Gold World News Flash

Retail Trader Positioning 7th November – Intervention what intervention?
Europe Opening A Little Shaky - And No ECB To The Rescue Yet With BTPs
More Bankers Feel the Sharp Edge of Recession - 60K Axed!!!
The End of the World is Nigh!
"Every Former MF Global Account Faces A Margin Call" - Non-CME MF Global Transfers Get The Monday Blues
"Every Former MF Global Account Faces A Margin Call" - Non-CME MF Global Transfers Get The Monday Blues
3 Drivers, 2 Months, 1 Gold Rally?
Michael Pento - Central Banks Sending Clear Buy Signal on Gold
Silver Update 11/6/11 – Margin Chagrin
Gold & Silver Edge Higher Overnight After Greece “Deal” on Coalition
Gene Arensberg: Bargain, bargain, bargain!
Moneyness
Gold $1771
Even Paul Krugman Says a “Gigantic Bank Run” is Coming
14 Reasons Why We Should Nationalize The Federal Reserve
Got Gold Report – Bargain, Bargain, Bargain!
Michael Pento: Central Banks Sending Clear Buy Signal on Gold
CME To Smash Gold and Silver
Newfoundland Herald: May 23rd, 1974 “Why Are Pressure Groups Hiding the News on Gold?”
Silvio Berlusconi: "We Don't Want Elections. We Want To Govern" - Tens Of Thousands Of Protestors Disagree
Silvio Berlusconi: "We Don't Want Elections. We Want To Govern" - Tens Of Thousands Of Protestors Disagree
Hit With Big Withdrawals, Fed Sells Assets, Borrows Cash
It's Greek To Me
It's Greek To Me
Road to Endless War
10 Trillion Dollars to Fund My Savings Account
Morgan Stanley Says Europe's Pandora's Box Has Been Opened
David Kotok on MF Global, Chutzpah & the New York Fed -- Parts 1 & 2
Presenting Jim Grant's Greatest Hits (On Money, Banking, Gold And The Fed)
“The Collapse Of Our Corrupt, Predatory, Pathological Financial System Is Necessary And Positive.”

Retail Trader Positioning 7th November – Intervention what intervention?

Posted: 06 Nov 2011 07:08 PM PST

FX traders are gearing up to test Jun Azumi's resolve to keep intervening in currency markets to weaken the yen from its postwar high.

While Japan's Finance Minister directed the central bank on Oct. 31 to sell what analysts estimate was about 8 trillion yen ($102 billion), sending it down as much as 4.7 percent against the dollar, the move failed to increase volatility. Traders avoid currencies with increasing price swings because they boost the odds of sudden losses.

The yen remains a favorite currency for Investment managers as Japan still has a strong trade surplus and benefits from the global risk aversion we are seeing. Based upon the evidence of past interventions its unlikely with the continuing tide of negativity washing over the world economy that traders will move out of the Yen any time soon.

It remains very much in our strong short zone with 70.91% of retail traders long.

Today's Data & journal links

Data sheets describing major market metrics, news and a journal area for trading records in the centre of the pdf.

Europe Opening A Little Shaky - And No ECB To The Rescue Yet With BTPs

Posted: 06 Nov 2011 06:49 PM PST

With EURUSD trading back to overnight lows at 1.3740 (100pips off its overnight highs), BTPs just opened 8bps wider to Bunds at +465bps. Gold is clinging to $1770 as Silver, Oil, and Copper drop notably thanks to USD strength. S&P futures are 16pts off overnight highs now having retraced almost 75% of friday's late swing higher. US TSY yields are compressing but relatively parallel for now and in line with Bunds. With Goldman and SocGen now calling for an EU recession in the next 2 quarters and Goldman suggesting short XOver credit, the situation is rapidly spiraling.

5Y to 10Y BTPs are all in the 6.4-6.5% yield now as 30Y BTPs just broke 7%. We would expect JEF to suffer more on Monday morning as the ITA 2s10s curve flattened 18bps so far this more and from their exposures, they are positioned for a curve steepener - ouch! No ECB buying yet either!!

Credit markets are not happy either with XOver +25bps, Main +5bps, SENFIN +11bps, and SovX +9bps

After initially trading very rich to broad risk assets (CONTEXT), it is clear that ES is starting to gather pace and lead risk-off (this can be tracked here in real-time - delayed 30mins for non-subscribers).

FX markets are also starting to get active and CHF is losing ground rapidly against the USD. Gold continues to hold up as the rest of the commodities and PM complex loses ground.

As we post all these trends are extending and ES is dropping notably.

Charts: Bloomberg and Capital Context

More Bankers Feel the Sharp Edge of Recession - 60K Axed!!!

Posted: 06 Nov 2011 04:20 PM PST

Unless you are a multi-millionarie or even billionaire, you will be damaged by the coming economic collapse. I think those that thought they were Rich are quickly finding out they are not so...Charles

Article Begins...

Taking the cuts announced by ABN into account, the total number of banking sector job losses announced in recent months now exceeds 60,000 or roughly 5pc of the industry headcount.
Read more....

The End of the World is Nigh!

Posted: 06 Nov 2011 04:18 PM PST

Do I really believe the end of the world is near? As for the financial word – Yes, I do! We are all watching the financial indexes whipsaw back and forth with our money. The magnitude of market moves have not been seen in recent times, so what do we do? I personally have not been overly affected by the recent financial negativity. I am not in the equities markets; I got rid of my unwanted house long ago and have plenty of Gold and Silver already. When the time comes and the U.S. population is truly desperate, I will be there to buy property at pennies on the dollar. Now, this may sound harsh, but this is exactly what the upper Class –Royal Elitist Class (REC) are doing. I am taking a page out of their manual and will use it to my benefit. The western economic order as you knew it is dying, how will you protect yourself and your family from what is about to come?

If you read Chapter's 1 & 2 on We, the Human Robots Blog, then you would already know what is occurring and why. If you recall, I outlined some of the causes of our current mire. The toxic derivatives created by the slimy, cretin's we call The Big Banks. I discussed how these same banks still hold trillions of dollars worth of toxic garbage on their books, while our leaders forced us to buy it back (our tax money) from the banks at prices well over the true value. Therefore, it is now obvious to most that The Big Banks, our federal Government and the Multi-national corporations work hand-in-hand to steal the wealth of everyone else except their class (REC). I think we can all officially call ourselves Serfs, as we are losing our wealth faster than the blink of an eye. When will we wake up? How can we defeat them?
Read more....

"Every Former MF Global Account Faces A Margin Call" - Non-CME MF Global Transfers Get The Monday Blues

Posted: 06 Nov 2011 04:15 PM PST

If you are a former MF Global account and you have your account transferred over to RJ O'Brien, or many others, you will have no choice but to fork out a bunch of cash to keep positions on, according to a statement awaiting all such accounts on the RJO website, or else be next in line for broad liquidations. To wit: "Former MF Global customers transferred to R.J. O'Brien were delivered with approximately 75% of the maintenance margin requirement related to their accounts. As a result, every former MF Global account faces a margin call. No excess equity was transferred." Naturally the next question is "Why are we not getting 100% of our MMR (Maintenance Margin) from the exchange?" And the answer: "This is an agreement between the trustee and CME Group. Please visit www.mfglobaltrustee.com for further information or questions." So, in addition to lowering initial margin for everyone, not just MF Global clients, did the CME iron out preferential terms over other exchanges and get larger equity of the account transfer than most? Because somehow we doubt that RJ O'Brien is the only exchange that is greeting their clients with this particular notice.

Full FAQ for All R.J. O'Brien customers:

#fddfde; border: 1px solid #fbc7c6; padding: 10px;" colspan="2">

R.J. O'Brien Margin Policy Update for Former MF Global Customers

Former MF Global customers transferred to R.J. O'Brien were
delivered with approximately 75% of the maintenance margin requirement
related to their accounts. As a result, every former MF Global account faces a margin call. No excess equity was transferred.

All former MF Global customers must wire R.J. O'Brien additional
monies to bring their account above its initial margin requirement or
liquidate their current trading positions.

If the account did not contain a trading position, former MF
Global customers must wire or mail R.J. O'Brien funds to initiate
trading as no excess equity was transferred.

All Margin Calls Must Be Met By Wire

Former MF Global customers will need to begin initiating payment
to meet margin calls immediately. Customers will need to wire monies
to the following account:

Harris Bank, Chicago IL
ABA #071-000-288
R.J. O'Brien Cust Seg Funds
#368-015-2
FFC: Customer Account Name
FFC: Customer Account Number

If funds are not received by the close of
business (4:00 PM CST) Monday, November 7, 2011, your account will be
subject to liquidation.

After your account has been properly margined, the regular R.J. O'Brien margin policy will be in effect.

Who is now clearing my account?

Individual trading and some other accounts formerly cleared by MF Global are now cleared by R.J. O'Brien.

When will I be able to trade my account?

We anticipate you will be able to trade at the regular Sunday
evening market opening(s) for the trade date of Monday, November 7,
2011.

How do I log in? Will I see my positions?

Log in to the MF Global.com page as you did before, using your
current account number and preferred platform. Your positions that were
transferred will be accessible via your platform.

What if there are discrepancies with my account balance or transferred positions?

Contact your trade desk or broker for assistance.

Has my account number changed?

