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Saturday, July 14, 2012

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Is the Cartel Moving Silver from Scotia Vaults to the SLV to Meet Delivery Requests?

Posted: 14 Jul 2012 09:45 AM PDT

from silverdoctors.com:

For the 3rd consecutive day (following the 1 million ounce withdrawal Monday and 651k ounce withdrawal Tuesday) we have a massive silver withdrawal to report from Scotia's vault Wednesday.
SD reader Saddle has noted that the previous 2 silver withdrawals almost exactly equal a coinciding massive new silver deposit just reported into the SLV fund.
As Harvey Organ has long alleged, it would not surprise us if the cartel is currently scrambling to move around what little PHYSICAL silver they have left to meet delivery requests at the SLV.

Saddle notes:
I want to point out something very important. SLV is allowed to increase its inventory through paper contracts, physical, and futures. If you look at the SLV inventory for July 10, 2012 you'll see it increased from 311,271,605.500 ounces up to 312,823,227.900. This is a net increase of: 1,551,622.4 ounces.
Remember that number.
Scotia has lost a lot of (supposedly physical) silver in their COMEX vaults on the following dates:
July 11, 2012 – 651306 ounces withdrawn
July 10, 2012 – 996615 ounces withdrawn
Add these up and you get: 1,646,921 ounces removed from the vaults. This is extremely close and only about 6% different. Its so close and when you're talking over a million ounces moving around, these are big movements. Remember how hard it was for Eric Sprott to get physical silver in quantity? Well, I can tell you these two movements are very likely connected.

Keep on reading @ silverdoctors.com

Fallacies – 1. Paper Gold is just like Paper Anything

Posted: 14 Jul 2012 09:40 AM PDT

from fofoa.blogspot.com:

This is the first in a new series I'll be returning to occasionally. I have recently come across a number of fallacies relating to the subject matter of this blog and my plan is to compile them and then correct them one at a time.

1. Paper Gold is just like Paper Anything

This first fallacy aims to undermine a good deal of what Another and FOA wrote about by claiming that the paper gold market has the same effect on gold as any paper market has on its underlying commodity. This fallacy claims that the same arguments made for an explosive revaluation of physical gold could be made for anything else, therefore they must be wrong.

Commenter "ForLiberty" put it this way:

"This whole 'paper gold is holding the price down' argument makes zero sense to me. It is just a logical nonsense. All paper trades have two parties – bidup and biddown. A paper gold trade could have never taken place if nobody wanted to short it. This is how all markets work. There are paper tomatoes sold too. Is there a conspiracy there too?"

ForLiberty was apparently paraphrasing Martin Armstrong who wrote something remarkably similar:

"They argue that today gold is really paper gold, and the market have multiplied that many times. They argue that the real gold is only about 5 billion ounces. They then argue that the paper gold depresses the price of gold and this is why it is not where it should be right now. All this sound nice, however, you can make the same argument about anything traded today from wheat to stocks and bonds given the derivative markets. Some see conspiracy behind everything."

Keep on reading @ fofoa.blogspot.com

Greyerz – Gold to Hit $3,500 – $5,000 in 12 to 18 Months

Posted: 14 Jul 2012 09:40 AM PDT

from kingworldnews.com:

Today Egon von Greyerz told King World News, "The credit bubble we've had, for at least 40 years, is going to accelerate dramatically, and the failures in the system will continue." Egon von Greyerz, who is founder and managing partner at Matterhorn Asset Management out of Switzerland, also said, "I see gold reaching $3,500 to $5,000 in the next 12 to 18 months."

Here is what Greyerz had to say about the ongoing financial crisis and where we are headed: "There is a fire in almost every country in Europe. The US is going to catch fire also. There will be a catalyst coming soon, probably some concerted action of QE or money printing between the Fed, IMF and the ECB. That will happen as a result of the economies, worldwide, collapsing."

Keep on reading @ kingworldnews.com

LIBOR scandal brings gold price manipulation once more to the fore

Posted: 14 Jul 2012 09:35 AM PDT

from mineweb.com:

There has been much written about the latest financial manipulation by global bankers of LIBOR – The London InterBank Offered Rate which is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. It is the primary benchmark, along with EURIBOR (The European InterBank Offered Rate) for short term interest rates around the world and is calculated for ten different currencies and 15 borrowing periods ranging from overnight to one year and are published daily after 11 am (London time) by Thomson Reuters. Many financial institutions, mortgage lenders and credit card agencies set their own rates relative to it. The global significance of the rate should not be underrated with estimates suggesting that at least $350 trillion in derivatives and other financial products are tied to the LIBOR, which makes the fine imposed on Barclays for its role in manipulating the rate just a tiny slap on the wrist. A fraction of a percent on this size of figure means potential gains across the financial sector of billions of dollars – so why is anyone surprised that the mechanism might be manipulated in this way?

It is certain that Barclays is not the only institution involved in this rate rigging – indeed it is already beginning to look as if governments and central banks – even the U.S. Fed – may all have colluded, or at least turned a blind eye, to these manipulations – sometimes with a view to protecting the global banking system against collapse.

But how deep does this financial malpractice go? Fictional character Gordon Gekko's much misquoted financial mantra – 'Greed is good' (the actual quote is "Greed, for lack of a better word, is good. Greed is right. Greed works") – from the film Wall Street suggests Hollywood may have scratched the surface of the financial culture underlying much of the system back in 1987 – and this culture is almost certainly even more prevalent today.

