Wednesday, February 13, 2013

Greece continues to implode/Greek construction down 66% y/y/France set for draconian measures/Silver OI continues above 150,000 mark.

Good evening Ladies and Gentlemen:

Gold closed down $4.00 at $1644.00 whereas silver finished the day down  15 cents at $30.85

In the access market:

gold: 41642.60
silver: 30.80

There really is nothing more to say as we witness daily raids by the crooks .
It seems that the lowering of the comex margins provided some fodder for our bankers to go after folks who think that they can leverage themselves with paper gold purchases.  The bankers will do everything in their power to remove you from your money.

In paper news, the president Governor of the Bank of England told the media today that he is very comfortable with Japan using QE to stimulate its economy.  The reason of course is that England is doing likewise. Switzerland is taking steps to cool it's read hot real estate market.

Wolf Richter has provided a dynamite paper on the new draconian measures that will be introduced by France.

Greece's construction industry is down 66% year and over. Professionals that collect VAT are not submitting the taxes to Athens as tax evasion is prevalent. Also citizens are resorting to stealing electricity to survive.
Their chief statistician is now on trial for telling the truth on the real debt of Greece. He refused to lie.

Spain's correction continues to sink Spain.
Also we have a report on the Italy and it's upcoming election

Finally, the conversation between Yra Harris and Greg Hunter is important on currency wars.





We will discuss these and many other stories but first let us head over to the comex and assess trading today............


The total gold open interest again rose today with a reading of 435,088 a gain of 1596 contracts from yesterday's level. Gold rose a tiny fraction yesterday after being down for most of the day so it is a little surprising to see gold's OI rise today.  The active contract month of February saw it's OI fall by 123 contracts from 2071 down to 1948.  We had 91 delivery notices yesterday so we lost 32 contracts or 3200 oz of gold standing in February.  The non active March contract saw it's OI fall by a tiny 34 contracts from 1224 down to 1190.  The next big active contract month is April and here the OI fell by 768 contracts from 261,047 down to 260,279.  The estimated volume today was very low at 127,508 contracts as many are fleeing this crooked casino.  They are better off buying the metal and forgetting about leverage.  The confirmed volume yesterday was also on the low side at 152,233.

The total silver comex OI rose another 1742 contracts and still remains well above the 150,000 mark.
The total silver comex OI rest tonight at 152,817 rising from 151,075 yesterday.  We are almost at the same level of OI when silver was trading at $49.00 a few years back( just shy by 2000 contracts).  The non active contract month of February saw it's OI rise from 35 up to 72 for a gain of 37 contracts.  We had 6 delivery notices filed yesterday so in essence we gained 42 contracts or 210,000 additional oz of silver will stand in February.  We are now 2 weeks away from first day notice in the all important March silver contract. The March OI fell by 3030 contracts from 61,677 down to 58,647.  This level remains highly elevated and the rollovers to May are not happening fast enough for our bankers. The estimated volume today at the gold comex was tame at 35,662. The confirmed volume yesterday was better at 52,941.






Comex gold/February contract month:
Feb 13.2013    




Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
7800.184 (HSBC)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
72,919.231(HSBC,Scotia)
No of oz served (contracts) today
 480    (480,000  oz)
No of oz to be served (notices)
1468  (146,800) oz
Total monthly oz gold served (contracts) so far this month
10,893  (1,089,300 oz) 
Total accumulative withdrawal of gold from the Dealers inventory this month
63,755.606
Total accumulative withdrawal of gold from the Customer inventory this month


 
83,741.731




We had good sized activity at the gold vaults.
The dealer had no deposits and no   withdrawals.




We had 2   customer deposits:


1) Into HSBC:  57,614.481 oz
ii) Into Scotia:  5,304.75 oz


total deposit: 72,919.231    oz



We had 1  customer withdrawal:

i) Out of HSBC:  7800.184 oz

total withdrawal: 7800.184 oz









We had 1  adjustments:



i) from the Scotia vaults:  51,084.28 oz of gold leaves the customer and enters the dealer at Scotia.


Thus the dealer inventory rests tonight at 2.701 million oz (84.01) tonnes of gold.

The CME reported that we had 480 notices filed for 48000 oz of gold today.   The total number of notices so far this month is thus 10,893 contracts x 100 oz per contract or 1,089,300 oz of gold.  To determine how much will stand for February,  I take the OI standing for February (1948) and subtract out today's notices (480) which leaves me with 1468 notices or 146,800 oz left to be served upon our longs.

Thus the total number of gold ounces standing in this  active month of February is as follows:

1,089,300 oz (served ) + 146,800 oz (to be served upon) = 1,236,100 oz or 38.45  Tonnes.



we lost 32 contracts or 3200 oz of gold.






Silver:



February 13.2013:   The February silver contract month




Silver
Ounces
Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory  994.3 (Delaware)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory  801,023.971 oz (Scotia)
No of oz served (contracts)59  (295,000 oz)  
No of oz to be served (notices)13  (65,000  oz) 
Total monthly oz silver served (contracts) 201  (1,005,000  oz) 
Total accumulative withdrawal of silver from the Dealers inventory this month984,015.06
Total accumulative withdrawal of silver from the Customer inventory this month1,996,330.3


Today, we  had fair activity  inside the silver vaults.

 we had no dealer deposit and no dealer withdrawal.


We had 1  customer deposits of silver:

1) Into  Scotia:  801,023.971 oz




 total customer deposit: 801,023.971 oz









we had 1 customer withdrawals:



i) out of Delaware:  994.3 oz



total customer withdrawal:  994.3 oz






we had 2  adjustments:

i) Out of CNT:  25,244.30 oz left the customer account at CNT and enter the dealer account at CNT

ii) Out of Scotia;  30,116.4 oz left the customer account at Scotia and enter the dealer.

When you see massive deposits and withdrawals you know that there is turmoil inside the silver vaults. 

  
Registered silver remains today at :  36.863 million oz
total of all silver:  158.762 million oz.




The CME reported that we had  59 notices filed for 295,000 oz of silver for the February contract month. To obtain what is left to be served upon our longs, I take the OI standing for February (72) and subtract out Tuesday's notices (59) which leaves us with 13 notices or 65,000 oz left to be served upon our longs. 

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

1,005,000 oz (served)  +  65,000 oz (to be served upon)  =  1,070,000 oz

We  gained 210,000 oz of silver standing for February.

As I promised you, the total silver ounces that are standing for February is advancing.











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:   Feb 13/2013:





Tonnes1,325.99

Ounces42,631,744.80

Value US$70.089   billion






Feb 12.2013:



Tonnes1,326.89

Ounces42,660,782.25

Value US$70.244  billion





Feb 11.2013:






Tonnes1,326.89

Ounces42,660,782.25

Value US$70.437   billion







Feb 8.2013








Tonnes1,326.89

Ounces42,660,782.25

Value US$71.133   billion








Feb 7.2013:








Tonnes1,329.90

Ounces42,757,579.81

Value US$71.284   billion






we  lost .9 tonnes of  gold at the GLD today.



and now for silver:



Feb 13: 2013:


Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50




feb 12.2013:

Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 11.2013:




Ounces of Silver in Trust337,406,018.600
Tonnes of Silver in Trust Tonnes of Silver in Trust10,494.50



Feb 8.2013:



Ounces of Silver in Trust335,858,876.200
Tonnes of Silver in Trust Tonnes of Silver in Trust10,446.38







Ounces of Silver in Trust335,036,944.900
Tonnes of Silver in Trust Tonnes of Silver in Trust10,420.81


Feb 6.2013:

Ounces of Silver in Trust335,036,944.900
Tonnes of Silver in Trust Tonnes of Silver in Trust10,420.81


 we neither gained nor lost any silver at the SLV


end







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 2.2 percent to NAV in usa funds and a positive 2.1%  to NAV for Cdn funds. ( Feb 13 2013)   

2. Sprott silver fund (PSLV): Premium to NAV fell to 1.71% NAV  Feb 12/2013 (i will update later tonight)
3. Sprott gold fund (PHYS): premium to NAV  rose to 2.56% positive to NAV Feb 12/ 2013..I will update later tonight)

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 2.2% in usa and 2.1% 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


And now for the major physical stories we faced today:



First gold trading from Europe and Asia courtesy of Goldcore.

Important points;

Both Platinum and Palladium are rising due to supply concerns.
Today Zimbabwe ordered miners to build refiners or else they would lose their license.
Zimbabwe is still a good producer of platinum although most of this metal is mined in only one country, South Africa.  For the past 12 months, South Africa has had many labour disruptions which has hurt production.  Now we can add Zimbabwe.




(courtesy Goldcore)


Platinum And Palladium Rise On Supply Concerns – Zimbabwe Now

Tyler Durden's picture




From GoldCore
Platinum And Palladium Rise On Supply Concerns – Zimbabwe Now
Today’s AM fix was USD 1,648.00, EUR 1,223.55 and 1,054.59 GBP per ounce.
Yesterday’s AM fix was USD 1,641.75, EUR 1,225.28 and GBP 1,053.15 per ounce.
Silver is trading at $31.05/oz, €23.11/oz and £20.02/oz. Platinum is trading at $1,724.50/oz, palladium at $772.00/oz and rhodium at $1,200/oz.