Yes. See the list below to determine your new number. For example, if you account number started with 550, it's now U50.
Z = will preface any offices that start with a blank
Y = 1
X = 2
W = 3
V = 4
U = 5
T = 6
S =7
H = 8
Q =9

What numbers do I call or night or day order entry?

Any phone numbers and personnel you currently use are still active.

What exactly moved over from my position at MF Global?

Open positions on U.S. futures exchanges were transferred to RJO.
These include positions on CME Group (including CME, CBOT and NYMEX),
ICE Futures U.S., Kansas City Board of Trade, Minneapolis Grain
Exchange, NYSE Liffe U.S. and CBOE Futures Exchange (CFE).
All account types, including individual, IRA, trust, joint, corporate, etc. were transferred.

Will positions on international exchanges move to RJO?

No. For information on these positions, please visit the trustee website at www.mfglobaltrustee.com.

What If I did not have positions on, only cash?

If you only had cash in your account, this equity did not transfer and resides with the trustee. Please visit www.mfglobaltrustee.com
for information on how to obtain these funds. However, you do have an
account on record with R.J. O'Brien and can trade after funding it. See
funding instructions below or at www.rjobrien.com/mfglobal.

Can I trade open outcry markets?

Call your trade desk or broker for assistance.

Where do I get my quotes and charts?

You can continue to receive data at www.mfglobal.com.

Who should I contact about receiving the cash in my account that did not transfer?

Please contact the MF Global trustee at www.mfglobaltrustee.com for all funds that did not transfer.

If I go on margin call because my entire account balance did not transfer, what do I do?

You will be required to properly fund your account to meet margin
requirements, or you will need to liquidate your positions to increase
the equity in your account. R.J. O'Brien's margin policy is available at
www.rjobrien.com.

Why are we not getting 100% of our MMR (Maintenance Margin) from the exchange?

This is an agreement between the trustee and CME Group. Please visit www.mfglobaltrustee.com for further information or questions.

What happens if I had an account at R.J. O'Brien and MF Global?

You will have two separate accounts.

Will my commission structure change?

We are committed to maintaining the current structure. Your
statement may contain a different rate, but it will be subsequently
adjusted.

How do I access my statement?

If you traditionally receive your statement via email or mail, you
will continue to receive it. If you receive it via your platform, call
your trade desk for assistance.

I want to close my account and/or transfer to another broker.

To close your account, see wire instructions below. To transfer to
another broker, contact that broker, who will facilitate the process.

I have a broker-assisted account. Can I still trade with my current market strategist?

Yes.

What if I have a deliverable position?

At this time, the clearing houses have not yet made a decision on the delivery process. Please contact your broker or www.rjobrien.com for further details.

How long do I have to meet my margin requirement?

As soon as possible; call your trade desk or broker for assistance.

How do I send money to my RJO account?

Please send checks by express mail to:

RJO Treasury Department
222 South Riverside Plaza
Suite 900
Chicago, IL, 60606

We will also accept wire transfers. Please use the following wire instructions:

United States Dollar-Customer Segregated, Fed wire instructions:
Harris Bank, Chicago IL
ABA #071-000-288
R.J. O'Brien Cust Seg Funds
#368-015-2
FFC: Customer Account Name
FFC: Customer Account Number

What are the wire cut-off times?

Inbound or outbound is 11:00 a.m. CT.

Can you accept checks made out to MF Global?

No. Please make checks payable to R.J. O'Brien.

Do you accept ACH deposits from clients?

We will be able to accept ACH's after the first of the year.
ACH set-up forms will be made available in the coming days.

I'm a Schwab at MF Global client. Can I still do an internal transfer between my futures and equity Schwab account?

No, this service is not available at this time.

Who do I contact with questions about my Schwab at MF Global account?

Contact your usual Schwab at MF Global representative and/or trade desk.

"Every Former MF Global Account Faces A Margin Call" - Non-CME MF Global Transfers Get The Monday Blues

Posted: 06 Nov 2011 04:15 PM PST

Full FAQ for All R.J. O'Brien customers:

#fddfde; border: 1px solid #fbc7c6; padding: 10px;" colspan="2">

R.J. O'Brien Margin Policy Update for Former MF Global Customers

All former MF Global customers must wire R.J. O'Brien additional
monies to bring their account above its initial margin requirement or
liquidate their current trading positions.

If the account did not contain a trading position, former MF
Global customers must wire or mail R.J. O'Brien funds to initiate
trading as no excess equity was transferred.

All Margin Calls Must Be Met By Wire

Former MF Global customers will need to begin initiating payment
to meet margin calls immediately. Customers will need to wire monies
to the following account:

Harris Bank, Chicago IL
ABA #071-000-288
R.J. O'Brien Cust Seg Funds
#368-015-2
FFC: Customer Account Name
FFC: Customer Account Number

If funds are not received by the close of
business (4:00 PM CST) Monday, November 7, 2011, your account will be
subject to liquidation.

After your account has been properly margined, the regular R.J. O'Brien margin policy will be in effect.

Who is now clearing my account?

Individual trading and some other accounts formerly cleared by MF Global are now cleared by R.J. O'Brien.

When will I be able to trade my account?

We anticipate you will be able to trade at the regular Sunday
evening market opening(s) for the trade date of Monday, November 7,
2011.

How do I log in? Will I see my positions?

Log in to the MF Global.com page as you did before, using your
current account number and preferred platform. Your positions that were
transferred will be accessible via your platform.

What if there are discrepancies with my account balance or transferred positions?

Contact your trade desk or broker for assistance.

Has my account number changed?

Yes. See the list below to determine your new number. For example, if you account number started with 550, it's now U50.
Z = will preface any offices that start with a blank
Y = 1
X = 2
W = 3
V = 4
U = 5
T = 6
S =7
H = 8
Q =9

What numbers do I call or night or day order entry?

Any phone numbers and personnel you currently use are still active.

What exactly moved over from my position at MF Global?

Open positions on U.S. futures exchanges were transferred to RJO.
These include positions on CME Group (including CME, CBOT and NYMEX),
ICE Futures U.S., Kansas City Board of Trade, Minneapolis Grain
Exchange, NYSE Liffe U.S. and CBOE Futures Exchange (CFE).
All account types, including individual, IRA, trust, joint, corporate, etc. were transferred.

Will positions on international exchanges move to RJO?

No. For information on these positions, please visit the trustee website at www.mfglobaltrustee.com.

What If I did not have positions on, only cash?

If you only had cash in your account, this equity did not transfer and resides with the trustee. Please visit www.mfglobaltrustee.com
for information on how to obtain these funds. However, you do have an
account on record with R.J. O'Brien and can trade after funding it. See
funding instructions below or at www.rjobrien.com/mfglobal.

Can I trade open outcry markets?

Call your trade desk or broker for assistance.

Where do I get my quotes and charts?

You can continue to receive data at www.mfglobal.com.

Who should I contact about receiving the cash in my account that did not transfer?

Please contact the MF Global trustee at www.mfglobaltrustee.com for all funds that did not transfer.

If I go on margin call because my entire account balance did not transfer, what do I do?

You will be required to properly fund your account to meet margin
requirements, or you will need to liquidate your positions to increase
the equity in your account. R.J. O'Brien's margin policy is available at
www.rjobrien.com.

Why are we not getting 100% of our MMR (Maintenance Margin) from the exchange?

This is an agreement between the trustee and CME Group. Please visit www.mfglobaltrustee.com for further information or questions.

What happens if I had an account at R.J. O'Brien and MF Global?

You will have two separate accounts.

Will my commission structure change?

We are committed to maintaining the current structure. Your
statement may contain a different rate, but it will be subsequently
adjusted.

How do I access my statement?

If you traditionally receive your statement via email or mail, you
will continue to receive it. If you receive it via your platform, call
your trade desk for assistance.

I want to close my account and/or transfer to another broker.

To close your account, see wire instructions below. To transfer to
another broker, contact that broker, who will facilitate the process.

I have a broker-assisted account. Can I still trade with my current market strategist?

Yes.

What if I have a deliverable position?

At this time, the clearing houses have not yet made a decision on the delivery process. Please contact your broker or www.rjobrien.com for further details.

How long do I have to meet my margin requirement?

As soon as possible; call your trade desk or broker for assistance.

How do I send money to my RJO account?

Please send checks by express mail to:

RJO Treasury Department
222 South Riverside Plaza
Suite 900
Chicago, IL, 60606

We will also accept wire transfers. Please use the following wire instructions:

What are the wire cut-off times?

Inbound or outbound is 11:00 a.m. CT.

Can you accept checks made out to MF Global?

No. Please make checks payable to R.J. O'Brien.

Do you accept ACH deposits from clients?

We will be able to accept ACH's after the first of the year.
ACH set-up forms will be made available in the coming days.

I'm a Schwab at MF Global client. Can I still do an internal transfer between my futures and equity Schwab account?

No, this service is not available at this time.

Who do I contact with questions about my Schwab at MF Global account?

Contact your usual Schwab at MF Global representative and/or trade desk.