Indeed, there is the strong suspicion that in today's financial world everything is subject to manipulation by governments, central banks and financial institutions. For the governments and the central banks this may take the form of currency manipulation, statistical manipulation – indeed manipulation of anything to try and present the administrations in the most favourable light and keep the population on side. What is Quantitative Easing, or Operation Twist if not manipulation of markets? Pump more and more money into the markets and, hopefully, the stock market remains healthy, unemployment levels are not catastrophic and the general public kept in the dark over the true state of affairs.

Keep on reading @ mineweb.com

Sprott Physical Silver Trust garners US$200-million

Posted: 14 Jul 2012 09:25 AM PDT

from business.financialpost.com:

It's a tried and true recipe: Announce a deal after the markets close, market it to North American investors and detail the terms of the offering before the markets open the next day.

Sprott Physical Silver Trust followed that script this week and ended up with US$200-million from the sale of 18.1 million units at US$11.05 per unit. While pricing is done on the context of the market, the trust has a rule that the price "must not be less than 100% of the recently calculated net asset value per unit." The proceeds from this deal – the third by the trust since it was formed in late 2010 – will be used to acquire physical silver bullion.

The offering was made in both Canada and the U.S. with RBC Capital Markets and Morgan Stanley leading the charge.

Keep on reading @ business.financialpost.com

Libor Rigging: The Tip of the Iceberg

Posted: 14 Jul 2012 09:20 AM PDT

from news.goldseek.com:

GATA was born in the late 1990's – primarily on the back of fundamental research by Frank Veneroso regarding Central Bank Gold Leasing. Veneroso's intellectual curiosity was aroused after being fed detailed data re: gold leasing by the Bank of England's Terry Smeeton.

The fact that gold prices and interest rates were so highly "inter-related" was first publicized in the alternative media by Reg Howe in 2001. Howe alerted the world to academic accounts of the special relationship between gold and interest rates. He highlighted the body of economic law and observation associated with "Gibson's Paradox" – something Lawrence Summers [later, U.S. Treasury Secretary and current senior economic advisor to Obama] wrote about with Robert Barsky while he was a professor at Harvard in the 1980's.

The upshot of this Gibson's Paradox economic theory goes something like this: real interest rates and the gold price are causal and inter-related with each other.

This is why Professor Lawrence Summers was summoned to Washington as assistant Secretary of Treasury under Robert Rubin [Clinton Admin. / 1993]. It was to implement HIS THEORETICAL WORK under the auspices of Treasury Secretary Robert Rubin's mythical "Strong Dollar Policy".

Conclusion: since 1994, the mythical Strong Dollar Policy had necessitated a two prong strategy: that of keeping rates low because weak currencies are typified by high interest rates; and the price of gold must be suppressed as it stands as an historical alternative settlement currency – and they don't want the alternative to appear "strong".

The interrelatedness of the gold price and interest rates helps to explain why – According to the Office of the Comptroller of the Currency – of the 302 Trillion in aggregate derivatives held by American Bank Holding Cos – 81 % of this is composed of interest rate products. This is due to the symbiosis that exists between gold and interest rates.

Libor – or the London Inter-Bank Offered Rate – is one of the lynch pins in setting [rigging] global U.S. Dollar interest rates. This is why a larger discussion needs to be had about the Libor rigging – it is not a London or Barclay's centric story. It has EVERYTHING to do with making the American Dollar look viable as the world's reserve currency.

Keep on reading @ news.goldseek.com

‘Peak Gold' – Gold Production Collapse Continues In South Africa

Posted: 14 Jul 2012 09:15 AM PDT

from goldcore.com:

Today's AM fix was USD 1579.00, EUR 1294.05 and GBP 1022.34 per ounce.
Yesterday's AM fix was USD 1565.50, EUR 1281.10 and GBP 1011.96 per ounce.

Gold fell by 0.3% in New York yesterday and closed down $4.90 to $1,571.70/oz. After a sharp drop and equally sharp bounce higher, silver rose 0.3% or 8 cents to close at $27.17/oz

After initial falls in Asia, gold traded sideways and then gradually ticked higher later in the Asian session and has seen further gains in European trading. Gold is currently set to finish the week marginally lower in dollar and sterling terms but higher in euro and Swiss franc terms.

South Africa's gold output continues to collapse and fell a further 2.9% in May, according to data from Statistics South Africa released yesterday. The decline in gold production comes despite a 0.8% rise in total mining output in the same month (see below).

Gold is being supported by euro zone currency and contagion risk and inflation hedging diversification.

Merrill Lynch predicted gold would reach $2,000/oz yesterday due to more astute investors fearing inflation due to ultra loose monetary policies. Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research Merrill Lynch, said in a CNBC interview that Merrill believe "that $2,000 an ounce is sort of the right number. We believe that ultimately the Fed will be forced to do quantitative easing.

Keep on reading @ goldcore.com

The Euro and the Dollar

Posted: 14 Jul 2012 08:24 AM PDT

from financialsense.com:

I'd like to do a short-technical piece today to discuss the euro and the dollar. Before I go into the technical picture, let's first summarize the fundamental backdrop. Now, the U.S. equity markets rose heading into the EU summit and launched soon after the details were given on the Friday morning of June 29th, which were:

Single Pan-European bank regulator by year-end '12
Once the supervisory mechanism was in place, the ESM could capitalize banks directly
Ireland to get better bailout terms
Spain to get aid from the EFSF until the ESM is up and running, without gaining seniority status on the debt
ECB to act as agent for the bailout funds
€120B growth pact

Keep on reading @ financialsense.com

Fallacy of New Deal Rescue Refuted by Gold’s Record

Posted: 14 Jul 2012 08:23 AM PDT

from wealthcycles.com:

As we have written many times, statistics can be used to prove just about any point—and then used to refute the same point. (See the WealthCycles.com article, Those Lying Numbers, for a few choice examples.)

