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• Gold, Silver, Oil: Volatility Is the New Stability
• Precious Metals Again: ETF Pullback Choices
• What is Really Behind the High Price of Gold?
• Which Gold Investments Should You Buy – and How Much?
• It's Just a Matter of Time Before Gold Becomes Priceless! Here’s Why
• Gold and Silvers Daily Review for December 9th, 2010
• Swiss bank client cant get his silver back two months after asking
• Is The Herd Trading Gold and SP500?
• SLV Tonnes in the Trust Back at Record High
• Trader alert: Watch out for a fake breakout in gold and silver
• It's official: Ron Paul now in charge of Fed oversight committee
• Will the World Return to a Gold Standard?
• India's silver imports may jump 20% in 2010
• GCC urged to boost gold reserves
• Iceland exits recession
• Swiss Bank Client Can't Get His Silver Back Two Months After Asking
• Silver 101: Production By Country
• Why the Eurozone and the Euro Will Not Collapse - But Will Change
• Confiscation Through Inflation
• Gold Down 2.8%, Silver Off 7% from Record Highs…
• America's Message To The Rest Of The World: You Send Us Oil And Cheap Plastic Gadgets And We'll Send You Our Wealth And Prosperity
• Old Copper, Future Cash
• Emerging Markets and Commodities: Where Stimulus is REALLY Going
• Investors to Silver: “Let’s Get Physical”
• US mint set to produce palladium eagles
• On the Move Again
• Gold Sinks as Treasury Yields Soar
• Interest Rate Hikes Should Support Higher Gold
• Good Times Ahead for Gold, Commodity Bulls
• Another Raid on silver and gold/ bonds tank
• Rocket (Yeah)
• Bernanke Ignores 4,500 Years of Failed Monetary Policy
• J.P. Morgan and the Great Silver Caper
• Gold Seeker Closing Report: Gold and Silver Fall About 2% and 5%
• SLV Record Metal Holdings
• China’s Gold-Buying Spree

Gold, Silver, Oil: Volatility Is the New Stability Posted: 09 Dec 2010 05:15 AM PST James West submits: In the last 30-day period, the price of gold has swung up and down like a yo-yo between $1,340-1,420 an ounce, giving it a volatility ratio of 5.6 percent. Silver during the same period traded between $25.38-30.50, which gives it a 16% volatility ratio. Oil’s volatility range over 30 days lies between $80.28-90.87, or 11.65 percent. For a 30-day period, those trading ranges are extremely high. For example, the volatility ratio in the price of gold in the same 30-day window 10 years ago was between $264-272, or 2.9 percent. Complete Story »

Precious Metals Again: ETF Pullback Choices Posted: 09 Dec 2010 04:26 AM PST In recent weeks, my ETF Pullback model (see Appendix below for explanation and performance data) has taken something of a global tour, touching down in parts of Asia, South America, Africa, Turkey and Poland. This week there’s still some Asia exposure, but otherwise this is a pretty solid play on potential strength in the U.S. economy. Here’s the current ETF list: Guggenheim Airline FAA ETFS Physical Palladium PALL ETFS Silver Trust SIVR iShares MSCI Hong Kong EWH iShares Silver Trust SLV This is last week’s list: Complete Story »

What is Really Behind the High Price of Gold? Posted: 09 Dec 2010 04:15 AM PST Some gold bugs say that this is only the beginning and gold will soon break $2,000, then $5,000 and then $10,000 per ounce but the question is, "How can anyone reasonably calculate what the price of gold is?" For stocks, we have all sorts of ratios. Sure, those ratios can be off . . . but at least they're something. With gold, we have nothing.... [or more correctly, had nothing, until the development of my very own model for doing just that. Let me explain.] Words: 945

Which Gold Investments Should You Buy – and How Much? Posted: 09 Dec 2010 04:15 AM PST It is no longer a matter of whether or not you should buy gold but, rather, which investment(s). Gold is now an asset class that you should consider having permanently in your portfolio. You don't need a lot but you do need some - and here's a primer on just what type of investment vehicles are available and recommendations on just how much you should buy. Words: 945

It's Just a Matter of Time Before Gold Becomes Priceless! Here’s Why Posted: 09 Dec 2010 04:15 AM PST If we continue down the same economic path that we have been following for the last four decades (and I seen no indication that we won't even if we wanted to, or could, at this point), it is mathematically inevitable that gold and silver will approach infinity in U.S. dollar terms at some point [in the future]. [Yes, to infinity!] Words: 1242

Gold and Silvers Daily Review for December 9th, 2010 Posted: 09 Dec 2010 03:36 AM PST

Swiss bank client cant get his silver back two months after asking Posted: 09 Dec 2010 03:19 AM PST

Is The Herd Trading Gold and SP500? Posted: 09 Dec 2010 01:27 AM PST

SLV Tonnes in the Trust Back at Record High Posted: 09 Dec 2010 12:06 AM PST Iacono Research

Trader alert: Watch out for a fake breakout in gold and silver Posted: 09 Dec 2010 12:02 AM PST From Gold Stock Trades: ... Last week, [the gold ETF (GLD)] broke the August-to-November trend and showed a negative divergence, causing many technical analysts, myself included, to be concerned of a steeper correction. Since my October 4 signal, where I ventured out of bullion into the junior miners, the best way to play the gold market is through trading the oscillators. In August and September, gold had a steady climb higher. This was a trending market. We began seeing some key psychological, bearish one-day reversals in October and the gold market began behaving volatile with a false breakout in early November. At that time, I focused on my highly rated junior miners, as I believed their breakouts were more secure... Read full article... More on gold: Why a selloff could be super bullish for gold Gold's most-accurate forecasters see prices hitting $1,500 by December China is building a floor under gold prices... much higher than anyone expects

It's official: Ron Paul now in charge of Fed oversight committee Posted: 08 Dec 2010 11:52 PM PST From Zero Hedge: Despite rumors that various splinter forces within the Republican party are attempting to block Ron Paul's fateful chairmanship of the Monetary Policy Subcommittee, we now have confirmation that the only sane politician left will now be Ben Bernanke's direct nemesis during any and all future Congressional spectacles starring the printing unchallenged one. And with U.S. debt creeping ever closer to the debt ceiling, coupled with the dollar for dollar monetization of the U.S. deficit, such spectacles will soon be plenty... Read full article (with video)... More on Ron Paul: Ron Paul: "Enough is enough" Ron Paul: What I would do if I were President Historic gov't battle coming: Ron Paul to take control of Fed oversight

