August 19 - Gold $1848.90 up $30 - Silver
$42.43 up $1.74
"The wind blows over the
surface of the lake. In this way, the effects of the invisible are made
visible." … I Ching
This morning was breathtaking. As I am still
having trouble getting off London/France time yet, I am still rising VERY
early. This morning was worth every second of it as I watched gold blow
through the 2% Rule with ease, RISING 3% at its highs of its rocket run.
Speaking of rockets…
gotta laugh. Do you think he is referring to those GATA rockets?!
UK Guardian Blog:
The deepening panic on stock markets has
sparked new metaphors, with gold - which broke through $1868 an ounce today -
being described as a "rocket ship". Jeremy Cook, chief economist at
foreign exchange brokers, World First, said:
Gold is a rocket ship at the moment and there
are many factors that make us expect further gains.
Firstly, the global recovery has juddered to a
halt and, with the obvious uncertainty surrounding the situation,
people have been looking to buy tangible assets.
Secondly, we are likely to see inflation
remain high and with the prospects of further quantitative easing in the UK
and US this will translate to an increased erosion of the value of money;
something that gold investors tend to crow about
Alright enough crowing for now
What the mainstream gold world and Planet Wall
Street do not understand is that one of the reasons gold is acting like it
has been is because of a Commercial Signal Failure. There were a number of
players who have played the gold trading game allied with The Gold Cartel.
They would short and short and then cover those shorts when The Gold Cartel
attacked the price and forced spec longs to sell. This is how they made money
over and over again by being short in a bull market.
Well, over the past couple of weeks the game
totally changed as The Gold Cartel began to lose control of their management
of the gold price, as evidenced by the breaking of the 2% Rule. The total
financial chaos in Europe and the US sent them into a panic, and instead of
shorting more as the gold price rose (which they have done for so long), they
became buyers (taking huge losses on their short positions), leaving The Gold
Cartel to hold the fort. In other words, these commercial shorts abandoned
the fort. This is what the GATA camp foretold long ago.
The other factors which have to have them
*The strong potential for a bank holiday,
which could be announced out of the blue.
*Central banks asking for their lent gold
back. You won’t hear this outside of the GATA camp, but the notion of
lent gold to support the gold price suppression scheme has been one of our
basic themes of understanding the gold market. If central banks, like
Venezuela, ask for their gold back, it could cause a PANIC, and has to have
sheeple central bankers who have lent gold out, to be in a twit. These are
risk adverse types whose worst nightmare is to be embarrassed and exposed to
their public as having been duped into folly. If this is so, as I suspect,
the price of gold is likely to advance much faster than even we thought, as
nervous central bankers start making demands of those who have their gold.
More evidence of just how solid the move up in
gold is … the AM Fix came in at $1862 and the PM Fix was $1848. The
physical market is very firm at these newly high prices.
Our kind of chart:
Daily gold price
http://futures.tradingcharts.com/chart/DG/The star of the show on Comex was silver as it rose
three times what gold did today, making a $42.56 high. Quite frankly, the
action is picture perfect and is making this MIDAS silver comment spot on…
August 17 - Gold $1791.20 up $8.80 - Silver
$40.35 up 53 cents
The best news of the day was silver finally
making its presence felt and closing above $40. Look at all the work it has
done below $40. Silver appears to breaking out from a massive base. This is a
market ready to TAKE OFF….
http://futures.tradingcharts.com/chart/SV_/And most likely do so with a GAP UP opening, one
which catches JP Morgan off guard….
Investors are realizing around the world,
there is no way out of the fiscal mess our politicians have put us in. It is
a NIGHTMARE for the little guy and girl. It is SO BAD,
investors don’t have to be convinced too much that gold can take out
$3,000, even $5,000. Silver will be the big surprise. WATCH!
We got that gap up this morning, one that held
like a rock.
General feedback to me is that one of the main
reasons silver is finally giving JP Morgan and The Gold Cartel fits is
because of Eric Sprott. He has been everywhere talking up silver as THE
One fantastic looking chart:
Daily silver, JUST breaking out of a huge
*** While the US stock
market fell apart late, silver UPTICKED another 34 cents in Access Market
trading ... YES! This is the sort of action we saw in the Access Market the
last time silver shot up to $50. The big players know JPM is in trouble
STUNNING and great news … the gold open
interest only rose 6633 contracts to 521,246, which
is a trifle for the kind of move we had yesterday. This is a further
indication that the Commercial Signal Failure is ongoing and contributing to
the kind of move we saw again today. If this move was mostly speculative
oriented, like in the past, the open interest would have been up something
like 20,000 contracts, at least. Of further significance is the silver open
interest went down 1130 contracts ahead of today’s sharp silver
advance. This tells us the Commercial Signal Failure in gold is leading to
one in silver.
Love it, from orator James Mc…
More cartel rules broken
gold is currently trading today well below +2% it continues to defy its
(former?) cartel masters. In just the first 15 trading days of August gold
has exceeded the 1% rule 9 times, and the 2% rule twice on a closing basis.
Furthermore the 2% rule has been called into action a whopping EIGHT times,
or roughly half of all trading days. While there's still evidence of their
all-out effort to keep gold controlled, in card parlance this is a
"tell". The cartel has revealed they no longer possess the same
kryptonite once used to kill gold rallies. The algos are telling their MIT
masters they see an abyss. Gold and silver short losses are approaching
catastrophic levels. With the Fed now bailing out Swiss banks they may also
be making margin calls at the Crimex, assuming cronies are actually forced to
meet them. If the CME still monitors MTM twice daily like they claim then
they know short losses are increasing billions of dollars daily. Any further
margin increases should effectively annihilate short sellers, however as we
know they always spin it as bearish for longs. Another cartel rule broken is
the negating of the breakout signal. Gold has correctly broken out, and
advanced further like a NORMAL market does. Pinch me I'm dreaming.
