Gold World News Flash

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• Gold Nears Weekend 2% Down as UK Quits New European "Fiscal Compact"…
• Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As "Cash"
• Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As "Cash"
• Scott Gibson Interviews Got Gold Report’s Gene Arensberg
• By the Numbers for the Week Ending December 9
• Eurozone Banking System on the Edge of Collapse
• Capital Account: Yanis Varoufakis, “All Europeans are Seeing the Collapse Coming” (12/09/11)
• Three To Get Ready
• Every “Solution” To The Euro Crisis Involves Printing Money
• Silver Christmas!
• Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Slightly on the Week
• The Ultimate "All-In" Trade
• The Ultimate "All-In" Trade
• Market News International retracts report about central bank gold sales
• Yep, that GLD you're holding is probably worthless
• Leaving the USA … would you do it?
• Gold Price Lost 2% This Week Closing at $1,712.80
• Guest Post: Precious Metal Pullbacks in Perspective
• Are Central, Commercial Banks Lending or Selling Gold?
• African Gold Prospects Shine
• Marc Faber Fears Gold Confiscation
• MNI report on the BIS, Federal Reserve and BoE selling gold was posted in error
• Surviving The Rollercoaster - UBS Charts The Global Secular And Cyclical Shifts
• Ominous Double Top In US Dollar
• Bank Of Countrywide Lynch On The Top Ten Macro Themes For 2012
• Bailout Total: $29.616 Trillion Dollars
• He Chose Well
• Iran: Not Just the Drone
• Gold Daily and Silver Weekly Charts - Divvying Up the MF Gold and Silver
• Interview with Martin Armstrong 12-09-2011

Gold Nears Weekend 2% Down as UK Quits New European "Fiscal Compact"… Posted: 09 Dec 2011 06:16 PM PST Bullion Vault

Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As "Cash" Posted: 09 Dec 2011 06:14 PM PST In what is likely the most logical follow up to our post of the day, namely the news of the lawsuit between HSBC and MF Global over double-counted gold, or physical - not paper - that was "commingled" via rehypothecating or otherwise, we present readers with the monthly note by Eric Sprott titled "Silver Producers: A Call to Action" in which the Canadian commodities asset manager has had enough of what he perceives as subtle and/or not so subtle manipulation of the precious metal market, and in not so many words calls the silver miners of the world "to spring to action" and effectively establish supply controls to silver extraction to counteract paper market manipulation in the paper realm by treating their product as a currency and retaining it as "cash". To wit: "instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don't pay their customers to take on those risks today." And the math: "If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices?" And there you go: Sprott 'reputable' entity to propose to fight manipulation with what is effectively collusion, which in the grand scheme of things is perfectly normal - after all, all is fair in love and war over a dying monetary model. Who could have thought that the jump from "proletariats" to "silver miners" would be so short. From Eric Sprott Silver Producers: A Call to Action As we approach the end of 2011, the silver spot price has admittedly endured a tougher road than we would have expected. And let's be honest – what investment firm on earth has pounded the table on silver harder than we have? After the orchestrated silver sell-off in May 2011 (please see June 2011 MAAG article entitled, "Caveat Venditor"), silver promptly rose back to US$40/oz where it consolidated nicely, only to drop back below US$30 within a two week span in late September. The September sell-off was partly due to the market's disappointment over Bernanke's Operation Twist, which sounded interesting but didn't involve any real money printing. Like the May sell-off before it, however, it was also exacerbated by a seemingly needless 21% margin rate hike by the CME on September 23rd, followed by a 20% margin hike by the Shanghai Gold Exchange – the CME's counterpart in China, three days later. The paper markets still dictate the spot market for physical gold and silver. When we talk about the "paper market", we're referring to any paper contract that claims to have an underlying link to the price of gold or silver, and we're referring to contracts that are almost always levered. It's highly questionable today whether the paper market has any true link to the physical market for gold and silver, and the futures market is the most obvious and influential "paper market" offender. When the futures exchanges like the CME hike margin rates unexpectedly, it's usually under the pretense of protecting the "integrity of the exchange" by increasing the collateral (money) required to hold a position, both for the long (future buyer) and the short (future seller). When they unexpectedly raise margin requirements two days after silver has already declined by 22%, however, who do you think that margin increase hurts the most? The long buyer, or the short seller? By raising the margin requirement at the very moment the long contracts have already received an initial margin call (because the price of silver has dropped), they end up doubling the longs' pain – essentially forcing them to sell their contracts. This in turn creates even more downward price pressure, and ends up exacerbating the very risks the margin hikes were allegedly designed to address. When reviewing the performance of silver this year, it's important to acknowledge that nothing fundamentally changed in the physical silver market during the sell-offs in May or mid-September. In both instances, the sell-offs were intensified by unexpected margin rate hikes on the heels of an initial price decline. It should also come as no surprise to readers that the "shorts" took advantage of the September sell-off by significantly reducing their silver short positions. Should physical silver be priced off these futures contracts? Absolutely not. That they have any relationship at all is somewhat laughable at this point. But futures contracts continue to heavily influence spot prices all the same, and as long as the "longs" settle futures contracts in cash, which they almost always do, the futures market-induced whipsawing will likely continue. It also serves to note that the class action lawsuits launched against two major banks for silver manipulation remain unresolved today, as does the ongoing CFTC investigation into silver manipulation which has yet to bear any discernible results. Meanwhile, despite the needless volatility triggered by the paper market, the physical market for silver has never been stronger. If the September sell-off proved anything, it's the simple fact that PHYSICAL buyers of silver are not frightened by volatility. They view dips as buying opportunities, and they buy in size. During the month of September, the US Mint reported the second highest sales of physical silver coins in its history, with the majority of sales made in the last two weeks of the month. Reports from India in early October indicated that physical silver demand had created short-term supply issues for physical delivery due to problems with airline capacity. In China, which reportedly imported 264.69 tons (7.7 million oz) of silver in September alone, the volume of silver forward contracts on the Shanghai Gold Exchange was more than six times higher than the same period in 2010. It was clear to anyone following the silver market that the physical demand for the metal actually increased during the paper price decline. And why shouldn't it? Have you been following Europe lately? Do the politicians and bureaucrats there give you confidence? Gold and silver are the most rational financial assets to own in this type of environment because they are no one's liability. They are perfectly designed to protect us during these periods of extreme financial turmoil. And wouldn't you know it, despite the volatility, gold and silver have continued to do their job in 2011. As we write this, in Canadian dollars, gold is up 23.4% on the year and silver's up 6.8%. Meanwhile, the S&P/TSX is down -12.3%, the S&P 500 is down -5.1% and the DJIA is up a mere +0.26%. So here's the question: we think we understand the value and great potential in silver today, and we know that the buyers who bought in late September most definitely understand it,… but do silver mining companies appreciate how exciting the prospects for silver are? Do the companies that actually mine the metal out of the ground understand the demand fundamentals driving the price of their underlying product? Perhaps even more importantly, do the miners understand the significant influence they could potentially have on that demand equation if they embraced their product as a currency? According to the CPM Group, the total silver supply in 2011, including mine supply and secondary supply (scrap, recycling, etc.), will total 1.03 billion ounces. Of that, mine supply is expected to represent approximately 767 million ounces. Multiplied against the current spot price of US$31/oz, we're talking about a total silver supply of roughly US$32 billion in value today. To put this number in perspective, it's less than the cost of JP Morgan's WaMu mortgage write downs in 2008. According to the Silver Institute, 777.4 million ounces of silver were used up in industrial applications, photography, jewelry and silverware in 2010.12 If we assume, given a weaker global economy, that this number drops to a flat 700 million ounces in 2011, it implies a surplus of roughly 300 million ounces of silver available for investment demand this year. At today's silver spot price – we're talking about roughly US$9 billion in value. This is where the miners can make an impact. If the largest pure play silver producers simply adopted the practice of holding 25% of their 2011 cash reserves in physical silver, they would account for almost 10% of that US$9 billion. If this practice we're applied to the expected 2012 free cash flow of the same companies, the proportion of investable silver taken out of circulation could potentially be enormous. Expressed another way, consider that the majority of silver miners today can mine silver for less than US$15 per ounce in operating costs. At US$30 silver, most companies will earn a pre-tax profit of at least US$15 per ounce this year. If we broadly assume an average tax rate of 33%, we're looking at roughly US$10 of after-tax profit per ounce across the industry. If GFMS's mining supply forecast proves accurate, it will mean that silver mine production will account for roughly 74% of the total silver supply this year. If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices? Silver miners need to acknowledge that investors buy their shares because they believe the price of silver is going higher. We certainly do, and we are extremely active in the silver equity space. We would never buy these stocks if we didn't. Nothing would please us more than to see these companies begin to hold a portion of their cash reserves in the very metal they produce. Silver is just another form of currency today, after all, and a superior one at that. To take this idea further, instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don't pay their customers to take on those risks today. None of this should seem far-fetched. One of the key reasons investors have purchased physical gold and silver is to store some of their wealth outside of a financial system that looks increasingly broken. The European banking system is a living model of that breakdown. Recent reports have revealed that more than €80-billion was pulled out of Italian banks in August and September alone. In Greece, depositors have taken almost €50-billion out their banks since the beginning of 2010. Greek banks are now completely reliant on ECB funding to stay afloat. The situation has deteriorated to the point where over two thirds of the roughly 500 billion euros that banks have borrowed from the ECB are now being deposited back at the central bank. Why? Because they don't trust other banks to stay afloat long enough to get their money back. Silver miners shouldn't feel any safer banking in the United States. Fitch Ratings recently warned that the US banks may face severe losses from their exposures to European debt if the contagion escalates. There's very little at this point to suggest that it won't. The roots of the 2008 meltdown live on in today's crisis. We are still facing the same problems imposed by over-leverage in the financial system, and by postponing the proper solutions we've only increased those risks. We don't expect the silver miners to corner the physical silver market, and we know the paper games will probably continue, but the silver miners must make a better effort to understand the inherent value of their product. Gold and silver are not traditional commodities, they are money. Their value lies in their ability to retain wealth in environments marked by negative real interest rates (), government intervention (3), severe economic uncertainty (3) and vulnerable banking institutions (33). Silver's demand profile is heightened by its use in industrial applications, but it is the metal's investment demand that will drive its future performance. The risk of keeping all of one's excess cash in a bank is, in our opinion, considerably more than holding it in the more enduring form of money that silver represents. It's time for silver producers to embrace their product in the same manner their shareholders already have.

Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As "Cash" Posted: 09 Dec 2011 06:14 PM PST In what is likely the most logical follow up to our post of the day, namely the news of the lawsuit between HSBC and MF Global over double-counted gold, or physical - not paper - that was "commingled" via rehypothecating or otherwise, we present readers with the monthly note by Eric Sprott titled "Silver Producers: A Call to Action" in which the Canadian commodities asset manager has had enough of what he perceives as subtle and/or not so subtle manipulation of the precious metal market, and in not so many words calls the silver miners of the world "to spring to action" and effectively establish supply controls to silver extraction to counteract paper market manipulation in the paper realm by treating their product as a currency and retaining it as "cash". To wit: "instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don't pay their customers to take on those risks today." And the math: "If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices?" And there you go: Sprott 'reputable' entity to propose to fight manipulation with what is effectively collusion, which in the grand scheme of things is perfectly normal - after all, all is fair in love and war over a dying monetary model. Who could have thought that the jump from "proletariats" to "silver miners" would be so short. From Eric Sprott Silver Producers: A Call to Action As we approach the end of 2011, the silver spot price has admittedly endured a tougher road than we would have expected. And let's be honest – what investment firm on earth has pounded the table on silver harder than we have? After the orchestrated silver sell-off in May 2011 (please see June 2011 MAAG article entitled, "Caveat Venditor"), silver promptly rose back to US$40/oz where it consolidated nicely, only to drop back below US$30 within a two week span in late September. The September sell-off was partly due to the market's disappointment over Bernanke's Operation Twist, which sounded interesting but didn't involve any real money printing. Like the May sell-off before it, however, it was also exacerbated by a seemingly needless 21% margin rate hike by the CME on September 23rd, followed by a 20% margin hike by the Shanghai Gold Exchange – the CME's counterpart in China, three days later. The paper markets still dictate the spot market for physical gold and silver. When we talk about the "paper market", we're referring to any paper contract that claims to have an underlying link to the price of gold or silver, and we're referring to contracts that are almost always levered. It's highly questionable today whether the paper market has any true link to the physical market for gold and silver, and the futures market is the most obvious and influential "paper market" offender. When the futures exchanges like the CME hike margin rates unexpectedly, it's usually under the pretense of protecting the "integrity of the exchange" by increasing the collateral (money) required to hold a position, both for the long (future buyer) and the short (future seller). When they unexpectedly raise margin requirements two days after silver has already declined by 22%, however, who do you think that margin increase hurts the most? The long buyer, or the short seller? By raising the margin requirement at the very moment the long contracts have already received an initial margin call (because the price of silver has dropped), they end up doubling the longs' pain – essentially forcing them to sell their contracts. This in turn creates even more downward price pressure, and ends up exacerbating the very risks the margin hikes were allegedly designed to address. When reviewing the performance of silver this year, it's important to acknowledge that nothing fundamentally changed in the physical silver market during the sell-offs in May or mid-September. In both instances, the sell-offs were intensified by unexpected margin rate hikes on the heels of an initial price decline. It should also come as no surprise to readers that the "shorts" took advantage of the September sell-off by significantly reducing their silver short positions. Should physical silver be priced off these futures contracts? Absolutely not. That they have any relationship at all is somewhat laughable at this point. But futures contracts continue to heavily influence spot prices all the same, and as long as the "longs" settle futures contracts in cash, which they almost always do, the futures market-induced whipsawing will likely continue. It also serves to note that the class action lawsuits launched against two major banks for silver manipulation remain unresolved today, as does the ongoing CFTC investigation into silver manipulation which has yet to bear any discernible results. Meanwhile, despite the needless volatility triggered by the paper market, the physical market for silver has never been stronger. If the September sell-off proved anything, it's the simple fact that PHYSICAL buyers of silver are not frightened by volatility. They view dips as buying opportunities, and they buy in size. During the month of September, the US Mint reported the second highest sales of physical silver coins in its history, with the majority of sales made in the last two weeks of the month. Reports from India in early October indicated that physical silver demand had created short-term supply issues for physical delivery due to problems with airline capacity. In China, which reportedly imported 264.69 tons (7.7 million oz) of silver in September alone, the volume of silver forward contracts on the Shanghai Gold Exchange was more than six times higher than the same period in 2010. It was clear to anyone following the silver market that the physical demand for the metal actually increased during the paper price decline. And why shouldn't it? Have you been following Europe lately? Do the politicians and bureaucrats there give you confidence? Gold and silver are the most rational financial assets to own in this type of environment because they are no one's liability. They are perfectly designed to protect us during these periods of extreme financial turmoil. And wouldn't you know it, despite the volatility, gold and silver have continued to do their job in 2011. As we write this, in Canadian dollars, gold is up 23.4% on the year and silver's up 6.8%. Meanwhile, the S&P/TSX is down -12.3%, the S&P 500 is down -5.1% and the DJIA is up a mere +0.26%. So here's the question: we think we understand the value and great potential in silver today, and we know that the buyers who bought in late September most definitely understand it,… but do silver mining companies appreciate how exciting the prospects for silver are? Do the companies that actually mine the metal out of the ground understand the demand fundamentals driving the price of their underlying product? Perhaps even more importantly, do the miners understand the significant influence they could potentially have on that demand equation if they embraced their product as a currency? According to the CPM Group, the total silver supply in 2011, including mine supply and secondary supply (scrap, recycling, etc.), will total 1.03 billion ounces. Of that, mine supply is expected to represent approximately 767 million ounces. Multiplied against the current spot price of US$31/oz, we're talking about a total silver supply of roughly US$32 billion in value today. To put this number in perspective, it's less than the cost of JP Morgan's WaMu mortgage write downs in 2008. According to the Silver Institute, 777.4 million ounces of silver were used up in industrial applications, photography, jewelry and silverware in 2010.12 If we assume, given a weaker global economy, that this number drops to a flat 700 million ounces in 2011, it implies a surplus of roughly 300 million ounces of silver available for investment demand this year. At today's silver spot price – we're talking about roughly US$9 billion in value. This is where the miners can make an impact. If the largest pure play silver producers simply adopted the practice of holding 25% of their 2011 cash reserves in physical silver, they would account for almost 10% of that US$9 billion. If this practice we're applied to the expected 2012 free cash flow of the same companies, the proportion of investable silver taken out of circulation could potentially be enormous. Expressed another way, consider that the majority of silver miners today can mine silver for less than US$15 per ounce in operating costs. At US$30 silver, most companies will earn a pre-tax profit of at least US$15 per ounce this year. If we broadly assume an average tax rate of 33%, we're looking at roughly US$10 of after-tax profit per ounce across the industry. If GFMS's mining supply forecast proves accurate, it will mean that silver mine production will account for roughly 74% of the total silver supply this year. If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices? Silver miners need to acknowledge that investors buy their shares because they believe the price of silver is going higher. We certainly do, and we are extremely active in the silver equity space. We would never buy these stocks if we didn't. Nothing would please us more than to see these companies begin to hold a portion of their cash reserves in the very metal they produce. Silver is just another form of currency today, after all, and a superior one at that. To take this idea further, instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don't pay their customers to take on those risks today. None of this should seem far-fetched. One of the key reasons investors have purchased physical gold and silver is to store some of their wealth outside of a financial system that looks increasingly broken. The European banking system is a living model of that breakdown. Recent reports have revealed that more than €80-billion was pulled out of Italian banks in August and September alone. In Greece, depositors have taken almost €50-billion out their banks since the beginning of 2010. Greek banks are now completely reliant on ECB funding to stay afloat. The situation has deteriorated to the point where over two thirds of the roughly 500 billion euros that banks have borrowed from the ECB are now being deposited back at the central bank. Why? Because they don't trust other banks to stay afloat long enough to get their money back. Silver miners shouldn't feel any safer banking in the United States. Fitch Ratings recently warned that the US banks may face severe losses from their exposures to European debt if the contagion escalates. There's very little at this point to suggest that it won't. The roots of the 2008 meltdown live on in today's crisis. We are still facing the same problems imposed by over-leverage in the financial system, and by postponing the proper solutions we've only increased those risks. We don't expect the silver miners to corner the physical silver market, and we know the paper games will probably continue, but the silver miners must make a better effort to understand the inherent value of their product. Gold and silver are not traditional commodities, they are money. Their value lies in their ability to retain wealth in environments marked by negative real interest rates (), government intervention (3), severe economic uncertainty (3) and vulnerable banking institutions (33). Silver's demand profile is heightened by its use in industrial applications, but it is the metal's investment demand that will drive its future performance. The risk of keeping all of one's excess cash in a bank is, in our opinion, considerably more than holding it in the more enduring form of money that silver represents. It's time for silver producers to embrace their product in the same manner their shareholders already have.

