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US Government Orchestrates Market Moves To Affect Massive Treasury Auctions In A Day Filled With Irony

By: Bill Murphy, Le Metropole Cafe, Inc.,

-- Posted Wednesday, 29 July 2009 | Digg This ArticleDigg It! | | Source:

July 28 - Gold $938.80 down $14.60 - Silver $13.73 down 14 cents

"The doubts of an honest man contain more moral truth than the profession of faith of people under a worldly yoke" … Ximenes Doudan, journalist (1800-187


This is one of those days I can write this portion of the MIDAS commentary before 9 AM Dallas time. Gold was just bombed for no apparent reason and has NO chance today. Unfortunately, The Gold Cabal forces, after capping the price around $956, made their move soon after trading on the Comex commenced for the reason articulated yesterday in my commentary…

"Usually The Gold Cartel is most aggressive around pivotal market reports (like the US jobs report), TV speeches regarding US economic policy, and key market events. The event this week is the astronomical amount of debt to be issued by the US Treasury … some $235 billion. The last thing the Treasury wants is a gold price headed towards $1,000 due to the perceived relationship between gold and US interest rates … so they are all over gold."

The bums made a stand at $940 which failed in the end, only to make another stand right below pivotal $960 … one which will fail too as time goes by. Even if (when) the US loses this latest battle, it will be a pittance compared to doing what they can to make sure their Treasury auctions aren’t a disaster due the price of gold shooting for psychologically important $1,000 per ounce.

The day is filled with irony…

*The CFTC is making a big deal they give a crud about market manipulation with their CFTC hearings on the energy markets this morning.

*They are doing so after refusing to include the manipulation of the gold and silver markets in these sessions, even as the price of gold is blatantly, and simultaneously, bombed by the same perpetrators GATA has cited for a decade.

*Dennis "Bash GATA" Gartman (The Kiss of Gold Trading Death) has done it again. The Gold Cartel held gold up long enough above $955 yesterday to allow him to put on what he calls his second unit of a gold long position. That position, along with his first unit, are now collectively well under water and have been stopped out (below $937) for the zillionth time, in just a matter of a day(s).

Courtesy of Rob Kirby

Why bother with this? Because DG is incredibly media visible and his attitude and recent commentary goes to the heart of the problem in the gold market….

"Moving on to the precious metals, we are long of gold once again and our propensity is to add to this position Indeed, we shall do so today if spot gold trades upward through… and remains for one hour above… $955. The chart this page makes our case rather clearly; there is someone trying to hold gold down below $955, and it is likely a mining concern hedging forward production rather than a government… the latter being the selling that the conspiratorialists love to believe exists and which we find a waste of time and effort to prove. Even if there were a conspiracy to keep gold down, so what?"

Hedger, my arse! And "waste of time?" The Gold Cartel makes DG look like a gold trading fool time and time again. Because he refuses to go there, they bag him over and over, making him the worst gold trader in history. And "so what?" Besides making DG look like a gold trading nincompoop, the nefarious doings of the cabal forces have hurt all those involved in the gold/silver sector, the poor in countries like South Africa, and have disconnected the gold financial market barometer, which directly led to the financial market/economic problems of the day.

*And again "so what?" … as usual, the big banks in The Gold Cartel attack as we have a precious metals option expiry, in this case August gold … ripping off the public again, even as the CFTC meets about market manipulation and ripping off the public. I mean, you can’t make this stuff up.

*Actually, to some Café members Dennis G is worth his weight in gold…

I actually sold into Gartman’s buy recommendation! He is unbelievable useless!
Now I buy it all back…

Hey Bill,
Thanks again for posting Gartman's trades on your blog. After seeing him screw up the last 20 gold trades in a row, I decided to sell some of mine after he doubled up long. Now I can buy back shortly here with tremendous savings.

Have you ever considered that the guy may be a shill for the bullion banks? Being wrong so many times consecutively cannot be a coincidence!

One of our colleagues is totally convinced he is a shill for bullion banks. Nobody could trade a market this badly, so consistently. However, I like the other side of the trade. IMO his arrogance over the existence of a Gold Cartel, or whether it matters, has clouded his judgement and trading acumen. He is the Poster Boy trader The Gold Cartel wants to sucker in before they bury them all. Been going on for a DECADE. Talk about the expression regarding those being so “blind because they refuse to see.”

PS: Sasan later told me he bought back in at $935.

Getting one after another of these...

Is Gartman a "Gold Reverse Indicator Shill"?

Hi Bill -
Dennis Gartman has been flat wrong on his gold calls so many times that IF I were a real conspiracy nut I would postulate that Dennis is a "Gold Reverse Indicator Shill" that the banking cabal has set up to announce to their crowd that a manipulation move is about to be made. I can just see the emails being passed around to the Commercial Traders.

"Hey everyone...if Dennis says BUY we will all pause for a few hours then everyone SELL....and if he says SELL we should pause for a few hours and then everyone BUY!"

It works like a charm.

