Monday, November 21, 2011

You Heard It Here First:

MF Global trustee: $1.2 billion missing

I reported back when this story first broke about three weeks ago that I had heard from Street "chatter" that the missing amount of customer money was at least double the $600 million being reported.  Now the Truth is leaking out:
the apparent shortfall in what MF Global management should have segregated at US depositories may be as much as $1.2 billion or more," the trustee said in a statement
Here's the latest:  LINK

I can't emphasize this enough:  If you have brokerage and commodity accounts at big Wall Street firms that are also owned by bank holdiing companies - get your money the hell out of there.  I'm dead serious about this.  This is especially true if your account is at Jeffries, Morgan Stanley or Bank of America/Merrill.  Fidelity and Schwab are the safest alternatives to outright physical gold and silver.


  1. the reuters news last night hinted of this...basically everyone knows where they stand....end of f#$%ing line...

    Money Market Mutuals (at risk) to Break a Buck on Europe?

  2. New Currency Controls in US at Currency Online; Capital Flight and Forced Repatriation in Europe

    Regrettably I write to inform you that, due to changes in legislation, we will be unable to continue to offer our international money transfer services to clients located in the United States of America (USA). As a result, any existing transactions that you have outstanding with Currency Online will be completed in the normal way, however you will be unable to undertake any new transfers.

  3. Hi Dave, Do you believe the sell off in Gold today is due to liquidation to address margin calls, manipulation, option expiration or something else? Good time to buy or wait until the dust settles? Thanks!

  4. Maybe the dumb ass public will understand this...

    Coming soon to the scene of Western finance.

  5. (Dave)

    I think the sell-off today is related to the general sell-off in equities. Right now the metals are highly correlated with movement in stocks BECAUSE hedge funds tend to dump everything when the stock market tanks. Hedge funds are the biggest players in paper gold and silver outside of the big banks.

    At some point the the metals will break correlation as a shitload of money flows into them for safety. I think you need to add to your positions weekly

  6. Don't you think there using the batons on the wrong people?

    Police State Watch: Curling Up In a Ball to Avoid Police Violence May Be Considered “Active Resistance” … Justifying the Use of MORE FORCE, Including Baton Strikes

    So in today’s “standard” police state procedure, curling into a ball to avoid violence from police is considered “active resistance” which warrants more force, including baton strikes?
    The real problem, of course, is that the criminal class that defrauded our country out of prosperity is now sending in the mercenaries to keep the peasants in line.

  7. LOL...

    Occupy the Hamptons

  8. Corzine should be at Pelican Bay for the rest of his life getting ass-raped by a pack of angry black bucks.

  9. "They" do what they want, when they want. We can only read the tea leaves by the crumbs they leave behind. Notice how the "collapse" keeps getting postponed, extended, delayed? Are you ready for a continuation of this ongoing manipulated policy for another 5 to 10 years? Don't count on PM's bailing you out for a while (If those were your plans). In the meantime, consider your stash exactly as that: Stashed, hidden away, out of sight, awaiting in the wings for a day in the distant future. But don't hold your breath.

    Forget buying the dip's. Dips are an illusion. Buy when ever you have enough cash to make a purchase. Throw the trends out the window. (What trends?) Buy when you have the cash, but make sure you have enough cash to take you through to the other side. They own the universe and we're just their pawns. The only way to function outside of THAT, their perceived control, is not to be attached too much to this relative world. Stay grounded and centered in the Self. Only the Self will have the means to navigate one through this Phase Transition. Eat well; organic non-GMO and plant a garden Get rest. Exercise daily. Always drink pure water. Keep the company of those who uplift and inspire and Lay low while the storm passes over. This is no drill!

  10. Trustee Claims Cash Shortfall May be Larger than Reported. We Smell a Rodent in the Room!

  11. @ European American ...wishful thinking...this thing feels like its going to Bust wide open...

    I listened to this Ben Davies interview ...the one thing that startled me was that the Austrailian pension managers have 0% allocation to gold...WTF?..that's right ....we have not seen anything yet....and he talks about how fast things change! Don't blink!