Scott Gibson Interviews Got Gold Report’s Gene Arensberg Posted: 09 Dec 2011 05:51 PM PST We sat down with Kitco Gibson Capital's Scott Gibson at the New Orleans Investment Conference in late October.  Kitco Gibson Capital just released a video from the conference in which we discuss the gold market and several of our resource company "Faves" here at Got Gold Report. As it turned out, we had a lot more in common than just being at the same conference.  Our thanks to Scott Gibson for the interview and the link to it below.  Please browse the other excellent interviews while there as well.  Source:  Kitco Gibson Capital http://www.kitco.com/ind/kitcogibson/

By the Numbers for the Week Ending December 9 Posted: 09 Dec 2011 04:48 PM PST HOUSTON --  Just below is this week's closing table followed by the CFTC disaggregated commitments of traders (DCOT) recap table for the week ending December 9, 2011. Got Gold Report schedule is also noted.   If the images are too small click on them for a larger version. Brief comment:  A choppy, directionless, nervous market this week. Slight relative outperformance of silver over gold one highlight. Note modestly positive money flow into the silver ETF.  Note also with all the angst in Europe the USDX was about flat. A tell?  Note the ICE commercials sticking with their large net short stance on the dollar index.  Inside weeks for both gold and silver, both had somewhat lower highs and higher lows, with hi—lo spreads contracting as some traders seemed to move to the sidelines.  However, we noted staunch and determined support for silver near $31.50 early on Friday, rising to near $31.80 ahead of the London close (and carrying into the N.Y. trade). Suggestive of at least modest short covering on Friday. While the drama in Europe played to an uneasy and tense commodity market on Thursday, with oversized stop triggering moves lower, by Friday it seemed that bargain hunters held sway, and held support higher than we expected.  More in the Got Gold Report to come.      Vultures, (Got Gold Report Subscribers) please note that we are planning a Got Gold Report update for release on Monday evening instead of Sunday this week.  Updates to our linked technical charts, including our comments about the COT reports and the week's technical changes, should be completed by the usual time on Sunday (18:00 ET).  Please note a number of changes and new notations in our linked Vulture Bargain Candidates of Interest (VBCI) charts, many of which have already been entered with more to come during the weekend.  Continued… Gold and Silver Disaggregated COT Report (DCOT) In the DCOT table below a net short position shows as a negative figure in red. A net long position shows in black. In the Change column, a negative number indicates either an increase to an existing net short position or a reduction of a net long position. A black figure in the Change column indicates an increase to an existing long position or a reduction of an existing net short position. The way to think of it is that black figures in the Change column are traders getting "longer" and red figures are traders getting less long or shorter. All of the trader's positions are calculated net of spreading contracts as of the Tuesday disaggregated COT report. (DCOT Table for Friday, December 9, for data as of the close on Tuesday, December 6.   Source CFTC for COT data, Cash Market for gold and silver.  Remember the changes to positioning are as of Tuesday.  Both gold and silver have since declined modestly but neither have broken technical support.  More in the Got Gold Report to come on Monday this week for our Vulture members. That is all for now but there is more to  come.