Before moving on, Rob Kirby chimed in later with another…

You just cannot make this stuff up

Adrian this morning…

The Cartel is one bunch of sick and twisted puppies. As the CFTC hearing on oil speculation gets under way and Gensler makes a remark
about imposing strict position limits the Cartel hammer gold as if it is the "longs" are liquidating, fearful of such strict limits!!!! The Open Interest tomorrow will show it is the usual criminal element selling short.


CFTC Isn’t Seeking to Eliminate Speculation, Chairman Says


By Tina Seeley

July 28 (Bloomberg) -- The U.S. Commodity Futures Trading Commission isn’t seeking to eliminate speculation in energy markets, agency Chairman Gary Gensler said.

"This hearing is an opportunity to determine how speculative position limits could be used to address excessive speculation, not how we can eliminate speculation," Gensler said at the first of three days of hearings on position limits.

To contact the reporter on this story: Tina Seeley in Washington at



Then Dave from Denver before gold broke really hard…

The Cartel Attacks Gold - Today is options expiration

How fitting that conversations going in DC right now to limit and penalize speculation in oil futures are completely ignoring the blatant, ongoing and quite illegal manipulation that goes on daily in gold and silver trading. How convenient it is that today happens to be August options expiration and this week is August futures "roll" week.

Could be a rocky week for gold as the cartel looks to take some profits on the massive build-up in their short position as per Friday's COT report.


Gold came off a low of $933.50 to finish below another key technical level at $940. Silver fared OK, but it has done so little on the upside with any vigor. What silver did do, as happens so often, is to come back down to fill some gaps.

More good news from the European central banks…

FRANKFURT (Dow Jones)--The Eurosystem's reserves of gold and gold receivables remained unchanged at EUR232.13 billion in the week ended July 24, the European Central Bank said Tuesday…


The Gold Cartel has to be using up a good deal more of their valuable supply in order to protect their issue of the week. While the Euro news was of no help today, if they continue to back away from their selling, The cabal forces are in the DEEPEST of trouble.

Considering the amount of cabal price capping yesterday, it is surprising to report the gold open interest fell 1050 contracts to 394,629. The silver open interest went up 1206 contracts to 97,498, as the silver price managers let them get quietly sucked in before their planned raid today.

Earlier, the Muppets on CNBC were all over the importance of our Treasury auctions this week. It didn’t go as well as expected…

U.S. Treasury sells $42 billion in 2-year notes

NEW YORK, July 28 (Reuters) - The U.S. Treasury sold $42 billion in two-year debt on Tuesday in a sale that drew lackluster demand by some measures and might not bode well for other bond auctions later in the week.

Demand overall was above average, measured by the bid-to-cover ratio of 2.75. However, a key proxy for foreign interest, the indirect bidder category, was below average at 32.6 percent.

Yields at auction were also slightly higher than expectations, gauged by trading in the when-issued market just before the sale. The two-year sale is part of this week's record $115 billion in coupon securities being auctioned.

With the government set to issue $2 trillion in new bonds this year to finance economic and financial rescues, investors have been watching for any signs of waning demand for U.S. debt, particularly among foreigners.

Treasury auctions have come under particularly close scrutiny since investors began to question the longevity of the United States' prized AAA credit rating back in May.


Crude oil fell $1.15 per barrel to $67.83.

The CRB lost 2.28 to 250.21.

More gold goodies:

Monday, July 27, 2009

A Chinese pause?

Friday’s capping of Comex gold below $954 and $1.70 loss on the day turned out to be more of a struggle than was apparent. Actual volume was 12.3% above estimate at 105,467 lots and open interest leapt 4,618 contracts (14.36 tonnes) to 395,762 – the highest this year except for 5 days during the late May/early June peak, when open interest topped out at 401,699.

Today gold peaked at $959.05 spot at 7-05AM NY time (according to It got over $957 spot just after 9AM on a recovery bounce after a tremendous initial selling onslaught (65,237 lots by 9AM!) but then was beaten down most of the rest of the session. August gold closed up only 40c at $953.50 having been as high as up $6.90. Some commentaries describe the latter part of the session as quiet, but aggregate estimated volume was 130,582 lots and on recent form actual might well exceed 150,000: a pretty active day.

MarketVane’s Bullish Consensus for Gold and the GLD ETF were unchanged at 80% and 1,086.61 tonnes, but the HGNSI added 6.7 points to 30.2%. This puts this indicator in the middle of its historic range.

Besides the Treasury auctions there is a ludicrously large Chinese/US meeting going on in DC today and tomorrow. HSBC’s gold commentary is unusually frank:

"According to a research note from HSBC currency economics, China

has sent as many as 150 senior officials, including almost the entire Cabinet, to the meeting... The sheer number of attendees, the range of topics set for discussion, and the fact this week will be a record week of US bond issuance, all suggest that the prospect of anything "contentious" emerging on currency issues is relatively low, according to the currency research."

(My emphasis) Apparently there is a seller on Comex with the same intention for gold. If indeed India has resumed buying this could be expensive.


Tuesday, July 28, 2009

Staggering volume

Indian ex-duty premiums: AM 28c, PM ($4.91) with world gold at $954.05 and $954.98. Below legal import point. The rupee weakened slightly to $1=R48.21 (Monday R48.16). The stock market finished down 0.28%.

