31 January 2012
SilverDoctors: Cartel Defends $1750 Gold & $34 Silver With Waterf...
SilverDoctors: Cartel Defends $1750 Gold & $34 Silver With Waterf...: Absolutely classic cartel raid in gold and silver today as they attempt to defend $1750 gold and $34 silver. Just prior to 10am EST, silve...
Super Powers Can Handle Super Debt?
World renowned Harvard economist Niall Ferguson says the USA is now unlikely to default on its debt (actually only partially) and that the reason they won’t “run out” of money has nothing to do with their status as a currency issuer, but has everything to do with being a super power which gives them the ability to handle “super debts” (via Business Insider):
“I think we are going to get some defaults one way or the other. The U.S. is a different story. First of all I think the debt to GDP ratio can go quite a lot higher before there’s any upward pressure on interest rates. I think the more I’ve thought about it the more I’ve realized that there are good analogies for super powers having super debts. You’re in a special position as a super power. You get, especially, you know, as the issuer of the international reserve currency, you get a lot of leeway. The U.S. could conceivably grow its way out of the debt. It could do a mixture of growth and inflation. It’s not going to default. It may default on liabilities in Social Security and Medicare, in fact it almost certainly will. But I think holders of Treasuries can feel a lot more comfortable than anyone who’s holding European bonds right now.”
“I think we are going to get some defaults one way or the other. The U.S. is a different story. First of all I think the debt to GDP ratio can go quite a lot higher before there’s any upward pressure on interest rates. I think the more I’ve thought about it the more I’ve realized that there are good analogies for super powers having super debts. You’re in a special position as a super power. You get, especially, you know, as the issuer of the international reserve currency, you get a lot of leeway. The U.S. could conceivably grow its way out of the debt. It could do a mixture of growth and inflation. It’s not going to default. It may default on liabilities in Social Security and Medicare, in fact it almost certainly will. But I think holders of Treasuries can feel a lot more comfortable than anyone who’s holding European bonds right now.”
MF Global Was Doing Great Until It Wasn’t
By Matt Levine
“Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone,” but every banker also seems to forget the modern corollary, which is that, if you have to prove you are worthy of credit, however good may be your arguments, don’t do it over email. Here’s someone who forgot that and does it surprise you to find his name in the same sentence as “House Financial Services Subcommittee on Oversight and Investigations”?:
“Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone,” but every banker also seems to forget the modern corollary, which is that, if you have to prove you are worthy of credit, however good may be your arguments, don’t do it over email. Here’s someone who forgot that and does it surprise you to find his name in the same sentence as “House Financial Services Subcommittee on Oversight and Investigations”?:A week before MF Global Holdings Ltd. collapsed, its chief financial officer told Standard & Poor’s in an e-mail that the futures broker had “never been stronger.”
S&P provided the House Financial Services Subcommittee on Oversight and Investigations with an excerpt of the e-mail from MF Global CFO Henri Steenkamp. S&P also informed the panel that Jon Corzine, then MF Global’s chief executive officer, met with its analysts on Oct. 20 to reassure them that his $6.3 billion bet on European sovereign debt was no threat to the firm, according to a Jan. 17 letter obtained by Bloomberg News.
U.S. lawmakers will turn their attention to the role of the ratings companies in the failure of MF Global at a Feb. 2 hearing after summoning Corzine, the former governor of New Jersey and Goldman Sachs Group Inc. co-chairman, to two hearings in December. S&P ranked MF Global as investment grade until its failure, while Moody’s downgraded it to junk status four days earlier.
“MF Global is in its strongest position ever,” Steenkamp told S&P on Oct. 24, according to the letter to Representative Randy Neugebauer, a Texas Republican, from Craig Parmelee, a managing director at S&P in New York.
Iran sanctions: India exploring Russia payment route
With the U.S. and the EU imposing fresh sanctions against Iran, India is exploring all possibilities to keep the Iranian oil flowing as it is critical to its energy security. One of the options being discussed is firming up an arrangement with Russia’s Gazprombank for paying to Iranian oil.
In the wake of the U.S. and the European Union approving fresh sanctions and an oil embargo against Iran, India has no choice but to step up its efforts to find new ways to pay for Iranian hydrocarbons.