Eurozone Banking System on the Edge of Collapse Posted: 09 Dec 2011 04:45 PM PST The eurozone banking system is on the edge of collapse as major lenders begin to run out of the assets they need to keep vital funding lines open. by Harry Wilson, Telegraph.co.uk: Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding. The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank. Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. Read More @ Telegraph.co.uk

Capital Account: Yanis Varoufakis, “All Europeans are Seeing the Collapse Coming” (12/09/11) Posted: 09 Dec 2011 04:35 PM PST from CapitalAccount: It's d-day for the eurozone! But is it crisis on or crisis averted? Most EU members sign on for more fiscal unity — analysis ranges from success to total failure. And does anything on the table really get to the core of the problem? Well, for one thing, the UK is forgoing the deal and Cameron's close but not so friendly encounter with Sarkozy may show why…And countries and banks are preparing for the collateral damage of a collapse of the euro. Contingency plans see countries like Ireland evaluating the need for additional printing presses. The swiss government is studying capital controls in case of a tidal wave of money come from savings in the periphery looking for safety in the core. And as pundits, economists, and analysts size up the crisis and solution, the global and market and personal impact from this side of the atlantic…we get the view from one of the countries most stricken — we'll speak to greek economist Yanis Varoufakis in Athens about all of this. He is author of the book Global Minotaur, and proponent of the "modest proposal" a solution for overcoming the Eurozone crisis. At the end of our program, Lauren responds to our audience during our "viewer feedback" segment of the show.

Three To Get Ready Posted: 09 Dec 2011 04:32 PM PST from TFMetalsReport.com: Three important items to review and ponder over the weekend. First and foremost, if you haven't read this yet, I suggest you drop everything and do so right now: http://www.zerohedge.com/news/gold-rehypotecation-unwind-begins-hsbc-sues-mf-global-over-disputed-ownership-physical-gold A lawsuit such as this one could easily bring about the total destruction of the Comex/LBMA-based, fractional bullion banking system. Perhaps someone can reach Andy Maguire and see what he thinks. Next, a little homework. Knowing what we now know about rehypothecation, please go back and read this: http://www.zerohedge.com/news/bank-america-forces-depositors-backstop-its-53-trillion-derivative-book-prevent-few-clients-dep Surely there's a loyal Turdite who has a savings or checking account with BoA. Perhaps someone even has a brokerage account there. If so, please review your account documents to see if you can find anything about rehypothecation of your money market funds or even your general savings. It may not matter much as the Merrill Lynch subsidiary almost certainly has rehypothecation "language" in their account documents. In any event, BoA account holders would be wise to follow very closely the continuing MF global saga. Read More @ TFMetalsReport.com

Every “Solution” To The Euro Crisis Involves Printing Money Posted: 09 Dec 2011 04:27 PM PST from GoldAndSilverBlog.com: Attempts by central banks to blatantly manipulate the price of gold lower should come as no surprise to long time gold investors. Market News International reported on Thursday that the Bank of England, the Federal Reserve and the Bank for International Settlements mounted coordinated selling in an attempt to drive the price of gold lower. After advancing to $1,757.80, gold reversed course, ending the day in New York trading at $1,706.80, down $51 from the morning high. The reported attempt to crush the price of gold coincides with the growing perception that every "solution" offered thus far to resolve the potentially catastrophic debt crisis in Europe revolves around the creation of vast amounts of new fiat currency. European countries that have piled up ruinous levels of indebtedness are quickly discovering that they have run out of options. The limits on imposing new taxes have been reached, bond markets won't finance additional borrowing, austerity won't work and debt costs are spiraling out of control as Euro zone economies grind to a halt. Read More @ GoldAndSilverBlog.com

Silver Christmas! Posted: 09 Dec 2011 04:22 PM PST from BigDad06:

Gold Seeker Weekly Wrap-Up: Gold and Silver Fall Slightly on the Week Posted: 09 Dec 2011 04:00 PM PST Gold dropped $3.75 to $1703.35 in Asia before it rose to as high as $1723.75 in London and then fell back off to see a slight loss at $1706.40 by a little after 9AM EST, but it then rallied back higher in New York and ended with a gain of 0.24%. Silver slipped to $31.448 in Asia, but it then chopped back higher for most of the rest of trade and ended with a gain of 1.9%.

The Ultimate "All-In" Trade Posted: 09 Dec 2011 03:00 PM PST We have spent a great amount of time recently discussing both the re-hypothecation debacle and the 'odd' moves in CDS - most specifically basis (the difference between CDS and bonds) shifts and the local-sovereign-referencing protection writing. Peter Tchir, of TF Market Advisors, provides further color on the latter (as the 'Ultimate' trade) and in an unsurprising twist, how the former was much more critical during the Lehman 'moment' and will once again rear its ugly head. Exposing the underbelly of these two dark sides of the market must surely raise concerns at the fragility of the entire system - as we remarked earlier - but the lessons unlearned, on which Peter expounds, from the Lehman period are reflective of regulators so far behind the curve that it is no wonder the market's edge-of-a-cliff-like feeling persists.   What exactly is this -> BNP Paribas Sold $2 Billion Swaps on France, EBA Says Either: Basis Unwinds or the BSC trade? [A Basis trade - as we have discussed here - is an arbitrage strategy that looks to profit/earn carry from the difference between CDS and Bond market pricing of credit risk. Typically it is created by buying bonds and simultaneously buying CDS protection (a hedge) to lock in a perceived valuation difference] Is this the basis unwind we predicted after the October 27th summit where banks were going to be forced to restructure debt without triggering CDS?  (it has happened yet, but that's another story).  So if banks were selling bonds and selling hedges, then it would show up as reduced bond exposure but increased CDS exposure (they sell bonds, and sell CDS). Or...   That is one possibility, the other is that they are running the "all-in" strategy at the expense of the taxpayers.  During the final days of BSC (before they were bought for $2 on a Sunday night and had their swap lines guaranteed) two distinct markets for CDS had developed, especially on indices and financials.  There was a price where BSC would sell CDS and the price where a counterparty that was likely to be around next week would sell protection.  On IG8 (I think that was the on the run index at the time), BSC was often offering it 3 to 4 bps tighter than anyone else.  You could buy IG at 176 from them, or 180 from a bank.  It made the market more confusing than ever.  Who would buy protection from them? Well, if you had sold protection to them, then maybe you buy it from them to cover.  It was simpler to have offsetting trades, plus you could book that 4 bps.  If you had already bought from them, you were between a rock and a hard place.  Their "bid" for protection was low.  Selling to them meant a mark to market loss.  So you could either buy more index protection from somewhere else or you could buy protection on bear.  Many were comfortable doing that as they were in such trouble.   It was a real issue, anyone who had sold them protection was happy to cover, especially at below market prices.  Those who weren't long credit via them had a problem. The same happened with clients, but they had an extra tool.  They could buy protection from them and try and "assign" another dealer.  That dealer didn't want to face bear, but some clients had a lot of influence, some salespeople had a lot of influence, some firms weren't well run, and there seemed to be pressure from the regulators to pretend it was business as usual.  So a firm that had managed their exposure well, had a potential problem because a big client came in, demanding that the protection they had purchased from bear, be "assigned" to you.  Legally you could say no, but there is always relationship pressure at times like that. But why would BSC be so willing to sell protection?  Well, the markets were very wide because of the fear that they would default.  You sell as much protection as possible.  If you default what do you possibly care?  Your stock is wiped out, your job is gone, and your strategy is totallly explainable to future employees.  If you don't default all this massive amounts of protection screams tighter and you have your best year ever. No brainer for the firm, an issue for the market. So, why are French banks selling protection on France like it is going out of style? Why are Italian banks doubling down on Italy?  Because if the bailouts work, it is free money.  Huge tightening on top of the spread income until the bailout finally wins.  If the sovereign defaults, is the bank really going to be around anyways? It is the ultimate trade.  If you make money, you get paid.  If you lose money you were screwed anyways. Who would buy from them?  Banks with silly risk management departments, or those who had sold to them when they were in hedging mode, and now are unwinding.  That would create the bid for bank CDS that we see (as people need to hedge purchases of CDS).  Some of these banks may qualify for no collateral from banks they trade with.  Then they don't even need to come up with cash even if the market moves against them.  Not posting collateral would be a huge deal, and I'm not sure how true it is, but I would bet someone like BNP has very big lines with most other banks, before the mark to market loss gets bad enough that they have to post. This may be the ultimate moral hazard trade.  Heads I win, tails, I don't care because I'm dead.  This couldn't happen if CDS was exchange traded (they could sell, but they would take mark to market margin call risk), but our regulators, have decided that putting CDS onto an exchange can wait. On a slightly separate, yet related note, the "re-hypothecation" story done by Thomson-Reuters has been attracting some attention.  Maybe now is a good time to remind people about Lehman.  For all of the talk about Lehman and CDS, that actually settled pretty smoothly.  There were far more problems with simple repo agreements.  No one wanted to pay attention at the time. Whenever I mention it, people look at me as though I have lost it, how could super complex CDS have had less problems than repo trades in a Lehman bankruptcy?  Well, it did, and MF Global and this article show why.  Yet another example of regulators dropping the ball.  Many of these problems occurred with Lehman, but the Fed has been so busy QE'ing and talking about the "Lehman" moment, no one addressed the repo market, and cross border collateral, and custodial responsibilities, that were laid bare with Lehman. It is far more fun to talk about the daisy chain risk of CDS, yet it was the problems in basic things like repo and custodial accounts and segregation, and adequate capital by entity, that froze liquidity in 2008.    If you can't find a copy of the article, zerohedge has it posted.  At the very least it is worth checking out as it could be another round forced deleveraging.  I have also heard that it is re-hypothecation that has slowed the transition of derivatives to exchanges as some people estimate banks would need to raise a trillion of money to make collateral calls that they either don't have right now (because of one-way collateral agreements) or because they meet them by re-hypothecating client collateral.