Vietnam local gold stood at a $3.70 discount to world gold of $952.45 this morning (Monday $8.73/$951.90)

TOCOM was a light seller. On day session volume equivalent to 6,549 Comex lots open interest slipped 1.82 tonnes (584 Comex). The public cut 0.46 tonnes from their long. The active contract closed up 9 yen and world gold which came in around the NY close went out $1.80 higher.

The ECB weekly statement of condition indicates no gold disposal at all for the second week running. This is unprecedented in the almost 10 year history of the Washington Agreements. The ECB Banks appear to have withdrawn from the market. On the other hand, renewal of the Washington Agreement, which finishes at the end of September, is getting conspicuous by its absence.

Today world gold initially rose from the TOCOM open, adding about $4 by the early European day. However this was entirely due to dollar weakness. This was erased in the hour before the Comex open, which saw immense selling: estimated volume of 124,953 contracts by 10AM. From the Comex open, the decline in $US gold (some $15) and Euro gold has been equivalent: a really serious seller has appeared – this is not just dollar firmness. The PM fix was a wide $10.75 below the AM one.

As noted last Thursday, it is a curious fact that whatever market conditions tempt The Gartman Letter to try doubling up to buy breakouts seem very often the precipitate violent selling. TGL’s 1-hr.>$955 was triggered yesterday.

Estimated volume at 12 noon was an immense 201,689 lots. ***


The DOW came back late in the day (AGAIN) and finished down a modest 12 to 9097. The DOG went UP 7 to 1974.

Dave from Denver sent us this link to gauge a real reading on the US economy. It is long but very detailed, and telling regarding the movement of goods…

It feeds into my notion the next slew of negative US economic news will kick in over the weeks ahead, which will send our stock market back down.


Janet Yellen Channels Ronald Reagan: "Deficits Don't Matter"


U.S. economic news:

09:01 May CaseShiller Home Price index for 20 largest cities (17.1%)
Compares to (18.1%) for Apr.
* * * * *

U.S. home prices see first rise in three years

NEW YORK (Reuters) - U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, suggesting prices may be stabilizing, according to Standard & Poor's/Case Shiller home price indexes on Tuesday.

The index of 20 metropolitan areas rose 0.5 percent in May from April, after a 0.6 percent decline the month before, in contrast with the 0.5 percent drop forecast by economists in a Reuters poll.

The May monthly rise resulted in an annual downturn of 17.1 percent, although this was the fourth straight month that the rate of decline slowed. This follows a 16-month string of record annual declines starting in October 2007 and ending in January.

S&P said its index of 10 metropolitan areas rose 0.4 percent in May after a 0.7 percent drop in April, for an 16.8 percent year-over-year drop.

In May, 17 of the 20 metro areas showed improved annual price changes compared with April. The 10 and 20-city indexes reported positive returns for the first time since summer of 2006.

"To put it in perspective, this is the first time we have seen broad increases in home prices in 34 months," David M. Blitzer, chairman of the index committee at S&P, said in a statement. "This could be an indication that home price declines are finally stabilizing".


10:00 Jul Consumer Confidence 46.6 vs. consensus 49.0
Jun reading was 49.3.
* * * * *

U.S. consumer confidence falls in July: Conference Board

NEW YORK (Reuters) - U.S. consumer confidence fell more than expected in July, the Conference Board said on Tuesday, recording its second consecutive decline as sentiment remained hampered by a difficult job market.

The Conference Board, an industry group, said its index of consumer attitudes slid to 46.6 in July from 49.3 in June.

Economists had expected a reading of 49.0, based on the median of 64 forecasts in a Reuters poll.

The Present Situation Index declined to 23.4 from a revised 25.0, its lowest since March this year.

"The decline in the Present Situation Index was caused primarily by a worsening job market as the percent of consumers claiming jobs are hard to get rose sharply," the report said.

The Expectations Index also deteriorated, coming in at 62.0, its weakest since April, from 65.5 in June.

The worsening of sentiment came as Americans saying jobs are "hard to get" increased, with that measure coming in at 48.1 percent -- the highest since March this year -- from 44.8 percent the previous month.

Those saying jobs are "plentiful" fell to 3.6 percent from 4.5 percent. That was the lowest jobs plentiful number since February 1983, when it was 2.9.


10:00 Jul Richmond Fed 14 vs. consensus 8
Jun reading was 6.
* * * * *

Plosser-Fed may need to hike rates before long-WSJ

WASHINGTON, July 27 (Reuters) - One of the Federal Reserve's most inflation-wary officials said on Monday the U.S. central bank may have to start raising interest rates even while the unemployment rate is still high to prevent price pressures from getting out of hand.

"I think we will probably have to begin raising rates sometime in the not-too-distant future," Philadelphia Fed President Charles Plosser said in an interview published on the Wall Street Journal Website.

That will probably occur while unemployment is still high, Plosser said. The Fed official said he expects the jobless rate -- which spiked to 9.5 percent in June -- to peak in late 2009 or early 2010.
Plosser, who is not a voter on the Fed's monetary policy-setting Federal Open Market Committee until 2011, has been among the most vocal of Fed officials in expressing concerns about inflation risks from the Fed's ultra-low interest rates and infusions of money into the banking system.