    Ben Davies

  12. @anonymous

    (I'm assuming "busting wide open" has numerous connotations, but we will consider that as PM's going stratospheric and dollar going subterranean)

    Actually I would prefer that, too, i.e. "busting wide open" (I had expected as far back as the 80's and prepared even back then) but there is still WAYYYYY to much money out there for them to squeeze out of the masses before THEY pull THAT plug. (I mean they still got to get yours and mine, right?) They got it down. They are so ahead of us it's ridiculous. Hilarious, actually.

    Squeeze the PM's out of the fearful ones, till they pop.

    Oh, how I would love a total meltdown tomorrow. I'm about as ready as I'll ever be. THAT system NEEDS to vaporize so we can get on to what is real. Unfortunately, that "real" won't be reality for a few more years. Sorry. I know a lot of people think something is about to happen. I mean, wasn't silver suppose to be about $100 right now and gold pushing $2500? Check with the supposedly gifted soothsayers of PM's, what some said some months back and that was the certain prophecy.

    Got security?

  13. Dave, is Interactive Brokers on your high-risk list? I have most of my paper savings with them.

  14. Gold Daily and Silver Weekly Charts - December Option Expiration Tomorrow

    It says a lot about a society where customers can be openly robbed, and markets can be blatantly rigged, and even more about the people who defend it and hold it up as an ideal for the rest of the world.

    This is what the average American mind cannot yet grasp, but those outside the system see it clearly. And it is puzzling to them. How can a reasonably educated and well off people act as such willing fools for those who take such shameless advantage of them?

    MF Global Revelations Keep Getting Worse

     Shortfall estimated at $1.2 billion or more (up from $600 million)
     “Repo-to-Maturity” is a “Total Return Swap-to-Maturity,” a Type of Credit Derivative
     Probable Shortfalls Throughout 2011
     Regulators Waive Required Tests for Jon Corzine
     Jon Corzine to Credit Derivatives Head: Next Time “Double Up”
     Questions About How MF Global Became a Primary Dealer
     MF Global Wrote Rubber Checks for some Electronic Checks for Others
     Tip-Offs for Some Customers?
     CFTC’s Gary Gensler Didn’t Act
     MF Global Debacle Damages a Key Global Market

  15. Yes but in Australia that is changing. Three years ago I was talking to the manager of the state pension fund about the dominant position of JPM in gold and silver and it's derivative position suggesting he dump it as counter party risk for share lending. Then he treated me like I was a madman from Mars. Today he seeks me out at events to talk about gold positions on the LBMA and the COMEX. It's changing the real area which is going to change is in the local miners and exploration companies because here the pension funds can easily divert.

    Ben Davies fund has masses of counter party risk for an Australian investor and the promotion of local state miners is a much better route to go. Productive capital in the country on a local exchange.

  16. The Goldman Rule: Don't Let This Puppet Master Pull Your Strings
    November 21, 2011
    By Shah Gilani, Capital Waves Strategist, Money Morning
    Goldman Sachs Group Inc. (NYSE: GS) Chief Executive Officer Lloyd Blankfein was really on a roll speaking at an investment conference in New York last week.

    Among other things, he said there's no way we can conclude that a slowdown in banking and trading businesses is "secular, rather than cyclical."

    That alone was enough to make me laugh. But then he went on to address concerns about pending regulations that are coming as a result of the Dodd-Frank Financial Reform Act.

    "In our conversations with clients, they have expressed several concerns on the impact to their businesses," Blankfein said, making it clear that his firm will make client interests a theme of its arguments against the regulations. "What Goldman Sachs does for our clients is even more relevant and important."

    Now that should make you laugh - if, of course, you're not too afraid.

    The truth is that Goldman Sachs and the rest of the big banks on Wall Street - in the inimitable words of author Michael Lewis from his seminal book Liar's Poker - invariably "blow up" customers to make money for themselves.

  17. customers be damned!!!!!!!!!