The Ultimate "All-In" Trade Posted: 09 Dec 2011 03:00 PM PST We have spent a great amount of time recently discussing both the re-hypothecation debacle and the 'odd' moves in CDS - most specifically basis (the difference between CDS and bonds) shifts and the local-sovereign-referencing protection writing. Peter Tchir, of TF Market Advisors, provides further color on the latter (as the 'Ultimate' trade) and in an unsurprising twist, how the former was much more critical during the Lehman 'moment' and will once again rear its ugly head. Exposing the underbelly of these two dark sides of the market must surely raise concerns at the fragility of the entire system - as we remarked earlier - but the lessons unlearned, on which Peter expounds, from the Lehman period are reflective of regulators so far behind the curve that it is no wonder the market's edge-of-a-cliff-like feeling persists.   What exactly is this -> BNP Paribas Sold $2 Billion Swaps on France, EBA Says Either: Basis Unwinds or the BSC trade? [A Basis trade - as we have discussed here - is an arbitrage strategy that looks to profit/earn carry from the difference between CDS and Bond market pricing of credit risk. Typically it is created by buying bonds and simultaneously buying CDS protection (a hedge) to lock in a perceived valuation difference] Is this the basis unwind we predicted after the October 27th summit where banks were going to be forced to restructure debt without triggering CDS?  (it has happened yet, but that's another story).  So if banks were selling bonds and selling hedges, then it would show up as reduced bond exposure but increased CDS exposure (they sell bonds, and sell CDS). Or...   That is one possibility, the other is that they are running the "all-in" strategy at the expense of the taxpayers.  During the final days of BSC (before they were bought for $2 on a Sunday night and had their swap lines guaranteed) two distinct markets for CDS had developed, especially on indices and financials.  There was a price where BSC would sell CDS and the price where a counterparty that was likely to be around next week would sell protection.  On IG8 (I think that was the on the run index at the time), BSC was often offering it 3 to 4 bps tighter than anyone else.  You could buy IG at 176 from them, or 180 from a bank.  It made the market more confusing than ever.  Who would buy protection from them? Well, if you had sold protection to them, then maybe you buy it from them to cover.  It was simpler to have offsetting trades, plus you could book that 4 bps.  If you had already bought from them, you were between a rock and a hard place.  Their "bid" for protection was low.  Selling to them meant a mark to market loss.  So you could either buy more index protection from somewhere else or you could buy protection on bear.  Many were comfortable doing that as they were in such trouble.   It was a real issue, anyone who had sold them protection was happy to cover, especially at below market prices.  Those who weren't long credit via them had a problem. The same happened with clients, but they had an extra tool.  They could buy protection from them and try and "assign" another dealer.  That dealer didn't want to face bear, but some clients had a lot of influence, some salespeople had a lot of influence, some firms weren't well run, and there seemed to be pressure from the regulators to pretend it was business as usual.  So a firm that had managed their exposure well, had a potential problem because a big client came in, demanding that the protection they had purchased from bear, be "assigned" to you.  Legally you could say no, but there is always relationship pressure at times like that. But why would BSC be so willing to sell protection?  Well, the markets were very wide because of the fear that they would default.  You sell as much protection as possible.  If you default what do you possibly care?  Your stock is wiped out, your job is gone, and your strategy is totallly explainable to future employees.  If you don't default all this massive amounts of protection screams tighter and you have your best year ever. No brainer for the firm, an issue for the market. So, why are French banks selling protection on France like it is going out of style? Why are Italian banks doubling down on Italy?  Because if the bailouts work, it is free money.  Huge tightening on top of the spread income until the bailout finally wins.  If the sovereign defaults, is the bank really going to be around anyways? It is the ultimate trade.  If you make money, you get paid.  If you lose money you were screwed anyways. Who would buy from them?  Banks with silly risk management departments, or those who had sold to them when they were in hedging mode, and now are unwinding.  That would create the bid for bank CDS that we see (as people need to hedge purchases of CDS).  Some of these banks may qualify for no collateral from banks they trade with.  Then they don't even need to come up with cash even if the market moves against them.  Not posting collateral would be a huge deal, and I'm not sure how true it is, but I would bet someone like BNP has very big lines with most other banks, before the mark to market loss gets bad enough that they have to post. This may be the ultimate moral hazard trade.  Heads I win, tails, I don't care because I'm dead.  This couldn't happen if CDS was exchange traded (they could sell, but they would take mark to market margin call risk), but our regulators, have decided that putting CDS onto an exchange can wait. On a slightly separate, yet related note, the "re-hypothecation" story done by Thomson-Reuters has been attracting some attention.  Maybe now is a good time to remind people about Lehman.  For all of the talk about Lehman and CDS, that actually settled pretty smoothly.  There were far more problems with simple repo agreements.  No one wanted to pay attention at the time. Whenever I mention it, people look at me as though I have lost it, how could super complex CDS have had less problems than repo trades in a Lehman bankruptcy?  Well, it did, and MF Global and this article show why.  Yet another example of regulators dropping the ball.  Many of these problems occurred with Lehman, but the Fed has been so busy QE'ing and talking about the "Lehman" moment, no one addressed the repo market, and cross border collateral, and custodial responsibilities, that were laid bare with Lehman. It is far more fun to talk about the daisy chain risk of CDS, yet it was the problems in basic things like repo and custodial accounts and segregation, and adequate capital by entity, that froze liquidity in 2008.    If you can't find a copy of the article, zerohedge has it posted.  At the very least it is worth checking out as it could be another round forced deleveraging.  I have also heard that it is re-hypothecation that has slowed the transition of derivatives to exchanges as some people estimate banks would need to raise a trillion of money to make collateral calls that they either don't have right now (because of one-way collateral agreements) or because they meet them by re-hypothecating client collateral.

