As veteran Café members know, it is my opinion the financial market press, who follow and comment on gold, rate at best mental midget status, as exhibited by this gold recap headline yesterday afternoon…
HUH? The DOW closed at its lowest level since 1997.
A few of The Muppets on CNBC have been pointed to the copper and oil charts as potential indicators that the economy might be about to show some life and that the market may be ready for a rally … from extremely oversold conditions. In particular, they are referring to their rounding bottom formations, which were followed today by breakouts, especially copper…
Then, this morning the DOW, S&P and the DOG were all called a fair amount higher on this news…
Perhaps coming Chinese economic stimulation is MORE than necessary as the true state of Chinese and Asian economic activity is not properly understood. The latest from my friend since 1980, Frank Veneroso…
1. The industrial collapse on a global scale has almost no precedent. Why has it happened?
2. The history of economic cycles tells us that industrial collapses like this one tend to be associated with two industrial excesses: massively excessive accumulations of inventories and manias in fixed investments.
3. We have just gone through the biggest inflation adjusted commodity bubble in recorded world history both in terms of amplitude and duration. History tells us there was probably global goods hoarding; in other words, there may have been an inventory cycle of immense amplitude, much of it unrecorded, which is now being unwound violently.
4. If excessive inventory building and excessive fixed investment has been partly responsible for the amazing speed of decline in global industrial production, where in the world were these excesses concentrated?
5. China has embarked on a massive increase in its distribution chain. There was an associated massive inventory build in stores that remain void of shoppers. There may also have been a speculative accumulation of inventories.
6. China is also the economy where the world’s greatest fixed investment excess occurred. The ratio of fixed investment to GDP has been well above 40% for a half decade. No such investment excess ever occurred in any major economy since the onset of the industrial revolution.
7. We are now hearing stories about immense overcapacity in construction of all kinds.
8. Exports to China from China’s trading partners is all important, since it gives us some insight into the Chinese economy which the Chinese garbage statistics prevent us from seeing clearly.
9. Year over year exports for Japan have now fallen an amazing 46% in January. Exports to China fell at the same rate as overall exports, suggesting a contracting Chinese economy.
10. Japanese exports of capital goods to China have collapsed. German and Korean exports of capital goods to China have done the same. All this points to a sharp contraction in unsustainably high Chinese private fixed investment.
11. Taiwanese GDP fell an 8.36% rate in the fourth quarter non-annualized. I have never heard of an industrial contraction at such a devastating rate.
12. Exports were a cause. Taiwan’s exports fell at a 42.7% rate year over year in January. Exports to mainland China and Hong Kong fell at an even faster rate.
13. The odds are that Taiwanese firms operating in China have drastically curtailed their fixed investment on the mainland – another indication of a bust in unsustainable private business fixed investment in China.
Neither commentary is mutually exclusive. If the Chinese go all out here because they are in such a mess, they will need a lot of oil and copper, etc. Better their people have shovels than guns.
This is a roundabout way to get into covering my field, gold and silver. Gold was bombed for 7 days in a row … from top to bottom $100+. Two weeks ago the world was falling apart and it was THE safe haven play. By yesterday the price drop had many of its advocates stumbling and the press was quickly ready to pan it as a GO TO investment.
This really is silly people stuff. Twenty to Thirty years from today people won’t believe the garbage reasons offered for gold doing what it does … emanating from the press and The Muppets. In a bigger picture sense it is equivalent to those who thought the world was flat some 500 years ago.
Gold is more a safe haven play than ever and the price is going to the moon, along with silver. The only reason we have seen and endured a stunning 10% drop in the price of gold in 7 days is because the US Government/Gold Cartel ordered the price down. Once they set the fall in motion, it led to normal technical selling by funds, as most follow money management/stop loss principles. The Gold Cartel has been feeding on these folks and the likes of momentum trader Dennis Gartman for the 10½ years The Café has been open.
Gold is now in its 9th year of making new highs; and still, many pundits and Muppets are questioning it as an investment because it has no yield. Another huh? Yep, and it has no counterparty risk either, nor has it lost 50% of its value like the DOW over the past 12 years.
There are so many dingbats out there who relate back to the 1980 gold high and say it has gone nowhere, or little to nowhere, which is more silly people stuff. Tell that to those who bought the DOW over the past 12 years, who are at best even, with most EVERYONE losing money, while gold has soared.
Silly, silly, silly.
On that note, veteran Café members will remember Neal Ryan (had not heard from him in 6 months or more) who spearheaded the Blanchard & Co. lawsuit against Barrick and JP Morgan. He just checked in with CP and me this morning. Forget the mental midget, Muppet gold commentary. This is the real deal and the main reason for gold’s $100+ price drop…Gents,
hope all is well on your end. I must profess that I haven't kept track of things in the metals markets much recently, but did some quick work for a friend who was looking to invest and asked about bank selling. Just an FYI since I was trying to explain to him why when central bank activity ramps up it's the time to buy....Euro CB's have dumped over 220 tonnes of gold on the market in the last 3 weeks...ie. they've met nearly half their yearly selling quota in 3 weeks. Hadn't seen anybody mentioned anything like that in any news lately, though hadn't been looking either. It's always the interesting stuff that no one in the mainstream media seems to notice. keep up the good fight!
Neal, who is so well connected and really knows his stuff, what? ... the press getting to the gold truth? Explaining it to the bewildered public?
Oh well what fun!!! From MIDAS yesterday (referring to JB’s ECB selling numbers)…
"But the key point of the note is that this 38 tonnes of selling is dwarfed over a two month period by the 249 tonnes GLD has supposedly bought over the same period of time (see Adrian below). Hmmm."