In a milestone mostly overlooked today gold
reclaimed its rightful throne as king of the precious metals. For at least 4
trading hours Friday morning gold was premium to both platinum and rhodium.
You have to think back to June, 2008, when rhodium was $10,100 an ounce, and
gold was $890. It took 11.35 ounces of gold to buy one ounce of rhodium. Now
they're at parity. Gold is pulling away in a romp, and should now leave the
other PM's in the dust. Anybody doubting $10K gold possibilities need look no
further than a 2008 rhodium chart.
One can only marvel at the bubble of the
century that's been blown. No, not gold as the idiot MSM portrays, but
Treasury bonds. The CME offering 43-1 leverage in
T-bond futures is akin to when no-doc and liar loans were being
peddled at the height of the housing bubble. That debacle got resolved
Gold and Silver
Commitment of Traders Report
*The large specs increased their longs by 596
contracts and reduced their shorts by 2,944.
*The commercials decreased their longs by
1,839 contracts and increased their shorts by 3,501.
*The small specs increased their longs by 327
contracts and reduced their shorts by 1,473.
What stands out is
the commercials increasing their shorts that much. This represents JPM and
friends trying to hold silver below $40, which has failed miserably.
Gold *The large specs increased longs by 4,566
contracts and increased shorts by 8,503.
*The commercials decreased longs by 2,910
contracts and decreased shorts by 3,269.
*The small specs decreased longs by 2,428
contracts and decreased shorts by 5,556.
What stands out here is a considerable amount
of new large spec shorts were slaughtered
How bad is the dollar? Get ready for something
that nears a collapse in the weeks and months ahead. Think about the
horrendous news of late, about the problems in Europe and yet the euro is
nearly 1.44, which is not far from its highs. Wait until the focus shifts
back to the US. The dollar is in the deepest of trouble.
Speaking of the dollar…
By the way, I monitor the cash USDX, and a
weekly close below 73.70 will "release" that market to the
downside. That number has been in play since the first week of June, but the
market has managed to close above it every Friday.
Jessie sent me the following last night…
Tough Day in the Gold
Pits for the Bank of England
It is a nine minute clip called Zulu War
Chants from the Movie ZULU, starring a very young Michael Caine,
which just happens to be my favorite movie. The movie is about the Battle of
Rorke's Drift, where the British successfully defended themselves against
thousands of Zulu.
I will never forget GATA’s good friend
Peter Grandich at a Cambridge House conference in Vancouver. Peter, the
conference moderator, stood up on his chair and led the audience in one of
those chants. The audience responded enthusiastically.
For those of you who might want to watch the
clip, which catches the drift (no pun intended), of what the movie is all
about, you might like to first understand how it fits into the GATA scheme of
defeating The Gold Cartel.
The gold price suppression scheme was having
an especially adverse effect on the poor miners in South Africa. 100,000 of
them were out of work and each miner supported at least 10 others, so it was
affecting a million+ people in that country. GATA decided to hold its first
conference in May of 2001 in South Africa to bring attention to The Gold
Cartel and the horror they were perpetuating, on purpose, on so many innocent
people. The price of gold was trading between $252 and $275 at the time.
Before we held our GATA African Gold Summit,
CP and I thought it would be a good idea for me to tour South Africa to drum
up support for the conference. That is a story unto itself. Suffice it to
say, back then I met GATA’s good friends Peter George (Mr. Gold of
South Africa) and Chris Hellinger (both at Gold Rush 2011) in Cape Town.
Then, it was off to Johannesburg, Durban, and Pretoria.
Now for how this relates to SHAKA and
GATA’s plan to defeat The Gold Cartel with our own "Enveloping
Horn" strategy, which HAS WORKED, but not in the manner which we planned
at the time….
From the Durban daily newspaper:
2/14/01 - "THE KING and I"
"THE KING and
The following photo was taken at the Royal
Hotel in Durban, South Africa of King Goodwin Zwelithini, leader of the Zulu
people, and Bill Murphy, Chairman of the Gold Anti-Trust Action Committee.
King Zwelithini is a direct descendant of the great emperor Shaka Zulu,
Africa's greatest general.
The King was very receptive to GATA's claims
and asked his aide, Moses, to call South Africa's Deputy-President Jacob G
Zuma on our behalf. The Deputy-President is also a Zulu.
February 19, 2001
"LEADERSHIP LESSONS from emperor
SHAKA ZULU the great" and The United States Treasury and Justice
GATA Chairman Bill Murphy's Address
African Gold Summit in Durban, South Africa
May 10, 2001
…The GATA camp has a hard time imagining
what the Gold cartel's end game is and how they are going to explain it all
in the future. One can be sure that the guilty perpetrators are going to try
and come up with some phony pabulum type of excuse to talk their way out of
what they have done. That is just what they must not be allowed to do.
Think of it like a chess match. If the
attendees at the summit ask the aforementioned questions and the press
reports on the questions being asked, King Gold Cartel can be checkmated by
us pawns and knights of this Round Table because of the resulting publicity
and focus on the matter. If they then come out with some nonsensical,
gobblygook of an explanation in the future, few will believe them. By asking
the appropriate and fair questions NOW, future gold reparation claims will be
It will also enhance the possibility that the
gold manipulation scheme ends earlier rather than later -- for all the
reasons we have brought to your attention.
It is time to fight back South Africa and
sub-Saharan Africa, for what was rightfully yours in the first place. We have
offered you a plan. GATA hopes you run with it. Allow the "enveloping
horn," the famous battle tactic of the great African General Shaka, to
win the day again.