Unlike Turkey, the current mediator between Indian and Iranian oil companies, one of the most convenient options seems to be using the Russian banking system, which is not facing a lot of pressure. To keep Iranian oil flowing as it contributes around 12 percent of New Delhi’s oil imports, India had started preparing in advance for the introduction of the EU oil embargo against Iran. An Indian multi-ministerial delegation visited Tehran from January 16 to 21 to discuss with Iranian colleagues the possibility of changing the current payment methods for Iranian oil.
According to Indian media reports, India is exploring the possibility of opening a bank account in another country, perhaps with Russia’s Gazprombank. The desire for such an arrangement was expressed by Indian Oil Corporation and Bharat Petroleum Corporation, India’s two largest oil refiners. Indian Prime Minister Manmohan Singh discussed the question of opening accounts with Russian politicians during his visit to Moscow in December. Gazprom has not yet released information about a possible deal. Another proposed way to change the payment scheme for Iranian oil would be to transition to a barter system. India would invest in other sectors of Iran’s economy and in return receive an equivalent amount of Iranian oil.
The other alternatives that are being explored include paying for Iranian oil in Indian currency or Japanese yen. There is also a possibility of paying through gold. Tehran receives around $12 billion annually from New Delhi for oil (12% of India’s total oil consumption), and both countries wish to maintain trade volumes. However, with the progressively worsening economic sanctions against Iran, imposed unilaterally by the U.S. and the European Union, there are fewer opportunities for India-Iran cooperation. For India’s oil companies, this situation could lead to serious economic losses.
In the wake of the U.S. and the European Union approving fresh sanctions and an oil embargo against Iran, India has no choice but to step up its efforts to find new ways to pay for Iranian hydrocarbons.
Unlike Turkey, the current mediator between Indian and Iranian oil companies, one of the most convenient options seems to be using the Russian banking system, which is not facing a lot of pressure. To keep Iranian oil flowing as it contributes around 12 percent of New Delhi’s oil imports, India had started preparing in advance for the introduction of the EU oil embargo against Iran. An Indian multi-ministerial delegation visited Tehran from January 16 to 21 to discuss with Iranian colleagues the possibility of changing the current payment methods for Iranian oil.
According to Indian media reports, India is exploring the possibility of opening a bank account in another country, perhaps with Russia’s Gazprombank. The desire for such an arrangement was expressed by Indian Oil Corporation and Bharat Petroleum Corporation, India’s two largest oil refiners. Indian Prime Minister Manmohan Singh discussed the question of opening accounts with Russian politicians during his visit to Moscow in December. Gazprom has not yet released information about a possible deal. Another proposed way to change the payment scheme for Iranian oil would be to transition to a barter system. India would invest in other sectors of Iran’s economy and in return receive an equivalent amount of Iranian oil.
The other alternatives that are being explored include paying for Iranian oil in Indian currency or Japanese yen. There is also a possibility of paying through gold. Tehran receives around $12 billion annually from New Delhi for oil (12% of India’s total oil consumption), and both countries wish to maintain trade volumes. However, with the progressively worsening economic sanctions against Iran, imposed unilaterally by the U.S. and the European Union, there are fewer opportunities for India-Iran cooperation. For India’s oil companies, this situation could lead to serious economic losses.
Iran well prepared for the worst
By David Isenberg
Most discussions of possible United States military operations in the Persian Gulf, should Iran try to prevent maritime traffic from going through the Strait of Hormuz, generally say that while it would not be a cakewalk, it would not be an enormously difficult task either.
But that conventional wisdom is wrong, according to a recent report issued by an independent, non-profit public policy research institute in Washington DC. The report found that the traditional post-Cold War US military ability to project power overseas with few serious challenges to its freedom of action may be rapidly drawing to a close.
While such conclusions have been voiced before, most notably in
regard to capabilities being developed by the People's Republic of China - which is developing an anti-access/area-denial (A2/AD) battle network that could constrain the US military's ability to maneuver in the air, sea, undersea, space and cyber-space operating domains - China is hardly the only country that has developed such options.