Which if Neal’s info is correct, means The Gold Cartel dumped 211 tonnes SURREPTITIOUSLY as part of their gold price suppression scheme and was THE real reason gold fell like it did. It all fits.
Oh, so many of the mainstream gold world folks is a bunch of shallow nincompoops!
CNBC’s Jim Cramer was jumping up and down about silver last night. It was quite a lengthy segment on silver. However, as bullish as he was, he said that gold and silver were going DOWN first, so buyers should scale in at intervals on the downside. Silver popped early to $13.17 but gradually fell apart, while gold was smothered for no apparent reason again, except for The Gold Cartel’s reasons. Gold roared early up to $922.30, then was nailed by the bums to $905 before stabilizing. We have witnessed this pattern (the cabal slams gold after an early burst) over and during the past (now) 8 days of successive losses. Perhaps we have a double bottom above $900. With so many buyers lurking out there between $880 and $900, that would not be a surprise. Then again, there is a horrendous US jobs report coming on Friday and gold is always nailed around that report. Perhaps that was part of what this takedown was all about and the major damage has been done already.
Silver was aided in the morning by the VERY firm copper and oil prices. The hoopla over the Chinese stimulus comments didn’t hurt either.
The gold open interest only fell 2,071 contracts to 365,271 (not much liquidation there), while the silver OI went up a slight 15 contracts to 93,051.The yield on the 10 yr T note is 3%. The dollar fell .73 to 88.57. The dollar/gold relationship has taken on an entirely new dimension for the time being.
The CRB came back from the dead, gaining 7.78 to 211.45.
AM gold goodies from John Brimelow…
Indian ex-duty premiums: AM (S15.63) PM ($8.79) with world gold at $913.58 and $911.80. Basis Delhi – well below legal import point. After a soft start, the rupee managed a rally at last, closing at $1 = R51.35 (Tuesday R51.95). This had a notable effect on the PM premium situation. The stock market also managed an up day. Closing 0.23% above Tuesday.
A rally in the rupee could have an important influence on world gold at this point.
In a somewhat confusing development, The Gartman Letter today speaks of cutting another unit of gold from its model portfolio, by my reckoning eliminating its position. But the portfolio summary reflects neither today’s nor yesterday’s action.
Nevertheless, the attitude towards gold now held by this well-informed and influential commentary is clearly unenthusiastic.
Of interest is that MarketVane’s Bullish Consensus for the S&P, which is normally very sticky, slipped a point last night to 32%.. In the past couple of years it has been lower only 3 days, October 8-10 last year, when it bottomed at 29% (and then saw a 10 point rally. On some reckonings (Hays), that remains the "internal low" of the market.
Since very recently selling in gold appears to have been linked to stock market weakness, this could be important to gold’s friends.
***MIDAS note: there will be JB evening input (more gold goodies) between 5 and 7 Eastern Standard Time unless otherwise notified. And here it is...
Tuesday’s deep $34 intraday Comex sell-off and down $26.40 loss (2.8%) saw only a minor fall in open interest. Only 2,071 lots were shed (0.6%). In the first instance this implies there continues to be a substantial short interest in the market, and that the widely reported long-liquidation is exaggerated, at least as far as Comex is concerned.
Today a promising early Comex rally was reversed on heavy volume – by 10am 62% of the day’s estimated volume had traded and gold was $10 off its high. Gold then drifted down to a floor close loss of $6.90. Only 99,266 lots were estimated to have traded – switch effect 8,734.
A great deal of attention is now being paid to the slack Asian demand/scrap reflux situation with wider discounts on kilo bar being reported, especially in the Far East (50c HK, 75c Tokyo). See
On the other hand, a survey of US coin and bullion dealer sites this afternoon suggests that US premiums have widened slightly, and remain very high.
MarketVane’s Bullish Consensus for gold slipped a point to 74%.
The GLD ETF achieved a fifth day running with reported gold holdings static at 1,029.29 tonnes.
While this is the 8th down day in a row for Comex gold, the bears cannot be said to have really pressed their advantage, with volume fading away once the early rally attempt was blocked. Neither the HUI (down 0.94%) nor the XAU (up 0 02%) lost their curious gains of yesterday. Some will see the apparent exit of The Gartman Letter as a positive sign.
The market remains interesting.
CARTEL CAPITULATION WATCHThe DOW was firm all day and closed up 150 to 6876 and the DOG leaped 33 to 1354.
Yet, to me, it was a HIDEOUS performanceby the DOW as it closed a hefty 120 off its high. More on that, but first, Bix...
Hi Bill Not much attention was paid all day to Palm who disappointed on it revenue guidance after the close last night; and to Google whose CEO, Eric Schmidt, came out with some shaky comments about his firm’s future earnings.
I don't think it was a coincidence that President Obama said to "buy stocks" yesterday and the market skyrockets today.
The decision must have been made by the PPT to squeeze the shorts and Obama was giving everyone a heads up.
There are no more free markets...if there EVER were!
Meanwhile, Blockbuster and Reader's Digest are filing for bankruptcy.
BUT THE BIGGIE BIGGIE was the HORRENDOUS price action of both JPM and GE.
