Friday, November 16, 2012

Conflict in Israel advances/Fiscal cliff to be kicked into 2013?/FHA to be bailed out/

Good morning Ladies and Gentlemen:  (Commentary for Saturday Nov 17.2012)

Gold closed Friday up by $1.00 to finish the comex session at $1714.30. Silver on the other hand fell 31 cents to finish the week at $32.36.  The bankers showed up early again Friday, trying to keep gold and silver contained.  Their true object of interest is of course silver which has seen the comex open interest continue to rise to multi year highs. It is common for the bankers to short the mining equity shares to dust trying to stymie excitement in the metals.  Victory will occur in the paper game once physical supplies have been exhausted.
The huge movements of silver out of the comex to satisfy demand from London is surely having a toll on the bankers.  On Friday alone, 2.9 million oz of silver left the London vaults to settle contracts owed in silver elsewhere. The Sprott purchase of 7.5 million oz plus the purchase of 3.0 million oz of silver for the new Canadian ETF must be playing havoc to the CME.  September saw a huge number of ounces stand in silver and no doubt December's delivery notices will be humongous.Eventually, the LBMA/CME will default as demand is too great as nations move both silver and gold onto their shores. Friday night saw the GLD record it's highest ever level of gold at 1342.63 tonnes of gold. The question of course is whether they have physical gold in their inventory or is it paper obligations from some other transactions.

In other news today, fighting between Israel and the Palestinians continued. No doubt a ground offensive is near as Israel must take out Hamas if it is to wage war on Iran and knock out their nuclear weapons.
In Spain, the government had decided to postpone the bad bank proposal for one simple reason:  no demand.  In Greece we are witnessing the Neo Nazi party gaining strength as we witness thugs  using physical force against foreigners.  Of all nations, Greece suffered greatly at the hands of the German Nazi's in World War II and you must shake your head with disbelief on seeing these atrocious events happen again in our life time.

Argentina again is in trouble and it looks like they will default shortly.

In the USA it looks like the FHA will default and thus in need of a bailout which will be provided for by Tim Geithner. Finally we will look at developments inside the USA on the Fiscal cliff.
Before we head into those stories, let us travel first to the comex and see how trading fared on Friday:

The total gold comex OI surprisingly rose by 1176 contracts.  Remember that we had a massive raid yesterday.  I guess it solved nothing as the lower price spurred gold into the hands of stronger longs.  The Oi rests this weekend at 463,123 from Thursday's level of 461,941.  The non active contract month of November saw it's OI fall 9 contracts from 27 down to 16.  We had 14 notices filed on Thursday so in essence we gained 5 contracts or an additional 500 oz of gold will stand in November.  The big December contract is now 2 weeks from first day notice. Here the OI fell by 17,212 contracts as our paper players rolled into February and April.  The December gold contract month has it's OI rest this weekend at 227,167 from Thursday's level of 244,379. The estimated volume at the gold comex came in at 142,938 on Friday compared to a relatively decent volume of 215,455 on Thursday.

The total silver comex again caused our bankers massive headaches on Friday.  The raid on Thursday was massive, yet the silver price fell only slightly by 20 cents.  The open interest instead of contracting by a wide amount,  rose big time to the tune of 1263 contracts from 144,620 to multi year highs of 145,883. We again will have another of those weekend meetings as the bankers are getting quite nervous as to the number of silver leaves that refuse to leave the silver tree. The non active November silver contract month saw it's OI fall from 19 to 18 for a loss of 1 contract.  We had 1 delivery notice filed on Thursday so everything is in balance and we neither gained nor lost any silver ounces. The big December contract month saw it's OI fall by a rather low 4268 contracts from 55,989 down to 51,721.  The December OI remains at quite lofty levels with only 2 weeks to go before first day notice.  The estimated volume at the silver comex came in at 48,680 which is pretty good.  The confirmed volume on Thursday was monstrous at 70,330.


Comex gold figures 

Nov 16-.2012

(first day notice for the December contract will be Nov 30.2012)   

 



-- 







--  |

Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
 nil
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
3,925.88(Scotia,Brinks)
No of oz served (contracts) today
 0  (nil)
No of oz to be served (notices)
16  (1600 oz)
Total monthly oz gold served (contracts) so far this month
321  (32,100 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month
63,574.347
Total accumulative withdrawal of gold from the Customer inventory this month


 
176,245.91
Today, we  had tiny activity  inside the gold vaults. 

The dealer had no deposits  and no   withdrawals.

The customer had two deposits:

i) into Scotia:  3,182.85  oz
ii) into Brinks:  743.03 oz


total customer deposit:  3,925.88 oz


we had 0  customer withdrawals:







Adjustments: none

 








Thus the dealer inventory rests tonight at 2.524 million oz (78.50) tonnes of gold.

The CME reported that we had   0 notices  filed  or zero of gold. The total number of notices filed so far this month is thus 321 notices or 32,100 oz of gold.
To determine what is left to be served upon, I take the OI standing for November (16) and subtract out today's notices (0) which leaves us with 16 notices or 1,800 oz left to be served upon our longs.

Thus the total number of gold ounces standing for delivery in November is as follows:

32,100 oz (served)  +  1,600 oz (to be served upon)  =  33,700 oz (1.048 tonnes of gold).  We  gained 500  gold ounces standing at the gold comex today


Silver:

Nov 16.2012:

first day notice for the December contract will be Nov 30.2012:

Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory nil
Deposits to the Dealer Inventorynil
Deposits to the Customer Inventory845,435.07 oz (Brinks,Scotia)
No of oz served (contracts)9  (45,000 oz)
No of oz to be served (notices) 9 (45,000 oz)
Total monthly oz silver served (contracts)63  (315,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month248,831.5
Total accumulative withdrawal of silver from the Customer inventory this month5,069,243.9

Today, we had fair activity inside the silver vaults.
 we had no dealer deposit and no dealer withdrawals




The customer  had 2  deposits :



i) Into Scotia;  248,828.07 oz
ii) into Brinks:  596,607.000 oz (again, these exact round oz is bothersome to me)




total deposit;  845,435.07  oz



we had the following customer withdrawals:

none


total customer withdrawal:  zero



we had 1 adjustments:

i) Out of CNT, whereby 45,621.000 oz was removed from the customer account and landed at the dealer at Brinks.

(Maybe someone out there can explain this to us.  Almost all physical transactions at the CNT vault has been exact numbers like today at 45,621.000.)




The high movements in silver inventory also suggest massive tightness in the markets.



Registered silver remains tonight  at a very low :  35.866 million oz
total of all silver:  141.982 million oz.



The CME reported that we had 9 notice filed for 45,000 oz . The total number of silver notices filed  this month remains at 63 contracts or 315,000 oz of silver.  

To determine the number of silver ounces standing for November, I take the OI standing for November (18) and subtract out today's notices (9) which leaves us with 9 notices or 45,000 oz ready to be served upon.

Thus the total number of silver ounces standing in this non active month of November is as follows:

315,000 oz (served) +  45,000 oz ( to be served upon)  =  360,000 oz
we neither gained nor lost any silver ounces at the silver comex.  

end 

 At 3:30 pm we received the COT report for both gold and silver which gives position levels for our major players,  This report is from Tuesday Nov 6/2012 through until Nov 13.2012.

Let us now head over to the gold COT:


Gold COT Report - Futures
Large Speculators
Commercial
Total
Long
Short
Spreading
Long
Short
Long
Short
207,847
36,253
33,324
144,488
369,283
385,659
438,860
Change from Prior Reporting Period
11,343
-78
-2,921
-300
16,753
8,122
13,754
Traders
209
63
73
52
43
294
154


Small Speculators




Long
Short
Open Interest



74,102
20,901
459,761



4,485
-1,147
12,607



non reportable positions
Change from the previous reporting period

COT Gold Report - Positions as of
Tuesday, November 13, 2012


Our large speculators:

those large speculators that are long in gold saw the financial landscape and decided it was necessary to pour it on and buy more paper gold contracts to the tune of 11,343 contracts.
The bankers saw this and were licking their chops waiting to fleece these guys.

those large speculators that have been short in gold stayed pat and covered a tiny 78 contracts.

Our commercials:

Those commercials that have been long in gold and are close to the physical scene pitched a tiny 300 contracts from their long side.

Those commercials that have been perennially short in gold and constantly in trouble with the law and are led by Jamie Dimon's JPMorgan with disciples added a monstrous 16,753 contracts to their short side.

Our small specs:

Those small specs that have been long in gold joined their older and wiser brother, the large specs, in adding a rather larger 4485 contracts to their long side.
These guys were fleeced this week as well.

Those small specs that have been short in silver covered 1147 contracts from their short side.