Will the World Return to a Gold Standard? Posted: 08 Dec 2010 08:50 PM PST "Under a gold standard, paper notes are convertible into pre-set, fixed quantities of gold." -Wikopedia "Although the Great German inflation ended with the introduction of the Rentenmark and the Weimar Republic continued for a decade afterwards, hyperinflation is widely believed to have contributed to the Nazi takeover of Germany and Adolf Hitler's rise to power. Adolf Hitler himself in his book, Mein Kampf, makes many references to the German debt and the negative consequences that brought about the inevitability of National Socialism. The inflation also raised doubts about the competence of liberal institutions, especially amongst a middle class who had held cash savings and bonds. It also produced resentment of Germany's bankers and speculators, whom the government and press blamed for the inflation. Additionally, later German monetary policy shows far greater concern for maintaining a sound currency, a concern that even affects Germany's present attitude in Eurozone debates concerning bailouts of failing national economies today. Incidentally, the hyperinflated, worthless Marks became widely collected abroad. The Los Angeles Times estimated in 1924 that more of the decommissioned notes were spread about the United States than existed in Germany." -Wikopedia The global test and more specifically in the United States will be to see if our foolhardy bankers let this move into an uncontrolled slide of hyperinflation. We say nasty inflation is a given. There is a very fine line between maintaining some semblance of control and suddenly seeing inflation at more than 50% per month; which is the definition of hyperinflation. I remain optimistic that loyal, constitutionalist Americans regain control and vote out or toss out, or whatever, the gang of fools running this nation. This posting includes an audio/video/photo media file: Download Now

India's silver imports may jump 20% in 2010 Posted: 08 Dec 2010 08:38 PM PST Link:  India's silver imports may jump 20% in 2010 Image:  Today's first silver-related story is a 2-paragraph article that I found posted over at Kitco yesterday.  The headline reads "India's silver imports may jump 20% in 2010".  This will just add to the bullion banks' litany of woes in the silver market.  It's a 1-minute read... and is posted over at opalesque.com... and the link is here.

GCC urged to boost gold reserves Posted: 08 Dec 2010 08:38 PM PST Link:  GCC urged to boost gold reserves Image:  The only gold-related story I have today is this piece posted over at thenational.ae website in the United Arab Emirates.  The headline reads "GCC urged to boost gold reserves".  GCC is the acroynym for the Co-operation Council for the Arab States of the Gulf.  GCC states should boost their foreign reserve holdings of gold to help shield their billions of dollars of assets from turbulence in global currency markets, say economists at the Dubai International Financial Centre Authority... read more

Iceland exits recession Posted: 08 Dec 2010 08:38 PM PST Link:  Iceland exits recession Image:  Reader Roy Stephens has the next item for you today.  It's from Tuesday's edition of The Guardian... and is headlned "Iceland exits recession".  The decision to force bondholders to pay for their banking system's collapse appears to have paid off, as the economy grew 1.2% in third quarter.  Nobel prize winner Paul Krugman has repeatedly called on most of the PIIGS to consider leaving the euro area and defaulting on debts.  This is a short article... and highly recommended reading... read more

Swiss Bank Client Can't Get His Silver Back Two Months After Asking Posted: 08 Dec 2010 08:38 PM PST Silver eagles outselling gold eagles 81 ounces to 1 in December so far. India's silver imports may jump 20% in 2010.  Inflation and hyperinflation coming: John Williams. German 2-year bond auction fails... and much more. ¤ Yesterday in Gold and Silver The gold price came under selling pressure about three hours after Wednesday trading began in the Far East... and was down over ten bucks by lunchtime in Hong Kong.  That was its interim low for the day... and once London opened for trading, the gold price began to inch higher.  Then, shortly before lunch in London, gold got hit for $15.  This decline lasted until New York opened at 8:20 a.m. Eastern time, when gold finally caught a bid... only to get sold off $25 by a not-for-profit seller of some sort between 9:40 a.m and 10:25 a.m... probably JPMorgan et al.  The 10:25 a.m. Eastern low tick for gold was reported as $1,370.40 spot. After that low, gold rose a bit, but every tiny rally attempt got sold off, but the gold price managed to close about eleven bucks off its low of the day. Silver managed to keep its head above water... and in positive territory... right up until 9:15 a.m. Eastern time... then got smacked for over a buck.  Silver's low price of $27.97 spot came at 10:50 a.m Eastern time... and from that point, it too, ran into selling pressure every time it attempted to rally any significant amount.  All in all, silver's price path was virtually identical to gold's. From it's open on Wednesday morning in Far East trading... to it's high of the day around 4:00 a.m. Eastern time... the world's reserve currency rose about 40 basis points.  Then the dollar proceeded to give back all those gains between that early hour... and the close of trading at 5:15 p.m. Eastern time yesterday afternoon.  So the dollar began and ended the day around 80.00 on the charts.  There was absolutely no relationship between the dollar and the precious metals prices. The gold shares rallied at the start of New York trading, but began to sell off within minutes of the open... and hit what appeared to be their lows around 10:45 a.m. Eastern... and then didn't do much for the rest of the day.  The HUI finished down 2.25%... but, like Tuesday, there were still quite a few green arrows in the stock list I follow... so there's obviously a lot of bottom fishing going on, which is what I would be doing if I had any money left to invest. Well, the CME Delivery Report on Wednesday showed a pretty big delivery from JPMorgan's client account... 1,307 contracts.  The biggest stopper of note [876 contracts] was Deutsche Bank from its proprietory [house] trading account.  Barclays and Goldman Sachs stopped [received] 133 and 114 contracts respectively.  There were only 63 silver contracts posted for delivery on Friday.  The link to all that action is here. The GLD ETF reported that 78,108 ounces of gold were withdrawn... and there was no report from the SLV ETF. The U.S. Mint sold another 4,000 ounces of gold eagles yesterday... along with another 275,000 silver eagles.  Month-to-date, the mint has sold 8,500 ounces of gold eagles and 692,000 silver eagles.  The silver/gold ratio in eagle sales in December currently sits at 81 ounces of silver for every 1 ounce of gold. The Comex-approved depositories showed only a minor change on Tuesday... as they received 29,519 ounces of silver. Sponsor Advertisement Tirex Resources (TXX: TSX Venture) has recently released impressive copper, gold and silver assay results from the company's recently initiated drill program. Included within the results was a thick section of robust mineralization grading 5.23% copper, 1.84% zinc, 57 g/t silver and 4.6 g/t gold over 25.3 feet. These assays came from a step out hole drilled in an area of the District called Gurthi South No. 1, from a location 60 m west of previously drilling in the zone. The zone remains completely open for expansion to the west and north and drilling continues. Please visit our website to learn more about the company and request information. ¤ Critical Reads Subscribe German 2-Year Auction Fails By 20% Of Notional As Rush From Government Paper Intensifies Today's first story is from 'David in California'... and the headline over at zerohedge.com reads as follows... "German 2-Year Auction Fails By 20% Of Notional As Rush From Government Paper Intensifies".  You know that bonds are on their last legs when Germany can't even sell their own debt paper.  One has to wonder how much U.S. paper is being swallowed by the Fed to prevent the Treasury department's bond auctions from failing?  The link to this rather short story is here. View full GSD edition Global bond rout deepens on US fiscal worries Ambrose Evans-Pritchard has something to say about the unfolding bond debacle.  In a piece filed late last night in The Telegraph, the headline reads "Global bond rout deepens on US fiscal worries".  Agreement in Washington on a fresh fiscal package has set off a dramatic rise in yields of US Treasuries and bonds across the world, threatening to short-circuit any benefits of stimulus. The bond rout raises concerns that the US authorities may be losing control over events.  Like the last story on German bonds, this story is worth your time as well... and the link is here. View full GSD edition Inflation and Hyper-Inflation Coming The next story is from reader 'Chris' and is an interview posted over at Canada's Business News Network.  It's with shadowstats.com's John Williams... and the title is "Inflation and Hyper-Inflation Coming".  It runs for just under ten minutes... and it's more than worth listening to... and the link is here. View full GSD edition Iceland exits recession Reader Roy Stephens has the next item for you today.  It's from Tuesday's edition of The Guardian... and is headlned "Iceland exits recession".  The decision to force bondholders to pay for their banking system's collapse appears to have paid off, as the economy grew 1.2% in third quarter.  Nobel prize winner Paul Krugman has repeatedly called on most of the PIIGS to consider leaving the euro area and defaulting on debts.  This is a short article... and highly recommended reading... and the link is here. View full GSD edition The Roving Eye: Naked emperor hails sex by surprise Here's one I received from a reader who calls himself "Jîvasattha".  It's a piece about WikiLeaks founder, Julian Asange.  It's posted in today's edition of the Asia Times... and is authored by Pepe Escobar.  The headline reads "The Roving Eye: Naked emperor hails sex by surprise".  It's quite intriguing... and quite entertaining... and the link is here. View full GSD edition India's silver imports may jump 20% in 2010 Today's first silver-related story is a 2-paragraph article that I found posted over at Kitco yesterday.  The headline reads "India's silver imports may jump 20% in 2010".  This will just add to the bullion banks' litany of woes in the silver market.  It's a 1-minute read... and is posted over at opalesque.com... and the link is here. View full GSD edition Silver 101: Production By Country A couple of readers sent me this nifty graph of world silver production by country... and the first person through the door was Randall Reinwasser.  The graph is imbedded in a short piece posted over at zerohedge.com that bears the headline "Silver 101: Production By Country".  The USA is tied for 9th place with Poland.  It's one paragraph, plus the chart... and it's definitely worth looking at.  The link is here. View full GSD edition Swiss bank client can't get his silver back two months after asking The next story is a must read James Turk interview with King World News that's imbedded in the following GATA release headlined "Swiss bank client can't get his silver back two months after asking".  This investor had been paying storage fee for years as well... and when he went to ask for delivery, the cupboard was bare.  If you don't have it in hand, do you know where your gold and silver really is, dear reader?  The link to this short blog is here. View full GSD edition GCC urged to boost gold reserves The only gold-related story I have today is this piece posted over at thenational.ae website in the United Arab Emirates.  The headline reads "GCC urged to boost gold reserves".  GCC is the acroynym for the Co-operation Council for the Arab States of the Gulf.  GCC states should boost their foreign reserve holdings of gold to help shield their billions of dollars of assets from turbulence in global currency markets, say economists at the Dubai International Financial Centre Authority... and the link to the story is here. Even if you don't read the article, the imbedded photo is worth looking at. View full GSD edition Speed Today's last precious metals-related story is this piece that I got from Ted Butler yesterday... and it's your big read of the day.   He sent me the link to CFTC Commissioner Bart Chilton's latest&a

