Thursday, November 29, 2012

Gold and silver advance/large reduction in OI for both gold and silver/

Good evening Ladies and Gentlemen:

Gold closed up today by $10.50 to finish the comex session at $1726.70.  Silver, however was the standout rising by 63 cents to $34.31.  Today gold and silver held up pretty good especially for the day prior to first day notice.  Yesterday's raid no doubt scared away many longs as they pitched their contracts instead of taking delivery.  This has been the ploy of the crooked bankers for many years.  Our CFTC commissioners just look the other way to this blatant manipulation. We have many stories to cover today but before we do let us now head over to the comex and assess trading today.....

The total comex gold open interest complex fell by a huge 27,244 contracts as suddenly it seems that many players decided to pitch rather than roll to the next contract month.  The contango is tiny (the cost to roll) so it seems rather strange that all of a sudden the huge raid yesterday had this deleterious effect on our longs.  The total gold comex OI fell from 479,373 down to 452,129.  The big December contract has first day notice tomorrow and late tonight I get to see how many first day notices has been filed for delivery on first day notice.  The OI for December fell an astronomical 62,519 contracts from 97,808 down to 35,289.  Many longs were just frightened away and they pitched instead of rolling. The next non active month is January and here the OI rose 502 contracts. The estimated volume today at the gold comex was high at 229,299.  The confirmed volume yesterday was unbelievable at 486,810 but that includes the many that did roll into another future month like February and April.

 The total silver comex OI fell by 4645 contracts from 150,727 down to 146,082.  The fall was not nearly as pronounced as gold. The November contract month is now off the board. The big December contract saw a mammoth fall in OI from 21,789 down to 7949 as many longs decided to pitch instead of playing against the bankers.  It seems our bankers won again. The next non active silver month of January saw its OI rise  from 372 up to 498 for a gain of 125 contracts.  The estimated volume today came in at a very good 70,357.  The confirmed volume yesterday was huge at 163,584.

Comex gold figures 

Nov 29.2012  Month of November now complete

(first day notice for the December contract will be Nov 30.2012)   



Final for November

--  |

Withdrawals from Dealers Inventory in oz
Withdrawals from Customer Inventory in oz
1,766.513 oz (HSBC,Manfra)
Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz
48,052.32 (BrinksHSBC,Scotia)
No of oz served (contracts) today
  5 (500 oz)
No of oz to be served (notices)
off the board
Total monthly oz gold served (contracts) so far this month
396 (39,600 oz)
Total accumulative withdrawal of gold from the Dealers inventory this month
Total accumulative withdrawal of gold from the Customer inventory this month

Today, we  had  a huge activity  inside the gold vaults. 

The dealer had no deposits  and no   withdrawals.
The customer had 3 deposits:

i) Into HSBC: 44,965.92 oz  (1.35 tonnes of gold)
ii) Into Scotia:  2121.90 oz
iii) Into Brinks:  964.5 oz

total customer deposit:  48,052.32 oz

we had 2 customer withdrawals:

i) Out of HSBC:  803.75 oz
ii) out of Manfra:  962.763 oz

Adjustments: none

Thus the dealer inventory rests tonight at 2.528 million oz (78.50) tonnes of gold.

The CME reported that we had   5 notices  filed  for 500 oz of gold. The total number of notices filed so far this month is thus 396 notices or 39,600 oz of gold.  That completes the month of November

Thus the total number of gold ounces standing for delivery in November is as follows:

39,600 oz (served)  + nil oz  (everything served upon)  =  39,600 oz (1.234 tonnes of gold).  We  lost 200  gold ounces standing at the gold comex today .

Nov 29.2012:  Month of November now complete.

first day notice for the December contract will be Nov 30.2012:

final for November

Withdrawals from Dealers Inventorynil
Withdrawals from Customer Inventory 624,870.44 (Scotia, Brinks, CNT,HSBC)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory1,655,376.24 (Brinks,Scotia,CNT)
No of oz served (contracts)month complete
No of oz to be served (notices) month complete
Total monthly oz silver served (contracts)72  (360,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month2,792,309.2
Total accumulative withdrawal of silver from the Customer inventory this month7,608,194.5

Today, we had huge activity inside the silver vaults.
 we had no dealer deposits and no  dealer withdrawals:

We had 3 customer deposits of silver

i) into Brinks:  6,002.70 oz
ii) into  CNT:  451,145.000  oz  (again CNT has a perfectly round deposit )
iii) into Scotia:  1,198,228.54 oz

total customer deposit:  1,655,376.24 oz

we had 4 customer withdrawals:

i) out of Scotia:  1,027.5000 oz
ii) Out of Brinks; 556,540.24 oz
iii) Out of HSBC 6002.7 oz
iv) Out of CNT:  61,300.000 oz  (another round number)

total withdrawal by customer: 624,870.44 oz

we had 1 adjustments:

at the Brinks vault, 318,875.85 oz was removed from the customer account and moved to the dealer account at Brinks.

Registered silver remains tonight  at a very low :  34.219 million oz
total of all silver:  141.383  million oz.

The CME reported that we had 0 notices filed for nil oz . The total number of silver notices filed  this month remains at 72 contracts or 360,000 oz of silver.  

To determine the number of silver ounces standing for November, I take the OI standing for November (0) and subtract out today's notices (0) which leaves us with zero notices left to be filed and thus completes the month.
Thus the total number of silver ounces standing in this non active month of November is as follows:

360,000 oz (served) +  zero ( to be served upon)  =  360,000 oz
we  lost zero oz of silver standing at the silver comex.  


The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.

Total Gold in Trust   Nov 29.2012

Total Gold in Trust



Value US$:74,680,496,234.81

Nov 28.2012:




Value US$:73,945,078,816.35

nov 27.2012:




Value US$:75,534,752,022.84

NOV 26.2012:




Value US$:75,515,972,852.04

Nov 23.2012:




Value US$:74,827,992,666.94

Nov 21.2012:




Value US$:74,376,524,720.40

we neither gained nor lost any gold today at the GLD.  The inventory of gold sits at a new record high established yesterday.

and now for silver:

Nov 29.2012:

Ounces of Silver in Trust315,174,390.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,803.02

Nov 28.2012:

Ounces of Silver in Trust315,658,356.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,818.07

Ounces of Silver in Trust315,658,356.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,818.07

Nov 26.2012:

Ounces of Silver in Trust315,658,356.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,818.07

nov 23.2012:

Ounces of Silver in Trust315,658,356.000
Tonnes of Silver in Trust Tonnes of Silver in Trust9,818.07

Nov 21:2012:

Ounces of Silver in Trust317,642,788.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,879.80

Nov 20.2012:

Ounces of Silver in Trust318,126,801.800
Tonnes of Silver in Trust Tonnes of Silver in Trust9,894.85

Today, we lost 484,000 oz at the SLV.
Notice the difference between gold and inventory advances yet silver inventory has been declining.

And now for our premiums to NAV for the funds I follow:  

Sprott and Central Fund of Canada. 

(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded to a positive 6.2 percent to NAV in usa funds and a positive 6.2%  to NAV for Cdn funds. ( Nov 29.2012)   it refused to contract in premium.  

2. Sprott silver fund (PSLV): Premium to NAV rises to   1.07% NAV  Nov 29/2012
3. Sprott gold fund (PHYS): premium to NAV  rose to 2.32% positive to NAV Nov 29/2012. 

 Now we witness the Central fund of Canada  gaining big time in its positive to NAV, as we now see CEF at a positive 6.2% in usa and 6.2% in Canadian.This fund is back in premiums to it's former self with respect to premiums per NAV. 

The silver Sprott fund announced a big silver purchase and this reduces the premium to NAV temporarily.  It seems that the bankers are picking on Sprott to short their funds trying to cause an avalanche in selling in the precious metals.  They are foolhardy in their attempt.

It looks like England may have trouble in finding gold and silver for its clients.
It is worth watching the premium for gold at the Sprott funds which is a good indicator of shortage as investors bid up the premiums.



Here are your major physical stories:

Interesting, the CME came out and stated that yesterday's blatant attack was not caused by a "fat finger".  So I guess we should ask them who supplied the non backed paper equivalent to 1% of annual production of gold within 1 second of the opening of the comex.  The seller had no profit motive on this sell order.

Bloomberg has a good article on Indian demand in November coming in at around 85 to 100 tonnes of gold.  I hope that this demand continues.

(courtesy goldcore)

