Gold World News Flash |
- What is the future of America in 2012
- Spreading the Risk
- The Scramble For US Safety, As Europe Imploded, Offset The $357 Billion Plunge In Q3 Shadow Banking
- Pento - When Extreme Volatility in Gold & Commodities will Hit
- Gold Seeker Closing Report: Gold and Silver Fall Almost 3%
- FT's John Dizard: Gold borrowed from governments or ETFs may be propping up European banks
- MF Global: A romance with risk that brought on a panic
- Give Silver Bullion an AAA Rating
- Silver’s Beta is Irrelevant
- The Risks of "Paper Gold"
- Six Tail Scenarios That Deutsche Bank Are Watching For Next Year
- The $30 Trillion “Problem” At The Heart Of Shadow Banking – A Teaser
- Wrapping Monday
- Guest Post: Taiwan and the Silver Situation
- Lower Lows For More Important Items
- Sheer Bedlam / Gold and Silver Attacked / Bourses Around the World Fall in Price
- Rehypothecation
- In The News Today
- Gold Price Dropped Through the 150 Day Moving Average, Will it Drop Farther?
- Capital Account: Peter Schiff on the Euro Crisis, the Dollar and the GOP (12/12/11)
- The $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser
- The $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser
- Not Redefining Rich
- Hong Kong’s Golden IPO
- Face to Face with Elizabeth Woodworth and 9/11 Consensus
- Gold: Supply Crunch? What Supply Crunch?
- Year-End Buying Opportunities Abound in Mining Stocks: Louis James
- Fleckenstein, Leeb shrug off metals' dip in King World News interviews
- Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As “Cash”
- Entire Western Financial System Will Implode
| What is the future of America in 2012 Posted: 12 Dec 2011 05:45 PM PST  The US economy has been hit hard by its worst downturn since World War II. Since late 2008 the economy registered record GDP declines and increases in unemployment. As a result, the US economy (real GDP) grew by only 1.1% in 2008.To see our economy seem to collapse is frightening, but what is more frightening is to believe that it can be put back together by the same thinking and the same people whose greed and corruption caused it. Now that we have the support of clarity and compassion in the incoming energies that are entering our space time continuum, we need not be afraid. To realign our monetary system and rid it of corruption and greed requires that it be dismantled and bullt up again in a new and better way. A great new civilization has a chance to be born now, and we all must take part in it for we have been created with a singular purpose to do this, each with a unique part to play. Watch the video........ 
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| Posted: 12 Dec 2011 05:20 PM PST The Gold Speculator
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| The Scramble For US Safety, As Europe Imploded, Offset The $357 Billion Plunge In Q3 Shadow Banking Posted: 12 Dec 2011 04:38 PM PST In continuing our exclusive analysis of the periodic variations in the by now all important shadow banking system, we next look at the change in third quarter (3 Months ended 9/30) shadow liabilities as disclosed by the just released Flow of Funds (Z.1) report by the Fed. As by now should have been made all too clear, if there is one threat above all to the monetary regime, primarily of the US but by extension, global, it is the ongoing collapse in shadow banking, which is simply an unregulated pass-thru funding conduit for all the non-traditional banks and bank holding company firms which perform one or all of the three banking functions: maturity, credit and liquidity transformations. As such these are critical because having peaked at $21 trillion, the shadow banking system was always substantially larger than the traditional banking system since Q4 of 1990 when it finally overtook in terms of total notional, and provided far more broad "credit-money" liquidity to the global financial system than regulated (and we emphasize this word with bold and underline) entities. And since the burst of the credit bubble, the liquidity is now evaporating on a quarterly basis. So cutting to the chase, in Q3, US shadow banking declined by $357 billion to $15.2 trillion in liabilities, a decline of $654 billion in 2011 YTD, and a drop of $5.7 trillion from the $20.9 trillion peak in March of 2008. Such an uncontrolled ongoing collapse, primarily brought by the disappearance of dumb incremental (marginal) money originating in Germany (Landesbanks) and Spain (Cajas), as well as various Asian sources of dumb money, is beyond a shadow of a doubt the biggest deleveraging threat to the global monetary system bar none. And here is where the central banks step in. As it turns out, and as was discussed previously, Q1 ended up being the first quarter which saw a sizable increase in consolidated shadow and traditional liabilities, primarily due to the impact of QE2 which culminated in Q1 of 2011. Afterwards, we saw a quarter in which there was no net consolidated change, courtesy of a rebound in traditional banking and now we analyze Q3, in which the abovementioned plunge in shadow liabilities was once again more than offset by a $388.5 billion jump in traditional liabilities. Yet what caused this spike in offsetting liquidity? Why none other than the Fed, via its latest preferred conduit: foreign banks, a topic discussed extensively first by Zero Hedge back in June. Because of the $624 billion increase in traditional liabilities in Q2 and Q3, the bulk, or $415 billion is courtesy of "Foreign Banking Offices in U.S." aka table L.111 in the Z.1. Said otherwise, in the most ingenious scheme to date, the Fed managed to pump reserves into foreign banks (or rather their US-based offices), and hence back into the US system, as these intermediaries promptly turned around and used said reserves as source of precious liquidity even as the rest of the shadow world was collapsing around them, courtesy of lack of demand for unregulated paper out of Europe. Ironically, it turns out that a collapsing European continent does as good a job, if not better at offsetting shadow leverage as quantitative easing. Unfortunately, for the Fed, reserve reallocation is only a stop gap measure, which in the absence of incremental liquidity will merely shuffle the chairs on the deck of the Titanic, while at the same time non-shadow European banking is caught in the "Death Spiral" discussed previously. Needless to say, should Europe collapse, the bulk if not all of shadow banking will go up in smoke with it due to the unregulated yet explicit daisy-chaining of Euro-facing transactions, and thus transatlantic counterparty risk. At that point not even the Fed will be able to offset the momentous collapse in nearly $15 trillion in gross shadow liabilities, or $7.5 trillion excluding GSE liabilities currently held with an implicit guarantee of the US itself. Because should the Fed have to ramp up its balance sheet from the current $2.7 trillion to $$10 trillion overnight, the resulting hyperinflation will be the least of everyone's worries. Yet that is precisely what the Fed has to do each and every time there is a collapse in shadow liabilities! Forget anything else you may hear about the justification for "printing money" and remember this: the Fed's one and only directive is to offset the massively deflationary and increasingly more rapid deleveraging of shadow liabilities, which incidentally consist of money markets, GSEs, Agency Mortgage Pools, ABS Issuers, Funding Corporations, Repos and Open Market Paper: these are the various components that can be tracked via the Z.1, and which cause sleepless nights for the 10 voting members of the FOMC committee. One key component that can not be tracked, primarily since it is domiciled in the UK due to an enabling regulatory regime, are the liabilities generated by hypo/rehypo and hyper-hypothecation, courtesy of lax UK supervision standards allowing up to infinite rehypothecation of the same asset in what could become the daisy-chain from hell of linked serial counterparty exposure. According to IMF estimates, this vehicle, which does not exist anywhere in the Z.1, accounts for an additional $4-6 trillion in shadow liabilities. Yet it is the marginal rate of change that interests us, and as such it relies almost primarily on the $9 trillion in levered hedge fund assets which subsequently are (re)hypothecated by Prime Brokers. In other words, should the hedge fund industry be decimated in 2011, as it likley will be, and if the $3 trillion or so in HF AUM collapses by a third, there goes another $3 trillion in hypo-associated shadow liabilities... with who knows how much real assets pledged as collateral. But that is a tangent to this story, which is that regardless of what is happening in the hypothecation vertical, a fascinating story in its own right, the "traditional" shadow liabilities (pardon the pun) continue to collapse and collapse. And unfortunately, in Q4 domestic offices of foreign banks will not help the US as any minute now, these same banks will be forced to commence an epic wave of deleveraging to the tune of up to €2.5 trillion... Which means that once again without halting the shadow banking collapse, it is QE (and we mean hardcore LSAP monetization - none of this sterilized amateur stuff) or bust. So for our visual readers, here is what all of the above means graphically. First, total Shadow liabilities on a quarterly basis, ex-rehypothecated. Note the peak and subsequent slide.