Silver 101: Production By Country Posted: 08 Dec 2010 08:38 PM PST Link:  Silver 101: Production By Country Image:  A couple of readers sent me this nifty graph of world silver production by country... and the first person through the door was Randall Reinwasser.  The graph is imbedded in a short piece posted over at zerohedge.com that bears the headline "Silver 101: Production By Country".  The USA is tied for 9th place with Poland.  It's one paragraph, plus the chart... and it's definitely worth looking at.  The link is here.

Why the Eurozone and the Euro Will Not Collapse - But Will Change Posted: 08 Dec 2010 08:27 PM PST

Confiscation Through Inflation Posted: 08 Dec 2010 04:39 PM PST Dollar Daze

Gold Down 2.8%, Silver Off 7% from Record Highs… Posted: 08 Dec 2010 04:29 PM PST

America's Message To The Rest Of The World: You Send Us Oil And Cheap Plastic Gadgets And We'll Send You Our Wealth And Prosperity Posted: 08 Dec 2010 03:15 PM PST Have you ever seen pictures of extravagant wealth from places such as Dubai or Abu Dhabi and wondered where in the world they got all that money from?  Have you ever read news stories that talk about China lending us hundreds of billions of dollars and wondered how they could possibly have so much wealth?  Well, it is actually quite simple.  They got much of it from us.  Every month, the United States buys much more from the rest of the world then they buy from us.  It is called a "trade deficit" and the United States has been running one for decades.  In essence, what is happening each month is that we are transferring somewhere between 40 to 50 billion dollars of our national wealth to the rest of the globe and they are sending us oil and cheap plastic gadgets that Americans greedily consume.  By the end of the year we have usually transferred somewhere around a half trillion dollars of our national wealth out of the country for good. In order to maintain our standard of living, the U.S. government has been going to the countries we have been sending our wealth to and has been begging them to loan us massive amounts of their dollars.  At this point the U.S. government literally owes trillions of dollars to the rest of the world. Scoffers say that it is just a bunch of "paper money" that we are sending them, but the truth is that it is hundreds of billions of dollars of "paper money" that is not in the hands of average Americans.  We have sent massive amounts of our wealth and prosperity overseas and it isn't coming back unless we borrow it. Today there are dozens and dozens of U.S. cities such as Detroit, Michigan and Camden, New Jersey that are turning into post-industrial hellholes while thousands of gleaming new modern factories are going up all over China.  42.9 million Americans are now on food stamps (a 16 percent increase in just one year) while the oil sheiks of the Middle East build opulent palaces that are extravagant beyond belief. Most Americans do not realize how serious the U.S. addiction to foreign oil really is.  We are constantly being drained of our wealth by the oil powers of the Middle East. So what are they doing with all of this money?  Well, let's take a look at just a couple of examples. Have you ever heard of the Emirates Palace? It is located in the United Arab Emirates and it cost approximately 3.8 billion dollars to build. The following is how one writer for a major UK newspaper described it after a visit.... The Emirates Palace has so many biggest and best boasts, it could have its own chapter in the Guinness Book of Records, but the atrium is the whistles and bells, the jaw-dropping big daddy of them all — 60 metres high, 42 metres wide and topped with the largest dome in the world. Staff need golf carts to negotiate their way around it. It is decorated with 13 colours of marble, ranging from sunrise yellow to sunset red (to reflect the many hues of the desert), and lots and lots and lots of gold: 6,040 square metres of gold leaf cover the largest gilded expanse ever created in one building. It's even in the food. I ate gold leaf on my chocolate cake. Apparently, it aids digestion. In Dubai, there is so much wealth that they pretty much build whatever they can dream up.  For example, in Dubai you will find the largest "indoor ski resort" in the world.  One travel site describes it this way.... When one thinks of Arabia, let alone Dubai, one likely pictures an arid desert of heat and sun. One does not think of snow skiing. Yet, that is what one can do at Ski Dubai, arguably the largest indoor ski resort in the world. The resort features 22,500 square meters of ski area. The heavily insulated building is kept at 30.2 degrees Fahrenheit during the day and 21.2 degrees Fahrenheit throughout the night, which is when the snow is generated. The resort features five ski runs and is open year round. But it is not just the Middle East that is getting incredibly wealthy off of the United States.  In a recent article entitled "China #1, United States #2? 25 Facts That Prove The Transition Is Really Happening" I detailed how China is in the process of surpassing the United States economically. Over the past 25 years, the U.S. trade deficit with China has soared into the stratosphere.  In 1985, the U.S. trade deficit with China was 6 million dollars for the entire year.  In the month of August alone, the U.S. trade deficit with China was over 28 billion dollars. For many Americans this can be difficult to comprehend.  For a moment, imagine a giant map of the world and that there is a gigantic pile of money in China and a gigantic pile of money in the United States.  Then start taking 20 billion dollars from the pile of the United States and give it to China every single month. After a while, what is going to happen? Well, the United States is going to be a lot poorer and China is going to be a lot wealthier. As we have become poorer, it has been harder and harder to maintain our very high standard of living. The U.S. government has been borrowing larger and larger sums of money from the rest of the world in order to "stimulate" our economy, but in the process we are piling up horrific amounts of debt. The national debt of the United States is now 13 times larger than it was just 30 years ago. If we did that again over the next 30 years, we would have a national debt of approximately $170 trillion by the year 2040. Of course that will never happen. Why? Well, because the entire financial system would collapse and we would be forced into national bankruptcy long before we ever got into that much debt. The truth is that we are already on the verge of total economic collapse.  In fact, CNS News is reporting that retiring U.S. Senator George Voinovich believes that the collapse could happen at any time now.... "I think we are on the edge of it right now. I really do," said Voinovitch. "If we don't do something about dealing with the debt and the budgets that aren't being balanced for as far as your eye can see, we are over the cliff. We are on thin ice right now. And I don't think that we can wait. We need to move forward. We need to move forward for our own benefit, but we also need to move forward because the world is watching us right now." Indeed, the world is watching us, and they are getting tired of financing our runaway debt. Just this week there have been some very troubling signs.  For example, U.S. Treasuries just experienced their biggest two-day sell-off since the collapse of Lehman Brothers. The rest of the world was deeply troubled when the Federal Reserve announced another round of quantitative easing.  Federal Reserve Chairman Ben Bernanke had promised that the Fed would not monetize U.S. government debt, but now that is exactly what is happening.  The rest of the world is less than thrilled by this. In addition, many economists are warning that the tax cut deal that Barack Obama and the Republicans have agreed to will increase U.S. government debt even more.  In reaction to the deal, economist Nouriel Roubini recently posted the following message on his Twitter account.... "Obama-GOP tax deal costs $900 billion over two years. US kicking the can further down the road. Are bond vigilantes starting to wake up?" A recent article on CNBC described what these "bond vigilantes" are.... Bond vigilantes – the term was coined by economist Ed Yardeni in the 1980s to describe major investors who demand higher yields to compensate for the perceived risks resulting from large deficits - could derail the country's precarious recovery, some economists say. The truth is that the U.S. government is not going to be able to borrow endless amounts of very cheap money forever. At some point the U.S. is either going to face much higher interest rates on government debt or the Federal Reserve is going to have to step in and monetize the vast majority of all new government debt. Either alternative will be absolutely disastrous. Most Americans just assume that the wealth and prosperity that we have enjoyed for so many decades will always be with us.  But that is not the case.  We have been exporting our national wealth and our national prosperity so that we could fill up our shopping carts with cheap foreign-made plastic crap and so that we could fill up our cars with foreign oil.  It has been a fun ride while it lasted, but with each passing day a national financial implosion draws ever closer. An economic nightmare is coming. You better get ready.