Conclusion:  Hugely bearish which will certainly explain the raid from Wednesday through Friday as the bankers went net short this week to the tune of 17,053 contracts.



and now for our silver COT and let us see if we see a difference between the gold players and the silver players:




Silver COT Report: Futures
Large Speculators
Commercial
Long
Short
Spreading
Long
Short
45,185
10,775
30,405
41,797
92,758
955
664
-272
3,071
4,354
Traders
78
39
47
31
42
Small Speculators
Open Interest
Total
Long
Short
144,567
Long
Short
27,180
10,629
117,387
133,938
1,500
508
5,254
3,754
4,746
non reportable positions
Positions as of:
133
109

Tuesday, November 13, 2012
  © SilverSeek.com  

Our large speculators:

Those large speculators that have been long in silver no doubt got word that London England supplies of silver were waning, so they continued to load the boat with another 955 contracts to their long side.

Those large speculators that have been short in silver added another 664 contracts to their short side.

Our commercials:

Those commercials that have been long in silver and are close to the physical scene added an extremely high 3,071 contracts to their long side.

Those commercials that have been short in silver from the time of Alexander the Great, continued to supply the necessary non backed silver paper by going short another 4354 contracts, much to the encouragement of our blind regulators.

Our small specs:

Those small specs that have been long in silver added a rather large for them 1500 contracts to their long side.

Those small specs that have been short in silver added another 508 contracts to their short side.

Strange silver COT as everybody added to their respective positions.

Conclusion:  the bankers went net short this week to the tune of 1283 contracts and thus a little bearish.  However we did have our raid on Wednesday through Friday as the bankers tried to extract their pound of flesh.


end



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.



Total Gold in Trust   Nov 16.2012  a new record high!!!




Total Gold in Trust

Tonnes:1,342.63

Ounces:43,166,879.89

Value US$:73,927,254,789.60






Nov 15.2012:

TOTAL GOLD IN TRUST

Tonnes:1,339.62

Ounces:43,069,992.38

Value US$:73,611,301,419.07





nov 14.2012:



TOTAL GOLD IN TRUST

Tonnes:1,336.30

Ounces:42,963,415.08

Value US$:74,106,532,724.05






Nov 13.2012:

TOTAL GOLD IN TRUST

Tonnes:1,338.71

Ounces:43,040,927.06

Value US$:74,262,633,095.20







NOV 12.2012:



TOTAL GOLD IN TRUST

Tonnes:1,338.71

Ounces:43,040,927.06

Value US$:74,650,815,284.73





Nov 10.2012:  Strange:




TOTAL GOLD IN TRUST

Tonnes:1,338.71

Ounces:43,040,927.06




Value US$:74,650,815,284.73





 


we gained: 3.01 tonnes of gold into the GLD!!!


and now for silver:


Nov 16.2012:



Ounces of Silver in Trust319,578,894.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,940.01


Nov 15.2012:


Ounces of Silver in Trust322,483,146.800
Tonnes of Silver in Trust Tonnes of Silver in Trust10,030.35


nov 14.2012

Ounces of Silver in Trust322,483,146.800
Tonnes of Silver in Trust Tonnes of Silver in Trust10,030.35


nov 13.2012:

Ounces of Silver in Trust323,306,047.100
Tonnes of Silver in Trust Tonnes of Silver in Trust10,055.94

something is going on!!:  we lost a monstrous 2.905 million oz from the vaults over at the SLV in London England.




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


Sprott and Central Fund of Canada. 




(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)



1. Central Fund of Canada: traded to a positive 4.4 percent to NAV in usa funds and a positive 4.4%  to NAV for Cdn funds. ( Nov 16.2012)   

2. Sprott silver fund (PSLV): Premium to NAV rose  to 2.36% NAV  Nov 16/2012
3. Sprott gold fund (PHYS): premium to NAV  fell to 2.34% positive to NAV Nov 14/2012. 

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 4.6% in usa and 4.4% in Canadian.This fund is back in premiums to it's former self with respect to premiums per NAV. 

The silver Sprott fund announced a big silver purchase and this reduces the premium to NAV temporarily

It looks like England may have trouble in finding gold and silver for its clients.
It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.

 


end



I pointed this out to you on Thursday: 




CME lowers margin requirements:

Gold lowered 18.50% in margin requirements
Silver lowered 9.1% in margin requirements
Copper lowered 9.1% in margin requirements



 GATA member James McShirley postulates the following:


James McShirley:





"This is VERY curious. I would have expected the exact opposite with what's going on. History has shown nearly all margin moves, up or down, are for the benefit of members and cronies. In this case they apparently just added overnight a whopping 20% extra leverage to gold (from 18.43-1 to 22.10-1) and about 10% more to silver. (9.10-1 to 10.00-1) While still not extreme by CME standards the timing is stunning, with both gold and silver at historically very high OI. Why extra leverage, and why NOW?


Possibilities:


* Lure in more weak longs for an attempted kill shot, maybe up at $1,800?

* Give margin-challenged shorts, or a single short like JPM, more breathing room? (remember there must be a few cronies on margin call after the recent Apple/general equity selloff)

* Try to stem the steep exodus of trading revenue?

* Could cronies actually be getting positioned to make a killing on a monster move higher?

Something has to come from this for sure.
JMcShirley




Here are you major physical stories:





Major points:



1. the CME cut margins on gold and silver as investors shy away from the crooked comex
2, the "gold" at the GLD is now within a whisker of record levels at 1339.6 tonnes.  The record was set in Oct  at 1340.5 tonnes
3, Take note of what Moore capital did with respect to GLD and Sprott gold.  Moore sold 20,000 shares of GLD to purchase Sprott's gold.  They have 100,000 shares left.  I wonder why they did that?  counter party risk maybe?

as Goldcore states:

Their liquidation of the SPDR Gold Trust is an interesting development and one which might be seen more often of in the coming months due to concerns about the counter party risk in the SPDR Gold Trust.

4. the rest of the commentary is on the phony GFMS report.  Take it with a grain of salt.




(courtesy goldcore)





Silver To Climb 38% In 2013 - "Possibly Over $50/oz" Say GFMS

Tyler Durden's picture




Silver To Climb 38% In 2013 - "Possibly Over $50/oz" Say GFMS
Today’s AM fix was USD 1,710.00, EUR 1,342.76, and GBP 1,077.91 per ounce.
Yesterday’s AM fix was USD 1,723.50, EUR 1,351.45, and GBP 1,087.66 per ounce.
Silver is trading at $32.32/oz, €25.48/oz and £20.46/oz. Platinum is trading at $1,554.50/oz, palladium at $624.80/oz and rhodium at $1,095/oz.
Gold fell $11.00 or 0.64% in New York yesterday and closed at $1,714.00. Silver slipped to a low of $32.166 and finished with a loss of 0.15%.
 Silver ETP Holdings Climb 0.4% to Record 18,853.6 Metric Tons
Gold and silver have traded a bit lower on Friday and are both heading for a loss of 1% on the week in dollar terms. This is to be expected after the 3% and 5% returns of last week and the trading action this week has all the hallmarks of consolidation.
Interestingly, the sharp falls seen in the Japanese yen this week have created the unusual situation of gold and silver prices being nearly 1% higher in yen terms while lower in most fiat currencies.
The jobless claims numbers were higher than expected (439K vs 338K) yesterday and Superstorm Sandy’s wrath may have worsened an already weakening US economy. Unemployment benefits grew by 78K for the week ending November 10th.  
Many of those who lost their jobs were unable to immediately file claims due to the dislocation caused by the storm.  Sandy led to over 100 deaths, left no power in many homes, curtailed rail or subway services and insurance losses estimated are between $20 billion and $50 billion.
US industrial output figures for October are published at 1415 GMT.
If the US fiscal cliff isn’t sorted out it will weigh on the dollar and benefit gold however the fiscal cliff is just the preliminary bout in many challenges facing the $16.15 trillion indebted US economy.
The CME Group cut margins on gold and silver futures contracts in a bid to ignite trading interest which is bullish from a contrarian perspective.
Gold demand is still strong.  The SPDR Gold Trust holdings grew to 1,339.616 tonnes by Nov. 15, just a tad off the record high of $1,340.521 tonnes hit in October.
John Paulson kept a major stake in gold in Q3 2012, a confidence boost to bullion's appeal as a hedge against economic uncertainty, a US regulatory filing showed on Thursday. 
While John Paulson kept his current stake in the SPDR Gold Trust (NYSE:GLD), Soros increased his holding in the gold trust by 49% to 1.32 million shares.
Soros and his team, unlike many “experts”, clearly believe gold is not a bubble and will protect and grow his wealth in the coming years.
Paulson, who became a billionaire in 2007 by wagering against the subprime mortgage market, owns about 5% of the SPDR Gold Trust, according to data compiled by Bloomberg. 
U.S. Securities and Exchange Commission filing for third- quarter holdings showed that Paulson & Co., the largest investor in the ETP, kept its stake at 21.8 million shares. While Bacon’s Moore Capital Management LP acquired 1.8 million shares in Sprott Physical Gold Trust last quarter.
While buying shares in the Sprott Physical Gold Trust, Moore Capital cut holdings in the SPDR Gold fund by 20,000 shares to 100,000 last quarter.  Patrick Clifford, a spokesman for New York-based Moore, declined to comment on the filing. Michael Vachon, a spokesman for Soros, did not reply to an e- mail sent by Bloomberg.
Their liquidation of the SPDR Gold Trust is an interesting development and one which might be seen more often of in the coming months due to concerns about the counter party risk in the SPDR Gold Trust.
Scout Capital Management LLC boosted holdings in the SPDR Gold Trust by 525,000 shares to 1.14 million shares, a filing showed yesterday.
Global ETP holdings reached a record 2,596.1 metric tons on Nov. 8 amid speculation that stimulus efforts will increase as the U.S. faces a so-called fiscal cliff of $607 billion in tax gains and spending cuts next year should Congress fail to act.
Thomson Reuters GFMS has published research that says they project silver prices to rise 38% in 2013 from current levels, as a sluggish global economy increases safe haven demand.
The bullish silver GFMS forecast was published on the Silver Institute website yesterday and is unusual as the GFMS have been quiet bearish on silver in recent years despite rising prices.
Philip Klapwijk of GFMS said that “a rebound in investment demand stemming from continuing loose monetary policies is expected to drive silver prices towards and possibly over $50 during 2013.” 
Spot silver has risen over 17% this year overtaking gold’s 10% gain, and paving the way for its third consecutive rise in four years.
"Strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates," are among the factors that will lure buyers to the safety of silver,” said Philip Klapwijk of GFMS.
"We are thinking prices will trend higher next year. I'm not convinced that we are going to $50. I think we will definitely see $40 to $45 prices."
Strong silver demand is seen by the increase of 4.5% in holdings of the iShares Silver Trust, the largest silver backed ETF (see chart above).
Klapwijk said, "In China, for example, jewellery demand is growing at a double digit pace," and predicts silver prices to trade between a low of $30.90 and a high of $36 for the rest of 2012.
Weaker industrial fabrication demand for silver is due to cuts in solar power subsidies in Europe which decreased demand from the electronics field and photovoltaic end users hence increasing the silver supply. In addition mine production has climbed 4% in 2012 said Klapwijk.
NEWSWIRE
(Bloomberg) -- IShares Silver Trust Holdings Fell 45.17 Tons as of Yesterday
Silver holdings in the iShares Silver Trust, the biggest exchange-traded fund backed by silver, declined to 9,985.18t, according to figures on the company’s website.
(Bloomberg) -- Gold Set for Record in India on Trend Signal: Technical Analysis 
Gold futures in India are poised to advance to a record in two to three months as the Raff Regression Channel indicates a rally, according to technical analysis by Kotak Commodities Services Ltd.
“It is time to buy as gold is trading within C1 and C in the channel, which shows positive trend,” said Mumbai-based Dharmesh Bhatia, associate vice president at Kotak, referring to the two trend lines which define the regression channel. Futures may touch 32,600 rupees ($593).

