Yesterday was an extremely volatile day with the Dow, the price of precious metals and just about all markets witnessing huge volatility to the extreme. In mid session there were rumours of a USA downgrade and that occurred late Friday night which should cause real problems for the USA economy starting Monday as many companies and individual states will also be downgraded. The price of gold finished the comex session at $1659.90 up $11.10 for the day. Silver with the huge shackles at its feet due to the onerous margin requirements did not participate with gold and finished unchanged at $38.21. The bankers are manipulating silver with ease.
Let us head over to the comex and see how things fared yesterday. There are considerable alarming details that I must go over with you.
The total gold comex open interest fell by over 5500 contracts to 521,070 from Thursday's level of 526,679
The volatility is frightening some longs probably due to margin calls as losses on their equities are hurting some hedge funds. The front delivery month of August saw its OI fall from 5106 to 4185 for a drop of 921 contracts which is very big. We had only 163 deliveries so we lost 756 contracts or 75,600 oz of gold standing. Maybe some of these longs had to liquidate because of losses in other accounts or they settled with Blythe for fiat. The Oct OI lowered to 24,381 contracts.
The big December contract OI lowered from 383,241 to 378,571 for a loss of just under 5000 contracts.
The estimated volume at the gold comex was a monstrous 244,890 with no switches. The confirmed volume on Thursday the day of the huge stock market fall saw the confirmed volume at 352,375 contracts.
This represents 35.23 million oz of gold. The world produces 75 million oz so the Thursday volume represented 47% of annual gold production. And our regulators just stand there quite aloof to the situation of a massive supply of non backed gold paper by the bankers.
The total silver comex OI again sits in the 119,000 channel. The OI Friday which is basis Thursday rests at 119,241 falling over 700 contracts from Thursday's OI of 119,981. Some of the bankers are feeling the heat.
The front options exercised month of August mysteriously saw its OI rise from 40 to 54. We had zero deliveries on Thursday so there was a big gain in silver oz standing and no cash settlements which is quite a contrast to gold. (If I were to bet I believe the large gold drop in August was due to cash settlements and not
longs being frightened off). The next big delivery month of September saw its OI fall from 59,490 to 58,069
as the bankers were a little timid in the silver arena and they decided to cover some of their shorts. The estimated volume at the silver comex on Friday was an extremely good day at 89,980. Take a look at the confirmed volume on Thursday: a huge 128,215 contracts. This represents 641 million oz or roughly 88% of annual production of silver. Please remember that the comex is not the biggest bourse for silver and gold as that belongs to London.
The activity inside the gold comex complex was basically nil.
There was only a tiny 129 oz of gold withdrawn from Brinks.
There were two adjustments: where the Scotia vault removed 3 oz of gold from the customer.
There was another very unusual adjustment to report from the JPMorgue vault:
There was a very sizable 19,291 oz removed from JPMorgan dealer vault
Strangely 17,800 was added to the customer account and the remainder
flew from JPMorgan's nest out of all registered comex vaults. (1491 oz)
The comex folk notified us that only 16 notices were served upon our longs yesterday
and this remember is a big delivery month. This represents 1600 oz of gold.
The total number of notices sent down so far this month total 5711 for 571,100 oz
To obtain what is left to be served, I take the OI standing (4185) and subtract out Friday's deliveries
(16) which leaves me with 4169 notices or 416900 oz left to be served upon.
Thus the total number of gold oz standing in this delivery month is as follows:
571,100 oz (served) + 416,900 oz (to be served) = 988,000 oz.
we lost a huge 75,600 oz of gold probably due to cash settlements. It would it unusual for these guys to have paid 100% of the money only to pitch without receiving a fiat bonus.
I am going to give you another alarming detail. They posted already what will be delivered upon in gold on Monday. Are you ready for this: only 1 contract. Ladies and Gentlemen, it looks like the gold is being depleted at the gold comex.
Gold COT Report - Futures
Change from Prior Reporting Period
non reportable positions
Change from the previous reporting period
COT Gold Report - Positions as of
Tuesday, August 02, 2011
Silver COT Report - Futures
non reportable positions
Change from the previous reporting period
COT Silver Report - Positions as of
Tuesday, August 02, 2011
a very tame COT in silver quite in contrast to gold.