Paul Krugman, the Nobel Prize-winning economist, uses statistics to bolster his argument that the solution to the global financial crisis is more government spending—big government spending. According to Krugman, the government spending (and taxpayer indebtedness) undertaken thus far is far too paltry to have the optimal positive effect on the faltering U.S. and global economies.

Forbes columnist Brian Domitrovic calls Krugman and his co-author, New York Federal Reserve economist Gauti Eggertsson, on one statistical argument. In a 2008 article in the American Economic Review, Krugman and Eggertson argue that the years 1933 to 1937 "registered the strongest output growth (39 percent) of any four-year period in U.S. history outside of wartime." Their premise: that the alleged period of economic growth was sparked by President Franklin D. Roosevelt's New Deal, a campaign of massive government spending aimed at pulling the United States from the depths of the Great Depression. Referring to a 2011 Great Depression conference at Ohio University, where Eggertson repeated his claim, Domitrovic writes:

Keep on reading @ wealthcycles.com

COMEX Swap Dealers Net Long Gold for Third Time Ever

Posted: 14 Jul 2012 07:44 AM PDT

HOUSTON --  For only the third time in the six years of Commodity Futures Trading Commission (CFTC) disaggregated trader data, commercial futures traders the CFTC classes as Swap Dealers reported a net long position in gold futures on the COMEX bourse in New York.

20120714-COT-Swap-Dealers
 
Source:  CFTC for COT data, Cash Market for gold.  Chart covers the entire disaggregated COT dataset for Swap Dealer gold futures net positions excluding spreading contracts.  A 2-year chart is shown below.   

Continued...


Swap Dealers are commercial derivatives traders who primarily trade in the form of swaps in other markets and then hedge those sophisticated positions using futures contracts.

The CFTC requires all large traders to report their open positions as of the close on Tuesday each week and then releases that Commitments of Traders (COT) data to the public, usually the following Friday.

As of Tuesday, July 10, as gold closed on the Cash Market in New York at $1,567.16, Swap Dealer commercial traders reported holding 54,038 gold contracts long and 53,239 short for a combined net long position of 799 lots according to  data released by the CFTC on July 13.

20120714-COT-Swap-Dealers-2yr

Seven reporting weeks ago, on May 22, the normally net short Swap Dealers edged briefly into long territory, reporting 82 COMEX 100-ounce contracts net long then, with gold near $1,568. 
 
The only other time the Swap Dealer commercial traders reported a net long position in gold futures occurred last year for four weeks in October, shortly after gold hit an all time nominal high near $1,923 an ounce but had corrected violently more than 13%.  The high net long position occurred on October 18, 2011, when the Swap Dealers reported a net long gold futures position of 8,731 lots – with gold then near $1,657.  – Gene Arensberg (Got Gold Report)

Sprott's Silver Trust Does Another Offering

Posted: 14 Jul 2012 06:07 AM PDT

Author: 
Ed Steer

Yesterday in Gold and Silver

Ed_GSD
July 14, 2012 2:07pm GMT

The gold price traded pretty flat and on little volume during the Friday trading session in the Far East.

But a rally began shortly before 3:30 p.m. Hong Kong time that lasted right up until the London silver fix, which came shortly before 12:00 noon BST.

From that point, gold got sold off to its New York low...$1,578.30 spot...which was set just a few minutes before the open of the equity markets.  Then a far more substantial rally began that came close to blasting through the $1,600 mark, but before it could do that, a not-for-profit seller showed up, or the buyer disappeared.  The high for the day [$1,598.00 spot] was set shortly after 10:00 a.m. Eastern...which could have been a slightly delayed London p.m. gold fix.

After that bit of excitement, the gold price got sold off quietly in three different bouts of very light volume selling.

The gold price closed at $1,589.40 spot...up $17.40 on the day...and well of its high.  Net volume was pretty light...around 112,000 contracts.

Silver's price pattern on Friday was very similar to gold's...almost too similar...with the major inflection points occurring almost at the same moment as gold's...so I shan't bore you with the play-by-play on this, as it's readily evident on the Kitco silver chart below. Silver's New York low and high came within 35 minutes of each other.  The high was $27.70 spot...and the low was $27.09 spot.

Silver closed at $27.34 spot...up 13 cents...almost double Thursday's 7 cent gain.  I was underwhelmed.

The dollar index traded within a 15 basis point price range during the entire Far East trading session.  Then there was a bit of dip shortly after 10:00 a.m. London time...and from there it rose to it's high of the day at precisely 9:00 a.m. in New York.

The dollar index then fell off the proverbial cliff starting about 9:20 a.m...dropping almost 40 basis points in less than forty minutes.  From that point it traded flat to down a hair into the 5:15 p.m. Eastern time close.  The dollar index closed at 83.35...down 36 basis points on the day.

The waterfall decline in the dollar index at the time indicated on the ino.com chart below certainly accounts for the big rise in gold and silver prices during that time period.  The timing was so precise on this that it looked like someone hit a 'Buy Gold/Silver-Sell the Dollar Index' button...as no normal trader could react to these changes this fast on their own...and you really have to look more closely to see this event in platinum and palladium during the same time period, as the price moves were not anywhere near as pronounced.  The obvious targets were gold and silver.

The gold shares chopped higher all day in New York...with the high of the day coming shortly after 1:00 p.m. Eastern time...a good three hours after gold's high for day was in at the London p.m. gold fix.  From that high, the stocks traded a bit lower into the close.  The HUI finished Friday the 13th up 1.47%.