NEWS
State won't pay in gold or silver - Politico

COMMENTARY

end





Ted Butler discusses the interview with Bart Chilton and Lauren Lyster.
He is thrilled that the manipulation is becoming mainstream.  He is still very upset at the CFTC in taking over 4 years to make up their minds:


(courtesy Ed Steer/Ted Butler) 





"My reaction to the Russia Today interview with Bart Chilton is two-fold. First, I am elated that the subject of the silver manipulation has come to be so widely understood. As I need not remind you, this has been my main professional focus for more than 25 years. The main reason it obsesses me is that it is such a serious matter, as no market crime is more important than price manipulation. Since discovering that JPMorgan was the big silver short 4 years ago due to CFTC correspondence to lawmakers, I have tried my level best to convince others of JPM’s involvement. Considering how widespread has become the awareness that it is JPMorgan at the heart of the silver manipulation, I can also state that I am elated about that as well. While I am most grateful for the financial support from subscribers and from Investment Rarities that has enabled me to delve into and mak e known the manipulation, my chief motivation was always to end a market crime that I found most offensive. How could I not be ecstatic that so much has been accomplished?"
"My second reaction is different. I’m appalled that the CFTC and the CME Group have not dealt with this matter in a forthright and aboveboard manner. Concentration is an incredibly specific issue and JPMorgan holds a manipulative share of the COMEX silver market, currently over 32% on the short side. The Hunt Brothers were judged guilty of manipulating the silver market for holding a 20% share in 1980. Had there ever been a single participant that held 32% of the long side of COMEX silver since 1980, it is a certainty that the CFTC and the CME would not have rested until that position was eliminated. Yet for more than 4 years, the CFTC has only pretended to investigate while JPMorgan manipulated the silver market continuously." - Silver analyst Ted Butler...14 November 2012


end



With global markets in turmoil, paper gold is being liquidated along with paper stocks. 
However the physical metals are being hoarded especially on the official front.
Another gold commentary from Europe courtesy of Ben Traynor of bullion vault.

(courtesy Ben Traynor)


  


Gold "Being Liquidated for Cash" as Stock Markets Fall Ahead of Fiscal Cliff Negotiations



By: Ben Traynor, BullionVault


-- Posted Friday, 16 November 2012 | Share this article | Source: GoldSeek.com

London Gold Market Report

WHOLESALE gold bullion prices fell below $1710 an ounce Friday morning in London, dropping below that level for the second day in a row, as stocks, commodities and the Euro all fell and US Treasuries gained ahead of negotiations among US lawmakers about the so-called fiscal cliff.

"Gold is being seen increasingly as a source of cash," says Simon Weeks, head of precious metals at bullion bank Scotia Mocatta.

"Liquidation of gold can cover losses elsewhere."

Silver bullion meantime fell to $32.19 an ounce.

On the currency markets, the US Dollar Index, which measures the Dollar's strength against other major currencies, touched a 10-week high as the Euro's recent rally stalled.

Heading into the weekend, gold bullion looked set for a 1.2% weekly loss by Friday lunchtime in London, while silver was down 1.3%.

President Obama is due to meet congressional leaders later today for negotiations on the so-called fiscal cliff due at the start of next year. Tax cuts made by former president George W Bush are due to expire on December 31, while spending cuts for the military and social programs are currently scheduled for January as a result of a deficit deal agreed last year.

Lawmakers are negotiating on how to reduce the federal deficit over the next deficit; failure to agree a deal would see the tax cut expiries and spending cuts occur as scheduled.

"[Obama] will not sign, under any circumstances, an extension of tax cuts for the top 2% of American earners," White House spokesman Jay Carney said Thursday, a day after President Obama suggested taxes should be raised for the wealthy to reduce the deficit.

"What we won't do is raise tax rates," countered Republican Senate leader Mitch McConnell, who will be at today's talks.

Ratings agency Standard & Poor's stripped the US of its AAA credit rating in August 2011, after weeks of negotiations on raising the so-called 'debt ceiling' for federal debt. 

"The [US credit] rating is in the hands of policymakers," says John Chambers, chairman of S&P's sovereign rating committee.

"If no budget deal is reached in the early part of next year and the debt trajectory just continues to rise," adds Bart Oosterveld at fellow ratings agency Moody's, "then we'd be looking at a downgrade of a notch to Aa1."

Aa1 is the second-highest Moody's rating after Aaa.

"If we don't see an agreement and there is a gridlock, it will burden the Dollar and benefit gold," reckons Dominic Schnider at UBS Wealth Management.

The UK government is unlikely to end its ownership of Royal Bank of Scotland and Lloyds "any time soon", according to a report published by parliament's Public Accounts Committee.

"The £66 billion cash spent purchasing shares in RBS and Lloyds may never be recovered," the report on the sale of Northern Rock says.

"The low level of competition [to buy Northern Rock assets] does not give us confidence that the taxpayer will make a profit on the sale of RBS or Lloyds... it seems inevitable that their 'temporary public ownership' will last for some time, if getting value for our investment remains the most important objective for government. "

By contrast, the US Treasury Department said earlier this year that it expects to make a $2 billion profit on the stakes it bought in US banks during the 2008 crisis.

The volume of gold bullion held to back shares in the SPDR Gold Trust (GLD), the world's largest gold ETF, rose to within 0.07% of its all-time high yesterday, rising to 1339.6 tonnes during Thursday's US trading.

Soros Fund Management increased its investment in the GLD by 49% to 1.32 million shares during the third quarter, according to the fund's 13F filing with Securities and Exchange Commission. Hedge fund Paulson & Co., the GLD's biggest investor, maintained its stake at 21.8 million shares.

In its quarterly Gold Demand Trends published yesterday, the World Gold Council notes that notes that gold investment through exchange traded funds was strong in Q3, in contrast with demand in many markets for gold coins and bars.

Ben Traynor

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

end




 
And now your major paper stories which influences the price of gold and silver:



Your early morning sentiment from Europe

1. Attention is still on Greece and Spain.  Greece is still waiting for the Troika report and since Germany will eventually fund this, they must vote on the pkg in their parliament.(Bundestag)

2. In economic news, European exports, the lifeblood of Europe faltered again in September by 1.1% after gaining 3.3% in August. As Europe entered into its recession imports fell by a much larger 2.7% and thus it's trade surplus actually widened to 11.3 billion euros.

News from Israel and Gaza remain quiet overnight but many expect a ground invasion.
The word came that rockets landed in Jerusalem and Tel Aviv again added more fear to the markets.


Also news from the USA on the fiscal cliff frightens many investors.