*Finally the DOW moves up, yet JPM loses $1.71 per share, putting in a $18.80. If the DOW had closed lower, JPM would have tanked BADLY. Word to me today is the nightmare scenario brought your way about JPM these past many months is THE WAY IT IS and kicking into high gear. Their derivatives book is blowing up and the Fed is in a panic ... TOO BIG TO BAIL is the problem!What is occuring at JPM, and in all the major financial institutions, is disintermedation (according to my plugged-in savvy sources who clued us in to the JPM mess debacle way back when). Counterparties are pulling out of MANY bank/financial firm deals because they have have no faith they will get there money on those deals. And who has the MOST counterparties of all with their hundreds of trillions of derivatives? JP Morgan Chase! Their disintermediation problem is mounting. Result:
It is called PANIC! and then there is
*GE, a small fry compared to JPM, but a mega American name and an increasing embarrassment to The Muppets and CNBC. They are in the hunt in the race to zero for former elite American firms. Their share price sank another 32 cents to $6.69, after making a $5.72 low. It is the same case here as JPM. Had the DOW not charged higher, GE was dead meat today. Both might be tomorrow! No wonder President Obama was out beating the drums.
Both JPM and GE are are loaded with toxic derivatives. Meanwhile, the ridiculous AIG coninues to lead the way to zero, finishing the day flat at a pitiful 43 cents. To view these stinko charts…
http://www.stockwatch.com/utilit/utilit_snapsh_result.aspxDave from Denver with the scoop…
GE credit defaulty swap is 17% bid 19% offered
Good morning Jack Welch!
http://acrossthecurve.com/?p=3577This bond trader heard that CDS buyers want 20% up front, but as he points out, he has not seen a trade like that actually "print." Let's look at the quoted "bid" side of 17%. That essentially means the market is saying that GE debt should be rated triple-C. It also implies a very high probability of bankruptcy. GE is so complex and has so much off-balance-sheet crapola, that we might not get so see until GE is in receivership, that I would just as soon stay away from GE as an investment altogether. There's probably some value left to shorting the stock… more later…
re: the 20% cost to insure GE debt against default
In my experience as a bond trader, and especially junk bonds, I found the bond market to be much more efficient at pricing in risk and forecasting future problems with a company. Bond investors tend to do a lot more thorough investigation of a company's "credit" quality, something the ratings agencies have been failing miserably on. The bond investors also often get a peek at the information bank debt investors have access to (even though technically they should not - my bond desk was right next to the bank trading desk). If GE credit default protection costs 20% up front now, a GE restructuring of some sort is coming soon to a theatre near you. Certainly today's stock price action in GE is starting to discount these facts. Be nice if burned investors start filing lawsuits against GE and CNBC….
GE on the hook for $8 billion in credit default payments
if they get downgraded:
billion-downgrade-time-bomb.htmlGiven the players involved behind the scenes at GE - e.g. Warren Buffet, Wall St, etc - I would imagine a lot of pressure is being put on the rating agencies to maintain GE's ratings. The credit ratings system is thus a total fraud.
The GE handoff goes to Garic…
This morning Bill Gross got on CNBC to say GE credit default spreads were soaring for technical reasons. The technicality was that Sovereign Wealth Funds were selling GE debt before it gets downgraded. To me this is more than a technicality; it is another sign that Sovereign Wealth Funds are diversifying out of the $U.S.
Meanwhile, the bubble perception on Wall Street and in Washington is we can print and borrow whatever we want to because the ROW is in worse shape than we are. Our Federal Reserve is going down a path that no currency has ever recovered from. Our administration enthusiastically proposed a budget that finances a welfare state with debt. They have proposed a debt to GDP of over 12%; no currency has ever maintained its purchasing power at those levels. 25% of homeowners are under water on their mortgages and in no position to lead the world out of this mess. Our Banking System is bankrupt 10 times over. No other currency has this many problems. Crude Oil and Copper appear to be bottoming as China adds both to their strategic reserves. There are $6.6T in foreign central bank reserves; they are beginning to buy real things to protect themselves against further $ debt losses. It is lunacy to continue to print unlimited amounts of dollars and issue unlimited amounts of debt when the World is screaming at us they have enough. The Economist and Business Week both featured the Euro’s problems on their covers. The top of this bear market rally in the dollar is now officially imminent. The Treasury and Dollar Bubbles are close to popping.
***Chuck checked in last night with some of his usual superb insight...
Take a look at the Dow here and tell me that everything is not in synch. It is obvious from everything that it is straight down here. At least, in though it has been incredibly frustrating for these years, we are on record and we will survive.
Here is the quote of the day. Speaking at a press conference on Tuesday, President Barack Obama said “buying stocks is a potentially good deal if you’ve got a long-term perspective on it…” What an amazing statement! They can't figure out what is coming the next minute.
I think I am losing what is left of my mind. And they think we are batty. Chuck
U.S. economic news:
*I loathe putting out disinformation. The input in MIDAS yesterday about a Treasury auction this week was premature. Bloomberg:
The U.S. will probably announce tomorrow that it will sell $33 billion of three-year notes on March 10, $17 billion of 10- year debt the following day and $10 billion of 30-year bonds on March 12, according to Wrightson ICAP LLC, a research unit of the world’s largest inter-dealer broker. The auctions follow $94 billion of note sales last week….
08:15 Feb ADP Employment reports payrolls (697K) vs. consensus (630K)
* * * * *
U.S. planned layoffs in February fall from 7-year peak
NEW YORK (Reuters) - Planned layoffs at U.S. firms fell 23 percent in February from January's seven-year peak, but remained well above long term averages as the protracted U.S. recession took a heavy toll on employment, a report showed on Wednesday.
Employers announced plans to cut 186,350 jobs in February, led by the auto industry, down from 241,749 in January, amid an economic slump that is on track to be the most protracted since World War Two, outplacement company Challenger, Gray & Christmas said on Wednesday in its monthly report.
"The decline in job cuts last month offers some hope that January was the peak and we will now see layoffs begin to fall or at least stabilize," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.
