? How many ounces of gold that venezuela owns is what percent of total gold on the planet? Why does it take so long for them to get the pittance that they have compared to other nations? Why is it Germany can't get its gold back? You deal in half truths and bullshit.. much like that douche bag kid dynamite or should I say dud... If you don't like what Harvey does, take your sorry ass over to kid dynamits site where you 2 can mutually mentally masterbate each other.. Her is somehting else you may enjoy.

Thanks for all you do Harvey.. ignore the ignorant ass...

Bill said...

Pardon my stupidity but I don't understand? Trading gold for dollars? So, in this crazy, twilight zone of a world, is the USD as good as gold?

FunkyMonkeyBoy said...


I think your diet contains too much aspartame.

You claim i state 'half truths', when i stated no claims to truths at all, I AM ASKING FOR FACTS/TRUTH, not stating anything as truth.


"Why is it Germany can't get its gold back?" - Proof please.

"Why does it take so long for them to get the pittance that they have compared to other nations?" - They don't seem to be complaining, they asked, and they got, within a couple of months. Why wouldn't they take delivering in batches? That seems common sense to me given the size and value of the delivery.

Do you know what common sense is, or are you just a sheeple condition by normalcy bias of this silver/gold bug movement?

I own physcial gold/silver, but it doesn't stop me being a critical thinker. Do you know how to think and question?

TheGilliom said...


You are such an annoyance. Why don't you prove
they aren't being settled in cash? I'd also like your
opinion of Jim Willies statements regarding the MF Global
mess. Yeah, there is no fraud or manipulation in the
or interventions in the markets

FunkyMonkeyBoy said...


Clearly not a critical thinker.

What an idiotic thing to say: "Why don't you prove
they aren't being settled in cash?"

I think the burden of proof should be the person making the claim, not the other way around.

A bit like saying "prove God doesn't exist"

If you're a typical example of a precious metals bug going up against alleged PM criminal JPM, then JPM are laughing all the way to the bank.

TheGilliom said...

I didn't hear any comment about Jim Willies
comments monkeyboy. Good old JPM has
their hands in everything. So I guess according
to you we can't state our opinions even based
on circumstantial evidence. This blog is for our
events for the news of the day plus the Comex
activity along with Harveys great commentary. I
like how you demand things from the bloggers
own blog. Get your own blog and stop cluttering up
this one. If anyone else feels this way feel free to
give me a here here.

Horatio said...


Here Here

Anonymous said...


I greatly appreciate your effots. The following question from your most recent post is very interesting: "It is extremely strange that we are in the biggest delivery month of the year, we are looking at deliveries of 58 tonnes of gold this month coupled with 1.77 tonnes last month and yet no gold enters the dealer. How on earth are the settling? Are they settling with paper GLD?"

It seems to me that this would be an easy question to answer by talking with one or more people who are standing for delivery. Surely, somebody is willing to talk. Do you have any first-hand accounts about recent deliveries?

Anonymous said...

Hear Hear:)

Anonymous said...

This is what I was trying to communicate to Turd's entourage the last time I was in a chat room there.

Ludwig von Mises

Most of them continuing to game the system don't seem to understand that you have to decide between having some metal now, seeing it fail now, and being able to survive reasonably well, OR having a lot of metal in the future, seeing it fail far ahead in the future with enough time for the elites to have everything in place for a complete takeover of the world, and you not being able to survive one day beyond the collapse.

I gave them that choice, and they seem to have chosen the latter, most of them. What I'm referring to is whether to get out of paper NOW or to keep playing the markets and using the money to buy more metal faster. To me, the latter is a sign of greed.

I'll put it this way. I won't have a lot of silver compared to these people, since I don't make a lot of money and my silver buying has slowed down tremendously since silver went up over $20, BUT my conscious is clear by choosing not to participate in that game. Remember that what goes around comes around.

You've been given a chance now to reconsider future actions. Do not be discovered by angry mobs post-America that you were one of the traders trading right to the end so that you could become the "new-rich" among metal holders.


Anonymous said...

"here here" FunkeyMonkeyBoy, you surely are an annoyance to Harvey's blog. I have been a follower of Harvey's analysis and commentary for some time and find it very valuable in making my own decisions to purchase physical gold and silver. It sounds to me like you doubt your own choices and as a monkey boy, you clearly don't know your head from your rear as Harvey has stated this is public data he presents. You present an ass in yourself! It is simple economics and math, you either believe the global monetary system is on the verge of collapse, and there is ample proof of that, and you buy gold and silver and sleep comfortable knowing there is no 3rd party counter risk, or you live your life of being paranoid that you may have made a bad "trade".....

Anonymous said...


yeah, great post.

I think generally there's 3 choices.

a) buy physical metal, stop trading
b) do not buy physical metal, trade/invest in paper money
c) buy physical metal, leave some $'s for trading

Absolute peace of mind is (a). # in this category is likely growing but still relatively small. It's inevitable this category will grow substantially, slowly and then not so slowly.

I suspect the the vast majority/all of those reading metals blogs do not fall into category (b). But the 99% or whatever are solely in paper. Some fortunate ones will get into holding physical metals. In any case, not a category one wants to be in.

And I suspect most that own physical metals are in category (c). This can further be broken down to those who i) set aside $'s and are ok with worst case scenario of losing it all to the casino and those whose ii) $'s are not play money and cannot afford to lose these $'s.

Imo, those in category (c)(i), set a target # of ounces for both gold/silver (Fofoa's approach hits home with me - equal # of gold oz's and silver oz's) and then, if one chooses to trade, it's with $'s leftover.