For more details, see Soc Gen's report and Jim Reid





(courtesy zero hedge, your overnight sentiment from Asia and Europe)








Directionless Drift Marks Eventless Session

Tyler Durden's picture




There was precious little in terms of actionable news in the overnight session, which means that, like a broken record, Europe falls back to contemplating its two main question marks: Greece and Spain, with the former once again making noises about the "inevitability" of receiving the Troika's long delayed €31.5 billion rescue tranche. The chief noise emitter was Italian Finance Minister Vittorio Grilli who said he was "confident that euro-region finance chiefs will reach an agreement on aiding Greece when they meet next week." He was joined by Luxembourg Finance Minister Frieden who also "saw" a Greek solution on November 20. Naturally, what the two thing is irrelevant: when it comes to funding cash flows, only Germany matters, everything else is noise, and so far Schauble has made it clear Germany has to vote on the final Troika report so Europe continues to be in stasis when it comes to its main talking point. In fundamental European news, there was once again nothing positive to report as Euro-area exports fell in September as the region’s economy slipped into a recession for the second time in four years. Exports declined a 1.1% from August, when they gained 3.3%. Imports dropped 2.7%. The trade surplus widened to 11.3 billion euros from a revised 8.9 billion euros in the previous month. Global trade, at whose nexus Europe has always been at the apex, continues to shrink rapidly. Elsewhere, geopolitical developments between Israel and Gaza have been muted with little to report, although this will hardly remain as is. Providing some news amusement is Japan, where the LDP opposition leader Shinzo Abe continues to threaten that he will make the BOJ a formal branch of the government and will impose 2% inflation targeting, which in turn explain the ongoing move in the USDJPY higher. This too will fade when laughter takes the place of stunned silence.
What macro traders are focusing on, via SocGen:
It is premature to conclude that the pre-election rhetoric of Japan's LDP leader Shinzo Abe has turned the trend around in G10/JPY but it has added welcome distraction from a market that remains largely hamstrung by the euro debt crisis. A turn lower in the US macro data, with some though not all blame laid at the door of storm Sandy, the phase of risk aversion that has characterised equity markets may not be over. With the S&P extending towards 1,350, a year-end rally looks further away than ever, and with chart technicals for example in EUR/JPY still pointing lower (see graph), one may be tempted to fade this week's burst through 103.00. The estimated EUR5bn of Greek T-bills that expire today will be repaid with the money raised at new bill auctions earlier this week, but in the background we are nowhere near closer to resolving the stalemate between the EU and the IMF. That is something for the Eurogroup meeting next week, but proposals now being floated to help out Greece include lowering interest rates and longer maturities on loans. No progress that we know of has been made on the IMF's wish for the EU to come forward with a ‘real fix' to lower Greece's debt burden. At stake over the coming days is how the EU can formulate proposals that deal with a haircut or loss without losing face with the electorate, an issue that for Germany in particular could be hard to swallow ahead of next year's ballot.

The focus today data wise is on the US where we get the latest TIC capital flow data and industrial output. The SNB's Jordan is scheduled to make a speech in Zurich that could be a heads up before the next policy meeting on 13 December.
More on the overnight summary from Jim Reid:
The shorter business cycle theory officially claimed Europe yesterday with GDP declining for the second quarter albeit at a mild -0.1% QoQ rate . To be fair the last 5 quarters have come in at +0.1%, -0.3%, 0.0%, -0.2% and now -0.1% so although an official technical recession can now be declared we've been pretty much on the edge of this for a year now in Europe with many member countries already experiencing recession. Of the 24 countries that are in the G20 and/or the EU-12, all but 3 of them have had at least one negative quarter of growth now in the last year or so. The lucky 3 without are China, South Korea and the US. The basis of the shorter cycle theory that we launched in our 2010 long-term study was that we were about to embark on a period of massively constrained fiscal and monetary policy relative to that seen in the previous 25-30 years.
So the big two without a negative quarter are China and US. To be fair China still has a lot of control over its own destiny in the short-term  so the theory was only meant to be applied to the over-levered developed world were rate were already floored close to zero. This leaves the US as the shining beacon amongst its Western peers (in the G20+Euro sample) as the only one without a negative quarter of growth since the recovery from the GFC. So is the US the exception to our theory? To be honest at the time we launched the theory we didn't differentiate the US from its peers and expected it to be as susceptible to the shorter cycle theory as all the others. However one would have to say that they have been pretty successful at disputing our lack of flexibility assumption as they've squeezed out every last bit of fiscal and monetary stimulus possible since the GFC. The Fed is moving towards 'QE infinity' and 2012 will be the fourth highest peace time US budget deficit in the 220 year history we have data for with no prizes for guessing which years made up the 1,2 and 3 spots! Even with this extraordinary stimulus this remains the second weakest nominal US GDP recovery of the 17 we have quarterly data for back to 1921. Only the 1927 recovery that was unfortunate to run into the 1929 stock market crash was weaker. So although the US has avoided a negative growth quarter, activity has been fairly anaemic by historical standards.
Bringing this forward to today's markets, the fiscal cliff outcome will likely have a big say as to whether we end up being right or wrong about shorter cycles in the US. If we can maintain deficits close to current levels over the next year or so then we may be proved wrong for the US and the cycle will again be notably longer than average. So a lot arguably rests on this issue. Finally its worth bearing in mind that if the US had a deficit in line with the average in Europe it would almost certainly be firmly in recession now. So that extra deficit flexibility has made all the difference.
On to markets now, it was another weaker day for risk assets not helped by escalating tensions in the Middle East. Indeed the conflict seems poised to escalate with BBC reporting that the Israeli government may begin ground operations in Gaza imminently to neutralise the threat of further rocket attacks. Palestinian militants fired over 200 rockets on Thursday, causing three fatalities, while three rockets also hit near the city of Tel Aviv.
This is the first time Tel Aviv has been threatened by missiles since the first Iraq war. Geopolitical concerns aside disappointing Q3 revenues from Wal-Mart and Target as well as a Sandy-distorted US Philly Fed survey (-10.7 v +2.0 expected) and initial jobless claims number (439k v 375 expected) all weighed on sentiment. This was also the largest week-on-week rise in claims since Hurricane Katrina. Interestingly though Sandy-effects didn’t show up in yesterday’s Empire State manufacturing survey (-5.2 vs. -6.2 prior month and -8 expected) although today’s IP report today will likely show a modest contraction in October.
All this saw the S&P500 (-0.16%) end lower for the third consecutive day and also on track to finish lower for the second consecutive week. We’ve seen a meaningful retracement in US equities with the index now 7.7% off its post-QE3 highs in mid-September. Indeed as we noted yesterday the risk tone has been stalling since QE3 and given the financial world's addiction to central bank liquidity it is ironic to see the QE3 announcement marking the 2012 peak in various asset classes. Commodities have also performed poorly with the S&P GSCI index, Copper and Brent all peaking on the day after QE3 was announced and have fallen 8.7%, 9.3%, and 6.6% respectively. Interestingly Gold is down around 3.2% over the same period. This leaves core rates as the major outperformer over this period with the UST 10yr yield down 29bp to around 1.58% overnight.
Staying on the Fed, Bernanke’s speech on the housing and mortgage market yesterday noted that the housing market is still plagued by tight credit and underwater borrowers. He also added that the Fed will do what it can to support the housing recovery. Ironically, data from Freddie Mac yesterday showed that the average 30-year fixed mortgage rate fell to a record low 3.34% last week, beating the previous record of 3.36% set on the 4th of October.
Back to the markets, Asian equities are on track to finish the week on the back foot. Chinese equities are leading the losses overnight (Shanghai Composite –1.20%) weighed by news that many Chinese cities are considering property taxes. Chinese equities remain one of the underperformers this year with YTD price returns of around -8.5%. The newly formed Politburo Standing Committee has been very much silent since President Xi Jinping’s inaugural speech yesterday. Elsewhere, the KOSPI (-0.57%) and ASX200 (-0.29%) are both lower.
After having rallied +1.9% yesterday the Nikkei is up by another 1.95% today as  investors digest on the return of opposition leader Shinzo Abe after early elections. The JPY is holding steady at 81.05 against the Dollar overnight after having traded 1.15% lower yesterday. Mr Abe is well known for his aggressive stance on monetary easing and has called for the BoJ to shower the economy with unlimited stimulus.
Our Japanese research team believes that a victory by the opposition Liberal Democratic Party (LDP) appears likely given that (1) the LDP continues to outpoll the ruling Democratic Party of Japan (DPJ) by a considerable margin, (2) 300 of the 480 lower house seats are single-seat constituencies that tend to strongly favor the most popular party, and (3) rapidly emerging minority parties may have insufficient time to rally their forces. They therefore expect Shinzo Abe to become PM for a second time.
European headlines took a backseat yesterday given the geopolitical tension in the Middle East and US fiscal cliff worries. On Greece, Merkel said that she expects next week's Eurogroup/ECOFIN (Nov 20th) meeting to decide on the next steps for Greece in terms of a disbursement and debt sustainability. On the latter, the Sueddeutsche Zeitung reported that EU leaders are considering retroactive interest rate reductions to Greece's debt, with the EFSF/ESM potentially funding Greece below its own funding costs. The difference would be subsidized by Euro-area governments, because the EFSF/ESM is forbidden from lending at below own-cost rates. Greece issued an additional EUR937m of one- and three-month T-bills yesterday, bringing the proceeds from this week's auction to EUR5bn ahead of today's T-bill maturities.
Turning to the day ahead, Obama meets with the four top leaders of congress (John Boehner, Mitch McConnell, Nancy Pelosi and Harry Reid) at the White House at 10:15am USEST in the first formal “fiscal cliff talks” so we may see more headlines after that. There will be little in the way of top tier data with the most notable release being October IP in the US.

