MF Global Lawsuit Puts Pressure on JP Morgan: Bullish Signs for Silver As COMEX Re-hypothecation Exposed? [SilverVigilante]

From http://silvervigilante.com

 

 

Mainstream pundits are doing what they can to cover for JP Morgan & Chase. Over recent weeks, in an attempt to make JP Morgan appear as the good guy in the MF Global theft, reports that the bank has returned client funds, which would be certain to contribute to the banks collateral problems, have circulated the web. But, would JP Morgan & Chase, a bank that has historically displayed a well-developed instinct for self-preservation, make things right with anything other than negligible amounts of money? Probably not. And, in light of this, the bank could be facing further legal action against it. This legal action could be bring to light the banks unconscionable position in the silver market as it comes to light the bank inherited gold and silver from MF Global after customer accounts were settled in cash and closed out at, basically, the market price of MF Global and JPMorgan’s choosing.

James Giddens, the trustee liquidating MF Global’s broker-dealer unit, has published a 275-285 page report in which he stated he might bring civil claims against former CEO Corzine and other top MF Global executives for negligence and breach of duties to customers.

Giddens also stated he was prepared to sue JPMorgan Chase, if he and the bank could not settle within 60 days claims that the bank played a role in the disappearance of customer funds.

The potential MF Global lawsuit presented by Giddens will presumably argue that Jon Corzine and other executives at the global investment house failed to make the company’s liquidity crunch known, thus helping foment the conditions that led to the company’s collapse.

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Silver and gold to test last year’s highs as the world waits for more money printing? [arabianmoney]

From http://www.arabianmoney.net/

When will the global central banks press the button and start the electronic money printing presses rolling again? Will they first allow some hot air out of over-inflated stock markets or seize on a contracting global money supply as a reason to get on with it?

Money supply data is in retreat all over the world, even in China. It is an alarm bell for recession and all the latest data on manufacturing orders points to a synchronized global slowdown already. Printing money offsets this contraction to an extent.

Debt and more debt

The problem is that global central banks have been printing money to deal with the financial crisis for more than three years. All they have managed to do is delay a crash, they have not induced a recovery, and at the same time they have borrowed a very great deal more money.

Far more indeed than they have got back in GDP growth. If I borrow $2 from you and give you $1 to spend that is economic growth but at an uneconomic cost.

For a crisis caused by too much debt in the system it was never entirely clear how borrowing even more money would solve the problem. Getting a second credit card after the first is full allows you to spend again but leaves you deeper in debt.

Inflation is then your only salvation. Destroy your currency and you destroy your debts. The bad news is that you destroy the value of a lot of your other wealth in the process of inflation, unless you park your money in assets that offer protection from inflation.

So at the merest hint of central bank money printing last week due to tumbling stock markets it was the turn of precious metals to rally. This is perfectly logical. The stupid thing was for investors to even thiink for a moment that the fundamentals had changed for the precious metals that can never be printed.

 

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Silver to outperform gold as euro crisis reaches a climax this autumn [arabianmoney]

From http://www.arabianmoney.net/

How long will it be before the eurozone debt crisis reaches a climax and the Germans finally have to pick up the bill because if they don’t then the whole house will burn down?

Spanish bonds will likely hit the danger level of seven per cent this week. Greece votes on the 17th and may vote for the euro knowing that austerity cannot last for long anyhow. Cyprus is being dragged under by humungous debt as Europe’s equivalent of Iceland, as yet another inevitable flash point.

Global economy dire

Moreover the contagion from the eurozone sovereign debt crisis is already very evident in the global economy. The US jobs data is appalling. China is stalling whatever nonsense the official data shows. The UK, Japan and parts of Europe are in recession. Oil prices are crashing down.

But this is a crisis of money. Debt is the creation of too much money. Too much money jacks up asset prices. Deleveraging or debt destruction takes money out of the system and brings asset prices down. The artificial price support of the bailouts of the past three years is falling apart.