Gold Falls Just 1.3% Despite Massive, Odd 3.5 Million Ounce Sell Orders

Tyler Durden's picture

Gold Falls Just 1.3% Despite Massive, Odd 3.5 Million Ounce Sell Orders
Today’s AM fix was USD 1,724.50, EUR 1,327.56, and GBP 1,076.47 per ounce.
Yesterday’s AM fix was USD 1,741.00, EUR 1,347.00, and GBP 1,087.38 per ounce.
Gold fell $22.10 or 1.27% in New York yesterday and closed at $1,719.20/oz. Silver slipped to a low of $32.92/oz and rallied back, but finished with a loss of 0.91% at $33.69/oz.  
Gold recovered somewhat overnight in Asia and again today in Europe despite the sharp selling seen on the COMEX yesterday.
As ever, it is very difficult to pinpoint exactly why gold and all precious metals fell in price. Interestingly, oil fell by even more - NYMEX crude was down by 1% and was down by more than 1.7% at one stage. 
The CME Group, which operates the U.S. COMEX gold futures market, said Wednesday's plunge in gold was not the consequence of a "fat finger" or a human error. The trading wasn’t even fast enough to trigger a pause on Globex, said CME.   
One thing that we can say for certain was that there was massive, concentrated selling as the New York stock markets opened with some 35,000 lots sold which is equivalent to 3.5 million ounces and saw the price fall from $1,735/oz to $1,711/oz between 0825 and 0830 EST.
One sell order alone was believed to be 24 tonnes or 770,000 troy ounces.  Incredibly there was 35% daily volume in just 60 seconds. 
The selling, like all peculiar, counter intuitive, sharp sell offs in recent months, was COMEX driven with COMEX contracts slammed leading to further stop loss selling.
The selling may have been by speculative players on the COMEX. It may have been algo or computer trading driven or tech selling – although this is less likely.
It would be naive to completely discount the possibility that a bullion bank, short the gold and silver markets, may have been trying to protect their large concentrated short positions. The CFTC data shows some bullion banks continue to have massive concentrated short positions - which are still being investigated.
Informed commentators questioned the nature of the selling as a large institutional COMEX trading entity would normally gradually sell a position of this size in order to maximise profit.
Other speculation was that because of the wholesale liquidation of all precious metals and some other commodities, the selling may have come from a fund forced to sell a range of speculative positions after the SAC Wells notice. 
Futures and options expiration may have also played a role, according to some analysts.
The robustness of gold overnight and recovery this morning is encouraging as normally one would expect to see follow through selling after such a sharp move lower.
The gold mining stocks indices were also higher yesterday which suggests that some precious metal market participants see the move as another mere blip in the precious metal bull markets.
The fundamentals driving the gold market remain very sound with broad based demand - store of wealth, investor, institutional and central bank - continuing to be seen globally. 
There have not been very significant increases in open interest on the COMEX and there is no mania on trading floors and universal bullishness.  
Indeed, this is far from the case today. There continues to be little or no positive coverage of the precious metals in the non specialist financial media. 
While ETF holdings are at record highs - the increase in holdings has been tentative and gradual with no huge jump in demand which would be associated by a market top.
The shoeshine girls and boys have been selling large amounts of gold jewellery in the international phenomenon that is 'cash for gold.' 
Meanwhile figures for mints, refiners and bullion dealers in last quarter show retail investor interest is tepid at best.   
Physical buyers should use the paper playing shenanigans of as yet unidentified players to continue to accumulate on price dips.
Today US GDP for Q3 is released at 1330 GMT.
(Bloomberg) -- Comex Silver Estimated Volume Rises to Highest Since May 2011
Aggregate volume was ~158,580 contracts today, highest since May 12, 2011.
(Bloomberg) -- India’s November Gold Imports Seen at 85-100 Tons, Trade Says
Imports seen higher in November because of festival demand, says Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation.
Gold imports by India may decline to between 700t to 750t in 2012 from 969t in 2011 as high prices curb demand.
Gold Fields Ltd., the fourth-biggest producer of the metal, will spin off part of its South African business as a wave of strikes and above-inflation pay gains add to costs and curb output for mining companies in the country.
(Bloomberg) -- IShares Silver Trust Holdings Unchanged at 9,818 Metric Tons
Silver holdings in the IShares Silver Trust, the biggest exchange-traded fund backed by silver, were unchanged at 9,818.07 metric tons as of Nov. 27, according to figures on the company’s website.
                Nov. 27    Nov. 26    Nov. 23    Nov. 21    Nov. 20    Nov. 19
                   2012       2012       2012       2012       2012       2012
Million Ounces  315.658    315.658    315.658    315.658    317.643    318.127
 Daily change         0          0          0 -1,984,433   -484,013 -1,452,093
Metric tons    9,818.07   9,818.07   9,818.07   9,818.07   9,879.80   9,894.85
 Daily change      0.00       0.00       0.00     -61.73     -15.05     -45.16
NOTE: Ounces are troy ounces.
(Bloomberg) -- Gold ETP Holdings Climb to Record for Ninth Straight Session
Amount in exchange-traded products backed by the metal rose 0.1% to 2,615.9 metric tons, data tracked by Bloomberg showed.
(Bloomberg) -- Chow Tai Fook Profit Falls Amid Hedging Losses on Gold Contracts
Chow Tai Fook Jewellery Group Ltd., a Hong Kong-based chain with more revenue than Tiffany & Co., said first-half profit fell 32 percent amid hedging losses on gold contracts
Net income dropped to HK$1.82 billion ($235 million) from HK$2.69 billion for the six months ended Sept. 30, according to a Hong Kong stock exchange filing today. That compares with the median estimate of HK$2.02 billion of four analysts surveyed by Bloomberg News.
(Bloomberg) -- Shanghai Gold Exchange to Start Interbank Gold Trading Dec. 3
Shanghai Gold Exchange will start an inter-bank gold trading system on Dec. 3 on a trial basis, the bourse said in a statement on its website today.
(Bloomberg) -- Gold Outlook Seen Bullish by Deutsche Bank on U.S. Rating Cut
The U.S. probably won’t avoid a Treasury debt downgrade, which is positive for gold, Deutsche Bank AG said.
Gold’s drop yesterday may not have been because of the U.S. fiscal cliff because growth sensitive markets such as the S&P 500 and silver that should have been hit harder didn’t fall as much as gold, Xiao Fu, an analyst at the bank in London, said in a report dated today. “This would suggest that gold was probably reacting to specific gold flow selling,” Fu said in the report. “On this basis, we would see this weakness as temporary particularly since we would view the combination of a debt downgrade and the U.S. avoiding the fiscal cliff as gold price bullish. Indeed events during August 2011 when U.S. Treasury debt was downgraded proved to be unambiguously bullish for gold prices.”

For breaking news and commentary on financial markets and gold, follow us on Twitter.


The Unmistakable Sign Of Illegal Market Manipulation

I preface this remark by saying that it is just a theory, but could Wednesday's Comex paper raid possibly be a signal of desperation by the cartel? We have been hearing countless reports out of London - the nexus of the world's physical bar market - that delivery supplies of gold and silver are getting tight.  Was Wednesday's raid an attempt by a desperate bullion bank to trigger open interest selling by longs in order to reduce the number of potential accounts that hold for delivery in the face of a tight physical bar market?

Wednesday right after the Comex opened, a total of 35,000 gold contracts were sold almost at once, with one order reported to be nearly 8100 contracts.  This is roughly 104 tonnes and 24 tonnes respectively.  It caused a "cliff-dive" in the price of gold/silver that was not cross-correlated with any other commodity market or equity/fixed income index. Why would someone, using paper, sell so recklessly and abruptly like this, flooding the market with an inordinately heavy supply of paper "gold."  Any veteran trader knows that if you are trying to unload a disproportionately large long position - that is, large relative to the price and volume context of a given market - you have to bleed your offers into the market and not give away your size in order to try and maximize your sell proceeds.  If you are not operating in this manner, you are either irrational or illegally attempting to influence the price lower.  In the absence of any other credible explanation or theory being offered - and an open admission that a "computer mistake" was not the catalyst, this was clearly an attempt to exert manipulative - illegal downward influence on the price of gold.  There is no other explanation for what happened on Wednesday morning.

I know that some analysts like to see some sort of proof that the manipulation occurred for the purposes of heading off a possible physical delivery squeeze. But you can't make trading profits without analyzing the "dotted lines" and anticipating future events based on what is likely unmistakable evidence. The motive for uneconomical selling like this is to derail potential stoppers (accounts who stand for delivery) as a means to avoid a physical squeeze.
In this case, the event has a long history and many experienced eyeballs and brains looking at the evidence of cause.  We know that China and several other Central Banks are accumulating physical gold which, at the margin, puts total global demand well in excess of annual mined supply.  We also know that several countries have either issued or are threatening to issue a recall of their sovereign-owned gold being held by the Fed, Bank of England and Bank of France (mostly those three custodians).  We also have first-hand accounts from several hands-on operators in London who are telling us that the global physical supply of gold is getting very tight.  Finally, the open interest in the December gold and silver front-month contracts has persisted at an unusually high level relative to the fact that today is first-notice day for December.  This means that any account that is long contracts is legally entitled to receive physical delivery of Comex gold bars from the counterparty who sold the contracts.  Usually the open interest starts declining starting a couple weeks before first notice as paper speculators either roll forward or exit the position.  But this time the open interest remained quite stubbornly high.

The success of this operation is evidenced by the fact that the uncharacteristically high open interest for the day before first notice of a little over 97,000 dropped precipitously by over 65,000 contracts. I can't recall seeing gold open interest this high the day before first notice or a percentage drop in open interest like this in one day. The 65,000 drop would cover the 35,000 contracts sold to trigger the raid plus account for 27.2k overall drop in open interest yesterday LINK.   From the standpoint of reducing the degree of delivery demand today, this illegal manipulation was a resounding success. There will come a time when it will fail...

Is the physical market finally getting to the point at which demand for delivery is starting to overwhelm the amount of paper claims "issued," the amount of which far exceeds available delivery supply?  There's no way of knowing for sure but, proverbially, if it looks like and duck and quacks like a duck...


In 2009 we alerted you on 15 million dollars worth of gold missing from the Royal Canadian Mint.
The Mint is very fastidious and for them to have this amount missing was quite something.  The Royal Canadian Mounted Police  (called in on Federal offenses) were summoned to investigate but in the end they used the words "Lax Controls" for the gold missing.

Now Rob Kirby has a plausible explanation for the missing gold

(courtesy Rob Kirby)

Royal Canadian Mint’s Tungsten Twostep?