Reg Howe and his lawsuit in federal court are
the point of the buffalo horn. He has the gold cartel's attention. The left
flank of the horn is our effort to mobilize the press and politicians. An
unbiased press can help us move on the gold cartel by just FACTUALLY
reporting on what was presented here today, while the other summit attendees
can go to various politicians in an effort to obtain answers to the action
plan questions. All along it was GATA's intention for the right flank of the
horn to be mobilized gold producers. We hope after what was presented today,
attending gold producers will be encouraged to speak out and also try and get
answers to the Action Plan questions.
Meanwhile, the Gold Anti-Trust Action
Committee will be on alert in the United States to help in anyway possible. We are just
a phone call or email away.
The "enveloping horn" is now in full
battle formation. By acting decisively together we can close the back end of
the "enveloping horn" on the gold cartel. These financially and
politically powerful institutions are likely to be slightly bewildered. The
truth will see the light of day and we will win. So will all of sub- Saharan
kahle! (Go well.)
kube nani! (Peace be with you.)
Entire Durban speech:
Behavioral Finance Report
*par for the BF course...
09:39 NY Fed President Dudley says banks in
much better shape than years ago - Dow Jones
Dudley again downplayed the Fed's monitoring of banks, saying it's something
the Fed does every day. Dudley made nearly identical comments yesterday
morning, saying the Fed is "always scrutinizing" banks, calling it
"standard operating procedure" and adding that the Fed is "not
focusing on foreign banks any more than U.S. banks."
* * * *
*The yield on the 10 yr T note is 2.07%.
*This week was a rout of the Gold Cartel and
The dollar fell .23 to 73.99. The euro went up
.0101 to 1.4398. The pound rose .0011 to 1.6488. The yen gained .14 to 76.48.
Early on the yen made an all-time high against the dollar at 75.94.
The CRB rose 2.81 to 329.23.
Crude oil fell 12 cents to $82.26 per barrel.
More gold goodies:
Thursday, August 18, 2011
Scotia Mocatta suggests $1,933 target
The CME Final for Wednesday reported that on
volume of 153,033 lots, 14.6% or 19,500 lots above estimate, open interest
was static: up 506 lots, 1.57 tonnes or 0.1%, to 514,613 lots. Gold of course
was up 0.32% basis the stock market close. Once again, the absence of
ballooning open interest on yet another record high close was a glaring
contrast to yesteryear.
On Thursday the gold price inflection which
began around 6AM NY time ran to a floor session high of up some $36.55 in Dec
gold around 10AM NY. Gold then backed off some $12 before recovering to
settle up $28.20 at $1,822. By 4PM gold had picked up $5 to stand 1.89% above
the Wednesday stock market close. Silver on this basis was up 0.84%.
Estimated volume was the highest this week, at 226,822 lots.
Gold shares had a disappointing day. The HUI
and XAU were only fleetingly in positive territory, broke down badly in the
afternoon and closed down 1.73% and 2.82%. Of course the Dow was down 3.68%
but lacked the extra afternoon weakness. The GDX/GDXJ
ratio reflected a flight from risk, (1.69%)/(3.29%).
Dan Norcini this evening has a lucid
discussion of the apparent gold share undervaluation, pointing out that gold
shares in relationship to gold a approaching the ultra-low relationship of
late 2008. See
The bullion vehicles traded with gold. PHYS
rose to a 4.88% premium to NAV and CEF to 2.3% (Wednesday 4.39% and 0.1%).
The GLD ETF reported adding 14.84016 tonnes (1.17%) to bring stated gold
holdings to 1,286.82507 tonnes.
MarketVane’s Bullish Consensus for gold
added 2 points to 89% and silver’s added 2 to 79%. The HGNSI
was unchanged at 27%.
Early on Friday morning local Vietnam gold
stood at a premium of $6.52 to world gold of $1,832.45 (Thursday
India’s banks and so FX markets are
closed tomorrow, so Indian buying will be impeded. Since gold has run on the
above $1,840 spot, this may not be an issue. Dec gold has seen a high of
$1,847.90 ($25.90 above Thursday’s floor close): at 12-30AM CME website
volume at over 23,000 is quite heavy.
ScotiaMocatta comments tonight:
"We see the measured move target at 1933
from the distance of the 3 year bull channel break at 1689. So far there is
no suggestion that the current bullish move is going to stop"
Friday, August 19, 2011
Macro Hedge Funds
Indian banks were closed today, which means
that the FX market was effectively shut and meaningful premiums cannot be
calculated. Rupee gold prices broadly matched world gold’s dramatic
action, but commentary suggests the public was not very involved. A very
difficult time to be an arbitrage dealer.
As noted earlier, local Vietnam gold this
morning stood at a premium of $6.52 to world gold of $1,832.45 (Thursday
Shanghai gold closed at a discount of $6.39 to
world gold of $1,859.95 on very heavy volume equivalent to 17,952 lots
(Thursday +$3.57/$1,793.15). World gold spiked up some $12 in the last half
hour which may have distorted the situation. Mitsui-London remarks that
earlier in the day premiums reached $20 on heavy buying but also notes scrap
sales. The Chinese authorities saluted Vice President Biden’s visit by
weakening the Yuan again – it slipped to a 6.77% post $US
"depegging" appreciation (Thursday 6.86%).
In dramatic action overnight, gold initially
crested around the Shanghai close, up some $39 on the NY floor close,
faltered, and then recovered to make an up $59.40 intraday high of $1,881.40
in the Dec contract around 6-40AM NY. CME website volume at 8AM was some
110,000 lots and at 10-20AM the website is showing another 85,000 lots have
UBS says of yesterday
"Macro hedge funds
were noted buyers and may also have dominated demand during yesterday's Comex
sweeps, which accounted for much of the price action…. If participation
from the macro hedge fund community has only just started to accelerate, this
adds a new dynamic to the gold market…"
Maybe this is what has cheered to gold shares
this morning. From the perspective of traditional analysis, of course, this
is a blow-off…again.