Next, we present a breakdown by key shadow components.
The sequential change shows that the attempt to arrest the decline failed in Q1 of 2011 and has since picked up speed once again.
Yet "shadow" is only half the battle. Don't forget the traditional stuff (aka U.S.-Chartered Commercial Banks, Foreign Banking Offices in U.S. and Bank Holding Companies). This area is the primary beneficiary of Fed QE largesse, typically via reserve accumulation. As can be seen while shadow liabilities collapse, it is the forced deployment of reserves into US and foreign banks that has done miracles to offset a consolidated crunch via the traditional banking pathway.
And the kicker: even without QE, the Fed has managed to sequester liquidity in the US via foreign banks (which accounted for $291 billion of the $389 billion in total traditional liability expansion) courtesy of the sovereign and financial crisis in the Europe which has peaked in 2011.
So will the Fed, and global central banks, be able to continue to offset the evaporation in shadow liquidity: certainly not, at least not without another massive large scale asset purchasing episode. Which, once Europe-based deleveraging picks up, is guaranteed. After all, there is nothing easier for the Fed than to push a button, and to add a zero to every banknote in circulation, or every checking account in the continental (and offshore) US. But that, like every other thing, will take the market some time before it is fully processed.
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| Pento - When Extreme Volatility in Gold & Commodities will Hit Posted: 12 Dec 2011 04:02 PM PST  With continued volatility in global markets, today Michael Pento, of Pento Portfolio Strategies writes for King World News to let KWN readers globally know what to expect in the coming year, "The original parameters used to construct the European Monetary Union were set up by the Maastricht Treaty of 1992. The Treaty on European Union contained strict limits on debt and deficits. In particular, deficits were not to exceed 3% of GDP and gross public debt was to be south of 60% of total output. Today, not even Germany can claim to have held true to those strictures. In fact, most countries in the EU have egregiously violated the Treaty's mandates."
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| Gold Seeker Closing Report: Gold and Silver Fall Almost 3% Posted: 12 Dec 2011 04:00 PM PST Gold fell all the way to $1657.28 by about 10:30AM EST before it bounced back higher midday, but it still ended with a loss of 2.66%. Silver slipped to as low as $30.883 and ended with a loss of 2.67%. Euro gold fell to about €1263, platinum lost $28.75 $1481.25, and copper fell 10 cents to about $3.45.
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| FT's John Dizard: Gold borrowed from governments or ETFs may be propping up European banks Posted: 12 Dec 2011 03:59 PM PST Just in case you think you own gold when you own ETF shares. ... * * * Greek Debt Crisis No Nearer Resolution By John Dizard http://www.ft.com/intl/cms/s/0/4b931eec-1f5a-11e1-ab49-00144feabdc0.html It appears that the faulty plumbing connections in the euro-area banking system are now creating something I have never seen before: a crisis of confidence in a monetary system that leads to a frantic selloff in gold. The partnership between the Federal Reserve and European Central Bank to provide hundreds of billions of relatively low-cost dollars for euro-area banks should have relieved the pressure to come up with greenbacks. Yet gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There's not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks or by gold exchange-traded funds. As James Steel, a gold market analyst for HSBC Securities (USA), says: "Until the funding difficulties at European banks are resolved, it is difficult for us to see any near-term halt in gold lending. This may help keep gold prices on the defensive." ... Dispatch continues below ... ADVERTISEMENT The United States Once Again Can Establish Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar. The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold. James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him." To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata The underlying problem in the euro area's crisis management at this point is a shrinking supply of attention span. All significant decisions are now being piled on to the desks of a small number of overwhelmed politicians and their underequipped staff. So critical tasks just aren't being completed. For example, the financial media and trading desks have shifted their attention from the Greek mess to the Italian mess and then to the new treaty mess. But the Greek mess has not, announcements to the contrary, been sorted out. Even though the Greek political leadership and parliament have agreed with the Europe-ECB-IMF troika on the outlines for a deal, there is no deal agreed, and a hard default is still looming. Timelines are important. There is a large lump of Greek government debt coming due in March 2012. There is not enough money in the Greek government's coffers, or in the new aid package, to pay that instalment on time. So those bonds have to be exchanged for new paper with less value and longer maturities. There is a lot of documentation that has to be circulated among the existing bondholders, and they need to get it at least 30 days before their signature is required, or some time before the beginning of February. This is becoming a problem. As someone knowledgeable about the negotiations between the Greek government and the bondholders says: "There is still a big gap between the bid and the offer side." In other words, Greece wants the real value of a deal to bondholders to be much lower than the bank group negotiating for bondholders is willing to accept. The issue for the foreign official sector, and the Greeks, is that the financing package for the Greek restructuring is based on the assumption that virtually all the present private sector holders of Greek government bonds will accept an exchange offer. If there are any bondholders who say, "Hey, this is a voluntary exchange, and I'm not volunteering, give me my 100 cents on the euro," then these "holdouts" have to be paid off with increased foreign official support. As my source says, "I think the troika will choke on that." I've been suggesting for over a year that the only way to make sure that over 90 per cent of the existing bondholders are pushed into making the exchange will be through the passage through the Greek parliament of a "retrofit collective action clause" covering the roughly 93 per cent of Greek debt that is governed by Greek law. This "retro CAC" would provide that if a supermajority of, say, two-thirds of bondholders agree a deal, the deal will be binding on the remaining holdouts, whether they like it or not. A bit rough, you may argue, but since it provides for a vote and a majority rule, it can be said there is something "voluntary" about the exchange. The law has to be introduced in the Greek parliament, and passed, though, before its provisions can be included in the exchange offer. This is where euro-dithering has lost not just valuable time, but essential time. Because there was concern that the "retro-CAC" could, in some future crisis, be applied to, say, Italian or Spanish bonds, that possibility had to be taken off the table with some euro announcement. That has pretty much been done with the Merkel-Sarkozy statement of this previous week, which limited so-called "private-sector involvement," or bondholder haircuts, on euro-area sovereign debt. For now. When the bank-bondholder group is confronted with the velvet-wrapped club of the parliament-imposed retro CAC, then it should be possible to conclude negotiations and finalise the documents. But it is not going to be possible to get all this done by the end of December, which was the hope when the Greek political class finished signing on to the so-called bailout. Instead, optimistically, the documents will be ready by mid-January. Given the timeline to a hard default, shortened by parliamentary friction and holidays, there is not another two weeks to be lost in delay and indecision. The Greek situation still has a fatal sting in its tail. Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing a silver commemorative coin: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. 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| MF Global: A romance with risk that brought on a panic Posted: 12 Dec 2011 03:33 PM PST By Azam Ahmed, Ben Protess, and Susanne Craig http://dealbook.nytimes.com/2011/12/11/a-romance-with-risk-that-brought-... Soon after taking the reins of MF Global in 2010, Jon S. Corzine visited the Wall Street firm's Chicago offices for the first time, greeting the brokers, analysts and sales staff there. One broker, Cy Monley, caught Mr. Corzine's eye. Unknown to MF Global's top management in New York, the employee, whose job was to match buyers and sellers in energy derivatives, was also trading a small account on the side, using the firm's capital. "How are you making money on side bets? What else are you guys doing to make money here?" Mr. Corzine asked enthusiastically, his eyes widening, the broker recalled. The new chief executive grabbed a seat and spent an hour questioning Mr. Monley as other top executives from New York hovered impatiently nearby. ... Dispatch continues below ... ADVERTISEMENT Prophecy Drills 384.9 Meters Grading 0.623 g/t PGM+Au, Company Press Release 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... Although Mr. Corzine had been a United States senator, governor of New Jersey, co-head of Goldman Sachs, and a confidant of leaders in Washington and Wall Street, he was at heart a trader, willing to gamble for a rich payoff. Dozens of interviews reveal that Mr. Corzine played a much larger, hands-on role in the firm's high-stakes risk-taking than has previously been known. An examination