He said that while he isn't worried about inflation in the near term, he does see risks in late 2010 or 2011.

The Fed slashed benchmark interbank lending rates to near zero and has pumped more than $1 trillion of additional cash into the financial system to counter the financial crisis that exploded in mid-2007 and the painful recession that followed.

The Fed has acknowledged that high unemployment is likely to persist into 2011, but has pledged to hold interest rates exceptionally low for a long time, in part because the weak labor market could sap fragile consumer confidence and spoil a recovery.

Many observers worry the Fed may not be able to pull back its massive support for the economy or time its exit properly. Commenting on how the Fed might withdraw its stimulus before the economy is clearly out of danger, Plosser said, "I think we've got a tough road ahead" given the political pressures that officials are bound to face.

Plosser emphasized his conviction that inflation remains a concern by saying, "I also don't want to repeat the Great Inflation of the 1970s."

That comment appeared to be a response to Fed Chairman Ben Bernanke, who defended the central bank's aggressive steps to counter the crisis in a television interview on Sunday.

"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," Bernanke said.


From Bix…

Interesting take by Ben Fulford on the $500B swap

The story behind the $500 billion on the Fed’s books

Many heads were wagging as Federal Reserve Gang Boss Ben (helicopter) Bernanke was grilled about why the Federal Reserve Board sent $500 billion overseas in late 2007.

Bernanke says the money went to 14 other central banks but he is lying. What really happened is that the Federal Reserve Board, facing bankruptcy at the end of the secret fiscal year of 2007 went begging to all the other European central banks for money to postpone its bankruptcy for another year. In other words, that $500 billion that appeared on its books in late 2007 are IOUs sent to 14 countries. At the time this maneuver was reported as an infusion of $500 billion into the markets by the European Central Bank.
Well, like a junkie going around mooching off old friends, there comes a time when nobody is willing to pay for a self-destructive habit anymore. That is what happened in September 2008. The US criminal government has been looting everything it can from its own American slave peoples since then in a desperate effort to postpone the inevitable. September 2009 will have Obama going around asking for $2 trillion or more and he ain’t going to get it.


Goldman Sachs In New York Magazine: Is The Bank Evil Or Just Smart?

Hagan's final conclusion is that none of Goldman's sky-high profits would possible have been "without government intervention--without the AIG bailout, the TARP money, the FDIC bonds, the fact that without Lehman Brothers it had one less competitor in the field."

Read the entire story at New York Magazine.


China's Wang-US must manage dollar supply

WASHINGTON, July 28 (Reuters) - Chinese Vice Premier Wang Qishan on Tuesday urged the United States to carefully manage the impact of the massive fiscal and monetary policy stimulus it has issued to counter a devastating financial crisis and deep economic recession.

"As a major reserve currency-issuing country in the world, the United States should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Wang said at a U.S.-China summit.

Wang said the two countries should modify their economic growth models. China, which has built its economic might on a powerful export engine, would work to increase domestic consumption, he said.

"While ensuring economic growth, the Chinese government will focus on boosting domestic demand, and in particular consumer demand, focus on deepening reform and opening up advanced economic restructuring and improving people's livelihood," he said.

Wang called for the two economic powers to help each other recover from the financial turmoil and maintain the momentum of trade and investment.

"We will work to increase our imports from the United States. We hope the U.S. will relax its controls and restrictions on exports to China of its high-tech technologies," he said.



COMEX Warehouse Stocks July 28, 2009


ZERO ozs withdrawn from the dealer’s inventory
ZERO ozs withdrawn from the customer inventory
Total dealer inventory 62.6 Mozs
Total customer inventory 55.3 Mozs
Combined Total 117.9 Mozs


7,500 ozs deposited in the dealers (registered) category
ZERO ozs withdrawn from the customer (eligible) category
Total dealer inventory 2.80 Mozs
Total customer inventory 6.33 Mozs
Combined Total 9.14 Mozs There were very little movements in metals. Apparently no silver moved in or out. Really!?

There were 77 delivery notices issued in gold for the JULY contract bringing the total for the month to 805 contracts or 80,500 ozs.

There were 29 delivery notices issued in silver for the JULY contract. The total delivery notices for the month stand at 3,865 or 19.3 Mozs which represents a mere 30.9% of the dealer inventory!

July silver closed for a tenth consecutive day in slight backwardation to AUG silver ($.002/oz higher). There still is only half a penny per oz of contango between July and September silver.

The usual shenanigans were evident today for the option expiry on the COMEX. What is the statistical chance of the metals going down on almost every option expiry day in a free market?

On the currencies…

Hi Bill
The Swiss Franc has a most beautiful classic cup and handle formation written all over it.

The Australian dollar and the Euro have similar shapes.

All begun to be formed around the end of 2008. The SF and EU cup and handle count point to about 13% rise which is very close to the down count of the dollar to 0.72 published by Sinclair and others.

The AUD count is much larger and point to a 40% rise, pointing towards inflation being a commodity currency.

It indicates again the coming crash of the USD.