Old Copper, Future Cash Posted: 08 Dec 2010 12:21 PM PST --"Drugs, domestic violence, copper theft and burglary lead the list," says Orangeburg County interim sheriff Barbara Walters [not THAT Barbara Walters] to The Times and Democrat of South Carolina. She was talking about what's killing people in South Carolina. And you might be surprised to see copper on the list, mostly since copper is just your normal, self-respecting, malleable, ductile, corrosion resistant industrial metal, located at spot number 29 on the periodic table. --But copper, it turns out, is a cold blooded killer. "The one [crime] that has increased almost beyond belief is copper theft," says Sheriff Barbara. "It's so much in demand by manufacturers, the price has doubled or more in the past two years. Today's price, $3.18 a pound, could get higher tomorrow. The thieves watch outdoor machines, old-model cars and collections of electric wire. Often they return to check out the location and number of people who live or work nearby. To them, old copper is future cash; sometimes big cash." --The reason "old copper" is "big cash" is that copper futures closed at an all-time closing high in New York trading yesterday at $4.10 a pound. The intra-day high is higher still at $4.28. But it's not far off. Sheriff Barbara needs to check her prices more carefully. Copper: The other Red Gold --There was some disagreement in the office recently about whether copper or iron ore deserves the moniker of "red gold." It turns out we've smacked the label on both at one time or another. Copper turns red when it's exposed to air. But when it's first rolled into coils for use in electricity (because of its conductivity) or in plumbing, it's just a red coppery colour. --Iron ore, on the other hand, starts of as red dirt before becoming steel. And iron ore is a lot more important to Australia as an export commodity. Exports of iron ore should generate nearly $53.4 billion this year, due to rising prices and rising export volumes, according to the Australian Bureau of Agricultural and Resource Economics (ABARE). --Exports of refined copper and copper concentrate, on the other hand, are only going to generate $6.5 billion according to ABARE (see page 20). But here's an important point: the dollar value of Aussie exports of key commodities doesn't tell you where you can make the most money as an Australian investor. --In copper's case, Diggers and Drillers editor Alex Cowie went to Africa to find an Aussie-listed miner digging and drilling a huge deposit. You can read about Alex's trip here in, "The Kalahari Carve Up." --But if you're a contrarian, should you really trust the prices the market is throwing at you right now? A price should normally tell you exactly where buyers and sellers are finding each other in the exchange for a given good or service. It's the signal that tells producers what consumers are willing to pay for something. --But if the price includes a lot of noise in it-garbage pumped in from somewhere else-then instead of communicating useful information to you it might actually be lying to you. And if you act on that deceptive, low-down, good-for-nothing information, you'll probably lose money. -- The copper move is terrifying and exhilarating. But what is it really telling you? Well the move from $1.25 a pound to over $4 a pound took place during the Bernanke re-flation and the massive Chinese credit expansion via bank lending (another US$1 trillion this year on top of last year's $1 trillion). Copper's strength is the U.S. dollar's weakness, with a strong tail wind from Chinese fixed asset investment." --There's a fundamental aspect to it, of course. The copper supply bottlenecks Alex has documented in Diggers and Drillers are providing support.  There's demand too. China Securities Journal reports that the Chinese government will spend three to four trillion Yuan (or US$451.5 billion to US$602 billion) to expand its railway network in the next five years. --If you view the emerging world (the BRIICs) as finally decoupling form the developed world (the bankrupt welfare states of Europe and America) then copper tells that story. It's the story of fixed asset investment in a modern industrial economy and growing domestic consumption. And the story, despite the de-leveraging death spiral of 2008, is basically bullish. --But let's not forget investment demand for metals. How much of copper's rise is being fuelled by investors? With exchange traded funds and similar vehicles, big institutions and retail investors can now bet on higher metals prices by buying shares in a fund that stockpiles those metals. --It sure seems like a good thing to be able to conveniently bet on (and profit from) higher metals prices without the unlimited exposure you'd get in the futures markets. But are investment flows distorting metals prices to the point that the price isn't a real price? It's not telling you the underlying demand...but has instead become the volatile plaything of hot institutional money flows? --Finally, is there any technical insight into the price action? Four bucks a bound looks like the top of a trading range. For copper to break out of that, something wildly bullish would have to happen (you'd think). For example, the U.S. could announce the settlement of a new colony on the Moon to be built entirely with copper. That might break it out of the range. --But rather than speculating, what does a real trader say? We put the copper question to Slipstream Trader Murray Dawes. He wrote back not long after.  He applied the same theory of price action he uses on Aussie stocks to the copper futures chart you see above. --"Copper is now testing the last major point of resistance at $4," Murray says. "A sustained breakout above this level could see a huge impulsive move to the upside in copper.  From a long term perspective you could see the last four years trading as a consolidation of the huge rally since 2002, with a break out above the current highs as a continuation of the long term trend. --"If the Fed is determined to keep printing money then investors will continue to flood into hard assets so this outcome can't be ignored." By the way, this is one aspect of Murray's trading that makes him unique. He understands the big picture. And even more importantly, he knows that if you trade without a big picture view (even if your analytical tools are good), you'll be flying blind and eventually blow up/crash. --He concludes that, "The resistance in this area will be very difficult to break and we may see more work done before the level is cleared.  A failure back into the range could see a sharp correction towards the Point of Control of the long term distribution at $3.25 but I would expect huge support there.  We would need to become wary of this outcome if copper falls below $3.60-$3.70 in the near future." --Future cash? Or present losses? Tune in tomorrow and find out! Similar Posts: Attack on 5,000 Copper, the Metal with a Ph.D. in Economics Profiting From the Copper Indecision A New 'Trade of the Decade' Copper Being Remilitarised