The problem then for investors is where to put your money if traditional assets like stocks or real estate are falling in value. Recently the answer has been bonds but then if you look at what is happening in Spain or Greece you see that bonds are the worst possible investment for the future.

It is all gradually funnelling investors into a very small and tightly held precious metals market. Gold and silver are also money but not one that central banks can print, indeed they are buying it too as a protection against the monetary inflation that they are themselves creating.

 

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India Gold,Silver import drop 33% to $3.1 billion in April

From http://www.bullionstreet.com

Exports of gems and jewellery also fell 25.7 percent to $2.6 billion in April and imports of pearls and precious stones slumped by 63.3 percent to $1.2 billion.

NEW DELHI(BullionStreet): World’s largest gold and silver importer India witnessed a sharp decline of these precious metals in April.

According to official figures, imports of gold and silver slumped by 33 percent at $3.1 billion mainly due to industry shutdown in early April.

Exports of gems and jewellery also fell 25.7 percent to $2.6 billion in April and imports of pearls and precious stones slumped by 63.3 percent to $1.2 billion.

Indian jewellers went on 21-day strike protesting the budgetary proposal to levy additional duties on sale of jewellery. Under pressure from various quarters, the government subsequently withdrew that proposal.

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China’s SHFE silver futures contracts expected to have impact on global market []

The Shanghai Futures Exchange’s silver futures contracts, the first of their type to be offered in China, give Chinese investors a new way to bet on the precious metal.

MUMBAI (MINEWEB) -

In a move that will make the silver market more liquid, the Shanghai Futures (SHFE) has begun trading in silver contracts. The contracts are expected to be bullish for silver prices, with traders stating that it could make market manipulation more difficult.

Although the country is a main producer and consumer of silver, it has remained on the sidelines in silver trading. By initiating silver futures, traders say China clearly wants more control over the precious metal’s pricing policy.

Chinese investors have been showing an increasing interest in the white metal amidst surging inflation and the sluggish performance of the stock and property markets. In March, about 134 billion yuan ($21 billion) in silver contracts were traded, more than 15 times the amount traded two years ago. More than gold, many retail investors prefer silver because the minimum requirement for investing in it is much lower in China.

The white metal is imbedded in the Chinese psyche. For long, it has been the basis of China’s currency. In 1935, the Shanghai-based biweekly Finance and Commerce reported personal hoards of the precious metal at 1.27 billion ounces.

With the Shanghai Futures Exchange gaining approval to begin trading silver futures, traders insist a significant shift appears to be in the making.

Wang Ruilei, an official with precious metals trader CGS Company told newswire agencies that the market would be bigger and more liquid with the advent of the futures contracts. Traders added the futures exchange would provide direct access to silver for Chinese investors.

It would also be beneficial to silver enterprises and industries as the metal would now be available for trading, hedging and buying at their local exchange and in the local currency.

Huo Ruirong, vice manager of the Exchange was quoted by newswires as saying that the new trading option would provide China with a pricing mechanism on silver and help readjust the silver industry structure.

This is at a time when China is believed to have exceeded Peru and Mexico to become the world’s leading producer of silver. The country is also the second-largest consumer of the precious metal after the United States.  It is also, of course, now the world’s leading producer of gold too.

Regulators in China are hoping to see more than just investors benefit from this new trading vehicle. At the inauguration ceremony, Liu Xinhua, Vice Chairman of the China Securities Regulatory Commission, pointed out that this year, they were keen to implement the spirit of Premier Wen Jiabao’s 2012 missive to “secure introduction of …commodity futures and financial derivatives, in order to enhance our overall competitiveness and meet the real economy needs to provide more tools and instruments”.

He said the silver futures market would be conducive to optimising the silver price formation mechanism and provide low-cost, efficient means of risk management.

