Tuesday, February 21, 2012

Quick Update

Gold represents a little less than 1% of the total value of global investments [stocks, bonds, money markets].  Think about what will happen if that percentage moves up to 2 or 3%.  In 1968 it was 5%.  In 1980 at the last peak in gold it was 3%.  - Felix Zulauf, Swiss money manager
Busy trading today.  Wanted to unload a few points of irritation.  It was reported locally that Michelle Obama spent the long weekend in Aspen with her daughters, courtesy of the Taxpayers, of course.  I don't recall the Obamas ever spending time in expensive resorts when they had to pay for it themselves.  Of course, until Barack became a national politician, he barely had a pot to piss in (like Clinton).  What really irritated me was the report in the Denver Post that the Aspen Sheriff "donated" several patrolmen to help with security.  I'm sure that "donation" cost the Federal taxpayers a couple hundred thousand dollars.  By the way, Michelle looked like a total dork in her ski outfit in the picture that was published in the Denver Post.  I wonder how many of the people who voted for Obama could actually afford to spend even one night in Aspen...

10 of the 15 richest counties, including the richest, are located near Washington, DC, in Maryland and Virginia  LINK.   Four of the top five counties.  The standard of measurement is household income.   This makes sense because the primary source of "household income" in the DC region is Government contracts and Government employee payroll and, of course SuperPac lobbyists/lawyer pay.  This factoid underscores even further the discrepancy between those who live off the Government and those who try to make a living privately.  I'm sure people who live in Fairfield County in Connecticut (Greenwhich) or Santa Clara County in California (high tech/venture capital) are surprised by this report.  But please note the standard of measurement is "income" and not "wealth."  The people who build and prosper from creating wealth are a completely different breed from the piss-ant sycophants and scum who prey on wealth by living off of Government largess. 

It's Big Government/Banking that is sucking the wealth of this country dry and ultimately will be what causes The Collapse.  Speaking of funding Government largess, the Treasury issued $35 billion in new 2-yr. Treasury notes today, taking the "official" Treasury debt load up to $15.4 trillion.  I say "official" because this number does not include some $7 trillion of Fannie Mae/Freddie Mac debt - I still don't know why this isn't included - nor does it include "special" Treasury paper issued, such as "IOU collateral" to entities like the social security trust ($2.5 trillion last I read).  This $15.4 trillion represents 101% of officially calculated GDP.  But if the manipulations were stripped away, I guarantee that the real number would be more like 120% of GDP - just like Greece...


  1. Jim Willie

    The short-term Silver lease rates returned to negative ground in February. With the successful theft of MFGlobal accounts, and the scaring off investor demand in December, conditions went back to normal in pursuit of Silver bullion bars. Typically a financially distressed institution can find giveaway rates to access physical Silver, only to dump it on the market. In the first week of February, the Silver lease plunged for the 1-month and 2-month rates into negative ground. The 1-month silver lease rate has gone below -0.3%, and the 2-month rate has gone below -0.2% as rates seek the mid-September and early December lows. Notice that the important Silver price declines happening exactly at those times of negative lease rates. To be a bullion bank able to borrow Silver in volume, with good reputation and relationship, the lender will pay out over 0.3% for the privilege of delivering the unwanted physical to other hot hands wishing to sell and dump it on the market. How incredibly corrupt! In the recent couple weeks, the intention of the cartel has been to prevent a move over the $34 and $35 price in Silver, to cap the market. They do so by dumping massive quantities. Notice also that the CME lowered margin requirements to draw in investors, while out the back loading dock; they turned the lease rates negative to encourage dumping in opposition. The criminality is much more in the open in the past year.

    A veteran gold trader source pitched in a brief comment, to instill some reality. He claims the supply line is dry. He stressed the Libyan gold deliveries to handle some heightened demand in the past couple months, which is largely depleted. He wrote, "There is no Silver (Ag). Like the allocated Gold (Au) the banks have sold bullion to the tune of 60 thousand metric tonnes. The precious metal has been swapped for certificates. Once the wheels come off and the physical demand expands further and delivery time is strained, the brown stuff will hit the fan big time. It is all an incredible window dressing in the midst of a fraud scheme that is perpetrated by the central banks and the commercial banks. By the way, the cartel banks just increased their shorts by 71 million ounces in past three weeks. What a corrupt game they play!" The Gold lease rates are similarly negative for the 1-month and 2-month arrangements.