end




Word comes to us that a rocket landed in Jerusalem.  An Egyptian envoy was sent to Gaza whereby Israel withheld bombings hoping that a peace agreement could be reached"

(courtesy Bloomberg)



Egypt Urges Push for Gaza Peace as Rockets Hit Israel


Ariel Schalit/AP Photo
Israeli Defense Minister Ehud Barak signaled that Israel is ready to escalate its military operations against Gaza after at least one long-range missile was fired at Tel Aviv by Palestinian militants.

end




More air raid sirens over Jerusalem by midday:



Hamas Escalates - Air Raid Sirens Over Jerusalem

Tyler Durden's picture




Markets have come to their senses a little and are selling off as news breaks of a plethora of concerning headlines from Israel:
  • *AIR RAID SIRENS HEARD OVER JERUSALEM
  • *HAMAS CLAIMS FIRED ROCKET TOWARD JERUSALEM AREA, CHANNEL 2 SAYS
  • *HAMAS CLAIMS IT HIT ISRAELI JET OVER GAZA STRIP
  • *HAMAS SAYS FIRED AT ISRAELI PARLIAMENT IN JERUSALEM
  • *FLASH: EXPLOSION HEARD IN JERUSALEM AREA: LOCAL MEDIA
Not good at all...

Via Sky News,
Air raid sirens are being sounded in Israel's capital Jerusalem, hours after a Palestinian rocket was fired at the country's largest city Tel Aviv.

Channel 10 reports that three rockets landed outside Jerusalem.

Police spokesman Micky Rosenfeld said: "We believe it landed off the shores of Tel Aviv". No injuries were reported.

Sirens wailed across Israel's commercial and cultural capital on Friday afternoon shortly before a loud explosion was heard.

The Twitter account of al Qassam Brigades, the armed wing of Hamas, said: "Al Qassam Brigades shelling Tel Aviv-Tel El Rabee with M75 homemade projectile."

A witness told AFP that the rocket landed some"some 200 metres (yards)" from the beachfront US embassy.

The attack sparked panic among beachgoers, although several people tried to swim out to the point where the rocket landed, the witness said.

It was the second day in a row that a rocket from Gaza had reached the Tel Aviv area in what Israeli networks said was the first time rockets had been fired at the city since the 1991 Gulf War, when it was hit by Iraqi Scud missiles.

On Thursday, another rocket fell in the sea and the other landed in a Tel Aviv suburb, causing no damage or casualties. Israel responded with airstrikes.

The latest rocket came as the Israeli air force continued a major bombing campaign across Gaza Strip.

Senior Israeli cabinet minister Moshe Yaalon warned that Israel was considering a ground operation in order to stamp out rocket fire.

end



Israel re escalates mobilizing 75,000 troops:

(courtesy zero hedge)



Israel Re-escalates: Mobilizes 75,000

Tyler Durden's picture




Update: Israel CDS 162/170, +8 bps
Earlier today, air raid sirens went off in Tel Aviv, and even Jerusalem was supposedly in danger of a missile attack: hardly the deescalation Israel was hoping to see. Sure enough, the ball is in Bibi's court and he wastes not time:
  • NETANYAHU CONVENING MINISTERS TO APPROVE RESERVES CALL-UP; TV
  • ISRAEL PLANNING TO CALL UP 75,000 RESERVISTS, CHANNEL TWO SAYS
Next: flip flops and other various closed-toed shoes on the ground.


end





Your opening Spanish 10 year bond yield: (  still close to 6% ) at around 7 am this morning.





SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.887000.01400 0.24%
As of 06:56:00 ET on 11/16/2012.

end




It looks like Spain's bad bank has a tiny little problem...no investor interest i.e. no bid for the junk.  The  Spanish government guarantees are worthless when there is going to be a big bailout.
The bad bank was suppose to get started by December 1 but it is now postponed until one month later.  Trust me, this will not commence ever!!



(courtesy zero hedge)





Minor Glitch Emerges In Spanish "Bad Bank" Deployment: No Investor Interest

Tyler Durden's picture




Two weeks ago, when Spain unveiled the specifics of the SAREB, also known as the Spanish Bad Bank initiative, which is simply the haphazardly put together chaotic plan to shift toxic assets from Spain's already insolvent banking sector to a bank that is even more insolvent than all others as it is fulled to the brim with "assets" such as land which has already been discounted by 80%, and backed with Spanish government guarantees, which are largely worthless as the entire country has been on the verge of demanding a bailout for 4 months now, we summarized it simply as follows: "it is ugly - far uglier than many had expected. And while the Spanish government expects private interest to take some of this massively discounted 'crap' off their hands, we have three words: 'deleveraging' and 'no bid!" We were right, although one wouldn't get that impression if one reads the official party line. Here is how Reuters summarized the government's party line: "Spain's bad bank is generating a lot of interest amongst international investors, an economy ministry source said. The bad bank would be possible with only domestic participation but non-resident investors gave the vehicle credibility, the source said." That's a lie. Here is the truth.
The government postponed for a month the launch of the Sareb. The 'bad bank' that will manage real estate assets and real estate loans of nationalized entities not formally ready for December 1, when committed to the European aid program set out in the MOU. To overcome this delay, the Fund for Orderly Bank Restructuring (FROB) will create a society preparatory to meet deadlines and allow time for entering the shareholders, to the difficulties in attracting private investors before 30 November.
In other words, not only was the Spanish government caught lying (hardly notable these days), but just as we expected, over two weeks after the launch of "Sareb" - the latest deus exwhich was supposed to offload the need to issue ever more sovereign debt to fund Spain's nationalization of ever more insolvent sectors to private investors, said private investors have taken a long, hard look at the "deal" the Bad Bank offers them and have said "no bid." Oh yes, and so much for "vehicle credibility."
We can't wait to see what other Tim Geithner inspired financial contraptions a broke Spain, and an asset-less Europe, have up their sleeve next.
end




Your opening Italian 10 year yield: 





Italy Govt Bonds 10 Year Gross Yield

GBTPGR10:IND

4.884000.00900 0.18%
As of 06:56:00 ET on 11/16/2012.



end




An in depth look at the Euro/USA cross and what it means.
It generally reflects the relationship between the two balance sheets:

i) the Fed
ii) the ECB

as they battle each other to defend their own currency.

Generally one takes the growth in each central bank's balance sheet and thus determine its theoretical value and then compare to its trading ratio.

Right now it is trading at a ratio of .9473 as the ECB's balance sheet has ballooned larger than the Fed's

However given the current ratio at .9473 one would expect that the cross should be at 1.21 and not the current level of 1.274.  So what does this mean?

We know that the Fed will add 1.17 trillion dollars to it's balance sheet next year.
Thus the Fed/ECB balance sheet ratios would rise to 1.33

The present 1.27 euro/usa cross implies a ratio of 1.08 and thus the market expects that the ECB will engulf 740 billion euros.  From where? Probably taking on Spain and quite possibly all of Greece.

This is what the market is telling us

your most important post of the day




(courtesy zero hedge)








Here Is Why The ECB Should Be Freaking Out

Tyler Durden's picture




Given the deterioration left, right, and center in Europe's core and peripheral economies, some question the sustained 'strength' of EURUSD. An under-the-table peg around 1.27 is the conspiracy chatter but we fall back to a tried-and-true recipe for comprehending what the market is thinking - the central banks are in charge and the EURUSD exchange rate merely reflects (as a main trend) the relationship between those two balance sheets (as monetary policy escalates downwards and they battle each other to 'defend' their own currencies' demise).

To wit, given the current ratio of the Fed and ECB balance sheets, we would expect EURUSD to be trading around 1.21. However, we know that the Fed will be adding $1.17tn to its balance sheet thanks to QE3 (and its inevitable QE4 extension to cover for Twist's expiration). The current ratio of Fed/ECB balance sheets is 0.95x, with the addition of the $1.17tn expected (to just over $4tn), the ratio rises to 1.33x.


The current EURUSD rate implies a balance-sheet ratio of 1.08x (see chart above) - which therefore means the market expects the ECB to expand its balance sheet by EUR740bn; this just happens to be the sum-total of Spanish sovereign debt (according to Bloomberg below - while our estimate is considerably higher).


So it seems, the market knows that once the ECB starts, it will not be able to stop and will end up taking the entire Spanish debt load onto its books.

