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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Indonesia imposes 20% export tax on Gold, Silver and Platinum [bullionstreet]

Indonesia has decided to retain gold, silver and platinum in the list of minerals enforced with a 20 percent export tax but coal is exempted.

JAKARTA(BullionStreet): Indonesia has decided to retain gold, silver and platinum in the list of minerals enforced with a 20 percent export tax but coal is exempted.

A total of 65 mineral categories has been included in the list which is expected to provide the government an additional revenue up to $2 billion.

The minerals include antimony, bauxite, chromium, copper, , iron ore, iron sand, lead, manganese, molybdenum, nickel, and tin apart from gold, silver and platinum.

Indonesia’s Finance ministry said the regulation would assist the government in properly listing and managing mining export performance in the country.

The regulation also stipulates that all mining-permit holders must submit a recommendation letter from the Energy and Mineral Resources Ministry before exporting metal ore.

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What the HECK is HAPPENING with The Metals?

David Morgan is interviewed by “Sherrie Questioning All”

Guest Post: Backwardation In Gold And Silver [Zerohedge]

From www.zerohedge.com

Submitted and © by Keith Weiner

Backwardation in Gold And Silver

On Monday, May 14, something happened that hasn’t happened since Dec of 2008.  Two successive near-month precious metals futures contracts were in backwardation at the same time.  To oversimplify, backwardation is when the price of a futures contract is lower than the price in the spot market.  It should not be possible for it to happen in gold and silver.

But ever since Dec 2008, it has been recurring intermittently, and recently it has become the “new normal” for each futures contract to head into backwardation before expiring.

Even in this “new normal”, however, it has been only one at a time: one metal, and one month.  This is because the backwardation occurs with the “contract roll”, as people sell the expiring contract and buy one farther out.  The selling pressure on the expiring contract is most intense for a short period of time.  After that, the spread widens as the market makers move on, the selling pressure abates, and with wider spreads all around, both the basis and cobasis fall into oblivion.  Except for the December month, gold and silver futures are liquid in different months.

That is why one does not see both monetary metals in backwardation simultaneously because they are “out of phase” by 30 days and temporary backwardation typically persists for only about a week or so.  And it should be even harder to see two different successive near-dated futures contracts in backwardation.

On May 14, this is precisely what occurred.  Both May and July silver are backwardated.

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Risk Aversion Money Flows Drop the HUI [Trader Dan]

he mining sector was weak to start the session even as some larger entities were attempting to force the S&P futures above the 1350 level. The problem was that gold could not move into the plus column, the Dollar was not buying the concerted push nor were the bond and note markets which refused to go negative on the day even with stocks initially rallying.

Once the S&P dropped back below the unchanged level, that was it for the mining sector shares which are now getting what looks to me like the BEGINNING of a final washout in this sector.

Note that the critical 50% Fibonacci retracement level could not stem the bleeding as the index has not yet even registered a mere bounce higher. One can almost sense the disgust and dismay that pervades this sector at the time being. While the economic world is being rocked, the proverbial safe haven of gold is being shunned in favor of…. Yep – US Treasuries here and German Bunds over in Europe. Apparently promises to pay by overstrained governments are more valuable than the ancient metal of kings in this Brave New World.

I am sending up a monthly chart once again to provide a long term view of this sector with some key technical regions noted. If we base our analysis PURELY on Technical factors, there does not seem to be anything in the way of downside support until one nears the 340 level which is the 61.8% Fibonacci retracement level of the entire rally from the low hit in 2008. if that cannot stop this rout, then the upsloping trend line (in blue) drawn off the pitchfork is the next target – that is currently near the 300 level.

SBSS 26. Who Is Running Scared?

 

Is an Ounce of Gold Worth $10,000? [caseyresearch.com]

Adam J. Crawford, Junior Analyst

Gold at $1,650 an ounce seems pricey to most investors simply because it costs five times more than it did a decade ago. However, $1,650 an ounce is actually a bargain if one were to price gold using the same formula that the US government used for many years. In the past, the federal government agreed to exchange gold for dollars at a fixed price of $35 per ounce. Gold’s fixed price wasn’t pulled out of thin air: it was established under the Bretton Woods system by dividing US gold reserves by the monetary base.

Gold reserves represent the total amount of gold the government is hoarding. The monetary base is the amount of dollars held by the public, in addition to the amount of dollars held as bank reserves.

Currently, the US government reportedly holds roughly 260 million ounces of gold. Thanks to Benny and his inkjets, the monetary base is currently flirting with the nosebleed level of $2.7 trillion. Using the government’s gold price formula of yesteryear, gold’s “shadow price” is roughly $10,000 an ounce ($2.7T/260 million).

The chart below tracks the market price of gold vs. what the price “should be” based on the Bretton Woods pricing method.

Contrary to popular opinion, this monetary maneuver is highly unlikely, given that a fresh flood of bonds will result in lower bond prices and rising interest rates… Oh yeah, and one helluva recession to boot!

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Keiser Report: Beggars Without Borders (E279)

A great episode with an amazing interview with Michael Hudson.

 

Simon Black at GoldSilver.com Radio

David Morgan UNCUT Lecture at the Texas Precious Metals Conference

Why Blythe Masters is Telling the Truth About Precious Metals Manipulation [silverdoctors]

As by now all of our readers are aware, JP Morgan’s Global Head of Commodities Blythe Mastersyesterday appeared on CNBC for a soft-ball interview giving Ms. Masters the opportunity to deny rumors and allegations that JP Morgan is manipulating the metals markets, particularly silver.