Friday, August 19, 2011
Thursday's O.I. suggests
gold going higher
The CME Final for Thursday reports that on
volume of 271,842 lots, 19.85% or some 45,000 lots above estimate, open
interest rose 6,633 NY lots – 20.63 tonnes or 1.29% - to 521,246
Amazingly, this is still over 25,000 lots
short of the recent high of 546,631 lots, seen last July 20th.
Gold of course was up 1.57% basis the floor
close and 1.89% basis the stock market close. Open interest growth is lagging
JBGJ concludes the classic O.I. sign of a top
– open interest ballooning above price moves as shorts dig in –
is not present. Yesterday’s volume, exceeded several times in recent
weeks, also does not suggest a crescendo. Combined with the increased faith
of bulls who are very likely to buy any dip, this
suggests gold is likely to move even higher.
JBGJ apologizes for omitting the Japanese data
this morning. On heavy day session volume equivalent to 24,578 NY lots TOCOM
open interest rose 1.82 tonnes or 585 NY, but the public cut 0.637 tonnes
(3.65%) from their net long by raising their short a tonne. The active
contract closed up 132 yen and world gold gained $20.70 during the session to
go out $22.70 above the NY stock market close.
Also, the Indian stock market lost 1.99%.
Estimated volume of 239,341 lots at 12Noon
suggests today is likely to be a heavier day than yesterday. Gold shares
continue to do far better than yesterday but may still wilt if the overall
market pulls back.
CARTEL CAPITULATION WATCH
What an ugly day for the
US stock market. Stinko, stinko, stinko. The DOW made new lows on the close,
finishing down 173 to 10,817. The suddenly rabid DOG fell 38 to 2342.
Mexico Mike last night…
potential crisis brewing?
sort of thing is above my pay grade, but I read the comments from Bill H with
interest today in terms of the sudden spike in M2. It is my understanding
that there are potentially trillions of dollars of CDS paper that could have
been triggered by the downgrade in US debt last month, and therefore those
bets must be paid off. We all know there is no real money backing those swaps
and just as AIG was swinging in the wind after the mortgage bonds started
detonating, I suspect some issuers of these CDS are in serious trouble here.
We have no way of knowing just how serious the problem is because these are
OTC deals. There was an initiative to install a central clearing house as a
neutral counterparty to ensure that this kind of meltdown could be prevented
and bring transparency into the system, but I think it stalled and went down
in flames. So none of this paper has come to light yet, but I would think
there is a very serious problem brewing here. So too with the rapid decline
in the 10-yr note. Again, I do not play in that particular sandbox but I
understand you can bet on the direction of interest rates as a form of
hedging for those that put big money into bonds, and I would have to believe
the total leverage on these derivatives could be in the trillions as well.
Some firm somewhere is probably going off like a hand grenade right now and
it has simply not surfaced yet as to the extent of the crisis.
wonder there is such a desire to own physical gold even as the price sets a
new all-time high on almost a daily basis. This kind of thing has never
happened in history. When LTCM and Refco blew up many years ago, the boys got
together and found a way to keep it all contained and divide up the losses
amongst themselves. Can a problem of this magnitude be resolved quietly with
a huge pile of money injected into the system? I guess we will be finding out
soon enough. Just adding up the total amount of money that has been printed
to keep things from getting terminal so far, I would have to assume it is
many multiples of the total amount of gold on the
planet even with the current higher spot market price. And it seems to me the
only option left to keep the system even in pretend mode is to continue
printing and papering over each new crisis that comes out of this mess.
brings me to question, when will it occur to some of the really big money
players out there to just start buying up gold juniors with large undeveloped
deposits? I can think of many that are trading below $50 per ounce of gold in
the ground. Historically the market would value these juniors at 5 - 10% of
in situ value and during manias that could climb much higher. Yet the juniors
are getting cheaper by the day. Today alone I watched many solid juniors with
multi-million ounce resources and huge cash positions in their treasuries
getting hammered in the trading. Look up SBB, UXG, GCU, ER, EAS... These stocks have no reason at all to sell off in
this market and if people start to understand that real gold and silver are the only asset of safety, then the light will have to
go on soon and set off a buying frenzy in the high quality juniors.
Dave from Denver…
August 19, 2011
A colleague alerted me to the recent bloodbath
in the high yield market the other day (thanks JR) and then zerohedge
happened to post that day that the high yield market had its worst monthly
sell-off in its 25-year history: LINK I wanted to put some attention on this because -
and zerohedge did not report this aspect because Durden was probably still in
high school back in the 1990's - when I was trading the high yield market on
Wall Street back in the 1990's, large directional movements in the high yield
market always preceded the same kind of directional movement in the stock
market. So now that we've had a big drop in the Dow/SPX which was preceded by
a big drop in the junk bond market, it will be interesting to see if
"hot" money piles back into the junk market, which would likely
precede a big bounce in stocks.
other point of note about the statistics as reported in the zerohedge link.