Virtually every large cap silver stock in Nick Laird's Silver Sentiment Index closed basically flat on the day...but the odd junior producer did much better than that.  The SSI closed up a microscopic 0.09%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 2 gold and 122 silver contracts were posted for delivery on Tuesday.  In silver, the big short/issuer was Jefferies with 121 of those contracts...and the biggest long/stoppers were, as usual, JPMorgan [68 contracts]...and the Bank of Nova Scotia [49 contracts].  The link to yesterday's Issuers and Stoppers Report is here.

There were no reported changes in GLD...but over at SLV an authorized participant withdrew 1,066,548 troy ounces.

There were some material changes in the short positions held in SLV and GLD.  These were reported over at the shortsqueeze.com Internet site a couple of days ago.  The short position in SLV declined by 17.78%...or about 2,400,000 shares/ounces...and is now down to 11,080,200 shares/troy ounces of silver, or 344.6 metric tonnes.  This represents almost six days of world silver production.  That's how much silver is owed SLV to back all the shares sold short.

In GLD the short position declined by 25.98%...or around 4.93 million shares. GLD's short position is now down to 14,035,600 shares...none of which have any physical gold backing them at all.  This is around 1.40 million ounces...which is equivalent to 43.5 tonnes of gold.

The U.S. Mint had another small sales report yesterday.  The sold 3,000 ounces of gold eagles...and 151,000 silver eagles.  Month-to-date the mint has sold 16,500 ounces of gold eagles...1,500 one-ounce 24K gold buffaloes...and 906,000 silver eagles.

Over at the Comex-approved depositories on Thursday, they reported receiving 616,012 troy ounces of silver...and shipped 343,099 of the stuff out the door.  The link to that action is here.

The Commitment of Traders Report showed improvements in the Commercial category in both silver and gold, but not as much as I would have liked.  JPMorgan et al reduced their net short position in silver by 3,247 contracts, or 16.2 million ounces.  The Commercial net short position in silver is back down to just 14,100 contracts, or 70.5 million ounces.  That's not a record low, but still in the 'wildly bullish' range.

The 'big 4' are short 143.3 million ounces of silver...and the '5 through 8' are short an additional 45.3 million ounces.  These 'big 8' Commercial traders are short 188.6 million ounces of silver, or 267% of the entire Commercial net short position.

And once you removed all the market-neutral spread trades, the 'big 8' are short 38.5% of the entire Comex silver market on a net basis...and that's a minimum number.  Once you remove the spread trades that only show up in the Disaggregated COT Report, that percentage would certainly exceed 40%. And all of these traders are working together as a group to rig the silver market.

In gold, the Commercial net short position declined by 13,871 contracts, or 1.39 million ounces.  The Commercial net short position is now down to 15.28 million ounces.  Like silver, this is not a record low, but still in the hugely bullish camp.

The 'big 4' are short 10.40 million ounces...and the '5 through 8' short holders are short an additional 5.16 million ounces.  The total of the 'big 8' short holders is 15.56 million ounces...a hair over 100% of the entire Commercial net short position show in the previous paragraph.

If JPMorgan et al can easily control the gold market holding 101.8% of the Commercial net short position...they have the silver market in a vice...holding 267% of the Commercial net short position.  And the 'big 8' shorts in silver are the same players as the 'big 8' short players in gold.

Before getting into the stories for today, I had a reader send me these two bird pictures...and I've had them sitting on my desktop for the last month.  I just couldn't bring myself to send them to the recycle bin without posting them first. The bird in question is a Himalayan Monal...a bird I'd never heard of before.  But it's a beauty.

For a weekend, I don't have that many stories for you...but that probably has to do with the fact that Roy Stephens has been out Internet range all week.

The world's economic, financial and monetary system continue to circle the drain at an ever-increasing velocity.
Indian central bank wants people to exchange metal for paper. Richard Russell: Inflate, or die. LIBOR scandal brings gold price manipulation once more to the fore.

Critical Reads

JPM Admits CIO Group Consistently Mismarked Hundreds Of Billions In CDS In Effort To Artificially Boost Profits

Ed_GSD
July 14, 2012 2:07pm GMT

Back on May 30th we wrote "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we made it abundantly clear that due to the Over The Counter nature of CDS one can easily make up whatever marks one wants in order to boost the P&L impact of a given position.

As of moments ago this too has been proven to be the case. From a just filed very shocking 8K which takes the "Whale" saga to a whole new level. To wit: 'the recently discovered information raises questions about the integrity of the trader marks, and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio during the first quarter. As a result, the Firm is no longer confident that the trader marks used to prepare the Firm's reported first quarter results (although within the established thresholds) reflect good faith estimates of fair value at quarter end."

As a result of this, regulators who now are only 3 years behind the curve, are most likely snooping to inquire not only how JPM did it (call us: we can brief you in 2 minutes), but who else has been doing this? Hint: everyone.

This must read Zero Hedge piece was sent to me by reader 'David in California'...and the link is here.

JPMorgan's Botched Trades May Generate $7.5 Billion Loss

Ed_GSD
July 14, 2012 2:07pm GMT

Botched trades by a JPMorgan Chase & Co. unit that Jamie Dimon had pushed to boost profit were masked by weak internal controls and may ultimately saddle the bank with a $7.5 billion loss.

JPMorgan's chief investment office has lost $5.8 billion on the trades so far, and that figure may climb by $1.7 billion in a worst-case scenario, Dimon, the bank's chairman and chief executive officer, said yesterday. Net income fell 9 percent to $4.96 billion in the second quarter, the bank said. It restated first-quarter results to reduce profit by $459 million after a review of the unit found employees may have hid souring bets.

Dimon, 56, had brushed off concerns raised by some of his most senior advisers, including heads of JPMorgan's investment bank, about the lack of transparency and the quality of internal controls in the CIO in past years, Bloomberg News reported last month, citing a person with direct knowledge of the matter. Capping the potential loss's size and revamping management of the unit responsible may help him restore investor confidence.