With a smirk on her face, Blythe informed viewers that ‘JP Morgan’s commodities business is not about betting on commodities, it is about assisting clients‘ and ‘we have offsetting positions….(manipulation) is not part of our business model.  It would be wrong and we don’t do it.

While Blythe’s statements’ have already been thoroughly dissected and ridiculed ad nauseum (The Doc included), the fact is that BLYTHE WAS NOT LYING THROUGH HER TEETH AS MANY CLAIM, SHE WAS TELLING THE TRUTH 100%. 

Here’s why:


As our friends at GATA have long alleged, it is highly likely that JP Morgan’s ‘client‘ referred to by Blythe Masters is none other than the Federal Reserve- specifically the NY Fed.

NY Fed Building

Viewed in this light, Blythe’s comments regarding gold and silver manipulation are completely honest (while obviously intentionally misleading, none-the-less they are honest at face value) as it is likely that JP Morgan is maintaining metals positions and trades per the instructions and wishes of their client, the NY Fed.

Recall the rumors in the market that a central bank gave orders to dump 1 million ounces of gold on the market in the span of 2 minutes on February 29th.  Recall that gold and silver were taken down massively and counter-intuitively last fall exactly 5 minutes prior to the Swiss Franc’s devaluation vs. the euro.   Recall that gold and silver are routinely smashed whenever the Federal Reserve Chairman is speaking publicly or the FOMC is meeting.

The Plunge Protection Team’s (NY Fed’s) Brian Sack (who was sacked this week….another story) routinely uses broker-dealers to conduct ‘open market operations’ to fund the Treasury ponzi.  i.e. the NY Fed makes agreements to handsomely reward the primary dealers for taking up treasury auctions with the full knowledge that the NY Fed will buy back the bonds at a premium in approximately a week’s time.  Would Goldman and JP Morgan be buying $1.5 trillion worth of treasuries annually at 2.5% if they had to hold them on their own books for 30 years?  Of course not!

Why should we believe that the NY Fed’s intervention in the commodities sector is any different?  Someone has to execute the trades on behalf of the NY Fed’s commodities intervention.  It makes perfect sense that JP Morgan holds their massive naked short gold and silver positions on behalf of their client, the NY Fed, and not as their own speculative bet.  

If JP Morgan held these positions on their own behalf, the CFTC would likely not be in their 4th year investigating silver manipulation.  The DOJ would be involved
, and let’s just say that Blythe would not be making charity appearances donating millions of dollars to community colleges in Colorado.

Unlike JP Morgan, the Federal reserve would have a variety of motives in suppressing the price of gold and silver, managing the metals markets with an iron fist, and ensuring the metals are smashed upon any significant macro-economic news intuitively harmful to fiat currencies.  

Gold and silver are anathema to central banksters, who make their living by sucking the value out of the population’s currency through inflation and currency devaluation.  The Federal Reserve has every motive to ensure that this process can continue unnoticed by the masses, until the wealth transfer is complete.

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Gata’s Bill Murphy Sees Non-Stop Government Gold/Silver Manipulation – April 10, 2012

FinancialSurvivalNetwork.com presents:

Billy Murphy has been fighting the good battle for 13 years. His organization http://www.Gata.org has been the David fighting the Goliath of the Fed, the Bullion Banks, the US Government and many other foreign interests as well. Bill categorically states there hasn’t been a free market in gold and silver for decades, and he’s got the evidence to back it up. There are thousands of documents proving Fed manipulation and witnesses calling major price moves days before the actual event occurs.

The manipulation and price rigging has only gotten worse since the beginning of 2012. First there was the Leap Day Metals Massacre. Then there was lasts week’s slam during the slow holiday markets. While the intervention has become more constant, the elitist’s efforts to hide it has not. Therefore, it’s not unusual to see an entire year’s supply of gold and silver sold into the futures markets in a matter of minutes. However, people and governments are starting to understand, which eventually will be the gold/silver cartel’s undoing.

Charles Biderman: The Problem with Rigged Markets

Silver Manipulation Acknowledged By Government Christian Garcia GoldSilver.com $SLV

Silver Manipulation Caught in the Act; HFT Swamps NASDAQ with 75K SLV Sell Orders Per Second

BY CRIS SHERIDAN

Ironically, just days after noted analyst Ted Butler came on the show to explain how silver and other markets are manipulated through the use of high frequency trading, the real-time data feed company, Nanex, showed how the silver ETF (SLV) was forced downwards by a rapid number of machine-generated quotes exceeding a rate of 75,000 per second. Before you start to think that this was merely a bunch of people hitting the sell button all at once, consider this: They were all launched within the space of 25 milliseconds—ten times faster than you and I can blink!

Here’s a chart of the second by second market activity in SLV where you can see the massive lightning-quick spike occurring at 13:22:33.

slv htf spike
Source: Nanex

Ted Butler Explains the Whole Process

“What’s happening is that these commercials [or large traders], through HFT, can set the price suddenly down. It didn’t go down because there was massive selling from the commercials, they just set the price down. They know how to do it with their computers by putting in actual orders, and faking it, and spoofing, canceling them right away; but what happens is when the price moves down then the selling comes, which is the intended effect and result. Commercials basically put the price down in order to set off stops because everybody seems to be some type of technical trader in the market that reacts to prices.”

(Click here for interview and full transcript)

Of course, this isn’t just limited to the extremely emotional gold and silver markets. A new study released last month, Financial Black Swans Driven by Ultrafast Machine Ecology, looked at 600 different markets around the world and found that these sort of events happen routinely. Over the most recent five years of market data analyzed, 18,520 crashes and spikes occurred at a speed far exceeding human origin.

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