According to the report published by the Center for Strategic and Budgetary Assessments (CSBA), "Iran, in particular, has been investing in new capabilities that could be used to deter, delay or prevent effective US military operations in the Persian Gulf. Iran's acquisitions of weapons that it could use to deny access to the Gulf, control the flow of oil and gas from the region, and conduct acts of aggression or coercion, are of grave concern to the United States and its security partners."
The report, "Outside-In: Operating from Range to Defeat Iran's Anti-Access and Area-Denial Threats" [1] notes that Iran has been preparing for a possible military confrontation with the United States for decades. Instead of engaging in a direct military competition, which would be pitting its weaknesses against US strengths, Iran has developed an asymmetric "hybrid" A2/AD strategy that mixes advanced technology with guerilla tactics to deny US forces basing access and maritime freedom of maneuver.
Even if Iran did not disrupt Gulf maritime traffic for long, it could still have a devastating impact. A recent report by the International Monetary Fund (IMF) found that Iran's closure of the Strait of Hormuz would "neutralize a large part of current OPEC [Organization of Petroleum Exporting Countries] spare capacity," saying "alternative routes exist, but only for a tiny fraction of the amounts shipped through the strait, and they may take some time to operationalize while transportation costs would rise significantly."
Most discussions of possible United States military operations in the Persian Gulf, should Iran try to prevent maritime traffic from going through the Strait of Hormuz, generally say that while it would not be a cakewalk, it would not be an enormously difficult task either.
But that conventional wisdom is wrong, according to a recent report issued by an independent, non-profit public policy research institute in Washington DC. The report found that the traditional post-Cold War US military ability to project power overseas with few serious challenges to its freedom of action may be rapidly drawing to a close.
While such conclusions have been voiced before, most notably in
regard to capabilities being developed by the People's Republic of China - which is developing an anti-access/area-denial (A2/AD) battle network that could constrain the US military's ability to maneuver in the air, sea, undersea, space and cyber-space operating domains - China is hardly the only country that has developed such options.
According to the report published by the Center for Strategic and Budgetary Assessments (CSBA), "Iran, in particular, has been investing in new capabilities that could be used to deter, delay or prevent effective US military operations in the Persian Gulf. Iran's acquisitions of weapons that it could use to deny access to the Gulf, control the flow of oil and gas from the region, and conduct acts of aggression or coercion, are of grave concern to the United States and its security partners."
The report, "Outside-In: Operating from Range to Defeat Iran's Anti-Access and Area-Denial Threats" [1] notes that Iran has been preparing for a possible military confrontation with the United States for decades. Instead of engaging in a direct military competition, which would be pitting its weaknesses against US strengths, Iran has developed an asymmetric "hybrid" A2/AD strategy that mixes advanced technology with guerilla tactics to deny US forces basing access and maritime freedom of maneuver.
Even if Iran did not disrupt Gulf maritime traffic for long, it could still have a devastating impact. A recent report by the International Monetary Fund (IMF) found that Iran's closure of the Strait of Hormuz would "neutralize a large part of current OPEC [Organization of Petroleum Exporting Countries] spare capacity," saying "alternative routes exist, but only for a tiny fraction of the amounts shipped through the strait, and they may take some time to operationalize while transportation costs would rise significantly."
SilverDoctors: Goldman, JPM Attempting to Exempt Swaps Books from...
SilverDoctors: Goldman, JPM Attempting to Exempt Swaps Books from...: Goldman and JP Morgan are attempting to exempt themselves from Frank-Dodd legislation regarding credit default swap regulation, stating that...
Venezuela Receives Last Shipment of Repatriated Gold Bars
By Nathan Crooks - Jan 31, 2012 1:08 AM GMT+0100
Venezuela today received the last shipment of gold bars in an operation that repatriated 160 tons of the South American country’s reserves of the metal held abroad, said Nelson Merentes, president of the country’s central bank.
Fourteen tons of gold arrived at the Caracas airport today on a flight from Europe, Merentes said. The gold bars were transported in a caravan, broadcast on state television, to vaults at the central bank where street banners proclaimed “Mission Complete.”
“In two months, we’ve brought 160 tons of gold valued at around $9 billion back to Venezuela,” Merentes said on state television from the Caracas airport. “Today marks the last day of the mission.”
