Monday, December 12, 2011

Sheer Bedlam/gold and silver attacked/bourses around the world fall in price

Dear Ladies and Gentlemen:

Today bourses around the globe plummeted as many have figured out that the Friday accord was really a phony and would not solve the economic crisis in Europe.  No doubt today we had many getting out of GLD/SLV and into real metals.  Confidence is now beginning to wane.  The price of gold finished the session at $1664.20 down $47.80 dollars.  The price of silver fell to $30.94 down $1.23.  I would like to emphasize to you that these prices are paper gold price and paper silver price.  The clowns continue to whack the paper price with no profit motive just to keep the price down and show the world that everything is fine.  Let us now head over to the comex and see how trading fared with respect to inventory movements and deliveries.

The total comex gold hardly budged with today's reading shedding only 187 contracts from Friday's, coming in at 424,055.  In another shocker, the front delivery month of December mysteriously saw its OI rise from 1356 to 1545 for a gain of  189 contracts despite 276 deliveries on Friday.  Thus we gained  465 contracts or 46,500 oz of gold standing.  The next big delivery month is February and here the OI fell slightly from 262,295 to 261,430.  The estimated volume today was high but I will bet most of the sales were short sales by the bankers as they have no backing for gold.  The confirmed volume on Friday with no raid came in at 113,304.


The total silver comex OI fell slightly by a little over 400 contracts to 96,348.  The front delivery month of December saw its OI fall 15 contracts to 376 from 391.  Since we had zero deliveries on Friday, we thus again lost 15 contracts to cash settlements.  Notice the contrast to gold.  The next delivery month for silver is March and here the OI fell by approximately 1500 contracts to rest tonight at 52,576.  The estimated volume today was surprisingly tiny at 37,978 despite the big raid.  The confirmed volume on Friday was 35,454.


Inventory Movements and Delivery Notices for Gold: Dec.  12 2011:


Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
40,091 (Manfra,HSBC)
Deposits to the Dealer Inventory in oz

nil
Deposits to the Customer Inventory, in oz
32,000 (HSBC)
No of oz served (contracts) today
21  (2100)
No of oz to be served (notices)
1524  (152,400 oz)
Total monthly oz gold served (contracts) so far this month
18,199 (1,819,900)
Total accumulative withdrawal of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
42,552



Strange day at the gold vaults today.
Still no gold deposit into the dealer.  The entire action was with the customer.

On the deposit side of things we had another of those perfectly round 32,000 oz and the vault
is HSBC.  Since I have been reporting on the nice round deposits generally going to Brinks, I guess the boys are trying to throw the scent somewhere else.  You just do not get exact deposits like this.

On the withdrawal side:

1.     40,027 oz from HSBC  (notice the ..27)  this is a normal withdrawal.
2.     64 oz from Manfra.

total withdrawal:  40,091 oz.
we had a tiny 98 oz adjustment as a customer leased this gold to the dealer.
The total registered gold remains at 3.347 million oz

The CME notified us that we had 21 delivery notices for 2100 oz of gold.
The total number of notices filed so far this month total 18,199 for 1,819,900 oz.
To obtain what is left to be filed, I take the OI standing (1545) and subtract out today's deliveries (21)
which leaves us with 1524 notices or 152400 oz left to be served.

Thus the total number of gold oz standing in this delivery month of December rises to the following:

1,818,900 oz (already served) +  152400 oz (to be served upon)  =   1,972,300 oz or 61.34 tonnes
or  60% of registered dealer gold.

Yet no gold has been withdrawn by the dealer to settle upon these longs.  To me it means that much of the  comex gold is settling with GLD paper and that paper is encumbered elsewhere. The only gold that is leaving the comex on settling is when the customer asks for the gold to be removed from all registered  comex vaults.



And now for silver 

First the chart: December 12th




Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals fromCustomer Inventory271,713(,Brinks,HSBC)
Deposits to theDealer Inventorynil
Deposits to the Customer Inventory770,734(Brinks,Delaware)
No of oz served (contracts)2 (10,000)
No of oz to be served (notices)374  (1,870,000,)
Total monthly oz silver served (contracts)737 (3,685,000)
Total accumulative withdrawal of silver from the Dealersinventory this month86,937
Total accumulative withdrawal of silver from the Customer inventory this month1,535,592
Again a lot of action at the silver comex yet no silver entered the dealer as a deposit and no silver was withdrawn by the dealer.