But he said monthly job cuts may remain above 100,000 in the first half of the year and possibly for the rest of 2009.
Job cuts could continue to be particularly heavy in the automotive, manufacturing and financial sectors, he added.
February layoffs were led by the automotive sector, which announced 61,288 planned cuts, or about one-third of the monthly total. The next biggest sectors were industrial goods industries with 19,462, retail with 18,759, and financial with 13,550.
The Challenger data comes ahead of the government's closely watched non-farm payrolls report on Friday, which is expected to show 648,000 jobs were lost in February, according to the median of forecasts in a Reuters poll.
07:30 Challenger reports job cuts in Feb (23%) to 186.35K
* * * * *
07:00 MBA mortgage purchase applications index (5.6%) in 27-Feb week; total market index (12.6%)
Compares to (2.6%) and (15.1%), respectively, in prior week. The refi index was (15.3%) vs. (19.1%) in the prior week. The 30-year fixed rate + 7bp to 5.14%; 15-yr. fixed rate +2bp to 4.73%.
* * * * * 14:06 Fed says US economy deteriorated further in February -- Beige Book
The report says nat'l economic conditions deteriorated further during the period of Jan through late Feb. 10 of 12 districts reported weaker conditions or declines in economic activity, with the deterioration broad based. Consumer spending remained sluggish and reports on manufacturing suggested deep declines in activity in some sectors and pronounced declines overall. Lending activity fell further overall, while the availability of credit remained generally tight. The Dow is modestly higher, though the markets have pretty much dismissed the news, as a dismal report had been expected: Dow +2.12% to 6868.27.
* * * * *
More Than 8.3 Million U.S. Mortgages Underwater as Values Sink
March 4 (Bloomberg) -- More than 8.3 million U.S. mortgage holders owed more on their loans in the fourth quarter than their property was worth as the recession cut home values by $2.4 trillion last year, First American CoreLogic said.
An additional 2.2 million borrowers will be underwater if home prices decline another 5 percent, First American, a Santa Ana, California-based seller of mortgage and economic data, said in a report today. Households with negative equity or near it account for a quarter of all mortgage holders.
"We have way too much supply and not enough demand," Sam Khater, senior economist for First American, said in an interview. "People aren’t going to purchase a home as long as prices keep falling, and someone who is worried about their job isn’t going to purchase a home either."
Prices in 20 U.S. cities fell 18.5 percent in December from a year earlier, the fastest drop on record, according to the S&P/Case-Shiller index. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest since 1997, and new-home purchases plunged to the lowest since records began in 1963, the National Association of Realtors and Commerce Department said.
U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January, RealtyTrac Inc. reported, and payrolls plunged by 598,000, pushing the unemployment rate to the highest since 1992, according to the Labor Department…
10:00 Feb ISM Non-Manufacturing 41.6 vs. consensus 41.0
Jan reading was 42.9.
* * * * *
U.S. service sector contracts again in February
NEW YORK (Reuters) - The U.S. service sector shrank further in February but by less than expected, according to a report released on Wednesday.
The Institute for Supply Management said its nonmanufacturing index came in at 41.6 in February versus 42.9 in January.
The level of 50 separates expansion from contraction in the index, which dates back to July 1997.
Economists had expected a reading of 41.0, according to the median of 69 forecasts in a Reuters poll ranging from 37.0 to 44.0.
The service sector represents about 80 percent of U.S. economic activity, including businesses such as banks, airlines, hotels and restaurants.
FDIC’s Bair Says Insurance Fund Could Be Insolvent This Year
March 4 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said the deposit insurance fund could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency.
"Without these assessments, the deposit insurance fund could become insolvent this year," Bair wrote in a March 2 letter to the industry. U.S. community banks plan to flood the FDIC with about 5,000 letters in protest of the fees, according to a trade group…
U.S. Bancorp Cuts Dividend to 5c a Share From 42.5c a Share
March 4 (Bloomberg) -- U.S. Bancorp cut its quarterly dividend to 5 cents a share from 42.5 cents a share. The information was released in a Business Wire statement.
Costco Profit Falls on Discounting, Overseas Sales
March 4 (Bloomberg) -- Costco Wholesale Corp., the biggest U.S. warehouse-club chain, reported its first profit decline in seven quarters as discounting hurt margins and the strength of the dollar eroded international revenue.
Net income fell to $239.7 million, or 55 cents a share, in the quarter ended Feb. 15, from $327.9 million, or 74 cents, a year earlier, the Issaquah, Washington-based company said today in a statement. Profit missed the 59-cent median estimate of 18 analysts surveyed by Bloomberg. International outlets open at least a year declined 11 percent in the three-month period…
16:31 API reports crude inventories (463K) vs. prior +341K
Gasoline inventories (642K), Distillate inventories +1.6M.
* * * *
10:30 DOE reports crude oil inventories (757K) barrels vs. consensus +1.00M barrelsSaudi hikes April crude prices to all buyers
Gasoline inventories reported +168K barrels vs. consensus (800K) barrels. Distillate inventories reported +1.66M barrels vs. consensus (1.0M) barrels.
* * * * *
DUBAI, March 4 (Reuters) - Saudi Arabia raised its official selling prices to all its customers for its crude in April, state oil firm Saudi Aramco said on Wednesday.
The kingdom raised the price of Arab Light to U.S. customers by 90 cents to West Texas Intermediate (WTI) plus $1.90 a barrel.
It raised the Arab Light price for customers in the Far East by 65 cents to the Oman/Dubai average plus 90 cents a barrel.