3 Drivers, 2 Months, 1 Gold Rally?

Posted: 06 Nov 2011 04:11 PM PST

November 04, 2011 By Frank Holmes CEO and Chief Investment Officer U.S. Global Investors Federal Reserve Chairman Ben Bernanke announced this week that the Federal funds rate will stay near zero for now. He reasoned that the “low rates of resource utilization and a subdued outlook for inflation over the medium run” would likely “warrant exceptionally low levels for the federal funds rate at least through mid-2013.” This will likely translate to the real interest rate (which is the rate of interest an investor can receive on a U.S. Treasury bill after allowing for inflation) remaining negative for at least another year and a half. For gold investors, a low-to-negative interest rate has been associated with a powerful historical trend. Going back four decades, gold has experienced positive higher year-over-year returns whenever the real interest rate tipped below 2 percent. And the lower the rates drop, the stronger gold tends to perform. ...

Michael Pento - Central Banks Sending Clear Buy Signal on Gold

Posted: 06 Nov 2011 04:01 PM PST

With gold near $1,750 and silver around $34, today Michael Pento, of Pento Portfolio Strategies, writes for KWN to explain what the central banks are up to and how it will impact the price of gold. Pento states, "Don't just tell me you love, show me that you do. That mantra is so true. It is actions, not so much words, which reveal the heart. But that axiom is not only true in matters of romance. In the same manner, it is the actions of central bankers who lord over fiat currencies that count, not their lip service paid to a belief in sound money, in which they have no conviction whatsoever."

This posting includes an audio/video/photo media file: Download Now

Silver Update 11/6/11 – Margin Chagrin

Posted: 06 Nov 2011 03:06 PM PST

from BrotherJohnF:

Gold & Silver Edge Higher Overnight After Greece “Deal” on Coalition

Posted: 06 Nov 2011 02:48 PM PST

Gold prices edge higher in overnight trading, reportedly on the news that Greece's politicians struck a deal to form a coalition government – and to approve a euro zone bailout critical to averting default.

Acoording to Reuters, "Greece's politicians agreed on Sunday to form a unity government to approve a euro zone bailout, with Prime Minister George Papandreou due to step down to break an impasse after the EU demanded its parties join forces to avert bankruptcy."

While fears on Greece eased after the coalition government plan, euro zone's trouble is far from over. Italian Prime Minister Silvio Berlusconi has one day left to win over waverers and see off a group of party rebels threatening to bring down his government in a backlash over its failure to adopt reforms to defuse a dangerous debt crisis.

Read More @ Reuters.com

Gene Arensberg: Bargain, bargain, bargain!

Posted: 06 Nov 2011 02:27 PM PST

10:26p ET Sunday, November 6, 2011

Dear Friend of GATA and Gold (and Silver):

Gene Arensberg's new Got Gold Report argues that junior mining shares are now great bargains as gold and silver prices recover. His commentary is headlined "Bargain, Bargain, Bargain!" and you can find it at the Got Gold Report here:

http://www.gotgoldreport.com/2011/11/got-gold-report-bargain-bargain-bar...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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Golden Phoenix Signs Definitive Agreement to Acquire and Reopen Santa Rosa Gold Mine in Panama

Company Press Release
Monday, September 19, 2011

SPARKS, Nevada -- Golden Phoenix Minerals Inc. (OTC Bulletin Board: GPXM) has signed a definitive agreement to acquire a 60 percent interest, with an option to buy an additional 20 percent interest, in the Santa Rosa gold mine in Panama, now owned by Silver Global S.A., a Panamanian corporation.

Santa Rosa produced more than 100,000 ounces of gold from 1996 to 1998 before being closed in part to low gold prices, which are now more than five times higher.

Golden Phoenix intends to acquire its initial 60 percent interest in Santa Rosa by acquiring 60 percent of the share capital of a recently created company under the name Golden Phoenix Panama S.A., formed to hold and operate the mine.

Tom Klein, CEO of Golden Phoenix says: "The agreement establishes a solid framework from which we can advance Mina Santa Rosa to production-ready status."

For Golden Phoenix's complete statement, please visit:

http://goldenphoenix.us/press-release/golden-phoenix-signs-definitive-ac...

Moneyness

Posted: 06 Nov 2011 02:24 PM PST

Have you ever wondered what money really is? You'll notice that everyone you read has a strong opinion about what money actually is, but who's right? Is money really just one single thing and then everything else has varying levels of moneyness relative to real money? Is gold real money? Or is money whatever the government says it is? Or is it whatever the market says it is? Is silver

Gold $1771

Posted: 06 Nov 2011 02:17 PM PST

Having retraced almost 61.8% of the September drop, Gold's recent run up - as the USD strengthens no less (from 10/28) - suggests some demand for safety is back (or more simply is the demand for German Gold making the German's hoard a little more?). Silver is actually outperforming from Friday's close but remains below Friday's highs for now.

UPDATE: USD vs Gold tonight!!

Chart: Bloomberg

Even Paul Krugman Says a “Gigantic Bank Run” is Coming

Posted: 06 Nov 2011 02:13 PM PST

By Dominique de Kevelioc de Bailleul

A "gigantic bank run" is imminent, so says Nobel Prize winner economist Paul Krugman.

In his Nov. 1 post, the economist every one enjoys making fun of believes the endgame for the euro lies in the breadbasket of the European sovereign debt market, Italy, leading to one of two lynchpin countries, France, to collapse next. Then, it's bedlam.

"The question I'm trying to answer right now is how the final act will be played," Krugman writes. "At this point I'd guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France."

Krugman states the obvious, of course, but he offers no recommendation for Europeans to protect themselves from the all-but-certain currency devaluations as a result of a broken euro—not that he is expected to do so. But it's times like these, one would think that this quack of economics had a suggestion for Europeans to protect themselves from a currency collapse. Or maybe the collapse of euro is how Treasury will be able to fund its upcoming $628 billion offering in the coming five months without going to war in another part of the world, as he had once suggested.

Read More @ www.beaconequity.com

14 Reasons Why We Should Nationalize The Federal Reserve

Posted: 06 Nov 2011 01:37 PM PST

One of the most important steps that we could take to bring prosperity back to America would be to nationalize the Federal Reserve. Doing so would allow the federal government to quit borrowing money, dramatically reduce taxes and eventually pay off the entire U.S. national debt. Instead of inheriting the largest debt in the history of the world, future generations would actually have a chance at economic prosperity because they would not be forced to pay off the horrific debt of previous generations.

The Federal Reserve is a perpetual debt machine, it has almost completely destroyed the value of the U.S. dollar and it has an absolutely nightmarish track record of incompetence. There are no good reasons to keep the status quo. Our current debt-based monetary system will inevitably lead to a complete and total economic collapse. We desperately need to make a change while we still can.

As you will see below, there are a ton of good reasons why we should nationalize the Federal Reserve.

Got Gold Report – Bargain, Bargain, Bargain!

Posted: 06 Nov 2011 12:29 PM PST

HOUSTON (Got Gold Report) – Both gold and silver seem to be clawing their way up and out of the harsh September rush-to-liquidity reaction lows, and if we are reading the signs correctly, both are experiencing rising support, albeit in a choppy, less than robust sort of way for silver.

Traders and investors have been buffeted by the severe political crosswinds out of Europe, but if we may be permitted to be very simplistic, just about everything we see coming at us from over there and from here in the U.S. just about has to be supportive for precious metals prices. Governments have can-kicked and printed their way into a big old global debt mess and have decided to attempt to fix it with a lot more of the problem instead of allowing the credit and debt bubble to self-clear by market forces. As long as they intend to keep the printing presses humming and interest rates artificially low – negative real rates; as long as the governments and central bankers are determined to debase their currencies in an attempt to spur inflation we, and more and more people all over the world just about have to seek refuge in "stuff" and in precious metals, do we not? At the same time all the uncertainty and angst has played hell with the more speculative miners and explorers we love to 'game' since about March or April. Welcome to a bargain hunter's paradise called "Vultureville," … uh, we mean "Bargainville."

We led off the last full GGR (October 16) with a chart of the Canadian Venture Exchange Index or CDNX, a decent proxy for the smaller junior miners and explorers we track and trade here at Got Gold Report. Recall that at the time we had just endured a very harsh downdraft in the miners and explorers as well as in the Big Markets. Fear and panic ruled the first week of October. Babies and bathwater were flying en masse then and, as Vultures (Got Gold Report Subscribers) already know, because they have already received our September-October and our November-December "VB Roundup Updates" … as GGR subscribers already knew, because they have constant access to all of our nearly 40 small resource company and technical charts (where we often add notations of what we are up to around here), … our Vultures knew we were gleefully, but calmly setting up on the bid in preselected, lower-than-low "panic targets" for a much larger than normal number of the issues we have chosen to game. (For bargain loving Vultures it's the equivalent of a man in a sporting goods or hardware store with everything 70% to 85% off! – SRC Nirvana.)

And, as it happens, the Trading Gods were very, very benevolent to us – we think and hope.

Indeed, right, wrong, win or lose, in the slightly more than three-week period ending on October 14, but peaking on Wednesday, October 5, our super-low, "Stupid Cheap," panic "stink bids" were fully or partially filled on an even dozen of our Vulture Bargain Companies of Interest (VBCIs) and fully fledged Vulture Bargain (VB) issues. In order to "be there" on the bid, we chose to deploy a portion of our trading reserves, the amount of our trading line we hold back and jealously guard for emergencies and anomalous, panic-inspired sell-downs. As long-time Vultures know, it is a rare event for us to use more than a thimbleful of our reserves, and even more rare to use them on more than one or two issues. Does that help put our September/October "action" in an understandable context?