  2. Unreal...the sba incompetence was highlighted in david einhorn's book.

    Wealthy Enriched by Double-Dipping U.S. Plan

    In April 2003, Piyush Agrawal deleted his son’s name as president of APS Technologies Inc. He replaced it with his own on a hand-written filing with the Florida Department of State.

    That made the 66-year-old retired educator the sole officer and director of the firm and separated its management from a medical supply company run by Agrawal’s two sons. Three months later, he followed his sons into a U.S. program that steers government business to the “socially and economically disadvantaged.” It was the Agrawal family’s second time obtaining federal assistance under a benefit that prescribes that immediate family members should participate only once.

    The New Delhi immigrants have grown rich on $256 million in government contracts since 1993 through a web of family-owned companies. The Agrawals are still in the nine-year program today, 18 years after first qualifying.

    They are among 12 repeat participants that have received $412 million in preferential contracts, and more than $1 billion in total government awards, based on data compiled by Bloomberg. Because of opportunistic entrepreneurs and lax government overseers, even the wealthy profit from a taxpayer-supported program designed to bolster underprivileged segments of society.

    The family’s medical distribution business was implicated in overbilling a veterans hospital in the 1990s, though the matter was settled. Later, the Agrawals were questioned in a criminal political-corruption probe in Florida related to how American Medical Depot was awarded local contracts for voting machines and medical supplies. No charges were brought.


  3. I am continually amazed at how otherwise seemingly well informed folks are taken in by the simple deception involved in PM 'lease rates' going negative.

    The published 'lease rates' are calculated from two factors according to the formulas 'libor minus gofo' for gold and 'libor minus sifo' for silver.

    Since libor (London Interbank Offer Rate) is normally higher than both gofo (Gold Forward Rate)and sifo (Silver Forward Rate), the resulting 'lease rates' are normally positive.

    But, when gofo and/or sifo are higher than libor, the respective 'lease rates' become negative.

    So, when the 'lease rates' become negative, one must ask whether libor has gone down, or have the PM forward rates gone up. If the latter, the negative 'lease rates' mean that the cost of leasing the metals in order to sell them at spot has actually increased, not decreased.

    Although I may not have thought it all through correctly, it seems to me that negative lease rates are rather like backwardation, in which spot prices are higher than futures prices. That is normally interpreted as a sign of mistrust that the metal will be available in the future, and therefore portends a much higher spot price going forward.

    1. Larry,

      Its funny you bring this up because today I was looking at the definition of gofo and
      Derived Lease Rate (DLR)here http://cij.inspiriting.com/?tag=gofo#

      and trying to determine if they are fudging the true tightness and cost of creating the bullion raids in the same manner they hedonically? manipulate/misrepresent the true cost of inflation.

      I'm not knowledgeable enough to know...anyone else?

    2. There's a lot of moving parts involved in calculating the lease rate for gold/silver. The GOFO rate going up means that the person taking delivery of gold in the future is demanding a higher amount of that good being delivered than is required on the spot market for immediate delivery. In a sense, it means that if you wait to deliver me gold in three months, I want more gold.

      What happens when a Central Bank is using gold to manipulate the price, and driving up the GOFO rate up, thereby creating a negative lease rate, is the Central Bank will flood the interbank market with gold available for leasing (or collateral use), thereby driving down the spot price of gold, which increases the GOFO and causes lease rates to go negative.
      Since I've been trading and researching the PM market (since late 2001), the occurrence of a negative leasing rate has always been followed by a big price correction. For sure, you could have negative lease rates occur in a market in which intervention does not occur, but it would be a signal of some sort of imbalance which would correct pretty quickly. I think it would be hard to make the case that when lease rates go negative in the markets we have now that it is anything BUT Central Bank intervention.

  4. The U S began as the new Roman Republic, it is turning into (if it not already is) the new Roman Empire.

    We watch as corruption after corruption occur with disbelieving eyes, wondering what has gone wrong with our country. Sadly, America is turning into the very thing The Founding Fathers hated and feared, a nation that serves itself instead of serving the people, all the people, not just the wealthy.