Various from the MidEast…
Good Morning Bill (from Dubai)
I don’t have much time these days to watch too much Bloomberg. Dubai is ET + 9 hours so it would have been during the morning sessions of the Budget Hearings on Tuesday that a member of Congress aggressively asked Bernanke the right type of hard question. "Who are the counter parties on the other side of the AIG contracts that render AIG too big to fail? The American people are expected to pour trillions into these bail outs of underwater derivatives but we are not being told who the beneficiaries are". Bernanke squirmed and ducked and dived and exhibited some really uncomfortable body language but obfuscated his answer with some general comments about his rage over some of the AIG issues. An irrelevant non answer but the problem was averted for the time being. I’ve read no reporting of this particular line of questioning in the mainstream media today.
It is amazing how these congressional inquisitors can exhibit so much moral outrage, posturing from the moral high ground of their own self righteousness. Not one of them (maybe Ron Paul is an exception) has yet dared to ask publically a hard question on USA gold holdings. There are 600 plus of these sitting congressional members. When the truth is out what are the excuses going to be. "Yes I read the WSJ-must just have missed the edition of 31st Jan 2008" or "my policy is never to read the adverts" or the politician’s special "concerning the GATA advertisement, I have no recollection".
If there are any naked gold shorts reading in, remember the recent spike in the Volkswagen share price (was it a five fold increase in one day?). Remember 22nd Sept 08 when the futures oil contracts for settlement in October spiked by $25 intraday. The $5billion profit earned by JP Morgan on its derivative book was widely published yesterday. For how long can the full statement be suppressed from public view-the full statement should read-JP Morgan managed to turn a $5 billion profit on its $500 trillion derivative book less any losses not publically disseminated under a John Negroponte reporting exemption. The Madoff and Stanford scandals broke overnight after festering for years. The pressure on the gold price suppression scheme is becoming intolerable. I know what a living hell it is for the "lucky" few who have survived and retained their jobs in the London financial markets.
Presumably the same applies in New York. Somebody who knows something which is beyond credible deniability will crack or break ranks-there must be just too many tragic souls on the edge of a precipice.
Ladies and Gentlemen:
During the March 3rd TOCOM sessions the seven historically largest paper gold shorts increased their net short position by 528 contracts to 8,013 contracts. STDJ increased theirs by 29 contracts to 10,270 contracts.
http://www.tocom.or.jp/souba/gold/torikumi.htmlIn silver they increased their net long position by 23 contracts to 119.50 contracts (60kg deliverable equivalent).
http://www.tocom.or.jp/souba/silver/torikumi.htmlAll the best,
In the March 3 session on the TOCOM Goldman Sachs made no change to their position. It remains at zero.
Hey Guys, http://news.bbc.co.uk/2/hi/business/7922089.stm
Didn't you have a run in with him Bill?
Cheers for GR21,
........Ted Truman, formerly a senior official at the Federal Reserve and US Treasury, is pushing for a huge - $250bn - allocation of SDRs to respond to the crisis.
He says that about $17bn would flow to the poorest economies, and $80bn to other developing countries.
A traditional argument against such allocations is that the money would be unconditional - you couldn't stop countries wasting the funds.
But Mr Truman thinks that's a plus in a world where many countries need to act to stimulate their economies but don't have the cash.
The other main objection is that it is inflationary: after all, it is the global equivalent to a central bank deciding to print money.
However, it would significantly increase developing countries' access to international resources.
It would be cheap.
And it wouldn't require the approval of the US Congress.
The same cannot be said of many of the other proposals floating around the G20. .........
Yes Jeff (this blast from the past is especially appropriate as I am listening to Gold Cartel sycophant Gordon Brown speak to Congress in the background)…
May 16, 2000 - Spot Gold $275.30 down 20 cents - Spot Silver $5.11 up 9 cents
Another blast from the past: (January 2000) - "We believe that the incredibly high liquidity of the gold market suggest that a net short position is the natural market equilibrium for the time being. The reason is that gold can consistently be borrowed much cheaper than money. For example, it is currently possible to borrow gold for one year at a lease rate of 1.8% while a one-year bond is yielding 6.6%. Borrowing gold, selling it, and investing the proceeds at the risk-free rate is an attractive trade. "Essentially, the price of gold could rise 4.8%, or about $13 per ounce and a bearish speculator would still break even on a short position established today. Clearly, certeris paribus, the risk/return profile of the gold market favors the short side. We expect this to continue for the foreseeable future." End...
It is hard to know whether Lehman is part of the gold cabal or not, but it would appear that they know the drill.
GATA put out a press release this morning about the Roll Call open letter and our trip to Washington, noting that we met with Congressman Spencer Backus of Alabama. Congressman Backus is Chairman of the House Banking Sub Committee on Domestic and International Monetary Policy. This committee has oversight of the gold and silver markets and is the right place to go about our gold market concerns.
We are keeping the names of the other politicians that we met with under wraps for the time being.
One of the reasons that we decided to mention Congressman Backus was to let GATA supporters know that we really have access to the highest levels of the United States Government and are feeding them with everything we know about the gold market manipulation and the potential banking crisis.
Frank Veneroso and Reg Howe are working up a storm with follow up material for the committee.
It is clear to all of us that the United States government is instrumental in holding down the gold price. That being the case, it is easy to understand why a Lehman Brothers can come out with such audacious commentary presented earlier in the Midas. The reasoning behind our more developed understanding about US government gold involvement will be divulged at the appropriate time.
The stakes are huge.
What we have presented Congress could effect: the make up of the next Congress and the legislation for the years to come; the Presidential election; President Clinton, who could be burdened with another administration scandal; Prime Minister Blair and his Labor government as the National Accounting Office in England is already investigating the Bank of England gold sale. Among other things, the NAO wants to know on who's advice did the Bank decide to sell more than half of the country's gold reserves?