Because of our impression then that we were near a selling/fear crescendo on October 5, this one time we deployed what amounts to a double bucketful of our very precious backup reserve ammo on multiple "Faves." We explained our reasoning to Vultures thusly in our most recent Vulture Bargain Roundup Update:

"… this is or has been by God a panic cascade, and when those very rare events come around we want to be able to take advantage of them. Having the panic targets serves us two purposes. First, by studying and choosing the zones in advance, it removes any uncertainty during the heat of battle as to where we are comfortable adding during a crisis. Second, by choosing what we refer to as "has-to-be-SC" (Stupid Cheap) prices for those zones, prices we would be delighted to own the shares for, it has the effect of keeping us from using up our limited reserve capital until the issues gets to SC or better.

As always, by sharing the (panic event) zones we have noted in blue we do not intend to tell others what to do; that is and always will be up to each Vulture as they see fit. What it is, however, is sharing our own targeting in a time of ongoing crisis, during this protracted buyer's strike. (At 10% to 25% of the most recent highs, depending on the Guru-chosen issue, like a 4-for-1 to 10-for-1 sale!) A 2008-style super confidence puncture could once again get underway and this Vulture wants to attempt to make the best of it if it does.

(So we did, right, wrong, win or lose. God didn't make the winner's circle for cowards.)

Here is just one of the examples we shared at the New Orleans Investment Conference of an issue that has been cast overboard by a fearful and panicky retail market.

(Northern Tiger Resources, our Vulture Bargain #7. One of our favorite targets, a Low-Volume-Panic-Spike lower. Vultures understand the theory behind our interest in LVPS events and why we are willing to take an over-sized position in them, even if a little early.)

In a very long trading career one will likely be able to count on both hands all of the sure-enough cascade sell-downs and major buyer's strike events – they are exceedingly rare, but they don't seem "rare" in real time. They just seem very frightening. The more frightening they are the better they are – ALWAYS. Remember 2002? Remember 2008? The extreme volatility of those events turned out to be very, very good buying ops, did they not? Toward the very end of this report we share an exceptional graph along those lines for our Vulture members.

Believe it or not, in a long trading career we don't get very many opportunities like the one being gifted to us right now. We think it pays to think in those terms, even if we end up early in our timing. The other side of the cascade selling valley looks just like the side we entered from.

***

We are getting ahead of our message for this week, so let's take a quick step back in review for just a moment. Just below is that CDNX chart from three weeks ago, along with a short snippet of what we said then, followed by the very same chart updated through November 4.

CDNX from Friday, October 14, daily.

In the last full report three weeks ago we said then: The calendar "says" it's time for the juniors to get more attention. The recent news and deal-flow says that juniors are "hotting up," but is that translating into a bounce for the issues we affectionately call The Little Guys?

A bounce? In a word, yes, a little. We have definitely gone from super-buyer's strike to a bargain hunter's, insider's and deep-value trader's recoil. No question about it. Just look at that chart. But the smaller, less liquid and more speculative miners and explorers have been so mistreated, so battered and abused, so maligned by a fearful and worried-sick market (nearly cut in half since March as a group), they have a very long way to go up, just to get back to the surface of this turbulent market pond. Recall also, that the CDNX is and has been underperforming the Big Miner indexes since 2008, so the carnage shown is actually much, much worse than it looks as hard as that may be to believe.

The same chart updated through Nov 4.

CDNX, daily updated through November 4. Note the challenge now of the 50-dma. The "Little Guy" proxy is already more than 300 points (more than 25%) higher than its panic lows on October 4. We have to regard this particular snap-back rally as an impressive specimen, do we not? In the process the CDNX has put in what could turn out to have been a "V bottom" – one of the most reliable signals in charting if, but only if "confirmed."

As we said in the last full report: The Little Guys have an enormous amount of recovering to do as a group before the general public will have confidence in them again.

By then, however … by the time the public has enough confidence to buy the heck out of the smaller issues (like they did in January of this year near the recent peak), it will likely be time to once again offload a basket of them (or at least a portion of them) to await the next crisis of opportunity – to await the next 50% to 70% off (or more) red-tag-sale for The Little Guys.

Meanwhile, we are not yet certain that this crisis is done. Calendar and seasonal influences notwithstanding, we can never be certain of such things – in advance. What we can say, almost universally, is that The Little Guys are officially and undeniably "on sale." The long-term buyer's strike has wreaked market-wide slaughter on the share prices of so many of the smaller companies that the entire space seems like, walks like, and quacks like a bargain."

Bargain, Bargain, Bargain!

Well, … armed with our own assessment that we were nearing a selling cascade peak, or at least the potential for one, and with the counsel of the best Vultures in the business, very, very savvy people like Rick Rule and Eric Sprott suggesting they saw compelling value too, we "threw caution to the wind" and deployed some of our reserve ammo at some of our "Faves" in the small miners and explorers.

As we said in the last full GGR: "We cannot know if we have reached and bounced from "The Bottom" or just "A Bottom," but we do know that the bounce signature shown in the CDNX graph above is exactly what we might look for when looking for an ultimate capitulation, selling exhaustion and reversal which is so typical of major turning points. The "V" signature on charts, a so-called "V-Bottom," if and only if confirmed with consolidation and eventual follow through, is one of the most reliable signals in charting. (If we seem redundant on that point it is because it is important.)

Confirmation of "V-bottoms" always comes swiftly (in a matter of weeks), or not at all, so at least we do not have a long wait to find out if this one is going to "stick it and run," or instead stick those who believe in it right in the left eye."

Well, so far so good. The "Little Guy" index has done nothing to negate the potential V Bottom and has given us a good measure of "follow through" despite all the damnable, confusing and frightening turmoil on the global newswires. What will "cinch" the deal would be a new, much higher turning low on the very next CDNX pullback attempt, no lower than that first little consolidation (near 1,500), and the 'best of the best' would be if that was also in the shape of a much smaller "V." It might be too much to ask for, but at that point any technically minded market watcher would bullishly call the V Bottom "confirmed."

Remember that we fully expect that the larger, better funded and more liquid companies, the mid-tiers and majors, know full well that the companies they are secretly targeting are pretty darn cheap right now. We know from discussions and rumors at the just completed New Orleans Investment Conference that some of our favorites and companies of interest have signed confidentiality agreements with unnamed due diligence doers, and it is a reasonable bet that some of the companies we just spent time with will not be around this time next year, having been gobbled up by the 'Bigs' in SRC natural selection Darwinism.

We expect the merger and acquisition wire to heat up even more than it already has over the next little while, in other words.

With the uncertainty of developments in Europe, with our own debt issues here in the U.S. and the so-called "Super Committee" about to be in the klieg lights just ahead; with capital attempting to flee and seek safe harbor from Europe and Argentina and other nervous countries (and some of that capital likely to land in gold); with the apparent monetary easing by the ECB and continued devaluation of all fiat currencies still underway; with central banks net buyers of gold and China quietly buying up gold companies and shipping all of their production back to Beijing on the QT, we just about have to conclude that the long-term trend of gold is unlikely to reverse anytime soon – so we have to think that the Big Miners' propensity to go resource replacement shopping among the successful junior miners and explorers is ascendant. We also have to think that sooner or later traders and investors will start breathing again and target the juniors that are themselves targets of the 'Bigs.'

We Vultures just have to manage our resources and weather this buyer's strike storm (for as long as it takes) while accumulating a very few of the delicious, overly cheap bargains very fearful sellers are willing to toss overboard like so much chum.

We have to remind ourselves that as dire and uncertain as things seem at times, that markets are forward looking barometers that attempt to tell us what to expect in the near to mid-term future. If we hold that to be true and we then look at what the Big Markets are "saying," maybe we can worry just a little less about the near-term future – even if the news people, sellers of Armageddon books and prophets of doom don't like that idea.

As bad as things have seemed in the press lately, the S&P 500 has broken out above the summer fear consolidation. That isn't all short covering, friends and fellow Vultures.

On that "high note" of the introduction, let's pause here and move directly into the full Got Gold Report.

Got Gold Report

First things first, the Got Gold Report – the full report – is published biweekly at least 24 times per year. Between reports we communicate more regularly on the GGR web log, which is always free and open to the public, or in our COT Flash reports and Vulture Bargain Hunter reports reserved exclusively for subscribers. COT Flash reports appear on off weeks for the Got Gold Report when there are what we consider important changes in the commitments of traders reports which cannot wait until the next full report. Vulture Bargain offerings appear ad hoc as there are developments we feel merit comment for and in the resource company issues we track closely.

Our aim is to briefly summarize our positioning for the gold and silver markets, and also to highlight a few of the dozens of indicators, ratios and graphs we keep in constant touch with. Vultures, after logging in, please see the commentary in our numerous technical charts located in their own section of the password-protected subscriber pages. We update most of the Got Gold Report linked charts each week, sometimes even the weekends when we don't publish the full report. Changes to the linked charts are almost always completed by 6:00 pm ET on Sunday evening (except when Monday is a holiday) and occasionally during the week as events unfold.

To continue reading, please log in or click here to subscribe to a Got Gold Report Membership.