By Rob Kirby
Back in 2009, the Royal Canadian Mint [RCM] claimed that it had lost $15 million worth of gold bullion. What ensued from the time the loss was made “public” can best be described as a ‘fumbling exercise’ where – initially - different accounts were put forward as to the reason for the loss.   Finally, public catcalls regarding this loss at one of the world’s most renowned Mints led to an official investigation by the Royal Canadian Mounted Police [RCMP]. 
In the end, we were all told that this loss was due to honest miscalculations and blunders, or in other words – LAX CONTROLS.
Lax Internal Controls at the Royal Canadian Mint?
It's elementary(?), Watson -- (December 21, 2009) A series of miscalculations and blunders in its gold refinery dating back to 2005 were responsible for 17,500 troy ounces of gold going missing from the mint's Sussex Drive inventory count last October, the mint announced in a 12-page report. That's the equivalent of almost forty-four 400-ounce bars and worth more than $20 million in today's prices.
More than $3 million in government gold was unwittingly sold off at a fraction of its value as refinery slag, while $8 million more was miscounted and never left the Royal Canadian Mint, the Crown corporation revealed today in a full accounting of how it lost track of a fortune in gold for a year.
The mint said a 14-month hunt to find out what happened to the precious metal now "fully accounts" for the missing gold, though it admits almost 3,500 ounces unwittingly sold off in slag to U.S. re-refiners will never be recovered.
"These reviews have bolstered our reputation by strengthening the mint's accounting practices, vindicating our security systems and confirming that our technical procedures and expertise in other areas are superior to industry standards."
As evidenced from the Royal Canadian Mint’s 2009 Annual Report – the mint has been an ISO member since 1999.  Furthermore, the mint “upgraded” it’s Ottawa operation’s ISO designation to the ISO 9001: 2008 standard - IN 2009.  Achieving this standard requires a rigorous 3rd party audit. 
Also worthy of note, the 2009 RCM Annual Report contained NO REFERENCE to AN investigation by the RCMP – its conclusion or its results - nor ANY mention what-so-ever of the $15 million loss in the bullion department.  It’s like it never happened.
Contents of ISO 9001
….Before the certification body can issue or renew a certificate, the auditor must be satisfied that the company being assessed has implemented the requirements of sections 4 to 8. Sections 1 to 3 are not directly audited against, but because they provide context and definitions for the rest of the standard, their contents must be taken into account.
The standard specifies that the organization shall issue and maintain the following six documented procedures:
·         Control of Documents (4.2.3)
·         Control of Records (4.2.4)
·         Internal Audits (8.2.2)
·         Control of Nonconforming Product / Service (8.3)
·         Corrective Action (8.5.2)
·         Preventive Action (8.5.3)
In addition to these procedures, ISO 9001:2008 requires the organization to document any other procedures required for its effective operation. The standard also requires the organization to issue and communicate a documented quality policy, a Quality Manual (which may or may not include the documented procedures) and numerous records, as specified throughout the standard.
The picture below would suggest that the ISO 9001 designation really means something to the folks who run the RCM – since they have proudly sewn its facsimile into the garments worn by the folks who handle their bullion – as evidenced in both their 2009 and 2010 Annual Reports:
If the RCM had internal controls “lax enough for the accidental discarding of $15 million worth of gold” – dating back to 2005 - they would have been UNCOVERED IN THEIR 2009 ISO AUDIT and they would never have received their ISO 9001: 2008 designation.
So What Does Make Sense?
The tungsten gold thing has recently been back in the news.  Reports of 10 oz “salted bars” in N.Y. have surfaced, but, to date….no one has admitted to finding a large bar – like a 400 oz “good delivery” bar.
My research and contacts in the international bullion business tell me they do exist and these bars are “silo-d” around the world.
The story offered for public consumption by the Royal Canadian Mint about how they “lost” $15 million bucks worth of gold bullion back in 2009 – put simply - is a DOG THAT DOES NOT HUNT - unless you believe that dogs can and really do eat homework.

                                       The Royal Canadian Mint At A Glance
The Royal Canadian Mint functions as a commercial Crown corporation, directed to conduct its affairs “in anticipation of profit”, as mandated by s. 3(2) of the Royal Canadian Mint Act.  As a result, the Mint does not rely on any taxpayer support to fund its operations.
Although the Mints stores large quantities of gold within its high-security facility in Ottawa, on behalf of customers and for its own operational needs, the Mint does not store any gold constituting reserves of the “national treasury” or the Bank of Canada.
Back in 2009 there were widespread reports of physical stocks of gold bullion being “very tight” as evidenced by the suspension / curtailment of U.S. Gold Eagle Production by the U.S. Mint:
          2009 Gold Eagle
2009 American Gold Eagle
The 2009 Gold Eagle had its product options significantly curtailed from the previous year. Strong worldwide demand for precious metals created sourcing problems for the United States Mint that impacted both bullion and collectible coin offerings.
The United States Mint offered the one ounce version of the bullion coin throughout most of the year. The offering was subject to order rationing from the beginning of year until June 15, and then once again from December 15 through the end of the year following a brief suspension. The fractional weight 2009 Gold Eagle coins were available briefly during the month of December when the US Mint offered a limited quantity of 1/2 oz, 1/4 oz, and 1/10 oz coins.
In October, the US Mint announced the cancellation of the the planned collectible versions of the 2009 American Gold Eagle. Collectors had been expecting one ounce 2009-W Uncirculated Gold Eagles and a full range of 2009 Proof Gold Eagles. In the same announcement, the US Mint also cancelled the collector versions of the 2009 Silver Eagle….
Back in 2009, Royal Canadian Mint was facing unprecedented demand for gold Maple coins with little to zero “working stock” of gold bullion to make them.  At the time, the Mint’s ability to access gold bullion was impaired due to the fact that the Canadian Government had previously sold all of its 660 metric tonnes of sovereign gold bullion.  
Here’s where we deduce why the Royal Canadian Mint circulated a “false, incredulous story” about how they lost $15 million worth of gold bullion:
In the face of unprecedented demand for gold maple coins and with physical supplies of gold being tight in 2009 – it makes sense that the RCM would have “borrowed” gold bullion from one of their customers whom they store bullion for. I have been told by industry insiders that the RCM does not assay gold bars when they take them in for storage.  When the RCM tried to melt these bars, they were revealed to be tungsten – which melts at a much higher temperature than gold.  This created a very awkward situation for the RCM – having to tell one of their customers that they had stored salted [tungsten] bricks of gold.  Can any of you imagine what would have happened if the offending counterparty simply stated, “they were pure gold bricks when we gave them to you for safe keeping”?  To prevent a scandal of all scandals from ensuing, the RCM simply says, “We’ll eat the loss on the bars we tried to melt”.
This makes sense.  This is ALSO consistent with the RCM’s later action – in 2011 – when they launched a gold ETF - as a means of securing dependable working stock [or monetization of additional tungsten, perhaps?] for its gold maple coin program:

Royal Canadian Mint's gold-backed ETF alternative raises $600 million
November 24, 2011
The Royal Canadian Mint has a hit on its hands after raising $600 million from the sale of its exchange traded fund alternative, exchange traded receipts backed by physical gold bullion held in the mint’s facilities in Ottawa, Ontario……

There no doubt will be charlatans in both the mainstream as well as the alternative press who will claim that none of this constitutes evidence to ANYTHING.
Everyone is free to come to their own conclusion[s] whether or not serial, deceiving or fallacious tales involving officialdom’s accounting of gold constitute evidence of wrongdoing or not.
On our little blue planet, when people are shown to be lying – there is usually a very good reason and it’s usually because they are hiding something.
Rob Kirby
Subscribe here.


The Chinese Ministry of Industry and Information stated that they expect a rise of around 25% of gold production from China by 2015. I brought this to your attention this week but it is worth repeating. Generally Chinese production goes straight to official reserves.  Imports from Hong Kong satisfies demand from the general public.  China is estimated to produce around 360 tonnes of gold this year.

(Market Watch)

Aiming to boost gold reserves, China sees 'fundamental market shortage'

China 2015 Gold Output Likely 450 Tons: Ministry
Monday, November 26, 2012
BEIJING -- China aims to have domestic gold production reach 450 metric tons by the end of 2015, a rise of around 25% from 2011, the Ministry of Industry and Information Technology said Monday.
The ministry forecast rising domestic demand for gold and a "huge amount of room" for the industry's development due to gold's safe-haven and wealth-preserving properties, it said.
Still, domestic consumption is likely to exceed 1,000 tons by the end of 2015, "widening the fundamental market shortage," the ministry noted.
China has tried to speed up industry consolidation, aiming to reduce the number of gold producers in the country to 600 companies by the end of 2015 from 700 in the 2006-2010 period, the ministry said. The amount of gold produced by the top 10 gold companies will rise to 260 tons by the end of 2015 from 100 tons in 2010, it said.
By the end of 2015, China is likely to have gold reserves of 8,000-9,000 tons, an increase of 20% from 2010, it said, without specifying if these were state reserves.

We all agree that the LBMA smoke signals in silver tells us of the massive shortage over there:

(courtesy NedNaylor Leyland/GATA)

Ned Naylor-Leyland: LBMA smoke signals on silver smell fishy

11:35a ET Thursday, November 29, 2012
Dear Friend of GATA and Gold:
In a market letter today, Ned Naylor-Leyland of Cheviot Asset Management in London elaborates on remarks made Tuesday to King World News by GoldMoney's James Turk ( that the London Bullion Market Association is hiding data that would show the silver market in serious backwardation, a sign of shortage.
Naylor-Leyland writes: "It seems to me there are a lot of coincidences layering themselves all over the silver market. ... These backwardation smoke signals are as black as they can be and indicate that a move to much higher ground is imminent."
The Cheviot market letter is titled "LBMA Smoke Signals Smell Fishy" and it's posted in JPG format here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Just look at the amount of gold hoarded by Indians: over 20,000 tonnes of gold.  The world from the beginning of time to now has produced around 160,000 tonnes so Indian citizens hold 12.5% of total global gold/  No wonder the central authorities are trying to curb the appetite of gold by its citizens as it is having an awful effect on its current account deficits.