I think it is appropriate to review some material about the Bank of England sale that was in the document I sent last July to Senate Banking Committee Chairman, Senator Phil Gramm:
"….The next morning I awoke to the Bank of England announcement. Since then the price of gold has collapsed over $36 or almost 15% per cent, and the sale has ignited a furor all over the world, fostering talk of conspiracies, etc. Before, I get into the ramifications of the sale, I thought the following utterances by some of England's most notable officials might raise an eyebrow or two:
Wire service commentary July 14, 1999 (my comments in parentheses):
"Asked in parliament if it was right to sell off part of Britain's reserves, Prime Minister, Tony Blair, replied, "The gold price has been falling for two years, so in fact if it carried on falling and we didn't sell we would lose money".
He then declined to say if he would meet with the South African Gold Industry delegation, but said the sale was justified saying, "We did this on technical advice from the Bank of England". (??? - Haruko Fukuda, CEO of the World Gold Council was told that the decision was a political one and made by the British Treasury, not the bank.)
Prime Minister Blair then went on to say, "It is only the Conservative Party's utter obsession with the euro in some bizarre way. Given that Argentina and Switzerland are also selling gold, what it has to do with the euro I do not know. It is only that which is making them raise this issue. It was done, as I say, on technical advice. It was carried through perfectly sensibly and we actually got the best deal for the country". End
How wrong can you get? The best deal the Bank of England could have made would have been $30 to $40 more per ounce by carrying out the sale quietly as all the other major countries have done for 20 years.
But the story now gets confounding. On Sunday July 11, The Chancellor of the Exchequer, Gordon Brown, said in the London Times, "The proposal to sell the reserves was put to ministers by officials, and, say TREASURY INSIDERS, agreed to it with LITTLE DISCUSSION".
According to the London Times article, the Chancellor is said to have been surprised and mortified by the reaction from Thabo Mbeki, the South African president, who said last week that the decision would have a "potentially disastrous effect" on South Africa.
Ok, so what gives here? Blair said it was a Bank of England decision. The Bank of England says it was a Treasury decision. The Treasury says it was only a Treasury decision of sorts and agreed to with little discussion.
Good grief? A decision that may have disastrous effects on South Africa, a democracy the West is committed to encourage, was made with little discussion and no one will take responsibility for it. Yet, it is such an important decision that Tony Blair will not reconsider it, even though it appears he does not know who made the decision in the first place. Meanwhile, the mortified (but confused) Chancellor of the Exchequer, Gordon Brown, (just prior to the trip to England by the African delegation) was all over the wire services talking about the righteousness of his gold decision while continuing to extol the virtues of the proposed IMF gold sale. The headline on the Reuters dispatch read: U.K.'s Brown Sees Wide Support for IMF Gold Sales.
However, a Bloomberg audio report reveals that when The Bank of England's Eddie George was asked whether the Bank of England's gold sale was 1) his decision 2) whether he was involved in it 3) whether he was consulted, his response was that he was consulted (which is a euphemism for being told). When asked who made the asset allocation decisions on the "bank reserves", he answered, "the government" --that is, the politicians."
So, what do we have here? The English now say their decision to sell gold was planned for some time and made the announcement, coincidentally, as the price the price of gold was about to take off. They became the first central bank in over 20 years to make an announcement of this sort in advance. They knew this announcement would devastate the market from a psychological perspective and send gold prices crashing- and, of course, it did - the gold price went straight down more than $36 per ounce. This assured English citizens the worst price possible and cost the country hundreds of millions of pounds.. Now, no one in the English government will own up to making this mysterious decision which is devastating poor African countries, among others.
Meanwhile, as my May 6 commentary indicated, somehow the bullion dealers knew what was coming and told their clients as much." End.
Alan Greenspan and Treasury Department officials have denied direct involvement of the Fed and Treasury in the US gold market. But, we don't know about the ESF and we don't know if they might be using secret off shore accounts to hold down the gold price. It is even possible that they are going through the Bank of England with their trading!
Many Senators and Congressman have been told that the US is not "manipulating" the gold market by the Fed and US Treasury. If, in fact, some faction of the US government really is holding down the price of gold, Alan Greenspan, Secretary Summers and President Clinton are going to have some serious explaining to do.
It would make their support for the IMF gold sales last year look to be very politically motivated - to put it kindly. Thirty six out of 41 poor gold producing countries voted against the IMF gold sales. The reason they voted against the gold sale is because the gold price was already badly hurting the economies of their countries. What will the Black Caucus, who went against the Clinton administration, on the IMF gold sale idea, say if they find out the Democrats were responsible for creating such misery all over the world?
Something stinks to high heaven about the $38 billion amount of notional off-balance-sheet gold derivative contracts on the books of JP Morgan at the end of 1999. It took aggressive bullion banker, Chase Bank, 14 years to build up its book to $22 billion according to Frank Veneroso. Morgan goes from $18 to $38 billion in 6 months. Give me a break! More on this to come later.
Allow me to let you in on some of the inside scoop going on here. Over the past year, the name Ted Truman has popped up in our circles as a CIA snoop. That is also the word around certain politicos in Washington. Rumor mind you, but smoke all over the place on this one. He used to work for the Federal Reserve, but he had a falling out with Alan Greenspan. Al Gore picked him to go work at the Treasury which is where he is employed at the moment. After one of our meetings in Washington, we met with one of GATA's support contacts and told him the names of who we met with. Immediately, he told us to be careful with one of them because he has a direct line to Ted Truman.