of company documents and interviews with regulators, former employees and others close to MF Global portray a chief executive convinced that he could quickly turn the money-losing firm into a miniature Goldman Sachs. He pushed through a $6.3 billion bet on European debt -- a wager big enough to wipe out the firm five times over if it went bad -- despite concerns from other executives and board members. And it is now clear that he personally lobbied regulators and auditors about the strategy. His obsession with trading was apparent to MF Global insiders over his 19-month tenure. Mr. Corzine compulsively traded for the firm on his BlackBerry during meetings, sometimes dashing out to check on the markets. And unusually for a chief executive, he became a core member of the group that traded using the firm's money. His profits and losses appeared on a separate line in documents with his initials: JSC. Yet few appeared willing to check Mr. Corzine's trading ambitions. The review of his tenure also sheds new light on the lack of controls at the firm and the failure of its watchdogs to curb outsize risk-taking. The board, according to former employees, signed off on the European bet multiple times. And for the first time it is now clear that ratings agencies knew the risks for months but, as they did with subprime mortgages, looked the other way until it was too late, underscoring how three years after the financial crisis, little has changed on Wall Street. MF Global filed for bankruptcy on Oct. 31. As the firm spun out of control, it improperly transferred some customer money on Oct. 21 -- days sooner than previously thought, said people briefed on the matter. And investigators are now examining whether MF Global was getting away with such illicit transfers as early as August, one person said, a revelation that would point to wrongdoing even before the firm was struggling to survive. The consequences of the firm's collapse have been severe: Some $1 billion in customer money remains missing and thousands of clients, including small farmers in Kansas or hedge funds in Connecticut, still do not have nearly a third of their funds. Some of that money may never be recovered if, as some regulators now fear, MF Global used it to cover trading losses and replenish overdrawn bank accounts. The bet on European sovereign debt is not thought to be directly connected to the missing money. But the fears about the firm's exposure to Europe tipped an anxious market, causing a run on MF Global that regulators suspect led the firm to fight for its life using customer money. Mr. Corzine has not been accused of any wrongdoing. Through a spokesman, he declined to comment for this article. While Mr. Corzine apologized for the firm's collapse when he appeared before the House Agriculture Committee on Thursday, he has continued to defend the European trade, calling it "prudent" at the time. The European trade was initiated by Mr. Corzine late in the summer of 2010. The new chief executive explained the bet to a small group of top traders, arguing that Europe would not let its brethren default. In just a few months, the trade swelled to $6.3 billion, from $1.5 billion. Europe's debt crisis, meanwhile, continued to flare, raising questions about whether some of the Continent's bigger economies, Spain and Italy, might be ensnared in the maelstrom. In August, some directors questioned the chief executive, asking him to reduce the size of the position. Mr. Corzine calmly assured them they had little to fear. "If you want a smaller or different position, maybe you don't have the right guy here," he told them, according to a person familiar with the matter. He also told one senior board member that he would "be willing to step down" if they "had lost confidence in me," Mr. Corzine told Congress on Thursday, although he said he had not intended to make a threat. The board relented. ... A Curious Career Move Few would have guessed that Mr. Corzine, having led Goldman Sachs before serving in the Senate and as a governor of New Jersey, would wind up the chief executive of a little-known brokerage house. At Goldman, which he joined in 1975, the young bond trader quickly gained a reputation as someone able to take big risks and generate big profits. Even after ascending to the top of the firm, he kept his own trading account to make bets with the firm's capital. In 1999, Mr. Corzine was ousted from Goldman amid a power struggle. By 2010, having suffered a stinging defeat in his bid for re-election as the Democratic governor of New Jersey, Mr. Corzine hoped to resume his career on Wall Street. A friend, J. Christopher Flowers, one of MF Global's largest investors, helped him get there. Mr. Corzine and Mr. Flowers worked at Goldman decades ago, and at one point, Mr. Flowers helped manage Mr. Corzine's vast wealth while he was a senator, according to Congressional records. Mr. Corzine's arrival was a coup. MF Global had hired an executive search firm, Westwood Partners, to hunt for a new leader. But some members of the board, including David I. Schamis, who worked for Mr. Flowers, were recruiting Mr. Corzine. He was a popular manager, former employees say. An avuncular presence with a beard and sweater vest, he had a knack for remembering names. Even in the firm's final hours, they recall, Mr. Corzine never lost his temper. His work ethic also impressed colleagues. He often started his day with a 5-mile run, landing in the office by 6 a.m. and was regularly the last person to leave the office. His intense routine was on par with his ambitions for the firm. With 15 top executives in the firm's boardroom on his first day, March 23, 2010, he said, "I think this firm has tremendous potential and I can't wait to get started," one person who attended said. Mr. Corzine faced a steep challenge. For years, MF Global aligned buyers and sellers of futures contracts for commodities like wheat or metals, and took a small commission along the way. But over the last decade, that business had become endangered. By the time Mr. Corzine arrived, near zero-percent interest rates and paper-thin commissions had led to five consecutive quarters of losses. Soon after taking the helm, Mr. Corzine oversaw a wave of job cuts and overhauled compensation, moving from steady commissions to salary and discretionary bonuses like the rest of Wall Street. At the same time, Mr. Corzine filled the ranks with employees from Goldman Sachs and hedge funds like the Soros Fund Management. He recruited Bradley Abelow, a fellow Goldman alumnus and a top aide when he was governor, to be chief operating officer. Mr. Corzine arrived just as Washington was pressing the big banks to curb their lucrative yet risky businesses. Spotting an opening, he fashioned new trading desks, including one just for mortgage securities and a separate unit to trade using the firm's own capital, a business known as proprietary trading. Not to be outdone, Mr. Corzine was the most profitable trader in that team, known as the Principal Strategies Group, according to a person briefed on the matter. Mr. Corzine traded oil, Treasury securities, and currencies and earned in excess of $10 million for the firm in 2011, the person said. Some inside MF Global worried that the expansion of the profitable trading business in New York came at the expense of its futures clearing operation, which was centered in Chicago. To drum up sales, Chicago brokers were pushed to introduce longtime clients to their counterparts in New York, a move that raised tensions. At times, Mr. Corzine seemed unfamiliar with some aspects of the futures division. In June, speaking at the Sandler O'Neill Financial Services Conference at the St. Regis Hotel in Manhattan, Mr. Corzine stumbled. "Right now, if you thought about MF Global's retail business, you probably could only think of. ...," he said, then paused to recall the name of the division at MF Global that catered to individual investors. He leaned over to an aide, who told him it was Lind-Waldock. ... 'Chief Risk Officer' "I consider one of my most important jobs to be chief risk officer of our firm," Mr. Corzine told that conference. Yet soon after joining MF Global, Mr. Corzine torpedoed an effort to build a new risk system, a much-needed overhaul, according to former employees. (A person familiar with Mr. Corzine's thinking said that he saw the need to upgrade, but that the system being proposed was "unduly expensive" and was focused in part on things the firm didn't trade.) While risk at the firm had been sharply increased with the bet on European sovereign debt, there was a compelling argument for Mr. Corzine's strategy. MF Global had obtained loans to buy debt of Italy, Ireland, and other troubled European nations while simultaneously pledging the bonds as collateral to support the loans. The loans would come due when the bonds matured, which would happen no later than the end of 2012. MF Global, Mr. Corzine reckoned, would profit on the spread between the interest paid on the loans and the coupons earned from the bonds. But the size of the European position was making the firm's top risk officers, Michael Roseman and Talha Chaudhry, increasingly uncomfortable by late 2010, according to people familiar with the situation. They pushed Mr. Corzine to seek approval from the board if he wanted to expand it. Mr. Roseman then gave a PowerPoint presentation for board members, explaining the sovereign debt trade as Mr. Corzine sat a few feet away. The presentation made clear the risks, which hinged on the nations not defaulting or the bonds losing so much value they caused a cash squeeze. The directors approved the increase. Mr. Roseman eventually left the firm. Within MF Global, Mr. Corzine welcomed discussion about his bet and his reasons for it, though some senior managers said they feared confronting such a prominent figure. Those who did challenge him recall making little progress. One senior trader said that each time he addressed his concerns, the chief executive would nod