The credit spread between BBB and BB bonds has blown out to over 300 basis
points. To me this indicates that the underlying economy is in much worse
shape than is being acknowledged by the Fed, Obama and the media. I would
also argue that the stock market is not discounting this degree of economic
deterioration, which means the risk of a big stock market
"accident" is still very high. To put this credit spread widening
in perspective, at the height of the credit/housing bubble, single-B rated
credits were trading tighter than 300 bps to Treasuries. In other words, the
"handicapping" of financial risk in our system has more than
doubled over the last month.
implications of this massive repricing of credit risk points to a developing
liquidity crisis in our financial system, similar to 2008, and reflects the
overall dismal economic condition of the real economy. I'm sure you won't
hear this from the Teleprompter that sits in the White House and pretends to
lead the country, but those two facts are what the big-money odds makers of
the U.S. financial casino are telling us.
this situation further develops, you can be sure that a lot of the
"hot" money that has left the high yield market and that is
mispricing the stock market will continue to flow into the precious metals
and mining stocks. Recently the idea that gold is in some kind of investment
"bubble" has been promoted all over the imbecilic media, including
a widely circulated report from the Einsteins at Wells Fargo that reads more
like some kind flamboyant yellow journalism from the National Enquirer in
that is was very poorly researched - if any bona fide statistical research
was done at all - and its premise and assertions lacked any basis in fact.
Need I remind any Wells Fargo employee/analyst that the bank's balance sheet
is connected to one of the greatest bubbles of all time and Wells Fargo would
have been liquidated in 2008 had it not been for the generosity of Tim
Geithner, on behalf of the U.S. Taxpayers...
I wanted to link a must-read commentary from John Embry, one of the investing
patriarchs of the current precious metals bull market. Specifically, I wanted
to highlight his comment about the nascent transition globally that is
occurring from a fiat currency based system to the restoration of a
gold-backed currency system (which has been the currency basis for 90% of the
last 5,000 years):
The unfortunate result of
these machinations will be the destruction of the existing debt, the end of
this experiment with pure fiat currency and the implementation of an entirely
new monetary system. Assets that will see investors through this traumatic
transition will be gold and silver just as they have done in every previous
example of fiat currency destruction. The very fact that the average citizen
has little or no understanding of this phenomenon virtually ensures its
outcome. Those who do hold the precious metals and other hard assets instead
of paper instruments of wealth will be the beneficiaries of the what will likely be the greatest transfer of wealth in
The bold emphasis is mine. I want to highlight
that because it is either extreme stupidity or motivated deceit on the part
of the bubble-promoters to label and define an investment bubble when the
primary ingredient of dumb public money is so notably absent from the market.
Here's Embry's piece: LINK
next two weeks are usually among the slowest trading days of the year besides
the year-end holiday period. I will try to post daily but most of my
attention will focused on managing our fund and
watching/playing a lot tennis.
U.S. economic news:
18-Aug-2011 22:54 BAC Bank of America may
cut more than 10K jobs - WSJ (7.01)
Brian Moynihan apparently sent out a memo this evening, though it's not clear
how detailed it was. People
familiar with the situation tell the WSJ:
* The bank is firing 3,500 this quarter,
including positions in investment banking and trading.
Thousands more jobs will be eliminated as part of "Project New
BAC," whose scope probably won't be determined for a few weeks. Consumer
banking, mortgage, legal, marketing, and HR will be targets, though one
source says the cuts may be stretched over three years.
Project New BAC's second phase will probably start in Q4 and target
investment banking, trading, wealth management, and corporate banking.
More bad news:
JPMorgan Cuts U.S. GDP
By Scott Hamilton - Aug 19, 2011 6:03 AM CT
The U.S. economy may expand less than previously thought in the next two quarters as
consumer sentiment drops and the housing market fails to gain momentum,
JPMorgan Chase & Co. wrote in a report.
Gross domestic product will grow 1 percent in
the fourth quarter rather than the 2.5 percent previously forecast and 0.5
percent in the first quarter of 2012 instead of 1.5 percent, Michael Feroli, JPMorgan’s chief U.S. economist in New York, said in an e-mailed note to clients today.
US Recession Was Worse Than We Thought - Fed's
By Cynthia Lin
Of DOW JONES NEWSWIRES
The magnitude of the recession caused by the
2008 financial crisis is taking a bigger toll on the U.S. economy than most
had expected, a U.S. central bank official said Friday, adding she was in
favor of providing the nation's recovery with more support at the latest
Federal Reserve meeting.
"The economy appeared to be
strengthening, and yet once again, in the summer, storm clouds
appeared," said Cleveland Federal Reserve Bank President Sandra
Pianalto. "We learned that the magnitude of the recession was worse than
we had thought."
In a speech to a community bankers association
in Ohio, Pianalto said the U.S. has to grow by about 2.5% annually in order
to keep the unemployment rate, currently at a towering 9.1%, from rising. She
said it will take "quite a few years" to get that rate down to
The central banker lowered her outlook on U.S.
growth and sees inflation falling back to 2%. Given those projections,
Pianalto said she was in favor of providing additional support to the
recovery at a Federal Open Market Committee meeting earlier this month. She
does not hold a voting slot on the monetary policy-setting FOMC.
With the targeted federal funds rate already
near zero, Pianalto said the Fed explicitly announcing a mid-2013 time frame
to stick to its loose monetary policy was a tool to help bring down interest
rates along the yield curve.
"Under the circumstances, I think it made
sense to take the unprecedented step of including that conditional guidance
in our press statement," she said.
Pianalto now sees the economy growing at about
2% in 2011, and 3% in each of the next two years. In June, Pianalto said she
expected the economy to grow at about 3% a year.
The Fed official points out that between June
and August, several pieces of economic data showed a deteriorating labor
market, tapering household spending and a still-depressed housing sector,
suggesting that the U.S. was in store for a slower pace of recovery in the
coming quarters than most expected.
With unemployment stubbornly high, consumer
confidence falling and households expecting their income to decline in the
next year, Pianalto said people are focused on rebuilding their wealth, not
"I put all of these facts together; I do
not expect much of an economic boost from consumer spending any time
soon," Pianalto said.
Turning to inflation, Pianalto sees inflation
averaging around 2% in 2012 and 2013, expecting the pressures of rising food
and energy costs to abate over time.