That sets the scene.
Yesterday, I almost fell off my chair when GATA Treasurer/Secretary Chris Powell faxed me of a copy of a letter he just received from none other than Ted Truman! It was dated May 10, the day of our meetings in Washington. We did not get out of our meeting that day until 3 o'clock. Chris Powell had written letters to the Treasury many months ago as had others in his behalf. I just looked in our files and found the following correspondence:
A letter that was sent to Senator McConnell of Kentucky from Jeffrey Rush Jr., Inspector General of The Treasury.
A letter to Dale Schnitzler and Congressman Sherrod Brown of Ohio from Marti Thomas, Acting Assistant Secretary of The Treasury.
A letter to Congressman Charles T. Canady from Linda L. Robertson, Assistant Secretary of the Treasury.
A letter to Senator Christopher Dodd (with "concerning questions from Mr. Chris Powell." written in the letter) from Michelle A. Smith, Deputy Assistant Secretary of the Treasury.
Two letters to Treasury Secretary Lawrence Summers from Senator Joe Lieberman of Connecticut.
A letter to Senator Lieberman from Alan Greenspan in response to GATA's Roll Call questions.
All this, but no letter from Secretary Summers to anyone, not even to Senator Lieberman. Secretary Summers had everyone else put their name down. But, NOT HIS.
At the same time, there was plenty of correspondence to Chris Powell over these past many months by other Treasury officials in response to his request for answers to the questions that GATA posed in the Roll Call open letter.
It is very odd then that this supposed CIA snoop (with the proper name of Edward M. Truman) with the Treasury writes to Chris Powell after obviously being immediately informed about we said at one of our presentations in Washington. The letter itself was a form one that most others received except for one difference. It started out, "Secretary Summers has asked me to respond on his behalf." I cannot help but think that Secretary Summers is the ringleader of the US gold trading operation, having taken over from former Treasury Secretary Rubin. The evidence is starting to mount. If that is the case, and Congress finds this out, it could open up a can of worms and who knows what else Congress will find?
The Gold Anti-Trust Action Committee and our supporters in the GATA delegation could be the Democrats worst nightmare, maybe Tony Blair's too.
May 16, 2000 Goldgate: GATA, The CIA, Secretary Summers and Tony Blair
WAR! Clinton Administration Launches Counter Offensive Against GATA
As a result of "The Enveloping Horn" battle tactic employed by the Gold Anti-Trust Committee, all heck is starting to break loose.
To begin with, I received this email early this morning from a Café member:
"Bill, apparently this article was in the news, then it was "PULLED" !!!
Date: Wed May 17 2000 06:46
SlangKing (FT: GATA exposes Gold price manipulation to Congress) ID#293152: End.
I don't know if this is true, so if anyone has specific information on this, please let me know.
Speaking of up one moment, down the next. John Hathaway's superb commentary, "JP Morgan to The Rescue" is back up with no, or almost no, changes. At least, that is what I have been told. How many Café members out there think JP Morgan, who was informed about their derivative position being made public the day Tocqueville took down the Hathaway essay, made a phone call? What I suspect happened it that by taking this wonderful commentary down, it only increased the attention on JP Morgan. So the piece had to go back up. Only a guess on my part. Well, an educated guess as there are other reasons for my saying so and that will come out in time.
What is really fascinating is that the discussion and focus on the issue of the manipulation of the gold market is really picking up steam.
Received an email from a Café member this afternoon about his efforts to make Senator Warner of Virginia aware of the GATA's issues. This is what the Café member sent me:
"Got a call from the Senator's office, was briefly advised a meeting took place yesterday with Congressman Backus and etc. something to the effect that Greenspan denies any involvement and Summers is looking into it ??? but denies it.
"They are still working on it." End.
I have asked for clarification about Summers comment. How can you deny something before it is looked into?
I am happy to see that former Defense Secretary Senator Warner is involved in some way. In January 1988, my wife at the time, another couple and I went out to the Senator's sprawling ranch in the Virginia countryside to watch the Super Bowl. The Redskins were playing in that game and I remember him telling me how owner Jack Kent Cooke was a friend of his. The Senator had just split up with Elizabeth Taylor.
I will have to contact him personally - and do so soon. If Senator Warner has already met Senator Backus, who is Chairman of the Sub Committee on Domestic and International Monetary Policy, and who listened to the GATA delegation a week ago, then things are "cookin" over in Washington. The Enveloping Horn is advancing at the highest levels of the U.S government
In last night's Goldgate serving I said the following:
"Allow me to let you in on some of the inside scoop going on here. Over the past year, the name Ted Truman has popped up in our circles as a CIA snoop. That is also the word around certain politicos in Washington. Rumor mind you, but smoke all over the place on this one. He used to work for the Federal Reserve, but he had a falling out with Alan Greenspan. Al Gore picked him to go work at the Treasury which is where he is employed at the moment. After one of our meetings in Washington, we met with one of GATA's support contacts and told him the names of who we met with. Immediately, he told us to be careful with one of them because he has a direct line to Ted Truman."
What I didn't tell you was that I set up this staffer with the direct line to the CIA snoop, Ted Truman, to find out if he would be fair with us or report information to the enemy camp; ie, the US Treasury and his CIA snoop contact, Ted Truman.
I fed him information Sunday night, only part of which I can reveal. I figured that if he was in the Treasury/CIA camp, I would receive some sort of feedback soon. Little did I know then that Chris Powell would actually receive a letter from Ted Turman. This is part of what I sent him:
"It could not be more clear that we have hit a hot button.
"Regarding the gold industry. Unfortunately, many of them are clueless about what is really going on…………
"The more the industry actually listens to what we have to say and takes the time to evaluate the material we left you, the more support we receive from them.