Emerging Markets and Commodities: Where Stimulus is REALLY Going Posted: 08 Dec 2010 12:21 PM PST "It was a debt of honour, so-called, which I had to pay, and I used money which was not my own to do it, in the certainty that I could replace it before there could be any possibility of its being missed. But the most dreadful ill-luck pursued me. The money which I had reckoned upon never came to hand, and a premature examination of accounts exposed my deficits. "The case might have been dealt leniently with, but the laws were more harshly administered thirty years ago than now, and on my twenty-third birthday I found myself chained as a felon with thirty-seven others convicts in the 'tween decks of the barque Gloria Scott, bound for Australia. " - Sir Arthur Conan Doyle, The Adventures of Sherlock Holmes Imagine going from England to Australia on a sailing ship, shackled 'tween the decks. The convicts must have been happy to finally get here. Imagine getting sent to Australia for failing to pay a debt (even one that was never intended by the creditor)! That would discourage you from spending money that is not your own! It was a tougher world back in 1855. The "laws were more harshly administered" then. Now, the laws aren't administered at all. The culprits are in so tight with the feds you'd need some WD40 to get them loose. The banks seem to have taxpayer money on tap. As much as they want. 24/7. On/Off. And the feds spend money that is not their own...and promise to replace it. That replacement money will never come to hand. And an examination of the feds' accounts exposes immense deficits - about 20 times the entire annual output of America's private sector. And along comes Washington with word of a deal. The bargain was struck yesterday. The rich get to hold onto their money for another two years. And the poor get another 13 months of unemployment benefits. Win/Win, right? Are you kidding? The feds' accounts show a deficit of $1.3 trillion. Tax cuts and further spending? Lose, lose, lose... Well, why not? Give everyone a Christmas present - whether you can afford it or not. Stocks will probably go up today. The papers are reporting that the extension of the Bush tax cuts may be all the economy needs. No further stimulus may be necessary. Because if rich people can look forward to the same tax rates next year... ..what exactly is it they will do? Invest more money? Yes...in India! And China! And commodities! And even gold! Yes, that's where the stimulus has gone so far. We don't like the looks of it. This market. This economy. Or this political situation. We don't like any part of it. It's all based on hype, fraud and hallucination. So, we've got our "Crash Alert" flag out. Most likely, of course, it won't be necessary. Things usually muddle forward. And most likely, they'll muddle forward like they did in Japan in the 1990-2010 period...or in Britain from the end of WWII to the Thatcher years. Sluggish economy...high unemployment...falling house prices...and foolish government intervention. We should see falling stock prices too. Investors have made no money in stocks in a dozen years...but stocks are still pretty pricey. We'd like to see them fall to about half to a third today's level. Then, maybe we could get excited about buying them. As it is, we presume they still face their rendezvous with the bottom. Until it is behind us, it is still ahead of us. Giving good financial advice is really very easy. Buy investments that are going up. "But what if they don't continue to go up?" you ask. Then don't buy them. See how easy it is? And more thoughts... While stocks have been going nowhere, guess what's been going up. You know. Gold! That's right, gold has been in a bull market for the last 10 years. And this year, gold is up 28%. That's a trend we like. Because it is long. Solid. And it shows no sign of stopping anytime soon. Why? Because the world monetary system has a rendezvous ahead of it too...a rendezvous with destruction. Until that's behind us, it's still ahead of us. "Wait a minute, Bill... How do you know the monetary system is going to crack up? You admit that you don't get to read tomorrow's headlines before everyone else." Good point. Of course, we don't KNOW anything. We're just guessing. But it seems like a good guess. Let's put it this way, it's an extrapolation of current trends in which we have great confidence. Ben Bernanke admitted this week that he didn't see the problem coming. Which confirms what we knew all along - the people running US monetary policy have no idea what they are doing. Gold is a bet against Ben Bernanke. It's a bet against the feds. It's a bet against a system that is corrupt and reckless. It's a bet that the managers of a managed currency will sooner or later manage to mess it up. *** Mr. Bernanke went on to assure the world this week that there was no way inflation would get over 2%. If they headed in that direction, he'd raise rates immediately, he said. We want to see that! Once consumer price inflation begins to leak into the system, people begin to expect it. They buy and invest - in order to get rid of paper currencies. The velocity of money increases. Prices go up. Raising rates a little doesn't help. You can't follow the rise in inflation. As Paul Volcker found, you have to get ahead of it. You have to raise rates MORE than the current CPI rate in order to squeeze out inflationary expectations. People have to believe you're serious, in other words; you actually have to cause pain and contribute to de- leveraging. It's not enough to talk tough. You have to be tough. Otherwise, they'll continue dumping currency and pushing up prices. Now let's try to imagine ol' Helicopter Ben raising rates in an economy with 10% unemployment, a 10% budget deficit, total debt equal to 380% of GDP and falling house prices. We can't picture it. We squeeze our eyes...we wrinkle our brow...but as hard as we try... ..we can't imagine it. *** Here's the Telegraph with a report on one of the big bombs that could explode any day: The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist. It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms. Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month. The Communist Party learned from Tiananmen in 1989 how surging prices can seed dissent. "Inflation is a redistributive mechanism in favour of the few that can protect living standards, against the large majority who cannot. The political leadership cannot, will not, take risks in that regard," said Mr. [Tim Ash, the bank's emerging markets chief]. Regards. Bill Bonner. for The Daily Reckoning Australia Similar Posts: US Has Highest Unemployment Rate of All Major Economies Government Spending Makes People Poorer Feds' Plan is to Reflate the Economy Obama's New Stimulus Program Ben Bernanke "Respectfully Disagreed" With Angela Merkel