Cross Currency and Precious Metal Table – (Bloomberg)
Gold rose $1.80 or 0.11% yesterday on closing at $1,651.50/oz. Silver slipped to $30.57 in London, but it then bounced higher and finished with a gain of 0.42%.
Gold and silver are marginally lower today while platinum and palladium have eked out further gains after the 1% gains seen yesterday. The Wall Street Journal reports that there was gold buying in Asia overnight with “bargain hunting helping to lift prices”.
Group of Seven policy makers roiled the currency and commodity markets they sought to calm amid conflicting messages on how much of an economic threat is posed by currency wars. 
The G7 sought to focus attention on the narrow issue of recent yen weakness rather than the more substantial issue of global currency wars in the form of QE ‘to infinity’, competitive currency devaluations, currency pegs and currency debasement.
As long as the G7 continue to obfuscate and fail to address the real risk from actual currency wars and an escalation of currency and gold wars then financial and monetary tensions are set to deepen which will support many non paper assets and the precious metals. 
Russia’s jump in gold mining output may see it pass the U.S. as the 3rd largest gold miner by 2015, said Sergei Kashuba, head of the Russian Gold Industrialists' Union, said on Tuesday. 
Platinum and palladium surged Tuesday on renewed concerns that supplies of the platinum group metals will shrink.
Zimbabwe's government has given platinum producers two years to begin refining the precious metals in Zimbabwe. 
This means that production of platinum will drop, because mining companies are now expected to build refineries – something which they may not do, due to the real risk of confiscation and nationalisation of assets.
Both metals climbed more than 1% yesterday with platinum for April delivery rising $21.10 to settle at $1,717.2/oz. Palladium for March delivery rose $12.80 to $771.40/oz.
"The worry is that it's going to restrict production," said James Steel, chief commodities analyst at HSBC in New York. "That was the prime motivator for the price movement today."
Platinum-group metals are widely used to make catalytic converters that filter car exhausts, in jewellery where increasing demand has been seen in Asia and in many military applications.
The majority of the world's platinum reserves are found in just one country, South Africa. But neighboring Zimbabwe also sits on large reserves.
Similar resource nationalism in other countries in Africa, South America and Russia could lead to serious supply issues which mean that the fundamentals of the platinum group metals remain sound.
Both remain well below their record nominal highs and way below their inflation adjusted highs.
The PGM metals are more volatile than gold and therefore merit a lesser allocation of one’s wealth but platinum and palladium coins and bars remain a prudent diversification for anyone wishing to preserve and grow wealth in the coming years.
NEWS   
G7 Fails To Defuse Currency Tensions – The Financial Times
COMMENTARY





A must see.  Pay special attention to Sri Kumar with respect to entering a gold standard:




(courtesy zero hedge/Bloomberg)


Four-Letter “G” Word Discussed on TV

Monetary Metals's picture






The title of the video clip under review and subject of their discussion is: “Would returning to the gold standard end currency wars?”  Obviously, countries which use gold as money would have to accept the fact that gold cannot be devalued.  This would be a huge improvement over today.
Michael Woolfolk from Bank of New York Mellon takes the anti-gold position, and Komal Sri-Kumar from Sri-Kumar Global Strategies is pro-gold.  Mr. Woolfolk seems the perfect representative of the establishment.  He works for a major bank and just wants to continue the status quo, though as most do, he has some quibbles with it.  While he admits that there is no long-term benefit to “currency wars”, he asserts that there is a short-term benefit.
Mr. Sri-Kumar, answers Mr. Woolfolk as he deserves.  Nothing good comes from robbing savers and productive enterprise via devaluation, in the short term or in the long term.  Unfortunately, he is not a great representative of the gold standard, as we shall see below.
Mahatma Ghandi once said, “First they ignore you, then they laugh at you, then they fight you, then you win.”  In this Bloomberg video clip, we see that we are currently somewhere between laughing and fighting.   Gold can no longer be ignored.
Mr. Woolfolk seems barely able to conceal his contempt at times.  In rebutting Mr. Sri-Kumar, he interrupts “but you can’t do that [adopt gold]… right?”  His face flickers to a smirk, which he quickly suppresses.  “I mean the value of gold would have to be astronomically high to be able to back the money supply.”  He adds,  “Wouldn’t it?”  He takes on a tone of exaggerated patience.
Mr. Woolfolk says we don’t have enough gold.  Whenever I hear that, I always feel an urge to ask three questions.  First, How much gold do you think we have?  Second, how much do you think we would need to have?  And finally, how did you arrive at these numbers?  There is little point in spending further electrons dwelling on Mr. Woolfolk.
Mr. Sri-Kumar made a point that I think is under-appreciated: central banks create uncertainty.  I would add that economic calculation as such is impossible under paper.  A construction worker cannot use a rubber band to measure the length of a beam; he must use a steel tape.  An accountant cannot use a rubber dollar to measure the worth of an enterprise; he must use gold.  Well, today, they do try to use dollars, but there is a systemic bias towards overstating profits and understating losses.
Unfortunately, Mr. Sri-Kumar’s main idea is wrong.  He wants governments to fix the price of gold.  He even claims he knows the magic number: $1675 per ounce.  Mr. Sri-Kumar and everyone else should be reminded that price fixing never works (and the price is always fluctuating in a free market).
Apart from this fatal problem with price fixing, government always gets the wrong price for two reasons.  First, they don’t have perfect information, and second there are special interest lobbyists.  Imagine the debate in Washington about a fixed gold price.  Debtors would want the price to be high, so they could liquidate their debts with as little gold as possible.  Creditors would want the gold price set low, so they can get more gold out of their counterparties.  The fighting between the special interest groups would be like the shoot-out at the OK Corral!
Mr. Sri-Kumar proposes to return to the last throes of the terminal gold standard, the twisted husk known as the “Bretton Woods System”.  In this system, it was a criminal offense punishable by imprisonment for a US citizen to own gold.  While Mr. Sri-Kumar did not endorse this particular feature, it is a necessary feature because otherwise unpredictable people could begin buying gold and force governments to either let the price rise or else drain their reserves of gold.
In Bretton-Woods, the dollar was redeemable only by foreign central banks.  Those banks were indeed redeeming, at an accelerating pace.  By 1971, they were bringing enough dollars to the US to take home over 100 tons per day.  The US government was within a few months or running out of gold at that rate.  President Nixon made his fateful decision to “temporarily” suspend redeemability as a response to this monetary crisis.
The failure of Bretton-Woods was inevitable.  Economists Jacques Rueff and Robert Triffin predicted it many years before it happened.
covered some of the problems of the pre-1913 gold standard, but it was superior in every way to Bretton Woods.  It certainly did not self-destruct.
It’s good that Mr. Sri-Kumar pointed out that there cannot be debasement and thus endemically rising prices under gold.  But there is much more to be said, if we are to avoid the fate of Rome.  The next time Bloomberg needs someone to talk about the gold standard, let’s hope they pick someone who  understands it fully. 
For those who are interested, I published a video yesterday discussing an important consequence of irredeemable dollar: the system is collapsing under the weight of the rising debt.


end




(courtesy the Economic collapse)



Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?

Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?Will oil soon be traded in a currency that is thousands of years old?  What would a "gold for oil" system mean for the petrodollar and the U.S. economy?  Are Russia and China hoarding massive amounts of gold because they plan to kill the petrodollar?  Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe.  This has created an overwhelming demand for U.S. dollars and U.S. debt.  But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade?  The truth is that it doesn't take a lot of imagination to figure that out.  Demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before.  So are Russia and China accumulating unprecedented amounts of gold right now because they eventually plan to cut the legs out from under the petrodollar and they want to gobble up huge stockpiles of gold before the cat is out of the bag?  Of course they will never admit this publicly, but there are rumblings out there that this is exactly what is happening.
Not that you can really blame any nation that wants to get into gold right now.  News outlets all over the globe are telling us that we are in the midst of a "currency war" as central banks all over the planet race to devalue their currencies.
So why would anyone want to be in paper in such an environment?
And of course the Federal Reserve is one of the biggest offenders.  The Fed has been printing money like it is going out of style, and nobody at the Fed or in the U.S. government really seems too concerned that all of this money printing could be endangering the petrodollar.
But the truth is that the Fed is endangering the petrodollar.  Just read some foreign news stories about the U.S. dollar.  They mock us for our reckless money printing.
In the end, our recklessness will make it very easy for the rest of the world to ditch the U.S. dollar.
At some point, it will happen.  In fact, there are persistent rumors that Russia and China actually intend to make it happen.
Many believe that this is the reason both nations have been hoarding so much gold recently.
Just check out how much gold Russia has been accumulating.  The following is from a recent Bloomberg article...
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
And Russia's gold hoarding appears to have accelerated last year.  According to one recent report, Russia added 3.2 million ounces of gold to their reserves in 2012 alone.
But of even greater concern is China.  Nobody really knows how much gold China has, because they do not tell us, but all indications point to the fact that Chinese gold hoarding has gone into overdrive.  The following is from a Zero Hedge article from a few months ago...
Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasurys, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn't provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PBOC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory.
As I wrote about the other day, nobody produces more gold than China does, and nobody imports more gold than China does.
Everyone agrees that China seems to have an insatiable appetite for gold, but nobody can agree on exactly how much gold they actually have.  One recent estimate put China's gold reserves at more than 7,000 tons of gold, but it could even be much higher than that.  Nobody really knows.
So what are Russia and China up to?
Well, for a long time both nations have expressed displeasure with the fact that the U.S. dollar is the de facto currency of the world.  Leaders from both nations have suggested the possibility of adopting a new global reserve currency, but up to this point no real contenders have emerged to dethrone the U.S. dollar.
So for now, the U.S. dollar reigns supreme in international trade.  Sadly, even though most Americans greatly benefit from the petrodollar, most of them do not even know what it is.  For those that do not fully understand the petrodollar, the following is a good explanation of the petrodollar from a recent article by Christopher Doran...
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world's nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.

