The USA government released their jobs report and the report showed zero jobs was created.
I will discuss the numbers with you in the body of my commentary.First I would like to report that two banks entered the morgue last night taking their last breath before the FDIC entered and pronounced them dead:
1. Creekside Bank of Woodstock Georgia
2. Patriot Bank of Georgia, Cumming Georgia.
The price of gold at closing comex time (1:30 pm est) came in at $1873.70 up a cool $47.70.
The price of silver fared even better rising to $43.02 for a gain of $1.54
Here are the final gold and silver prices from the access market:
gold and silver advanced to its zenith after the CME released its COT report which I will also discuss with you.
Let us head over to the comex and access the wild day of precious metals trading.
The total gold comex OI advanced by less than a 1000 contracts to 503,799 despite the huge run up in price on Thursday. Bankers are covering their shorts with reckless abandon at higher and higher prices. Some bankers are visiting their psychiatrists and some are jumping out of windows. The rise in gold and silver are blowing up their derivatives. The front options expiry month of September saw its OI fall from 579 to 509 for a loss of 70 contracts. We had 76 deliveries on Thursday so we gained 6 contracts of gold ounces standing and lost zero oz to cash settlements. The next delivery month is the October contract. This contract month is a very low volume month as many investors seek the more popular December contract. The October OI fell by a few contracts to 33,736. The big December contract rose by over 800 contracts to 336,575. The estimated volume at the gold comex yesterday was very good at 193,980. The confirmed volume on Thursday was lower at 147,977.
The total silver comex OI continues to contract. On Friday, the OI fell to 111,735 from 112,243 for a loss of about 500 contracts with a huge rise in silver. The silver bankers are joining the gold bankers in seeking medical help. The front delivery month of Sept saw its OI fall from 2418 to 1364 for a loss of 1054 contracts.
We had 550 delivery notices yesterday so we lost 504 contracts or 2,520,000 oz to the fiat bonus money supplied by JPMorgan's Blythe Masters. The big December contract remained constant at 76,939 contracts.
The estimated volume at the silver comex was 43,425 which is quite low. The confirmed volume on Thursday was very anemic at 30,670 which kind of shows you how the bankers now are now loathe to supply any paper short. You will see this in the COT report.
Inventory Movements and Delivery Notices for Gold: Sept 3.2011:
Total Gold in Trust
|Ounces of Silver in Trust||314,503,353.900|
|Tonnes of Silver in Trust||9,782.15|
|Ounces of Silver in Trust||313,366,988.800|
|Tonnes of Silver in Trust||9,746.80|
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 30, 2011
what a stunning report.
The large speculators that have been long in gold decided to take some profits and reduce some of those positions to the tune of 21,411. They have made their fiat profits so they are happy but they would have been happier if they maintained their positions.
Those large speculators that have been short in gold certainly saw the tea-leaves and covered a huge 10,677 of their short positions at higher prices. They are crying the blues with their losses.
And now for our famous commercials:
Those commercials that have been close to the physical scene and have been long in gold, added a smallish 1,326 contracts to their longs. This could also be our banker shorts who go long on different months which is the same as covering their short positions.
Those commercials, like JPMorgan and friends who have been perennially short gold from 4 BCE to today, covered a stunning 11,755 contracts from their short side. Please remember two important details:
1. they covered at higher and higher prices in gold
2. the report is from August 23-August 30 and does not include the big gains for the past 3 days.
The small specs seem to be getting into the action in gold:
Those small specs that have been long in gold pitched 3842 contracts from their long side.
Those small specs that have been short in gold covered 1495 contracts from their short side:
Our gold banker shorts are being cooked in their own juice. This is an extremely bullish COT report for gold.
And now for our silver COT report:
Silver COT Report - Futures
non reportable positions
Change from the previous reporting period
COT Silver Report - Positions as of
Tuesday, August 30, 2011
Our large speculators that have been long in silver and these guys are now considered to be strong hand players covered a tiny 2219 contracts from the longs as they took some profits.
They also wished that they had maintained their positions for the past 3 days.
Our large speculators that have been short silver also saw the tea-leaves similar to gold as they covered 2,051 contracts of their short positions.
And now for our commercials:
Those commercials that have been long in silver pitched 2,337 contracts from their long side.
This could also be our short bankers who buy long in other months which serve the same purpose as covering their shorts.
And now for our famous short bankers like JPMorgan and friends:
they covered a massive 4,288 contracts from their short side at higher and higher prices.
JPMorgan is sweating bullets this weekend.