The customer had the following deposit:

1.  724,752 oz into Brinks
2.  45, 982 oz into Delaware

total deposit;  770,784 oz.

The customer had the following withdrawal:

1.  Out of Brinks:  255,939 oz
2. Out of HSBC:    15,774 oz

total withdrawal:  271,713 oz.
We had 3 adjustments, one being very strange:

1.  An accounting error:  an addition of 47,909 was added to the customer inventory at Delaware vaults.

2.  We had an adjustment of 5123 oz of silver as a lease from the customer to the dealer.

3.  We had another adjustment of 5232 oz of silver as a lease from the customer to the dealer.

The registered silver remains at 34.217 million oz.
The total of all silver rests tonight at 110.962 million oz.

The CME notified us that we had 2 notices for delivery for 10,000 oz.
The total number of notices filed so far this month total 737 for 3,685,000 oz.
To obtain what is left to be served, I take the OI standing for December (376) and subtract out today's deliveries (2) which leaves us with 374 or 152,400 oz left to be served upon.
Thus the total number of silver oz standing in this delivery month is as follows:

2,685,000 oz (served) +  1,870,000 oz (to be served upon)  =   5,555,000 
we lost 15 contracts or 75,000 oz of silver to cash settlements.

end


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 12.2011:

Total Gold in Trust

Tonnes:1,294.80

Ounces:41,628,977.81

Value US$:69,071,861,155.17




Dec 10.2011:

TOTAL GOLD IN TRUST

Tonnes:1,295.40

Ounces:41,648,427.39

Value US$:71,168,045,704.04








WE LOST .6 TONNES OF GOLD AT THE GLD. THIS GOLD IS LEAVING THE GLD/BANK OF ENGLAND TO PUT OUT FIRES ELSEWHERE AS DEMAND FOR GOLD IS HIGH.




And now for silver Dec 12.2011:


Ounces of Silver in Trust314,084,400.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,769.12
Dec 10.2011:
Ounces of Silver in Trust314,084,400.200
Tonnes of Silver in Trust Tonnes of Silver in Trust9,769.12


SLV inventories remained constant today.

end



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


1. Central Fund of Canada: traded to a positive 2.7 percent to NAV in usa funds and a positive 2.7% to NAV for Cdn funds. ( Dec 12.2011).
2. Sprott silver fund (PSLV): Premium to NAV fell slightly  to  17.35% to NAV  Dec 12/2011
3. Sprott gold fund (PHYS): premium to NAV fell to a 3.68% positive to NAV Dec 12.2011).

Considering the monstrous raid our premiums still remain high with the Sprott funds and with the Central Fund of Canada it still remained above zero.


end.

I thought that today we would see a run on the GLD/SLV as the MFGlobal scandal is making investors think that they cannot trust the gold in these two vehicles. Alasdair is thinking along our lines:

( courtesy ,Alasdair MacLeod and GATA


Alasdair Macleod: Deflating the derivatives balloon
Submitted by cpowell on 11:17AM ET Saturday, December 10, 2011. Section: Daily Dispatches
2:13p ET Saturday, December 10, 2011
Dear Friend of GATA and Gold (and Silver):
Economist and former banker Alasdair Macleod, who spoke at GATA's Gold Rush 2011 conference in London in August, writes at GoldMoney today that the collapse of the MF Global brokerage house may herald the collapse of the futures and options markets as investors realize that their money is protected neither by exchanges nor governments. A transfer of trading from futures markets to physical markets, Macleod notes, would be very bad for the big short positions in gold and silver run by bullion banks. Macleod's commentary is headlined "Deflating the Derivatives Balloon" and you can find it at GoldMoney's Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

end


And likewise for Jim Rogers:

Dear Friend of GATA and Gold:
Commodities investor Jim Rogers tells Bull Market Thinking's Tekoa Da Silva this week that while the collapse of the MF Global brokerage house is a disaster for the firm's clients, its most important effect may be to push commodity trading away from Chicago and into Asia. We'd probably wish as much, at least until the new chairman of the Chinese Communist Party turned out to be Gee Me Dy-Minh. A summary and full audio of the interview with Rogers are posted at Bull Market Thinking here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


end.