Michael Pento: Central Banks Sending Clear Buy Signal on Gold

Posted: 06 Nov 2011 12:13 PM PST

from King World News:

Michael Pento continues: Read More @ KingWorldNews.com

CME To Smash Gold and Silver

Posted: 06 Nov 2011 12:12 PM PST

www.preciousmetalstockreview.com November 5, 2011 The markets were wild this week and in the end ended up at least 2% lower in the US. Two huge down days, two large up days then Friday saw modest weakness into the weekend. To say the markets are schizophrenic is an understatement and we’re sitting on the sidelines in the swing trading portfolio, although these wild gyrations are setting up some pretty sweet charts that may give us a great chance to make some quick profits in the very near term. The big swings were caused mainly by the Greek wavering on a potential referendum. I don’t know what’s wrong with these guys over there but they caused huge markets disruptions and look set on continuing the mayhem until something certain is set. Late Friday night the Greek Prime Minister survived a vote of confidence by a margin of 153 to 145. Let’s look at the charts which look great, but the CME has thrown a ...

Newfoundland Herald: May 23rd, 1974 “Why Are Pressure Groups Hiding the News on Gold?”

Posted: 06 Nov 2011 11:13 AM PST

By SGT

"bankers and so-called experts have been doing everything in their power to talk investors out of gold – the question is "Why?"

Our friend Alvin sent us this re-print of a full page story that appeared in the Newfoundland Herald in 1974. Turns out not much has changed in the past 35+ years:

"The governments of the world are printing more and more millions of paper money to cover deficits with nothing to back it up except faith which is fast eroding."

Well, truth be known, things have changed quite a bit. It's gotten much, much worse. And now instead of 'millions', governments are printing TRILLIONS… Got physical?

Silvio Berlusconi: "We Don't Want Elections. We Want To Govern" - Tens Of Thousands Of Protestors Disagree

Posted: 06 Nov 2011 09:57 AM PST

Even as the EURUSD is surging because of, uh, we are not quite sure - HFTs hitting all stops most likely, it is only 9 short hours until BTPs, that one and only fulcrum security for the entire European continent reopens. And while for Greece getting a new government, even if one headed by a former Fed member is somehow good news (we wonder how the people will react knowing that their fate as debt slaves repaying European banks has just been sealed for a few more months), in Italy government "stability" (we realize the comic value of this statement) is the key to prevent a blow out to the 10 Year BTP, and the launch of a domnino cascade that will stop only with French OATs, and potentially rip through through that final firewall: Germany (with or without BuBa's billions in gold reserves... which we can only hope are not parked with the New York Fed). So back to Italian government "stability" which according to France 24 is not doing that hot. "Tens of thousands of Italians gathered in Rome on Saturday to protest Prime Minister Silvio Berlusconi's tackling of the country's sovereign debt crisis. "Silvio out" was the rallying cry for the large crowd that took part in the rally organised by the Democratic Party, the country's main opposition movement. Some demonstrators poured scorn on the prime minister after G-20 leaders humiliatingly put Italy's struggling economy under surveillance, amid a lack of trust in Berlusconi's reform pledges. At the summit in Cannes, the billionaire prime minister played down the gravity of the economic crisis with a trademark quip, claiming that "restaurants are full and the planes fully booked." "I go to restaurants... to do the washing up," read one banner at Saturday's mass demonstration." And the kicker is that over the weekend enough defections from his party have taken place which according to many, but not Silvio, are enough to lose him his majority: "There is growing concern Berlusconi no longer commands enough loyalty among MPs to ensure the quick passage that European and international financial officials say Rome must achieve to avoid falling victim to a dramatic debt crisis like that bringing Greece to its knees... "We don't want elections. We want to govern," Berlusconi added." So much for democracy in yet another country, but he does bring up a fair demand, one shared by the increasingly more skeptical holders of BTPs. Because when Silvio finally falls, all bets are off.

Hit With Big Withdrawals, Fed Sells Assets, Borrows Cash

Courtesy of Lee Adler of the Wall Street Examiner

The Fed was hit with withdrawals of $83.3 billion last Wednesday, the largest withdrawals from its deposit accounts that were not associated with quarterly tax payments since February of 2009. $7 billion of that was the net cash transferred to the US Treasury from its note and bond sales less outlays. The Fed still had to meet the other $76 billion. These transactions were revealed in the Fed's weekly H.4.1 report.

The Fed was apparently forced to take extraordinary measures to fund these withdrawals. These included the outright sale of nearly $24 billion in its Treasury note and bond holdings from the System Open Market Account. As a result, the Fed's System Open Market Account (SOMA) fell to $2.611 trillion, some $43 billion below the Fed's stated target of $2.654 trillion. Prior to this week, it had not strayed from by more than $7 billion since June. The Fed's action was not only a direct contradiction of its stated policy, but it was done without warning or explanation. It ran counter to Bernanke's penchant for telegraphing every important move the Fed makes so that the banking/speculating organizations can front-run it.

The Fed took another unusual and virtually unprecedented action to fund these massive withdrawals. It borrowed $43 billion from foreign central banks (FCBs) through Reverse Repurchase Agreements (reverse repos, or RRPs).

The Fed's commitments of reverse repurchase agreements, where it pledges its securities holdings in return for cash loans, bulged by a record amount to a record level. The magnitude of this action is unprecedented.

These RRPs were done with FCBs. There were no open market operations with the Primary Dealers or Tri-party RRP participants reported in the NY Fed's daily postings, or in the H41.

This borrowing and the sales of the Treasuries covered all but $10 billion of the withdrawals. The Fed issued currency to cover about $7 billion, and covered the rest with minor adjustments to other accounts.

This action was such a surprise and done with such stealth, that apparently I am the only person in the in the known universe, who writes regularly about the Fed, who noticed it. I could find no coverage of it anywhere this weekend, either in the mainstream Wall Street lackey press, or in the financial wackosphere, of which, like it or not, I am a member. Since I know that I'm not that smart and the big boys at the Wall Street Urinal are, I have to assume that there's nothing going on here... (Uh... Not).

One other surprise item on this week's Fed H41 was the U-turn in foreign central bank buying, which I suspect is related to these withdrawals. After 7 weeks of record selling of their Treasury holdings, the FCBs last week did an about face and made record purchases, reversing much of their recent selling. The dollar rose sharply on Tuesday and Wednesday. I covered the details, with charts, in the Wall Street Examiner Professional Edition Treasury update (Rising Cesspool Lifts All Floaters).

Whether there's any relationship between these gigantic FCB actions and the giant withdrawals from the Fed's deposit accounts, I can't say. Unfortunately, I'm not one of the Fed's fair haired boys to which they like to leak inside information. For that, your business card must include the magic words- Wall Street Journal, New York Times, or Washington Post.

I actually did put in phone calls to Michael Derby at the WSJ, and Greg Robb at Marketwatch, but it was late in Friday afternoon, and neither returned my call. It will be interesting to see if, and what, they report as a result of my calling this to their attention. They obviously have the inside contacts which I do not and I was hoping to glean some information from them, or to tip them to what might be a story worth pursuing. I wait with baited breath to see if anything comes of these contacts- Or maybe a press release from the horse's mouth (cue visual- horse's backside) itself.

Until then, I don't know whether this is some kind of technical adjustment, however big, or a sign that the wheels might be beginning to come off the world financial system. Given what's going on with countries and brokerages going bankrupt and internet coupon companies setting the investing world on fire, it's difficult not to suspect the latter.

We'll have to see what hits the fan this week. If no reports show up in the mainstream media, rather than concluding that there's nothing here, I would tend to suspect that there is, and that the reason there's no reporting is that the Fed does not want us to know. I'd infer from that that Dr. Bernankenstein has lost control of his monster.

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, and get regular updates on the US housing market in the Wall Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

It's Greek To Me

Posted: 06 Nov 2011 08:48 AM PST

Excerpts from this week's Stock World Weekly,

It's Greek To Me

We ended last week's newsletter "Europhoria" less than europhoric, with Phil's statement, "We take a series of BALANCED trades – SELLING as much premium as we can so that time (theta decay) is always on our side. We take our profits off the table and, when we have to, we take our losses. However, we try to adjust the losing sides of our positions with the expectation that the markets will remain in a trading range and make the occasional reversals... Our bearish expectations are based on possible Yentervention by the BOJ, negative analysis of the European Financial Stability Facility (EFSF) over the weekend, and LACK of additional stimulus by the US, China and Japan to match the strong but Globally inadequate EU contribution."

Our worries came to fruition this week. Monday began with a massive Yentervention that pushed the Dollar all the way from 76 to 77.6 in less than 24 hours. This was followed by a surprise announcement from Greek Prime Minister George Papandreou ("G-Pap"). He revealed plans for a national referendum on last week's proposed expansion of the EFSF and the 50% "haircut" for holders of Greek debt. Completing the trifecta for the bears, in its statement on Wednesday, the Federal Reserve didn't include additional stimulus for our ailing economy, despite Bernanke's hinting about the potential for more money printing in late October. President Obama's $60Bn infrastructure bill being blocked in the Senate did nothing to boost bullish sentiments.

To finish up a very volatile week in Greece, G-Pap won a vote of confidence in the Greek parliament. Business Insider reported, "The highly anticipated vote was crucial to the immediate implementation of bailout measures EU leaders agreed to last week.

"Papandreou's PASOK party will now seek to form a national unity coalition with other parties in parliament. The prime minister has said he is prepared to step down. That would likely turn power over to Evangelos Venizelos, the current finance minister and Papandreou's rival.