This Bloomberg story was posted on their website late Friday afternoon...and I thank West Virginia reader Elliot Simon for sending it...and the link is here.

Libor Rigging: The Tip of the Iceberg

Ed_GSD
July 14, 2012 2:07pm GMT

The rigging of the LIBOR interest rate...GATA consultant Rob Kirby of Kirby Analytics in Toronto wrote yesterday...was only a small part of the greater scheme of controlling interest rates and the price of gold and supporting the U.S. dollar with vast derivative positions on the books of investment bank JPMorgan Chase.

Kirby's commentary is headlined "LIBOR Rigging: Tip of the Iceberg" and it's posted over at the goldseek.com website.  This very long and rather involved commentary is well worth the read...and it's not the parts you won't understand that will scare you.  The link is here.

Smackdown: Bartiromo vs. Spitzer

Ed_GSD
July 14, 2012 2:07pm GMT

This CNBC video does not show Maria at her finest, as she looked like she'd totally lost it.  Couldn't happen to a finer person.  The video clip runs a hair over ten minutes...and I thank 'David in California' for his second offering in today's column.  The link is here.

Bank of England says it acted on Geithner's Libor email

Ed_GSD
July 14, 2012 2:07pm GMT

Documents obtained by Reuters earlier on Friday showed that U.S. Treasury Secretary Timothy Geithner pressed the British central bank in June 2008 to make changes to the way that the widely used interest rate benchmark was set.

Geithner, who was the head of the New York Federal Reserve Bank at the time, sent a private email to BoE Governor Mervyn King recommending six ways to enhance the credibility of the London interbank offered rate.

The BoE passed on Geithner's thoughts in an email to the British Bankers Association (BBA) - the banking group responsible for Libor - which at that stage had already decided to launch a review of the rate.

This story was posted on the Reuters website early yesterday afternoon Eastern time...and I thank Washington state reader S.A. for sharing it with us.  The link is here.

Sir Mervyn left to flounder in a Libor can of worms

Ed_GSD
July 14, 2012 2:07pm GMT

It just gets worse. If Sir Mervyn King was up to his waist in Libor before, now he's drowning in it.

And the Bank of England Governor's not the only one – top brass at the Financial Services Authority and the British Bankers' Association are hardly doing much better.

The decision to release emails detailing how Tim Geithner warned the Bank in June 2008 about fears that Libor could be manipulated have opened a new can of worms.

Then head of the Federal Reserve Bank of New York, Geithner's email recommended steps to "improve the integrity and transparency of the rate-setting process... including procedures designed to prevent accidental or deliberate misreporting".

I found this story posted on The Telegraph's Internet site yesterday...and it's definitely worth the read.  The link is here.

Moody's downgrades Italy's government bond rating to Baa2 from A3, maintains negative outlook

Ed_GSD
July 14, 2012 2:07pm GMT

Moody's Investors Service has downgraded Italy's government bond rating to Baa2 from A3. The outlook remains negative. Italy's Prime-2 short-term rating has not changed.

The decision to downgrade Italy's rating reflects the following key factors:

1. Italy is more likely to experience a further sharp increase in its funding costs or the loss of market access than at the time of our rating action five months ago due to increasingly fragile market confidence, contagion risk emanating from Greece and Spain and signs of an eroding non-domestic investor base. The risk of a Greek exit from the euro has risen, the Spanish banking system will experience greater credit losses than anticipated, and Spain's own funding challenges are greater than previously recognized.

2. Italy's near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets. Failure to meet fiscal targets in turn could weaken market confidence further, raising the risk of a sudden stop in market funding.

Egan Jones downgraded Italy two weeks ago.

I pulled this story from the moodys.com website. It's courtesy of yesterday's edition of the King Report...and the link is here.

Marshall Auerback: The Pain in Spain

Ed_GSD
July 14, 2012 2:07pm GMT

Just when you think that things can get no worse in Spain, they do.

Yiagos Alexopoulos at Credit Suisse estimates that Spanish capital outflows are currently running at an annualised rate of 50 per cent of GDP. No question, the bank run is clearly accelerating, and one can easily understand why. The country is turning into a

Temporary Credit Solutions In Europe Cause Traders to Buy U.S. Paper

Posted: 14 Jul 2012 03:50 AM PDT

"Investors are plowing cash into new U.S. Treasuries at a record pace, making economic growth rather than budget austerity a key issue as Barack Obama and Mitt Romney face-off in November's presidential election."

"Even as Romney and fellow Republicans assail Obama for presiding over the increase of U.S. publicly-owned debt to $10.5 trillion from $5.75 trillion in 2009 amid the worst financial crisis since the Great Depression, the bond market is showing growing investor confidence in the safety of dollar assets."

"The perceived stability of the U.S. financial system, where you have an active and aggressive Federal Reserve, and a broad $15 trillion-plus economy means the U.S. is going to continue to be regarded as a deep, liquid, strong area to invest in," Rick Rieder, chief investment officer of fundamental fixed income at New York-based Blackrock Inc., which manages $3.68 trillion, said in a June 29 telephone interview. "Rates are going to stay low for a long time."

"Demand for new issues from the U.S. Treasury has accelerated as investors seek assets in the world's reserve currency. The dollar has gained +5.9% against the Euro and +1.9% against the British pound since the end of March as Europe's sovereign debt crisis worsened, the U.K. entered another recession and U.S. growth cooled."

"One of the ideas that the market is very complacent about is that rates could actually go up," said Kathleen Gaffney, co- manager of the $20.9 billion Boston-based Loomis Sayles Bond Fund, in a June 28 telephone interview. "When they move, they move very fast."