On the weekend, I brought out stories that indicated that the shadowy bank industry (10 trillion fold)
was behind the rehypothecation crisis. Ordinary customers have bank insurance so they are safe to deposit their dollars in the bank.  However large depositors do not have that luxury so they engage in depositing large funds in return for sovereign bonds or other securitized investments in a market called the repo market.When the banks or brokerage folk, reuse the collateral for their own use, this is rehypothecation.The reuse of collateral is the shadow banking industry and because these assets have been deteriorating, there is a need to supply additional collateral and this, in banking lingo, is called a "haircut" to the bankers. Lately the haircut has been rising as the bonds used to secure the deposit fall rapidly in value like the subprime loans (2008) and Greek bonds (2010-2011). The best paper on "haircuts" in the REHYPOTHECATION/SHADOW BANKING INDUSTRY  see a fellow by the name of Gorton.

With this background:  look at what the BIS stated today.  This is a time bomb ready to explode:

(courtesy Dow Jones)


DJ BIS: Derivatives Dealers Have Transferred Credit Risk To Shadow Banks Since 2010 Sun Dec 11 15:52:39 2011 EST
LONDON (Dow Jones)--Derivatives dealers have transferred large amounts of credit risk to opaque and largely unregulated parts of the financial system, often using instruments that were themselves opaque, the Bank for International Settlements said Sunday in its quarterly report.In a chapter updating its statistics on credit derivatives, the BIS said that the overall amount of credit risk transferred through credit default swaps remained small, relative to the overall size of the banks, insurers and hedge funds that account for most of the trade in such instruments.
However, it noted that participants in the credit derivatives market had used "multi-name" products, based on either a basket of credits or an index, to transfer significant amounts of credit risks away from their own books.
"To the extent that such risks remain, they appear to have been passed on from the banking sector to parts of the non-bank financial sector often known as shadow banks," the BIS said.
The BIS's findings come against the background of an exhaustive initiative by the Financial Stability Board to cast light upon, and regulate, the shadow banking sector, a broad swathe of financial institutions that act like banks but are so set up as to avoid being regulated like them.
The BIS's data also showed that, despite the high degree of attention given them, CDS trades on sovereign and financial debt still accounted for less than half of all the activity reported. The BIS's data covered trade up until June of the year.
-END-


Lee Adler reports that USA withholding taxes are much weaker than usual as the government last week had to raise an additional 9 billion dollars to cover increased expenses.  This week they announced 13 billion in additional bond/treasury offerings. Foreign central banks have now shunned purchases of Us Treasuries as they have their own problems.


This is a must read:


(courtesy Lee Adler  Wall Street Examiner/zero hedge)



Unreported Bedlam In Treasuries Signals Massive Panic

ilene's picture




The following is an extended excerpt from the Wall Street Examiner Professional Edition weekly Treasury update. 
Last week was a light auction week with a net of just $3 billion in new supply settling on Thursday. That took the pressure off stock and bond prices. The fact that neither market could mount a sustained rally suggests that markets are weak. Stocks and bonds gyrated wildly but in the end remained in a tight range, in spite of all the bullish ballyhoo in the media. You would have thought that the Europeans saved the world on Friday. I don't think so, and within the data there's plenty of reason to continue to be concerned, if not scared shitless.
Withholding tax collections remain weak and the government had to raise $9 billion (11%) more than forecast last week. Next week the overshoot will be around $13 billion. That means that the economy is significantly weaker than government forecasters had foreseen just 5 weeks ago when these estimates were issued. The clues were available in the data at that time and I correctly guessed that the auctions would begin to balloon in size.
At the same time, foreign central bank purchases of Treasures are falling off a cliff again. But the markets aren't paying attention or have not noticed these negatives because they have not had to. Massive tidal waves of panic capital flight have been overwhelming the Treasury market in never before seen numbers. The indirect bid tendered on the 4 week bill last week was a mind blowing $61.8 billion, or 5 to 10 times the norm! Even more startling, Primary Dealers (PDs) bid $268 billion on that issue. That's over a quarter TRILLION! One third of the PDs are foreign banks. Seven of them are European banks. Is something rotten in Denmark, Brussels, Rome, and Paris? You bet your bippy.
Get the full sized chart with analysis in the Professional Edition
Notably, the panic buying was limited to the 4 week bill. The indirect bid was weak on the 13 and 26 week bills. This is short term cash looking for a safe place to park, not long term investable funds. It remains to be seen if this panic will slosh over into longer term Treasuries. With the 10 year at a major inflection point near a yield of 2.10, the big week of auctions ahead could provide a watershed moment. If the 10 year moves above 2.10, the wheels could be coming off, with untold chaos immediately ahead. On the other hand a drop back toward the lows might buy a little more time, but not much else.
If yields do move above 2.10, the other thing to watch is whether stocks rally with that move or begin to decouple from the lockstep risk on/risk off perception where falling yields signal risk off and falling stock prices, and vice versa.
Get regular updates on the US housing market, and stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market…stay ahead of the herd. Click this link to try WSE’s Professional Edition risk free for 30 days! 