"The problem with gaining U.S. support is that the big gold producers are afraid of U.S. government retaliation and antagonizing their own bullion bankers." End.
It was my thought that if this "staffer" was one of them, he would take "the bait" and my comments right to the US Treasury and CIA snoop. The companies would then be contacted and subtly informed that there are environmentalist groups around, certain judges with jurisdictions in some of the mining states, etc. Just your average subtle, sledgehammer conversation items.
Sure enough, that is what came back to me today. Word is also going out that we are a bunch of crazies! In the future, this will all be laid out in specific, written detail to Café members; it is all on paper in SEVERAL files.
It is like an interview of a juror. As far as I am concerned, this staffer has disqualified himself from further participation in the investigation of the gold market. He has no credibility with me anymore. The written evidence of what occurred is going off to Washington next week. Hopefully, it should eliminate someone that appears to wish to kill the gold market investigation just as it is roaring ahead.
It is clear that the players manipulating the gold market are going on a full court press to try and discredit what the Gold Anti-Trust Action Committee and the GATA delegation has to say. That has been the Clinton administration SOP from day one and they are utilizing that tactic once again. They will lose this time. The truth is too obvious and they are going to run out of gold.
And here GATA is still on the case NINE years later with so much proved out, and still the silly mainstream gold world won’t go there, or are too brain dead. When it comes to gold, the US Congress is brain dead also.Superb input from the Bixter...
I just read the CME Group (NYMEX) response to the Ted Butler allegations of manipulation. The interview is with Tom LaSala who is a managing Director at CME Group or the NYMEX.
I am AMAZED at his admissions! Here's what he is confessing to:
1) The NYMEX justifies the massive bank short concentration because it is backed by physical metal (the obvious metal is the SLV inventory controlled by JP Morgan. This means the ETF inventories have multiple potential ownership issues and conflicts)
2) The NYMEX does not inspect, assay or validate silver inventories but instead "asks" the inventory holders if they have sufficient metal to deliver against their short positions (JP Morgan is the monster short and they are justifying that position by telling the NYMEX and CFTC that they can deliver the SLV inventory on COMEX delivery requests. JPM is the "Custodian" of the SLV silver but also not required to inspect, assay or validate inventories as per the prospectus. JPM also changed the prospectus requirements of holding "Silver Bullion" to now only holding "Silver". The word "Bullion" was removed because it implies a certain quality of silver that is NOT in their inventories)
3) The NYMEX states that there is no logic in banks wanting to suppress the price of monetary metals so there is no motive for manipulation (Do they think we are all idiots?) Gold and silver are the barometers of the fiat money system. Rising gold and silver prices means monetary restraint is failing and faith in the fiat money system is in question. Control of the monetary metals is an essential component of Western Monetary Policy makers.)
4) The NYMEX has not, and will not, analyze the current concentrated short position manipulation even though the single bank concentration level facts are NEW to the market. The JPM short equates to 25% of annual production....this is a NEW concentrated manipulation fact. Tom LaSala
I see this response to Ted Butler as more supporting evidence that silver market manipulation is PROTECTED by officials at the NYMEX as well as the COMEX.
Thanks to Tom for the book "YOUNG AGAIN" by John Thomas and a 10,000,000 RESERVE BANK OF ZIMBABWE note. I went to my bank today to cash it and, for some reason, I got nowhere.
Demand for gold soared in 2008
Demand for gold increased by 64% in 2008, with most investors preferring physical gold such as bars or coins, according to the World Gold Council (WGC).
A report released by Lipper Fund Market Information (FMI) says that European investors sought to diversify assets away from the collapsing financials sector and hedge against the threat of inflation, which may return because of quantitative easing….
London calling, late yesterday afternoon…
Good afternoon Bill,
I thought it was an excellent Midas last night. When you add up the news on AIG, on banks in general and Warren Buffett's blunt assessment of the outlook for inflation, it is hard to envisage a more pro-gold set of stories. The terrorist attack today in Pakistan only adds to the case.
I am not sure if you are aware of the gold page which is now a permanent feature in the on-line version of the Telegraph. I have put in a link to it below.
This is another sign of growing mainstream interest in gold and is particularly interesting here, as gold has not been that well followed by the UK press. It occurs to me that you could ask them for an opportunity to write a piece on the manipulation of gold.
The behaviour of the gold price so far today seems remarkably subdued given the terrorist attack in Lahore on the Sri Lankan cricket team's bus. Cricket is followed closely throughout the Indian sub-continent and the nature of the attack will only re-inforce the tensions between India and Pakistan, even though the Indian team was not involved. I would also imagine that the attack will intensify the stresses within Pakistan itself. I find it hard to believe that international cricket teams will visit Pakistan for some time now, which will be a blow to the country's pride.
Am still waiting to hear from CNBC. No matter, now is the time for GATA’s Enveloping Horn to strike. If you have some time, please contact the Telegraph re what GATA has to say and let us find out if they are afraid to put our slant on gold out there. Thanks much. I am on that case, as well as carrying the GATA spear on other fronts.
And THANKS SO MUCH to so many of you who have contributed financially to our efforts these past weeks. It is going to make a huge difference in what we can do.Not much action in the gold/silver shares. The HUI lost 2.58 to 113.47 and the XAU was flat at 113.47.
The unthinkable, as mentioned in this column over and over, is at hand ... UNFORTUNATELY.
All of us are going to wake up one day with gold and silver prices up so much in that given day that you will think your computer or TV is broken. REMEMBER...
GATA BE IN IT TO WIN IT!