Municipal Bonds May Face
Downgrades Following Final U.S. Budget, S&P Says
Standard & Poor’s, the credit rating company that cut the U.S. to
AA+, said the federal budget deal may lead to downgrades on municipal
The company, which said earlier this month
that states and local governments could remain AAA even after the U.S. cut,
said in a report today downgrades could come after reductions in federal
funding or changed policy. Ratings changes would come based on
"differing levels of reliance on federal funding, and varying management
capabilities," and, after the Budget Control Act of 2011, will be felt
"unevenly across the sector," S&P said.
"Experience tells me I would expect there
to be some downgrades," said S&P credit analyst Gabriel Petek in a
telephone interview. "These cuts are coming in addition to the losses of
revenue that already came during the recession."
The initial budget cuts would be smaller than
the revenue losses during the recession that ended June 2009, he said. States
lost $67 billion in aggregate during the 18-month contraction, the report
said. The federal government has planned $7 billion in cuts, most of which
won’t be implemented until 2013, giving states some time to prepare,
S&P will begin evaluating states and local
governments starting Nov. 23, when a panel of 12 members of Congress, split
evenly between Republicans and Democrats, is supposed to come up with
recommendations, Petek said.
In 2009, when the U.S. introduced economic
stimulus, federal spending on average was 24.6 percent of state gross
domestic product, the report said. States that had federal funds representing
more than 30 percent of GDP included Alabama, Alaska, Hawaii, Kentucky, Maryland, Montana, Mississippi, New Mexico and West Virginia. The state
with the lowest percentage was Delaware.
"We do not have immediate concerns at the
state and local levels," said Natalie Cohen, managing director and senior municipal-bond
analyst for Wells Fargo Securities, in an Aug. 16 report.
The 11,500 municipal bonds already downgraded
from AAA in lockstep with the U.S. were a "logical extension," and
"not a symptom of a meltdown in the municipal-bond market," she
wrote. The debt was directly dependent on federal funding.
S&P mentioned possible changes to the
municipal market if tax policy is altered. If tax cuts enacted during George W. Bush’s presidency are allowed to expire, federal
taxes would increase and the tax exemption on municipal bonds would be more attractive to
investors and drive yields on municipal bonds lower, S&P said.
Alternatively, Congress could limit some of
the tax exemptions on municipal bonds to raise more government revenue, which
would likely increase interest costs, S&P said.
What else is new…
MOODY'S ANALYST BREAKS
SILENCE: Says Ratings Agency Rotten To Core With Conflicts, Corruption, And
A former senior analyst at Moody's has gone
public with his story of how one of the country's most important rating
agencies is corrupted to the core.
The analyst, William J. Harrington, worked for
Moody's for 11 years, from 1999 until his resignation last year.
From 2006 to 2010, Harrington was a Senior
Vice President in the derivative products group, which was responsible for producing
many of the disastrous ratings Moody's issued during the housing bubble.
Harrington has made his story public in the
form of a 78-page "comment" to the SEC's proposed rules about rating agency
reform, which he submitted to the agency on August 8th. The comment is a
scathing indictment of Moody's processes, conflicts of interests, and
management, and it will likely make Harrington a star witness at any future
litigation or hearings on this topic.
The primary conflict of interest at Moody's is
well known: The company is paid by the same "issuers" (banks and
companies) whose securities it is supposed to objectively rate. This conflict
pervades every aspect of Moody's operations, Harrington says. It incentivizes
everyone at the company, including analysts, to give Moody's clients the
ratings they want, lest the clients fire Moody's and take
their business to other ratings agencies.
Read more: http://www.businessinsider.com/moodys-analyst-conflic
In the "You Can’t Make This
Goldman Sachs VP Changed Name, Now a Top
Thursday 18 August 2011
by: Lee Fang, ThinkProgress | Report
Peter Haller, now a congressional staffer, was
previously known as Peter Simonyi when he served as a VP to Goldman Sachs.
Has Rep. Darrell Issa (R-CA) turned the House
Oversight Committee into a bank lobbying firm with the power to subpoena and
pressure government regulators? ThinkProgress has found that a Goldman Sachs
vice president changed his name, then quietly went
to work for Issa to coordinate his effort to thwart regulations that affect
Goldman Sachs’ bottom line.
In July, Issa sent a letter to top government regulators demanding that they
back off and provide more justification for new margin requirements for
financial firms dealing in derivatives. A standard practice on Capitol Hill
is to end a letter to a government agency with contact information for the
congressional staffer responsible for working on the issue for the committee.
In most cases, the contact staffer is the one who actually writes such
letters. With this in mind, it is important to note that the Issa letter ended
with contact information for Peter Haller, a staffer hired this year to work for Issa on the Oversight
Issa’s demand to regulators is exactly
what banks have been wishing for. Indeed, Goldman Sachs has spent millions this year trying to slow down the implementation of
the new rules. In the letter, Issa explicitly mentions that the new
derivative regulations might hurt brokers "such as Goldman Sachs."
Haller, as he is now known, went by the name
Peter Simonyi until three years ago. Simonyi adopted his mother’s maiden name Haller in 2008 just
as he was leaving Goldman Sachs as a vice president of the bank’s
commodity compliance group. In a few short years, Haller went from being in
charge of dealing with regulators for Goldman Sachs to working for Congress
in a position where he made official demands from regulators overseeing his
Truthout is supported by tax-deductible donations from our readers.
Please make a contribution today to keep truly independent journalism strong!
