Monday, March 19, 2012

gold and silver rise/Auction on Greek bonds showing 78.5% loss/Belgium at 140% debt/GDP

Good evening Ladies and Gentlemen:

Gold closed today up by $11.30 to $1667.10.  Silver had a much better day rising by 35 cents to $32.93.
Gold shares languished again today so expect the bankers to hit again tomorrow.  I strongly believe that Jim Sinclair is right in that the USA is using (selling) gold belonging to Germany and Switzerland.  The raids have been too frequent and you can bet that eastern nations are hell bent on picking up the physical in London.
It looks like we are in a battle to the finish. The bankers short the gold equity shares as this creates capital that they can use to buy up regular equities in the USA and thus a support for the Dow. The two physical articles today that are worthy is the one supplied by Dave from Denver where he discusses the repatriation of gold to German and Swiss soil.  The other physical commentary is from KingWorld News and GATA where our London trader was interviewed.  The London trader tells us that 50 tonnes of gold were removed from London and that must put a very deep hole in the 100:1 derivative whole over at the LBMA.

Let us head over to the comex and assess trading today.

The total gold comex open interest fell by a considerable 3460 contracts with gold having a neutral day on Friday.  The new OI rests tonight at 438,190 contracts compared to Friday's level of 441,650.
The front non delivery month of March saw its OI fall from 213 to 127 for a loss of 86 contracts.  We had 178 delivery notices on Friday so we gained 92 gold contracts or 9200 oz of additional gold standing.
The next big delivery month is April and here the OI fell from  170,082 to rest at 163,517 as most of the loss in April rolled into June.  The estimated volume at the gold comex today was  good at 164,440.
The confirmed volume on Friday was better at 195,387.

The total silver comex open interest seems to go in opposite directions to gold.  Today the OI rose by 586 contracts to register 107,309 from Friday's level of 107,309.
The front delivery month of March saw its OI fall from 321 to 320 for a loss of 1 contract .  We had 2 delivery notices filed on Friday so we gained  1 silver contract or 5000 oz standing for the month.
The next delivery month is May and here the OI fell by only 284 contracts from 55,875 to 55,595.
The estimated volume at the silver comex today came in at a very low 35,836 compared to the confirmed volume on Friday at 44,013.

Let us begin with March inventory movements  in Gold

 gold ounces standing in March 19:

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
Deposits to the Dealer Inventory in oz

Deposits to the Customer Inventory, in oz
No of oz served (contracts) today
(88) 8800
No of oz to be served (notices)
(39)  3900
Total monthly oz gold served (contracts) so far this month
(1076) 107,600
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month


We had no activity of any kind in the gold vaults today.

we had quite a few minor adjustments:

1.78 oz out of the customer at HSBC

.04 oz out of JPMorgan dealer.
.15 oz out of JPMorgan customer.

At Scotia:

.19 oz added dealer
.55 oz added customer Scotia.

it looks like they did a full inventory.
The registered gold rests tonight at 2.461 million oz or 76.54 tonnes of gold.
The CME notified us that we had 88 delivery notices filed for today for 8800 oz.  We had only 35 notices to be served upon late Friday night so some entity was badly in need of physical gold.  To obtain what is left to served upon, I take the OI standing for March (127) and subtract out today's delivery notice (88) which leaves us with 39 notices or 3900 oz left to be served upon.

Thus the total number of gold ounces standing in this non delivery month of March is as follows:

107,600 oz (served)  +   3900 oz (to be served)  =   111,500 oz or 3.46 tonnes of gold.


the silver chart for March:    March 19/2012:

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventorynil
Deposits to the Dealer Inventory317,855(Brinks)
Deposits to the Customer Inventory 589,020 (JPMorgan)
No of oz served (contracts)0 (zero)
No of oz to be served (notices) 320 (1,600,000)
Total monthly oz silver served (contracts)1277 (6,385,000 )
Total accumulative withdrawal of silver from the Dealers inventory this month3,231,423
Total accumulative withdrawal of silver from the Customer inventory this month 1,918,618

We had some activity today at the silver vaults.
The dealer at Brinks took in 317,855 oz.  We had no dealer withdrawal and no customer withdrawal.

The customer at JPMorgan took in 589,020 oz.

The registered silver rests tonight at 34.897 million oz
The total of all silver rests at 133.13 million oz.

Today, the CME notified us that we had zero notices filed so the total remains at 1277 notices for
6,385,000 oz.  To obtain what is left to be served upon, I take the Oi standing for March  (320)
and subtract out today's notices for delivery  (zero) which leaves us with 1,600,000 oz left to be served upon. (320 contracts)

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

6,385,000 oz (served)  +   1,600,000 (oz to be served upon)  =  7,985,000 oz
we gained 1 contract or 5,000 oz of silver standing.


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.

March 19.2012

Total Gold in Trust



Value US$:69,065,241,735.48

March 17.2012:




Value US$:68,921,973,519.0

MARCH 15.2012




Value US$:68,506,928,146.97

March 14.2012:




Value US$:68,351,752,380.04




And now for silver March 19 2012:

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 17.2012:

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 15.2012:

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 14.2012

Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

March 13.2012
Ounces of Silver in Trust313,555,695.500
Tonnes of Silver in Trust Tonnes of Silver in Trust9,752.67

again, no silver entered or left the silver vaults at the SLV.