Market News International retracts report about central bank gold sales Posted: 09 Dec 2011 02:39 PM PST 11:02p ET Friday, December 9, 2011 Dear Friend of GATA and Gold: Market News International, which, on the basis of confidential sources, reported Thursday that the Bank for International Settlements, Bank of England, and Federal Reserve had sold gold that day to reverse an upward spike in the price as the euro zone financial crisis worsened, has retracted the report. (See http://www.gata.org/node/10752.) Word of the retraction comes via GATA's friend Michael Kosares, proprietor of Centennial Precious Metals in Denver and its Internet site USAGold.com, who wrote to the news agency in search of information supporting its report. Kosares today received this reply from MNI's Vicki Schmelzer: "The bullet that was posted was posted in error. We had one contact mentioning that this might be the case, but when we called other, more trusted sources later, they said this was not the case and in fact selling by these institutions was totally unlikely. We put out a retraction shortly after the initial bullet." Of course MNI's statement doesn't mean that central banks were not selling or leasing gold this week to support the euro and other government currencies as the Western financial system teetered. Since mainstream financial news organizations simply assume that market interventions by central banks, particularly interventions in gold, are properly secret and can't be asked about in polite company, it's unlikely that any central bank was pressed enough this week about its gold activities that it even had to bother issuing a "no comment." Indeed, MNI's retraction just as easily could mean that the news agency was pressured or threatened by a government or governments for broaching a topic considered likely to jeopardize national security. At least the counterintuitive behavior of the gold price is far from news and long has been one of GATA's themes. South African gold mining analyst Peter George remarked on this in August 2005 at GATA's Gold Rush 21 conference in Dawson City, Yukon Territory, Canada. "In the last 10 years," George said, "central banks have effectively shown that when there's a real crisis, gold actually goes down, and then it's so blatant it's a joke." Video of George's comment from six years ago can be found at the 38-second mark in the video at the top of the page here: http://www.gata.org/node/20 The smashing of the gold price on September 6 this year, just moments before the surprise devaluation of the Swiss franc, which until then had been the only remaining "safe haven" currency apart from gold, was the sort of blatant intervention George talked about. In an interview that day with King World News, this intervention was cited by Hinde Capital CEO Ben Davies, who had spoken at GATA's Gold Rush 2011 conference in London a month earlier. Davies said of gold: "Why was it selling off just ahead of a really bullish announcement? You have to believe that there was some coordinated action. ... The central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn't want the price of gold to skyrocket on what is incredibly bullish news for gold." (See http://www.gata.org/node/10393.) Anyone seeking meaningful information from central banks about gold has to sue, as GATA sued the Federal Reserve in December 2009 in U.S. District Court for the District of Columbia under the U.S. Freedom of Information Act, winning this year disclosure of one incriminating document but failing to win disclosure of many more the Fed insisted on keeping secret: http://www.gata.org/node/9560 http://www.gata.org/node/9623 So what did central banks do in the gold market this week? Mainstream financial journalists seem to know better than to ask. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. ADVERTISEMENT Prophecy Drills 384.9 Meters Grading 0.623 g/t PGM+Au, 0.3% Ni, 0.15% Cu (0.45% NiEq) From Surface At Yukon Wellgreen Project Company Press Release Thursday, December 8, 2011 VANCOUVER, British Columbia -- Prophecy Platinum Corp. (TSX-V: NKL, OTC-QX: PNIKF, Frankfurt: P94P) has announced the final drill results from 2011 drilling at the company's fully owned Wellgreen platinum group metals, nickel, and copper project in the Yukon Territory. Borehole WS11-192 intercepted 384.9 meters of 0.45 percent nickel equivalent starting from 9.45 meters depth. Included in this greater interval of continuous mineralization is a platinum group metals-rich zone with a combined platinum-palladium-gold grade of 1.358 grams per ton over 19.23 meters (nickel equivalent 0.74%). The final drilling results for 2011 have shown the Wellgreen Central-East and Central-West deposits to be one contiguous body, whereby there is good potential to broaden significantly the Central-West resource base, which currently contributes only about a quarter of the current 43-101 compliant resource at Wellgreen. Overall the drilling program met with good success in expanding the resource to the east and south. The long drill intercepts suggest the deposit remains very much open in those directions. For the complete drilling results and the full company statement, please visit: http://prophecyplat.com/news_2011_dec08_prophecy_platinum_wellgreen_dril... Join GATA here: Vancouver Resource Investment Conference Sunday-Monday, January 22-23, 2012 Vancouver Convention Centre West Vancouver, British Columbia, Canada http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference Saturday-Sunday, February 11-12, 2012 Hyatt Grand Champions Resort Indian Wells, California, USA http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing gold and silver commemorative coins: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: http://gata.org/tshirts Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Or a video disc of GATA's 2005 Gold Rush 21 conference in the Yukon: http://www.goldrush21.com/ Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: http://www.gata.org To contribute to GATA, please visit: http://www.gata.org/node/16 ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization at Blackdome in British Columbia -- 13.6g over 1.5 Meters From a Company Press Release November 22, 2011 VANCOUVER, British Columbia -- With its latest surface diamond drilling program at its 100-percent-owned, formerly producing Blackdome gold mine in southern British Columbia, Sona Resources Corp. has discovered a potentially high-grade gold-mineralized area, with one hole intersecting 13.6 grams of gold in 1.5 meters of core drilling. "We intersected a promising new mineralized zone, and we feel optimistic about the assay results," says Sona's president and CEO, John P. Thompson. "We have undertaken an aggressive exploration program that has tested a number of target zones. Our discovery of this new gold-bearing structure is significant, and it represents a positive development for the company." Sona aims to bring its permitted Blackdome mill back into production over the next year and a half, at a rate of 200 tonnes per day, with feed from the formerly producing Blackdome mine and the nearby Elizabeth gold deposit property. A positive preliminary economic assessment by Micon International Ltd., based on a gold price of $950 per ounce over eight years, has estimated a cash cost of $208 per tonne milled, or $686 per gold ounce recovered. For the company's complete press release, please visit: http://www.sonaresources.com/_resources/news/SONA_NR18_2011-opt.pdf

Yep, that GLD you're holding is probably worthless Posted: 09 Dec 2011 12:16 PM PST The Gold "Rehypothecation" Unwind Begins: HSBC Sues MF Global Over Disputed Ownership Of Physical Gold

Leaving the USA … would you do it? Posted: 09 Dec 2011 12:10 PM PST Interesting article titled — "What Is The Best Country In The World For Americans To Relocate To In Order To Avoid The Coming Economic Collapse?" Found here;  http://theeconomiccollapseblog.com/archives/what-is-the-best-country-in-the-world-for-americans-to-relocate-to-in-order-to-avoid-the-coming-economic-collapse I read most of the several hundred comments. Some very interesting stuff. Quite a few people feel that "bailing out" on the USA is a cowardly act. [...]