Liu Xinhua stressed that the silver futures play, from the listing to mature and play features, would require a gradually cultivated stance, and was no overnight decision. He added the move would help the Shanghai Futures Exchange strengthen market surveillance and effectively guard against market manipulation and other illegal activities.

INVESTMENT INTEREST

Investment in silver has been booming in China. An early indication was the trading volume of silver forwards on the Shanghai Gold Exchange, China’s only exchange for the precious metal, which surged 751% in 2010 as compared to a year earlier. Also, the volume in September last was more than six times that of the same period in 2010.

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Why we’re nowhere near the mania phase in precious metals [Sovereignman]

From sovereignman.com

Yesterday was my lucky day.

Tahoe1 300x200 Why were nowhere near the mania phase in precious metals

While hiking in the middle of nowhere around Lake Tahoe, I literally stumbled onto a 1-ounce US silver eagle coin, 1996 issue. It was just lying there on the ground without a soul in sight.

lucky1 300x200 Why were nowhere near the mania phase in precious metals

The coin was pretty muddy, but I managed to clean it off later with an old toothbrush and some elbow grease… at which point I decided to take my good fortune on the road for a little unscientific poll.

I’ve traveled to plenty of countries where the local population is very in tune with the prices of gold and silver, particularly in Asia, India, and the Middle East. It’s simply part of the culture.

In the developed world, however, people have much greater confidence in their paper currencies because they’ve been brainwashed since birth to believe their currencies are sound.

As such, I was not surprised by the results of my little informal survey.

Walking around the lakefront resort community where I’m staying, I stopped passers-by and explained to them how I had found this coin. Then I’d ask, “What do you think it’s worth?”

The first person I showed it to held it in his hand and felt the coin’s heavy weight with a slight tick of his eyebrow. Then he flipped it over to the reverse side, saw the “1 OZ. FINE SILVER- ONE DOLLAR” marking at the bottom, and replied, “Uh, a dollar…”

One after another, locals, tourists, and staff alike were completely mystified at the prospect of my weighty silver coin having much ‘value’.

Several people commented on the coins year, claiming, “Well it’s probably not worth much, maybe just a dollar, because it’s only from 1996… I mean, if it were from the 1950s, then you might have something…”

Another common response was “I have no earthly idea.” After half a dozen of those, I changed my approach and walked into one of the local casinos where I saw three bored dealers at an empty blackjack table.

I plunked my coin on the table and asked, “How many chips will you give me for this?”

Each one of them examined the coin and looked at each other in silent conference before one of them said, “$1.”

I asked a few other folks milling around the lobby if they’d give me $5 or $10 for the coin, which seemed to offend people much more than spark their curiosity for the opportunity.

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CFTC – Managed Money Short Positioning High for Gold, Silver

SOUTHEAST TEXAS – Taking a break from the grueling, demanding and intense quest for things with fins and scales for a half day* today, we thought we would share with everyone a couple of the more interesting charts which surfaced in the latest Commodity Futures Trading Commission (CFTC) commitments of traders report (COT).  The report was released Friday, May 18, with data as of Tuesday, May 15.

According to the CFTC, as of Tuesday of last week, large traders the CFTC classes as Managed Money (“MMs,” hedge funds, commodity trading advisors and other funds that trade futures on behalf of others), increased their short positions in gold futures by 9,837 contracts to show 32,822 contracts short.  That is the highest pure short position for the “funds” since September 16, 2008, during the height of the 2008 panic with gold then in the $770s.  One week later, on September 23, gold closed at $891.90, about $122 higher as the MMs covered or offset more than 20,000 of those short positions (not a misprint).

20120520-MM-Short-gold

Source for all graphs CFTC for COT data, Cash market for gold and silver. 

Very high pure short positions for the usually net long Managed Money traders very often correspond with important turning lows for gold.  To confirm that notion simply look at the graph above and note that the spikes to the upside for the blue line (short positions) often correspond closely with bottoms in the pink price of gold.

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