And all of this has worked out very nicely for the United States.  It has created a massive demand for U.S. dollars and U.S. debt.
But what would happen if the rest of the world rejected the petrodollar system and adopted a "petrogold" system instead?
A recent article by Jim Willie discussed how a petrogold system might work...

The crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note. It will enable peer-to-peer payments to be completed from direct account transfers independent of currency, and most importantly, not done through the narrow pipes and channels controlled by the bankers with their omnipresent SWIFT code system among the world of banks. The Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape. Any bond or bill earning almost no interest is veritable clutter. The zero bound USTreasurys open the door in a big way for replacement by a better vehicle. The new trade notes will involve posted gold as collateral, whose entire system for trade usage will bear a massive gold core that also will include silver and platinum, maybe other precious metals. The idea is to avoid the FOREX systems, to avoid the USDollar, and to avoid the banks as much as possible in a peer-to-peer system that can be executed between parties holding Blackberry devices or simple PC to complete the payments on transactions. If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative.


And Russia and China would greatly benefit from a petrogold system.
Today, Russia is the number one oil exporter on the planet.
China is the number two consumer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.
Does it make sense that they should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions?
And now Russia even has the number one oil company in the world.  The following is from a recent article by Marin Katusa...



Exxon Mobil is no longer the world's number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp – oh, whoops. I mean the title belongs to Rosneft, Russia's state-controlled oil company.
Rosneft is buying TNK-BP, which is a vertically integrated oil company co-owned by British oil firm BP and a group of Russian billionaires known as AAR. One of the top-ten privately owned oil producers in the world, in 2010 TNK-BP churned out 1.74 million barrels of oil equivalent per day from its assets in Russia and Ukraine and processed almost half that amount through its refineries.
With TNK-BP in its hands, Rosneft will be in charge of more than 4 million barrels of oil production a day. And who is in charge of Rosneft? None other than Vladimir Putin, Russia's resource-full president.
And Russian gas giant Gazprom supplies a huge percentage of the natural gas that Europe uses...



Gazprom, the Russian state gas company, already has Europe wrapped around its little finger. Russia supplies 34% of Europe's gas needs, and when the under-construction South Stream pipeline starts operating, that percentage will increase. As if those developments weren't enough, yesterday Gazprom offered the highest bid to obtain a stake in the massive Leviathan gas field off Israel's coast.
Gazprom in control of Europe's gas, Rosneft in control of its oil. A red hand stretching out from Russia to strangle the supremacy of the West and pave the way for a new world order– one with Russia at the helm.



Russia and China have a tremendous amount of leverage when it comes to energy.  What if they got together with a bunch of oil producing nations in the Middle East and decided to set up a system where oil is traded for gold?  Would not much of the rest of the world go along with such a system?
Of course if that happened the U.S. financial system would crash.  We would no longer be able to export our inflation to the rest of the globe and prices would rise dramatically.  Demand for U.S. government debt would go through the floor and interest rates on that debt and on everything else in our economy would skyrocket.  Economic activity would grind to a standstill and the financial markets would collapse.
And that would just be for starters.
Most Americans simply don't understand that Russia and China have the power to collapse the U.S. economy by going to a gold for oil system.  All they have to do is pull the trigger.
The other day I wrote an article entitled "Show This To Anyone That Believes That 'Things Are Getting Better' In America" which discussed all of the reasons why the U.S. economy is already collapsing.  But as bad as things are now, this is nothing compared to what things will be like when the petrodollar dies.
So pay keen attention to anything in the news about Russia or China suggesting that oil should be traded for gold.  When Russia and China pull the trigger, things will get messy very quickly.
Gold


end




And now for your important paper stories which will certainly have an influence on gold and silver.


First, overnight sentiment

Important points:

1.  Mervyn King, of the Bank of England suggesting that it is OK for Japan to stimulate its economy and thrash its currency:

 "it’s very important to allow exchange rates to move," adding that "when countries take measures to use monetary stimulus to support growth in their economy, then there will be exchange rate consequences, and they should be allowed to flow through."

2. The he added that the B. of England will look right through inflation and higher CPI if that will cure the economy.

Thus England gives a thumbs up to Japan!! Why?  Because it is planning the same stimulus to its economy.

The pound was "pounded" early this morning reaching a low of 1.5531, settling at 1.5571 

3. Switzerland has a red hot real estate market so the SNB now requires banks to keep an extra 1% buffer for potential losses.

4. Details courtesy of Soc Gen and Deutsche Bank





(courtesy zero hedge/Soc Gen/Deutsche Bank)




Cable Snaps As Bank Of England Welcomes The Currency Wars

Tyler Durden's picture





Following yesterday's G-7 announcement which sent the USDJPY soaring, and its embarrassing "misinterpretation" clarification which undid the entire spike, by an anonymous source in the US who said the statement was in fact meant to state that the Yen was dropping too fast and was to discourage "currency wars", it was only a matter of time before another G-7 country stepped into the fray to provide a mis-misinterpretation of the original G-7 announcement. That someone was the BoE's outgoing head Mervyn King who at 5:30 am eastern delivered his inflation reporting which he said that "it’s very important to allow exchange rates to move," adding that "when countries take measures to use monetary stimulus to support growth in their economy, then there will be exchange rate consequences, and they should be allowed to flow through." Finally, King added that the BOE will look through CPI and relentless UK inflation to support the recovery, implicitly even if it means incurring more inflation.
In other words, the BOE is firmly on the side of Japan, because the BOE itself it itself planning on engaging in precisely the kind of currency warfare that Japan is in the spotlight for, or King merely validated what we said in November when we advised against the lunacy of holding GBPUSD now that a Goldmanite is set to be head of the central bank. Sure enough, the cable snapped and plunged over 100 pips in the aftermath of King's unofficial entry into the currency wars, and is now some 600 pips lower than when Carney was officially announced as the next head of the BOE.
Expect someone from the G-7/20 to say immediately that there is no currency wars even as England is now officially in them.
In other news from the otherwise quiet session, the Swiss government imposed capital buffers on banks to cool the blistering housing market, forcing banks to hold an extra 1% for mortgages as a means to offset capital risk. Since Switzerland and especially its real estate market are still a lone beacon of stability in a sea of European insolvency, we wish them the best of luck in attempting to cool their housing market.
Finally, and surprising nobody, socialist France which definitely has a spending problem, announced it would miss its 3% of GDP deficit target for the year.
Some more macro events from BBG:
  • Treasuries decline, curves bull- steepen as 10Y, 30Y yields rise before refunding auctions today and tomorrow. 
  • Yen erases overnight decline, falls to 93.53; EUR/USD gains to as much as 1.3493.
  • Bank of England Governor Mervyn King said Britain faces a further bout of inflation and a muted economic recovery, and pledged officials will look through the volatility in prices to keep nurturing growth where they can
  • Sweden’s central bank kept its benchmark interest rate unchanged at 1%, a decision predicted by 13 of 22 economists in a Bloomberg survey, with the rest expecting a cut
  • Euro-area industrial production increased more than forecast in December
  • The Swiss government ordered banks to hold additional capital as a buffer against risks posed by the country’s  biggest property boom in two decades
  • Obama laid out an activist second-term agenda, including raising the federal minimum wage to $9 an hour and threatening to use executive action on climate change and economic incentives if Congress doesn’t act
  • The world’s biggest buyers of corporate debt are seeking refuge in shorter-maturity bonds as concern deepens  that a three-decade rally will end in losses as interest rates rise
  • BofAML Corporate Master Index OAS steady at 148bps as $4.8b priced yesterday; Markit IG at 87bps. High Yield Master II OAS narrows to 504bps; $1b priced yesterday. CDX High Yield declines to 102.59
  • Nikkei falls 1%; China closed all week for New Year’s. European stocks decline, U.S. equity-index futures gain. Italian and Spanish yields fall, bund yields rise.  Energy higher; precious metals mixed
Here is what to expect in the macro realm today from SocGen
The G7 yesterday blamed investors for misinterpreting its first statement on exchange rates and it was forced into an embarrassing U-turn moments later after the JPY had initially continued to weaken when the first headlines broke. It subsequently stated that G7 countries are indeed concerned about excess moves in the Japanese currency and so the bounce back in JPY that instantly took place has carried on overnight during Asian hours with USD/JPY sliding below 93.00 and EUR/JPY defending 125.00. It is difficult to see the currency coming under pressure as we await official word from the G20 gathering tomorrow and Friday in Moscow. Former SNB chairman Hildebrand tried to pour cold water on the currency debate, stating that central banks are only pursuing policies in accordance with domestic mandates, referencing the existing output gap in the UK and the elevated US unemployment rate. This united developed market front is up against the emerging market front over the next 48 hours, but putting ourselves in PM Abe's position, there is no strategic domestic interest in trying to stop the yen from weakening.
And a full overnight recap from DB:
In terms of markets, if talking currencies were a currency in itself we'd all be rich at the moment. It seems that this is dominating macro discussions at the moment. Following the G7’s well publicised statement yesterday calling for “fiscal and monetary policies that…will not target exchange rates”, there were a number of subsequent conflicting statements. An unnamed official was quoted as saying that the G7’s statement “signalled concern about excess moves in the yen. The G7 is concerned about unilateral guidance on the yen”. The official added that “Japan will be in the spotlight at the G20 in Moscow this weekend" (Reuters). The comments caused the JPY to gain around 1.4% against the dollar. However another G7 official later commented that the statement was not about any individual country or currency, which helped the JPY pare initial moves upwards to finish 0.9% weaker on the day against the USD. The Fed’s Dennis Lockhart also weighed into the debate, assuring markets that we’re not “in a currency war in any sense”. He added that it’s more important that Japan breaks out of its deflation cycle, which he described is “in everybody’s interest”.
Indeed the rollercoaster ride for the yen has continued overnight with USDJPY trading another 0.55% lower as we type, at around 92.97 in Asian trading. Senior Japanese Finance Ministry official Takehiko Nakao made comments seemingly affirming his government’s commitment to market-determined exchange rates and said monetary policies must not be directed at devaluing currencies. Outside of the yen, the Nikkei is trading 1.2% lower, which is a fairly muted response given the Nikkei has averaged daily up/down moves of more than 2% in the last five sessions. The 10yr JGB yield is marginally lower at 0.743%, and is poised to close lower for the sixth straight day.
Turning to other overnight markets, Asian equities are trading broadly higher although liquidity remains low with markets in China, Hong Kong and Taiwan still closed for holidays. Interestingly, the KOSPI is leading the region’s gains (+1.48%) despite further North Korea-related headlines. Newswires are reporting that South Korea has positioned missiles in case of provocation from the North. The South Korean government has also stated that it will meet with US officials to explore nuclear deterrence strategies (Yonhap).
Recapping yesterday’s session, equities closed broadly higher with the S&P500 (+0.16%) continuing to forge new cyclical highs. European markets also finished strongly with the Stoxx600 adding 0.5% helped by better corporate results including a solid Q4 report from Barclays whose stock closed 8.6% higher. Barclays' results helped the European senior and sub financial credit indices outperform yesterday, closing 6bp and 11bp tighter respectively.
Draghi's speech to the Spanish parliament was also seen as supportive, which boosted sentiment in Spanish equities (IBEX +1.9%). Periphery bond yields also had a better session with Spanish and Italian 10yr yields closing around 10bp tighter.
In the US, Obama’s State of the Union speech laid out his agenda for his second term, with plenty of focus on “reigniting” the economy, reforming the tax code, reviving the middleclass and also gun control. The president called for raising the minimum wage to $9 from $7.25 and also urged Congress to approve a $50 billion “Fix It First” program of infrastructure improvements. On the budget debate, Obama said he remained committed to reducing the budget deficit, but warned that he would support only what he deems “balanced” efforts that include both spending cuts and tax increases, including the closing of tax loopholes for the highest income earners and corporations. The President also urged Congress to take measures to avert the upcoming spending sequesters (NY Times).
While on the subject of sequesters, Senate Minority Leader Mitch McConnell said late on Tuesday that it's now "pretty clear" that $85 billion in automatic spending cuts will take place, adding that he sees no sign that serious negotiations will occur to avert the sequester.
McConnell said he has no interest in reviving the kind of "eleventh hour" negotiations he participated in with Vice President Biden to avert the fiscal cliff in late December (Reuters).
Looking at today’s calendar, the US will print retail sales for January and the BoE publishes its quarterly inflation report. It will be an active day for auctions with Italy issuing 2017 floaters and 2015, 2026 and 2040 bonds. Germany will also auction EUR5bn in 2yr notes in the morning. The BoJ begins its two-day policy meeting today. So it will be interesting to see if we get anything further from the central bank most in focus at the moment.