Click here to contribute.It’s not the first time Haller has worked the
revolving door to help out Goldman Sachs. According to a report by the nonpartisan Project on Government Oversight,
Haller — then known as Peter Simonyi — left the Securities and
Exchange Commission (SEC) in 2005 to work for Goldman Sachs, then quickly
began lobbying his colleagues at the SEC on behalf of his new firm. At one
point, Haller was compelled to issue a letter to the SEC claiming he did not
violate ethics rules. A brief timeline of Haller’s work history
underscores the ethical issues raised with Issa’s latest letter to bank
– After completing
his law degree in 2000, Haller was employed by Federal Energy Regulatory
Commission as an economist, and later with the Securities and Exchange
Commission in the Office of Enforcement.
– In April of 2005,
Haller resigned from the SEC to take a job with Goldman Sachs. He soon began
lobbying the SEC on behalf of Goldman Sachs.
– On September 2,
2009, Haller left Goldman Sachs to take a job with the law/lobbying firm Brickfield Burchette Ritts & Stone.
– In January of
2011, Haller was hired to work for Issa on the Oversight Committee. Under the
supervision of Haller, Issa sent a letter dated July 22, 2011 to bank
regulators (including the heads of the Federal Reserve, FDIC, FCA, CFTC, FHFA,
and Office of Comptroller) demanding documents to justify new Dodd-Frank
mandated rules on margin requirements for banks dealing in the multi-trillion
dollar OTC derivatives market, like Goldman Sachs.
When he took over the chairmanship of the
Oversight Committee this year, Issa dramatically shifted the committee’s focus away from its
traditional role of investigating major corporate scandals. Instead, Issa has
used the committee to mergethe responsibilities of Congress with the interests
of K Street and Issa’s own fortune.
In June of this year, ThinkProgress broke the
story about Issa’s own complicated relationship with Goldman Sachs. We revealed that Issa purchased a large amount of Goldman Sachs
high yield bonds at the same time as he used the Oversight Committee to
attack an investigation into allegations that Goldman Sachs had
systematically defrauded investors leading up to the financial crisis. This
conflict of interests, along with our exclusive story about Issa’s earmarks benefitting his own
real estate empire,received coverage in a recent piece by the New York Times.
We also broke a story last month revealing other revolving door
conflicts within Issa’s staff. Peter Warren, Issa’s new policy
director, maintains some type of financial contract with a student loan
lobbying group he led last year, and received a bonus from the lobbying group
before leaving to work for Issa. Since joining Issa’s staff, Warren and
his colleagues have fought to weaken the recently created Consumer Financial
Protection Bureau, the new agency charged with overseeing student loans.
The new revelations about Peter Haller,
however, raise even more significant ethical concerns than Peter Warren and other ex-lobbyists working for Issa. Why did Issa hire a high-level
Goldman Sachs executive to work on stopping regulations on banks like Goldman
Sachs? Haller’s direct involvement in the July letter brings
Issa’s ability to lead the Oversight Committee — charged with
conducting investigations on behalf of the public interest — into
King World News interviews John Embry on
Submitted by cpowell on 09:02AM ET Friday,
August 19, 2011. Section: Daily Dispatches
12:01p ET Friday, August 19, 2011
Friend of GATA and Gold:
King World News today interviews Sprott Asset
Management's John Embry about GATA's London conference, where he spoke, and
the explosiveness of gold and silver. A summary of the interview is headlined
"Silver About to Roar Through $50 All-Time High" and you can find
it at King World News here:
lyWeb/Entries/2011/8/19_Jo...CHRIS POWELL, Secretary/Treasurer
Anti-Trust Action Committee Inc.
Jeff Christian is at it
to see the 'gold expert' Jeff Christian is once again appearing on TV with
comments that are at odds with the market behaviour. This interview on BNN is
posted on the Kitco website: Gold Outlook with CPM’s Jeff Christian
that during the interview Christian states that demand is low for gold coins
and retail investors are probably selling to coin stores. He states low
premiums as his evidence of this trend, in the range of 3% for one ounce
coins. Well according to the US Mint the demand for gold coins remains high.
And if I use Kitco as a proxy for the retail dealers, we see the following
to the worldwide surge in the demand for precious metals, we are experiencing
extraordinarily high transaction volumes. As a result you may experience
delays in some of our services over the coming days."
does not appear to me that Kitco is experiencing heavy retail selling of gold
coins, or they would not have a delay to round up shipments and meet sales.
for the actual coin dealer premium, today Kitco is showing one ounce Canadian
gold maples selling for $1935, a premium of about 4.4% above the spot price
of $1850. Again, this evidence flies in the face of the spin from Christian.
We are supposed to believe that smaller investors are taking advantage of the
high gold price and selling according to his comments, but in fact it appears
the opposite is true. When is Christian ever bullish on gold? When has this
guy ever stated its a good idea to be a buyer? Last
year during the PDAC in Toronto I stood watching him live as he stated that
gold had probably topped and I believe gold was trading around $1250 or so at
the time He even pointed out in his interview that he was a gold bull and had
been right all the way up. The guy has absolutely no credibility.
annoys me further is he goes on to describe the options market trading, with
market makers relying on black boxes to hedge risk. In his view, the traders
buy gold to protect their hedging as the gold price rises. Well that has been
true only in the last few months as gold has risen
strongly in part BECAUSE THE SHORTS ARE COVERING. This has been rare
throughout the gold bull market, as it is well documented that the shorts
tend to pile on as the gold price has risen, and in fact one may argue that
it is intense selling from the shorts that often capped gold and drove it
lower in years past. In a related note, when a trader dumped 50,000 contracts
for silver in one minute last month, I wonder if Christian thinks that was
some form of risk management or hedging strategy. And I also point out that
he never describes the 'hedging' for what it is: shorting. Since the net
short interest is usually larger than the total inventory of metals at the
Comex, I would say hedging has very little to do with the trade. Price fixing
and manipulation is more like it.
why do the guys that are always wrong on the metals get
invited back every time gold or silver go on another run? Nice miss Jeffery.
up the good work...