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

1. Central Fund of Canada: traded to a positive 4.0percent to NAV in usa funds and a positive 4.0% to NAV for Cdn funds. ( March 19.2012)

2. Sprott silver fund (PSLV): Premium to NAV  fell slightly today  to  6.7% to NAV  March 19.2012 :
3. Sprott gold fund (PHYS): premium to NAV fell slightly to  2.82% positive to NAV March 19. 2012). 

Maybe Eric Sprott is angry and will be going after the whole enchilada in silver.  He still has considerable
fire power in his shelf offering for silver.  The fact that the premiums fell may be an indicator that he will purchase more silver and bury the bums.


Today:  Dave from Denver in his commentary talks about German and Swiss
repatriation of their gold

(courtesy the GoldenTruth/Dave from Denver)

Sunday, March 18, 2012

Listen To What Central Banks Do, Not What They Say

A sharp fall in gold prices has triggered large purchases of bullion by central banks in recent weeks, according to several traders with knowledge of the transactions..."Central banks have definitely been looking at gold as an asset class much more closely ever since European central banks stopped selling," a senior gold banker said. "There has been a huge interest."

The quote is from the Financial Times: 

Hmmmm. Recall, recently that Congressman Ron Paul asked Ben Bernanke - who was under oath and on camera - why Central Banks still hold any gold if it was irrelevant as a currency. Bernanke's response was that he didn't know but maybe out of "tradition." That answer shocked me because it was so absurdly mindless - I was wondering if Bernanke had a full frontal lobotomy. Paul also asked Bernanke if he thought gold was "money" and Bernanke said "no." Here's the clip and it's worth watching, as it's the first time I've seen Ron Paul really hold Bernanke's feet in the fire on any issue: 

The scramble behind the scenes for taking delivery is going on and it's a real threat to the banking and political elitists. It was easy for Hugo Chavez to repatriate Venezuela's 200 tonnes from NYC and London. And don't lose sight of the fact that China takes delivery of all of the gold it buys into a shiny new warehouse depository in Hong Kong. But it will be interesting to see what happens if Switzerland and/or Germany make a serious move to repatriate because then you're talking about thousands of tonnes that may have already been leased out and sitting in vaults in Hong Kong, India and other depositories not controlled by the Fed, Bank of England or the big bullion banks (JPM, HSBC, Scotia, Barclays, Deutsche Bank, UBS). I wouldn't be surprised if there's a lot of lobbying going on behind the scenes to try and quash the incipient movements for this going on the German and Swiss legislatures because if either Germany or Switzerland wants its gold and can't get it, things could get really ugly.



Today, KingWorld News interviewed our "London Trader" for his insights in the markets.

you must read his comments.

1.  He stated that the physical off take or amounts of physical leaving London is high.
   the press has been stating that foreign entities (namely China) has been buying gold in the 4- 6 tonnes range.  The London trader believes it is somewhere around 50 tonnes of gold.

2. He states that all of the hot money that was piling into paper gold has now left.

3. Oil in Iran starts trading in currencies other than the dollar tomorrow.
As we all know wars are fought when countries switch from using the USA dollar.

4. The foreign purchases are using a step approach to buying physical gold using every dip to purchase more

here is this important commentary:

(courtesy KingWorld News/GATA).

Gold offtake far greater than suggested in press, London trader tells KWN

5p ET Monday, March 19, 2012
Dear Friend of GATA and Gold:
The London trader source of King World News provides today what may be his most interesting commentary yet, remarking, among other things, that the physical offtake resulting from the recent gold smashdown was 10 times larger than suggested by the financial press and that the bullion banks manipulating the market likely will have to push the price up now to prevent the filling of large sovereign orders that have been placed just below the market. The interview is posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Today was the first part of the Greek Credit Default saga.  Stage number 1 is an auction to determine
the amount of loss each underwriter must pay per 1000.00 bond that were tendered.  The loss is 78.5 cents per dollar.  It looks like the total of actual bonds that have the attached credit default swap is 3.2 billion usa dollars. Thus the actual loss on these bonds is 3.2 billion 78.5% or 2.5 billion dollars.  The bonds that did not tender are not part of this equation.  Also side bets where you do not need the bond is not included in the 2.5 billion dollar figure. We will have to wait and see the conclusion of the English law Greek bonds and what that does to the credit default swaps.  It may cause a cross default. According to the BIS, the total notional credit default swaps underwritten is 37 trillion dollars.  With Greece being the subject of interest for the past two years, I expect to see the losses from the swaps increase dramatically over the next few weeks.

(courtesy Bloomberg)

Final Results Of Greek CDS Auction: 21.5% Final Settlement Price

Tyler Durden's picture

The Hellenic Republic Greek CDS Auction has ended, pricing at 21.5%, just slightly less compared to the Initial Market Midpoint of 21.75 of par. As explained back in January 2009, those who had bought the Cheapest to Deliver Greek bonds trading in the teens coming into the auction, made a quick buck, as these will be taken out at a nice premium to purchase price. For those who bought at par, we can only hope they have arrangements with the ECB to fund the shortfall, especially since only the ECB can "book a profit" by buying up Greek bonds at 80 cents on the euro and seeing these terminate at 21.5. Limit buy orders that were satisfied ranged from 22.75 (where there was just under 70 million in bids by accounts using JPM and DB as dealers), all the way to 21.625, where the breaking bid was courtesy of 120 million in indicated bids, spread evenly between HSBC and Barclays: these satisfied the 291.6 Million in outstanding Open Interest. Overall, there was 3,362.7 million in total limit buy orders across the stack. The laugh of the day once again comes courtesy of an account using JPM, which submitted a total of €135 million in bids between 8 cents and 1 cents (50 million at the former). If they had been hit on that it would have made quite a payday. On the offer side, the dealers showing the biggest Physical settlement requests were HSBC with €332 million, and BNP at €158 million. And the joke of the day once again comes courtesy of RBS, which as usual seems to have one of the most "entertaining" bond trading desks: the reason for the RBS "Adjustment Amount", as speculated earlier, was that the bank's Bid of 22 was above the market midpoint of 21.75: the good news is that unlike before at least they did not confuse price and discount.