end




The ECB is worried about a rise in the Euro/USA cross as it hurts the peripheral countries exports a lot, and to a lesser extent Germany.  It also plays havoc to the Target 2 imbalances.

(courtesy zero hedge)


ECB Smacks Down Euro Again, Says EUR Strength Will Hurt Recovery In Crisis States

Tyler Durden's picture





Just like yesterday, it was some anonymous Yen vigilante smacking down the USDJPY saying the initial G-7 statement was misinterpreted, so today it is the ECB's turn, which just smacked down the EUR royally, for the second time in a week following last week's Mario Draghi comments, when it said that:
  • THE ECB IS WORRIED EURO STRENGTH WILL HURT RECOVERY IN CRISIS STATES
And just like yesterday the refutation came via shady pathways, i.e., an anonymous leak in D.C., so today, apparently the information comes from that venerable ECB conduit: Bild. What can one say - all is fair in central bank love and currency war.
EURUSD once again slides first, asks questions next:
Unless the ECB formally denies this Bild report, it is safe to say that for Draghi 1.3500 is the key resistance level, above which GETCO's FX algos will have to find other USD carry pairs to fund their market levitation

end






Our resident expert on France


(courtesy Wolf Richter/www.testosteronepit.com)


Draconian Cash Controls Are Coming To France

testosteronepit's picture




French Prime Minister Jean-Marc Ayrault himself presided over Monday’s meeting of the National Anti-Fraud Committee—“a first for a head of government,” he said at the press conference afterward, to hammer home just how important this was. But he wasn’t worried about run-of-the-mill fraud that might fleece some old lady of her life savings. He was worried about people not paying their taxes.
He is desperate. In its just released annual report, France’s state auditor, the Cour des Comptes, told the government that it was dreaming. Its forecast of 0.8% growth for 2013 was way high. Try 0.3%. And forget about the budget deficit target of 3% of GDP, which had been based on that illusory 0.8% growth. And even if growth came in at 0.8%, the deficit would still be above that all-important 3%.
To get to the deficit target, the government had raised a slew of taxes to extract another €32 billion this year from households and businesses that are already gasping for air. Now “absolute priority” must be on bringing down spending, admonished Didier Migaud, First President of the Cour des Comptes, when he presented the report.
But spending cuts—whether corporate welfare projects or social programs—would be highly unpopular. Hence, the government’s emphasis on fighting tax fraud. Some estimates put tax fraud in the range of €60 to €80 billion per year, others at half that. Either way, a free gift. If the government could just get its hands on that money.
So Ayrault trotted out his national plan, a 20-page documentthat outlined his all-out effort to go after any kind of behavior that could possibly deprive the government of those sorely needed euros. A seamless fit for France’s principle: squeeze hapless “fiscal residents” like lemons to get their last drop of juice—fiscal residents, because citizens or foreigners who live in France only part of the year and pay taxes in some other country escape income taxes in France.
Stuffed into that 20-page national plan is a draconian tool:prohibiting cash payments of over €1,000 per purchase. The current threshold is €3,000. It’s urgent. He wants to get the process started soon so that “a decree and legislative measures” can be finished by the end of 2013.
Two crisp 500-euro bills and a single coin: voilà, an illegal transaction. OK, most cash transactions fall below that limit. But used cars, for example, might not. Between individuals, a cash transaction protects the seller. Otherwise, a trustworthy girl buys your car, signs the documents, hands you a check or initiates an electronic payment, and drives off. By the time you realize that the check bounced or that the electronic transfer didn’t go through, the car is on its way to Russia.
But the limit would only apply to fiscal residents. In a nod toward the wealthy and not so wealthy that the government has driven into fiscal exile, Ayrault included an exception: people, citizens or not, who are fiscal residents of a countryother than France would be able to pay €10,000 in cash per purchase, down from the current €15,000 limit.
It will doubtlessly be called the “Depardieu exception.” Iconic actor Gérard Depardieu sought to establish a residence across the border in Belgium to escape the oppressive taxes at home [“Trench Warfare” Or “Civil War” Over Confiscatory Taxes In France]. Then suddenly, he obtained a Russian passport, a “defection” that caused a whirlwind of anger, derision, support, and laughs. But Russia does have a flat 13% income tax.
People like him, when they’re in France, will still be able to pay for high-end girls in cash. The rest must use another payment method, anything from smartphones to checks. But they leave indelible electronic skid marks. Companies that process the payments retain personal and transaction details that form a seamless record over time. And copies of these details are handed to the government, either upon request or automatically.
With this law, the French government will be able to tighten the vise on its people one more turn, restricting their freedom of choice (how to pay), wiping out any privacy in those transactions, and imposing another layer of government control. Once people have gotten used to the €1,000 limit—based on the great principle of incrementalism with which restrictions of freedom come to pass in democracies—the vise will be tightened further, until the government can document every purchase made by “fiscal residents.”
And here is the principle of Regulatory Capture: “Former employees of the SEC routinely help corporations influence SEC rulemaking, counter the agency’s investigations, soften the blow of SEC enforcement actions, and win exemptions from federal law.” A damning report on how Wall Street insiders rotate in and out of the SEC—until Wall Street culture and personalities dominate the agency. Regulation and enforcement become a joke. Read....  Wall Street Takes Over Its Regulator.




Leave it to the Greeks:


  Greece's construction activity implodes by 66.6% year over year (with respect to building permits and 63.3% in terms of surface area, and 65% in terms of total volume)

And how are citizens surviving?
i) not paying their VAT
ii) stealing electrical power is now a big business.

a good look at Greece today:

(courtesy zero hedge)



Greek Economy Grinds To A Halt As New Construction Implodes By 66.6%

Tyler Durden's picture



Some time ago we used to joke that the Greek economy, and by implication society, is literally falling apart due to its sacrifice at the altar of preserving the European, and thus global, status quo. It is no longer a joke, and the latest confirmation of the absolute halt in the Greek economy, which is now way beyond the liquidity trap and is now in a liquidity (and everything else) tiger cage is data on Greece Construction activity which according to data released on Tuesday by the Hellenic Statistical Authority is in complete freefall. From Kathimerini "In November 2012, total activity dropped 66.6 percent year-on-year in terms of building permits, 63.3 percent in terms of surface area and 65.4 percent in terms of volume." Just 1,156 permits were issued across the country, corresponding to 197,000 square meters and 706,900 cubic meters. In the first 11 months of last year construction activity shrank by 36.4 percent in terms of permits, 30.3 percent in surface area and 28.7 percent in volume, compared with the same period in 2011. The statistics observed in private construction activity are virtually the same as the above, as activity in the public sector has effectively ground to a halt.
And for those curious how the people are surviving, the answer is simple: nobody is paying taxes:
More and more professionals are withholding value-added tax from the authorities in a bid to maintain cash flows.