"The new government must quickly pass the new reforms that were a contingency for the next bailout so that it can receive the next tranche of aid by mid-December. If it does not, it will almost assuredly default. This decision should calm markets after a turbulent week." (Greek PM Papandreou Wins Confidence Vote)

In other news, apt to further destroy confidence in the financial markets, the Securities and Exchange Commission (SEC) opened an investigation of MF Global for insider trading allegations. According to Bloomberg, "The U.S. Securities and Exchange Commission is reviewing trades in MF Global Holdings Ltd. (MF) convertible bonds to determine whether some investors sold the debt based on confidential information before the firm's demise, according to two people with direct knowledge of the matter." (SEC Said to Conduct Review of Possible Inside Trades of MF Global's Bonds)

There was some encouraging news on the employment front, as Thursday's Jobless Claims numbers dropped to 397,000 from the previous week's revised reading of 406,000. Friday's Non-Farm Payroll Report showed employment continuing to trend higher as 80,000 jobs were added in October. However, the unemployment rate remained unchanged at 9%. Commenting on the Nonfarm payroll report and the 9% unemployment rate, Karl Denninger wrote, "The problem here is that we're not making actual progress. Yes, it's "better," but this is the reason we continue to see the reliance on "borrow and spend more," and it goes back to 2000 - and it's not fixed.

"Until and unless this chart (above) gets out of the ditch, and there's no indication that it is, there's no solution that involves continued 'support' from government transfers." Government transfers only make the chart worse.(Employment? Hmmm...)

On Thursday, Lee Adler of the Wall Street Examiner commented on this week's jobless claims report. "First time claims actually increased by 9,361. The AP, and everybody else, reports a fictitious number, the seasonally smoothed fantasy... Claims did indeed increase in the week ended October 29. The last week in October virtually always has an increase. But there is real, positive news in this. This week's increase was the smallest for the last week of October since the raging bubble year of 2005, when claims actually fell by nearly 8,800. But in the recovery years of 2003 and 2004, claims rose by 17,000 and 25,700. So this year looks good by that standard. Furthermore, this year's number is much better than last year's increase of 30,170, and way better than the recession years of 2008 and 2009, when 50,200 and 21,970 filed claims."

However, Lee also warned that while there was an increase in real wage withholding data early in October, those gains evaporated in the second half of the month. "Regardless of what the reported number for October is, the reality is that the withholding data deteriorated in the last two weeks. If this trend isn't reversed, the November jobs number will come as a negative shock to the market." (First Time Unemployment Claims Increase But Less Than Usual)

Eurozone Contagion

Tyler Durden of Zero Hedge reported on another aspect of the European debt crisis--the exposure of U.S. banks to the European crisis, and the possibility of fiscal contagion spreading to the U.S. After pointing out that Morgan Stanley is carrying $39Bn in gross exposure to the French banking sector, Zero Hedge wrote, "Today it is time to refresh this story, as none other than Bloomberg pulls the scab right off and while confirming our observations, also goes further: yes, banks are not only massively exposed to Europe, but they are in essence misrepresenting this exposure to the public by a factor of well over ten!" (How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper)

Last week's agreement in the eurozone included a "voluntary 50% haircut" for Greek bond holders. This is important because at the heart of the problem is a financial instrument called a credit-default swap (CDS). CDSs are contracts between bondholders and independent parties who, for money, agree to insure bonds against DEFAULT. In this case, because a 50% haircut is being accepted voluntarily by bondholders, there is no default, and insurers do not have to pay out on the CDS, although ratings agency Fitch might beg to differ. The Greek bailout plan protects the CDS writers from having to pay billions of Dollars which would become due if Greece defaults. As Phil wrote, "banks, that nicely 'volunteered' to take 50% haircuts on their debt are faced once again with the REAL ISSUE, which is that an INVOLUNTARY default by Greece would trigger $500Bn worth of CDSs, the majority of which are insured by Gang of 12 Members in the TBTF Club like GS, MS, CS, DB, BAC, JPM, C…"

The Week Ahead

On the world stage, the Greco-drama continued gripping the financial markets as Prime Minister Papandreou struggled to form a temporary coalition government in the aftermath of his failed push for a referendum on the recent EU bailout deal. He promised the Greek parliament that he would begin forming a power-sharing government and appointing a successor. The UK Independent reported on Saturday, "Greece's future in the euro remained in serious doubt last night, as the government narrowly survived a confidence vote with no sign of the consensus the EU has demanded in return for a proposed rescue package." (Bailout deal thrown into new chaos after Greek PM wins vote) The situation remains very fluid.

After all the political manipulation, posturing, and austerity measures, the Greek people seem headed towards a breaking point. Public support for the country's political system has collapsed, as pollster Christoforus Vernadakis declared "everyone is furious with the politicians and the anger has reached violent proportions."

Turmoil in the eurozone drove the Dollar higher giving Dollar bulls a great week. Should eurozone uncertainty subside, the Dollar is likely to fall, which should be bullish for equities and commodities. However, there are substantial headwinds facing the eurozone. At Friday's G20 summit, the proposed expansion of the EFSF found "verbal support," but no new funding. World leaders told Europe to "sort out its own problems" and delayed moves to provide more resources. German Chancellor Angela Merkel remarked at a press conference "there are hardly any countries here which said they were ready to go along with the EFSF." Potential investors China and Brazil were reported as wanting "to see more detail before they made any firm commitment to put money into the bailout fund." (Euro zone finds no new money for debt crisis at G20)

On Saturday, European Central Bank (ECB) Governing Council Member Yves Mersch casually mentioned in an interview with an Italian newspaper that the ECB often discusses the possibility of ending the purchases of Italian bonds if it concludes that Italy is not adopting promised reforms. Mersch claimed the "ECB did not want to become a lender of last resort to help the euro zone solve its debt crisis... Our job is not to remedy the errors of politicians."

Saturday was "Bank Transfer Day," an offshoot of the "Occupy Wall Street" movement that is encouraging people to move money out of the "too big to fail" banks, and into local credit unions. According to Think Progress, "the Credit Union National Association (CUNA) reports that a whopping 650,000 Americans have joined credit unions since Sept. 29 — the date Bank of America announced it would start charging a $5 monthly debit fee, a move it backed down on this week. To put that in perspective, there were only 600,000 new members for credit unions in all of 2010." (Moved Your Money)

Pharmboy's Trade Ideas

This week's trade ideas come from Pharmboy, who submitted the following essay. The remainder of this section is courtesy of Pharmboy.

At PSW, we focus on just about everything from virtual day trades to virtual income portfolios. As Barry Ritholtz noted, the average stock is being held no longer than seven months (in 2007). For longer term, dividend-yielding stocks, a few companies stand out. For investors looking for a mix of solid companies with more speculative biotechs, here are some ideas. Most are buy/write examples - buying 100 shares and selling 1 call and 1 put to reduce the net cost of the shares. (For more details on recent buy/write examples, click here.)

Merck (MRK, $34.02) - we initiated a virtual buy/write on MRK by selling the Jan. 2013 $40 call and $35 put for $8 (sold). We bought the stock for $37.30. Currently MRK is trading lower, but the calls and puts more than offset the lower stock price. I like initiating a virtual new spread by buying 100 shares, and selling 1 Jan. 2013 $35 call and 1 Jan. 2013 $30 put for $5.20 or better (combined).

Bristol-Myers Squibb (BMY, $31.34) - we initiated a buy/write on BMY by selling the Jan. 2013 $25 calls and $27.5 puts for $7.70 (sold). Currently, BMY is trading at $31. For a new virtual position, I would buy the stock and sell the Jan. 2013 $30 call and $27.5 put for $5.80 or better.

(Ed. note: Pharmboy switched from selling a higher strike BMY Jan. 2013 put in the first buy/write example to selling a higher strike call in the second example. The reason is that Pharmboy thought the stock would rise when he provided the first virtual trade idea. Now, he is less confident that BMY will trade higher, although he thinks BMY should stay above $25, even if stocks trade lower.)

Pfizer (PFE, $19.66) - Not one of my favorite big pharmas. Lipitor comes off patent...but IF it maintains its dividend, I'd be VERY conservative with a buy-write. I like buying 100 shares, and selling 1 Jan. 2013 $15 call and 1 Jan. 2013 $17.5 put for $6.65 or better.

British Petroleum (BP, $43.85) - things are looking up for this oil giant, and it pays a nice dividend. I like buying 100 shares and selling 1 Jan. 2013 $40 call and put for $13.30 or better.

Sunoco (SUN, $37.65) - I like selling a Jan. 2013 put for $2.50 or better (trading at $2.44 now). This is to initiate a future buy of SUN.

Intel (INTC, $23.74) - this tech giant continues to shine. I like buying 100 shares and selling 1 Jan. 2013 $22.50 call and put for $6.05 or better.

For more trade ideas from Pharmboy, sign up for a free trial to Stock World Weekly and read the rest of the newsletter here >

Disclosure: Pharmboy has positions in stocks he discussed in this summary of his investing ideas.

It's Greek To Me

Posted: 06 Nov 2011 08:48 AM PST

Excerpts from this week's Stock World Weekly,

It's Greek To Me

Eurozone Contagion

The Week Ahead

Pharmboy's Trade Ideas

This week's trade ideas come from Pharmboy, who submitted the following essay. The remainder of this section is courtesy of Pharmboy.