end.

The following paper discusses in plain English the ticking time bombs.  The bonds of these various countries that are coming due and need to be refinanced.  How is going to bail out these entities:

(courtesy zero hedge/ econmatters)

Euro Zone: Another Crisis, Another Backdoor Taxpayer Bailout?

EconMatters's picture



Exactly 20 years to the day after the creation of the European Union (EU) and the Euro currency, German Chancellor Angela Merkel successfully secured an historic agreement from all 27 current members of the EU, except Britain, forging a deeper economic integration in the euro zone on Friday, 9 Dec.

The Euro crunch summit also came away with an agreement to provide up to €200 billion ($268 Billion) in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis, with 150 billion euros of the total coming from the euro zone countries.

The date that the European Stability Mechanism (ESM), capped at €500 billion ($666 billion), operation was also pushed up, the pledge to make private investors absorb losses in any future bailout for a euro nation is also to be scrapped.

While this new pact might be better to prevent future such sovereign debt crisis, others (including the US, andthe IMF) view is that the summit has failed to adequately address the more immediately and urgent issues.

Ticking Euro Debt Bombs

Euro zone has to repay or roll over more than €1.1 trillion, around$1.5 trillion, debt due in 2012, with about €519 billion, or $695 billion, of Italian, French and German debt maturing in the first half alone, according toBloomberg. (See Graphic below from Spiegel with a shorter time frame sans Germany).


Graphic Source: Spiegel.de, 29 Nov. 2011


With Euro Zone sovereign bond yield spiking to record levels, probability is quite low for Italy and Spain to refinance next year at a sustainable rate going forward as there's not an effective backstop firewall

Germany, France would most likely need to pay a much higher interest rate due to this debt crisis contagion.  Belgium is no GIIPS yet, but its sovereign bond interest rate is closing on the 7% threshold that could require external bailout aid.


Graphic Source: Spiegel.de, 29 Nov. 2011


European Banks Need $153 Billion in Fresh Capital

There are also problems at the heart of the European banking system.

According to the European Banking Authority (EBA) in London (fromBusinessWeek),
"....Banks in the European Union must raise #222222; font-family: arial, sans-serif; font-size: x-small;">€114.7 billion ($152.8 billion) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis."
Back in July, eight European banks failed the regularly scheduled stress tests with a combined capital shortfall of #222222; font-family: arial, sans-serif; font-size: x-small;">€2.5 billion. And things have deteriorated since then.  The updated figures from EBA take into account bank's sovereign holdings through the end of September.

Step-by-step Is Killing The Euro Zone

Europe, even with the aid from the IMF, would have a very difficult time covering between the sovereign debt rollover and shoring up the banks capital structure.  Essentially, the 'step-by-step' crisis solution as described by Merkel is a killing the Euro Zone.

The European Union of course is fully aware that markets are unlikely to be in the forgiving mood without some 'bazooka'.

The inaction could suggest
  1. The actual 'hole' is a lot more substantial than figures floating in public out there.  Kicking the can down the road as far as possible is probably the only viable option in the short-to-medium term
  2. Politics truly trumps economics as Germany could be using this crisis as a cudgel to gain power and control over the EU and on the global stage.  This also seems to indicate Germany has plenty of resource for this step-by-step waiting game.  

Another Backdoor Taxpayer Bailout Across the Pond?

Germany is reportedly still against the idea of a collective Euro Bond (although Italy's Monti seems confident that Germans would eventually see the light), and does not like the European Central Bank (ECB) embarking on large-scale bond purchases, like the U.S. Federal Reserve have been doing, either.