Financial Crimes Squad (SDOE) inspections last months led to fines imposed for the nonpayment of VAT and the tax on salaried service growing by 51 percent within a period of just one year: In January 2013 the fines amounted to 35.3 million euros, compared to 23.3 million in January 2012.

In total the fines imposed by SDOE inspectors last month amounted to 258 million euros, from 217.4 million euros in January 2012. Notably, while there were more inspections conducted (1,559 against 1,460) and while more fines were imposed, the violations identified were actually lower in number: In January 2012 the violations numbered 5,332, while last month there were just 2,999 identified. Most of those violations concerned the issuing of fake financial data.

The question now is how these fines will be collected, as experience to date shows that despite the imposition of fines, debtors often fail to turn up to settle their accounts, at the expense of public coffers.
Good luck with the collections Greece, especially if they are at night as soon the public utilities themselves will soon be halted:
The phenomenon of electricity theft has grown out of control due to the economic crisis and the inability of many to pay their bills.

While before the crisis power theft was only seen in certain downgraded areas such as Roma settlements, it has now spread across the country and into expensive areas too, including the northern suburbs of Athens.

Officials at the Hellenic Electrical Energy Distribution Network Operator (DEDDIE) estimate that the turnover from electricity theft at businesses alone has quadrupled within just one year, climbing from 10 million euros in 2011 to 40 million in 2012.

The methods employed to steal power vary although authorities believe that in many cases electricians are paid to carry out the illicit connection. Public Power Corporation’s data on its lost income have been compiled from checks on corporate supplies, as there are no inspectors available to conduct random checks on household meters.

“Unfortunately [the illegal] connections are conducted in such a way that cannot be noticed by inspectors who check the meters once every four months,” a DEDDIE official told Kathimerini. “We have information about con artists who have made electricity theft their profession, but this information is not sufficient for us to catch them.”
So to paraphrase Rajoy, when excluding everything else, Greece is fine.


end





(courtesy Der Spiegel/Ed Steer commentary)


Good grief!!



Prosecuting the Messenger: Chief Greek Statistician Threatened with Jail




He was hired to bring Greece's debt statistics in line with European norms. Now, chief statistician Andreas Georgiou faces jail time for allegedly producing inflated sovereign debt numbers. He says he was merely being honest, and he has plenty of support in Europe.
When Georgiou decided in the summer of 2010 to take over leadership of the revamped, newly independent Greek statistics service ELSTAT, he never imagined that the position could land him a jail sentence. But at the end of January, felony charges were filed against Georgiou and two senior ELSTAT staffers for allegedly inflating the 2009 deficit. In other words, at a time when the rest of the world was furious that Greece had artificially improved the country's budget statistics, Greek prosecutors are accusing Georgiou of doing the opposite. Prosecutors acted after a 15-month investigation into allegations made by a former ELSTAT board member. If found guilty, Georgiou faces five to 10 years in prison.
This is another spiegel.de offering from yesterday...and once again courtesy of Roy Stephens.  The link is here.




end





This nation is imploding by the minute

(courtesy zero hedge)


Greek Consumers Most Pessimistic On Earth: 40% Have No Disposable Income

Tyler Durden's picture




Chronicling the collapsing Greek socioeconomic reality would be an interesting business school case study of what a zombie monetary regime kept alive at all costs does to the "weakest link(s)" (most recently "Greek Economy Grinds To A Halt As New Construction Implodes By 66.6%" and "Person Trampled As Fight Breaks Out At Greek Free Food Handout"), if only there weren't real men and women suffering as a result of the stupidity and greed of a few entrenched individuals who will stop at nothing to see their paper wealth preserved at all costs. The latest salvo of the utter misery Greek society finds itself in comes from Nielsen research, which reports that Greeks are now the most pessimistic consumers on the planet, with the Greek consumer confidence index dropping to 35 points in the last quarter of 2012. That is the lowest level among a total of 58 countries surveyed and 11 points lower than the same period last year in Greece.
It gets worse.
As Kathimerini reports: "Four out of 10 Greeks told the same survey that they no longer have any disposable money left after covering their basic needs, which is the highest rate ever recorded in Greece and the biggest in the October-December period in Europe. A year earlier (in Q4 2011) that rate had stood at 34 percent and in Q4 of 2010 it had been at 25 percent." Obligatory spin: once nobody has anydisposable income, things can only get better. Unless, as Rajoy might add, they get worse.
What little money Greek do have is spent "toward the payment of loan and credit card installments (31 percent) or savings (22 percent). Only a very small number of consumers use their disposable income for entertainment, vacations and buying clothes, which helps to explain the turnover slump in of the sectors of food catering, domestic tourism and apparel stores."
With unemployment soaring to unprecedented levels, it comes as no surprise that finding and/or keeping a job constitutes the greatest concern among Greeks, which, at a rate of 44 percent, is among the highest in the world. The state of the economy ranks second, at 38 percent, debts are third at 26 percent and the increasing level of utility bills are fourth, on 21 percent.

Shrinking disposable incomes combined with insecurity have led to a change in Greeks' shopping habits, with 77 percent stating they have curtailed spending on entertainment outside the home, 67 percent saying they choose cheaper commodities (mostly own-label supermarket products) and more than half (54 percent) say they have cut down on fuel and electricity.
No wonder nobody tries to sell Europe on forecasts of a second half improvement in 2010, 2011, 2012, 2013 anymore. By now virtually all of them have given up.
The same survey found that the country with the most optimistic citizens is India, with an index reading of 121 points, followed by the Philippines with 119 and Indonesia with 117. Asia generally appears to be the most optimistic continent on the planet, with Europe being the most pessimistic. In total, the global index came to 91 points in the last quarter of 2012, dropping by one point from the previous quarter.
In addition to being the most optimistic, India is the one place in the world where gold is as functional a currency, and a store of wealth, as paper money (much to its central bankers' chagrin). One wonders if there is a connection...
As for the Greek gold: one wonders just which deep underground London vault it has been "rehypothecated" to these days?


end






The following is self explanatory:



(courtesy zero hedge)






Map Of The Day - Spain's Corruptometer

Tyler Durden's picture




Confused by the latest scandal in Southern Europe? Unsure of which corruption claim is being denied in the Iberian Peninsula? Fear no longer, as the Corruptometer provides an at-a-glance map of which political party, encouraged by the actions of their leadership, is engaged in bribery, embezzlement, prevarication, falsehoods, scams, tax fraud, and money laundering. There are currently 314 of said politicians involved in 730 cases on the map and while the count is close, it appears Rajoy's Popular Party wins the overall cup for 'Most Corrupt'.

Click image for interactive Google Map

end




The comeback of Berlusconi is certainly fraying some of our bankers' nerves

(courtesy Ed Steer commentary/der Spiegel)





The Italian Patient: Resisting Berlusconi's Charms




Silvio Berlusconi may be back with his customary bombastic campaign promises. But will the Italians bite? If they do, it could spell doom for the country. If they don't, Italy's tradition of political instability might return anyway.
Berlusconi's return to the political arena is a shock. It would be his sixth candidacy, his "last great political battle," as he calls it. He will be 77 this year and is currently defending himself in two court cases. It's been hardly a year since the rating agencies downgraded Italy's credit rating because of its unstable political situation, and Berlusconi submitted his resignation on Nov. 12, 2011.
But now the mummy has returned, and has rapidly become the most important personality in the pending general election. A remark by Berlusconi, like the one he made on Sunday, is enough to cause the markets to plunge and the risk premiums for Italian sovereign bonds to rise. It is enough to trigger the return of worry about the Italian patient, the fear of contagion, the euro crisis and political self-paralysis -- in short, the fear of the former Italy.
The original title to this article was "Italian election campaign foreshadows return to politics as usual".  It was posted on the German website spiegel.deyesterday...and I thank Roy Stephens for sending it.  The link is here.


end

Interesting commentary from EconMatters as he has correctly deduced that the Brent Oil contract
is a sham for the simple reason that nobody takes delivery.  It is all paper and the bankers manipulate the oil in the front month higher so the investor cashes his oil and proceeds to buy the cheaper future Brent oil.  This is backwardation except  all rules do not hold if the market is predominately or all paper where you manipulate your way into bliss"


(courtesy EconMatters)




The Brent Oil Contract is a Sham!

EconMatters's picture





By EconMatters  


Oil Benchmark 
It is a sad state of affairs that the entire world of energy, and consumer energy prices are all based upon a fraud of an energy contract masquerading as the Industry`s Benchmark, setting the price for all other grades. 