Thank you for all that you do
Dani D

GATA’s Adrian Douglas travels the world as one of its leading oil consultants…

The CFTC meeting today to discuss speculation in futures markets is a sham. A Kangaroo court. Notice that the concern of the CFTC portrayed here is ONLY why oil went up last year. They have no concern as to why it fell so abruptly from $147 down to $35 even though Don Coxe was widely quoted at the time of having knowledge that the Government had instigated a massive take down. Their focus is on commodities of "finite supply" and preventing speculation. This is the most ridiculous initiative by the CTFC to date! Up until about 10 years ago the world was always living with a glut of commodities, and particularly the most important one…crude oil. Technology had allowed the production capacity of oil to always grow much faster than demand increase was growing. This is why OPEC was continually trying to impose production quotas, but they had little effect as poor discipline always led to over-supply. In the first half of 2008 the world was struggling to produce enough oil to meet demand. In 2007 we saw a rice shortage and producing countries put restrictions on exports. We saw a shortage in corn as an ill-fated plan to solve the growing energy crisis involved making ethanol from corn!

Shortages in commodities lead to higher prices. The response of the US-aligned crony capitalists over the last decade was to foster a derivatives monster to manipulate prices down even as shortages began to occur. The OTC derivative market grew to 1.4 Quadrillion dollars…20 times bigger than the GDP of the world! This hardly garners any discussion in the Press. This was the mechanism by which the US and its cronies tried to defy the laws of economics and push down the price of things in short supply. It worked for a while but it is now failing. Commodity prices and in particular, Oil prices are now rising rapidly again. There is nothing to say that shortages can’t exist in the middle of a recession. In fact it is the hallmark of inflation and hyperinflation. In Zimbabwe there is a shortage of everything!

History shows that when monetary inflation starts to be evident in prices of real goods the first thing that governments do is impose price controls. Here we have exactly that in a different flavor. The CFTC is trying to find a way to disadvantage those on the buy side of commodities of "finite supply". They are in effect trying to control prices under the guise of preventing excessive speculation!! The very use of the term "finite supply" means there is a supply crisis in commodities!! If these commodities were in abundance the free market deals with speculators automatically because as they drive the price up the producers produce more, the price comes down and the speculators lose their shirts. What the Government likes to happen is as the speculators drive up prices, instead of the producers producing more, the Cartel produces more paper promises of more production so that speculators lose their shirts. When the buyers are not speculators but buyers who want delivery the game ends. The inference from the CFTC comments is that this is the end of the game and the start of a super-bull in commodities. The problem is not speculators…the problem is the commodity of "infinite supply"…the US dollar. Trillions are being created and are chasing commodities of finite supply. Economics tells us what the result will be with or without the King Canute policies of the CFTC.


CFTC to Issue ‘New and Better’ Report on Speculation

By Tina Seeley and Daniel Whitten

July 28 (Bloomberg) -- The U.S. Commodity Futures Trading Commission will issue a "new and better report" next month bolstering the case for regulation of swaps dealer and index investors in markets it oversees, Commissioner Bart Chilton said today.

"The report should send an alert to Capitol Hill that we need regulatory reform that provides the agency with oversight into dark, over-the-counter markets," Chilton said in an e- mailed statement as the commission began three days of hearings to consider whether to impose limits on speculators.

The panel on Sept. 11 issued a report finding that the level of investment by index investors was declining in the first half of 2008 as crude oil prices were increasing. Former CFTC Acting Chairman Walter Lukken told Congress at the time it "doesn’t seem there’s a correlation" between index investors and higher prices.

New CFTC Chairman Gary Gensler has said speculators did affect commodity prices last year and that he wants the agency to "seriously consider" imposing certain limits on speculative trading.

"This hearing is an opportunity to determine how speculative position limits could be used to address excessive speculation, not how we can eliminate speculation," Gensler said at the start of today’s hearing.

Chilton, who dissented from the commission’s report last year, said today that "many will have a greater degree of confidence" in the new report.

The commission is considering whether it should impose position limits on speculative trading in energy markets or other markets of "finite supply."

‘Spinning’ Data

The August report "will be better and we will not try to spin it and say speculators had no role, like we did last year," Chilton said in an interview today on Bloomberg Television. Chilton said he can’t prejudge what the report will say…

In dissenting from the report last year, Chilton said he had "significant concerns relating to the underlying analysis on which the recommendations are based."

‘Right Balance’

Chilton said today the agency hasn’t already decided to put position limits in place. The agency will "strike the right balance to make sure that markets operate efficiently and avoid fraud or abuse," he said.

"If we have it my way, we will not go slow" and will "have something by the end of the year," Chilton said.

To contact the reporter on this story: Tina Seeley in Washington at; Daniel Whitten in Washington at



More from Adrian…

Last week Al Grayson asked Bernanke if the fact that the dollar rose by 20% in 2008 at exactly the same time as ½ trillion dollars in currency swaps were arranged with Foreign Central Banks was a coincidence.

After about a 3 second pregnant pause, and the look of deer in the headlights, Bernanke answers simply "Yes"!