One of the messages out of the crunch summit is that private investors would not 'absorb losses in any future bailout for a euro nation,' which could suggest banks would get 100 cents on the dollar of the future troubled sovereign debt of Italy and  Spain, etc.

So we could also be looking at yet another backdoor taxpayer bailout of the banks -- similar to the U.S. Fed's '$1.2 trillion secret loan to banks, with repayment optional) --so banks would support buying the European sovereign bonds, while keeping the banking financial system afloat.

Somebody, somewhere has to put up the money and take the loss of the Euro Zone, and it does not look like EU would rise up to the occasion.  Eventually the markets would get past the Euro crisis and the world would move on.  But it seems the European taxpayer, just like their American counterpart, could end up being the last hero standing saving the global financial system,along with the worldas we know it.


Graham Summers: he strongly believes as do I that Germany will leave the Euro pact:

(courtesy Graham Summers)

The EU in its Current Form is Finished

Phoenix Capital Research's picture



As I’ve stated several times in the past, my personal view is that Germany is in fact simply playing for time so it can mitigate the damage that will result from it LEAVING the Euro in the near future. Think I’m off base here? Consider that Germany has:

1)   Asked its major banks to raise capital as soon as possible
2)   Introduced legislation to nationalize its major banks in the event of Crisis
3)   Introduced legislation allowing it to leave the Euro but stay in the EU

Do these look like the actions of a country that intends to remain part of the Euro? Remember, Germany’s finance minister has stressed the importance of a “political union,” NOT a “monetary union.”
           
“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.”..

[Schäuble] 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.


Germany may in fact not be the only one:

Some central banks in Europe have started weighing contingency plans to prepare for the possibility that countries leave the euro zone or the currency union breaks apart entirely, according to people familiar with the matter.

The first signs are surfacing that central banks are thinking about how to resuscitate currencies based on bank notes that haven't been printed since the first euros went into circulation in January 2002.


Folks, if you’re not considering the possibility that the current EU is going to be broken up…  you need to start doing so now. They’re all out of options over there which means… you guess it… it’s default/ systemic risk rime.

The EFSF, which was supposed to save the day, failed to raise even five billion Euros in bonds…  so that plan is dead. The IMF doesn’t have the firepower to bail out Europe (and the political environment in the US wouldn’t stand for it either). And the ECB can’t monetize the system without Germany walking out of the Euro entirely.

In other words: the EU in its current form is out of options. Small wonder various members are contemplating having to revert back to their old currencies. My question to the bulls: what happens to stocks when the Euro implodes?

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: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.

Good Investing!

Graham Summers

end

And I will bet that all of you thought that German banks were safe?  Guess again!!

(courtesy Reuters and special thanks to Robert H for sending)


Commerzbank in State Aid Talks:



FRANKFURT |
Mon Dec 12, 2011 1:51pm EST
Reuters
 
(Reuters) - German lender Commerzbank (CBKG.DE) and the government have been in talks for several days over possible state aid, five people familiar with the matter told Reuters on Monday.
 
The aim was to reach an agreement in principle by Christmas, coalition sources said on Monday.
 
While Commerzbank, 25 percent-owned by Germany, wants to avoid state aid, it needs to find 5.3 billion euros ($7 billion) capital by mid-2012 to meet European Banking Authority capital rules.
 
Since Germany's second-largest bank raised 5.3 billion euros from shareholders in June, writedowns on Greek sovereign debt and tougher capital rules have eroded its capital cushion.
 
How Germany could help strengthen Commerzbank's balance sheet remains open, coalition and banking sources said.
 
On Monday, Commerzbank stood by its commitment to avoid taking more help from Germany, which would move it nearer to nationalization -- a spokesman reiterated its stance last Thursday when chief financial officer Eric Strutz said: "We stand by our intention not to make use of additional public funds."
 
In particular, the bank wants to avoid a direct capital injection and would rather bolster its balance sheet by shedding liabilities, people close to Commerzbank said.
 
One option is transferring parts or the whole of its problematic Eurohypo unit to a "bad bank" within Germany's bank rescue fund SoFFin, these people said. By unloading the risky assets from its loss-making real estate finance unit to the government rescue fund, Commerzbank could free up 5 billion euros.
 