Thanks MM. This guy Christian is truly weird.
He wants to debate me at The Silver Summit. What is there to debate? Two
years ago ago at that summit he said that gold (with the price at $980) would
average $946 for the next decade. I was a raving bull, as usual. Last year
with the price of silver at $23, he was bearish. I was a raving bull, as
usual. The guy is shameless.
charts for you today.
Relative to gold, both the HUI and XAU are
reaching extreme under-valuations. Aside from the 2008 panic, we have not
seen the HUI:Gold ratio this low since early 2002.
The chart also demonstrates the folly of over-hedging as the XAU (which was
laden with heavy hedgers) effectively missed the entire bull run that the HUI
experienced between late 2001 and late 2003:
About a month or so ago an expert who I
respect mentioned that the gold stocks were mispriced by one full standard
deviation. I’ve applied standard deviation (Bollinger) bands to a 60
day mean to produce the chart below. The ratio has struggled for about 4
months to regain the -1 (yellow) band, only briefly
doing so about a month ago before again careening downward. This is the
longest stretch below the low tide marker since the 2008 debacle (and almost
as long). The presages a strong move up when it happens (hopefully soon).
Note how the yellow line served as strong support for virtually all of 2010
and how the red line served as strong resistance for over half a year prior
to the 2008 collapse.
Archive- Hoarders Rush
Gold To Federal Reserve Pittsburgh Press, March 10, 1933
Click here: The Pittsburgh Press - Google News
update on the options open interest for September gold....
On the CALL side there
was substantial profit taking for the past <
For silver, the CALL selloff was greater and
even the total CALL open interest < P not gain, but lost
-4.2% last 20 days:>
The next big event will be the December
expiry, < P for both metals, biggest open interests lie way
For silver at 50, and gold at 2000 strike price,
which to reach silver has to advance about 25% and gold only 10%...
wish a nice weekend,
will remember I sent you this LOG GOLD GBP graph before, I thought you might
appreciate an update on it.
I have been plotting this hyperbolic curve on
this longterm log chart of gold in the UK pound since 2008 and it is still
fitting. The curve has recently been tested and proved as the reaction from
hitting the it has been dramatic.
By the looks of things we are should be at
least at £1800 an ounce by this time next year.
I am sorry that I couldn't make it to the GATA
gold rush in London recently, but look forward to the DVD when it becomes
MJB last night…
Ratio To Gold Back At Pre-QE1 Levels
Critical seventy-two hours for the
PM shares and juniors…if they catch a bid by Tuesday, the Geek Squad
will be buying our sector hand over fist. I see the Ides of August-Labour Day
as the watershed moment for gold/silver equities.
The ultimate paired trade is long
ABX (11.7 times earnings) and short GLD (heaven forbid!).
The XAU rose
3.92 to 210.44 and the HUI gained 13 to 581.26.
If you want to get excited about the potential
of the gold/silver shares, take a look at this HUI chart. When it closes
above 608, it will have completed a massive base which will have the
technical power to send this index to the moon, the base will be that HUGE…
Yep, I think MJB is right on. For a change the
gold/silver shares exhibited significant strength, right off the bat, even
though the general stock market was soft. It has been expressed for some time
by some contributors to this column, and by me, the precious metals share
market has been worse than dreadful when compared to what the prices of gold
and silver have done. It could have been because of general apathy, a hedge
fund short side theme play, or something far more sinister. Hard to say. But,
here is what I do know…
*It is of great interest that the gold/silver
shares would pop like they did today, coinciding with the pop in silver. Both
have been unnaturally suppressed, IMO.
*The undervaluation of the gold/silver shares
as a group is at an extreme. We are headed back to the mean and then some to
*Gold and silver are JUST becoming mainstream
investment plays. This has to spill into the shares.
*The Café Sentiment Indicator, dead all
summer compared to the gold price move, has exploded the past two days. This
may be an indicator the gold/silver shares will finally catch investor
*For every action there is equal but
opposite reaction. As lousy as the gold/silver action has been, it will
be the reverse on the upside as they take off. The gold/silver share market
cap is tiny compared to other markets. The Dow has gone nowhere in a decade,
interest rates offer little return, real estate is worsening. The name of the
game: GOLD AND SILVER, which we know have a long way to go. Perhaps we are at
the tipping point when hordes of investors will want in on the precious
metals share sector. Once the tide bursts, it will be a sight to behold.
Fortunes will be made quickly. Our tiny market cap sector will not be able to
handle all the buying without pushing share prices up dramatically.
*Shorters who overstayed their welcome, will get crushed.
*It will be the momentum trading crowd which
will power our sector to MUCH higher levels.
*There will come a point when any stock with
gold and silver in their name, precious metals oriented or not, will move much
This is an investment opportunity of a
lifetime, handed to newbies on a gold and silver platter. There are so many
investors out there who are clueless and don’t know what to do. Please
send this MIDAS to as many friends as possible and have them sign up for a
free two week trial so they can get a handle of what is going on. Out of
sight of mind. Just suggest they read the last four MIDAS commentaries, which
will be all they need to know.
GATA BE IN IT TO WIN IT!
Much more for
Gold Anti-Trust Action Committee
Le Metropole Café is a Membership site.
Visit and Experience a 2 week Free Trial !
Bill Murphy is chairman
of the Gold Anti-Trust Action Committee. and
proprietor of www.LeMetropoleCafe.com, an Internet site devoted to financial commentary with emphasis on
the precious metals. You can
become a trial member for free for two weeks by clicking here.
He has also chaired three international gold
African Gold Summit in Durban, South Africa on May 10, 2001.
*Gold Rush 21 in the Yukon’s Dawson City on August 8-10, 2005.
*GATA Goes To Washington in Arlington, Virginia on April 17-19, 2008.