Now the question is: what happens to the holdouts, and how soon until we get i) real litigation, not class actions suits filed in German courts, by hedge funds holders of Greek bonds, and, more importantly,  ii) litigation or par payout by holders of UK-law bonds.
That said, when calculating fair value of sovereign bonds we now know: 78.5% discount.


And now Pimco's El-Erian expects that Portugal is now next up.

(courtesy, Jim Sinclair and author Ambrose Pritchard Evans

Jim Sinclair’s Commentary
QE to infinity.
Pimco chief Mohamed El-Erian expects ‘second Greece’ in Portugal
The giant bond fund Pimco said Europe has not yet tamed its debt crisis and will soon face a “second Greece” in Portugal as the country’s economy spirals downwards. 
By Ambrose Evans-Pritchard
10:32PM GMT 18 Mar 2012
Mohamed El-Erian, Pimco’s chief executive, said Portugal will need a second rescue as the original package of €78bn (£65bn) falls short, setting off a political storm over EU rescue costs.
“Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector,” he told Der Spiegel over the weekend.
German finance minister Wolfgang Schäuble insists that Greece is a “completely unique case” and that there will be no further haircuts for banks, insurers and pension funds holding eurozone sovereign bonds.
However, the EU authorities broke their pledges so many times during the Greek saga that market faith has been shattered. Even Norway’s sovereign wealth fund has expressed disgust, signalling that it will give Club Med debt a wide birth from now on. It has already sold half its Spanish bonds.


Alasdair MacLeod has delivered an excellent paper on defaults and their meaning. Alasdair also
pounds the table that state debt must be included when a sovereign defaults together with state run operations like the railway etc.  (see Mark Grant ) .  Thus the default of sovereign Greece goes far beyond just the
Republic of Greece bonds.

No longer is a myth that sovereign paper  provides the rock solid foundation for banks. Also the
retrofitting of sovereign bonds to the ECB ahead of private investors should certainly unnerve many investors from partaking in investing in sovereign bonds.  Thus the essential backing of "money" with "government debt"
is now suspect:

(courtesy Alasdair MacLeod/Gold Research Analysis)

Gold Research Analysis

Eurozone banks and contagion risk


Map of Europe Greece has now defaulted, and other eurozone governments as well as agencies such as the International Monetary Fund, European Central Bank and European Investment Bank have retrospectively inserted themselves as senior creditors, a precedent that should be of great concern and which has profound implications for private sector banks.
Furthermore, when a state defaults it is only a small part of the whole story, because governments today are major participants in their economies. The consequences of a central government default extend to state guarantees for other entities and related businesses: in the case of Greece its default has altered the assumptions behind all non-central government public-sector loans, such as railway bonds. And the private sector not directly dependent on government subsidies or contracts is also affected by the prospect of excessive taxes.
For this reason, the consequence of Greece’s default goes considerably beyond the loans directly involved, and all other eurozone nations are in a similar position. The headline numbers are a fraction of the total involved.
This brings us to a fundamental truth. Government debt is the basis for fiat money systems. This basis is now being questioned. It is the key component of the capital held by banks, as well as cash and deposits at central banks – both of which are also government creations ultimately backed by government debt. Ever since gold was legislated out of the monetary system, confidence has become totally dependent on the validity of government debt.
The insolvent position of a number of eurozone nations invalidates the general assumption that government paper provides a solid foundation for eurozone banks. That the stronger euro-countries can underwrite the weak is now also doubtful. The precedent that has been set by the retrospective interposition by governments and their agencies as senior creditors undermines the value of government debt even further for private-sector banks, who become junior creditors. It is not surprising that they have re-deposited the bulk of the money lent to them by the ECB with the ECB itself. Euros held at the ECB only give refuge from exposure to specific government paper and is the best of a bad choice. Banks outside the region are exercising the option of opting out altogether.
It may seem unnecessary to question the very basis of the European financial system in this way. But this is bound to be debated in boardrooms across the entire banking network, inside and outside the euro area, and banks will react. It is also the underlying reason why the situation remains so precarious regarding Europe’s debt crisis. The way Greece’s default has been handled brings an increased risk of capital flight from the region at the worst possible time. Funding for all eurozone nations has become a lot more difficult. The ECB will come under growing pressure to not only rescue banks, whose balance sheets are imploding, but also to directly bailout governments as well.
Because of the systemic role of government debt, the crisis can be expected to spread rapidly from the insolvent weaker euro-nations to all the others. In short, the mishandling of Greece’s debt problems has made things worse.


The technocrat leader of Italy, Mario Monti is now meeting labour leaders hoping to change labour laws
with the hope of Italy becoming more productive like Germany.  The question is whether contagion will spread to Italy, Spain, Portugal and Belgium.