Monthly Rollover Ramp
Here is an idea of how manipulated the Brent Oil contract that trades mainly on the ICE exchange is we are at rollover time once again in the Brent oil contract and sure enough as day, the contract is moved up substantially right before expiration. 
This happens almost every rollover, and is impossible to do in a non-deliverable market without precise market manipulation. 
Always Positive Rollover Carry
The other common feature of the Brent contract is the expiring month is always higher by a dollar, dollar and a half, than the contract for the next month without fail. Again this happens every single rollover without fail, and again very hard to “naturally occur”. 
It might be reasonable in the old days, or in a market that was partly physical deliverable that you would have times that exhibit Contango features that would account for this price differential. 
No Physical Delivery 
But this happens every time, and the old rules of Contango and Backwardation don`t apply to purely paper markets as there is no need from one month versus the next for “stronger demand” as nobody ever takes delivery of a Brent contract of oil. There is no demand for near term oil contracts due to supply shortages in the oil market.
The only reason for this price differential which always occurs and is heavily manipulated is to ensure for a positive rollover effect for the big players in the market.
No Rollover Risk equals much easier to invest capital in the market
Why lose money if in basically an unregulated space you can just move up the front month at expiration so that when you sell to close out the position on the front month at a higher price, and buy the next month to reestablish a position at a lower price you have a positive built in rollover. 
Makes the risk of investing in oil with an always positive carry much less. It is a scam of major proportions when you factor in how many years this has been going on in the ICE market.
Not fully credentialed to be a Benchmark for anything
However, that isn`t the only thing that doesn`t pass the smell test with the Brent contract. The main problem is the Brent contract is illegitimate and should not serve as a founding basis for any price discovery.
It trades on essentially an unregulated market with little or no accountability in regards to transparency. And this contract is setting the price of oil for the entire oil supply chain.
Represents what Storage Facilities?
First of all the Brent contract needs to be tied to actual oil inventories in Europe so that supplies can actually be tracked and evaluated on a historical basis. 
For example, WTI is based upon oil inventories at Cushing Oklahoma, which can actually be tracked in a weekly report, and reported by an independent government agency in the EIA, for Brent to become a legitimate Oil contract it needs to do the same. 
Needs to be actually Regulated
Or frankly regulators need to force the ICE exchange to do so or discontinue the futures contract, as it has become far too important at setting world oil prices to remain in this non-transparency illegitimate status. 
Independent Governmental Agency Reporting of Supply Data
So once actual inventories of oil supplies are attached to the Brent Contract, there needs to be an independent government agency like the EIA in the US which collects data on an independent basis and provides weekly, quarterly, and annual reports on oil stockpiles.
We live in the Information Age
We do live in the modern age of increased technology, data collection, and transparency with unprecedented access to all types of information. 
ICE exchange has no incentive to change status quo without Regulatory Pressure
It is about time that the ICE exchange is forced by regulators to come into this century, especially given the important role that Brent has become as a benchmark for setting price in the oil markets, and thus derivatively gasoline and heating oil markets, by being forced to comply with these aforementioned instrumental changes, or be forced out of the market. 
Brent is so much easier to Rig than WTI: This attracts Fund Flows
You want to know the real reason that the Brent market has traded at so high a premium to WTI, and became so popular by the major players in the oil trading and investment community? 
It is because the contract is based on “nothingness” has no supervision by regulatory authorities, completely non deliverable, represents no actual storage facilities, no data tracking, has no independent weekly status reports, a forever positive carry, no transparency, and very easy to manipulate. 
Fund Inflows Set Price not the Fundamentals Anymore
Moreover, since oil prices are not set by the fundamentals of supply and demand, price is solely determined by fund flows, i.e., investment capital goes into a commodity it goes up, investment capital goes out of a commodity it goes down.
“Asset Class” Investing has a built-in Long Bias
I know theoretically capital inflows could come into a market and price could go down, i.e., they could all go short, but for various reasons these shorting periods are relatively few and far between in the modern era of oil trading. 
The same reason investment capital for the S&P 500 has a long bias applies to oil markets as well in the modern era of asset class investing. Funds want exposure, and the modern definition of an “asset class” by investors is inherently long biased. It is just how it actually plays out, theoretically it doesn`t have to, but it just does.
The Dirty Little Secret of the Brent Premium to WTI
So given this state of affairs, and prices have no real attachment to the fundamentals of supply and demand, fund inflows into the futures market increase price, and consumers all over the world pay for end use products based upon these fund inflows, not the fundamentals. 
So the dirty little secret why the Brent Contract is so much higher than WTI is it attracts more fund inflows by the large players who want exposure from an investing standpoint to the commodity, thus increased fund attractiveness equals increased prices, and a much larger premium to WTI than would otherwise be the case.
It all has to do with fund inflows, and the deleterious effects for consumers play out in the following: Fund inflows into Brent, Finished Petroleum Products pegged to Brent Price, Consumers pay higher prices with no change in the fundamentals of supply and demand in the marketplace. 
Given the slow growth economy, consumers should be getting a break at the pump!
We have gone from a supply and demand market to a funds flow market and this really sucks for consumers. 
This is where the regulators are supposed to step in and protect consumers. After all, this is part of what governments can offer citizens for taking substantial pieces of their income via taxes.
But the regulators to date have been unwilling to step in and regulate the oil markets, and consumers and businesses will continue to pay more than they should for gasoline and heating oil products in the marketplace. 
ZERO-SUM Game in Oil Markets
However, what sucks for one group is often great for another constituency, and for large banks, hedge funds, and financial institutions that have been known to rig a market wherever and whenever they can, this ICE exchange traded Brent Oil contract is a dream come true for their needs.

end




Your early Wednesday morning currency crosses;  (8 am)

 

Wednesday morning we  see huge euro strength  against the dollar   from the close on Tuesday. The yen this the morning  is very weak  against  the dollar, again closing in on the 94 barrier   at 93.57 yen to the dollar .    The pound, this morning is very weak against the USA dollar breaking into the 1.55 column at 1.5571. The Canadian dollar remained a little weak against the dollar at 1.0018.   We have a mixed  risk  situation  this morning with most European bourses in the red but the German Dax in the green. Gold and silver are mixed  in the early morning, with gold trading at $1647.52 (down $1.18 )  and silver at $31.05 (up 5 cents)

The USA index is down 16 cents at 79.86.  A break below USA index of 79.00 will certainly be beneficial to gold and silver




Euro/USA    1.3506  up .0054
USA/yen  93.57 up  0.249
GBP/USA     1.5571 down .0102
USA/Can      1.0033 up .0018

end






your closing 10 year bond yield from Spain: 

...a slight decrease in yield.



SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.200.12 2.27%
As of 11:59:54 ET on 02/13/2013.


yesterday's yield;


SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE

GSPG10YR:IND

5.320.10 1.88%









end.





The Italian 10 year bond yield:

big decrease in yield.



yesterday's yield



Italy Govt Bonds 10 Year Gross Yield

 

GBTPGR10:IND

4.400.11 2.44%
As of 12:00:00 ET on 02/13/2013.



yesterday's yield





ITALY GOVT BONDS 10 YEAR GROSS YIELD

GBTPGR10:IND

4.510.11 2.45%
As of 11:59:58 ET on 02/12/2013.




Your 4:00 pm closing Tuesday currency crosses:


The Euro weakened somewhat from this morning's initial rise  finishing at 1.3446.
The yen  strengthened  a tiny bit  this afternoon with news from the world misinterpreted that the G& will tolerate Japanese printing of yen.   The pound was again 'pounded" into submission and it settled at its lows of 1.5535.  The Canadian dollar also rose a tiny fraction against the dollar.  The USA index reversed course and rose 09 cents to 80.10. 


Euro/USA    1.3446  down  .0006
USA/Yen  93.49  up .175
GBP/USA     1.5538  down a huge .0136
USA/Can      1.0016  flat







end.




Your closing figures from Europe and the USA:
everybody in the green today 


i) England/FTSE up 20.73   or 0.33%

ii) Paris/CAC up 11/95 or .32% 

iii) German DAX: up 51.7 or .67%

iv) Spanish ibex up 71.5 points  or  0.87%

v) Italian bourse (MIB) up 67.7 points or 0.41%

and the Dow: down 35.79 points or 0.26% 





end.





Now we have two more trust funds that will add considerably to the debt of the USA nation:

1) FEDERAL  EMPLOYEE RETIREMENT FUNDS
II) MILITARY RETIREMENT TRUST FUNDS.


(courtesy Bruce Krasting)



What's Up With These Trust Funds?

Bruce Krasting's picture





The topic of the day is the Military Retirement Service (MRS) and the Federal Employee Retirement Fund (FERS). Let me be very clear at the onset of this – I don’t understand what is happening with these two. But, that's the point. I’m not sure that anyone knows what's going on here. At least not the folks in the Press, or the public.

My interest in FERS/MRS was tweaked a week ago with the release of the Congressional Budget Office’s (CBO) annual report on the economy and the budget. The critical number from the CBO was its calculation of the future Debt to Public/GDP ratio. There is a footnote to the CBO’s calculations:

a. Off-budget surpluses or deficits comprise surpluses or deficits in the Social Security trust funds and the net cash flow of the Postal Service.


I read this (me being the suspicious type) and said to myself;

Why did CBO exclude the results for FERS and MRS?

Social Security IS adding to the Debt Owed to the Public (DOP). CBO calculates the SS cash shortfall and includes it in the total for DOP. My question was do FERS and MRS also contribute to DOP? If so, by how much?

I did do some research; there is information on-line related to these entities . I did not find the answers to my questions however. I determined that the Congressional Research Service (CRS) is the source of most of the information that is available. The more I read, the more questions I had. Over the weekend I wrote a long e-mail to the author of the report for FERS. Sure enough, Monday morning I got an answer. Not bad for the Government, huh? Unfortunately it was not quite the answer I was hoping for:

CRS provides research and analysis exclusively to the U.S. Congress. Because we work only for Congress, we are unable to respond to other inquiries.