Today we have another coincidence. The CFTC hold hearings to discuss speculation in the energy markets on OPTION EXPIRY day on the COMEX. Then Gensler, in opening remarks, talks about imposing strict position limits on speculators. It is clear that by "speculators" they are referring ONLY to long side positions. The hearing is biased to the politically popular view that rising commodity prices are unwelcome from the point of view of the general public. This is NOT a hearing on regulating the futures markets to have accurate price discovery process. It is all about how can we disadvantage the "longs" because those market participants are exposing the fact that we are producing US dollars like confetti?

The fact that this sham is conducted very visibly on the option expiry day I am sure is just another coincidence like the one Bernanke referred to! I didn’t see anything that indicated that Gensler made reference to the ongoing investigation into the SHORT SIDE manipulation of the gold and silver markets which is now in its 10th month!...but that is probably just another coincidence too! Nor did I see any mention of the suspicions that there was massive short side manipulation in commodities last year to bring down prices and allow a massive reduction in OTC commodity derivatives of the 5 big US banks who hold 96% of the OTC derivatives…just another coincidence I suppose!...and the fact that Gensler is ex-Goldman Sachs is just another coincidence!

Bill H:

What a stupid I am!

To all: repeat after me, Gold bad (infinite in supply), Dollar and Treasuries good (precious in quality and supply). Repeat this 3 times then go stand on your head for 1 minute while holding your breath. Once you have done this you will then have qualified to be a full fledged member of the "ignorant sheeple" that the masters of the universe consider us all to be!

So Gold is down some $18 and the HUI index is down about 6.5% on a day when the dollar has the enormous "bounce" of .3%, that's right POINT THREE PERCENT! Since I am such an imbecile I think I will go out and liquidate all my physical metal and every last mining share because as I said before...Gold=bad, paper=good. In fact, I'm going to write this as fast as I can so I can get on the phone and blow out everything AT MARKET! This is so scary I don't even know what to do because "man oh man am I losing those valuable Dollars in a hurry". If I wait too long I may end up with just a bunch of Gold and mining shares that are worthless and worst of all I won't have any of those precious Dollars left.. I should have listened to these "seer's of all" from the beginning, as Roberto DiVicenzo said at the 1967 Master's tournament, "what a stupid I am".

And here I thought the Chinese were going to give The Three Stooge's the proverbial middle finger in Washington. I guess the Chinese must have said "yes massa" to the Washington elite and immediately started selling their Gold holdings so they could pony up to the Treasury's $200+ billion auctions this week. Like I said, "what a stupid I am", I thought Gold would really start to move higher and the Dollar and Treasuries lower based on the charts and a little good ole common sense! Boy did they show me!

What could I have possibly been thinking? The biggest auction in U.S. history (other than the Mexico bailout in 1985), and here I thought supply might just overwhelm demand since the Chinese have seemed none to happy with their Dollar holdings lately. Well what can I say? I'll just leave it at that and be on my way in a rush rush fashion because I don't want to lose any more Dollars. Hopefully after I've liquidated everything and stand on my head while holding my breath for a minute, I CAN QUALIFY for the club too.

On second thought...maybe I should just sit tight because ounces are ounces right? They will still be ounces in a vault or in the ground in 6 months right? And more than likely (as in guaranteed) there will surely be more Dollars sloshing around by then. Yeah, that's what I'm gonna do. Nothing at all because DAMN IT, I just don't like standing on my head because it gives me a headache and I hate headaches! Their gonna need to try harder than today's paper bombardment on Gold to get me to stand on my head. Maybe it's just a case of having a little common sense and not taking (mis)direction well? Regards, Bill H.

The gold/silver shares were hammered. The HUI lost 15.36 to 344.60 and the XAU sank 5.98 to 142.92.


You have long maintained the key to the price of Gold is whether the Cartel has enough physical supply to meet demand. Below is a detailed article on the manipulation in the oil markets written by a former regulator. He claims Goldman Sachs and B.P. control the worldwide price of oil by using the very small quantities of physically deliverable Brent Crude which they already have a controlling interest in the access of:

"The manipulation in the oil market is taking place at a different "meta" level to that of the Leesons and Hamanakas. The Goldman Sachs and JP Morgan Chases (JPM) of this world do not break rules: if rules are inconvenient to their purpose they have them changed. The Market is the Manipulation."


For the second day in a row, Garic’s comment yesterday was apropos…

"The $ and T-Bonds are on the verge of breaking down with a record auction in front of us and Gold is about to break out, what does Larry do? How about the deflation trade one more time. Cap Gold, cap the Euro, step away from propping up the Stock Market and voila Treasuries get a bid, the $ gets a bid, Gold corrects and the auctions can precede."

While the gold/silver/share performances of late have been frustrating, to say the least, perhaps the analysis and input coming from a number of sources in this commentary can be of real value as to what lies ahead. It seems to me the increasing market manipulation in the US is key to understanding the markets and this sort of analysis is certainly not to be found in Muppet Land and the rest of Wall Street.

Garic is correct. Our financial markets are moving as if they are one enormous manipulation algorithm … or in coordinated and counterintuitive fashion.