I would also like to point out that the silver is in record backwardation in price of about 1.49 per oz from top to bottom in the future months. It goes into real backwardation from March 2012 to 2015. It is in slight contago for the first 6 months. This is also a very bullish silver COT report.
Let us now see the big news of yesterday and how that will shape the price of gold and silver.
The big news of course is the release of the NON FARM PAYROLLS. The number posted was a big fat zero. That is no growth at all:
Courtesy Reuters official release:
WASHINGTON, Sept 2 (Reuters) - U.S. employment growth ground to a halt in August as sagging confidence discouraged already skittish businesses from hiring, keeping pressure on the Federal Reserve to provide more stimulus to aid the economy.
Nonfarm payrolls were unchanged, the Labor Department said on Friday, the weakest reading since September. Economists had expected a gain of 75,000 jobs. The report underscored the frail economy and kept fears of a recession on investors' radar.
"The economy is slowly grinding to a halt. The problem, however, on the policy side is that I wonder whether the numbers are truly weak enough to galvanize a political response," said Steve Blitz, senior economist at ITG in New York.
U.S. stock index futures extended losses on the data, while Treasury debt prices rose. The dollar extended losses against the Swiss franc, but rose against the euro.
Here is Jim Sinclair talking about the lousy job growth and what it did to markets around the world as well as John Williams new figures that show real unemployment at 22%
CHART SHOCK: The REAL Unemployment Rate Is 22%
It's now above 23% with the August update. Details from John William's Shadow Stats.
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
The jobs number is generally a phony due to the plug addition of the B/D (Birth Death)
To all newcomers, the BLS takes a figure of those who lost their jobs (Death) and these guys become entrepreneurs (Birth). They hypothesize on a number and it is always a huge number increase. Yesterday the B/D plug was a monstrous addition of 87000 jobs. For the year so far they have added a fictitious 491,000 jobs. What a joke: (courtesy zero hedge)
Birth Death Adds 87K To Today's NFP Miss, 491K Jobs In Past Year Due To "Statistics"
NEW YORK (Reuters) - A measure of future U.S. economic growth slipped in the latest week, while the annualized growth rate tumbled to its lowest level since November, a research group said on Friday.
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index eased to 122.5 in the week ended Aug 26 from 122.7 the previous week. That was originally reported as 122.8 percent.
The index's annualized growth rate fell to minus 4.3 percent from minus 2.1 percent, hitting its lowest level since early November 2010.
With the lousy numbers the world is producing we can now promise you QEIII will be upon us later this
month. It did not take the pundits long to announce this form of QEIII:
US TREASURY OUTLOOK-Market expects Operation Twist in September
*After weak August payrolls data, confidence Fed must act
* Fed would sell short-dated Treasuries and buy long bonds
NEW YORK, Sept 2 (Reuters) - Bond investors see Federal Reserve action to boost the flagging U.S. economy as practically a done deal after Friday's dismal jobs report.
Government data showing the economy failed to create new jobs last month heightened speculation the Fed will launch a program this month to pump money into the economy by pushing down long-term borrowing rates.
The move, known to some in financial markets as Operation Twist, would probably involve the Fed selling shorter-dated Treasuries it holds its balance sheet and buying longer-dated bonds.
The Treasury market appeared to price in greater chances of this after the jobs report, with 30-year long bonds
Goldman's call echoed in the Treasury market on Friday, with a flattening of the yield curve as traders increased positions in longer-dated bonds at the expense of shorter maturities.
Some analysts said even without the dismal jobs data the Fed's move would have been inevitable.
"We thought they were going to do it in August," said Ira Jersey, interest-rate strategist at Credit Suisse in New York."
"But I guess with some of the operational issues it raises they wanted to wait."
Operation Twist would take some fancy footwork, Jersey said, with the New York Fed likely having to hold two auctions in a single day.
In the first, the Fed would sell shorter dated securities.
It would then hold a second to buy bonds of longer maturities from primary dealers. Both auctions would settle the following day.
Hatzius, at Goldman, said such an operation would ultimately remove so much longer-dated debt from the market its effect would be almost as big as the Fed's last major easing program.
Referred to by many as QE2, the Fed bought $600 billion in Treasuries.
"This type of operation would be the equivalent of 80-90 percent of QE2 in terms of duration risk removed from the market," Hatzius said.
In operation twist, the Fed buys the longer maturities and sells its short 3 month or 6 month treasury bills and thus lengthens the duration of its holdings.
The problem here is how are they going to finance their huge 1.5 trillion dollar deficit?