with understanding but do nothing. These concerns were only internal at first because, while MF Global had disclosed the existence of the transactions in at least one filing in 2010, it never mentioned the extent to which they were used to finance the purchase of European debt. The firm bought its European sovereign bonds making use of an arcane transaction known as repurchase-to-maturity. Repo-to-maturity allowed the company to classify the purchase of the bonds as a sale, rather than a risky bet subject to the whims of the market. That called to mind an earlier era of trading when firms used repo-to-maturity to finance the purchase of risk-free assets like U.S. Treasury securities, Mr. Corzine's specialty at Goldman many years earlier. "It's like a bond trader from 15 years ago went to sleep and suddenly awoke to make these trades," one regulator who later reviewed the transactions remarked to a colleague. Eventually, MF Global's auditor, PricewaterhouseCoopers, asked Mr. Corzine to report the European debt exposure to his investors. He personally met with the accounting firm in December 2010, two people said, and it was agreed that the transactions would be mentioned in a footnote in the firm's annual report, which was filed on May 20, 2011. Earlier, one of MF Global's many regulators noticed something curious. The Financial Industry Regulatory Authority, which helped watch over MF Global's securities business, noticed a sharp swing in profits in a monthly report the firm filed to regulators. Finra asked MF Global executives about the volatile accounting line but did not get a satisfactory answer, say people familiar with the matter, until the annual report came out weeks later. When Finra realized what MF Global was doing, it grew concerned. The Wall Street self-regulator told MF Global to set aside enough money in case the trades went bad. But Finra didn't have the authority to force the firm to do so -- that power was in the hands of the Securities and Exchange Commission, whose rule Finra was citing. Mr. Corzine then personally took the firm's case to the SEC in mid-August, taking the Delta Shuttle to Washington for a meeting with a top agency official. The SEC indicated it would side with Finra, but needed a few weeks to make a final determination. In the meantime, MF Global and Finra haggled over the size of the capital cushion: The regulator wanted $200 million set aside, while the firm pushed for a figure closer to $50 million. In late August, Finra won out. It would be the beginning of the end for MF Global. ... The Unwinding MF Global's investors may not have been fully informed about the European bet, but the firm's executives had been explaining the strategy to the ratings agencies for months, according to two people with direct knowledge of the conversations. Indeed, Moody's Investors Service and Standard & Poor's had applauded Mr. Corzine's effort to overhaul the firm, a move that included ratcheting up risk. "We consider the most recent strategic plan of the new CEO Jon Corzine to be sound," S.& P. said in 2010, while acknowledging the plan "will incrementally increase the firm's risk profile." But the move by Finra to force the extra capital cushion appeared to only unnerve the ratings agencies when news reports about it emerged in October. A week later, Moody's cut its rating on MF Global to a notch above junk, pointing to the European debt holdings. The reversal angered some executives at MF Global, who felt it was disingenuous for the agency to change its mind so suddenly. A spokesman for the ratings agency said, "Moody's does not refrain from taking rating action when its opinion on the credit risk of an issuer has changed." The downgrade sent MF Global into free fall on Oct. 25. Its stock price plunged and trading partners and lenders demanded more capital to continue doing business with the company. At day's end, rattled employees dialed into a conference call with Mr. Corzine, who tried to be encouraging. "The sun will come out tomorrow," he told them, according to one employee. In truth, the company had just two options: sell itself or unload assets. Mr. Corzine organized two teams. Mr. Abelow, his deputy, began hunting for a buyer and decamped to the 40th floor of the firm's Midtown Manhattan headquarters. On the 39th floor, where his office was next to the trading floor, Mr. Corzine took charge of selling the assets. On Friday evening, Oct. 28, regulators and top executives trooped into Mr. Corzine's office, joining a phone conference with Mary L. Schapiro, chairwoman of the SEC. Pictures of Mr. Corzine with Presidents Barack Obama and Bill Clinton sat on shelves near his desk. Towering stacks of paper lined the walls and windowsills of his modest office, partly obscuring the window view. Dressed in his trademark sweater vest, Mr. Corzine expressed confidence a deal would be reached with one of the potential buyers, which included Interactive Brokers, JPMorgan Chase, the Jefferies Group, and the Macquarie Group, according to people briefed on the call. A deal became crucial as trading partners and lenders circled the firm. LCH.Clearnet, the firm responsible for clearing the vast majority of MF Global's European sovereign debt trades, was also demanding $200 million to maintain the positions, atop $100 million it had claimed from MF Global earlier in the week, one person briefed on the situation said. Other people close to the investigation, led by the Commodity Futures Trading Commission's enforcement division, have said that as the firm rushed to pay off creditors, MF Global dipped again and again into customer funds to meet the demands. The bidders dropped out one by one, leaving just Interactive Brokers on Sunday, Oct. 30. Mr. Corzine and his team briefed regulators at 2 p.m. saying a sale looked likely to go through. About nine hours later he got word that more than $950 million in customer funds was missing, making a merger impossible. The day after the bankruptcy, Mr. Corzine sifted through transactions in the hope of locating the missing money, one person said. Ultimately, the bets Corzine placed wound up better than the firm itself. The European debt trades were profitable, though too late for MF Global. Before Congress on Thursday, Mr. Corzine continued to emphasize how well his trades held up. "As of today, none of the foreign debt securities that MF Global used," he said, "has defaulted or been restructured. There actually were no losses." Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference 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: 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: 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: To contribute to GATA, please visit: ADVERTISEMENT Sona Discovers Potential High-Grade Gold Mineralization From a Company Press Release 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 d
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| Give Silver Bullion an AAA Rating Posted: 12 Dec 2011 03:32 PM PST The FinancialTimes reported early on Monday that Standard & Poor's will announce a potential downgrade of five triple-A rated governments. As of writing time, no announcement has been made. Investors see what the ratings agencies also see, but are too slow to call out – the financial condition of major governments is not nearly as attractive as it appears. In particular, Germany and France are handicapped by the weight of other EU nations struggling with high debt yields. Rethink the Ratings Ratings from the major credit agencies have several focuses, but in general the agencies seek to rate an institution's ability to make payments on their obligations. That is, ratings agencies make public their own evaluation of a country's or company's ability to generate cash. A common saying says something like, "a bird in the hand is worth two in the bush," implying that one of something guaranteed is worth more than the potential to have two of something in the future. If ...
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| Posted: 12 Dec 2011 03:31 PM PST Beta is a financial term that describes an asset's volatility relative to the S&P500 index. In scoring individual assets against the equity markets, financiers hope to find a collection of securities that provide the best possible appreciation with the least amount of beta. That is, financiers are compensated to make many different investments to form the perfect portfolio that, over time, goes up in the straightest line possible. There are obviously a few short-comings with any beta figure for any non-equity investment. First, silver is a commodity, not a company, so the comparison here isn't very applicable. You wouldn't compare the relative volatility of your automobile to the stock market, even if it makes up a large part of your net worth. There just isn't enough basis for comparison. Even then, we can afford to give financiers the benefit of the doubt in applying a beta measurement to commodities on this particular point. Why Beta Shouldn't Concern In...
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| Posted: 12 Dec 2011 03:24 PM PST December 12, 2011 [LIST] [*]Let’s get physical: Two new reasons to have real gold in your personal possession [*]Confiscation? Byron King on a more likely threat to your gold stash [*]And no one panicked on Friday? Safety trade in play, one trading day late [*]Who says the ECB is hawkish? Dan Amoss’ postmortem on the latest eurozone developments [*]A Christmas tree made of gold... Tax pro weighs in on the cons of the “Tax-Out”... Should Cramer get the Family Guy treatment?... and more! [/LIST] “You had better have your stash of physical gold and silver,” Byron King advised his Outstanding Investments readers last Thursday. “I mean...YOUR stash. It’s not yours if it’s on deposit with someone else. (Remember MF Global and ask yourself why Jon Corzine is still walking the streets a free man!)” Mr. King’s remarks look especially prescient after developments over the weekend. After the spot ma...