(courtesy Bloomberg/ Patrick Donahue)

Monti to Meet Labor Unions Amid Fresh Warning on Crisis

Italy’s Prime Minister Mario Monti will press ahead with efforts to revise the country’s labor lawsthis week, amid fresh warnings that the three-year-old European debt crisis is far from over.
Monti will lead talks with unions and employers in a final round of negotiations beginning tomorrow as the government seeks an agreement this week. Decision makers meanwhile warned against complacency after delivery of the final element of Greece’s 130 billion-euro ($171 billion) bailout package and the completion of the world’s largest sovereign-debt restructuring last week.
“Optimism should not give us a sense of comfort or lull us into a false sense of security,” International Monetary Fund Managing Director Christine Lagarde said at the China Development Forum in Beijing yesterday. “We cannot go back to business as usual,” she said, urging vigilance on oil prices, debt and the risk of slowing growth in emerging markets.
An easing of the crisis offered breathing room for Monti to seek an Italian labor-market overhaul and for euro-area ministers aiming to bolster euro bailout funding before a meeting at the end of the month. Still, urgency was underscored by an IMF warning that the Greek bailout held “exceptional risks” that could prompt a “disorderly” exit from the monetary union unless additional help is prepared.

‘Sovereign Default’

“The materialization of these risks would most likely require additional debt relief by the official sector and, short of that, lead to a sovereign default,” IMF staff wrote in a report released March 16. “In the absence of continued official support and access to” refinancing by the European Central Bank, “a disorderly euro exit would be unavoidable,” it said.
With billions of euros committed to hold Greece afloat and investors looking to see whether contagion could spread to Spain or Italy, the fragility of rescue efforts were reflected in bond yields last week. Spain’s 10-year yield climbed 20 basis points to 5.20 percent, the second weekly gain, while the yield on similar-maturity Italian debt rose three basis points to 4.86 percent.
Stocks and the euro fell, with the Stoxx Europe 600 Index down 0.5 percent at 9:45 a.m. Frankfurt time and the euro down 0.2 percent, trading at $1.3151.
Investors have been encouraged by the Italian prime minister’s efforts to rein in the country’s debt since his government of non-politicians replaced Silvio Berlusconi’s administration last year.

Month’s End

Monti’s labor overhaul will include a revision of firing rules and an expansion of jobless benefits. The rules, which will distinguish between workers removed without just cause and those fired for disciplinary or economic reasons, are among the most contentious. Under article 18 of the Italian labor code, employers have to compensate and rehire any worker ruled to have been fired without just cause by a labor court.
Monti met with employer and labor chiefs over the weekend and has said he wants to pass labor legislation by the end of the month. Italian Labor Minister Elsa Fornero said she will present a plan to overhaul labor laws even if negotiations with unions and employers fail to produce an agreement.
“We can’t keep going ahead and having endless discussions,” she said last night on the television program “Che Tempo Che Fa.” Fornero said that the two-month-old talks had “matured” and that an agreement could be reached.
“We’ll get an agreement within about a week, although there may be some small changes to the present proposal before it’s all done,” Erik Nielsen, chief global economist at UniCredit SpA (UCG) in London, wrote in a note to clients.

Greek Election

Even as focus shifted beyond Greece to other parts of the euro area, the IMF’s continuing concern about the Greek package illustrated the difficulty of implementing changes that officials in Brussels and Athens had been negotiating for months. Greece remains “accident prone,” the Washington-based institution’s staff said in the report.
The IMF reduced its contribution to the second Greek bailout because the operation poses what staff called “unprecedented financial risks” to its finances. One of the risks identified was the Greek election, to be held in April or May.
Lagarde has pushed European governments to boost their bailout fund in an effort to protectSpain and Italy from contagion. Euro finance ministers may decide to increase the region’s crisis fund to a total capacity of 692 billion euros when they meet on March 30, a euro-area official said March 16.

EFSF Moves

The ministers, who will meet in Copenhagen, are weighing what to do with the temporary European Financial Stability Facility and its permanent successor, the European Stability Mechanism. The 692 billion-euro figure represents the most attainable compromise between 500 billion euros, if policy makers change nothing, to a maximum of 940 billion euros, the official said.
On March 16, Chancellor Angela Merkel left the door open to boosting the euro-area backstop, saying a decision on reinforcing the firewall will be made before IMF meetings next month. Ministers have discussed “combination possibilities” for the EFSF and the ESM ahead of their meeting.
“What’s clear is that we need to settle on a position with a view to the IMF’s spring meeting because the topic will surely come up and because there have been offers by the international community,” Merkel said. “You can count on us setting the course by the end of March.”
To contact the reporter on this story: Patrick Donahue in Berlin at


Today Italy's Industrial Production collapsed M3 has been collapsing for the past 6 months
and now M1 is in free fall.  How on earth will labour reforms help this nation?