Spain can perhaps deal with its existing debt in this way - but this appears to us merely incremental sustainability - and like in the US where the Fed is monetizing all long-dated Gross issuance, so the ECB will have no choice but to do the same with Spain in 2013 and 2014 - Treaty or no Treaty!!







end



This has to be frightening!!

(courtesy zero hedge)


US Embassy, Athens Warns Of Rise In 'Unprovoked' Racist Attacks

Tyler Durden's picture





With over 10% of the Greek population polling in favor of the neo-nazi Golden Dawn party, it is hardly surprising but today's acknowledgement by the US Embassy in Athens of
"a rise in unprovoked harassment and violent attacks against persons who, because of their complexion, are perceived to be foreign migrants. U.S. citizens most at risk are those of African, Asian, Hispanic, or Middle Eastern descent in Athens and other major cities"
certainly makes it a little more real for us sitting across the pond from this inferno.

United States Embassy Athens, Greece

Security Message for U.S. Citizens: Safety and Security in Greece

November 16, 2012

The U.S. Embassy informs U.S. citizens that the “Threats To Safety and Security” section of the Greece Country Specific Information page has been updated to inform U.S. citizens of a rise in unprovoked harassment and violent attacks against persons who, because of their complexion, are perceived to be foreign migrants. U.S. citizens most at risk are those of African, Asian, Hispanic, or Middle Eastern descent in Athens and other major cities. Please review the Country Specific Information for Greece.

We encourage all U.S. citizens to review their personal security plans; remain aware of their surroundings, including local events; monitor local news stations for updates; and report specific incidences of targeted violence to the U.S. Embassy in Athens or the U. S. Consulate General in Thessaloniki at the numbers below. U.S. citizens should maintain a high level of vigilance and take appropriate steps to enhance their personal security. For additional information, please refer to"A Safe Trip Abroad."

U.S. citizens traveling to or residing in Greece are encouraged to enroll in the Department of State’s Smart Traveler Enrollment Program. By enrolling, U.S. citizens make it easier for the Embassy or nearest Consulate to contact them in the case of an emergency. U.S. citizens without Internet access may register directly with the nearest U.S. Embassy or Consulate.

Up-to-date information on security can also be obtained by calling 1-888-407-4747 toll free in the United States and Canada or, for callers outside the United States and Canada, a regular toll line at 1-202-501-4444. These numbers are available from 8:00 a.m. to 8:00 p.m. Eastern Time, Monday through Friday (except U.S. federal holidays)...
UPDATE: Greek Foreign Minister says "Greece was and remains a safe place... Isolated incidents of racist violence have been foreign to the Greeks, to our culture and its long tradition of Greek hospitality [and takes] a
policy of zero tolerance to these events and take all necessary measures to prevent and suppress such behavior"


end


Your 7:30 am early currency crosses: (showing Japanese strength, euro a lot weaker,but the pound and the Canadian dollar basically flat )

Euro/USA    1.2737  down .0044
Japan/USA  81.19    up .07
GBP/USA     1.5860   down  .0006
USA/Can       1.0011  flat




end 





Your early results for bourses for Europe 7:00 am :mainly in the red except France which is a touch above par.


i. England/FTSE down 29.62 points or .52%

ii) Paris/CAC up a tiny 3.13 points or .09%

iii) German DAX: down 43.59 points or 0.62%

iv) Spanish ibex: down 47.9  points or 0.62%


end 



Today early in the morning we received word that credit default swaps were trading in the area implying a 60% probability of a default in Argentina with a recovery of 25%.

In 2000 the President of Argentina, Nestor de Kirchener faced with pressure from the Paris club as Argentina owed mega billions of USA dollars.  At that time, he had copious amounts of USA dollars in reserves. The Paris club asked for those dollars but Kirchener said no.  Instead he bought 1 million oz of gold and had this gold sent to Buenos Aires for safe keeping.  When the Paris club asked again for their money, he offered his 1 million oz of gold to retire Argentina's mega debt of around 132 billion USA dollars. The Paris club refused, and then Argentina defaulted but kept their gold to which they still have today.  Lately they have added at least another 600,000 oz or more to their hoard.
Kirchener died a few years ago.  His wife Cristina Fernandez de Kirchener took over the reins as President of Argentina and continued to bleed the country rewarding her and her cronies with copious Argentinian pesos.  Two years ago, Argentina again ran into trouble as they  still were not able to go to the markets for financing. De Kirchener nationalized the entire populace's retirement funds. You can imagine the chaos if Argentina now defaults on sovereign Argentinian bonds as senior citizens will have zero funds.



(courtesy zero hedge)







Meanwhile In Argentina...

Tyler Durden's picture




Dear Buenos Aires: we have three words of advice - "hide yo' catamarans" (before Paul Singer comes and collects them all once you default again in what the market now deems is inevitable to occur in the next few weeks). 5Y CDS on Argentina just reverse-Baumgartnered to over 3000bps (49/53% upfront) and short-dated CDS imply a 60% probability of default(assuming a 25% recovery).


Chart: Bloomberg
end





Now look what Obama is planning:

scary indeed!!!  (now re-read the Argentina story)




(courtesy James Sinclair commentary/National Senior's Council)






Obama Begins Push for New National Retirement System
A recent hearing sponsored by the Treasury and Labor Departments marked the beginning of the Obama Administration’s effort to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans, NSC is warning.
The hearing, held in the Labor Department’s main auditorium, was monitored by NSC staff and featured a line up of left-wing activists including one representative of the AFL-CIO who advocated for more government regulation over private retirement accounts and even the establishment of government-sponsored annuities that would take the place of 401k plans.
"This hearing was set up to explore why Americans are not saving as much for their retirement as they could," explains National Seniors Council National Director Robert Crone, "However, it is clear that this is the first step towards a government takeover. It feels just like the beginning of the debate over health care and we all know how that ended up."
A representative of the liberal Pension Rights Center, Rebecca Davis, testified that the government needs to get involved because 401k plans and IRAs are unfair to poor people. She demanded the Obama administration set up a "government-sponsored program administered by the PBGC (the governments’ Pension Benefit Guarantee Corporation)." She proclaimed that even "private annuities are problematic."
Such "reforms" would effectively end private retirement accounts in America, Crone warns. "These people want the government to require that ultimately all Americans buy these government annuities instead of saving or investing on their own. The Government could then take these trillions of dollars and redistribute it through this new national retirement system."


end




Wolf Richter describes events in Greece as Germans enter Greek soil and dictate terms
This week Germans were attacked in Tessaloniki where mayors were meeting.  A report had showed that it took 3000 Greeks to perform public tasks that 1,000 Germans could do on German soil.
Rioting broke out on that report which we brought to your attention.

So now we have Germans marching into Greece and telling them what they have to do as the Greeks demand billions of which the Germans must finance.  The billions raised will not go to the Greek citizenry but back to the ECB and national central banks that lent them money in the first place. 

This is playing out all across Europe and is destroying the basic fabric of Euroland.  The irreversible Euro is playing havoc to our periphery!!




(courtesy Wolf Richter)