Germany is already preparing legal work to reinstate the SoFFin bank rescue fund.
 
German ruling coalition sources said the question of whether Commerzbank could be forcibly recapitalized remained open.
 
Commerzbank received an 18.2 billion euros bailout in 2008, and had repaid around 14.3 billion by this summer.
 
Its core tier one capital ratio was 9.4 percent at the end of the third quarter, although its definition differs from that of the EBA, which has demanded banks meet a core tier one ratio of 9 percent by mid-2012 in a bid to shock-proof them against a worsening of the financial crisis.
 
The EBA's capital definition is more stringent because it asks banks to revalue European sovereign debt holdings on their portfolios.
 
At the end of September, Commerzbank had 13 billion euros exposure to the sovereign debt of Greece, Ireland, Italy, Portugal and Spain.
 
Banks need to inform regulators by January 20 how they will plug gaps in their balance sheet to achieve a core Tier 1 capital ratio of 9 percent by mid-2012, as required by the EBA.
 
In October, Commerzbank chief executive Martin Blessing said it would not tap state rescue fund SoFFin a second time.
 
($1 = 0.7567 euro)
 
(Reporting by Kathrin Jones, Alexander Huebner, Philipp Halstrick, Edward Taylor; Editing by David Hulmes and Dan Lalor.

end


This is new.  Bonus clawbacks as they terminate bankers?? 



Jefferies Said To Demand Bonus Clawbacks From Terminated Bankers

Tyler Durden's picture



Earlier today, Fox Business' Charlie Gasparino broke the news(which was really surprising only for anyone who had not seen the JEF stock slide in the past several months) that the firm has fired a substantial number of people just after the bank's fiscal year end: "People inside the firm say the cuts are occurring most heavily in Jefferies' equities division, and according to traders inside the firm, they could total as much as 11% of the entire firm when the job cutting is complete". We now have some additional, and more disturbing information: the actual number of people is roughly 65 or so, but the worst news is that Rich Handler will demand a 1 year clawback from the departees, in the form of bonus refunds for both cash and stuck. While this has been isolated to Jefferies for the time being (which has other liquidity concerns of its own, most of which are quite well known), we are certain that now that this practice has a "case study" other banks, especially of the B-grade variety, will implement comparable clawback strategies. This approach, once adopted broadly, will likely cause a substantial dent in banker spending patterns, as rarely if ever before have terminationwithout cause been accompanied by demand for money back. In effect, this activity will force even greater spending retrenchment, and could cause a flight of the ultra high net worth retail customer who will suddenly be forced to think twice about spending not the upcoming bonus, but even the previous one, heretofore considered safe and sound, in some Cayman bank account.

22 comments:

gothicreader said...

Harvey - thanks for your daily info/analysis

In your post you stated the prices of gold and silver is actually the paper gld/slv. If this true then what would be a fair price for the metals? I guess my question is since I have the metals how much and when would you see the paper decoupling from the physical and what price would the metal be worth?
Judy.

Curt Brown said...

In advance, "Go Away FMB"

Anonymous said...

I like FMB and where he stands. Let him speak his mind. Sheeple make me puke.

Anonymous said...

Anonymous=FMB

Anonymous said...

FNB is like boy coming to a all girl sleep over, he knows not what to do,except wish!
Now to the real life, the TSHTF long ago, now it coming to a town near you! A gift was gave today, take those gifts & stack. Peace out!
Good on you Harvey!

Anonymous said...

http://www.martinarmstrong.org/files/Where%20to%20Keep%20Your%20Money/index.htm

Budd said...

Keep stacking pslv,pgld, using those inflated fiat dollars. Each new Qe bailout pushes the old dollar value down a little more. The metals keep getting cheaper because of the lower fiat dollar value and the jpm ' and bankstrers' price manipulations! When this situation "finally is allowed to change" the laws of supply and demand will determine the true non manipulated value of all P.Ms. ...thanks once again Harvey....good luck to all...Budd

bad968 said...

Thank you Harvey!

Great insight by Bruce Krasting. If MFG doesn't make individual investors panic, what will?

Anonymous said...

Re:Gold prices attacked:

As of 11:20 EST @goldprice.org
Gold is down $62 for 11/12/11.

This is because the Delivery for December is a bigggeeee !!!!!