"For all the progress, it might take several months or, a year to implement the plans, according to German Chancellor Angela Merkel, and may not be enough, said Italian Prime Minister Mario Monti. Two rescue funds, the European Financial Stability Facility and the yet-to-start European Stability Mechanism, may only amount to about 20% of the debt of Italy and Spain."

"As long as Europe continues to make headlines with its bailout process, which is taking much longer than the market would like it to, we should continue to see a bullish underpinning to Treasuries from that flight to quality dynamic," said Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut."

"The median forecast of 70 economists in a Bloomberg survey is for 2012 growth of +2.2 percent, below the +2.7 percent average from 2002 to 2007. The Fed has cut its projections for 2013 six times since January 2011. That level of expansion won't be robust enough to cut an unemployment rate that has remained above 8% for 40 months before next year, according to the central bank's forecasts."

"The economy faces the prospect of diminished fiscal stimulus, with $1.2 trillion in automatic federal spending cuts poised to take effect at year-end. "

"Investors have generally looked through the fiscal cliff" of expiring George W. Bush tax rates and mandatory spending cuts, as well as "the deficit position and overall debt issues with respect to the U.S," Christopher Sullivan, who oversees $1.9 billion as chief investment officer at United Nations Federal Credit Union in New York, said in a June 29 telephone interview. "The first choice among investors in terms of flight-to-quality or safety is the U.S." -Daniel Kruger 7-2-12 Bloomberg.net

The Greek credit mess was larger but manageable. However, Italy and Spain cannot be covered nor contained. The central bankers managed to kick the can to this fall of 2012, but after that we see a decent into chaos. Euro-land will break-up and the Euro Currency fades away as we did forecast in 2003. Germany will go it alone to keep itself alive but gets hit hard on failing exports to others.


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Links for 2012-07-13 [del.icio.us]

Posted: 14 Jul 2012 12:00 AM PDT

Peak Gold - Gold Production Collapse Continues In South Africa

Posted: 13 Jul 2012 11:10 PM PDT

gold.ie

Gold Now Flat on a Year Ago

Posted: 13 Jul 2012 10:54 PM PDT

Robert Ian looks into the Future

Posted: 13 Jul 2012 10:50 PM PDT

In this podcast
(1) We discuss whether gold will crash like in 08
(2) We discuss the Euro problems
(3) We discuss LIE-MOR (LIBOR).

from altinvestorshangout:

Part One

Part Two

~TVR

Lanci: Silver Behaving Like Copper

Posted: 13 Jul 2012 10:45 PM PDT

We recap the FED/FOMC minutes, discuss the strong USD, and analyze why silver is acting more like copper and other base metals in light of this week's Chinese economic data on this week's edition of "RESET" with Vince Lanci of FMX Connect. Kitco News, July 13, 2012.

from kitconews:

~TVR

China’s Relevance Growing,QE3 Not So Much

Posted: 13 Jul 2012 08:55 PM PDT

from silverinvestingnews.com:

Silver investors were mainly concerned with the European crisis and US easing for most of the first half (H1) of 2012. Now, it seems that China is increasingly earning its place on investors' radars and according to many analysts, it should be.

Silver started the week with upward momentum and a closing New York spot price of $27.34. According to a CME Group market note, some of that positive movement may have been drafted off the historical gains being forged in the US grain markets. These price movements are noteworthy for investors, and were echoed in a Gold Investing News interview earlier this week with Peter Schiff, CEO of Euro Pacific Precious Metals.

When talking about about the relationship between gold, soybeans and other agricultural commodities such as wheat, Schiff indicated that the positive correlation between these agricultural products and silver appears even stronger than with gold.

On Tuesday silver attempted another upward move but macroeconomic sentiment soured and the metal's price dropped.

Prominent among the concerns was news of China's $31.7 billion trade surplus, which for many suggested a slowdown in domestic demand and thus another indication of a hard landing. The currency markets shifted to a position that did not favor silver. The euro declined and money began to flowing into perceived safe havens such as the dollar and yen. September silver closed near the day's low and the final New York spot price was $.53 below the prior close at $26.81.

Keep on reading @ silverinvestingnews.com

Artificial Intelligence & Fedspectations: Long Road Ahead For Silver

Posted: 13 Jul 2012 08:50 PM PDT

from silvervigilante.com:

Scurrying for the reasons silver was volatile this morning, the white noise of the obvious hummed in the back of my mind. That white noise informed me that I was likely to find no reasons for the sudden spike this morning in the price of the devil's metal. No war with Iran, no quantitative easing, no technological breakthrough demanding increasing amounts of silver. Instead the black hole of artificial intelligence trading had been ticked at the $26.50 level, most likely where thousands if not millions of automated buy orders are triggered, and programmed to sell somewhere before $27.30.

These critical mass artificial intelligence trading platforms will in effect dictate the price of silver in such a way so as to benefit speculators. Thus, savers and stackers in the metals will be frustrated by extremely volatile conditions and charts totally out-of-whack.

Other markets are responding predictably to shattered fespectations over quantitative easing. The short-term price of gold and silver will remain intimately tied to Federal Reserve policy. This makes gold and silver rather exposed in the short-term, as panoply of news blitzes and market movements by market makers could send the metals down in the absence of quantitative easing hinting.

But appearances only go so far. While the mainstream investing public waits idly for the headlines of mainstream pundits to instruct them what to do, behind the scenes the fundamentals for gold and silver remain largely unchanged from the original enunciations of aggressive quantitative easing policies of 2009. The bearishness is founded. Silver has a rough road ahead. But, patience will prove valuable.