(UKTelegraph/Ambrose Evans Pritchard)

Italy is trapped in a monetary Völkerkirker

Another month, another blow for Italy.
Industrial orders fell 7.4pc in January, according to ISTAT. Domestic orders fell 7.6pc.
Output fell 4.9pc, as you can see from this chart:
This follows the release of construction data on Friday showing a 10.9pc fall in output.
This debacle was entirely predicted by monetary data six to nine months ago, as you can see:
(Source: Banco d'Italia)(Source: Banca d'Italia)
The M3 money data is at last improving very slightly (ie, it is collapsing less fast) but M1 is falling ever faster. We’ll see how that plays out.
I wish premier Mario Monti all the best. He is one Europe’s great gentlemen. Yet I fail to see how his labour reforms can – under current macro-policies – pull the country out of its downward slide before the debt trajectory blows out of control.
By all means repeal Article 18 of the labour code, which restricts redundancies for economic reasons, always bearing in mind that two labour reformers have been assassinated by neo Red Brigades since the late 1990s for venturing into these waters. But don’t expect such supply side reforms to bear fruit for many years.
"Are we really sure that a recession is the right moment to carry out such social reforms?" asks Tito Boeri, a professor of labour economics at Milan’s Bocconi University. "To carry out reforms a times of stress, you need a multi-billion support package."
Meanwhile, Mr Monti is carrying out a draconian fiscal squeeze of 3.5pc of GDP this year (the UK is doing 1pc) in the midst of deep slump, even though Italy is close to primary budget surplus. (unlike the UK, with an alarming primary deficit).
No rich developed country with control over its own policy levers would engage in such pro-cyclical folly. Italy is having to do this – ie, carry out an "internal devaluation" — because it is cannot devalue, cannot take central bank action to stop the implosion of the Italian money supply, and cannot safely defy the EU authorities. It is trapped in a monetary Völkerkerker
The IMF is aghast at what is happening, even though its civil servants can only express their views in couched terms, as chief economist Olivier Blanchard did recently:
"Decreasing debt is a marathon, not a sprint. Going too fast will kill growth. What is happening in Europe is making things worse … leading to a dangerous downward spiral."
The IMF now expects Italy’s economy to contract by 2.2pc of GDP this year, and to keep contracting into 2013. This alone will push public debt to 127pc of GDP. The contraction itself is driving the debt burden higher.
The markets have chosen to ignore this for now, bringing yields on Italian 10-year bonds down to 4.82pc – an almost healthy level. The euphoria from the ECB’s €1 trillion Draghi Bazooka (just €530bn in fresh money, nota bene) is not yet exhausted.
I am not in the camp that thinks Italy is necessarily doomed within the euro. Mario Draghi has certainly given it a lifeline. The country can make it if the eurozone’s policy machinery is tilted towards the South, and if the ECB takes its leisurely time before tightening into the next global upswing (a very big if, of course).
But of course – as we all know – any policy aimed at stopping the collapse of the Latin money supply will lead ineluctably to an unacceptable surge in the Teutonic money supply (ie 4pc, 5p, or 6pc inflation in Germany).
There lies the rub.
Needless to say, nothing in Euroland has really changed. .


Mark Grant does a great job sifting through records trying to ascertain the correct debt per GDP of our European nations.  Last week he did a great job on Spain.  Today it is Belgium.  The figures today are in USA dollars.  If you divide by 1.31 you will have the Euro amounts.  Suffice to say that the real debt to GDP figure for Belgium is 140%.

(courtesy  zero hedge/ Mark Grant..Out of the Box) 

On Belgium's 140% Debt/GDP

Tyler Durden's picture

From Mark Grant, Author of "Out of the Box and onto Wall Street" 
Belgium - A Great Mistake Of Accuracy
“Only by interrogating the other passengers could I hope to see the light, but when I began to question them, the light, as Macbeth would have said, thickened.”
-Hercule Poirot, Murder on the Orient Express
I have now concluded a much more accurate debt to GDP ratio for Spain and Italy that may be found in my prior commentaries. It is a slog, I can assure you, to find accurate information on each country past the size of their Gross Domestic Product. Eurostat does not count sovereign guarantees as part of any ratio and hence the accurate debt ratio, as I have demonstrated, is miles apart from the headline number we are given. It seems that in Europe a contingent liability is just a footnote to any financial statement and not anything of real meaning. Nowhere is the fantasy any larger than in Belgium and nowhere is there a larger detour from the truth.
Belgian GDP    (U.S. Dept. of State)                  $467 billion
Admitted Public Debt                                        $466 billion
Sovereign Guaranteed Debt (Eurostat)            $113 billion
Bank Guaranteed Debt (Dexia, Fortis et al)      $181 billion   
Bank Loans                                                      $  11 billion
Debt to GDP Ratio                                           140%       
So we find, in the case of Belgium, a 40% miss from what is bandied about by the Europeans. Then it should be noted that in the case of Dexia, Fortis et al that the guarantee of contingent liabilities may not be the amount of money that is required and so the situation could still worsen from here. Belgium, in fact, is not much better off than Greece and, as their economy sinks into recession, the numbers and ratios are bound to get worse. Not only do I expect further downgrades for this country by the ratings agencies but I also expect a further rise in yields as the more sophisticated investors grasp the reality of Belgium’s issues and respond accordingly.
“There those who have to exercise their little grey cells, and some who lock people ‘in’ them.”   
                                                                              -Hercule Poirot, Dead Man’s Folly

In the USA expect that the authorities will announce that QE twist will end with no real "official"
backup. With a deficit of 1.4 trillion usa dollars and no country out there with the capability of buying the USA debt, it is very probable that the USA is buying its own debt with the swap money arranged overseas.  Bernanke needs an excuse to drive the markets down so Bernanke can come to the rescue and initiate QEIII:

(courtesy zero hedge)

Operation Twist Is Coming To An End: A Preview Of The Market Response

Tyler Durden's picture

As macro data trends deteriorate and Dudley demurs, it is becoming increasingly clear that the risks for the US equity market are skewed to the downside as we head towards the end of Operation Twist (and seasonal factors subside). The Fed's 'upgrade' from modest to moderate growth certainly spooked Gold and Treasuries and saw small caps notably underperform but given historical precedence, if Operation Twist ends without a new program beginning, investors will likely expect a drop in equities (broadly) of 8-10% (which coincides with the QE1 and QE2 ends as well as the 1983, 1994, and 2003 normalizations in policy). Reiterating our recent theme, in order to avoid the end of Operation Twist, the Fed's economic outlook would need to deteriorate - which itself is a scenario likely to result in falling stock prices and just as the cause of a 'crash' in PCE towards the end of QE1 and QE2 was a function of higher inflation, we have the current spike in energy prices to ensure this time is no different.


