The Cost Of Doing Business

One reason that Wall Street bonuses are so large is that these firms commit fraud and basically lie, cheat and steal to make money while the Government voted into office to enforce the laws looks the other way:

when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed (Atlas Shrugged).

So JP Morgan made billions underwriting and packaging asset-back/mortgage-back garbage into securities and then dumping them into the laps of the people who manage YOUR retirement money and now I see that they are in "advanced" negotiations to settle this extreme fraud.  Here's the Bloomberg report:  LINK

If precedence sets the standard, expect that JP Morgan's penalty will be under $100 million.  It's the cost of doing business in America today when, to paraphrase Francisco D'Anconia above "the people who are in charge of enforcing the laws are the people who are breaking the laws."  If you think I'm fantasizing, let's take a look at Obama the good Democrat and his oval office:   His chief-of-staff is an ex-JP Morgan official.  Several of his closest "advisors" are ex-Goldman Sachs employees.  His Secretary of Treasury is the lap-dog of former Goldman CEO and thief extraordinaire, Robert Rubin.  Rubin's mentally diminutive "Mini-Me," if you will.

I bring this up because now the world is asking me to see that JP Morgan is breaking every written securities law, getting caught, paying fines that are a fraction of the profits disgorged from YOUR pension funds and the world expects me to believe that the ONLY area of finance where JP Morgan is NOT breaking the laws is in its silver futures and OTC derivatives business.  LOL.  Okay - really?   What is beyond staggering is that the U.S. Government refuses to investigate the situation despite volumns of evidence, written, spoken, recorded and emailed pointing toward extreme criminal activity in JPM's silver and gold trading business (primarily silver with JPM and HSBC; several firms in the gold pit). 

What's even more absurd is that respected market analysts like Ted Butler expect people like me to place faith in the idea that the CFTC and the Obama Administration will do something about this.  That's more laughable than a Bill Mahr comedy act (I saw him a few weeks ago in Boulder and he was hilarious).  In fact, the worse the obvious manipulation and criminal activity gets, the more the people in charge of enforcing the laws look the other way. In fact, for those who don't know, the Fed is fighting a Freedom Of Information Act inquiry by GATA in which GATA just wants to see the gold trading activity that has been conducted at the Fed.  For some reason the Fed is contesting the right of the public to see this data.  It's winding its way thru the court system, I believe that it's at the Appellate level after the Fed was denied at the State level. Someone explain to me why the public should not be able to see what the Fed is doing with the gold that is owned by the citizens of this country?  What is the Fed afraid of disclosing?  I have no faith that the Fed has acted legally in its gold trading activities and more and more people are losing that faith - that's why gold and silver are in a 10-year bull market that will last a lot longer...It's actually a sad and tragic implication of where this country is headed. 

Several people have inquired as to my view on when this latest manipulated waterfall in silver (and gold) will be over.  I don't know how low it will go and I don't know when it will go back up but i know between now and a year from now it will be significantly higher (despite the criminal activity keeping the price capped).  I also know that eventually it will become very difficult to source silver eagles - the retail silver investment of choice - regardless of where the Comex/paper price of silver is.  In fact, a very close friend of  mine was asking me for my outlook on silver this morning.  He had wavered on buying a mint box of eagles about a month ago when silver was at $32.  He called Tulving the next day with silver at $34 and Tulving was out of them.  Yesterday Tulving had a lot of boxes of silver maple leafs and some boxes of older silver eagles.  Those are gone today and, in a conversation with Hannes, he said he does not know when he will be getting more in.  I don't remember the last time a big coin dealer couldn't at least give me an estimated date of shipment. 

With that physical market color in mind, I will say that it is possible that the extreme demand vs. supply in the silver/gold physical market could well reduce the severity/duration of this latest manipulative, illegal attack by Wall Street on the metals. Reports from India/Asia suggest that all levels of buyers over there are buying up physical gold/silver with both hands and feet.  The market premium in Viet Nam, a key barometer of the market in my opinion, had been quite negative for the past 3 weeks or so.  Last night it flipped to +$15.  A very bullish indication in my view. And judging from all the reports this morning about coin dealers everywhere in Canada and the U.S. being wiped out of supply this week, it seems more and more people are catching on to the illegal manipulation game being waged on Wall Street and in DC.

And the best indicator for me is when I opened the Denver Post today and saw a full-page ad in the front section and smaller ads in other sections from some outfits who are begging you to sell them all of your gold/silver.  Those are expensive ads and you have wonder how anyone can believe that gold/silver are in a "bubble" when the professionals are spending a lot of ad money convincing the public to keep selling...When those same pros start spending money to convince you to "buy" their product at the "best" prices will be when we can have a serious debate on bubble/no-bubble.  

Ciao e buon fine settimana a tutti!