I can understand that CRS is too busy helping out legislators to answer any of my silly questions. But there is no other way to get the information I wanted other than to ask the folks in D.C. Color me disappointed.

For what it’s worth, I think that FERS and MRS are adding to the DOP in a significant way. It will be measured in the hundreds of billions over the next ten-years. Anyway, I do have some questions about the published materials, including:

On FERS

FERS has a trust fund called the Civil Service Retirement and Disability Fund (CSRDF). Some raw data on CSRDF from CRS:

- The Balance of the Fund is $800 Billion! Sounds good! But…

- Because CSRS retirement benefits have never been fully funded by employer and employee contributions, the Civil Service Retirement and Disability Fund has an unfunded liability.

How big is the hole at FERS? Pretty big…

- The unfunded liability was $622.3 billion in FY2010. According to actuarial estimates, the unfunded liability of the CSRDF will continue to rise until about 2023, when it will peak at $684.8 billion.

There is a requirement to measure the projected results of any government trust fund over a 75-year period. I think this a complete waste of time as no one has a clue what the world will look like in 50+ years. This is what CRS thinks is in the future for its TF:

FERSFund2085

Well look at those beautiful numbers. The TF grows to a cool 14 trillion! There is one assumption that drives these results - The US economy is going to soar every week, month year and decade – for ever! CRS has the economy growing from a measly 16T today to – hold on - $450T in 2085. This miracle is the result of uninterrupted compound GDP growth of 4.5%. A growth rate like this is possible, but for a mature economy, with a non-stop aging problem and monstrous deficits this appears to be a “blue skies” outlook. Based on this, a 1 dollar cup of coffee today would cost $1,750 in 2085. With a tip, $2 grand.

The way FERS is set up, it gets bigger and bigger. Today it has a TF equal to 10 times current year payables. The TF will grow to 20 times then current payable over the forecast period. I think this is a perfect example of why the entire TF logic is flawed. The TFs should have a balance of one-year's worth of payments. The CRS recognizes the flaws in TF accounting:

Observers have suggested that investing the CSRDF entirely in U.S. Treasury bonds does not represent true “pre-funding” of CSRS and FERS annuities because these bonds are merely a claim held by the government against its own future revenues.

Bingo!! CRS says there is no “money” in the TF. For those of us who have been pounding the table on this, it's nice to see in print. CRS explains further:

  
From a cash perspective, when trust fund holdings are redeemed to authorize the payment of benefits, the Department of the Treasury finances the expenditure in the same way as any other Federal expenditure—by using current receipts orby borrowing from the public.

FERS will collect $4.2B in CASH and $90B in PAPER in 2013. It will pay out $78B in CASH. To me, this implies that FERS will be forced to redeem $74B of its paper for the year. Every penny of that would force an equal increase in DOP. This number would not be reflected in any deficit calculation. If this interpretation of the cash flows is correct, then it would be a very big deal.

csrfundMRS

Note: While I’m unsure of the prior calculation, I’m certain that interest is a non-cash item. This would mean that FERS would force an increase of $16B in DOP in 2013. That’s still over $200B over the next ten years.

One final point on FERS – It breaks out the Postal contributions - $3.9B due in 2013. The PO has no money and no borrowing authority left. Any “payments” that the PO made to FERS in the past were the result of direct PO borrowing from the Treasury. There is no “money” in this system. It’s just a bunch of IOUs. Those IOUs are all going to be DOP at some point. What we have here is a house of cards.


On MRS

Screen Shot 2013-02-12 at 5.50.57 PM

MRS has a fancy annual report. The audit is done by that powerhouse CPA firm – Acuity Consulting. Never heard of them?Neither have I. This is a boutique accounting firm (on the D.C. Beltway, of course) that specializes in government audits. The principals of Acuity are all ex Air Force. The boss went to the USAF Academy. I think this is one of those “close” relationships you hear about.

MRS is different in many ways from either SS or FERS. But it is similar in that it has a trust fund, receives payment from the government and makes benefit payments.
The Military TF also has assets, and those assets are expected to grow at a very rapid rate. In 2013 the TF totals $500B, it will grow to $2.676 Trillion over the next 20 years. The compounded growth rate of the TF is a whopping 9%. A portion of this a function of increasing government payments, but the bulk of the growth comes from interest income. At least that is what MRS is saying. Here is the footnote that explains the critical assumptions on interest rates:

The preceding projections assume a long-term5.75% interest rate each year.

Huh? The Congressional Budget office released its estimates for the MRS Trust Fund today. CBO thinks the MRS TF will grow to $966B in 2020, MRS has reported that the number will be $1.174 Trillion. A modest $210B variance. What's a 1/4 trillion amongst pals?

MRS is restricted to investments in government securities. How does one achieve a 5.75% return investing in Govvies? The answer is that it's not possible. The assumption used to value MRS is way out of line with interest rate assumption used by CBO, FERS and SS. Why?

Look at how MRS invests its money. This blows my mind:

Screen Shot 2013-02-06 at 9.07.42 PM

Fully 86% is invested in inflation-protected securities? The balance is in short date Treasury paper that has next to zero cash-on–cash return? What the hell are the Generals preparing for with this portfolio?
The military is storing its “nut” in an inflation bomb shelter. To get a 5.75% return on this portfolio, inflation (CPI) would have to be well north of 6%. If the country experienced inflation of that magnitude on a sustained basis, it would blow up. I wonder if the Generals consulted with Bernanke when they put this investment strategy together. Ben would have told the Brass they would never see those results. (Who knows?)

Some TIPS facts – They have a negative yield across all maturities today. The yearly inflation adjustment is added to the principal. The cash flows from a 5 Year tip (assuming 2% CPI)

Year 1 -102 (you pay a premium up front)
Year 2 0 (sorry, no cash interest for you)
Year 3 0 Ditto
Year 4 0 Ditto
Year 5 +110 (Finally, you get a cash return)


On paper, MRS is in good shape. For 2013 it anticipates “revenue” of $122.8B, of which $28.5B is interest income. Cash expenses will be $54.5B. If you assume that most of the interest income is accrual, and not cash, then the remaining income of $84.3b is more than sufficient to cover benefits. On the surface, there is a $30B surplus.

It's here that I get confused. MRS has to come up with $54.5B of cash this year. Where are they going to get that cash? The description of the MRS "money" flows:

mrsflows


From this chart I conclude that MRS has next to zero cash income. It has accrual (non cash) income from investments. All of the other sources are marked Intergovernmental Transfers. These are not cash transfers. The transfers are more of that “Borrowing Authority”.

There is a possibility that MRS gets a bunch of paper which it immediately redeems with Treasury for the needed cash. If that were the case, then MRS would be forcing Treasury to issue more DOP (+50B?).

For America, the DOP to GDP ratio is crucial (more important than the Total Debt to GDP – that includes those meaningless TF IOUs). We know that DOP goes up when there is a budget deficit – but DOP also rises based on what is happening with the big Trust Funds. How much the TFs are driving DOP is something I would like to know, and I’m disappointed and frustrated that I can’t give you the “right” answer. If any readers can clear this up, it would be most appreciated. I’ll be sure to send a link of this to CBO, OMB, CRS, FERS, MRS and SS. If I do hear from someone, I'll let you know; don't hold your breath.
Note: For those who have a check coming from FERS/MRS please don't read this as a suggestion that your benefits are at risk. That is not the case. Those benefits are money good. The taxpayers, well, they are going to have a problem with this.

end




This is something that we must watch as the 10 year has just broken above 2% in yield at 2.05%.  If this yield rises and in a shorter time frame, the interest rate swaps of the bankers blow up.

(zero hedge)






10 Year Prices At 2.05%: Highest Yield Since March 2012

Tyler Durden's picture




It was well-known that today's 10 Year auction would price somewhere north of 2.00%, for the first 2%+ print since April of 2012, it just wasn't known where. Sure enough, moments ago the US Treasury priced $24 billion in 10 Year paper at a high yield of 2.046% (38.76% allotted at high), the highest since last March when we had a 2.076% 10 Year auction (and a carbon copy environment in which every pundit was screaming about a great rotation out of bonds), only to see the April and especially May auction tumble in yield when Europe once again became unfixed. What was notable about today's auction is that it tailed the When Issued modestly, which was bid 2.039% at 1 pm, implying a 0.7 bps tail. Also notable: the Bid to Cover dropped to 2.68, below January's 2.83, and well below the 12 month TTM of 2.99. Dealers took down 47.7% of the auction, Directs as has recently been the case ended up with a sizable 24.2%, while Indirects took only 28% of the auction, higher than the December 24.2%, yet worse than all other auctions going back all the way to April 2009. For those confused - don't be - we have been here in 2012, and 2011, and 2010, when risk assets were surging, and when yields were sliding, only to see a modest subsequent pick up in inflation, mostly in China, but certainly Europe, at which point the global liquidity glut ceased and the economy (if not the centrally-planned market) resumed on its downward glideslope.


end



Someone should ask:  exactly how is the strong dollar policy implemented?

(courtesy Chris Powell)



But just how is the 'strong dollar' policy implemented, except by suppressing gold?