Watch out for this:  the  10 yr USA bond yield has risen to now 2.38%:


The IMF Christine Lagarde now fears an oil spike could throw the global economy into a tailspin:

((courtesy UKTelegraph/Ambrose Evans Pritchard)

IMF chief Christine Lagarde fears oil spike poses serious threat to global recovery

The International Monetary Fund has warned that surging oil costs pose a serious risk to the global economy, threatening to smother expansion before a fresh cycle of growth is safely under way.

“The world is not yet out of the danger zone,” said Christine Lagarde, the IMF’s managing director, speaking in Beijing. “The rising price of oil is a new threat that could derail the recovery. I think it is a major threat.
“Optimism must not lull us into a false sense of security. The global economy may be on a path to recovery, but there is not a great deal of room for manoeuvre and no room for policy mistakes.” The warning came after Brent crude reached $126 a barrel last week, hitting all-time highs in euros and sterling. The US and Britain have agreed in principle to release supplies from their strategic reserves if necessary, but so far no decision has been taken on this.
The bilateral accord did little to soothe jittery markets. Traders saw it as a signal that Washington is moving closer to a military strike on Iran’s nuclear facilities.
Bank of America said the latest oil spike is nearing the pain barrier. It has pushed energy costs to almost 9pc of global GDP, a trigger for world recessions over the past 40 years. “For 2012, we believe the global economy cannot afford oil prices above $130,” the bank said.
Crude costs are already a greater drain on Europe’s economy than in 2008, compounding the region’s economic slump.
Oil inventories held by the OECD bloc are already lower than last year during the Arab Spring, while Saudi spare capacity has dropped below the critical level of 2m barrels a day (b/d). “Although Libyan production has staged a marked recovery, the oil market is facing a multitude of supply disruptions,” said Deutsche Bank.
Troubles in Sudan, Yemen, Syria, Iraq and the North Sea, combined with EU sanctions against Iran, have cut global supply by 2m b/d. On top of this, Japan is running two of its 54 nuclear reactors, relying on imports of oil and liquefied natural gas to produce power.
Mrs Lagarde said fragile banking systems and high levels of debt in the West still threaten recovery, while a slowdown in China and other emerging powers has become a concern. “There is a growing risk that activity in emerging economies will slow over the medium term. They are far from immune,” she said.
China’s National Bureau of Statistics said the country’s property market cooled further in February, with price drops in more than half of the 70 largest cities, including Beijing, Shanghai and Guangzhou.
A nationwide index published by SouFun Holdings suggests the six-month slide in home prices is accelerating as credit curbs bite, with drops of 0.3pc in February from a month earlier. “The size of the fall is expected to be bigger in the coming months and more property developers will offer discounts,” it said.
The property squeeze is intentional. Premier Wen Jiabao said last week said that home prices are still too high and vowed to drive the froth out of the market as part of the country’s plans for slower but healthier growth.
Stephen Jen from SLJ Macro Partners said that China’s slowdown strategy may have a big detrimental effect on Australia, Brazil and other commodity exporters that have been feeding off China’s boom.
“I remain unconvinced that the markets have priced in the full implications of a China soft landing, which will likely be innocuous for China, but consequential for other countries,” he said.


The USA is just doing fine:  Look at what is happening to California school teachers:

(courtesy Jim Sinclair commentary)
More than 20,000 California teachers pink-slipped CIGA Eric
Pink slips in the public sector are not restricted to California. This is happening all across the country and is reinforcing a vicious downward cycle that the private sector cannot absorb.
Headline: More than 20,000 California teachers pink-slipped
More than 20,000 public school teachers in California opened their mailboxes over the last few days to find a pink slip inside as districts met the state’s Thursday deadline for dispensing the dreaded news to the educators that they may not have a job in the fall.
The layoff notices are preliminary, the districts’ best guess at the amount of money they will get to educate kids next year after the Legislature concludes its annual budget fight this summer. But a proposed tax measure on the November ballot offers more uncertainty than usual.
Districts won’t know until two months into the new school year whether voters will approve a tax increase that would prevent a $4.8 billion trigger cut to education funding, as proposed in the governor’s budget.
That cut would be about $807 per student, the equivalent of 55,000 teacher layoffs or 17 days of school, according to The Education Coalition, representing 2.5 million teachers, parents, administrators, school boards and other school employees.
"Though the very future of our state depends on California’s teachers … (they) will now spend months in limbo, worrying about their futures and the future of their students," state Superintendent Tom Torlakson in a statement.