Well that explains everything.
Will somebody pls tell COMEX that they are afraid of a default. Perhaps they did not know that they were afraid.

Maybe they want to get physical !!

ChasVoice said...

The Role of Cash Settlement in Market Manipulation and in the Panic of 1987

We have been alarmed by the recent behavior of our financial markets. Our concern is not so much with market volatility but rather with market combustibility. It is not random wildness that troubles us but the markets susceptibility to specific stimuli which are controlling the short and intermediate pricing of equities, futures and options.

We are concerned that the regulators have allowed the development of a market mechanism that they neither understand nor can control. More, we contend that the US equity markets are now sullied by an extensive on-going manipulation of unprecedented proportion...

http://chasvoice.blogspot.com/2011/12/role-of-cash-settlement-in-market.html

Harvey Organ said...

Many thanks to you all:

A little heads up for you today on the delivery notice front:

1. gold 361 delivery notices
(out of 1524)

and yes, we are having a biggy delivery month in gold.

2. silver: 2 delivery notices ( out of 374)

I am so glad that many of you have caught the importance of Bruce Krasting's article. In 10 days, our country Canada returned all the clients money and securities as rehypothecation is illegal here.

In the USA and England, little has been returned . There is no doubt in my mind that rehypothecation is the central theme here and will cause an armageddon viral debt spiral something that we have never seen.

We have 3 banking problems out there:

1. huge actual sovereign debt

2. Huge credit default swaps.(bets on the survival of companies/debt/sovereigns)
3. Huge repos/ and huge rehypos

the latter is getting out of control as the customer is withdrawing his capital exposing the murky underground shadow banking fraud. The collateral that the banks need is getting less as their toxic junk is getting bigger.

Note that this is the same as the Bank of England's problem with gold. As investors withdraw their beautiful bar numbered gold, they leave behind the toxic derivatives on gold which will vapourize the world similar to the vanishing funds of MFGlobal. The Bank of England is running out of gold to hand to sovereigns wishing to increase their official reserves.
The Bank of England and other sovereigns have not yet found a way to print gold bars.

all the best
Harvey.

banking fraud.

Anonymous said...

I thought it would be interesting to try and correlate where we are in this financial mess in regard to the movie Titanic.

Clearly we have hit the ice berg. Now I would say, the news is getting out that there is a significant problem. Some people may be seeing water in the lower areas of the corridors.

Despite this, some still believe the boat can't/won't sink no matter what has happened.

The stir of panic is spreading on the upper decks, and some people are already beginning to get in the life rafts.

Soon, or maybe they already have determined that the damage will in fact sink the boat.

Of course, we all know, there are not enough physical life boats (silver/gold).

Of course, we all know how this is going to end.

Anonymous said...

So what's a 'poor' investor to do…especially if one believes that only phys AU and AG are the way to go, but have massively loaded up investment portfolios with AU and AG equities? Is it a hold your nose and hope that the stocks will catch up to the physical market, or get out of everything and go for the phys totally? Folks who have 401ks and are below the retirement age and who are counting on their portfolios to allow them some financial freedom in the future are worried. If you liquidate now, you take a severe hit in cap gain taxes and penalties. If you don't and the black swan appears, you get toasted along with the S&P, DOW and every other market out there. Anyone with good ideas is welcome to comment!

Anonymous said...

anon @ 6:05am:

Ultimately, what will happen and how things will play out is of course unknown.

But generally, I find the people that read these blogs fall into these categories:

a) possession of gold/silver, own mining stocks (take delivery of share certificates) into new system.

This option assumes a) holding mining stocks into the new system is better than holding gold/silver in physical form now.

b) possession of gold/silver, own mining stocks for now, at some point assuming value of miners go up, trade paper in for more physical metal.

c) own physical gold and silver.

There's various pros/cons to each options.

Imo, you're right about the retirement account/investment account conundrum. Leave it in there or take the tax hit and convert to metals/miners?

No right answer and depends on each individual's circumstances.

But imo, I do not find value in holding a retirement account if it will be hyperinflated away anyways.
The question I put to myself is what will hold/store more value in the new system? Paper or metal?

For those that are all in physical gold/silver, they are seeking peace of mind right now and giving up potential paper gains (or on the flip side, potential paper losses)and will spend their metal wealth in the new system. There is also the issue of what proportion of gold/silver to hold.