(courtesy Financial express)

Indians hoard 20k tonnes gold worth record $1.16 trn

Banikinkar Pattanayak: New Delhi, Nov 29 2012, 03:09 IST

New Delhi: Indian households have piled up as much as 20,000 tonnes of gold, worth $1.16 trillion, an historic high. This shows that the government’s efforts to trim overseas purchases of the idle asset by imposing an import duty and raising it in short intervals to reduce the current account deficit (CAD) haven’t yielded the desired results.
The World Gold Council’s (WGC) latest estimate of India’s household gold reserves is 11% higher than the 18,000 tonnes it had been pegged at earlier. Coupled with 557.7 tonnes of the central bank’s holdings, gold stocks at known sources in the world’s largest consumer would represent more than 75% of its gross domestic product. Gold prices in Mumbai stood at R32,325 per 10 gm on Wednesday.
Periodic surveys by private firms and independent researchers had, from time to time, pegged India’s household reserves in the range of 18,000 to 24,000 tonnes, but the WGC, the miners’ body whose estimates are widely tracked, has never put Indian household reserves at such a high level.
Anecdotal evidence would point at a significantly higher volume as the estimates don’t factor in unaccounted reserves held by religious institutions and trusts.
The government effectively doubled the import duty on gold to 2% in January and followed it up by raising it to 4% during the budget announcement in March. Gold imports worth $50 billion helped push up the CAD to a record 4.2% of the GDP in the financial year through March. The CAD rose to 3.9% of the GDP in the first quarter of 2012-13, compared with 3.8% a year earlier.
Adding to policymakers’ worries, after three successive quarters of decline, gold demand surged 9% to 223.1 tonnes in the three months through September, defying an 11% drop globally. In value terms, Indian demand shot up by an impressive 27% to Rs 65,373 crore in the September quarter from a year before, thanks to a more than 20% depreciation of the rupee.
“In the first half of 2012, gold demand in the country was affected by elevated prices, economic slowdown, doubling of import duty and the consequent strike by jewellers for around a month. However, demand rebounded in the September quarter as people got adjusted to the high prices. Moreover, a late revival of monsoon and restocking by traders and jewellers ahead of the festive and wedding season were key reasons for the upward trend in demand,” Amresh Acharya, director (investment) at the WGC, told FE.
"I expect demand to remain firm in the last quarter of 2012 as well due to the festival and wedding season...although overall demand for the year could still decline to 800 tonnes due to the decline in the first half," Acharya added. India’s gold demand touched 933.4 tonnes in 2011.
The country’s gold demand recovered from a 38% fall in the June quarter to rise to 223.1 tonnes in the three months through September. The average gold price in the third quarter was $1,652 per ounce, down 3% from a year before, although the weak rupee has offset any gains for of 2012-13, compared with 3.8% a year earlier.
Adding to policymakers’ worries, after three successive quarters of decline, gold demand surged 9% to 223.1 tonnes in the three months through September, defying an 11% drop globally. In value terms, Indian demand shot up by an impressive 27% to Rs 65,373 crore in the September quarter from a year before, thanks to a more than 20% depreciation of the rupee.
“In the first half of 2012, gold demand in the country was affected by elevated prices, economic slowdown, doubling of import duty and the consequent strike by jewellers for around a month. However, demand rebounded in the September quarter as people got adjusted to the high prices. Moreover, a late revival of monsoon and restocking by traders and jewellers ahead of the festive and wedding season were key reasons for the upward trend in demand,” Amresh Acharya, director (investment) at the WGC, told FE.
"I expect demand to remain firm in the last quarter of 2012 as well due to the festival and wedding season...although overall demand for the year could still decline to 800 tonnes due to the decline in the first half," Acharya added. India’s gold demand touched 933.4 tonnes in 2011.
The country’s gold demand recovered from a 38% fall in the June quarter to rise to 223.1 tonnes in the three months through September. The average gold price in the third quarter was $1,652 per ounce, down 3% from a year before, although the weak rupee has offset any gains for of 2012-13, compared with 3.8% a year earlier.
Adding to policymakers’ worries, after three successive quarters of decline, gold demand surged 9% to 223.1 tonnes in the three months through September, defying an 11% drop globally. In value terms, Indian demand shot up by an impressive 27% to Rs 65,373 crore in the September quarter from a year before, thanks to a more than 20% depreciation of the rupee.
“In the first half of 2012, gold demand in the country was affected by elevated prices, economic slowdown, doubling of import duty and the consequent strike by jewellers for around a month. However, demand rebounded in the September quarter as people got adjusted to the high prices. Moreover, a late revival of monsoon and restocking by traders and jewellers ahead of the festive and wedding season were key reasons for the upward trend in demand,” Amresh Acharya, director (investment) at the WGC, told FE.
"I expect demand to remain firm in the last quarter of 2012 as well due to the festival and wedding season...although overall demand for the year could still decline to 800 tonnes due to the decline in the first half," Acharya added. India’s gold demand touched 933.4 tonnes in 2011.
The country’s gold demand recovered from a 38% fall in the June quarter to rise to 223.1 tonnes in the three months through September. The average gold price in the third quarter was $1,652 per ounce, down 3% from a year before, although the weak rupee has offset any gains for
Indian buyers.
Global gold prices have gained 11% so far this year after recording 11 straight years of advance, although a nearly 5% depreciation of the rupee in 2012 has made purchases by Indians more expensive. The rupee has weakened 14.5% since hitting this year’s high of 48.61 against the dollar on February 3.
"Globally, demand for gold looks firm due to the loose monetary policy of the US (as it has improved liquidity in the market). Prospects for gold also brightened since the US elections earlier this month. In India, although elevated prices kept some buyers at bay earlier this year, demand usually firms up when prices drop a little," said Lakshmi Iyer, head of fixed income and products at Kotak Mutual Fund.
Analysts said the 4% import duty wouldn’t discourage buyers from purchasing gold, which also acts as a hedge against inflation, as returns are still better than many other investment instruments.
After gaining last week, however, gold dropped on Wednesday as shares and other commodities fell on lack of clarity about the new agreement to prevent debt-hit Greece back from going bankrupt and concerns that the steps taken by euro zone finance ministers may fail to bail out Greece. Spot gold fell 0.47% to $1,733.55 an ounce intraday, while US futures shed 0.49% to $1,733.90.


The Dutch are asking the right questions:

(Dutch News).

Are the Netherlands' gold reserves real? MPs want answers

Wednesday 28 November 2012

Questions have been asked in parliament about the location and value of the country's gold reserves, most of which is said to be in foreign vaults, news agency ANP reports on Wednesday.
The Netherlands is said to have 612 tonnes of gold, with a value of some €24bn. Just 10% of it is held at the central bank headquarters in Amsterdam. The rest is in bank vaults in the US, Canada and Britain.
Socialist and Christian Democrat MPs are now asking if it is sensible to keep the gold abroad and want to know how pure the gold bars actually are.
The questions follow a decision by Germany's Bundesbank to carry out a formal inspection of its gold reserves, most of which is being held in other countries.
The gold, a central bank investment, is the 'last ditch reserve' at times of great crisis, ANP said.


Overnight market trading from Asia and Europe:

The Shanghai composite index fell another .5% as China refuses to engage in quantitative easing.
In Germany, the unemployment  rose again, with 5,000 more souls losing their job. The unemployment rate remains at 6.9%.

The algos drove the important Euro/USA cross to over 1.2990 and thus signalling the risk is on trade.  European bourses were all in the green (see below) by the end of the day.

The Eurozone confidence index came in again at a -26.9
The big question then is why the big push in stocks?

SocGenerale gives a detailed report on early morning European activity

(courtesy zero hedge/Societe Generale)

A Market Only A Mother Could Love

Tyler Durden's picture

We have again reached a point where attempting to explain away an utterly irrational market, in which sentiment and momentum shifts on a dime overriding any fundamental newsflow, and summarizing overnight catalysts has become a moot point. With stocks acting and reacting like petulant, schizophrenic children with ADHD, fundamentals are totally meaningless: yesterday and the overnight trading session have become perfect examples as prepared bulletins by two politicians, which said absolutely nothing of significance or constructive - have been enough to override 72 hours worth of actual fundamental deteriorating data, and also offset each other. Will Congress resolve the Fiscal cliff in its 10 remaining days in session without a major impetus to move such as a market plunge? Of course not, but once again the question has become one of who sells first, and the momentum piles on - and if there is no downside momentum, then logically there are no volume ramps to the upside: the market can no longer just stand still. In the meantime all the sellside firms have gone uber bullish on 2013, setting up the Fiscal Cliff as a perfect strawman. Of course the "Cliff" will be surmounted eventually, and after some near-term pain, but the reality is that the resulting rising taxes across the world in 2013 will be a major economic headwind, just the opposite of what the sellside crew is saying as one after another strategists push out optimistic outlooks on the next year to sucker in what little remaining retail interest in the farce formerly known as the market may be left.
In the meantime, the Shanghai Composite slid by another 0.5% overnight to a fresh post-2008 low of 1,963: why? Because as repeatedly said, the PBOC will not ease on fears of what the past summer's drought will mean for pork prices in 2013, and what every central bank entering eternal monetization phase means for hot inbound capital flows.
Also in the meantime, and confirming the schizophrenic nature of the underlying disconnect, both Japanese and Belgian yields have tumbled to either record or multi-year lows, even as PIIGS bonds are being bought, while stocks are rising at the same time. In other words, the same old mentality of  "buy everything" is back. It failed every time in the past, with bonds always and without fail proven correct over stocks, but perhaps this time it will be different.
We did get some data out of Europe, with Italy pricing EUR6 billion in 5 and 10 Year bonds at the lowest yields since November 2010, a day after Italian banks reported the first material deposit outflow in months. The result was taken as positive even thought the bid to cover on the 2022 BTPs was 1.18, well below the 1.43 prior, and barely covered. And yet the yield was 4.45%, down from 4.920% previously. Can one spell window dressing buying by Italian banks on fumes?
Elsewhere in Germany, unemployment rose for the eigth month in a row as companies curbed investment. The silver light here? The unemployment rise of 5,000 was less than expected. The unemployment rate, which came in just as expected at 6.9%, could not be spun.
Naturally, none of this in itself was market-moving. What was apparently enough to push the market-driving EURUSD to breakout from its trading band in the low 1.2940s? The veryfundamental and catalytic opening of Europe around 3:00 am Eastern which forced the move of the major FX pair to 1.2990. Because nothing says Europe is getting stronger than a rising currency which is making the key GDP driver of the export-driven German economy that much more expensive.
Finally, and confirming that all news and data flow is just one big joke, was Eurozone Consumer confidence, which stayed flat at -26.9, same as last, and same as expectations, while Economic Confidence actually rose even as the Eurozone unemployment rate has risen to record highs, as the continent has officially doubled dipped, and as PMIs indicate more pain is coming. Makes perfect sense.
So what can one expect in this ritalin and geodon-addicted market?
Who knows: watch out for any fiscal cliff headlines, which will be spun in any way that the stop hunt du jour wishes them to be spun. And certainly watch out for anyone promising a better economy (which the market has not reflected since 2009) - with taxes about to rise substantially for many, the last thing a rational person should expect is additional so desperately needed CapEx spending. Certainly watch out for more corporate layoff notices as the only thing companies can control - their payroll - is forced to absorb ongoing declining revenues.
Finally, here is SocGen's take on why it may well be best to sleep through the rest of the day, week, month, and maybe year.
Markets continue to trade off headlines pertaining to Greece and the US fiscal cliff and to be honest it is difficult to see anything fundamentally changing today. There are a number of data releases and central bank speakers of note, but the big trends in currencies and rates remain hostage to headlines on the Greek debt buyback and progress between Democrat and Republican negotiators in Washington, and the anticipation in stocks of some sort of breakthrough.
Eurogroup finance ministers are now looking to finalise the terms of a debt buyback by 13 December in order to offer guarantees to the IMF so that the next bailout tranche can be released. The current fear is that if a buyback programme results in new losses for Greek banks then a recapitalisation could be necessary (explaining the hit to share prices yesterday). In addition, markets are speculating that to get debt as a percentage of GDP below 110% by 2022 as stated in the EU communiqué, write-downs will be inevitable. German finmin Schaeuble has hinted in that direction if Greece's primary balance returns to surplus by 2016. For the moment at least, keeping Greece out of the headlines is nigh impossible and not something German leaders are keen on continuing before the election next year. Tabloids like Bild have started to pick up on the extra bailout cost for German taxpayers, but Chancellor Merkel will be pinning her hopes on the economy and the labour market to safeguard her re-election next year. Whether that is intellectually naive remains to be seen. After German inflation data yesterday showed a decline in annual CPI to 1.9% in November, higher unemployment (out today) would underpin the bid in bunds that pushed 10y yields back below 1.40% (swaps sub 1.70%)..