As we know, the key to the Orwellians at the moment is to pull off the Treasury auctions. Should they go off very poorly thru Thursday, it will substantially reflect on our fiscal and real estate markets. Look at what happened today to enhance the atmosphere for these auctions…

*The dollar, which was in the process of breaking down, reversed course from a low of 78.31 to finish up .29 to 78.91. to…

*The DOW was nailed early (down more than 100 while the auction bids were coming in) only to come back yet again later in the day after the auction results were announced to only close a fraction lower. Unreal that so few can so what is going on here. I mean how obvious can it get?

*The euro continues to be influenced on a daily basis by what the DOW does. From a high of 1.4303 it fell to 1.4130 before coming back with the DOW to finish at 1.4170, off .0075. Why should the euro trade with the DOW so often? It makes no sense on a tick by tick basis (at times), or over the very short term. While the DOW gave us the ole Hail Mary late rally, the euro was left behind near the end.

*Then, there is…

A Yen for gold, again

On this aggravating day, it's worth examining the forex market in detail. The media may report that the Dollar is up, and gold is down but that is just a diversion. The real story is that the Yen is soaring today, up well over 1%, as I write this. Once again it's clear that gold's foes are using some kind of gold/Yen trade to pummel the metal. There isn't a natural link between the two, but there that's how the markets are — the charts for the last couple of years show a tighter inverse correlation between gold and the Yen than anything else I've found.

On the plus side, $930 is looking good as support. In spite of today, my vote is that $1,000 will be in our rearview mirror by Labor Day.
Best wishes,
Peter R.

*Gold gets slammed for the reasons mentioned earlier. If anything, concern over the US fiscal deficits ought to put a BID into the gold market. We haven’t had a free gold market in so long, we forget how markets SHOULD behave.

*Yesterday morning the yield on the 10 yr T note was 3.75%, which then came off a bit. However, by this morning, with the market, the euro, and gold under pressure, the yield fell all the way to 3.62% before today’s auction results were announced … then roared back up to 3.69% when the auction didn’t fare all that well. The bad guys have their work cut out for them the next couple of days.

It’s clear to me (and I am sure most of you) that market manipulation is completely out of hand in America. It is all that Geithner, Summers and Bernanke seem to know how to do in these dire circumstances. To get right to the point, these shenanigans are what got us here in the first place. In essence, they have orchestrated another "wellness" illusion. To right the real dreadful mess, they have enhanced their wrong way thinking further and it is leading us into an even greater financial market and economic DISASTER in the US.

It is likely today’s note auction will be a forerunner of what is to come for long term US interest rates, the ones which will affect our wilting real estate markets and general business conditions for those who need to borrow money.

The dollar is sure to break through its triple bottom above 78. They never hold…

US dollar

A break of 78 will be NASTY!

The Tom Foolery by the Orwellians in Washington and New York will fail. When the bad news begins to become profligate, a bit of unease and panic will reoccur among the investing public and they will flee the stock market, sending the market much lower.

Gold and silver, the investments with no counterparty risk, will become the darling of the general investment world and it's UPTOWN we go … WAY UPTOWN. The Gold Cartel will be helpless to stop a surge of a lifetime!




Goldman Sachs: Gambling With Your Money?

Goldman Sachs is using its new taxpayer-subsidized status to bring increased risk to the financial system, a group of House members charged Monday. They want to know why the Federal Reserve is allowing it.

The group on Monday sent a letter to the Fed asking for an explanation of why Goldman Sachs is being allowed to speculate wildly even while officially redesignating itself a bank holding company, which theoretically means stricter regulation. The bank designation gives Goldman access to dirt-cheap Federal Reserve loans.

Goldman initially applied for the new designation last fall, so that it could access bailout funds (since paid back). Because bank holding companies, unlike investment banks, have access to a host of valuable taxpayer subsidies, they are required to reduce the risk associated with their investment activity. But Goldman then applied to the Federal Reserve for an exemption to the rules, saying that it takes time to alter a business model. The exemption was granted in February -- and Goldman went on to take even greater risks. Its Value-at-Risk model, a widely used measure of the risk of loss, recently showed potential trading losses at $245 million a day; in May 2008, it was $184 million a day.

The bets paid off in the most recent quarter as the market rose and Goldman posted stellar earnings. Morgan Stanley, meanwhile, was similarly given an exemption by the Fed but did what it said it would do and reduced its risk. The company lost money, largely as a result of that decision.

The likely result: Other players on Wall Street will follow Goldman back toward the cliff they dangled over just months ago. In announcing its lousy earnings, Morgan Stanley assured that it will increase the risk it takes in the future. Citigroup is racing to increase its exposure, too, handing another billion dollars worth of chips to its riskiest traders, bringing its hedge fund operations to close to $2 billion. On the brink of collapse, it had scaled such investing down to around $800 million.

Lucas van Praag, a Goldman spokesman, declined to respond directly to the charges in the letter, but said that the firm is working to reduce its exposure.

"We're very cognizant of risks inherent in risk taking. We have one of the highest capitalizations of any bank," said van Praag. He said that the Value-at-Risk numbers, while the only publicly released measure of risk, are only one metric and that internal measures show the bank has reduced its exposure over the past year.