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| Six Tail Scenarios That Deutsche Bank Are Watching For Next Year Posted: 12 Dec 2011 03:17 PM PST Jim Reid and his team from Deutsche have produced another magnificent compendium of information and prognostication in their 2012 Credit Outlook and while their up-in-quality preference (non-financial) may not be earth-shattering strategically, their timing view is of note. Instead of viewing the looming refi-ganza among European sovereigns and financials in H1 2012 as a reason for doom and gloom, they see it as the necessary evil to drive the ECB into the markets in size only for the latter half of the year to disappoint significantly as the reality of the underlying problems rear their ugly head once more. The down-then-up-then-worse-down perspective on markets for next year hardly sounds optimistic but it is the following six scenarios away from European woes that keep them up at night. From the positivity of a US housing rebound or Election year cycle to much more extreme downside risks such as geo-political concerns and non-European sovereign risks, their views on China, QE-evolution and Inflation concerns are noteworthy. Before the six scenarios though, one of the most interesting longer-term charts we have seen recently for some context of where European Sovereign Yields have been:
Obviously there is plenty of room for decompression still and that is Deutsche's view of H2 2012 market reactions to another risk flare - but that's tale well told recently. Six Curve Balls for 2012 1->Disappointing China/EM Growth And Ongoing Geo-political Risks
2->Japan/US/UK Sovereign Risk?
3->Inflation To Come Roaring Back?
4->Does QE Change?
5->US Housing
6->US Election Years
Much as they say it, these may not all be 2012 'events', but they are certain to all be discussed ad nauseum over the coming year for better or for worse.
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| The $30 Trillion “Problem” At The Heart Of Shadow Banking – A Teaser Posted: 12 Dec 2011 02:42 PM PST from ZeroHedge:
Frequent readers know about Zero Hedge's fascination with the murky world of "shadow banking" a topic we have been covering since late 2009, which can best be summarized as follows: the near-infinite fungibility of electronic credit-money equivalents within the infinitely interconnected modern financial system. The recent escalation in the discovery of massive broker capital deficiency courtesy of the MF Global bankruptcy as a result of a collapse in one of the numerous shadow banking funding pathways, namely rehypothecation, is just the very tip of the iceberg. Much more is coming, as shadow banking continues to be unwound day after day (we will post an update of the Q3 data later in the day). In the meantime, we go back to that one certain Citi report from September 5, 2008 which explained just how broken the financial system was that according to some, the realization, and not some ulterior deathwish, is what sparked the run on Lehman, and subsequently money market, ABCP, repos, synthetics, structured products, securities lenders, AIG, and everything else that the Fed had to step in with a roughly $30 trillion bail out. Why was it $30 trillion? Simple: because at its heart, the "shadow banking" system has a $30+ trillion diabolic funding mechanism, where when one cuts out all the fancy nomenclature, acronyms, abbreviations, and jargon, the bottom line is that there are increasingly less and less hard assets (i.e., cash-flow generating), funding ever more and more liabilities, and where one's assets are another's liabilities in a "fractional reserve" recursive loop, and which in that shadowy sub-center of modern banking – London (because New York is just for regulatory diversion)- the loop can go on literally in perpetuity.
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| Posted: 12 Dec 2011 02:36 PM PST from TFMetalsReport.com:
Ugh. Yuck. What an ugly day in paper metal. Almost makes paper metal seem worthless. Hmmm. Now there's a thought… Anyway, sorry that this was such an ugly day. It certainly wasn't any fun and I don't think the shellacking is finished yet, either. We did, however, find some support today in an old, familiar place. Check out the chart below. Gold stopped and reversed almost right at the "gap open" of 8/7. You remember 8/7, don't you? That was the very fun Sunday evening following the late 8/5 announcement by S&P that they were downgrading U.S. debt. Anyway, having found support there once again, we now have a very clear line of demarcation to watch overnight and into the rest of the week. Gold is certain to test today's low of 1660 at some point. If that area holds again as a double-bottom, some spec buying may return and ease some of the pressure. If 1660 fails…which I suspect it will…it will be a clear signal that gold is headed to 1600-1610 next and, from there, could fall all the way toward 1550. Stay tuned. Read More @ TFMetalsReport.com
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| Guest Post: Taiwan and the Silver Situation Posted: 12 Dec 2011 02:16 PM PST by Warren Armstrong, edited by SGT:
I am a self-proclaimed Silver Vigilante and proud supporter of the war on financial terrorism. I first learned about the Silver Liberation Army (SLA) and the true nature of the world's monetary system in Vietnam back in 2008. That's when I first realized that the Vietnamese Dong was severely devalued when priced in U.S. Federal Reserve Notes. It cost me only 32,000 Vietnam Dong to buy a nice lunch – that was about $2 US dollars at the time. So I wanted to learn more about currencies. Why was ours worth so much more than theirs? Then I came across a documentary online called 'Zeitgeist', it was directed by Peter Joseph. I put his theory of constant money devaluation to the test by converting the money I made as an English Teacher in Ho Chi Minh City into gold. I purchased my first ounce of gold right at the height of the financial sub-crisis, when gold was at around $900 USD an ounce. Since February of 2008 I have watched the price of gold climb to what I once thought was unattainable heights. Now that I understand the banking system, whenever I look at the price of precious metals I view them only in comparison to worthless peices of paper. In my opinion now, there is no "bad price" at which to buy more gold any more. Any time you exchange fiat currency for something of real value like gold, it's a good time in my opinion. Physical gold is real. Paper is paper. There is no comparison. Whenever the big banks sell short and manipulate the price of physical gold, causing it to go lower when priced in fiat dollars, I cheer because it means I can buy more with my meager salary. To date I have stacked slightly more than 600 ounces of silver, most of it is constitutional silver, American and Canadian pre 1964-1967 coins. The rest is in silver Canadian Maple Leafs and bars. I also hold 3 ounces of gold. We've all heard the estimates of what gold and silver are really worth. Bix Weir has made the case for silver and gold at 1,000 times their current prices. And if that just sounds too nuts to you, the highly respected James Turk predicts $8,000 gold and $400 silver in just a few short years. And with all of silver's uses beyond its practicality and 5,000 year history as a monetary metal, I think it's worth far more than gold. Knowing this, it becomes easy to understand why investor demand for silver is growing around the world while the precious supply is quickly diminishing… which brings me to an interesting little discovery I made in Taiwan.
Asia is booming and the Taiwanese love Western-style consumption. Gold is still very popular in Asia and it is advertised openly at all the banks, there is even gold savings accounts. In fact, there are even billboards that not-so subliminally show how GOLD trumps Federal Reserve Notes. I found this one outside of the bank near my apartment, and all banks around Taiwan use imagery of gold in their marketing. Gold is embedded in the culture here. Unlike in Vietnam very few Taiwanese keep their gold in physical form. Just as in America, a lot of people are going to just see their electronic savings vanish into thin air, and then they will know real poverty. When the meltdown finally arrives, suddenly that wrinkled old man with the tattered clothes selling water, camping supplies and preserved foods will have a whole new status in life. Fortunately, at least for now food here is stil cheap, a decent meal only costs me a dollar. Central banks in Asia are regularly among the top purchasers of gold. Gold is pressed more deeply into the DNA of the government and the citizens here than it is in the United States. I think the entire world will be in for a rough ride when the financial SHTF, but I think that this side of the world will be better equipped to deal with it. At least here the people have some working knowlege of and appreciation for the true value of precious metals.