The new Greek bailout is suppose to help the banking sector. Local bankers are refusing to voluntarily participate in this critical bond buyback because they would receive a 70% haircut again and will need additional funds to shore up its balance sheet.

(courtesy zero hedge)

First Greek Bailout Snag - Local Bankers Refuse To "Voluntarily" Participate In Critical Bond Buyback

Tyler Durden's picture

Those who have been following the recent developments over the Greek distressed debt buyback, which in any normal universe would have been considered an event of default but certainly not in "special cases" such as Greece where the country's official default would start the Lehman-like domino collapse as apparently getting a 70 cent haircut in 8 months is a "voluntary" event, have been quite confused by the internal dynamics. On one hand the sole beneficiary of the transaction are those hedge funds who bought the GGB2 bonds when they tanked to lows just barely in the double digits as a % of par; on the other, there is absolutely no benefit to the Greek people as a result of this sub-par prepayment, as the only fund flow benefits hit the bondholders (and it is up to Greece to figure out how to grow its GDP by over 4% per year over the next 8 years). Then let's not forget that nobody has any clue yet where the funding for said buyback will come from. And finally, as Kathimerini just reported, we learn that one group that has just vocally declared against the buy back are the very people who are supposed to be benefiting from the Greek bailout: i.e., the country's bankers.
From Kathimerini:
Bank managers are planning to express their opposition to the credit sector’s likely participation in the bond buyback program at a meeting with Finance Minister Yannis Stournaras scheduled for Thursday.

The administrations of all commercial banks are stressing that they cannot possibly participate voluntarily in a program that leads to the financial exhaustion of shareholders.
Oops, looks like the local bankers are suddenly far less "voluntary" inclined, after realizing that their equity stakes will be largely impaired in the balance sheet waterfall, which sees bonds previously marked to myth at par, remarked to 35 cents, 20 cents, or whatever the final buyback price is agreed upon, largely a function of whatever cash the Greek government can find hidden underneath the rug.
Senior bank officials told Kathimerini that besides the legal consequences of a possible voluntary participation, such a serious decision, which would signify a change in the lenders’ portfolios, cannot be approved by their governing boards alone. They underlined that such a decision would require discussion and approval at general shareholders meetings, but that would compromise the buyback plan as it is a process that takes time.
In their meeting with Stournaras the bank managers will ask for their exemption from the buyback and propose alternative solutions to the problem.
They will also request changes to the terms of the recapitalization process. The main point is how to reduce the amount of capital requirements, which could take place via the bond swap or through the guarantee of bank bonds by the European Financial Stability Facility (EFSF), which would allow for their valuation at their nominal value. That would reduce capital needs by 11 billion euros at once and render recapitalization much more attractive for private shareholders. The more funds private investors contribute in the recapitalization process, the less money the state will have to pay through the Hellenic Financial Stability Fund (HFSF).
Bank officials argue that the scheme proposed for the buyback process is bereft of financial logic as it constitutes double borrowing and additional burdening for taxpayers. By contrast, they say, the guarantee of bonds would have a better result at no additional cost. However these alternative plans were rejected by the representatives of the country’s creditors a few weeks ago and there is no sign of them changing their attitude on the issue.
Analysts say that banks are right to protest as in spring they were burdened by the 53.5 percent bond haircut and a few months later the state is asking to buy the bonds back at 30 percent of their value.
To summarize:
  • Greek banks have suddenly become the fulcrum stakeholder class, and if their "involuntary" posture is maintained can scuttle the entire bailout as (mis)conceived over the past month.
  • Hedge fund buyers of GGB2s in the secondary market are delighted by the Greek buyback as it means a 50%, 100% or maybe even higher return in months - a number which can, however, collapse if the discovered funds for the buyback are limited to single digit billions, resulting in a scramble to sell to the biggest fool and thus only bid left.
  • Greek bankers are furious as there will actually be a repricing of the fair value of the GGB2s held on bank balance sheets, and coupled with no new capital infusion from the ECB. For the fatally insolvent Greek banking system this is yet another net capital outflow it simply can not afford.
  • In effect, there is a new priming of General Unsecured obligations, as the new money will likely come at the expense of a new tranche of senior/secured debt.
  • As pertains to the Greek economy, the outcome either way is irrelevant, as there is not one penny that actually enters Greek society or its economy.
  • Also worth noting: Germany is set to vote on the Greek bailout even as it suddenly appears that the entire third Greek bailout as previously conceived is at risk of being sabotaged by none other than the very people it is supposed to be helping!
Or, in an even briefer summary: winners - hedge funds; losers - everyone else.


And now for some other paper stories from around the world which will influence the price of gold and silver:

A recipe for disaster:


LDP leader Abe: BOJ must ease until inflation hits 3 percent

TOKYO | Wed Nov 7, 2012 6:14am GMT

(Reuters) -Japan's main opposition leader Shinzo Abe said on Wednesday that the Bank of Japanshould continue monetary easing until it achieved 3 percent inflation, signalling the central bank could come under more political pressure after the next general election.
Abe's Liberal Democratic Party (LDP) leads in opinion polls, which puts the former prime minister in pole position to become the next premier in an election expected within months.

"The Bank of Japan basically needs to continue unlimited easing till 3 percent inflation is achieved," Abe told a gathering of business executives and academics, stressing that beating deflation and countering the yen's strength were Japan's most urgent economic policy issues.

He noted that although 3 percent looked like a good target, further discussion was needed and it would be up to the central bank to decide what measures to take.

Analysts, however, question the practicality of Abe's demands. "Setting an inflation target is advisable but a 3 percent price target is too high, and it will be very difficult to achieve by BOJ monetary easing alone," said Koichi Haji, chief economist at NLI Research Institute. "It would have an adverse effect on the economy."

The BOJ set a 1 percent inflation target in February and has faced growing pressure from the ruling Democrats for more monetary stimulus to prop up an economy mired in a decade-long deflation and on the brink of another recession.

The central bank has boosted its asset-buying programme four times this year and last week twinned the latest stimulus with an unprecedented joint statement with the government pledging continued efforts to end deflation.

Abe's comments raised the stakes in politicians' efforts to commit the central bank to even more aggressive steps.

He said that if his party returned to power he would consider revising a law guaranteeing the BOJ's independence to allow the government more say in shaping central bank policy.

"Monetary policy has been becoming an increasingly political issue," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. "But it is still uncertain whether what he said will become the LDP's election pledge at the moment."

Japan's Prime Minister Yoshihiko Noda promised in August to call an election "soon" in order to secure opposition votes for key piece of legislation, but he has been coy on exactly when he will call the election for the lower house, which must be held by August next year, with the opposition pressing Noda to keep his promise.

Japan's opposition-controlled upper house is also expected to hold an election next summer, which could further strengthen Abe's hand.

Latest data showed Japan's core consumer prices fell for the fifth straight month in September, factory output suffered its biggest fall since last year's earthquake while the government's index of leading indicators fell to a level suggesting the start of a recession.

Some market players also speculate that the central bank will ease again this year, possibly in December, to help the struggling economy with a strong yen.

(Reporting by Yuko Yoshikawa, writing by Kaori Kaneko; Editing by Tomasz Janowski and Eric Meijer)


The Argentinian saga with its holdout debt holders continues:

Round 2: WINNER Argentina.

as the courts favour Argentina in a stay. Now we await the real court action.
We now have two heavy weight lawyers fighting the case:

David Boies for the hedge funds that participated in the previous restructuring of Argentinian debt
and Ted Olsen who represents the hedge funds who have held out from the beginning.