He also took a dig at other Wall Street players who have avoided using mark-to-market accounting in an effort to fluff their balance sheets. Earlier this spring, banks lobbied Congress and the Financial Accounting Standards Board to soften mark-to-market rules. The new rule allowed banks to inflate their balance sheets by claiming that an asset was worth more than it could fetch on the market because the market was frozen. Goldman Sach, said van Praag, doesn't use that slight of hand, so its balance sheet is an honest reflection of its exposure.

"We have dramatically reduced our leverage and as a mark-to-market firm--we aggressively mark our assets to market--our leverage ratio is a true reflection of risk," said van Praag.

Nevertheless, as Wall Street follows Goldman, overall systemic risk is ramped up. Meanwhile, Congress is debating whether to give the Fed authority to regulate systemic risk throughout the economy. The congressional letter puts the Fed on the spot, demanding that it explain why it's allowing Goldman to use taxpayer dollars to increase systemic risk.

"The only difference between Goldman Sachs today and Goldman Sachs last year is that today, the company is officially gambling with government money. This is the very definition of 'heads we win, tails the taxpayers lose,'" reads the letter.

Read the full letter:

Dear Chairman Bernanke:
In the fall, Goldman Sachs secured access to government funding by converting from an investment bank into an ordinary bank. Despite this shift, the CFO of the company, David Viniar, said last week that the company is continuing to operate as if it were still a high-risk investment bank: "Our model really never changed," he noted in a quote to Bloomberg. "We've said very consistently that our business model remained the same."

This statement seems accurate. Earlier this year, the Federal Reserve granted a temporary exemption to Goldman Sachs from standard bank holding company Market Risk Rules, allowing the company to continue operating as if it were an investment bank. The company and its employees have taken full advantage of its new government subsidies, and the retained ability to bet big. In its most recent quarter, Goldman Sachs earned high profits of $2.7 billion on revenues of $13.76 billion, with 78 percent of this revenue derived from high-risk trading and principal investments. It paid out much of this revenue in compensation, setting aside a record $772,858 for each employee at an annualized rate. The company's own measurement of risk, its Value-at-Risk model, recently showed potential trading losses at $245 million a day, up from $184 million last May.

Despite its exemption from bank holding company regulations, Goldman Sachs has access to taxpayer subsidies, including FDIC-backed bonds, TARP money (since repaid), counterparty payments funneled through AIG, and an implicit backstop from the taxpayer that allowed a public equity offering in a queasy market. The only difference between Goldman Sachs today and Goldman Sachs last year is that today, the company is officially gambling with government money. This is the very definition of "heads we win, tails the taxpayers lose."

It is worth noting that there sometimes might be good reasons to grant temporary regulatory exemptions, considering that companies cannot instantly change their business model. Still, given Goldman Sachs's last quarter results and public statements that it is not changing its business model, we are worried that the company is using its regulatory freedom to evade capital requirements and take outsized risks with taxpayers on the hook for losses.

With this in mind, our questions are as follows:

1) In the letter granting a regulatory exemption to Goldman Sachs, you stated that the SEC-approved VaR models it is now using are sufficiently conservative for the transition period to bank holding company. Please justify this statement.

2) If Goldman Sachs were required to adhere to standard Market Risk Rules imposed by the Federal Reserve on ordinary bank holding companies, how would its capital requirements differ from the current regulatory regime?

3) What is the difference in exposure to the taxpayer between these two regulatory regimes?

4) What is the difference in total risk to the portfolio between these two regulatory regimes?

5) Goldman Sachs stated that "As of June 26, 2009, total capital was $254.05 billion, consisting of $62.81 billion in total shareholders' equity (common shareholders' equity of $55.86 billion and preferred stock of $6.96 billion) and $191.24 billion in unsecured long-term borrowings." As a percentage of capital, that's a lot of long-term unsecured debt. Is any of this coming from the Government? In this last quarter, how much capital has Goldman Sachs received from the Federal Reserve and other government facilities such as FDIC-guaranteed debt, either directly or indirectly?

6) Many risk-management experts, most notably best-selling author Nassim Taleb, note that VaR models can dramatically understate risk. What is your overall view of Taleb's argument, and of the utility of Value-at-Risk models as regulatory tools?

As we work through legislative conversations regarding systemic risk, these questions are taking on increased significance. We appreciate your time and the efforts you are making to explain the actions of the Federal Reserve to Congress, and to taxpayers.


Alan Grayson (D-Fla.)
Brad Miller (D-N.C.)
Dan Lipinski (D-Ill.)
Elijah Cummings (D-Md.)
Ron Paul (R-Texas)
Tom Perriello (D-Va.)
Maxine Waters (D-Calif.)
Jackie Speier (D-Calif.)
Maurice Hinchey (D-N.Y.)
Walter Jones (R-N.C.)


sadly funny photo caption

In yesterday's Journal. section C page 3, there was an article on the BRIC market, (Brazil, Russia, India, China). They ran a photo of a guy, Jim O'Neill from Goldman Sachs. The photo carried this caption: "Jim O'Neill of Goldman Sachs says the crisis has been good for some"

I had to laugh out loud at the irony of a Goldman guy saying that.


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