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| Lower Lows For More Important Items Posted: 12 Dec 2011 12:54 PM PST
 As someone in the USA who tends to read more US-centric commentary, I continue to see analysts look almost exclusively at the US markets. Because US stock markets have been relatively strong recently, a frequently read conclusion is that the US economy is holding up well and terms like "de-coupling" are making their way back into the financial lingo. This is a ridiculous concept in the current global economy, but people want to believe good times are just ahead just like when "green shoots" and "goldilocks" were bandied about in prior cycles. The US is not decoupling, it is lagging. Just as emerging (and other) markets topped later than the USA in the 2007-2009 bear market, so the US is the laggard this time. It doesn't mean the USA will avoid the pain or another nasty bear market (one has already begun in my opinion, but the "slope of hope" is alive and well). I am continuing to document the signs of this bear market for those interested in preserving their wealth through what promises to be turbulent times, indeed. I previously pointed out markets making lower lows below their October lows in a previous post. Continuing along that theme are some very important additions to the list. First up, China, using the Shanghai Index ($SSEC). Here's a 6 month daily chart thru today's close:  Next up, India ($BSE):  For commodity bulls, are you paying attention to the CCI Commodity Index ($CCI), which is more balanced and less oil-weighted than the $CRB Index?  Here are the so-called BRIC nation returns since their cyclical bull market peaks thru today's close: Brazil: Down 21.6% since Nov. 2010 peak Russia: Down 36.5% since April 2011 peak India: Down 24.6% since Nov. 2010 peak China: Down 34% since Aug. 2009 peak The engine of global growth has been gummed up with bad debtor paper and declining demand. The global recession has already begun and the exact timing of each market making its biggest declines is the only game worth playing in my opinion. Meanwhile, the precious metals (PM) and PM stocks continue to decline. A very important buying opportunity is approaching in my opinion in the PM sector, but I don't think we're there yet. My subscribers and I are currently short emerging markets while waiting to go long in the PM sector. If you're crazy enough to try trading in these markets, consider my low cost subscription service. Otherwise, just keep buying physical Gold on price dips and sleep well at night knowing you own the world's oldest and most reliable currency.  ![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif) 
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| Sheer Bedlam / Gold and Silver Attacked / Bourses Around the World Fall in Price Posted: 12 Dec 2011 12:25 PM PST by Harvey Organ: Dear Ladies and Gentlemen: Today bourses around the globe plummeted as many have figured out that the Friday accord was really a phony and would not solve the economic crisis in Europe. No doubt today we had many getting out of GLD/SLV and into real metals. Confidence is now beginning to wane. The price of gold finished the session at $1664.20 down $47.80 dollars. The price of silver fell to $30.94 down $1.23. I would like to emphasize to you that these prices are paper gold price and paper silver price. The clowns continue to whack the paper price with no profit motive just to keep the price down and show the world that everything is fine. Let us now head over to the comex and see how trading fared with respect to inventory movements and deliveries. The total comex gold hardly budged with today's reading shedding only 187 contracts from Friday's, coming in at 424,055. In another shocker, the front delivery month of December mysteriously saw its OI rise from 1356 to 1545 for a gain of 189 contracts despite 276 deliveries on Friday. Thus we gained 465 contracts or 46,500 oz of gold standing. Read More @ HarveyOrgan.Blogspot.com
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| Posted: 12 Dec 2011 12:23 PM PST by Andrew Hoffman, MilesFranklin.com:
It's Monday morning, and I'm on FIRE with rage, a true RANTING ANDY morning! As the world careens toward complete, utter FINANCIAL COLLAPSE, the efforts by TPTB to buy time and position themselves personally have reached SPIRITUAL levels, from unfathomably blatant PPT support of global stock markets, QE support of sovereign bonds, daily currency manipulation and, of course, the intensification of "OPERATION PM ANNIHILATION," which commenced MINUTES after the Labor Day holiday, minutes before the Swiss National Bank devalued the Franc. I hope you appreciate how much time I am now writing, as it is taking four-plus hours each day to update emerging "horrible headlines," and hopefully inject a bit of wisdom somewhere along the way. Just this weekend's gold manipulation "retraction" analysis took three hours, and I sense this morning's market update will take at least that long, given the long, and rapidly growing list of "horrible headlines."
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| Posted: 12 Dec 2011 12:03 PM PST Dear CIGAs, The following action is to be taken when the gold price get hit as currency controls are prepared, financial euromortus sets in, euro leaders talks politics, not actions, and when clearing houses go pear shaped. Close your eyes, cover up with puppies, turn the heat down, light a wood fire and take Continue reading In The News Today
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| Gold Price Dropped Through the 150 Day Moving Average, Will it Drop Farther? Posted: 12 Dec 2011 11:58 AM PST Gold Price Close Today : 1664.20 Change : (48.60) or -2.8% Silver Price Close Today : 3093.50 Change : 123.80 cents or -3.8% Gold Silver Ratio Today : 53.797 Change : 0.559 or 1.1% Silver Gold Ratio Today : 0.01859 Change : -0.000195 or -1.0% Platinum Price Close Today : 1486.70 Change : -27.05 or -1.8% Palladium Price Close Today : 659.90 Change : -24.05 or -3.5% S&P 500 : 1,236.47 Change : -18.72 or -1.5% Dow In GOLD$ : $149.32 Change : $ 2.29 or 1.6% Dow in GOLD oz : 7.224 Change : 0.111 or 1.6% Dow in SILVER oz : 388.60 Change : 9.89 or 2.6% Dow Industrial : 12,021.39 Change : -162.87 or -1.3% US Dollar Index : 79.58 Change : 0.948 or 1.2% The GOLD PRICE dropped clean through its milestone 150 day moving average (now $1,664) when it struck bottom at $1,657.32. Here's a catchy footnote: during the life of this bull market, you could hardly have gone wrong, even for a short time, blindly buying gold at its 150 DMA. Only on one occasion -- 2008 -- did it stay below the 150 DMA for enough time to scare you, and even then it came back. What about other destinations? The 200 DMA stands at $1,613, and the last low at $1,535. Everyone who called today asked, "Will it drop farther?" Might as well flip a coin as ask me. That 150 DMA is a place I like to buy gold. I will buy more at the 200 DMA, and I will be looking around to sell grandchildren if it reaches $1,535. The SILVER PRICE broke 3150c support and fell all the way to 3086c, a little higher than the November low (3069c). I like to look at the worst possible outcome whenever the roof appears to be caving in. If silver fell the height of the even-sided triangle that it has sketched out, it would fall to about 1750c. Not impossible, but not likely. That flash low at 2615c in late September offers another target, as does 2000c below that. Before y'all start looking for a rope to lynch me with, let me remind y'all that the SILVER PRICE is VOLATILE, way more volatile than the GOLD PRICE. Always is, and the scary side of that appears when silver corrects. The side you like, the outperform-gold-four-to-one side, comes when silver rallies. You don't get one without the other. SILVER and GOLD have just fallen out of even sided triangle formations. I would buy gold because it's at the 150 DMA, as I mentioned above. Silver, on the other hand, has fallen below its 300 day moving average. In this bull market, if you had done nothing brighter than merely buying silver whenever it sank below its 300 DMA, you would now be sitting on a pile of cheap silver. Only in 2008 did silver stay below its 300 DMA for long, and then only for about 8 months. Yes, most everybody who now owns silver or gold is puking in his wastebasket today, with visions of having to buy a hurdy-gurdy and monkey to make a living, but wait. Exactly when they are all sticking their heads in the wastebasket is the time we want to be buying. Or do y'all think that over the weekend Ben the Bernancubus and all the other central bank heads suddenly got religion and decided they weren't going to gut the public anymore? They are caught in their own trap. Either they inflate, or they die. Y'all know as well as I do which they'll keep on choosing. Another Euro-bobble, as the eurocrats failed again to enact any substantial solution to their bank solvency crisis. They are, however, tightening the power stranglehold on member countries and centralizing power like a drunk ordering highballs at a free bar. The outcome was a spectacular dollar rally. US dollar burst through 79 and is now trading at 79.58, up 1.22% or 94.8 basis points. The dollar's opposite numbers, of course, tumbled. Euro gapped down and fell to the October low (131.64). Ended at 1.3182. If the euro cannot check its fall here, it will tumble to 1.2500 to 1.2000. Yen fared somewhat better, but also gapped down. Remains in the 4-1/2 month range. Closed 128.33c/Y100 (Y77.92/$1), down 0.4%. Euro's greatest enemy now is gravity. Back away from the US dollar chart and look. It has now nearly reached the 79.84 early October high, and the 79.70 November high. This makes the dollar's THIRD time to knock at that 79.80 door, so the outcome won't be indifferent. Either it will slice through that 79.80 resistance like the Golden Horde of Mongols slicing through Eurasia, or it will fail and fall like your reading glasses out of your shirt pocket when you leaned over the rail to look down off the Empire State Building. I'm laying my bet on the dollar rising, because the Eurocrats' stubborn clinging to their unblemished fecklessness may be, at last, spooking the market into a REAL panic, just like 2008. When that happens, everybody will drop everything and run to the dollar for salvation. Boy. Will they ever get THAT wrong. I see reports that European commercial and central banks may be selling gold to raise dollars. May be, I have no way of checking that and they aren't about to tell me. But in a panic folks always rush into whatever the majority perceive as the safest instrument. Right now that's the dollar, so you