You will recall that Boies represented Al Gore in the 2000 Presidential campaign and Olsen, represented former President George Bush,

round 3 will start shortly:

(courtesy zero hedge)

Argentina Wins Reprieve - Brevan Howard Vs Elliott Round One Or Gore Vs Bush Round Two

Tyler Durden's picture

Just as the ever soaring Argentina default swaps indicated that a technical default for the Latin American country - one which would eventually morph into a second full blown default in a decade - was all but inevitable (and previews extensively here), the twisting and turning multi-year story of Argentina vs its "vulture" holdout creditors got its latest dramatic installment last night. Shortly after market close, the Second Circuit court of appeals once again override last week's critical order by Judge Griesa that Argentina promptly pay everyone or face monetary exclusions, lumping together any and all agents who facilitated the ongoing isolation of the holdout hedge funds from the broader group which in Griesa's view had pari passu status throughout.
To wit (pdf):
"IT IS HEREBY ORDERED that the motion by the Exchange Bondholder Group for leave to intervene as interested non-parties for the purpose of appealing orders entered by the district court on 11/21/12 and for the purpose of seeking a stay pending appeal is GRANTED."
The immediate result: Argentina GDP Warrants surged the most this year, rising 1.88 cents or 20%, to 11.40, as hope that an immediate technical default could be avoided.
As a further result, Reuters promptly added that "Argentina has won a reprieve against having to pay $1.33 billion next month to "holdout" investors who rejected a restructuring of its defaulted debt and have waged a long legal battle to be paid in full. Argentina argued that, if left to stand, the order would make future restructurings impossible for countries facing debt crises because creditors would have no incentive to exchange their bonds at a discount. However, some legal experts said Griesa's order would not have such broad ramifications because Argentina hurt its own cause in refusing to pay the holdouts, and that Griesa's ruling focused on the government's behavior in this specific case."
While the above is completely correct, there is a more nuanced interpretation of the events, one which of course involves the role of the "exchange" bondholders as well as their very floral lawyers.
As the FT had discussed before:
The group of “exchange” bondholders, led by the fund Gramercy, but also including Brevan Howard, one of the world’s biggest hedge funds, sought the reimposition of the stay to “ensure that interest payments to the bondholders continue while the appeal is decided”, David Boies, a lawyer for the group, said.

“The exchange bondholders agreed to take under 30 cents on the dollar to support Argentina’s debt restructuring in accordance with US government and international fiscal policy. They should not be further penalised,” Mr Boies added.

Argentina swapped nearly 93 per cent of the almost $100bn on which it defaulted in 2001 in two rounds of restructuring in 2005 and 2010. As a result, it now considers the default history.

The exchange bondholders also entered a declaration by Stephen Choi, a New York University School of Law professor. Mr Choi said Judge Griesa’s order – and a separate ruling by the Second Circuit Appeals Court in October – would “reduce the ability of sovereigns in economic and financial distress to engage in efficient, value-increasing restructurings”.

He added that it was likely that “sovereigns that traditionally issued bonds under New York law will switch to English law and possibly other jurisdictions including local law”.
In other words, the underlying dynamics here have shifted from much more than a mere case of equitable treatment of an impaired bondholder class (so found in a court with US jurisdiction), but now have implications over the entire sovereign distressed debt process and protocol, which in the process could force creditors to avoid US bondholder protections in the future, and to seek UK, Swiss or even Japanese bond indenture jurisdictions. The shift to local law would certainly be quite curious as it is precisely what the key fulcrum issue in an insolvent Europe is. Recall that as Lee Buccheit said several months ago it is the vast preponderance of weak-protection local bonds in Spain, that will allow for a comparable cram down in the country similar to that which happened in Greece previously. It is just a matter of time.
More curious, is that what until now was merely a headline grabbing conflict between a hedge fund: Elliott, and a sovereign, has now morphed into one between a hedge funds (or two: Elliott and Aurelius - the "Holdouts") and other hedge funds (Brevan Howard and Gramercy - the "Exchanges"). In other words, whereas previously it was the smart money vs what many consider "dumb" Argentina public servants, Argentina now has very vocal a hedge fund backing on its side, in this case mega fund Brevan Howard, who will do anything to prevent the halts of cashflows from Argentina, even if that means taking on not only Paul Singer but Judge Griesa directly.
But where the conflict's escalation will be by far the most entertaining, is in the legal arena. Because as the Guardianbelow summarizes, the two key opposing lawyers already are quite familiar with each other...
The latest big gun to enter the fray is celebrated attorney David Boies, whose appearance is the latest sign of escalating stakes in the case. Boies, a partner at Boies, Schiller & Flexner, represents holders of Argentine bonds who agreed to two rounds of restructurings in which Argentina issued new debt at a steep discount.

His appearance also sets up a potential rematch between Boies and another top-flight attorney, Theodore Olson, who is representing an opposing group of investors. Olson represented former President George W. Bush at the Supreme Court in a case that decided the U.S. presidential election in 2000. Boies represented Democratic candidate Al Gore, who lost the election.

Olson, a partner at Gibson, Dunn & Crutcher and a former solicitor general under Bush, represents investors who refused to participate in the restructurings, the so-called holdout bondholders.
Argentina may have avoided an immediate default, but it is likely that the Elliott wing will do everything in its power to return to the pre-appeal status quo asap. This will be fought tooth and nail by the Exchanges, and soon, in court, potentially escalating all the way to the SCOTUS.
One thing is certain: the drama and the excitement of watching Boies vs Olson in the Supreme court once more this time discussing not hanging chads, but Argentinian solvency, coupled with the navies of Elliott and Brevan Howard, will be truly fascinating stuff.

Censored: Poverty Report in Germany

testosteronepit's picture

On September 17, the German Labor Ministry sent a draft report “on Poverty and Wealth” to the other ministries to be rubber-stamped. Only the final report, once sanctified by Chancellor Angela Merkel, would be made public. The draft was supposed to remain hidden. But it seeped to the surface almost immediately. And it was hot. Too hot.
The massive data (PDF, 535 pages) described the tough reality that many people faced in Germany—a reality that got tougher every year. For example, in 1998, the lower 50% of the population owned 4% of all private wealth, while the upper 10% owned 45%. By 2008, the lower 50% owned only 1%, but the upper 10% had increased its share to 53% (at the expense also of the in-between 40%). Other reports have painted similar pictures.
The poverty report by Germany’s statistical agency showed that the “poverty rate” in Germany has been creeping up: in 2008, it was 15.5%; in 2009 it was 15.6%, and in 2010 it was 15.8%. Particularly hard-hit were people under 65 who lived alone. Their poverty rate was 36.1%. For single-parent households, it was 37.1%. The city of Munich issued its own poverty report. By taking into account Munich’s high cost of living, it found that nearly a fifth of its residents lived in poverty.
Poverty data has been stirring public debate for a while, and across most of Europe. Even the largest consumer products companies are adjusting to it by using commercial strategies that were successful in developing countries [read....  The “Pauperization of Europe”]. But now the Labor Ministry’s “Poverty and Wealth” report, as revised by the Economy Ministry, was leaked to the Süddeutsche Zeitung, which then put a grunt to work to compare the two versions. Turns out, the original version had been censured!
It started in the introduction. In the new version, the sentence, “Private wealth in Germany is very unevenly distributed,” has been deleted.
The original version pointed out: “While wages have risen in the upper areas over the past ten years, lower wages adjusted for inflation have dropped. The income spread has increased,” which would hurt “the sense of justice of the people” and could “jeopardize social cohesion.” Incendiary words, emanating from a Labor Ministry run by a conservative government. Too incendiary.
It was replaced by the new jargon, heard so often in the battle over Greece: falling real wages were an “expression of structural improvements” in the labor market and created low-wage jobs for many unemployed people.
The report also noted that the hourly wage of many people who live alone and work fulltime wasn’t enough to secure a livelihood. This “increased the risks of poverty and weakened social cohesion.” That comment was deleted. Now it only said that the low-wage issue “should be looked at critically.”
Even certain data has been deleted, including this sentence: “However, in 2010, over four million people worked in Germany for an hourly wage of less than €7.”
The opposition was outraged. “The whitewash of the report is shabby,” said Katja Kipping, head of the Left Party, accusing the government of a cover-up.
“Those who hide and ignore reality cannot make fair policies,” said Andrea Nahles, SPD Secretary General. “The reality” for which the coalition was “responsible” was “too gloomy even for the Merkel government. She wants to deny it instead of tackling the problems.” And she lambasted the coalition’s policies that served “only a very specific affluent clientele.”
“The federal Government wants to water down, conceal, and beautify crucial elements of the report,” griped Annelie Buntenbach, board member of the Confederation of German Trade Unions (DGB), an umbrella organization representing over 6 million workers.
The report has heated up the public fight between Labor Minister Ursula von der Leyen (CDU), who doesn’t mind shining a light on conditions in Germany, and Economy Minister Philipp Rösler (FDP), who is facing a very iffy reelection fight. The CDU and FDP are uneasy coalition partners. But if the FDP, which is teetering, doesn’t make it into parliament in next year’s election, Rösler would be axed from any role in the government.
He and laissez-faire stalwarts at his ministry were bothered by comments on the increasing social chasms in Germany, and their impact on social cohesion. He’d already criticized the original report after it was leaked, claiming that certain elements weren’t “the opinion of the Federal government.”
Then the backpedaling started. A spokesperson of the Labor Ministry declared that, yes, there’d been requests to change some things, but “all reports of the Federal Government” had to be coordinated with all ministers and the chancellor. It allowed the government to speak with one voice. So this was “a totally normal process.”
Alas, the statement that censuring such reports was “a totally normal process” caused another burst of outrage. As always, to no effect.
That this debacle would occur just as more money was being tossed at Greece, where poverty has been surging and where wages have been plunging, was priceless. By keeping Greece in the Eurozone, eurocrats or better “euro morons” have successfully avoided a weak drachma and a subsequent Greek hyperinflation. Instead they have successfully created stagflation. Read...  Euro Morons: Hyperinflation Successfully Avoided, Stagflation Successfully Created.