There's many out there playing the convert silver to gold when a target ratio is hit and thus own way more silver than gold. Pros/cons to this approach, and a game I personally don't play.

enocent said...


you state-"I think all these numbers provided by the CME/COMEX are complete and utter junk. As you have stated, they just don't add up."
you are completely right. I am glad that Harvey logs the rubbush that cme is publishing. At least Harvey publishes the facts with interpretation for the world public of this play. Because of this great work, the CFTC has a hard time to explain what they are actually doing to the public. I hold them accountable for this crime. The cftc will go to jail together with the banksters, as finally this will be brought to court. Meanwhile the bankster and the cftc people have a great time $$$$.

Only thanks to Harvey's efforts we become aware of this fraud of the cme & accomplices CFTC.
If the cftc doesn't investigate these facts published by Harvey, then they are part of the game.

Harvey, keep on publicing and make the sure the CFTC is held accountable and feal uneasy with these FACTS, so they start to to their job,

@Harvey, may be it would be nice, to have a summary of what the cftc has accomlished so far. (nothing?)

Thanks Harvey

Anonymous said...

Harvey astonishing collection today - first rate!
FMB OK let's move on a bit...
Tekoa has done an astonishing series of interviews with top class people and is well worth checking out, well done Tek!

Anonymous said...

Oh yes I forgot:
They have not yet managed to sort out the straw man issue of what a "swap" means yet have they?
That is cool though, as it leaves a little window of time to take action...

Harvey Organ said...

Good morning to you all:

just a little heads up for tonight:

gold deliveries 77

(Outstanding contracts waiting to be served last night totaled 728)

silver deliveries: 24

(outstanding contracts = 416)

see you tonight.


Anonymous said...

Good morning to you Harvey. FMB, we all know that the numbers from the comex is "fantasy football", I agree with that statement 100%, unfortunetly the fantasy game controlls the physical game, I really wish it were true to football, my beloved cowboys would be doing better. A quick statement on mf global. I heard celente on a radio show a few weeks back, the host made a statement about why no other high profile people have come forward, celente said" there are other high profile people out there, I don't understand why they have not" then he got cut off by host, then commercial, and then the subject never came up again. So here is where the scam is. The msm, and this ag committee, will focus on all the food futures, and NEVER bring up the missing gold/silver(the wsg had front page story yesterday, all about the farmer, evan had a picture of his little girl, to get your emotional side) Notice they ALWAYS say "not everyone will get there money back" They are being blackmailed! If you stand for delivery, you go to the "oh, we cant find your money" column, If you don't stand, well here is your money back, with a gag order/ gag contract. Can I "prove" this NO, but why else would they keep silent?. The money changers(junkeys) and the federal goverments have to keep the money system going or they lose power, and they use the futures market to control inflation on real goods to help the serfs stay in line. They have created about $20,000,000,000,000 in the last couple of years, And gold/silver/copper(monetary metals for eons) are down??? I read your blog everyday harvey, keep doing what you do. God bless you and yours. p.s. Freedom of speach is to protect the views of the minority, Keep on speaking your mind fmb, I sometimes, agree with you, other times I do not, but thats what its all about brother.

Anonymous said...

The wsj story about the farmer was front page of biz section, my bad!

Anonymous said...


If you please...

If all of us are wondering how the bullion banks are settling, ie.:

1) With bullion, then why no drop in Registered?

2) With cash, then thats illegal.

So...why aren't you all URGING the CFTC to immediately look into how they are settling? These numbers are right before their eyes.

Thanks in advance,


Anonymous said...

Anyone else notice that JPM's PPS and the PPO of Silver were about the same for a breif instant this morning? This is when JPM always smacks it down. And for all the nay-sayers about this out there and doubters about whether this fact is legit, overlay a JPM daily stock chart on the chart of silver. They CANNOT have their PPS go under by very far, ESPECIALLY at this stage in the game....their derivitives will implode. Granted only on their books.

So, I know your counter point and question devils advocates....why didn't JPM implode when silver was at $50 back when JPM's stock price was at $40? Because it happened so fast, they knew they are were to knock it down tremendously AND they were in much better financial shape then. They are literally hanging by dental floss at this point.

What would Dimon/Blythe say today?

All is well in the land of JPM.

You want to make money in the stock market? SHORT JPM with leverage. (Not advice, just a thought)


Anonymous said...


A $50.00 smackdown in the Gold 1754-1704 as of 11:25 est. This is done on the day JC testifies "I have no idea were the money is". Yet again
the idea of a "good delivery" is redefined.

Anonymous said...

Germany is setting the stage for leaving the Euro IMHO. It knows that imposing honerous checks and balances on other Euro countries will likely be unpalatable so it can use this as an excuse to create a convenient Euro exit door for itself.

Germany has one of the largest Gold reserves in the world (second only to the US as far as I remember) so any strengthening in teh Gold price should see it benefiting. The US should also keep a hold of its reserves as the price goes up and the value of the dollar debases.

Greg Dock.

Anonymous said...

"Man, I feel like leaving the country today, great day to get out of town, and away from office" genler dec 8 2011 Sorry I lied about this quote!

Anonymous said...

Regarding "waiting for resolution from Europe"

I heard that the real definition for EFSF is


That's all folks

Anonymous said...

FMB, I have changed my mind on some thing I have said all my life, the only dumb question is the one that no one asks, well you have made me make a change of heart, You are a total FUBAR & I would help you but time does allow to mess with those who never have been were millions have been & still live but do not want to talk about it period. All 3 branchs of gov,plus the SEC,CFTC,TSA,FDA & all the rest of these gov butt buddies have become a FUBAR on a scale that has joined in with the devil to destroy all that is good & keep good down long enough to steal as much as it can, but all that extra weight will sink them dowm to Davey Jones Locker! Peace out BIA's!

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