Investors to Silver: “Let’s Get Physical” Posted: 08 Dec 2010 12:20 PM PST The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which comes with counterparty risk. This conclusion is apparent from the fact that the futures prices for gold and silver have moved into "backwardation." Allow me to explain... Because gold is money, gold almost always trades in "contango," meaning that the future prices - i.e., forward prices - are higher than the spot price. The percentage difference between gold's spot and forward price is gold's "interest rate." So in this regard, gold is not different from other moneys, except gold's interest rate is lower than those of national currencies. But supply and demand dynamics also influence the differential between the spot price and forward prices. And this is where our story gets interesting... If the forward price is lower than spot - a condition called backwardation - you can sell your metal in the spot market, invest the dollars you receive to earn interest, and then buy your metal back in the future at a lower price and profit the difference. But there is another important factor to consider outside the math of this formula. If you sell your physical metal in the spot market and at the same time agree with someone to buy it back at a future date, you are now holding someone's paper promise instead of physical metal. In other words, you have counterparty risk, which, of course, is avoided when you hold physical gold or physical silver. Normally, few people worry about counterparty risk. So bullion dealers and other institutions that deal in the precious metals watch for opportunities to profit from backwardation, with the result that gold rarely trades in backwardation, which explains why the chart below is so extraordinary. Gold for 1-month and 3-months forward has been mainly in backwardation for more than one year. Even more exceptional is that gold 6-months forward has been in backwardation since November 5th. To show how rare this event is, I checked the LBMA database, which goes back to 1989. There is not one instance of 6-month forward gold being in backwardation, which confirms my own experience. I've been trading the precious metals since the 1970s, and I can't recall any time before this year when 6-months forward gold was in backwardation. The current and continuing backwardation is truly incredible. 12-month forward gold is also approaching backwardation. These downtrends make clear that the demand for physical gold is intensifying. The picture is even starker in silver. Silver 6-months forward has been continuously in backwardation since June 2nd and mainly in backwardation for more than one year. What does it all mean? In a word, it is bullish. The only way the increasing demand for physical metal can be met is with higher prices. The higher price will at some level entice people to sell their metal and hold a national currency instead. Some skeptics may argue that there is no backwardation apparent from COMEX settlement prices. Aside from the fact that COMEX recently changed the method to determine settlement prices from a market-driven basis to instead allow a manual override, which now makes backwardation on the posted COMEX settlement prices virtually impossible, one has to first recognize that COMEX is first and foremost a market for paper- gold and paper-silver. Therefore, a piece of paper can promise virtually anything, without regard to the underlying reality of how physical metal is actually trading. In other words, COMEX shows March futures in contango, when they should in reality be in backwardation. Thus, if you are buying March silver or April gold futures, you are overpaying. This overpayment is no doubt going into the pockets of those banks that are perennially short and use their size to control the paper market. They can, after all, always conjure up whatever paper they want out of thin air, which of course they cannot do with physical metal. Any way you look at it, the backwardation in gold and silver is a truly rare event and an exceptionally bullish one too. So be prepared for an upside explosion in the price of both precious metals as the scramble for physical metal intensifies even further, and investors increasingly choose to hold the metals themselves, instead of paper promises. Regards, Frank Holmes, for The Daily Reckoning Australia Editor's Notes: Frank Holmes is chief executive officer and chief investment officer of US Global Investors Inc. He specializes in resource-based industries and money management. Similar Posts: Investors in COMEX Futures Don't Necessarily Want Physical Gold Gold and Silver! The Price of Gold is Low – But It Won't Stay There Forever! Gold Falls for Four Straight Days but is the Low Price a Bad Thing? Gold Flourishes but Silver is the Real Precious Metal Story of Late

US mint set to produce palladium eagles Posted: 08 Dec 2010 10:58 AM PST just waiting on the basketball fan to sign the bill... http://news.coinupdate.com/american-...ignature-0558/ The American Palladium Eagle bullion coin bill (H.R. 6166) was passed by the Senate on November 30th by unanimous consent, which clears its way to being signed by the President next week. This bill will provide numismatic consumers with a fourth precious metal, complementing gold, silver, and platinum, as well as provide economic support for the single source of palladium in America, the Stillwater Mining Company (SWC) of Billings, Montana. The bill was originally sponsored by Montana's Congressman, Denny Rehberg, who saw this as an opportunity to both fill a niche for coin collectors and precious metals investors who wanted an American palladium coin, as well as counter-balance the effects of General Motors' post-restructuring decision to use offshore sources for the palladium in their products. From the Congressman's web site, he stated, "This is a good bill for Montana that will empower the private sector to create good, well-paying jobs. As the price of gold skyrockets, Palladium provides investors with an option for an alternative precious metal."

On the Move Again Posted: 08 Dec 2010 10:00 AM PST After a month-long correction – what technicians call 'base building' – gold is on the move again, heading to $1,500 an ounce, if not by year end then very likely during the early months of 2011.

Gold Sinks as Treasury Yields Soar Posted: 08 Dec 2010 10:00 AM PST Gold fell almost $20 for a second day to settle at $1,382. The culprit seems to be a rapid rise in US Treasury yields on the long end.

Interest Rate Hikes Should Support Higher Gold Posted: 08 Dec 2010 10:00 AM PST Metals market focus has shifted to the US bond market and concerns about ultra accommodative US monetary and fiscal policy and continuing quantitative easing.