Keep on reading @ silvervigilante.com

Why I Love Gold/Silver/Integrity and Jim Sinclair

Posted: 13 Jul 2012 08:40 PM PDT

from fortwealth.com:

US$ continues to lag at the top of its range with the current trade at 83.76 down 4.9 points in a tight range with a low of 86.645 and a top of 83.870, Treasuries are flat as well with all T-Products trading flat to lower. Energy Sector is trading higher with Crude Oil up 80 cents at $86.88. Gold is steady trading up $16.40 at $1,581.70 after reaching a low of $1,565.60, Silver is following the leader with the trade at $27.350 up 18.9 cents with the rest of the metals sector following suite. All Grains are trading higher with a real heat issue that is certain to prove there is significant damage to all crops which will eventually be report after the harvest and ironically, after the election. Softs are trading higher as well leaving the meats into a negative mode. Paper markets are still getting that European support and as to why?? Well, it's truly simple, the banks are continuing to support itself and its paradigm. We (the entire GIB/IB brokerages that traded thru PFG are left out to hang, because of some events not of our doing. Every person at PFG, that has been picking up the phone and helping to answer questions need to be commended. Many realized that their jobs were gone the day the NFA admitted its oversight. But to find the souls that understand the importance of communications when it comes to other people's money and to be there to offer up what they know is real important. We give these solid souls a deep bow of gratitude. We are truly thankful that Jim Sinclair told his readers to take delivery thru our firm several years ago. Fort Wealth made sure to follow Jims suggestions to the letter. That is, to make sure no one else holds the Gold/Silver for the clients. Because of his foresight, our clients have a lion share of their long term values in a secure place outside this arena of doubt, that is, outside the banking system. The funds (in the accounts) we have now are currently frozen and all our positions have been liquidated by force. None of my clients gave permission to liquidate all their purchased Call options in the Precious Metals sector. I personally got the worst fill in the liquidation on my March Silver $50 Call options. We have friends at "The United States Chart Company", they keep the history of options value and hold this data for their subscribers to review. Because of this, I was personally able to see this glaring fact that these options were sold at 9.5 cents, the lowest price ever for this option. As of this writing, the closing price from Thursday is 13.5 cents. These are small differences, but the percentages bring out the fact that there's a 33% spread between liquidation and the settling price given. We were also told that the liquidation's where authorized by Jefferies, which does the commodity trades for PFG. Many of my clients are furious that their purchased options were liquidated to supply more cash for the distributions of what's left. I called and spoke to a legal representative at Jefferies, we want to know who the individual is that made this "authorization" to liquidate already purchased options that have no other risk that could be added to the firms involved.

Keep on reading @ fortwealth.com

Old gold often erroneously sold below market price

Posted: 13 Jul 2012 08:35 PM PDT

from goldmoney.com:

Lately financial media have been describing how resourceful gold buyers are taking advantage of many of their clients' lack of gold knowledge. In most cases, these clients are elderly and retired people who wish to sell their gold and silver jewellery for extra income. Experts are warning that these sellers should be cautious not to sell their jewellery at too low a price.

In the face of today's hostile financial environment, selling one's silverware has turned into a necessity for some people. Many households own gold and silver jewellery, as well as silverware or coin collections. Buyers have their eyes set on these utensils – which have often been carelessly stored for decades – offering quick cash to those interested in selling. Sometimes these transactions are made at the seller's door, in public spaces or in restaurants after those interested in selling have responded to an ad posted in a regional newspaper.

Major English-language financial newspapers have been increasingly denouncing those who are trying to fleece naïve sellers. Experts are calling for an information campaign aimed at improving sellers' knowledge.

But those interested in selling have to be willing to take the necessary time to gather the right information. While some voices are asking the government to start an information campaign, it seems hard to understand why tax money should be spent on this. After all, people have to be responsible for their own decisions. This would help sellers to be in a better position right from the start.

Keep on reading @ goldmoney.com

Fleckenstein – Central Banks & The Fed Are Close To Panic

Posted: 13 Jul 2012 08:30 PM PDT

from kingworldnews.com:

Today Bill Fleckenstein told King World News, "…the central banks of the world, and in particular the Fed, are close to where they are going to panic and do something big." Fleckenstein, who is President of Fleckenstein Capital, also said, "What I am salivating over is the chance to really press my gold position. I think the next leg is going to be really, really powerful." Here is what Fleckenstein had to say in what turned out to be a very powerful and timely interview: "This all-paper experiment started in 1971, when Nixon closed the gold window. We had horrendous inflation in the 70s, Volcker came in and saved the day, and created an environment of credibility whereby Greenspan could ruin things for the next 20 years. He (Greenspan) then passed the baton to Bernanke, who is continuing the ruination."

Bill Fleckenstein continues:

"That same process is going on around the globe, ex a little foot-dragging in Europe. I don't know what the catalyst will be (to end this), but my belief is that at some point they will all start printing money. At some point they will recognize we are not going to have a deflationary collapse, that we are not going to have a deflationary debt liquidation, which is really meant to say a dislocation to the downside.

Keep on reading @ kingworldnews.com

Gold to Hit $2,000 by Year-End on More Fed Easing: Merrill

Posted: 13 Jul 2012 08:25 PM PDT

from cnbc.com:

Merrill Lynch has added its voice to the chorus of gold bulls who have been predicting that bullion will hit $2000 an ounce.

Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at the investment bank, says he expects the Federal Reserve [cnbc explains] to initiate an asset-purchasing program of as much as $500 billion in the second half of the year, which will drive spot gold much higher by the end of the year.