Spain Now Faces a Systemic, Societal, and Sovereign Collapse

Phoenix Capital Research's picture

Spain’s financial system is at truly apocalyptic levels.
If you’ve been reading me for some time, you know that Spain has already experienced a bank run equal to 18% of total deposits this year alone (another story the mainstream media is avoiding). However, what you likely don’t know is that an on annualized basis, Spain has experienced portfolio and investment outflows GREATER THAN 50% OF ITS GDP.
To give this number some context, Indonesia only saw outflows equal to 23% of its GDP during the Asian Financial Crisis. Spain is experiencing more than DOUBLE this.
I’ve long averred that Spain will be the straw to break the EU’s back. By the look of things this is not far off. The country’s regional bailout fund has only less than €1 billion in funding left. As the below chart shows, this will barely make a dent in the regions’ debt problems:
Indeed, things are far far worse than is commonly know. Valencia for instance owes its pharmacies over €500 billion. In some areas there is no longer insulin.
In the region of Andalusia some government workers haven’t been paid in eight months and are working for free while begging for food.
And Catalonia is pushing to secede from Spain entirely. Indeed, its pro-secessionist leader, President Artur Mas, just won the most recent election. And over 1.5 million of Catalonia’s 7.5 million inhabitants turned out for an independence rally in September.
Again, Spain as a country is finished. Things are so bad that British Airways (many wealthy Brits vacation in Spain) is putting a contingency plan for SPAIN to leave the Euro.
Worst of all, it is clear EU and Spanish leaders have no clue how to deal with any of this. Their latest plan is for the country to cut the balance sheets of three nationalized banks by 50% sometime in the next five years. How will they do this? By dumping their toxic property assets into a “bad bank.”
The idea here is that somehow someone will want to buy this stuff. Spain already had to postpone the launch of the bad bank by a month because no one wanted to participate in it(despite the mainstream media claiming that the idea was popular which is untrue).
So, here we have Spain proposing that it can somehow unload a ton of garbage debts onto “someone” even though there is no “someone” to buy them. And the whole point of this exercise is to meet conditions so that Spain would qualify for another €40 billion in aid.
€40 billion in aid... when  Spain has experienced portfolio and investment outflows of more than €700 billion.
Indeed, things are so bad that the ECB has put the entire Spanish banking system on life support to the tune of over €400 billion Euros. To put this number into perspective, the entire equity base for every bank in Spain is only a little over €100 billion.
Oh, and the country needs to issue over €200 billion in debt next year.


Debt bondholders of Bankia will be hit hard in the next restructuring for the nationalized Spanish banks:

(from London's financial times ,more bad news for Spain's bank debtholders:)

Bankia debtholders to take a hit from restructuring: The FT, in an article that did not break much new ground, discussed the hit that Bankia's subordinated and hybrid securities holders will have to take as part of the restructuring demanded by the EU. The paper noted that Bankia said that holders of preferred shares will have to take a writedown of 39%, while holders of perpetual subordinated debt will face a writedown of 46% and holders of subordinated debt with a maturity date will have to take a loss of 14%. The article noted that according to estimates by Barclays, ~€30B of these products were sold to individual savers/retail investors before the crisis by small Spanish banks, including Bankia.


And now France's economy is in shambles:

(courtesy Graham Summers/Phoenix Research Capital)

The EU Just Lost Another Prop: France’s Economy is Crumbling

-- Posted Thursday, 29 November 2012 | Share this article | Source:
By Graham Summers

Meanwhile, as Greece continues to distract the markets, France, the other primary prop for the EU besides Germany, is now experiencing an economic contraction on par with that of 2008-2009.

Indeed, France’s September’s auto sales numbers were worse than those ofSeptember 2008 (the month Lehman collapsed). The country’s PMI reading is back to April 2009 levels. Even the French Central Bank, which would hold off as long as possible before unveiling bad news, has announced the country will re-enter recession before year-end.

Over the past few weeks, an extraordinary cry of alarm has risen from chief executives who warn that the French economy has gone dangerously off track. In an interview to be published on Nov. 15 in the magazine l’Express, Chief Executive Officer Henri de Castries of financial-services group Axa (CS:FP) warns that France is rapidly losing ground, not only against Germany but against nearly all its European neighbors. “There’s a strong risk that in 2013 and 2014, we will fall behind economies such as Spain, Italy, and Britain,” de Castries says.

On Nov. 5, veteran corporate chieftain Louis Gallois released a government-commissioned report calling for “shock treatment” to restore French competitiveness. And on Oct. 28, a group of 98 CEOs published an open letter to Hollande that said public-sector spending, which at 56 percent of gross domestic product is the highest in Europe, “is no longer supportable.” The letter was signed by the CEOs of virtually every major French company. (The few exceptions included utility Electricité de France, which is government controlled.)

We get additional confirmation that France is in big trouble from its partner in propping up the EU, Germany.

German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone's second largest economy could come back to haunt Germany and the broader currency bloc.

Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the "wise men", to consider drafting a report on what France should do…

"The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction," Feld said on Wednesday.

"France needs labour market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won't work unless more efforts are made."

France will be a bigger problem than Spain or Italy for the EU?!?! That is one heck of an admission from a German official. If France deteriorates then it’s game over for the EU.  The current bailouts mean Germany is already on the hook for an amount equal to 30% of its GDP. If France tanks the amount will balloon astronomically. At that point it’s game over.

This is why the Powers That Be in Europe are absolutely terrified of what’s happening there.

Best Regards,

Graham Summers


Your opening Spanish 10 year bond yield at 7:30 am:
(down in yield with expectation of a bailout soon) 



5.272000.04800 0.90%
As of 07:36:06 ET on 11/29/2012.

Your opening Italian 10 year bond yield

Italy Govt Bonds 10 Year Gross Yield


4.527000.04800 1.05%
As of 07:36:10 ET on 11/29/2012.

Your 7:30 am early currency crosses: showing general  USA dollar weakness with the exception of a stronger dollar against the yen . 

Euro/USA    1.2994  up .0044
Japan/USA  82.08   down .059
GBP/USA     1.6027  up .0015
USA/Can       .9913  down  0008


Your early results for bourses for Europe 7:30 am Tuesday morning prior to NYSE :  (everybody in the green)

i. England/FTSE up 55.77 points or 0.91%

ii) Paris/CAC up 34.70 points or 0.99%

iii) German DAX: up 55.35 points or 0.75%

iv) Spanish ibex: up 98.10   points or 1.25%


The Bank of England gave the following warning today to the UK banks:

(courtesy Philip Aldrick?UKTelegraph)  special thanks to Robert H for sending this to me.

UK banks face £60bn black hole
Britain's banks face a financial black hole of up to £60bn from regulatory demands, hidden losses, and potential mis-selling costs that threaten to jeopardise future growth, the Bank of England has warned.
The Bank of England wants banks to build more capital.
By Philip Aldrick, Economics Editor
6:46PM GMT 29 Nov 2012
Telegraph UK
In its Financial Stability Report (FSR), the Bank revealed that the big four lenders - RBS, Lloyds, Barclays and HSBC - may need to take £15bn of extra provisions on consumer loans and European debt, “a further £4bn-£10bn” to cover fines and customer compensation, and “between £5bn and £35bn” to meet regulatory risk standards.
Sir Mervyn King, the Bank’s Governor, said the potential losses distorted the “picture of banks’ health” and that lenders may have to “raise capital or take steps to restructure”. He added: “The danger to be avoided is that of inadequately capitalised banks holding back our recovery.”
However, he stressed that no more taxpayer money would be put on the line. “It was made very clear that the Treasury did not want to put more into the state-owned banks,” he said.
Markets have lost confidence in the banks due to their “complex and opaque” numbers and, to recover investors’ trust, lenders need to set aside capital for “expected losses” and for potential compensation and fines over customer mis-selling and Libor rigging, the Bank said. Risk levels also need to be calculated more prudently.
The decision was taken after last week’s meeting of the Financial Policy Committee. In the most dramatic intervention since the £67bn bail-out of lenders from RBS to Lloyds, the proposal will see regulators from the Financial Services Authority sent into banks and building societies to ensures losses are properly declared by March next year.
However, the Bank declined to put a single number on the scale of potential recapitalisations, stressing that it would depend on the FSA judgement on each individual bank. Sir Mervyn added: “The problem is manageable, and is already understood at least in part by markets.”
Bank shares reacted favourably as fears of a worse outcome proved unfounded. Barclays shares closed up 1pc at 244.6p, RBS was 1.5pc higher at 299p, and Lloyds rose 1.5pc to 46.64p. Jason Napier, an analyst at Deutsche Bank, said: “Overall, the FSR is in line with our expectation, and in areas the report is better than we had feared.”
The plan could lead to a shake-up of the industry with rights issues, asset sales, and disposals – so long as they “do not hinder lending to the real economy”.
Barclays has already raised $3bn (£1.8bn) in contingent capital, Royal Bank of Scotland has previously been asked by the regulators to consider selling its US operation Citizens, and Lloyds Banking Group is rumoured to be looking at the disposal of its stake in wealth manager St James’s Place.
Sir Mervyn said: “The recommendation we have made will soon get the banks back to a position where they can support our economic recovery.”
The Bank also released separate data yesterday showing that write-offs by UK banks fell to £3.5bn in the third quarter from £4bn in the previous three months – well below the peak of £6.3bn in 2011 and the lowest since 2009. Citi’s economist Michael Saunders said: “The drop may be a symptom of increased banking forbearance and reluctance to face losses .”


Your closing Spanish 10 year yield: (reversed course in yield)



5.339000.01100 0.21%
As of 11:59:56 ET on 11/29/2012.


Your closing Italian 10 year bond yield:  (now safely below 5%)

Italy Govt Bonds 10 Year Gross Yield



4.560000.03100 0.68%


Your 4:30 pm currency crosses: ( still showing some  USA weakness against major currencies except the Japanese yen and the Canadian dollar both of which rose against the dollar.)