    New Peril MF Global Trustee

    The MF Global Trustee (on alleged-rumored urging by the Department of Justice and the SIPC) seeks via court motions to exclude customers from representation in the Bankruptcy Process. Customers, in the form of the customer coalition want to cross balance sheets towards the entities who stole their money (including the CME, Corzine, JPM, Bank of America et al) while the establishment wants to wind this thing down by creating a firewall.

  18. (Dave)

    Roger, I don't know a lot about IB but they don't do investment banking and are not owned by a bank holding company so I would assume they are fine. They are the ones who were going to buy MF but pulled the rip chord when they discovered the missing customer funds.

    I wouldn't keep most of my paper net worth at any one broker. In fact, I would start moving as much as you can into physical gold snd silver and move it out of the system. Note: physical gold and silver = no ETFs

  19. One Massive Circle Jerk: Presenting The Scam That Is ECB Bond Purchase "Sterilization"

    When discussing European sovereign bond purchases it is never polite to say the ECB "monetizes" when talking to "very serious people" - after all they "sterilize", or in other words, don't see an actual balance sheet expansion, as they offload the entire cumulative balance (which as of this week was €194.5 billion) onto other financial institutions. In this way, the bank supposedly does not take on interest rate risk, which in a feedback loop, is the cause and event of such modestly unpleasant monetary expansion episodes as the Weimar republic. What few discuss, however, is just where the banks get the money to actually buy bonds from the ECB. Well, as it turns out, all the money used for sterilization comes from, you guessed it, the ECB, in what is one massive several hundred billion circle jerk. In essence what the ECB does, by pretending to not monetize and pretending to sterilize, is taking on not only interest rate risk one level removed, but also bank solvency and liquidity risk!

  20. Cash for gold in the eurozone bailout
    By Jack Farchy
    Financial Times, London
    Tuesday, November 22, 2011

    Ever since the eurozone bond markets first started to get the jitters, hedge fund managers have been whispering that gold could play a part in resolving the crisis.

    Until recently this discussion has mainly been the preserve of gold market conspiracy theorists and backbench German politicians.

    But now the use of gold to fund a eurozone bailout is coming closer to reality. Buried within a draft of the European Commission study on joint 'eurobonds,' reported by the Financial Times this week, is the suggestion that gold could be used as collateral for these bonds.

  21. As the World Crumbles: the ECB spins, FED smirks, and US Banks Pillage

    Today, the stock prices of the largest US banks are about as low as they were in the early part of 2009, not because of euro-contagion or Super-committee super-incompetence (a useless distraction anyway) but because of the ongoing transparency void surrouding the biggest banks amidst their central-bank-covered risks, and the political hot potato of how many emergency loans are required to keep them afloat at any given moment. Because investors don’t know their true exposures, any more than in early 2009. Because US banks catalyzed the global crisis that is currently manifesting itself in Europe. Because there never was a separate US housing crisis and European debt crisis. Instead, there is a worldwide, systemic, unregulated, uncontained, rapacious need for the most powerful banks and financial institutions to leverage whatever could be leveraged in whatever forms it could be leveraged in. So, now we’re just barely in the second quarter of the game of thrones, where the big banks are the kings, the ECB, IMF and the Fed are the money supply, and the populations are the powerless serfs. Yeah, let’s play the ECB inflation game, while the world crumbles.

  22. Dave, thank for your input on Interactive Brokers.

    I have been gradually shifting all my paper to physical silver and gold (I'm at about 30% physical at this point). I have IRAs that I can't yet bring myself to cash out and take the penalty. So I buy PM miners with those. I have Fidelity, American Century and IB. IB has insanely low fees, so I have a bit of paper with them to do a little side trading. Buy weakness, sell strength.

    1. If you pull up their annual report, you'll notice that IB has very little leverage, lots of liquidity, and has increased the frequency of their securities reserve computations to daily from weekly in response to MF Global (whatever that means). In the end, you don't really know, which is why it makes sense to spread your bets among 3-4 brokers. Similarly, it makes sense to spread your investments across various asset classes as well and not concentrate in gold, regardless of how safe it may appear. Gold dropped 40% before it made a huge move to the peak in the 1980s. If you didn't have any cash (ick, cash!), how were you supposed to buy that dip?