There's others that are trying to make more paper gains to buy more metals for the new system. Same end goal, different approach.

Then there's others that will either sell their miner shares if they rise to a 'sufficient' value and/or will keep the shares into the new system.

Again, no one knows how this will play out and so it depends on one's theories/understanding. If you have not studied fofoa, it is well worth the adventure. In the worst case, you'll get a different perspective to round out your views.

Ultimately, you must make the decision that you are most comfortable with and let's you sleep at night.

Anyways, just my two cents.

sierra_hpbt said...

my problem with boy spanking his monkey is this, Harvey takes his time to present and give this information for free. We all have opinions and I don't have a problem with a differing opinion. I do have a problem when some jerk off starts to critisize a mans work that he is asking nothing in return for. Boy Spanking his monkey needs to take his crap elswhere.

Anonymous said...

Check out Ann barnhardt's recent post about 401k's.

Bubba said...

Bubba likes him some gold and silver!

Don't want yours???? Sell it to Bubba

Bubba loading his truck up and ready to hit da gas! Don't be stuck empty handed when da metals moon shoot up again!

Ya'll be watchin Bubba's taillights as he speeds away with the physical and leaves all ya'll holding your derivative papers ha ha ha ha ha ha

Bubba LOVES Harvey's advice!!!! Keep it pointed north Harvey!

-Bubba

Anonymous said...

From Dave in Denver:

http://truthingold.blogspot.com/2011/12/upon-further-review.html#comment-form

Here's what I think: I think that gold is taken from GLD unallocated bins and given to banks to sell into the market and the gold is attributed to Central Bank leasing. Until that view is proven wrong, that is the truth.

The real problem with this is that now that a lot of gold was leased and sold at $300/oz., banks stand to lose a shitload - billions - if the CB's recalled the gold. The banks would not only have to pay several multiples more than they leased it for, but they would drive up the price with their bid to buy. This is why the Fed won't allow an audit of its gold stock - it's not there - it's been leased.

If the lessor bank defaults, they could NEVER figure out who owns the bar. But that's why you don't leave gold in depositories of the bullion banks like HSBC and JP Morgan. Because you'll get MF'd. If you don't want to safekeep it yourself, keep it at a place like Diamond State Depository - a private depository.

And an interesting link in the comments section:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/13_KWN_Special_-_Money_is_Fleeing_the_US_Financial_System.html

MA reports investors have been moving large amounts of $$'s out of New York.

Anonymous said...

Looks like Bubba can't read! Its not headed north dummy, it falling south - and fast! Serious Harvey, why are PM's falling faster than I can click my refresh button?

Bubba said...

Bubba can read real good ya yellowgutwhippersnapper. Quit hitting refresh so dang much! Ain't gonna do you no good no how.

Bubba is long in more ways than one, in a this case its precious metals. $31.35, $30.65, hell $26.00...won't matter no how when it hits $100 in a few years ya nickle and dimein' fool.

You and the monkey boy can fiddle faddle all you won't over a couple of buckeroos, its the long term trend you should focus on DUMMY.

- Bubba.

PS: Bubba appreciates Harvey!

PPS: He also thinks those who hide behind "anonymous" are chicken liver eatin wooseys.

Anonymous said...

hahaha!!!! The long trend eh Bubba? You and the rest of these bozo's keep telling each other that... and just so you know, saying it won't make it happen. I never have bought paper and I've had a good amount of physical for years. I was going to sell at $50 (when Harvey and the others were spouting how high it was going to go $75, $100, $200 to the moon... into the stratosphere, etc) and of course we all know what happened next. Anyway, thats MY two cents and for all you people that want to get defensive just remember, this is a public forum that supposed to welcome comments and opinions whether you agree with them or not. Last time I checked, this is why we live in America - Freedom of Speech and all that.

and Bubba, the name is Tony Vitalli - I just dont have a Google account and am not setting one up if tahts okay with you.

Anonymous said...

Harvey, good wine does not need...,
however I am a bit amazed not having seen any reaction to my previous blog abt. German and French authorities looking for gold stored siiince WWII in the US.The FT Deutschland of 13.12.2011 has an article on this situation, quoting C.Powell of GATA see gata.org/node/9363,9597,8192,10635. The article was retaken by 24Gold.

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