Speaking of the debt and deficit, the USA has now reached their temporary debt limit, a month early:
(courtesy zero hedge):
Deja Vu All Over Again: Total US Debt Passes Debt Ceiling... In Under One Month Since Extension
Here is Goldman Sachs position as to why QEIII is needed
to pay off more bank bonuses at year end:
(courtesy zero hedge)
Goldman Justifies The Need For More QE3, And Even More Record Wall Street Bonuses
Zero Hedge now believes a $5 trillion QE3 program will be announced by July 2011, when gold is trading at $10,000, the entire Treasury curve is at zero, and stock prices are meaningless courtesy of a DXY sub 50, and every commodity opening limit up daily.
- The US economy has not fallen off a cliff, despite the “confidence shock” precipitated by the debt ceiling impasse, the downgrade of the US sovereign rating, and the financial market turmoil of recent weeks.
- The August employment report was weak but not recessionary. The payroll survey was very disappointing, with no job growth, a drop in weekly hours, and a decline in hourly earnings. But the household survey posted a decent gain and the unemployment rate held steady at 9.1%.
- So far in the third quarter, “hard” indicators of economic activity look a tad better than our forecast of 1% real GDP growth (annualized), while “soft” measures such as business surveys look weaker. Recession remains a substantial risk but not our base case forecast.
- The economy’s growth performance so far in 2011 would be disappointing in any year, and is woefully unacceptable given the high level of unemployment. So we expect the Fed to take further action at its September 20-21 meeting, most likely by announcing that it will extend the duration of its securities holdings by selling shorter-dated securities for longer-dated Treasuries.
- We expect the impact of such a balance sheet “twist” to be similar to QE2. Given widespread speculation of further Fed action, and a very dovish set of minutes from the August meeting, we believe this impact is largely (though not completely) “priced in” to markets at this point.
So far in the third quarter, “hard” indicators of economic activity look a tad better than our forecast of 1% real GDP growth (annualized), while “soft” measures such as business surveys look weaker. Recession remains a substantial risk but not our base case forecast.
Lee Adler has given this great commentary on the shape of the USA economy showing tax revenues are
plummeting (excise taxes and corporate taxes):
(courtesy zero hedge/ilene and Lee Adler of the Wall Street examiner)
The following sent gold flying in Europe yesterday ahead of the NFP numbers:
Gold is trading at USD 1,853.50, EUR 1,300.10 , GBP 1,143.30, CHF 1,446.50 and JPY 142,320 per ounce. Gold’s London AM fix this morning was USD 1,854.00, EUR 1,301.23, GBP 1,143.81 per ounce. The gold fix was higher than yesterday’s in all currencies - USD 1,815.50, EUR 1,270.73, GBP 1,118.95 per ounce.Today, the President of the ECB, Jean- Claude Trichet did not rule out a gold backed euro bond in an interview with ‘Il Sole 24 Ore’ published on the ECB’s website.
Reuters says that the "demands ignore the fact that this gold is not the property of the PIIGS' governments to sell."
The next big news of yesterday was the fact that major lawsuits were being prepared against the banks for their folly into the mortgage fiasco: (courtesy New York Times)
U.S. Is Set to Sue a Dozen Big Banks Over Mortgages
Published: September 1, 2011
Joshua Lott for The New York Times
Add to Portfolio
Andrew Harrer/Bloomberg News
- And so it begins:
- FHFA Sues Barclays over mortgage securities over losses for $4.9 billion: RTRS
- FHFA Sues Merrill Lynch Bank of Americal over mortgage securities over losses for $30.85 billion: RTRS
- FHFA Sues Nomura for $2 billion in losses: RTRS
- Citi... and so on.
- Federal housing finance agency sues Barclays PLC BARC.L - court filing
- Federal housing finance agency sues Barclays over losses on $4.9 billion rmbs
- Federal housing finance agency sues Bank of America Corp BAC.N - court filing
- Federal housing finance agency sues Bank of America Corp over losses on more than $6 billion securities
- Federal housing finance agency sues bank of America's Merrill Lynch unit over losses on $24.85 billion securities
- Federal housing finance agency sues Nomura Holdings Inc 8604.T - court filing
- Federal housing finance agency sues Nomura over losses on more than $2 billion securities
- Federal housing finance agency sues Citigroup Inc C.N - court filing Federal housing finance agency sues Citigroup Inc over losses on $3.5 billion securities
The Imminent Failure Of The Eurozone
- Remove the need for the ECB to buy bonds continually on secondary markets;
- Ensure that troubled countries have access to financing;
- Prevent the strong countries from being dragged down by the weak.