The Curse Of The “Irreversible” Euro

testosteronepit's picture




Young educated Greeks are facing an insurmountable wall of unemployment [Merkel Has A Dream]. With little chance of finding a job in their field, they’re competing for any kind of job. Wages have plummeted. Benefits have disappeared. The economy has shriveled by 19.4% from the third quarter of 2007. Promises that education would open doors to a better future have evaporated.
Yet, Parliament passed another austerity plan that the Troika, the bailout gang from the EU, the ECB, and the IMF, is now loudly praising. It includes a provision to cut public sector employees by 80,000 over the next few years, starting with 2,000 employees this year. And it has to please the Germans who will foot a big chunk of the bill.
In the spirit of helping Greece improve the productivity of its public service, Hans-Joachim Fuchtel, German Deputy Labor Minister and special envoy to Greece, shared some Teutonic thoughts. “Studies have shown that 1000 workers in Germany perform the same amount of work as 3,000 workers in Greece,” he explained. “The partner countries that finance this Greek practice want to hear answers on how the efficiency of public sector workers in Greece can be raised.”
That was on Wednesday. Municipal workers were already furious; apparently, local authorities had been asked to come up with a list of redundant positions to be axed. On Thursday, they were ready for Fuchtel.
A German delegation that included him was supposed to arrive for a propitious conference of German and Greek mayors in Thessaloniki. Starting early morning, protesters gathered by the entrance of the conference center. As they waited for Fuchtel, they shouted, “Throw the Nazis out,” or more generically, “Capitalists should pay for the crisis.” They held up mock grave stones. “Fight to the end” was written on some banners.
But Fuchtel wasn’t born yesterday. He entered through a side entrance. So when Wolfgang Hoelscher-Obermaier, the German Consul in Thessaloniki, showed up at the conference center, all heck broke lose. Perhaps on the basis that all Germans looked alike, the protesters pushed and shoved him, ripped off his glasses, and threw cups of coffee and bottles of water on him. He was able to escape to the inside under police escort—shook-up, coffee-stained, and bedraggled but otherwise uninjured.
So the conference commenced. Outside, anger boiled over. Protesters pried open some shutters, stormed the conference center, and tried to force their way into the conference hall where the meeting was taking place, though they were stopped by riot police.
Inside the conference hall, the atmosphere was warm and friendly, once again pointing at the undercurrent of all “bailouts” anywhere: the people on the street suffer the consequence of decisions made in cushy conference rooms by privileged participants who take care of their own and tighten the belts of other people.
Yet Germany has become a Promised Land for young Greeks. Net migration to Germany (those moving in, minus those moving out) during the first half of 2012 jumped 35% over last year. Particularly strong were the movements from the southern austerity belt where the vision of a future has become a mirage: 53% more Portuguese, 53% more Spaniards, and 78% more Greeks moved to Germany.
Before the euro debt crisis, there was little tension between Germany and Greece. The gravy train of cheap euro debt dramatically elevated the Greek standard of living. But the money is now gone, some of it in offshore bank accounts. Germany, at the time “the sick man of Europe,” restructured. Real wages sank, benefits and pensions were cut, housing stagnated. In 2005, fed-up Germans kicked out Chancellor Gerhard Schröder, the architect of these reforms.
But with the debt crisis came the absurdities. Now a bunch of empowered Germans march around Greece, telling Greeks how to run their country down to the last municipal detail. And the Greek government is demanding hundreds of billions of euros from taxpayers in Germany (and elsewhere). Instead of being able to spend it on its citizenry, the government has to send most of it back to the ECB and the national central banks that had bought its old debt from the banks to bail them out [Unintended Consequences Of Bailouts: Greece Gets Slammed].
This is playing out across the Eurozone. In their effort to keep the Eurozone intact, politicians, elected or not, are beginning to sacrifice the fabric of the European Union, the colorful family of 27 nations that used to wage war on each other. The euro is creating artificial problems between peoples. And by being “irreversible,” as ECB President Mario Draghi had said, it has become a curse—and a religious dictum that must not be questioned regardless of how much havoc it may ultimately wreak.
France, with its private-sector jobs fiasco, has become the new fulcrum of the debt crisis. But now the government lashed out against the media for pointing at the miserable results of its economic policies. Read... French Minister Whines: “Le French Bashing” Is Terrible.

end 


And for comedy relief:




(courtesy zero hedge)






Anonymous Hacks Greek Finance Ministry, Finds "123456" Is Password For 37% Of All User Accounts

Tyler Durden's picture




While we have yet to go through the thousands of files that hacker collective Anonymous has just released as a result of its hack of the Greek Finance Ministry, an exploit it described as follows: "We gained full access to the Greek Ministry of Finance. Those funky IBM servers don't look so safe now, do they... We have new guns in our arsenal. A sweet 0day SAP exploit is in our hands and oh boy we're gonna sploit the hell out of it. Respectz to izl the dog for that perl candy," what we find even more amusing, if not surprising, is that of the 136 username accounts Anonymous hacked, the password of precisely 50 of them, or some 37% of all workers, is.... 123456 (full list here).
That, together with this archival picture of the inside of the Athens Finance Ministry, explains much more about the current and future state of Greek affairs, than any idiotic Troika/IMF forecast ever could.
As for those curious just what secrets the chaotic finance ministry of the Eurozone's most insolvent country holds, the downloads are available here and here.

end


our closing 10 year Spanish bond yield; staying close to the 6% level.  Tonight back down
 in yield .



SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.872000.02900 0.49%
As of 12:00:00 ET on 11/16/2012.





end







Your closing Italian 10 year bond yield:  (now safely below 5%)



Italy Govt Bonds 10 Year Gross Yield

GBTPGR10:IND

4.868000.02500 0.51%
As of 11:59:00 ET on 11/16/2012.

















end 


Your 3:30 pm currency crosses: ( still showing  USA strength against the Euro and Cdn dollar
weaker against the Japanese yen and pound), 

Euro/USA    1.2728 down .0053
Japan/USA  81.278  up .167
GBP/USA     1.5881 up .0018
USA/Can      1.0008 up 0001

end



Your closing bourses from Europe and the USA, 
everybody in the glue...red ink big time again on Friday




i) England/FTSE down 72.16 points or  1.27%

ii) Paris/CAC down 40.88 points or 1.21%

iii) German DAX: down badly at  92.89 points or 1.32%

iv) Spanish ibex: sown  107.3 points or 1.39% 



and the Dow: plus  45.93   points up on news of a false conciliation between Boehner and Obama.



end



Throughout the week, protest gripped ever peripheral European nation that is undergoing austerity measures.

A short but excellent commentary on what Europe is going through:




(courtesy Peter Tenebrarum/Acting Man )



Guest Post: Europe In the Grip of Anti-Austerity Protests

Tyler Durden's picture





Via Pater Tenebrarum of Acting Man blog,

Strikes and Demonstrations Across the Periphery

As if we needed more proof that the course implemented by the eurocracy becomes increasingly untenable politically, millions decided to strike in several European countries this week. The demonstrations have, as they are wont to do these days, turned violent in a number places. The protests were most intense in Spain, where unemployment is at over 25% and desperation over the collapse of the bubble economy is growing by the day. 
The 'Big Picture' has brought a number of photographs of the worst clashes between protesters and police.
"Millions of Europeans joined together in general strikes and demonstrations on Wednesday to protest the strict austerity measures undertaken by their countries. In Portugal and Spain, hard hit by the debt crisis, locals conducted a 24-hour general strike that largely paralyzed public infrastructure, suspending train service and grounding hundreds of flights, in addition to shutting down factories.

Most of the protests remained peaceful, but in Madrid there were some violent clashes between demonstrators and police. Officers at Cibeles Square in the city center fired rubber bullets and used batons against protesters, reporting 34 injuries and the arrest of more than 70 protesters.

Officials warned the situation could escalate further on Wednesday night, with major protests planned for Madrid and Barcelona. A similar demonstration had also been planned for Portugal's capital city, Lisbon.

The day of strikes had been called by organized labor across Europe as part of a "European Day of Action and Solidarity," and similar events were staged in Italy, Greece, Belgium, Austria and France. The protesters believe that the austerity measures being taken in those countries to combat the debt crisis are worsening the recession. "We're on strike to stop these suicidal policies," said Candido Mendez, the head of Spain's UGT union, the country's second-biggest labor federation."
(emphasis added)
This is what happens when after decades of socialism, the money to pay for the freebies finally runs out. To be sure, this is a bit too simplistic. We are inclined to sympathize with the demonstrators for the following reason:  instead of liquidating unsound credit and letting a few over-extended banks and their bondholders bite the dust, the eurocrats have decided to spread the joys of bankruptcy around and let their populations pay the bill. In most cases the poorest members of society have been hit the hardest.
Most of the people thronging the streets don't fully understand what has happened. They don't realize that the deadly combination of a cradle-to-grave welfare state with a centrally planned fractionally reserved banking system has produced a terminal boom and that there is simply no painless way out of the situation anymore. There never was. An enormous amount of wealth has been squandered and consumed during the boom.
There is no salvation in abandoning the euro and trying to inflate and spend oneself out of the hole that has been dug either: that would only invite an even greater economic catastrophe. However, Europe's political and monetary elites continue to misdiagnose the problem, in many cases refuse to level with their populations and are too halfhearted in implementing reform. 
What the protesters don't seem to get: the status quo antecannot be recreated by decree. There is no magic wand for anyone to wave. The protesters have every right to be enraged, but they are raging against something that cannot be changed at the flick of a switch – the wealth is gone.  If governments were to start on a renewed deficit spending spree, they would merely invite a greater crisis, very likely without delay. Even more government cannot be the solution for a problem that too much government has created.
Radical pro free market economic reform is called for, but this is apparently neither recognized, nor does anyone have the guts to implement it. And so the European Chinese water torture version of 'austerity', which includes only a shrinking private sector, but not a shrinking government, continues without offering any light at the end of the tunnel to the people living in the periphery.

Demonstrators and police battling in Madrid.
(Photo via: The Web, unknown source)

Maybe it is time to rename the Molotov cocktail. Throwing petrol bombs at the police has become a specialty of protesters in Greece.

end


And now for some USA stories:



The following Bruce Krasting commentary is very important as yesterday the FHA is now deficient in funds.  We brought you the story on Wednesday that leaks from the FHA would state that they were in desperate need of cash.  The FHA replaced Fanny and Freddie in guaranteeing many mortgages and from 2008 onward, they have guaranteed close to 70% of these new mortgages.
The Wall Street Journal now reports quite conveniently (10 days after the election) that they are deficient to the tune of 16.3 billion dollars and will probably need another line of credit of 50 billion dollars.. The FHA is the brainchild of the Democratic senate.

How will the FHA be bailed out?

read on....

(courtesy Bruce Krasting)


Geithner To Bailout FHA?