Venezuela today received the last shipment of gold bars in an operation that repatriated 160 tons of the South American country’s reserves of the metal held abroad, said Nelson Merentes, president of the country’s central bank.
Fourteen tons of gold arrived at the Caracas airport today on a flight from Europe, Merentes said. The gold bars were transported in a caravan, broadcast on state television, to vaults at the central bank where street banners proclaimed “Mission Complete.”
“In two months, we’ve brought 160 tons of gold valued at around $9 billion back to Venezuela,” Merentes said on state television from the Caracas airport. “Today marks the last day of the mission.”
MFGlobal and our vaporizing 1.2 billion dollars/Greece and Portugal/Gold and silver raid prior to first day notice
Good evening Ladies and Gentlemen:
I guess our boys decided that a raid on silver and gold was necessary prior to first day notice. The object of the exercise was to dampen the spirits of the long holders into taking cash and depositing it into the brokerage account in order to take delivery of gold and silver. Gold closed down by 3.00 dollars to $1729.80 whereas silver fell by 25 cents to $33.50. I would have to say that the raid was a total wipe out for our bankers.
Let us head over to the comex and assess trading. First day notice is tomorrow. However I still do not have delivery notices going into tomorrow. This will be important so I will post it tonight in my comments sections.
The total comex gold OI today fell by 3551 contracts from 433,710 to 430,159. On Friday we had a very good day for gold so again a few bankers bit the dust. The front options expiry month of January is now complete. The big delivery month of February saw its OI rest tonight at a monstrously high 29,103 contracts. I will still need tomorrow's OI data to see how many rolled into April. The next front month of April saw its OI rise from 175,305 to 213,997 for a rollover of 38,692 contracts. This snapshot would be as of Friday as all OI numbers are 24 hours back. The estimated volume at the gold comex today was very very light at 184,065. I would have thought that more rolled to the April month today. The confirmed volume on the gold comex on Friday was very high at 343,879 but many were rollovers.
The total silver comex OI fell marginally by 121 contracts from 102,006 to 101,885. Since silver had a great day on Friday we again lost some bankers who could not stand the heat. The front options expiry month of January is now off the board. The new front options expiry is now February and here the OI rose from 124 to 159 as these guys will be given a futures contract for February and thus automatically stand for metal. The next big delivery month for silver is March and here the OI stayed quite constant rising by 500 contracts to 49,053. The estimated volume at the silver comex today was anemic at 31,583 contracts. The confirmed volume on Friday was also anemic at 34,752.
Keiser Report
In this episode, Max Keiser and co-host, Stacy Herbert, discuss banking zombies and clowns and their magical thinking on zero rates while starving the economy of interest income. In the second half of the show, Max talks to Ned Naylor-Leyland about the silver, gold, backwardation, manipulation and more.
No Pushing In The Default Line, Please
By: Michael Ashton | Mon, Jan 30, 2012
Europe continues to smolder, but it is about to burst into outright flame. The 'private sector initiative' (PSI) discussions, which were supposed to be completed the Friday before last, continue. The leaks of an imminent deal continue, and eventually I am certain that a deal will be announced because eventually we will be down to just one bondholder still represented by the IIF. It is pretty clear by now - or it should be - that the PSI is no panacea. The only ray of hope to that process is that the approval of a 'haircut' (in the same way that Hannibal Lecter gave haircuts) would give the EU a fig leaf to approve a deal to send good money after bad, if it could overlook the failure to implement austerity measures that currently has German Finance Minister Schaeuble in a tizzy.
It would be a colossal mistake to agree to another €130bln bailout, even if the chances of it actually being disbursed would be slim (after all, remember the PSI process is necessary for the disbursement of the past-due tranche of the current bailout). And, honestly, I think the only reason they are continuing the charade is to give themselves more time to ready the Plan B default and/or Euro exit.
However, the market may not give them the time. Today Portugal's 10-year rate rose nearly 200bps (see Chart, source Bloomberg), likely triggered in part by a headline saying "ECB cuts off bond buying as pressure mounts."