British Petroleum (BP, $43.85) - things are looking up for this oil giant, and it pays a nice dividend. I like buying 100 shares and selling 1 Jan. 2013 $40 call and put for $13.30 or better.

Sunoco (SUN, $37.65) - I like selling a Jan. 2013 put for $2.50 or better (trading at $2.44 now). This is to initiate a future buy of SUN.

Intel (INTC, $23.74) - this tech giant continues to shine. I like buying 100 shares and selling 1 Jan. 2013 $22.50 call and put for $6.05 or better.

For more trade ideas from Pharmboy, sign up for a free trial to Stock World Weekly and read the rest of the newsletter here >

Disclosure: Pharmboy has positions in stocks he discussed in this summary of his investing ideas.

Road to Endless War

Posted: 06 Nov 2011 08:18 AM PST

[Ed Note: Presented for your consideration because all 9 parts are worth watching.]

Road to Endless War:

Part 1:

Part 2:	Part 3:
Part 4:	Part 5:
Part 6:	Part 7:
Part 8:	Part 9:

10 Trillion Dollars to Fund My Savings Account

Posted: 06 Nov 2011 07:51 AM PST

[Ed Note:You gotta love the teller, she's largely uninformed but sweet. 2:06 "You can take the silver to a Pawn shop."]

Morgan Stanley Says Europe's Pandora's Box Has Been Opened

Posted: 06 Nov 2011 07:29 AM PST

Have a sinking suspicion that the way the Eurozone has handled the past week's Greek threat has set the stage for the collapse of the Eurozone (here's looking at you Italy, over and over) now that Merkozy has made the possibility of a country leaving the Eurozone all too real? You are not alone: Morgan Stanley's Joachim Fels has just sent a note to clients in which he not only commingles three of the catchiest and most abused apocalyptic phrases of our time ("Emperor has no clothes", "Water Pistol not Bazooka" and "Pandora's Box") he also warns, in no uncertain terms, that "by raising the possibility that a country might (be forced to) leave the euro, core European governments may have set in motion a sequence of events which could potentially lead to runs on sovereigns and banks in peripheral countries that make everything we have seen so far in this crisis look benign." And when a major investment bank, itself susceptible to bank runs warns of, well, bank runs, you listen.

Full note (highlights ours):

The Emperor has no clothes. This coming week markets are likely to continue to grapple with the notion that the 'comprehensive solution' presented after the EU Summit on October 26 is neither comprehensive nor a solution. First, bank recapitalisation was always about curing the symptoms rather than the disease – sovereign risk. And by giving banks until mid-2012 to meet the capital ratio target, governments have likely set in motion a wave of deleveraging that could have severe economic and market consequences. Second, the leveraged EFSF may still turn into a bazooka, but so far it looks more like a water pistol. We continue to doubt that investors will find the insurance and SPIV constructs appealing, and as the G-20 meeting this Thursday and Friday made clear, non-European governments also stand to be convinced that co-investing with the EFSF make sense. But perhaps euro area finance ministers will unveil some more reassuring details on the construct after their meeting this Monday/Tuesday – don't hold your breath though. Third, the Greek political saga continues and even though the prime minister won the confidence vote in the early hours of Saturday, the second bail-out and debt restructuring package still needs to be approved and likely new elections late this or early next year could spring additional uncertainties. And fourth, but not least, while the ECB cut rates on Thursday, ECB President Draghi made it clear in the press conference that the bond purchase programme remains temporary and limited (see the quote of the week below), suggesting that hopes for large-scale monetary financing remain just that, at least for now.

Another Pandora's Box opened? However, my main takeaway from last week and my main worry for the weeks and months ahead is that Chancellor Merkel and President Sarkozy, in response to the idea of a Greek referendum on the bail-out package, raised the possibility of a country leaving the euro – so far a taboo in European political circles. This is the second time in less than four months that European leaders could have opened a Pandora's Box: on July 21, the decision to involve the private sector in the Greek bailout signaled that euro area government debt is no longer risk-free and thus sparked massive contagion into Spanish and Italian debt markets. This past week, by raising the possibility that a country might (be forced to) leave the euro, core European governments may have set in motion a sequence of events which could potentially lead to runs on sovereigns and banks in peripheral countries that make everything we have seen so far in this crisis look benign. But maybe I'm too pessimistic after another long week.

And what is even more disturbing is that Germany itself is now demanding a referendum. According to Welt, 71% of Germans want a referendum, and want to to vote directly on important decisions for Europe and the Euro. Only 27% oppose the motion. And the same poll has found that 63% of Germans think Greece should be kicked out of the Euro, with just 32% believing the country can still be saved.

David Kotok on MF Global, Chutzpah & the New York Fed -- Parts 1 & 2

Posted: 06 Nov 2011 05:25 AM PST

Below are two posts from David Kotok of Cumberland Advisers that I commend to your attention. And to David and others, Gerry Corrigan deliberately disbanded the dealer surveillance function before he left the FRBNY in 1993. -- Chris

MF Global, NY Fed, Chutzpah?
November 5, 2011

David Kotok

Cumberland Advisors (www.cumber.com)

"The Federal Reserve Bank of New York has terminated MF Global, Inc's status as a primary dealer." –October 31, 2011, NY Fed press release

For the details involving primary dealers and a list of those firms that are currently members of this select club, see the New York Fed website. This link: http://www.newyorkfed.org/markets/primarydealers.html and a few minutes of reading will tell the story.

Among the rules and policies of the New York Fed primary dealers you will find the following sentence. "The Bank (NY Fed) expects primary dealers to submit accurate data, but the Bank itself does not audit the data" (boldface is mine). Readers may note that regulatory oversight of primary dealers is not conducted by the NY Fed. This is so even AFTER Dodd-Frank.

The policies regarding primary dealers were updated on January 11, 2010. Here is the link: http://www.newyorkfed.org/markets/pridealers_policies.html. January 2010 is AFTER a primary dealer named Countrywide failed and was merged with a primary dealer named Bank of America, which was enticed to do the deal with a rule change promulgated by the Fed. January 2010 is AFTER a primary dealer named Bear Stearns was merged with another primary dealer named JP Morgan Chase, whom the Fed assisted by taking assets under "Maiden Lane LLC." January 2010 is AFTER a primary dealer named Merrill Lynch was merged with the primary dealer named Bank of America. And January 2010 is AFTER a primary dealer named Lehman Brothers failed and triggered the financial meltdown we know as the Great Recession, for which we are still paying a price.

Readers may note that the NY Fed also published the criteria for admission to this select club of primary dealers. Take a look at them. Then ask yourself if the policy of selection, transaction, and reporting of primary dealers is consistent with the Fed disclaimer you will read below and in the rules. Is this a sound policy? Or is it chutzpah?

The citation is from the NY Fed website. The boldface portion is my doing, for emphasis.

"The New York Fed continues to emphasize that the nature of its relationship with primary dealers is a counterparty relationship, not a regulatory one. This policy establishes the framework by which the New York Fed will prudently manage its counterparty risk consistent with its mandates to implement monetary policy and promote financial stability. The New York Fed also recognizes the value of maintaining transparency in its administration of its relationships with the primary dealers. In light of the foregoing, third parties are reminded that the designation of an entity as a primary dealer by the New York Fed in no way constitutes a public endorsement of that entity by the New York Fed, nor should such designation be viewed as a replacement for prudent counterparty risk management and due diligence."

Is this not chutzpah?

Let me engage in a quick digression so I am not accused of being anti-semantic. New York City is a wonderful place to visit. It is also the global bastion of innovative financial chutzpah. For those unfamiliar with the word chutzpah, please note it is a Yiddish term meaning boldness and self-confidence, temerity, or lack of respect. Example of financial chutzpah: a lawyer takes a taxi to the MF Global bankruptcy hearing. The cabby says "That will be $37.50. The lawyer says "Come inside and join the unsecured creditors." That's chutzpah.

The MF Global affair is doubly muddied up by alleged fraud and misuse of client funds. We cannot blame the NY Fed for an alleged fraud. But we can ask if the sanction for a primary dealer that fails the "transparency" and the "accuracy" tests should be limited to getting kicked out of the club. Maybe the $150 million minimum regulatory net capital requirement should be expanded, and maybe the shareholders and debt holders of a primary dealer should be told they are subordinated to claims that will include financial penalties for failure to comply with NY Fed rules. Maybe the NY Fed should take on an escrow safety-cushioning function in the same way a landlord holds a security deposit for a tenant. Maybe this whole system of New York Fed actions and primary dealer status needs reexamination. Maybe the system needs a chutzpah scan to remove the viruses.

Was the MF Global risk taking apparent? Many say no. But there are some very smart and skilled folks who say otherwise. One of them is Janet Tavakoli. Janet nailed it. For readers who are not familiar with Janet, see her website: www.tavakolistructuredfinance.com.

Here is an excerpt from a note that Janet wrote on November 3. We are fortunate enough to see her superb and timely work. We talked with Janet on Friday. She walked us through the evidence that was missed by many. Janet, you are awesome!

Janet wrote: "The fact that MF Global was exposed to default risk and liquidity risk because of these trades and that they were linked to European sovereign debt was disclosed in MF Global's 10K for the year ending March 31, 2011, a required financial statement filed with the SEC. The CFTC and other regulators had the information right under their noses, but it appears they didn't understand that they were looking at a leveraged credit-derivative transaction that could lead to margin calls that MF Global would be unable to meet."