Bruce Krasting's picture






So two days ago the WSJ runs the story that the FHA is soon to be in default due to a shortfall in its reserve fund. Sure enough, it's now official:

The government's finances are creating a three-ring-circus of events. I'm thinking to myself, "Where's the tent?"
Just a quick thought on the timing of FHA's bad news. This was "known" two months ago (or more). The leak, and the announcement, came a comfortable two weeks past election day. If you believe that's just a coincidence, well, I guess I have nothing to say.
The FHA says the shortfall in the books comes to a modest $16.3Bn. As bailouts go, that's chump change. It's small beer today, but next quarter there will be another shortfall as the "book" of nutty mortgage's works its way through (and steam rolls) the FHA. The losses being booked today (and next month) result from mortgage guarantees made back in the dark days of 2008 -09. These loans were programmed to make losses. The chickens are coming home to
die roost. I think FHA will need a line of credit for at least $50Bn.
Given that we are already on the brink of warfare in Washington over a bunch of money issues, the timing for FHA to go into the red is terrible. The Republicans must be peeing in their pants with glee over this affair. After all, FHA, is a child of the Democratic Senate. In the end, elder statesmen and learned stewards like Chuck Schumer (D-NY) were supposed to be keeping an eye out for FHA. Oh, well.

If you have an worries about FHA, and its ability to keep grinding out those ultra cheap 97.5% LTV mortgages, let me assure you that this will not be a problem at all. You can keep buying those high flying builder stocks, and maybe even buy a home of your own. The bottom of the RE market was a year ago already, right?



The problems at FHA are going to be swept under the carpet with no problems at all. In an ironic twist of history, Tim Geithner will put a pen to the FHA bailout before the end of the year. It will be his last act as Treasury Secretary. Our boy Tim came in bailing, he is going out bailing. He is, and always will be, the Bailout King.
Here's how it will work:
- Geithner will use his own bank, The Federal Financing Bank (FFB). This bank is owned by the US Treasury, and Geithner is the the Chairman of the Board.
- No Congressional legislation is required for Geithner/FFB to make loans to, or guaranteed by, government agencies. Geithner doesn't even have to take a call from a Senate Republican. Tim has the only signature required.
- FHA will get a $50Bn line of credit from FFB. It will immediately draw $20Bn in order to replenish the reserve accounts. FFB will book the advance as a loan. FHA will book it as a subordinated capital note, and therefore treat it as tier one equity. Of course this is all accounting rubbish. Just what's necessary to maintain the charade.
- Speaking of charades and accounting rubbish, the loan from FFB will not be reflected in America's debt profile. The FHA loans are not part of the Debt Subject to Limit. That's just the rules of this game. Loans to Solyndra were guaranteed by DOE, so the money Treasury borrowed to make the bad loans to Soly never showed up on the books. Talk about a neat trick!
- Treasury will issue a few more notes to the public to come up with the cash that FHA needs to honor its guarantees. That's not a problem at all. Maybe Bernanke will buy some of the paper, just to keep a necessary balance.
- With Ben B Zirping, the Vig for the FHA will come in at a very low rate. The FHA will borrow $30-40Bn and not pay a dime over 3/4 percent. Can you say "magic?

The foregoing is well more than a guess on my part. There is a road map for this type of problem. The FDIC was down to nickels back in 1991. It got a line of credit from the FFB for $30Bn. Later the FDIC line was increased to $100Bn. When the SHTF in 2009 the line went to a cool half trillion. When it comes to providing credit to government agencies that have outstanding guarantees to the public, the FFB is the way to go when in need of some cheap/fast cash.


There is a lot of talk going around that reads, "The debt doesn't matter". Maybe that's true. That, or the whole thing is smoke and mirrors. The FFB bailout of FHA will be of the smoke and mirrors variety.


end


and now this on the FHA debacle: basically FHA is the only player left
and the FHA has guaranteed/lent to the worst possible areas:




(courtesy Amir Sufi/prosufi/zero hedge)


The FHA's Fatal Scattergram Flaw

Tyler Durden's picture





Judging by the media rancor, the fact that the FHA has run out of capital is a stunning shock since besides, housing is in recovery right? Well, there is one simple reason why the FHA is FUBAR and is only going to get worse (cue Geithner Bailout). As the only player left, the FHA has simply been the sole source of mortgage provision to the worst of the worst. The following chart from Chicago Booth's Amir Sufi shows the diabolic-distribution of poor-performing zip codes that the FHA has lent into - even during the crisis.


The chart shows the fraction of losses incurred by the FHA (y-axis) for each zip code (each blue dot) compared to the average household default rate in that zip code... if all was well the points would cluster around that 45-degree red line but as is clear, the FHA has clearly been the source for the worst of the worst borrowers as its loan performance is dismal (above the line)...
We are not sure where to start on this - but once again it seems the government subsidization of the weakest (or most levered) has come back to bite the most sensible, staid and unlevered...
Data source: HMDA and Credit Burean Data
(h/t Amir Sufi @profsufi)


end

Prepare for an extension on the fiscal cliff until 2013:

(courtesy zero hedge)




Fiscal Cliff Can About To Be Kicked Into 2013?

Tyler Durden's picture




With precisely 13 working sessions left for Congress in 2012, it is time to ratchet up the can kicking rhetoric a bit. Sure enough, here comes the White House, via the Wall Street Journal, doing just that.
  • WHITE HOUSE IN ADVANCED INTERNAL DISCUSSIONS ON PLAN TO REPLACE SEQUESTER - SOURCES - DJ
  • CONCEPT WOULD KICK MAJOR DEFICIT-REDUCTION TALKS INTO 2013 - DJ
  • CONCEPT WOULD BE PART OF BROADER NEGOTIATIONS ON TACKLING 'FISCAL CLIFF' - DJ
Because when unable to reach a compromise over anything, what is the best option? Just stick head in sand, and demand that the Mr. Chairman gets to work. As for the news above, this is largely irrelevant for the actual fiscal cliff negotiations as the news means there will be no actual consensus and the futures buying algos are once again in for a rude awakening.
From the WSJ:
White House officials are in advanced internal discussions about a plan to replace the sweeping spending cuts set to begin in January with a smaller, separate package of targeted spending cuts and tax increases, people familiar with the planning said. The spending cuts, known as the "sequester," will begin in January unless the White House and Congress intervene. They would cut spending by roughly $100 billion next year, and then for eight additional years, hitting a number of federal programs, including military programs, embassy security and state aid.

The discussions are just one part of a complicated set of possibilities as Washington deals not only with the looming spending cuts but also the expiration of the Bush tax cuts and other traditional year-end priorities, such as finding a way to halt the scope of the Alternative Minimum Tax. While moving along separate tracks, it is also possible these three policy issues could be wrapped up into one universal deal.

The White House is set to start negotiations with Republican and Democratic congressional leaders Friday.

By postponing the sequester cuts, Washington would essentially push off a number of large deficit-reduction decisions into mid-2013. This would include a long-term plan to replace the remaining sequester cuts, a plan to overhaul the tax code, and separate decisions about how to restructure Medicare and Medicaid.

The plan that has been discussed by White House officials is similar in many ways to what lawmakers have discussed. It would terminate the spending cuts for a period of six to 12 months, and replace the cuts with more targeted reductions and revenue increases. House Republicans have proposed a similar model, though they have called for terminating the cuts to defense programs only and haven't accepted a deal to include tax increases as part of any package.

A White House spokeswoman declined to comment.

end



The reason the Dow turned around from being deeply into the red and ending in green territory:

(courtesy zero hedge)




Risk Ramp On Boehner Banality

Tyler Durden's picture




Great timing. The ubiquitous post-European close trend-reversal was extended by some 'nothing' comments from Boehner that every media outlet is inferring means everything's fixed and compromise is close. It's not - what did we expect him to say?
  • Boehner says talks with Obama were constructive. Outlined a
    framework with Obama; Will accept revenue if spending cuts
AAPL jumped up to VWAP and S&P 500 futures coincidentally reached overnight highs/stops. Now let's see if anyone really believes...
And for those who have forgotten last summer's debt ceiling negotiations, here is a sample of what happened before the market tumbled by 20% to get the deal done:
  • July 18, 2011: House Republicans brace for compromise on debt (Source: LAT)
  • July 22, 2011: Debt Ceiling Talks Collapse as Boehner Walks Out (Source: NYT)
Luckily, the algos never learn...
and AAPL has popped for the hopers to yesterday's VWAP...

Today's "Fiscal Cliff Compromise" Moment Brought To You By The Congressional Short Squeeze Inception Team

Tyler Durden's picture





Once again the market falls for the politicians' snake oil (as we explained before). Unconvinced? This is what none other than "Fiscal Cliff compromise is imminent" photo op participant Nancy Pelosi said moments later to the WSJ:
Ms. Pelosi said. "I was focusing on how we send a message of confidence to consumers, to the markets in the short run, too."
And there you have it from the horse's mouth: absolutely nothing of actual substance in today's presser which was completely hollow of anything remotely resembling an actual compromise, but merely the same type of  Euro-propaganda we have grown to loath and despise for the past 3 years, where a flashing red headline was supposed to generate a short squeeze. It succeeded.
There is one open question: did Nancy Pelosi's multi-millionaire investor husband Paul Pelosi know ahead of time what the announcement would say, and did he buy any securities in hopes of a "short run" gain?

Search This Blog

Loading...