Gold Price Lost 2% This Week Closing at $1,712.80 Posted: 09 Dec 2011 11:24 AM PST Gold Price Close Today : 1,712.80 Gold Price Close 02-Dec : 1,747.00 Change : -34.20 or -2.0% Silver Price Close Today : 3217.00 Silver Price Close 02-Dec : 3262.00 Change : -45.00 or -1.4% Platinum Price Close Today : 1,514.80 Platinum Price Close 02-Dec : 1,547.50 Change : -32.70 or -2.2% Palladium Price Close Today : 684.65 Palladium Price Close 02-Dec : 643.60 Change : 41.05 or 6.0% Gold Silver Ratio Today : 53.24 Gold Silver Ratio 02-Dec : 53.56 Change : -0.31 or 0.99% Dow Industrial : 11,997.70 Dow Industrial 02-Dec: 12,020.03 Change : -22.33 or -0.2% US Dollar Index : 78.81 US Dollar Index 02-Dec : 78.29 Change : 0.52 or 0.7% Franklin Sanders has not published any commentary today, if he publishes later today it will be posted here. Argentum et aurum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2011, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Guest Post: Precious Metal Pullbacks in Perspective Posted: 09 Dec 2011 11:23 AM PST Submitted by Jeff Clark of Casey Research Pullbacks in Perspective If you're bullish about the long term for gold and silver, it's mouthwatering to watch them undergo a major correction after taking earlier profits that added to your deployable cash. For a little historical perspective on pullbacks, consider the following charts. The current 15.6% gold decline, while considered a "major" correction, is not out of the ordinary, particularly following the late summer spike. And after each big selloff, there was a price consolidation phase that in every instance led to higher prices. The message: hold on, and buy the big dips. Not surprisingly, silver's biggest corrections are larger than gold's. This is also true for the rebounds; they've been quite dramatic. If we apply the biggest three-month recovery of 44.3% to the current correction, that would take silver to $40.63… meaning we probably shouldn't expect $60 silver by year-end.

Are Central, Commercial Banks Lending or Selling Gold? Posted: 09 Dec 2011 11:11 AM PST The big feature of last week's decline in the gold price has been the lending of gold into the market. Commercial banks could have been doing it, but there is evidence in the past that central banks have leased gold to cap the gold price and bring it down. The gold price declines were so rapid and extensive that some investors theorized that central banks, including the Federal Reserve, were actively selling gold.

African Gold Prospects Shine Posted: 09 Dec 2011 10:55 AM PST Brock Salier, a mining analyst with GMP Securities Europe, sees plenty of gold coming out of Africa in the coming months and years. In this exclusive Gold Report interview, he says increasing political stability, good geological prospects and governmental recognition of the benefits of mining operations are reasons to look there for growth.

Marc Faber Fears Gold Confiscation Posted: 09 Dec 2011 10:23 AM PST Aside from the cherished and entertaining Faberisms deployed from time to time in his fight to preserve the truth in front of television audiences controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he's the go-to man for clarity and thoughtful insights in the midst of today's Orwellian headache. Speaking with FinancialSense Newshour's (FSN) James Puplava on Wednesday, Faber, the editor and publisher of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom and tyranny, to his concerns of people living in an age of central bank monetary cannons gone completely rogue. He also touched on one of his favorite asset classes, gold, and the third-rail subject of interest to every gold bug: government confiscation. Note: James Puplava's FinancialSense.com Web site is loaded with some of the most informative interviews from the brightest minds assembled on the Internet. See its audio archived interviews. As far as how high the price of gold can go, it depends upon who has control of the printing presses, according to Faber. Right now, he said, the power hungry in Washington won't let gold bugs down, as each sign of a lurking systemic collapse or stock market meltdown has been propped up by the Fed. Read more This posting includes an audio/video/photo media file: Download Now

MNI report on the BIS, Federal Reserve and BoE selling gold was posted in error Posted: 09 Dec 2011 10:08 AM PST 09-Dec (USAGOLD) — The MNI bullet about official gold selling that was posted on this page yesterday was subsequently retracted by them. From MNI: The bullet that was posted was posted in error. We had one contact mentioning that this might be the case but when we called other more trusted sources later they said this was not the case and in fact selling by these institutions was totally unlikely. We later put out a retraction shortly after the initial bullet We apologize for any confusion. We apologize as well.

Surviving The Rollercoaster - UBS Charts The Global Secular And Cyclical Shifts Posted: 09 Dec 2011 10:00 AM PST While the top-down macro perspectives on where we go from here remain stuck in a bi-modal distribution and bottom-up fundamentals may help at the margin but remain dominated by correlated risk asset flows, UBS has created a veritable smorgasbord of charts and technical analysis of the major asset classes. From presidential and economic cycles & secular equity regimes, across precious metals and the USD & the super bull cycle, to bond market bubbles, there is a little here for every connoisseur of cartography or devourer of data. Some of the more notable charts include: The first half of the chartbook focuses on the equity market in general, ending (around Page 36) with some interesting analogs for our current situation and the more secular structure of stocks:   Questioning the super bull cycle in commodities starts at Page 46, with a view that the secular structure for crude oil remains bullish: They discuss Gold's long- and short-term cycles from Page 51, with a view that the bull market has further to go: From Page 57, the discussion of the interaction of Presidential election cycles and the USD interacting with the secular bearish trend is discussed: Starting Page 67, they discuss the turn in the cycle of bonds but do not expect a rapid deterioration as the US long bond looks set for more wide range trading and Bunds lose momentum on the upside. UBS Cross Asset Overview

Ominous Double Top In US Dollar Posted: 09 Dec 2011 09:52 AM PST Morris Hubbartt Weekly Market Update Excerpt posted Dec 9, 2011 US Dollar Double Top Chart Analysis [LIST] [*]The US Dollar looks to have put in the classic two month double top. The above chart this week continues to show divergences in the dollar. When a market is expected to move higher, and instead falls at a two month potential double top, this is an ominous technical sign. [*]Fundamentally, debt and deficits are a clear and present danger to America. It’s easy to overlook this fact, with the media focusing on Europe. US debt is exploding, up over 50% just since President Obama took office. The deficit is running well over $1.3 trillion. Interest payments get continuously added to this enormous debt, which is already un-payable. [*]The immediate risk is renewed deflationary depression in Europe, and in turn, in America. The end result will likely be money printing. The very risk of such a deflationary event should provoke cen...