Those large speculators that have been long in silver added 907 contracts to their longs.
Those large speculators that have been short in silver covered a tiny 31 contracts.
And now for our commercials:
Those commercials that are long in silver and close to the physical scene saw them add a small
451 contracts to their long positions.
NFP Prints At 117K, Beats Expectations Of 85K, Unemployment Rate Down To 9.1%
- Change in Non-Farm Payrolls M/M 117K vs. Exp. 85K (Prev. 18K)
- Change in Private Payrolls (Jul) M/M 154K vs. Exp. 113K (Prev. 57K)
- Change in Manufacturing Payrolls (Jul) M/M 24K vs. Exp. 10K (Prev. 6K)
- US Average Hourly Earnings (Jul) M/M 0.4% vs. Exp. 0.2% (Prev. 0.0%)
- US Unemployment Rate (Jul) M/M 9.1% vs. Exp. 9.2% (Prev. 9.2%)
- Private payrolls rose 154k vs est. 113k (range 70k-150k);prior revised to 80k from 57k
- Unemployment fell to 9.1% vs est. holding at 9.2% (range 9.1%-9.4%)
- Unemployment decline due to labor force participation rate decline to 63.9%, a cyclical low, says Bloomberg economist Joseph Brusuelas
- Avg. hourly earnings 0.4% increase a function of minimum wage gains; govt. continues to furlough workers, says Bloomberg economist Rich Yamarone
- Underemployment rate 16.1% vs prior 16.2%
- Monthly growth below 150k not consistent with supporting sustained unemployment declines, notes Brusuelas
- TJ Marta writes that the report is not all bright: unemployment rate fell because labor participation fell to 63.9% from 64.1%
- Payrolls “beat” was within +/- 50k statistical “white noise” for non-farms econometric models
- Longer term, report doesn’t change downward trajectory of economy, which needs 150k+ just to keep pace with new entrants to labor force
- Household survey showed 38k decline in employment
This is why the unemployment rate "dropped", a big drop in the labour force participation rate.
Earlier this week, the number of people on food stamps rose from 44 million to 45.8 million folk:
Labor Force Participation Rate Drops To 63.9%, Lowest Since January 1984
This set alarm bells all over Europe as bond yields on both Italian bonds and Spanish bonds exceed 6%. This is the collateralization trigger explained quite well by zero hedge:
(courtesy zero hedge)
Italy And Spain Spreads Approaching Incremental LCH Margin Collateralization Trigger
LONDON (Dow Jones)--Clearing house LCH.Clearnet said Thursday it is raising the extra margin it requires for positions in Irish government bonds cleared through its RepoClear service.
Back in October, the clearing house said it would generally consider a spread of 450 basis points over the 10-year AAA benchmark to be indicative of additional sovereign risk, meaning it may materially increase the margin required for positions in that issuer."
French, Italian CDS Hit Record, Yen Resumes Climb
Fannie Demands Another $5.1 Billion In Aid From Treasury In Q2, $103.8 Billion Total Since Conservatorship
The loss in the second
quarter of 2011 reflects the continued weakness in the housing and mortgage markets, which remain under pressure from high levels of unemployment, underemployment, and the prolonged decline in home prices since their peak in the third quarter of 2006. Pursuing loan modifications, key aspect of the company’s strategy to reduce defaults, also contributed to its loss in the quarter. Fannie Mae expects its credit-related expenses to remain elevated in 2011 due to these factors.
“We remain the largest source of liquidity for the U.S. mortgage market, and we are committed to creating long-term value by helping to build a stable, sustainable housing market for the future,” said Michael J. Williams, president and chief executive officer. “We are focused on reducing taxpayer exposure by limiting our credit losses and building a strong new book of business. Our new book of business is now nearly half of our overall single-family book and we expect these new loans will be profitable over their lifetime.”
Fannie Mae’s net loss attributable to common stockholders in the second quarter of 2011 was $5.2 billion, or $(0.90) per diluted share, including $2.3 billion in dividend payments to the U.S. Treasury. The company’s net worth deficit of $5.1 billion as of June 30, 2011 reflects the recognition of its total comprehensive loss of $2.9 billion and its payment to Treasury of $2.3 billion in senior preferred stock dividends during the second quarter of 2011. The Acting Director of the Federal Housing Finance Agency (“FHFA”) will submit a request to Treasury on Fannie Mae’s behalf for $5.1 billion to eliminate the company’s net worth deficit.Upon receipt of those funds, the company’s total obligation to Treasury for its senior preferred stock will be $104.8 billion.