Good Times Ahead for Gold, Commodity Bulls Posted: 08 Dec 2010 10:00 AM PST Gold is the type of market or asset that thrives when other asset classes are not performing well. Rarely does gold perform well if there is persistent strength in another asset class such as stocks or bonds.

Another Raid on silver and gold/ bonds tank Posted: 08 Dec 2010 09:55 AM PST

Rocket (Yeah) Posted: 08 Dec 2010 09:06 AM PST Mercenary Links Roundup for Wednesday, Dec 8th (below the jump). 12-08 Wednesday Falcon 9 Rocket Is Scheduled for Liftoff – NYTimes.com SpaceX Launches Cargo Spacecraft Into Orbit Tax Appeals Swamp U.S. Cities, Towns as Property Prices Plunge States Face Budget Gaps in Billions – WSJ.com California Deficit May Reach $28 Billion, Brown Says – Bloomberg Food Stamp Rolls Continue to Rise – Real Time Economics – WSJ Retail Option Traders Go On Call Buying Frenzy (Again) | tradersnarrative Soaring US bond yields rattle investors Higher Interest Rates Could Offset Obama Tax Deal – Barrons.com Moody's worried U.S. tax cuts could become permanent | Reuters Extension of U.S. Tax Cuts Will Prompt Congress to Discard Own Budget Law German Exports Decline as Production Leaps – WSJ.com Eurozone debt fears infect German bonds – Telegraph ECB Steps Up Bond Purchases to Fight Market Tensions – Bloomberg European Central Bank Plays Cat and Mouse Over the Euro Dollar advances as Treasury yields surge higher Big Banks Plan New Currency-Trading Venue – WSJ.com The EU Is Pushing Ireland to the Brink of Ruin – SPIEGEL Banks in Europe Failing Market Tests for Stress With No Central Authority Italy Budget Adds Political Risk to Debt Woes for Berlusconi: Euro Credit Bank of America Deal in Muni Case May Be `Tip of the Iceberg' – Bloomberg The 25-Year 'Foreclosure From Hell' – WSJ.com Toll Brothers CEO Sees Nascent Rebound in U.S. Home Sales – Bloomberg E.U. Suggests Jail Time for Insider Trading – NYTimes.com U.S. sends more subpoenas in insider trading probe | Reuters E.U. Fines Five Flat-Panel Screen Makers for Price Fixing – NYTimes.com Southwest Loses On-Time `Bragging Rights' as Ranking Slips – Bloomberg McDonald's November sales weaker than expected | Reuters Wal-Mart Plans to End Extra Pay in U.S. for Sunday Shifts – Bloomberg Beware $90 oil – Fortune Finance Mexico Approves Private Oil Service Contracts – WSJ.com Offshore Oil-Drilling Inspectors in Disarray, Report Says – NYTimes.com Copper Rises to Record Close in N.Y. on Bets Demand Will Outpace Supplies Silver 101: Production By Country | zero hedge Cold Blast Strains Farmers – WSJ.com Zhang Yue, Chinese Tycoon, Pushes a Green Agenda – NYTimes.com Investors Pile Into Commodities – WSJ.com Sugar Plus Science Equals $150,000 Tires – WSJ.com Obama Woos Wary Party on Tax Deal – WSJ.com Obama Lashes Out at Critics in His Base – WSJ.com South Korea Trade Deal Unlikely to Add Jobs Soon – NYTimes.com Job Openings Increased in October – WSJ.com Hackers Strike Back to Support WikiLeaks – WSJ.com Assange could face espionage trial in US – Crime, UK – The Independent "Operation Payback" Crashes VISA Website In Under One Minute | zero hedge The Best of Daniel Loeb's (Third Point) New Stock Picks – Insider Monkey The Desperate Battle Against Killer Bat Plague | Wired Science | Wired.com Oriental hornets powered by 'solar energy' HIV-positive porn performer speaks out – latimes.com ~ ~

Bernanke Ignores 4,500 Years of Failed Monetary Policy Posted: 08 Dec 2010 09:00 AM PST I naturally wanted to get my two-cents in about Ben Bernanke's interview on 60 Minutes where he answered softball questions by explaining that everything will be fine and there is no cause for alarm because he and the Federal Reserve were "on the job," although things will probably get worse for a long time, while he is "100 percent" certain that he could prevent inflation in prices by (get a load of this!) raising interest rates! This is the same guy who has pounded interest rates to historic lows, near zero, less than the rate of inflation that is perking along at more than 2%, according to the GDP Deflator, and yet he would raise rates! Hahahaha! Unfortunately, I could not write a thing with my hands, as I was still trussed up in a straightjacket and tied to a chair so that I could watch the spectacle on TV, a situation that was the result of a compromise. The family knew from the years of my watching Alan Greenspan (the horrid little man who is directly, personally responsible for getting this whole bankrupting, inflationary mess started when he was chairman of the Federal Reserve) on TV, that watching Bernanke would make me go likewise crazy with outrage and anger, and their position was that I should not be allowed to watch it. Or, if I did watch it, then I should be immediately killed, which I thought was a little extreme. My bargaining position, on the other hand, was that I watch it, and then we go to Washington, DC to storm the Federal Reserve building, take over monetary policy, put the dollar back on a gold standard, and then I would be famous and everyone would love me, and everywhere I would go people would say, "Mogambo! Come and have a free donut or perhaps a free slice of pizza, which I give you because I, like all Americans, love you and revere you for putting us back on the glorious gold standard, which has kept prices from rising while giving us higher quality goods and services as the miracle of capitalism and free enterprise provide their blessings upon us!" Back and forth the negotiations went, with the final compromise being that I was allowed to watch it, but only while being tied up in a straightjacket and lashed to a chair. So, I did get to watch the spectacle, and I noticed that he did not say that he thinks he is the smartest man who ever lived, but it is implied since every other dirtbag government in the last 4,500 years that borrowed too much money and was facing the inevitable bankruptcy, a falling GDP and rising unemployment that listened, in desperation, to a blustering moron like Bernanke who had a "theory" that one could buy oneself out of debt by creating more money and more debt, or a government which heeded the cacophony of likewise blustering morons like we have today in the mainstream media and the majority of universities who parrot such a preposterous "theory," none of whom see anything wrong in this monetary insanity. Unfortunately, it always failed to "fix" things because a tidal wave of inflation swept in and destroyed everything, which is the moral of the story. Thus, quantitative easing has failed very time in the last 4,500 years, although Ben Bernanke thinks he will be the first person to pull it off. After 4,500 years of everybody else trying and failing. As I watched him blubbering, one thing I noticed is that I wanted a voice-stress analyzer, so that I could more accurately pinpoint exactly when he was lying and what he was lying about, instead of merely watching and listening to him on TV, his dry lips trembling in fear, his voice stammering and obviously nervously aware that I am watching him. Oh, you could see by the way he squirmed that he knew that my Beady Mogambo Eyes (BME), although bloodshot, were upon him, and still capable of boring into his head like a laser, penetrating his brain to read his mind, analyzing his every word, examining his every move, watching him for the tell-tale giveaways that will cause me to suddenly leap to my feet and exclaim, "That proves he's a lying bastard who is destroying the dollar, the economy and the world by inflation due to his constantly creating more and more money, and enrolling foreign central banks in his wicked schemes to do the same thing, and all in some bizarre mental illness parading around as neo-Keynesian econometric theoretical swill wherein he actually hears voices, or sees visions, or somehow gets the message to institute a long-term plan to purposely create constant inflation in prices in the range of 2% by purposely creating constant inflation in the money supply, instead of it being the most stupid thing that a banker ever said!" Secretly, in my dark heart full of anger, I think he should have his face slapped over and over and over until he pleads, "No more, Mighty Mogambo Man (MMM)! I admit I am a lying scumbag, but since nothing can be done, I figure what's the harm in trying anything, no matter how outlandish?" Or is it just assumed that since he is the chairman of the foul Federal Reserve, a secretive bank that has destroyed 97% of the buying power of the dollar since 1913 and destroyed a quarter of it in the last few years alone, he is lying all the time because everything that the Federal Reserve has done has been a Bad, Bad Thing (BBT) of higher inflation and more government intrusion about which they always lie? Well, to be sure, everything the Fed has done has turned out badly, as just looking around will prove. The only bright spot in such monstrous monetary inflation is that it causes the prices of gold, silver and oil to go up, and they will go so much that all my idle dreams of indolence, gluttony and sloth will all soon be coming true. And the best part is that it's so easy that I happily say, "Whee! This investing stuff is easy!" The Mogambo Guru for The Daily Reckoning Bernanke Ignores 4,500 Years of Failed Monetary Policy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today's markets. Its been called "the most entertaining read of the day."