It didn't actually cut off bond buying, but it bought very little last week. It seems fairly clear that the limits of the ECB's ability to sterilize the transaction are nearby, if they have not already been reached, and no doubt some cooler heads have pointed out that failing to have enough buyers for a 7-day ECB tender would be much worse than allowing bond yields to reach free-market levels. After all, what's the difference to Portugal of 15% or 17% on 10-year notes? Neither level makes Portugal's situation even vaguely sustainable.
Europe continues to smolder, but it is about to burst into outright flame. The 'private sector initiative' (PSI) discussions, which were supposed to be completed the Friday before last, continue. The leaks of an imminent deal continue, and eventually I am certain that a deal will be announced because eventually we will be down to just one bondholder still represented by the IIF. It is pretty clear by now - or it should be - that the PSI is no panacea. The only ray of hope to that process is that the approval of a 'haircut' (in the same way that Hannibal Lecter gave haircuts) would give the EU a fig leaf to approve a deal to send good money after bad, if it could overlook the failure to implement austerity measures that currently has German Finance Minister Schaeuble in a tizzy.
It would be a colossal mistake to agree to another €130bln bailout, even if the chances of it actually being disbursed would be slim (after all, remember the PSI process is necessary for the disbursement of the past-due tranche of the current bailout). And, honestly, I think the only reason they are continuing the charade is to give themselves more time to ready the Plan B default and/or Euro exit.
However, the market may not give them the time. Today Portugal's 10-year rate rose nearly 200bps (see Chart, source Bloomberg), likely triggered in part by a headline saying "ECB cuts off bond buying as pressure mounts."
It didn't actually cut off bond buying, but it bought very little last week. It seems fairly clear that the limits of the ECB's ability to sterilize the transaction are nearby, if they have not already been reached, and no doubt some cooler heads have pointed out that failing to have enough buyers for a 7-day ECB tender would be much worse than allowing bond yields to reach free-market levels. After all, what's the difference to Portugal of 15% or 17% on 10-year notes? Neither level makes Portugal's situation even vaguely sustainable.
China buying Gold like cheap cabbage, COMEX Gold speculator positions surge
The spot market price of buying Gold climbed to $1728 an ounce Monday morning London time – a slight drop from last week's close – while stock markets, commodities and the Euro all fell and government bond prices rose as European leaders met for their latest summit in Brussels.
The cost of buying Silver fell to $33.08 at one point – a 2.6% drop from where it ended last week.
Gold fell as low as $1718 per ounce Monday morning, dropping steadily during Asian trading, though this represented a loss of only 1% on Friday's closing price.
CHINA
"Everybody seemed to be expecting profit taking out of Shanghai after the two Chinese bourses came back online," said one Hong Kong dealer.
"As far as we can see, there wasn't much of that."
During last week's Lunar New Year holiday, China saw a "gold rush", with consumers spending more on buying gold than during the 2011 festival, according to a China Daily report.
"People seem crazy about gold, snatching it up more like a cheap cabbage than such a precious metal," it quotes Beijing resident Miao Miao.
The value of sales at two of Beijing's top gold retailers, Caibai and Guohua, reportedly hit 600 million Yuan ($95.28 million) – a 49.7% rise on last year's sales, almost 50% increase in purchases!The gold price in Dollars meantime rose around 25% over the same period.
Is Gold the hottest currency in the world?
The price of Gold is roaring back from its latest temporary correction, sending the bears into full withdrawal. If you sold your gold in December as it fell to $1525 an ounce, you’re probably feeling foolish at the incredible $210 rise to $1735– a 15% move in no time at all.
Gold, you see, is not a commodity like oil and Copper and wheat. It is rather an alternative currency– one that finds buyers when paper currencies like the Euro are being hugely increased in supply by the ECB to forestall a sovereign cum bank crisis in Europe. There’s $650 billion in European bank and sovereign debt coming die before March 31, 2012 which can be sopped up by the $650 billion gift from ECB to the banks at the bargain rate of 1%. And more available from the European central bank– Europe’s very own Quantitative Easing program.
As the supply of gold cannot keep up with paper money(supply increases very little despite exploration), and it can be bought without loss of any real interest income, it seems clear t hat the gold bull market is alive and well. Central banks obviously are of the mind that gold’s rise will make up for t he decline in paper money and the lack of income on central bank liquid investments.