Got Bank Of America CDS? New York AG Says BAC's $8.5 Billion Settlement Is "Unfair and Misleading"; BAC Equity Offering Imminent
The Attorney General of the State of New York Eric T. Schneiderman (the “Attorney General”) has statutory and common law authority to safeguard the welfare of New York investors and the integrity of the securities marketplace generally.
Pursuant to this authority, the Attorney General seeks to intervene in this proceeding to protect the marketplace and the interests of New York investors, the vast majority of whom otherwise are not present before the Court in this proceeding.
Moreover, the Attorney General has an interest in this proceeding because the proposed settlement may interfere with his ability to pursue claims against BNYM, Countrywide, BoA, or affiliated entities.
The Attorney General therefore seeks an order pursuant to CPLR 401, 1012, and 1013 granting him permission to intervene as an adverse party in this proceeding to protect the interests of the People of the State of New York.”
“The allegations by the New York Attorney General are outrageous, baseless, unsupported by fact and law and we will fight them if necessary in court,” Ron Gruendl, a BNY Mellon spokesman, said in an e-mail.
“We are confident that we have fulfilled in all respects our responsibilities as trustee,” Gruendl said. “The AG’s action is misguided and fails to comprehend the role of the trustee and the benefit the settlement would provide to investors.”
Bank of America and Countrywide separately face liability for “persistent illegality” in breaching contractual promises about the quality of loans, as well as failing to provide complete mortgage files, Schneiderman said in court papers.
Lawrence Grayson, a spokesman for Bank of America, declined to comment.
New York Attorney General Eric Schneiderman asked a state judge to reject a proposed $8.5 billion settlement agreement over soured loans between Bank of America and a group of investors, claiming in court documents that a separate bank representing the investors committed fraud for failing to ensure that the mortgage securities were created in accordance with state law and for failing to act in the investors' best interest. Bank of New York Mellon, the trustee representing the investors, "knowingly, repeatedly, and consistently" misled investors into thinking that the mortgage bonds were created properly, Schneiderman said in court documents. BNY Mellon also put its own interests before those of the investors it's supposed to represent, he said.
BNY Mellon, the 11th-largest U.S. bank by assets and one of the nation's largest trustees, stands accused of "repeated fraud and illegality," according to court filings, which alleges that the abuses "were repeated literally hundreds of times."
In short, Countrywide Financial, the lender purchased by BofA in 2008, failed to properly assemble loan documents needed for the creation of mortgage securities, and BNY Mellon effectively looked the other way, which "apparently triggered widespread fraud," Schneiderman said in court documents. BNY Mellon should have known the mortgage securities were improperly created because the evidence was "abundant," Schneiderman asserted, citing the bank's own documents, news coverage of "foreclosure fraud" and foreclosure actions brought on the bank's behalf.
It also opens up new worries for BofA, the nation's largest handler of home loans, as the company could be faced with the prospect of having New York's top legal officer determining that untold billions of dollars' worth of mortgages turned into securities by Countrywide, the nation's largest mortgage company when purchased by Bank of America during the credit crisis, aren't really securities at all due to failures in the security-creating process.
In court documents, Schneiderman is demanding that his agency be allowed to further examine loan documents to ensure the securities were properly created. New York's top law enforcement officer is using the Martin Act, a powerful state law that gives prosecutors broad powers to investigate fraud.
On the S&P Downgrade and further volatility
On the S&P ratings move
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending is less likely than we previously assumed and will remain a contentious and fitful process.
Chris Powell: Who will put the gold questions to central banks?
Gold Anti-Trust Action Committee Inc.
GATA Gold Rush 2011
Savoy Hotel, London
Friday, August 5, 2011
Representatives, and three times as governor of Connecticut. He told me that repetition is crucial in politics, and that, tedious as it may seem, just when you think you're going to have to kill yourself if you say something over again, that's when people are just starting to listen.