have to expect silver and gold to suffer in a panicked dollar rally. Could be worse -- they could be stocks. Stocks have rolled over on their belly again, and are about to roll off the wall. Dow today barely held on at 12,000, closing down 1.34% (162.87) at 12,021.39. S&P500 lost 1.64% (18.72) to 1,236.47. Here's a guess. The Dow's decline began off the May top, fell to 11,950, rallied back to 12,700, then fell to 10,400 in October. That last was the big tough leg (so far), and all the drama since October has been nothing more than a correction of that fall. Correction ended at 12,200, where it failed. Now stocks have in front of them a "journey", as the pompous like to intone. Their journey will carry them below that October low at 10,400, and on down into the bowels of the earth. How could any enterprise prosper in the government-caused regulatory and financial anarchy that terrorizes markets today? That brings us to silver and gold, whose plugs were yanked today. Gold fell $48.60 (2.8%) to 1,664.20 on Comex. Silver fell 3.8% (123.8c) to 3093.5c. I'm not trying to cover myself, but remember I did warn y'all that metals could break up OR down out of their even-sided chart formations. Down it was. Y'all will find this hard to believe coming from a Tennessean, but 3 years ago my son and I went to New Hampshire, shopping for a Scotch Highland bull. We found Bill and Kathy Baker, who for over 30 years had been line breeding and ruthlessly culling for perfect animals. When I saw their cattle, they literally took my breath away. More than that, down the road Kathy has a shop where she makes wreaths. No, no, not those cheesy plastic things, but REAL wreaths out of dried flowers or fresh balsam. Everything they use is locally grown or gathered, they never use any additives or chemicals, and Kathy and her crew make the most exquisite Christmas wreaths you have ever seen, and ship them all over the US. They are all made to order. I think Kathy sells out every year, but she probably still has time to make a few more wreaths. You'll find them at www.cubemtn.com. On 12 December 1946 a United Nations committee voted to accept a six-bloc tract in Manhattan to be the site of UN headquarters. The land was a gift from John D Rockefeller, Jr. That was sure-enough disinterested and public spirited, wasn't it? On 12 December 1862 came the Battle of Fredericksburg, Virginia where Union General Ambrose Burnside smashed regiment after regiment against entrenched Confederates behind stone walls atop Marye's heights. Burnside took 12,653 casualties to Lee's 5,377, and shortly had to look for a new job. The battle lasted from 11 December to 15 December, and was probably the most lopsided engagement of the war. The battle was a tragic monument to what one dedicated man can do with stupidity AND professional military training. 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. 
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| Capital Account: Peter Schiff on the Euro Crisis, the Dollar and the GOP (12/12/11) Posted: 12 Dec 2011 11:31 AM PST from CapitalAccount: The European Union's summit solution or no solution? Friday, markets were excited for a day, but now is it just back to reality? Moody's reiterates that its ratings for the eurozone are still negative, with a downgrade still in the card for a number of sovereigns, including, you guessed it, France. Sarkozy says the loss of a triple A (AAA) would not be "insurmountable," and that If the rating companies did "pull it, we'll face the situation coolly and calmly." Really? Maybe for Napoleon this is true, but in Latvia, depositors are already lining up to take their money out of banks, which proves that "cool and calm" is not always something that can be achieved simply by words alone. And this should concern France and the rest of the Eurozone, in light of reports like this latest one by the OECD, which warns that industrialized governments should expect to struggle with borrowing more than 10 trillion dollars this year as they remain at the mercy of the market's "animal spirits." And speaking of bank runs, it's the anniversary of one that started in the US in 1930, credited with bringing down the banking system. So what could stop that from happening today? While people talk about jobs, the deficit, the president…is this the silent threat that could bring down the economy? Peter Schiff of Euro Pacific Capital joins us to discuss all these issues. He is host of the Peter Schiff show, as well as author of many books including "Crash Proof," and "The Little Book of Bull Moves in Bear Markets." Now, in other news, we learned today that Virginia-based Xe (formerly known as Blackwater USA) plans to unveil a new name—Academi—and new logo. In an interview with The Wall Street Journal, Ted Wright, president and chief executive, said the name change aims to signal a strategy shift by one of the U.S. government's biggest providers of training and security services. Also, despite the growth of government and the very large deficit spending that we have seen over recent years, the White House has proven that it is not immune from the downturn hitting the rest of the real estate market in America. Zillow, the online real estate marketplace, now values the White House at $263,453,600, a drop of $350,200 in the past 30 days, making it a relative bargain. And the place has great walk and transit scores to boot.
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| The $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser Posted: 12 Dec 2011 10:19 AM PST Frequent readers know about Zero Hedge's fascination with the murky world of "shadow banking" a topic we have been covering since late 2009, which can best be summarized as follows: the near-infinite fungibility of electronic credit-money equivalents within the infinitely interconnected modern financial system. The recent escalation in the discovery of massive broker capital deficiency courtesy of the MF Global bankruptcy as a result of a collapse in one of the numerous shadow banking funding pathways, namely rehypothecation, is just the very tip of the iceberg. Much more is coming, as shadow banking continues to be unwound day after day (we will post an update of the Q3 data later in the day). In the meantime, we go back to that one certain Citi report from September 5, 2008 which explained just how broken the financial system was that according to some, the realization, and not some ulterior deathwish, is what sparked the run on Lehman, and subsequently money market, ABCP, repos, synthetics, structured products, securities lenders, AIG, and everything else that the Fed had to step in with a roughly $30 trillion bail out. Why was it $30 trillion? Simple: because at its heart, the "shadow banking" system has a $30+ trillion diabolic funding mechanism, where when one cuts out all the fancy nomenclature, acronyms, abbreviations, and jargon, the bottom line is that there are increasingly less and less hard assets (i.e., cash-flow generating), funding ever more and more liabilities, and where one's assets are another's liabilities in a "fractional reserve" recursive loop, and which in that shadowy sub-center of modern banking - London (because New York is just for regulatory diversion)- the loop can go on literally in perpetuity. Said otherwise, when one or more of the funding pathways in this system break, the whole backbone of what maintains modern finance can and will collapse, as was explained so vividly back in September 2008 by Citi. While we will go into far greater depth on this topic soon, we want to leave readers with a teaser schematic that explains the core relationships betweem the key actors and the primary driver of global economic "growth" over the past 3 decades - the flow of synthetic liquidity. It took the Fed every weapon in its caliber to prevent this chart from imploding (in its real world manifestations of course) in late 2008. It will take the global central banking cartel all that and much more to halt the second such implosion. Which is coming.
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| The $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser Posted: 12 Dec 2011 10:19 AM PST
Frequent readers know about Zero Hedge's fascination with the murky world of "shadow banking" a topic we have been covering since late 2009, which can best be summarized as follows: the near-infinite fungibility of electronic credit-money equivalents within the infinitely interconnected modern financial system. The recent escalation in the discovery of massive broker capital deficiency courtesy of the MF Global bankruptcy as a result of a collapse in one of the numerous shadow banking funding pathways, namely rehypothecation, is just the very tip of the iceberg. Much more is coming, as shadow banking continues to be unwound day after day (we will post an update of the Q3 data later in the day). In the meantime, we go back to that one certain Citi report from September 5, 2008 which explained just how broken the financial system was that according to some, the realization, and not some ulterior deathwish, is what sparked the run on Lehman, and subsequently money market, ABCP, repos, synthetics, structured products, securities lenders, AIG, and everything else that the Fed had to step in with a roughly $30 trillion bail out. Why was it $30 trillion? Simple: because at its heart, the "shadow banking" system has a $30+ trillion diabolic funding mechanism, where when one cuts out all the fancy nomenclature, acronyms, abbreviations, and jargon, the bottom line is that there are increasingly less and less hard assets (i.e., cash-flow generating), funding ever more and more liabilities, and where one's assets are another's liabilities in a "fractional reserve" recursive loop, and which in that shadowy sub-center of modern banking - London (because New York is just for regulatory diversion)- the loop can go on literally in perpetuity. Said otherwise, when one or more of the funding pathways in this system break, the whole backbone of what maintains modern finance can and will collapse, as was explained so vividly back in September 2008 by Citi. While we will go into far greater depth on this topic soon, we want to leave readers with a teaser schematic that explains the core relationships betweem the key actors and the primary driver of global economic "growth" over the past 3 decades - the flow of synthetic liquidity. It took the Fed every weapon in its caliber to prevent this chart from imploding (in its real world manifestations of course) in late 2008. It will take the global central banking cartel all that and much more to halt the second such implosion. Which is coming.