 Section: 
Nobody in political authority or journalism ever asks.
* * *
Obama's Treasury Pick Says He Supports Strong U.S. Dollar
From Reuters
Wednesday, February 13, 2013
WASHINGTON -- Jack Lew, President Barack Obama's pick to run the Treasury Department, on Wednesday said he would support a strong U.S. dollar, in line with longstanding U.S. policy.
"Treasury has had a longstanding provision through administrations of both parties that a strong dollar is in the best interests of promoting U.S. growth, productivity and competitiveness," Lew said during a hearing vetting him for Treasury secretary, in response to a question.
"If confirmed, I would not change that policy."





I will leave you tonight with this discussion of currency wars with Yra Harris and greg Hunter

(courtesy Greg Hunter/USAWatchdog/Yra Harris)



Currency Wars are Real—Yra Harris

By Greg Hunter’s USAWatchdog.com 
Dear CIGAs,
Legendary trader Yra Harris says, “The currency wars are real, and the game is on.”  Harris says the global currency war is what helped Volkswagen gain market share in the last few years.  So, what is Japan doing?  It is cutting the value of its currency so Toyota will gain market share.  The currency war is also what’s been driving gold higher.  Harris says, “Is gold in a bull market?  Absolutely.  Is gold a tired bull for the moment?  Absolutely. . . . I think you’d be crazy to sell because there are so many variables of uncertainty.”  Harris goes on to predict, “What do I think is the most explosive event for gold?  It is the day Draghi (President of the ECB) can no longer jawbone quantitative easing.  He actually has to step up to the plate.”  Harris is counting on the Fed to continue to pump out dollars.  He says, “I can go to sleep at night and know one thing–the Fed will not allow deflation.”  The reason is simple, according to Harris, “We live on debt in this society.  Debt based societies cannot absorb a deflationary spiral.”  Join Greg Hunter as he goes One-on-One with analyst and trader Yra Harris.




Well that is all for today.

I will see you tomorrow night.

Harvey



20 comments:

Budd said...

Some news today on Russia and China making a trade deal For Oakland minerals. In effect bypassing the U.S dollar. Oil for gold is only a very small step away.

Budd said...

Should read oil and minerals (darned iPad)!

Dub said...

What about SILVER?????????????????????????

fred said...

Harvey--

You complained when COMEX raised margin rates and you now complain when COMEX lowers margin rates.

How would YOU determine proper margin rates?

Also, the volumes on gold and silver this week are low because of holidays in both China and Japan.

PeaknikMicki said...

Low volume....isn't that a good reason to leave the margin rates untouched?
Secondly, didn't you see what happened last time? They lowered the margins, suckered in specs, the comms went short and CME then followed up with 5 margin hikes in a week and that was in a period without particular volatility (which the margins are supposed to curb).

fred said...

Two points: First, low volume doesn't equate with low volatility.

Second, I don't know what "last time" you are talking about. You mean when silver was having $2 and $3 daily ranges and COMEX raised the margins?

Besides, I'd love to find the trader who bases his spec trades on COMEX lowering margin rates from $10,000 to $8500. If you're that tight for money you shouldn't be in that arena anyway.

harveyorgan said...

Fred: the last time they lowered margins for gold/silver was three months ago and right after that the bankers lowered the boom by providing massive non backed future gold contracts to lower the gold price.

as for proper margin rates, that is up to the CME to determine and risks involved.

However, I can tell you that volumes are falling badly at the comex as folks get their metal elsewhere.

Volumes on gold and silver have been low for quite some time and you have to also figure in the Bozo HFT traders as well.

end

To all Agnico Eagle shareholders;

record production in 2012

but most important a huge increase in measured/indicated/inferred resources of gold

AEM proven and probable 19 million oz

measured/indicated/inferred 41 million oz



this company is worth far more than 7.6 billion dollars.

PeaknikMicki said...

1) no but low volume in temporary period i.e. as result of public holidays etc isn't really representative of market movements. In this case they should have margins specific for those days just to stop large movements during illuiquid periods.

2)rising market isn't same as volatility and CME didn't stop raising or eased off on margins as price came down.

3) I am not a trader on COMEX but according to Reuters margins went up 84% or from $8.500 to $16,000
http://www.reuters.com/article/2011/05/05/businesspro-us-markets-silver-slide-idUSTRE7437XU20110505

I would suggest the margin hikes didn't prevent volatility, it caused it by violently forcing long specs to dump and as price came down this was of course compounded.so that more and more long hands were forced out.
Not too different from the smack downs they used to do in the thinly traded access price a few years ago to ensure there would be down gaps in price when markets opened.

fred said...

Harvey, you wrote "volumes are falling badly at the comex as folks get their metal elsewhere".

You sure couldn't prove that by the COMEX volume numbers:

volume Jan 13 6.85 million contracts

volume Jan 12 6.39 million contracts

that's UP in Jan 13 by 7.3%

Looks to me like volumes are doing exactly the opposite of what you keep saying.

Jeff North said...

HOLY COW! silver is @ $30.37 as of this post! this break through a MAJOR support line means it's only going to go lower (maybe 26.50ish?) ! this is perhaps the most obvious example of market manipulation in recent history! I don't believe it's so insidious as Harvey likes to pronounce, but one does have to watch out for the "whack-a-mole".

technical analysis still holds up in this market, it just takes about 3-4 weeks longer for the patterns to play out because of the manipulation. the big rally is STILL coming! but probably best to put your money on the sidelines for now and get back in around $27. something I've learned from this constant smack-down is to never leave your money sitting in silver unless it's going UP, and get out as soon as you hit or miss your target! if you "buy and hold", you are basically telling these short-sellers "here, take my money, please!"

Jack Lee said...

Demand for physical silver is unrelenting. I see APMEX selling 6,000 ASE's per day. When they dropped the premiums from 2.99 over spot to 2.59, sales went over 10,000 per day. COMEX is dropping the phony paper price in an attempt to kill demand for physical silver. Don't think it's going to work this time.

Domarius Raines said...

Harvey do you submit data to the cftc regulary that shows the manipulation.

Jeff North said...

obviously, any organization that takes over 4 YEARS (!) to "investigate" the problem isn't really investigating anything. just the amount of time the CFTC has supposedly spent on this is enough to convince me they are looking the other way.


also, it's very likely that this "manipulation" isn't a conspiracy at all. if you're playing dice on the streets with $10, against someone who's holding $1000... how long are you likely to last in that "market"? when someone has more money than you - billions more - they are simply going to have more effect on the price of that market than you do. crying "manipulation" won't solve that fundamental problem.


also, why would it necessarily be "bankers" doing the manipulation? 55% of silver demand/consumption is by the USERS of silver - the Commercials. I would think these companies, who trade futures as way of locking in good prices... I would think THEY have the most interest in keeping prices low! also, governments are stacking up their gold reserves, and they aren't interested in selling it later for a profit. ANYONE with an interest in USING silver and gold (not for investment purposes) has one primary objective - get as much as you can for the lowest price possible.


all one has to do is check here with Harvey for the daily OI, and the COT's... anytime the commercials are 2-3 times more long than short, you can expect they will be closing out those long positions at some point! this "manipulation" is so transparent and predictable, I say BRING IT ON! more manipulation, please, you guys are making me rich! :)

fred said...

Margin increases or decreases are not meant to increase or decrease volatility or influence prices. They may do that, but that's not the purpose.
Initial margin is your good faith deposit. If silver has a $2 range during the day, that's $10,000 per contract. Obviously an $8500 deposit is inadequate to cover counterparty risk and the risk to the exchange clearing system. There were several days when silver had $3 ranges, making a $20,000 margin not unreasonable.

Dub said...

The CFTC is an absolute joke and it members should be prosecuted for financial terrorism along with anyone else involved in this suppression scheme - including all politicians that are in these peoples back pocket. For decades this country and its leaders have been on a downward spiral ethically and morally - now we can add financially. The entire system is corrupt and its only getting worse but hey, at least homosexuals can be open in the Military and will soon be able to join the Boy Scouts... and politicians and bankers can continue to steal the money right out of hardworking Americans pockets with absolute impunity. God Bless America, home of the, brave.

SILVERisAjoke said...

Silver now under $30.00 - what fkkn shame.

Exasperated SilverBug said...

Can anyone please explain why the PM prices are dropping so drastically other than Harvey's generic "its another raid"? Thank you.

PeaknikMicki said...

G20 MOPE (management of perspective economics)
"Soros dumps gold"
"NY Empire beats expectations"
"Cleveland Fed head talks about early end to QE"
"Consumer sentiment up"
"US sanctions eliminate gold flow from Turkey to Iran"
"Citigroup cuts gold miners to sell"
Yay, we are saved everything will be fine......not

Of course many traders were lining up. When you get technical break you get new shorting coming in and you trip stops. It is a downdraft that feeds itself for a while.
Will be interesting to see the COT though. The silver long hands have been very firm so far. The silver short must be most anxious to get a flush out of these.

PeaknikMicki said...

Penned by FOA in 2000 (I posted this about a week ago as well but worthwhile re-posting for all to ponder)
"This places Euroland, the BIS and major world physical gold players on a direct
collision course with the US backed contract gold marketplace. The effects of
this will "most likely" be seen in a literal flood of new paper gold entering
this arena in an effort to maintain "bookkeeping" credibility for the market
makers. Today we see the beginnings of this change impacting the market as it is
evolving into little more than a large paper float that exists mostly for this
"bookkeeping" purpose. It will stay viable until dollar price inflation dries up
to physical supply that to date still sells into this market"

In essence; paper games will go on until physical supply dries up.
When this happens it will be a tectonic shift that happens in an instant.
Do you believe this will happen and do you want to be out of the metals when it does happen?

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