Euro/USA    1.2976 up  .0026
Japan/USA  82.11  down .029
GBP/USA     1.6041 up .0029
USA/Can      .9927  up .0006


Your closing figures from Europe and the USA:

 in the green for Europe/and USA

i) England/FTSE up 67.02 points or  1.15%

ii) Paris/CAC up  53.69 points or 1.53%

iii) German DAX: up 57.55 points or 0.78%

iv) Spanish ibex: up 136.1 or 1.74% 

and the Dow: up  36.71  points  (.28%)


And now for some big USA stories: 

Today we received second reading of 3rd quarter GDP.  The first flash reading last month was 2% and it was widely expected to have a reading of 2.8% gain.  It came in at 2.7%.

However if you dissect the numbers, one finds a huge contraction in personal consumption, the engine for growth in the USA at 70% of the USA GDP.

What caused the big growth in GDP:  government spending, soaring .67%
Sadly the Hurricane is not in these figures as it occurred during the first part of Q4:

(courtesy, zero hedge)

Ugly Q3 GDP Confirms Personal Consumption Collapsing; Headline "Growth" Driven By Government, Inventory Accumulation

Tyler Durden's picture

One glance at today's second read of Q3 GDP may leave some with the false impression that the US economy is soaring, because after sliding to 1.3% in Q2, and after a preliminary read of 2.0% in the first Q3 estimate, today's print, which missed estimates of a 2.8% print, did nonetheless rise to 2.7%. "A stunning success", the administration sycophants would say. Absolutely wrong. Because a quick glance at the underlying numbers shows the true picture of the economy which contracted far more than most expected, with personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures - the core driver of 70% of the US economy - were a tiny 36% of the headline number. Ironically today's second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution. So what drove "growth" in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number. Finally, and most importantly, Fixed Investment, aka CapEx, was a meager 0.1%, or the lowest GDP contribution since Q1 2011. Without CapEx there is no corporate revenue growth (and future hiring intentions) period.
Sadly not even Sandy can be blamed on the collapse in consumption in Q3, for the simple reason that the Hurricane did not hit until 1 month into Q4. Perhaps it is Sandy's fault it did not hit sooner. In the meantime, all those hoping that the US consumer is finally waking up from his slumber and is spending (on credit of course) like a drunken sailor (for anything more than iPads using student loan proceeds), will have to wait until Q1 2013, as the Q4 2012 number will be even uglier than the one just released.
And a longer-term confirmation of the collapse of Personal Consumption courtesy of John Lohman:


Even with the Sandy effect gone, the moving average of jobless continues above 400,000

(courtesy zero hedge)

4-Week-Average Jobless Claims At 13-Month High As Sandy Effects Gone

Tyler Durden's picture

While any and every bad data point recently has been summarily dismissed by the 'transitory' effects of Hurricane Sandy, it appears in the deepest darkest reality that there is more of a structural trend to this shift than simply a 'blip'. Claims missed expectations and prior data was revised higher leaving the four-week-average at its highest since October 2011 jumping back over 400k. More critically, when we dig into the details on the DoL site, we find some rather disturbing trends that totally dismiss Sandy effects. For instance, according to the DoL,there were 30.6k fewer initial claims in New York Last week - when this higher aggregate data point is supposed to be due to 'Sandy'. FL, MI, and MA saw the largest increases in claims. It seems blaming this trend-break on Sandy is now a non-starter - fiscal cliff front-running perhaps? Election hangover?

and by state - NY saw improvements so the miss and rise in aggregate claims is NOT a Sandy-related thing quite clearly...

Charts: Bloomberg and DoL


The fun now begins.  New York and New Jersey are asking for 80 billion USA dollars for cleaning up after the hurricane. The maximum per year allocated for disasters is 11 billion dollars so anything greater than this amount must be passed by Congress. With the fiscal cliff staring them right in the eyes, this will not go over too well.

(courtesy Bruce Krasting)

DC to NE – Drop Dead!

Bruce Krasting's picture

If you’ve lived in NY for a long time, it is very hard to forget this now famous, headline. I think the Daily News will be able to reuse this title page again sometime over the next month or two. NY and NJ have stuck out their hands, and requested a very lumpy $80B from Washington to cover the cost of the clean up from Sandy.

Man is this bad timing. If granted, the cost to the Feds would be reflected in the 2013 budget. Good-bye to any hope of improvement in the overall deficit picture if this nut has to be paid. The $80b that has been requested is more than the revenue from a reversal of the +$250k Bush tax cut. It comes to $530 for every worker in America.

The 2011 Budget Control Act limits annual payments of disaster relief to $11B. So the $80B is going to require a special spending bill. That’s not going to be easy to achieve in Washington with all the Cliff/money issues that are now on the table.

NY’s big Democratic Senator, Chuck Schumer is very much in the middle of this. He knows he has problems with this request. From The Hill (Link).

“There is no doubt this is going to be a hard fight. It comes in the middle of strenuous negotiations around the fiscal cliff.”

Schumer is a weasel; he also had this to say about the process of getting the necessary legislation passed:

I am working to keep the quest for Sandy aid separate from the talks and to preserve a tradition of not offsetting disaster relief.

Separate? How can you keep $80B separate? The issue of not offsetting the cost of a disaster by reducing other spending is not going to come easy. Some Republicans are going to insist that there be cuts in the budget to offset a big portion of the Sandy clean up. An aide for Eric Cantor chimed in with this:

Cantor has made clear that needs beyond the $11 billion allotted by the Budget Control Act will be properly considered.

Properly considered? That is Washington speak for, “No way in Hell”.

There is an element of this that is going to prove difficult for the NE legislators. Why are the costs of Sandy so high? Answer:

Schumer wants to do away with limits such as a $31,000-per-home cap on repairs because of high home prices and expenses in the New York area.

Ah! That explains it. The numbers are big because of expensive beachfront homes. This is not going to sell very well, nor should it.

I’m looking for a big fight over this money, and I think it has to be part of the Fiscal Cliff discussions. It is too big a number to sweep under the carpet. There is the broader issue of what really should be the role of the Federal Government when weather turns bad. It’s way past time for a discussion of the costs of cleaning up properties that are in storms way. The folks who don’t live on ocean water, are subsidizing everyone who does.

If you live on the West Coast the weather report this morning is terrible. Another “Pineapple Express” is headed to land. The expectations are for winds north of 80mph and rainfall of as much as 12 inches. If that is what happens, expect to see pictures of houses being washed down the streets of Bel Air. A storm like this could easily cost $10B.  


Fred said...


You wrote:

"Yesterday's raid no doubt scared away many longs as they pitched their contracts instead of taking delivery."

So you mean the guy who had allocated $175,000 in cash to put it in his account so he could take delivery of 100 ounces of gold because he really, really wanted physical metal all of a sudden decided he wouldn't because the value of the gold bar dropped by a measly $2500???

And that explains the decline in open interest of 27,000 lots??

Even you can do better than that.

Anonymous said...

"Large reduction in OI for both gold and silver"

and who in the hell didn't see that coming! Same old shit different day!!

So whats up with your buddy Bart and the going on FIVE YEAR SILVER CLUSTERFUCK INVESTIGATION?

Old Timer said...

Hate to say it, but the only way I see contracts not being covered is when more people start buying and and taking physical possession, and holding onto it for the long haul.

In other words, more demand than they can supply. How much of the population would it take to purchase just 1 pct of their income into physical before there is a crisis in the supply, before production can't keep up? Not much I would bet.

Price can only go up long term. Labor and fuel will not go down, and in my opinion, the easy physical has already been mined. That to me is the most important part of the equation. If it costs more to mine than what it is selling for, they will sit on it and force the market up, which it will have to do. If they sit on it, supply shrinks.

Basic economics really. It has to go up medium to long term.

Tell your buddies to start buying.

Anonymous said...

Thanks Harvey for all you do and for putting up with the Trolls. Have a Wonderful Holiday Season. Much Love and Aloha from some tropical islands.

legerde said...

So 7949 is the final number for december? If so, thats 39745000 ounces. Registered inventory is less than that.

Or, is there one more day of OI declines?

clive mossmoon said...


What relevance is the silver OI if the COMEX is paper settling paper? What does the OI going up or down tell us about the physical flow? Thank you for all of your diligent work.

Gurwinder Singh said...

It is extremely interesting for me to read this blog. Thanks for it. I like such themes and everything that is connected commodity & stock market. Thanks with Regards
Stock Tips, NIFTY Tips, Commodity Tips

Anonymous said...

Funny how everyone that points out obvious bullshit spewed out by harvey is a "troll." I've never seen so many cannot-think-for-themselves people in one place (except at a political convention of course)

harvey, do you actually believe that a "raid" caused all of the longs to throw in the towel? That is bullshit and even you know it... what is really going on???

Anonymous said...

Think of where we are today regarding physical gold and silver. A parallel to that would be the Saudi Arabians oil incident back in the early to mid 1960's.
The authority pushed by the central bankers over oil recovery back then took full advantage of the Saudi's and other Middle Eastern zones - after all , they were the authorities of currency.
That's the same way with the "authorities" in gold and silver today. They have the upper hand and must be respected for what is dictated by they're wielding for metal prices.
Until the physical world of gold and silver secedes from that of the algorithm induced , etf , paper , make believe world of g&s nothing will change in the price controlled end of it all....nothing !
Once Saudi Arabia changed things making sure that the banking cartels respect the property owners from which they were taking oil out of the ground , things changed very favorably for the rightful owners of the oil.
If you don't hold it ~ you don't own it !! Until that motto is fully understood and respected, the true value will not be recognized as the spot prices indicated.

Harvey Organ said...

Goooood morning to you all:

Strange delivery notices late last night:

in gold ONLY 71 notices (7100 oz) filed for the biggest delivery month in the year!!!

in silver: 571 (2.85 million oz)

it looks like the comex is running dry.

see you tomorrow morning.

Anonymous said...

Please, please stop displaying graffiti. It just encourages defacement of property, and it is a crime after all. Andrew

Anonymous said...

"the Comex is running dry"... and yet the price goes




Anonymous said...

Looks like they can knock metal prices down whenever they want. How can the CFTC be brought under investigation???????

Anonymous said...

After hours trading in the Gold miners was heavy w/a lot of canciled trades at 1633 anyone know whats up???

Search This Blog