"We think that $2,000 an ounce is sort of the right number," Blanch said on CNBC Asia's "Squawk Box" on Thursday. "We believe that ultimately the Fed will be forced to do quantitative easing [cnbc explains] . If it happens in September, as our economists expect, we will get a rally sooner in gold. If it happens after the election (in November), we will get the rally a little bit later; probably we will touch $2000 an ounce sometime next year."

Spot gold was trading almost unchanged at $1,569.71 an ounce by 6.14pm GMT on Wednesday and inched up to about $1,572.80 in early Asian trade on Thursday. The metal has fallen nearly 20 percent since touching an all-time high of $1,918 in September last year, as a combination of Europe's debt crisis and concerns over global economic growth triggered a selloff in risk assets like commodities.

Despite this decline, market watchers from prominent investor Jim Rogers to hedge fund manager Eric Sprott have continued to stay bullish on gold, believing that central banks around the world will continue their policy of monetary easing and investors will seek out the metal as an inflation [cnbc explains] hedge.

Keep on reading @ cnbc.com

India's Reserve bank looking to put idle household gold to better use

Posted: 13 Jul 2012 08:20 PM PDT

from mineweb.com:

The Reserve Bank of India is looking to mobilise the country's idle gold deposits. The apex bank is mulling ways other than direct curbs on imports of gold to reduce the current account deficit.

With gold imports contributing substantially to India's current account deficit, a bank instituted panel is looking into the aspects of devising some alternative routes.

Anand Sinha, deputy governor of the Reserve Bank of India (RBI) said the bank is considering financial instruments that mimic the returns on gold.

"Gold imports have been a substantial part of the current account deficit. Therefore, it is being looked at what best can be done. Import is one aspect, the other aspect is that the gold that already exists in the country can be brought out to satisfy the demand by devising financial instruments which can mimic the returns on gold," Sinha told mediapersons.

The idea is to put the idle gold to productive use, said Sinha.

The RBI has been contemplating measures for some time now to ensure the country consumes less physical gold, since the nation's craze for the yellow metal is putting India's external trade at risk.

India imported $45 billion worth of gold in 2011-12, an increase of 3% year on year although physical imports fell 17% to 854 tonnes from 1,034 tonnes due to high international prices which was amplified by the weak Indian rupee.
Analysts say gold imports further declined as the government stepped up measures to control the precious metal's flow into the country.

Keep on reading @ mineweb.com

Financial Alternative to Gold Considered

Posted: 13 Jul 2012 08:15 PM PDT

from truthingold.com:

The Reserve Bank of India (RBI) is planning to introduce financial products with returns that match the earnings from gold investments.

The move is aimed at discouraging gold imports. This would help reduce the current account gap. A committee has been set up by the central bank to devise alternative investment avenues for retail investors

"Gold imports have been a substantial part of the current account deficit. It is being looked at (seen) what best can be done," Anand Sinha, deputy governor of RBI, told reporters on the sidelines of a seminar organised by the Indian Chamber of Commerce here on Thursday.
"Import is one aspect. The other aspect is gold, already in the country — whether we can bring it out to satisfy the demand … (or) devise financial instruments which can mimic the return on gold. Several proposals are there. There is a committee looking into all these aspects."

Sinha did not offer details on the types of financial products the banking regulator was looking to introduce.

In the Financial Stability Report released last month, RBI had expressed concern at banks' import of gold coins for retail sales, as investment in the yellow metal by households will affect availability of financial sector funds.

"Banks' import of gold coins for retail sale to households has been a matter of concern. It has risen from just one per cent of total imports by banks in 2009-10 to 3.8 per cent in 2011-12," RBI said in the Report.

Quoting World Gold Council data, RBI said as much as 23 per cent of all gold imported is for investment purposes in India and said even its use in jewellery at 75 per cent has an investment element for households. Market players said it is difficult to guess the type of financial instruments that RBI will introduce to match the returns on gold investments.

Keep on reading @ truthingold.com

Sprott Sees Record Gold in 2012: Corporate Canada

Posted: 13 Jul 2012 08:10 PM PDT

from bloomberg.com:

Gold will climb to a record by yearend as the global economy slows from the weight of too much debt, says Eric Sprott, the founder and chairman of Canadian fund manager Sprott Inc. (SII)

"I just can't imagine the demand for gold is going down," he said in a July 9 interview at Bloomberg's Toronto office. "I don't personally see a solution to the problem that we're in, the financial leveraging issue that we all have where everybody wants to shed debt and there's no buyers."

Sprott's company manages funds investing mainly in gold, silver, and precious-metals equities. He expects bullion will rise as investors seek the safest assets while governments spend to stimulate their economies, increasing chances that inflation will accelerate.

Gold, which had advanced for 11 successive years, is little changed so far in 2012. It's 19 percent lower than the record $1,923.70 an ounce traded on Sept. 6 in New York after investors favored buying the dollar amid Europe's escalating debt crisis.

The metal "should go to new highs before yearend, that would be my guess," said Sprott, 67. "Gold has blown away every financial market in the world since 2000, let's not forget that."

Rallying to a record would mean gold climbing at least 23 percent on the Comex in New York, where bullion for August delivery fell 0.7 percent to settle at $1565.30 an ounce today. Gold futures gained 2.4 percent in 2012 through June, the smallest first-half increase since 2007.
'Fundamental Problem'

Sprott declined to make a specific price prediction. Future highs are "indefinable" because they will depend on decisions by policy makers, he said.

Sprott has previously made predictions that were accurate, or largely so. He said in May 2011 that gold might rise to $2,000 that year. In March 2008 he said banking stocks would collapse. Bear Stearns Cos. was sold to JPMorgan Chase & Co. later that month and Lehman Brothers Holdings Inc. filed for bankruptcy in September.

Keep on reading @ bloomberg.com
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