J.P. Morgan and the Great Silver Caper Posted: 08 Dec 2010 08:40 AM PST By Eric Fry 12/08/10 Laguna Beach, California – There's a lot of rumor, buzz, innuendo, chitchat and scuttlebutt about the precious metals markets these days. Most of the chitchat is about J.P. Morgan and silver. Rumor has it that J.P. Morgan has amassed a whopping short position in silver. The scuttlebutt, according to SFGate.com, is that "J.P. Morgan holds a giant short position in silver. Furthermore, some observers are accusing the bank of acting as an agent for the Federal Reserve in the market…I.e., a lower silver price helps maintain the relative appeal of the US dollar… "By selling massive amounts of paper silver in the futures market," SFGate continues, "J.P. Morgan has been able to suppress the price of the precious metal. It is believed that these short positions are naked (i.e. they are not backed by any physical silver)." If the silver price were falling, Morgan's (alleged) short position would be lauded as a stroke of genius. But since the silver price is soaring, Morgan's (alleged) short position looks much less laudable. "In recent days," SFGate notes, "rumors have been swirling on the Internet that J.P. Morgan's massive short position is about to blow up in its face in the form of an almighty short squeeze and potential COMEX default, as large traders demand physical delivery of silver that COMEX does not have in its vaults." Based on some of the latest conjecture, Morgan's short position totals a whopping 3.3 billion ounces. If, therefore, the buzz about J.P. Morgan and silver is even half true, the prestigious investment bank could be cruisin' for bruisin'. For perspective, 3.3 billion ounces is roughly equal to: 1) One third of all the world's known silver deposits; 2) Two times the world's approximate stockpiles of silver bullion; 3) Four times the annual mined supply of silver; 4) 30 times the inventory of silver at the COMEX. To repeat, short positions – even titanic ones – are no big deal, as long as the price of the underlying asset is falling. But if, inconveniently, it is rising, the spaghetti can hit the fan in spectacular and gruesome fashion. The silver price is rising…a lot. From less than $10 an ounce two years ago, the silver price has more than tripled. Therefore, if J.P. Morgan does, in fact, hold a 3.3 billion ounce short position, every one-dollar increase in the silver price would produce a loss of $3.3 billion…at least on paper. Unfortunately, Morgan cannot simply unwind this trade with a couple of mouse-clicks in an E*trade account. The position is too large, both in relation to the world's physical supplies of silver and in relation to the paper "supplies." (Morgan holds almost half of all short positions on the COMEX, which is essentially a "paper market" – participants rarely take delivery of physical silver). To make matters even more dicey for Morgan, the supplies of physical silver are disappearing rapidly from the marketplace. Increasingly, the kinds of folks who invest in precious metals are also the kinds of folks who distrust intermediaries. These precious metals investors want to know that the shiny stuff is in their personal possession. Meanwhile, the ETFs that hold precious metals are soaking up massive quantities of physical metal. Over the last 12 months, the silver ETFs around the globe have increased their holdings by nearly 100 million ounces – or almost as much silver as the entire inventory of the COMEX. The trend in gold is identical. Therefore, as a result of soaring demand from both individual investors and ETFs, the physical stockpiles of gold and silver are atrophying in relation to the paper claims on both metals. This is not a pleasant picture for a short seller of silver. Furthermore, the kinds of folks who tend to buy gold and silver are also the kinds of folks who have contempt for Wall Street…and for Wall Street banks like J.P. Morgan. So it should come as no surprise that a grassroots campaign has formed – the sole purpose of which is to punish J.P. Morgan for its attempted manipulation of the silver market. "A viral campaign (Crash JP Morgue Video [below]) to buy a physical silver and 'crash' the bank is now spreading like wildfire on the Internet," SFGate reports. "Just Google, 'Crash JP Morgan Buy Silver' [to learn more about it]… Those who wish to participate in squeezing the living daylights out of J.P. Morgan, may want to consider buying physical silver, silver futures and SLV." Maybe this story about J.P Morgan's short position in silver is mere innuendo. Maybe not. But two facts are irrefutable: 1) J.P. Morgan is already under investigation by the CFTC for manipulating the silver market. "The investigation into the bank can be traced back to November 2009," SFGate reports, "when London metals trader and whistleblower Andrew Maguire contacted the CFTC to report market manipulation prior to it actually occurring." 2) Precious metals investors are increasingly keen to get their hands on physical gold and silver, rather than mere paper facsimiles. Eric Fry for The Daily Reckoning Read more: J.P. Morgan and the Great Silver Caper http://dailyreckoning.com/j-p-morgan-and-the-great-silver-caper/#ixzz17YwPCWdW

Gold Seeker Closing Report: Gold and Silver Fall About 2% and 5% Posted: 08 Dec 2010 07:17 AM PST Gold traded about 1% lower in Asia and London before it fell as much as $36.52 to as low as $1371.78 by about 10:30AM EST, but it then rallied back higher in the last few hours of trade and ended with a loss of just 1.9%. Silver fell to as low as $27.978 before it also bounced back higher in late trade, but it still ended with a loss of 5.14%.

SLV Record Metal Holdings Posted: 08 Dec 2010 04:19 AM PST Gotgoldreport

China’s Gold-Buying Spree Posted: 08 Dec 2010 03:59 AM PST Chovanec

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