With USA naval vessels heading over to Iran, this is very disturbing:

(courtesy zero hedge)

ABC Reports Russian Troops Have Arrived In Syria, Russia Denies

Tyler Durden's picture

Earlier today, Al Arabiya made waves in the energy market following reports that a Russian ship carrying special forces had arrived in the Syrian port of Tartus, previously demonstrated here to be a key strategic asset in the Mediterranean. This news was promptly denied by RIA, which said that "there were no Russian military ships off Syria coast" and that the Iman ship is a tanker which is merely conducting resource support functions. Furthermore, according to the Russian Ministry of Defense, the crew of Iman consists solely of "civilian personnel, which is being guarded." That may or may not be the case, but has not stopped ABC from blasting, minutes ago, a headline that "Russian anti-terror troops arrive in Syria" a development that a "United Nations Security Council source told ABC News was "a bomb" certain to have serious repercussions." Which begs the question: is everyone now dead set on having war in Syria, and by proxy, Iran?
From ABC:
Russia, one of President Bashar al-Assad's strongest allies despite international condemnation of the government's violent crackdown on the country's uprising, has repeatedly blocked the United Nations Security Council's attempts to halt the violence, accusing the U.S. and its allies of trying to start another war.

Now the Russian Black Sea fleet's Iman tanker has arrived in the Syrian port of Tartus on the Mediterranean Sea with an anti-terror squad from the Russian Marines aboard according to the Interfax news agency. The Assad government has insisted it is fighting a terrorist insurgency.

The Iman replaced another Russian ship "which had been sent to Syria for demonstrating (sic) the Russian presence in the turbulent region and possible evacuation of Russian citizens," the Black Sea Fleet told Interfax.
Here is where ABC's report gets a little screwy:
RIA Novosti, a news outlet with strong ties to the Kremlin, trumpeted the news in a banner headline that appeared only on its Arabic language website. The Russian embassy to the U.S. and to the U.N. had no comment, saying they have "no particular information on" the arrival of a Russian anti-terrorism squad to Syria.
Actually no, here is what RIA did say about the development, google translated: (original can be found here)
Defense Ministry denied the information circulated a number of media that the coast of Syria are ostensibly Russian warships.

"No Russian warships, performing tasks from the shores of Syria, no. In the Syrian port of Tartus 10 days of the ship auxiliary fleet tanker" Iman "which performs the tasks logistics - the replenishment of fuel and food - of the Black Sea and Northern Fleets, which provides security shipping in the Gulf of Aden anti-piracy ", - told RIA Novosti representative of management information and the Defense Ministry.

Previously, some Russian and foreign media reported that the Black Sea Fleet tanker "Iman" on board which is a group of Marines, ostensibly to perform combat missions off the coast of Syria.
Which is rather odd - one would imagine that when reporting on such potential warmongering scenarios fact-checking would be rather important. It appears not.
Either way, ABC continues:
Last week Russia's Foreign Minister Sergei Lavrov said Russia had no plans to send troops to Syria.

"As for the question whether I consider it necessary to confront the United States in Syria and ensure our military presence there… in order to take part in military actions -- no. I believe this would be against Russia's national interests," Lavrov told lawmakers, according to RIA Novosti.
So... Buy crude or yes? Because it has been a whopping 48 hours since we heard anything from Israel ever since its security council proceeded to give the go ahead in a 8-6 vote to attack Iran.

I am sorry that I have to leave you as I have many things
to attend to tonight.

I am having difficulty finding the time to write this commentary
everyday as things just keep piling up.

I will do my best to inform you always.

I will see you tomorrow night


Anonymous said...

Harvey you seem like a nice enough fellow, which makes it even sadder to see you get played by Chilton and the other CFTC do-nothings. They lie to your face, and you believe them. Sad.

TheGilliom said...

Have a great night Harvey. Thanks for the news articles and commentary.

croc987 said...

Thank you Harvey!!

Fred said...


I'm guessing you figured out the anomaly with the 88 gold notices vs. the 35 open interest.


Anonymous said...

your hard work is always appreciated harvey,i read a lot of it and skim some two as i read zero hedge also,thanks

Anonymous said...

As always thank you very much Harvey.

Anonymous said...

I appreciate all of your time and effort on keeping us updated. I understand this must be a very time consuming blog. Just know I value your efforts very much.

Harvey Organ said...

Fred: why didn't you answer that

I knew immediately?

Anonymous said...

Thank you for your time sir, your efforts are most appreciated. :)

Anonymous said...

Looks like Russia threw a spanner in the war machine. I wonder what the war mongerers are going to do now? Attack Russia? Now that would be insane.

Fred said...

All right, I'll confess. My real nym is Kid Dynamite. And yes, I'm a paid shill for the Bankers.

Sorry boys, but I've lost too much by day trading, and I have to make back some of my losses.

Silvergood said...

Great blog Harvey, thank you!

Anonymous said...

Fed Fred is such a sicko. I shudder to think what kind of person he is in real life. The dude needs a psychiatrist. Either that or he is NSA shill bot. Both are pretty disturbing.

Anonymous said...

There was a time when i discarded any comment that didn't jive with the silver story and thought the poster was off their rocker and just didn't get it...

and now I find I discard any comment that does jive and reaffirm the silver story.

Some have and will open up to the possibility that things aren't what they seem, while most will not.

Anonymous said...

Harvey, your blog is very interesting and well prepared. Thanks for your efforts and time!

Harvey Organ said...

delivery notices for today:

gold 20
silver 60

see you tonight


Best Business Brands said...