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| Posted: 12 Dec 2011 10:00 AM PST The first part of this Gallup survey addresses the level of annual income Americans would need to consider themselves "rich", a question that, at least by most definitions of the word (i.e., relating to wealth, not income), doesn't make sense. But, the second poll asking what net worth would be required to qualify as "rich" had more interesting results:
A surprising 74 percent of those polled think that, if you've reached the one million dollar mark you are "rich" and, even more surprisingly, this hasn't changed in seven years since the last time this survey was conducted. It strikes me that, either one of these polls was somehow flawed or people really don't understand what has been happening to their money – even using the government's dubious inflation statistics, $1 million in 2003 is now worth almost $1.25 million today, meaning that there should have been a sizeable shift upward in the survey results.
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| Posted: 12 Dec 2011 09:53 AM PST by Vincent Le, GoldMoney.com:
The first driver of gold demand, the fear trade, is driven by the "gloom and doom" headlines and turmoil in financial markets. The fear is driven by easy money, negative real interest rates, quantitative easing, and the overall attitude that governments around the world – chiefly Western governments – lack the political will to cut spending or welfare programmes and will instead resort to devaluing their currencies. Sure, there are exceptions or occasional steps in the right direction – famously Paul Volcker's rate hike to 20% in 1981, Standard and Poor's recent warning shots at the eurozone, and Italy's new austerity measures, which aim to defend the euro and impose fiscal restraint and honesty. It is common to hear that this "uncertainty" is the only reason why people are buying gold – that gold is a hedge against unlikely but consequential negative events, or "tail risks." On the contrary – people that are actually buying gold are motivated by certainty. They are certain that the world will continue to drown in debt and certain that our leaders will not do the right thing, and they are betting on the world's most independent asset based on these fears.
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| Face to Face with Elizabeth Woodworth and 9/11 Consensus Posted: 12 Dec 2011 09:52 AM PST This week our guest is retired medical librarian Elizabeth Woodworth, who coordinates a newly formed panel calling itself "Consensus 9/11″ — which recently announced the release of statements constituting 13 Consensus Points challenging the official government account of the events of September 11, 2001. Co-chaired by Elizabeth and scholar David Ray Griffin, the points were produced using a version of a methodology designed to identify best evidence known as the Delphi method. According to Woodworth, "The strength and credibility of the Delphi method is based on the fact that respondents are blind to one another through several rounds of review, during which feedback is continually refined until consensus is reached." The Consensus 9/11 panel conducted "three survey rounds with 22 respondents, and reached an average consensus of 94% on 13 points of evidence that directly contradict the fundamental claims of the official account of September 11th." The survey points, backed by 81 literature references, include failures of the government to explain massive explosions in the Twin Towers reported by 100+ firefighters; the free fall collapse of the 47-story steel-frame WTC 7; pervasive high-tech nanothermite (an incendiary explosive) in the WTC dust; the horizontal ejections of huge sections of the towers as far as 600 feet; the airliner strike on the Pentagon by incompetent al-Qaeda pilot Hani Hanjour and the incongruous and unlikely story of Flight 93…
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| Gold: Supply Crunch? What Supply Crunch? Posted: 12 Dec 2011 09:26 AM PST Synopsis: A comparative analysis of the gold market of 1970-1980 and today reveals valuable clues about where prices for the yellow metal are most likely headed. Dear Reader, Last week was another busy week in our business, with one salient highlight being gold's drop on the Eurozone's woes. How does that work? It's a bit crazy, but when the euro drops sharply against the USD, the dollar looks strong – and if the dollar is "strong," what do we need gold for? Rock & Stock StatsLastOne Month AgoOne Year AgoGold1,709.001,784.001,391.25Silver32.0034.5828.41Copper3.543.444.02Oil100.9995.7488.35Gold Producers (GDX)57.8360.6961.43Gold Junior Stocks (GDXJ)28.9931.4441.36Silver Stocks (SIL)23.2124.1525.64TSX (Toronto Stock Exchange)12,034.7512,156.2213,166.94TSX Venture1,547.311,621.002,108.99 But failure to be the worst currency of the week is not the same as being a strong currency. We believe traders caught in the old paradigm of...
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| Year-End Buying Opportunities Abound in Mining Stocks: Louis James Posted: 12 Dec 2011 09:26 AM PST The Gold Report: We're now into year-end tax-loss selling season. How do you think 2011 will compare with previous years as far as the performance of resource stocks in the next several weeks and into 2012? Louis James: This should be an interesting year for tax-loss selling. Whether the market's up or down, there is selling pressure at the end of the year. If people have a lot of gains, they want to sell underwater positions to offset them. If they have a lot of losses, they may do the same, planning to buy back in at the lower cost basis in the new tax year. In a down year like this, it's certainly something to be aware of; people will want to offset their winners with losers, and there are a lot of losers out there this year. Many good stocks are down because the market is down—not necessarily because companies have underperformed or failed to deliver as intended. Some people want to establish losses in stocks they like with the idea of buying back in January. I do like to warn i...
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| Fleckenstein, Leeb shrug off metals' dip in King World News interviews Posted: 12 Dec 2011 09:10 AM PST 5:10p ET Monday, December 12, 2011 Dear Friend of GATA and Gold (and Silver): Gold and silver investors looking for a pep talk tonight might start at King World News, where fund manager Bill Fleckenstein shrugs off today's action and argues that brokerage house officers should be made personally liable for the wrongful losses of their firms. An excerpt from the interview with Fleckenstein is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/12_F... Also at King World News, fund manager Stephen Leeb predicts that Germany eventually will decide to save the European banks by printing a lot of money and thereby igniting gold. An excerpt from that interview is posted at the King World News blog here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/12_S... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Be Part of a Chance to Discover Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada. Check out the exploration program on our Allco gold/silver project : -- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit. -- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries. -- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited. To learn more about the Allco property or Northaven's other gold and silver projects, please visit: http://www.northavenresources.com Or call Northaven CEO Allen Leschert at 604-696-3600. Join GATA here: Vancouver Resource Investment Conference http://cambridgehouse.com/conference-details/vancouver-resource-investme... California Investment Conference http://cambridgehouse.com/conference-details/california-investment-confe... Support GATA by purchasing a silver commemorative coin: https://www.amsterdamgold.eu/gata/index.asp?BiD=12 Or by purchasing a colorful GATA T-shirt: 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: 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: To contribute to GATA, please visit: ADVERTISEMENT The United States Once Again Can Establish Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, has released a plan to restore economic growth through a stable dollar. The plan, titled "The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies," responds to the recurrent economic crises of the last century and outlines a detailed proposal for America's leadership on "how we get from here to there." That is, how we get from the present unstable paper dollar to a stable dollar as good as gold. James Grant, author and editor of Grant's Interest Rate Observer, says of the Lehrman plan: "If you have ever wondered how the world can get from here to there -- from the chaos of depreciating paper to a convertible currency worthy of our children and our grandchildren -- wonder no more. The answer, brilliantly expounded, is between these covers. America has long needed a modern Alexander Hamilton. In Lewis E. Lehrman the country has finally found him." To learn more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit: http://www.thegoldstandardnow.org/gata
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| Posted: 12 Dec 2011 09:09 AM PST 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.
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| Entire Western Financial System Will Implode Posted: 12 Dec 2011 08:53 AM PST Jim Willie discusses three items: systemic implosion, deception and exponentially rising risk. You can find the interview here. It is definitely worth listening to as it explains the impact of negative interest rates on the economy. I couldn't have wished for a better timing as it is closely tied to my Gold Model.
This posting includes an audio/video/photo media file: Download Now |
An interesting way to look at global gold demand is through the scope of two of the most basic, yet powerful human emotions: fear and love. Understanding this duality – 
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