Portugal's Debt Will Be Restructured; 3-Year Government Bond Yield Tops 25%; CDS at Record High, Implies 72% Chance of Default
MISH'S
Global Economic
Trend Analysis
Inquiring minds are watching Portuguese government bonds soar into the stratosphere, with record-high bond yields across the entire yield curve.
In all the images below, the numbers are accurate but the charts reflect yesterday. I have mentioned this to Bloomberg a number of times to no avail.
Portugal 2-year Government Bonds
Portugal 3-year Government Bonds
Global Economic
Trend Analysis
Inquiring minds are watching Portuguese government bonds soar into the stratosphere, with record-high bond yields across the entire yield curve.
In all the images below, the numbers are accurate but the charts reflect yesterday. I have mentioned this to Bloomberg a number of times to no avail.
Portugal 2-year Government Bonds
Portugal 3-year Government Bonds
You Ain't Seen Nothin' Yet; Another Trillion (or Two) Euro LTRO Coming Next Month
MISH'S
Global Economic
Trend Analysis
Last month, European banks tapped the ECB for €489bn in a long-term refinance operation dubbed LTRO. On February 29, another round of LTRO is coming up and expect banks to go for the gusto. Banks like cheap money to speculate and that is exactly what they will do.
The Financial Times reports Banks set to double crisis loans from ECB
Global Economic
Trend Analysis
Last month, European banks tapped the ECB for €489bn in a long-term refinance operation dubbed LTRO. On February 29, another round of LTRO is coming up and expect banks to go for the gusto. Banks like cheap money to speculate and that is exactly what they will do.
The Financial Times reports Banks set to double crisis loans from ECB
European banks are preparing to tap the European Central Bank’s emergency funding scheme for up to twice as much as the ECB supplied in its debut €489bn auction last month, providing further evidence of the sector’s liquidity squeeze.
Several of the eurozone’s biggest banks have told the Financial Times that they could well double or triple their request for funds in the ECB’s three-year money auction on February 29.
“Banks are not going to be as shy second time round,” said the head of one eurozone bank at last week’s World Economic Forum in Davos. “We should have done more first time.”
Three bank chief executives, all of whom asked to remain anonymous, said they were planning to increase their participation twofold or threefold.
Making Money On Poverty: JP Morgan Makes Bigger Profits When The Number Of Americans On Food Stamps Goes Up
How would you feel if someone told you that one of the largest banks on Wall Street makes more money whenever the number of Americans on food stamps goes up? Unfortunately, this is something that is actually true. In the United States today, one out of every seven Americans is on food stamps. In fact, the number of Americans on food stamps has increased by a whopping 14 million since Barack Obama entered the White House. All of this makes JP Morgan very happy, because JP Morgan has been making money by the boatload on food stamps. Right now, JP Morgan Chase issues food stamp debit cards in 26 U.S. states and the District of Columbia. The division of JP Morgan Chase that issues these debit cards made an eye-popping 5.47 billion dollars in net revenue during 2010. JP Morgan is paid per customer, so when the number of Americans on food stamps goes up, they make more money. But doesn't this give JP Morgan an incentive to try to keep the number of Americans on food stamps as high as possible? Of course it does. JP Morgan is interested in making money as rapidly as possible. If JP Morgan can get more Americans enrolled in the food stamp program and keep them enrolled in it for as long as possible, that is good for business.And the Obama administration is certainly doing what it can to help out. Even though a whopping 46 million Americans are now on food stamps, the Obama administration plans to give out large amounts of money to organizations that are able figure out ways to get even more people enrolled in the program....
SilverDoctors: ISDA is Behind the Attempt to Appeal Position Limi...
SilverDoctors: ISDA is Behind the Attempt to Appeal Position Limi...: The International Swaps and Derivatives Association (ISDA) will be responsible for a very important decision shortly. As Jim Sinclair sta...
SilverDoctors: Jim Sinclair: The Impending Undeclared Default Of ...
SilverDoctors: Jim Sinclair: The Impending Undeclared Default Of ...: The Legendary Jim Sinclair has released a MUST LISTEN BREAKING NEWS interview recorded tonight with the Ellis Martin report on the IMPENDI...
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