Many european nations going to Greece, more euro crises on the way, ... Keynsian bromide one of many solutions, big banks buyers of debt, treasury bills .... gold and silver rise/Auction on Greek bonds showing 78.5% loss/Belgium at 140% debt/GDP · The Hiding of European debt/Hungary will probably do "an Iceland"/ ...

Anonymous said...


Fred said...

Sheeplse please buy paper only. We need fresh meat on so-called market. Please , try to understand.

Fred said...

The posts at 9:58 pm and 10:01 am are not from the "original" Fred.

Since someone has decided it would be a good idea to hijack my name, I will no longer post as Fred. I'll be posting under "Anonymous" like the majority of the others.

If you think I'm going away from calling Harvey out when he makes false statements, you're very, very wrong.

But now I'll be doing it so that it won't be obvious if it's one poster or a dozen who disagree with Harvey.

Anonymous said...

Harvey, your daily report says that "there is now evidence that the GLD and SLV are paper settling on the comex."

What evidence is there? That would be an important development.

I hope you have more evidence than " My broker JB Slear ( a.k.a 'Tigger') told me." or "Ted Butler says so."

What evidence???

Harvey Organ said...

Just now:

Powerful 7.9 Magnitude Earthquake Shakes Mexico City
Submitted by Tyler Durden on 03/20/2012 14:20 -0400

Fisher headlines Mexico Reuters

Moments ago we saw headlines flashing of a major 7.6 magnitude earthquake swaying Mexico City. It turns out the earthquake was even stronger, and according to the USGS is now classified as 7.9. From Reuters: "MEXICO CITY, March 20 (Reuters) - A major 7.9 magnitude earthquake struck near Acapulco on Mexico's Pacific coast, the U.S. Geological Survey said on Tuesday. Earlier it had been reported at 7.6 magnitude." Luckily, as Al Jazeera's Alan Fisher notes, "Mexican TV reports no major damage in the State of Oaxaca" citing the local governor.

From the USGS:


Fred said...

Don't fret boyz. It is very very safe now to invest in SP and Dow. Don't forget COMEX futures. It is very very safe . MF GLOBAL was just nonsense , glitch. Trust us boyz, our priority to make you happy.
Please liquidate your stacks , believe me it will be for good.

Fred said...

post @ 10:43 AM is not mine. I have nothing to hide. I am honest and hard working man. I always be your Fred

Anonymous said...

"Front options delivery month"


Anonymous said...

to Fred @ 11:31 and 11:35

Your grammar, syntax and punctuation are all horrible.

They're about as well executed as your overall thought process.

Anonymous said...

Hey, FakeFred--

From what third world country are you blogging??

Anonymous said...

Hey Harvey and all- word is filtering out of china that there was a coup, or an attemted coup!!

Fred said...

to Anon @ 11:49 AM

Well, I am not academic like your friend Ben the Printer, so excuse my grammar. I am hard working man from Nosuchplaceville.
I again urge you to get out of phyzz and put all you hard earned money into stocks and bonds and munis. It is very very very safe now. Trust me.

Anonymous said...

To FakeFred @ 12:25--

Yes, I'm sure the work in the laundry at the half-way house is difficult for you.
I'm just happy they let you have access to a computer so you can prove your financial competence to all of us.

Anonymous said...

Thanks Harvey!,
Does anyone notice that these detractors seldom address the blog content??,
@ ya Anon 10.43,
Fred is a fake,his/hers stink will always give them away!,
Still hanging around like a bad smell!.
get a job,get a life,if you can!

Anonymous said...

Hi Harvey,

I watched the Max Keiser video you had a link of on your blog the other day where he talked about a "Buy an Ounce, Give an Ounce" movement(of physical). I think that is an absolutely wonderful idea and if us silver bugs spread the word we could get the Occupy Wall Street types as well as the regular Joe's buying (and giving) at least an ounce of silver - multiply that by say... a million or so people (or better yet ten million or so) that would certainly go a long way into helping crashing the Comex... would it not? Please give me your serious opinion on this and I would be interested to know how your other blog readers feel about this. Obviously the more people that buy, the less physical is out there and we reach our goal faster, to crash the Comex. Everyone please give me your thoughts on this as it doesn't take too much to get a worthwhile "movement" started nowadays. Thanks, Darrell D.

Fred said...

Please sheeple , buy Facebook stock. Buy a Share , Give a Share.
Paper only . Get out of phyzz.
Stock market is very , very , very safe now. It is insider info , Jammie Demon told me so. Trust me , trust him. And thank me later ( I take coins only ).

Anonymous said...

Stinky Fred 'from the Fed',
is still posting,


Fred said...

@ FakeFred

You clown , get away. It's my domain here. Your work is very destructive , you must be very cunning and wit like me to fit in here.
Sheeple nowdays are very jittery. You have to convince them you are pro-metal first. Only then you strike them with controversial questions. And then you flame to no end.
So please melt away, it's my life here.

Anonymous said...

All the GLD and SLV metal is stored at the Bank of England, according to Harvey. wait.. it's all sitting in New York where it's also counted as COMEX inventory, according to Harvey.

Oh, just kidding. It's all just paper, according to Harvey.

Anonymous said...

Occupy Wall Street bums have no money for silver dats why they occupy! and even if a million bums bought an oz. each it wouldn't change a thing.

But if many people with money go long gold/silver on the COMEX and stand for delivery... with all the shortages every1 is talking about...

Why don't they do it? MFG? I don't think so! so why not?

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