Thank you, Janet.

Let's segue to some questions. More will be revealed on the fraud allegations; nothing for us to add there. But one question haunts us. Will the opacity of the New York Fed and the accountability for its oversight or lack of oversight be made transparent? Has anything really changed since the six-month period between the Bear Stearns merger (March 2008) and the Lehman failure (September 2008)? If the New York Fed was "watching the store," did they miss the clues for lack of skill, or were they deceived by MF Global? Is the disclaimer of the NY Fed financial chutzpah to the Nth degree?

Inquiring minds want to know. So should all the others who have to live with the results of the failure of the primary dealer named Lehman Brothers, whose CEO sat on the board of directors of the NY Fed until his firm failed. And so do the creditors of MF Global.

One corrective note. In my interview with Bloomberg's Tom Keene (October 31, www.bloomberg.com), I misspoke. I said that MF Global was not a primary dealer. Live television is unforgiving, and so let me clarify. What I was trying to do is distinguish between two primary dealer failures. The first was Lehman's failure and the aftermath that followed. The second is the present MF Global failure. I argued that the latter is a one-off event and is not a systemic threat like Lehman turned out to be. That was during the Monday interview and discussion with Tom Keene and Stephanie Ruhle. On Friday, I had some quality phone time with Janet Tavakoli. She alerted me to some details that were new information for me. I'm less sanguine about systemic risk now than I was on Monday.

Thank you, Janet. And also a sincere thank you to Rick Lang, a friend, fellow GIC member, and retired Fed official who noted my comments on Tom Keene's show. Rick inspired me to clarify them; hence, today's missive strays from our usual market-outlook commentary.

MF Global & NY Fed—Part 2
November 6, 2011

Many thanks to readers for their supportive email re yesterday's comments on MF Global and the NY Fed. We have a little follow-up.

MF Global.

Corzine resigned and has retained "white-collar" counsel. The FBI investigates. There's more to be revealed. Meanwhile we wonder, how did $600 million of clients' assets held at MF get to JPMorgan Chase. And why? This is a puzzle for us. Cumberland Advisors is a boutique firm (26 people) with a few billion in client's assets under surveillance. We try to know where every dollar is every day. Daily reconciliation reveals any discrepancies and resolves them quickly. We do not understand how MF did not know where the assets were and how JPM was not sure. Note that Cumberland has/had no exposure to MF Global (readers asked), and we did not buy their debt, even though it was rated investment-grade.

NY Fed.

Gretchen Morgenson and Josh Rosner covered the issue of NY Fed audit and supervision in their book, Reckles$ Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon (pp. 42-44). I read this book and recommend it to readers. They mentioned the fact that in January 1992 the Fed ended its primary dealer surveillance program that it had long used to audit and inspect Wall Street firms. From then on, the Fed had to rely on reports filed by the firms, which were verified by other regulators. "It was, to some Fed officials, a dangerous delegation of an important duty that had given the central bank access to crucial information about the soundness of the Wall Street firms it was dealing with," the authors wrote.

Let's flesh out some history.

The Fed stopped (1992) this surveillance activity following the bankruptcy of Drexel Burnham, then a primary dealer. The Fed was motivated by the Salomon Brothers episode, according to a document review. The Salomon affair came after Drexel.

Let's probe.

In his January 13, 2010 letter to the US Senate Banking Committee, Fed Chairman Ben Bernanke cited the Drexel case as an example of the Fed's surveillance used with a positive outcome. Readers note that the NY Fed policy statement on primary dealers that I cited in my previous commentary was published just two days before Bernanke sent this letter. That is the statement in which the NY Fed disclaims supervision and says it relies on the accuracy and transparency of the information the primary dealers report to the NY Fed. Boldface is mine for emphasis. Bernanke wrote:

"A similar example emerged in the case of the failure of Drexel Burnham Lambert in February 1990. Drexel's rapid collapse posed a risk of gridlock in the financial markets. Notably, because of their parent's failure, Drexel's solvent broker-dealer and government securities dealer subsidiaries experienced serious difficulties liquidating their positions. Because of its ongoing supervisory relationships with the banks that provided settlement services to Drexel's subsidiaries and its knowledge of the payment and settlement system's infrastructure, the Federal Reserve had the access, contacts, and in-depth knowledge that enabled it to obtain the information it needed to evaluate this complex problem and formulate a plan to address it. The Federal Reserve understood the potential problems of Drexel's counterparties and clearing banks and was able to work with the banks and securities firms to identify developing problems and fashion procedures that enabled an orderly winding down of Drexel without adverse effects on other market participants or further disruption to financial markets."

The full text of Bernanke's letter is here: http://www.federalreserve.gov/BoardDocs/RptCongress/supervision/supervis... When you read it you will note the argument for surveillance and supervision. And you will see that it is silent on the behavior about the NY Fed's surveillance or lack of same.

We did some digging into the 1992 decision, which was motivated not by Drexel but by the Salomon Brothers episode. Then NY Fed president Jerry Corrigan is quoted in the minutes of the FOMC conference call of January 9, 1992. The minutes were released to the public in 1997, five years after the event. Readers may find the transcript at http://www.federalreserve.gov/monetarypolicy/files/FOMC19920109confcall.... Readers please note that Corrigan is identified as vice-chairman because the president of the NY Fed is the traditional vice-chairman of the Federal Open Market Committee of the Fed, and this is a transcript of an FOMC conference call. Today. NY Fed president Bill Dudley is the vice-chairman of the FOMC.

We excerpt from Corrigan (1992). Boldface is mine.

VICE CHAIRMAN CORRIGAN. All I can say, Bob, is that the point you raised has been at the heart of this issue since time immemorial. There is only one solution to the problem that I know of and that solution would be that the Federal Reserve should have a full [unintelligible] and regulatory authority, something that the Federal Reserve itself historically has never been crazy about. It is also something that as a practical matter would be extremely difficult to achieve in political terms …"

At the November 12, 1997 FOMC meeting, then NY Fed official Peter Fisher stated the following in his report. For the minutes of that meeting see: http://www.federalreserve.gov/monetarypolicy/files/FOMC19971112meeting.p....

Peter Fisher's report is excerpted below. Boldface is mine.

"Criteria for primary dealer relationships with the FRBNY were revised in February 1992 following the Solomon Brothers episode. At that time, we identified "drawbacks" of the then-existing primary dealer system as including: "... the pubic impression that, because of the Federal Reserve Bank's standards for selecting and maintaining these relationships, the Fed is in effect the regulator of the primary dealer firms [and that] . . . the primary dealer designation has been viewed as conferring a special status on these firms that carries with it elements of "franchise value" for the dealer operation ...."

As a consequence, the criteria were revised, dropping the requirement that dealers maintain a one-percent share of total customer activity. At the same time, the FRBNY discontinued its "dealer surveillance" activities.

So here is the question for the NY Fed and, by reference, the FOMC.

You have the power to write the rules and policies for primary dealers. You cannot do it for the entire system, because you need the Congress to legislate, but you can do it for the primary dealers that transact directly with you. You choose them. You set the terms of admission to this club. You had a surveillance operation and ended it in 1992. The evidence shows that the surveillance function worked prior to that ending decision. Your Board of Governors Chairman noted how successful it was in keeping the Drexel failure from becoming a systemic meltdown. Your Fed Chairman cited the repeated role of the Fed in numerous crises and how the Fed responded to limit systemic damage.

So why do you not require compliance with a surveillance team as a condition of primary dealer status? Without the surveillance team, we have witnessed Countrywide, Bear Stearns, Lehman, Merrill, and now MF Global. Would a defined role for a surveillance team have changed things? Maybe. It did with Drexel, when you had the team in place. You admitted MF Global to primary dealer status in February, 2011. Had there been a surveillance requirement, would they have applied? Would you have granted them this status? If yes, would their behavior have been different? Would Lehman's? Would others?

The great sage Albert Einstein suggested that repeating something and expecting a different outcome is "insanity." The NY Fed is repeating its reliance on primary dealers to be transparent and accurate and to do so voluntarily. That 1992 policy change has been and is a disaster. The Fed Chairman made the case for surveillance and supervision in his letter to the US Senate.

Question for the NY Fed and FOMC: you have the power to change this. What are you waiting for?

Presenting Jim Grant's Greatest Hits (On Money, Banking, Gold And The Fed)

Posted: 06 Nov 2011 04:30 AM PST

Jim Grant, whose Grant's Interest Rate Observer has been one the world's most informative premium newsletters since 1983, has long been one of Zero Hedge's favorite commentators, not least due to his convergent ideas on monetary policy and the role of central planning in the world, which as Arthemis Capital presented very vividly last week, is the sole marginal decider of risk in the world's capital markets (and thus the most critical shadow political force the world, or rather its bankers, has ever unleashed upon itself). So while we await any news out of Greece, however non-eventful they may be, and at best will see the placement of one Pap ("G"), with another Pap (the "L", who as we profiled is nothing but yet another puppet of the Federal Reserve), here is a compilation of James Grant's best moments on money, banking, central banking, gold and the Federal Reserve System, courtesy of Gresham's Law. It is no wonder that Ron Paul recently said that he would choose James Grant as Fed Chairman if elected.