Bank Of Countrywide Lynch On The Top Ten Macro Themes For 2012 Posted: 09 Dec 2011 09:15 AM PST As we head into the artificial investing horizon of year-end, sell-side research is compelled to offer its best-guess at what will be key for the year ahead. We certainly head into 2012 with considerable potential downside risks - US recession?, breakup of the Euro?, hard-landing in China? - and BofA Merrill Lynch's RIC Report bears these in mind as it suggests investors position for these ten key macro themes (some positive, some negative) from slower global growth to a weakening US consumer and QE in US and Europe. Starting from a neutral equities, long gold (target $1200), long US corporate bonds, they favor growth, quality, and yield in one of the more complete summaries of expectations we have read.   10 key macro themes for 2012 Heading into 2012 the RIC believes investors should position for the following 10 macro themes: 1. Slower global economic growth Co-heads of Global Economics Ethan Harris and Alberto Ades forecast that global GDP growth will slow modestly to 3.5% in 2012. The US economy will expand by 1.9% in 2012 but will weaken in the second half. In Europe, our base case is for a mild recession, and we expect EM growth to slow to 5-6%.   How to play it: Neutral equities until lead indicators trough; overweight Growth versus Value and large versus small cap stocks; reduce Treasury allocations in the spring as our fixed income strategists expect a trough in Treasury yields by early 2Q12. 2. The US consumer will weaken again Our economics group expects the recent momentum from US consumer spending to subside in coming quarters, in the absence of much stronger jobs creation or wage growth.     How to play it: Weaker US consumption growth means portfolios should be tilted toward defensives in the US in early 2012 (Chart 3). Within defensives, US Equity and Quantitative Strategist Savita Subramanian's favored sector is Consumer Staples. 3. A soft landing in China China is vulnerable to a US and European recession, but a healthy balance sheet, a huge current account surplus and massive foreign reserves mean China can ease aggressively if necessary. Economist Ting Lu expects China to avert a hard-landing, and forecasts GDP growth of 8-9% in 2012.   How to play it: As inflation risks fade in 2012, look for Chinese policies to turn increasingly pro-growth. Maintain exposure to commodities and begin to look for opportunities in other EM assets as more EMs join the easing cycle. 4. Quantitative easing in the US and Europe Tighter fiscal policies in the US, Europe and Japan are likely to be offset by accommodative monetary policies around the world, aided by lower inflation. Importantly, our economists expect fresh rounds of quantitative easing by mid 2012 in both the US and Europe. This will prove to be an important inflection point for risk assets (Chart 4).     How to play it: Buy gold and gold stocks. Commodity Strategist Francisco Blanch has a 12-month gold price target of $2000/oz. 5. Negative returns for holders of US Treasuries Treasury returns were one of the biggest surprises in 2011. Next year, US Rates Strategist Priya Misra expects 10-year Treasury yields will fall to 1.6% by early 2Q (before the Fed launches QE3), before rising to 2.4% by year-end. This would imply a total return of -0.7% for the year. While Treasuries are likely to remain a safe-haven asset, the downside and upside on yields will be limited.   How to play it: Underweight Treasuries and overweight corporate and Emerging Market bonds, which offer a more attractive risk-reward profile. 6. Yield and income will remain paramount This will be another year of low rates and scarce yield, and investors will continue to seek assets that provide quality income. Credit Strategists Hans Mikkelson and Oleg Melentyev are bullish on corporate credit. They expect credit spreads to significantly tighten by the end of 2012 and forecast total returns of 4.8% and 13.9% from US IG and HY bonds, respectively.     How to play it: Within corporate bonds, favor the US over Europe, and overweight IG Financials. Within equities, favor high quality and high dividend yielding companies, US Staples and Tobacco stocks, REITs and MLPs. 7. Modest upside for equities Equities should offer roughly 10% upside in 2012. Our year-end targets for equities are 330 for the MSCI ACWI and 1350 for the S&P 500. Deleveraging and slower earnings growth will limit upside, but quantitative easing, valuation and positioning will limit downside. We remain convinced that the true equity bull market is in stocks and sectors that provide high growth, high quality and high yields.   How to play it: 2012 portfolios should continue to be tilted toward Creditors over Debtors, Growth over Value, large over small, quality over junk, US over Europe and EM over Japan. Select US sectors (Consumer Staples, Tech) and themes that offer a combination of high quality and strong secular growth. 8. Large-caps should outperform small-caps The RIC expects large-caps to continue to outperform small-caps in 2012, as earnings growth and valuations are better up the market cap spectrum. The heightened volatility and macro uncertainty offsets the clean balance sheets and potential for more M&A within small-caps.   How to play it: Avoid small-cap ETFs. Within small-caps, look for size and quality to outperform along with secular growth stocks. Small-cap Strategist Steven DeSanctis' favored sectors are Energy, Health Care and Tech, and his least-favored are Financials and Materials. 9. EM rate cuts support EM assets and commodities  Our economists expect Emerging Markets to continue to be the engine of global growth in 2012. EM government debt-to-GDP ratios are well below those in DMs, leaving room for increased public spending. And as recent policy easing in Brazil, Russia, Turkey and Indonesia suggest, EM central banks will be pre-emptive in supporting growth.   How to play it: Aggressive EM easing is positive for EM bonds and equities, although the upside to EM currencies will be constrained. Asian easing should be positive for commodity prices. 10. Stock picking opportunities likely to emerge A decline in correlation and volatility is very likely from the current unprecedented levels and should engender higher returns from active fund management in 2012. The growth of high frequency program trading and widening use of ETFs has simultaneously increased correlations and inefficient pricing of individual stocks. Correlations are likely to drop once a macro solution is forced upon Europe.   How to play it: This can be exploited with a buy-and-hold strategy for the best companies and aggressive stock pair trades, as well as favoring active fund management.   The good news is investor sentiment is more defensive today than 12 months ago, and central banks are once again demonstrating they will do everything they can to prevent systemic financial market turmoil. The BofAML base case is that policymakers will once again succeed in avoiding the abyss in 2012. As a result, the RIC believes 2012 offers many investment opportunities, as well as threats.

Bailout Total: $29.616 Trillion Dollars Posted: 09 Dec 2011 08:50 AM PST 09-Dec (TheBigPicture) — There is a fascinating new study coming out of the Levy Economics Institute of Bard College. Its titled "$29,000,000,000,000: A Detailed Look at the Fed's Bail-out by Funding Facility and Recipient" by James Felkerson. The study looks at the lending, guarantees, facilities and spending of the Federal Reserve. The researchers took all of the individual transactions across all facilities created to deal with the crisis, to figure out how much the Fed committed as a response to the crisis. This includes direct lending, asset purchases and all other assistance. (It does not include indirect costs such as rising price of goods due to inflation, weak dollar, etc.) The net total? As of November 10, 2011, it was $29,616.4 billion dollars — (or 29 and a half trillion, if you prefer that nomenclature). Three facilities—CBLS, PDCF, and TAF— are responsible for the lion's share — 71.1% of all Federal Reserve assistance ($22,826.8 billion). [source]

He Chose Well Posted: 09 Dec 2011 08:49 AM PST Bullion Vault

Iran: Not Just the Drone Posted: 09 Dec 2011 08:28 AM PST December 9, 2011 [LIST] [*]It’s not just the drone: How Washington is aiding and abetting guerrillas fighting Iran’s government in the run-up to the “New War” [*]Byron King in London with unique insight into why Britain snubbed the euro negotiations [*]Sprott’s John Embry with encouraging words after gold’s euro-driven losses yesterday [*]Chris Mayer on a “big breakthrough” for the U.S. oil industry [*]More “Tax-Out” scenarios... an alternative explanation for Black Friday gun sales... Jon Corzine gets the Family Guy treatment... and more! [/LIST] The run-up to the “New War” Byron King is forecasting is taking some mighty strange turns this week. No doubt you’ve heard about the drone aircraft captured by the Iranian government... nearly intact... and proudly shown on state TV... How exactly it fell into their hands, no one is saying... but the Pentagon has confirmed it’s t...

Gold Daily and Silver Weekly Charts - Divvying Up the MF Gold and Silver Posted: 09 Dec 2011 08:11 AM PST This posting includes an audio/video/photo media file: Download Now

Interview with Martin Armstrong 12-09-2011 Posted: 09 Dec 2011 08:08 AM PST Martin Armstrong is back on the show to talk about what's really happening to the world financial markets. He explains how flimsy the entire Euro structure was from the get-go. He advised the leaders to unify Europe both monetarily and fiscally, but they rejected that advice, rightly believing that theexpanded European Union would never have been approved. His only surprise is that the entire structure held together as long as it has. He believes that Germany will be forced to inflate, because no one is willing to accept the consequences of massive deflation, complete with bank failures and widespread unemployment. Therefore, the politicians will take the path of least resistance as they always do. MF Global was another disaster of massive proportions. It is now obvious that your money is unsafe no matter where it is being kept, except perhaps in physical gold and silver. The clearinghouse was always supposed be the ultimate guarantor of customer funds, making good on customer accounts when companies failed. However, this never happened in the MF Global failure and there are many thousands of investors left holding the bag. But more importantly, confidence in an already shaky system has been furtger undermined. The eventual results could be devastating to all investors any place on the globe. Please send your questions to kl@kerrylutz.com or call us at 347-460-LUTZ. This posting includes an audio/video/photo media file: Download Now

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