    Unlike the average Roman Citizen, we can see the handwriting on the wall and we are making preparations accordingly (buying gold and silver) to shield our wealth as things deteriorate as time passes.

  5. SNAFU...

    Nigel Farage - Catastrophe Imminent

    “Let’s empathize with these poor people in Greece. We (the EU) are driving them into something that is truly appalling. We saw two weeks ago those television pictures of buildings in Athens burning and 80,000 people outside the Greek Parliament, literally storming the Parliament trying to get in.

    5,000 armed police stopped them from getting in. This is a modern day catastrophe that is about to occur. And all that’s happened overnight with this agreement, that Greece will now take another bailout, is we are guaranteeing these problems can only get worse.

    This (agreement) was expected and predicted last week when I spoke to you. The Greek government has been forced to borrow another 130 billion euros and this from a country that can’t service the existing debt. The whole thing is complete madness....

    “I saw a photograph today of Christine Lagard, from the IMF, based in Washington. There she was smiling and applauding Mr. Papademos, the new Greek ‘puppet‘ Prime Minister, appointed by the European bureaucrats and I almost felt like being sick.

    It is just appalling what is happening.


  6. Dave, That $15.4 trillion does include intragovernmental holdings. Here's a link to the US Treasury Debt page that shows the split:


  7. The Greek Tragedy and Great Depression lessons not learned

    That is why the Greek government wants to bolster its now junk-rated banks (in addition to the money that banks are getting directly from bailout-for-austerity loans) and foreign ones, at the cost of hurting the population. But since the economy (even at its healthiest level ever) can’t sustain its bailout borrowing costs (as opposed to its operating costs which would have been payable without the increased rates and bailout principle mixed in), this is an unstoppable downward spiral.

    Greece’s GDP has contracted 13% (by 7% in the last quarter of 2011) from a late 2008 record high. (By comparison, the United Kingdom’s GDP has fallen by 20% in the same period, and though its unemployment rate has risen, its borrowing costs remain manageably low, making it cheaper to sustain its banks.) Greece’s savings rate at 7.5% is at three decade lows (but still higher than that of the US).
    The speed and intensity of Greece’s decline reflects nothing short of an international mafia-style hit.

  8. And you thought wealth was concentrated in the States?

    Israel Tycoons Said to Face Rules Cutting Company Pyramids to Three Levels

    Israeli companies, such as Delek Group Ltd. (DLEKG) and IDB Holding Ltd. (IDBH) will need to simplify corporate structures as the government seeks to reduce debt risk and boost transparency, a person familiar with the discussions said.

    The government committee on economic concentration will demand companies limit their pyramid structure to no more than three layers, according to the person, who declined to be identified because the information hasn’t been made public. The committee will propose a four-year deadline for corporations to comply with the new rules, said the person familiar with the final recommendations, which will be presented to the public today.

    If implemented, companies including billionaire Isaac Tshuva’s Delek Group, Nochi Dankner’s IDB Holding and the Ofer family’s Israel Corp. (ILCO) may have to sell assets and merge business activities. Some 20 families control 25 percent of the listed companies and 50 percent of the total market share in the Tel Aviv Stock Exchange (TA-25), one of the highest concentrations among developed economies, the Bank of Israel said in its 2009 annual report.


  9. Help for the uninsured: Doctors accept local currencies

    NEW YORK (CNNMoney) -- When a doctor spotted a lump on Alisha McNamara's lungs earlier this year, she and her husband Michael started panicking.

    The couple had gotten rid of their health insurance when sales at their Fayetteville, Ark. pizza shop, Bariola's Pizza, started sliding last year.

    For two months, they agonized over how they were going to afford the MRI and other tests that the doctor said Alisha needed, until they remembered their stash of "Trade Dollars," a local currency used in the Fayetteville area.

    The currency, issued by a company called Local Trade Partners, allows local business owners to exchange goods and services without using U.S. dollars. An auto repair man could earn Trade Dollars by fixing someone's car, for example, and then use the Trade Dollars he earned to buy a pizza at Bariola's. The McNamaras could then use the currency at other local businesses that accept it, including a handful of medical care providers.


  10. Sounds like everyone uses the same template....

    Evil overlords or lucky devils

    How we have unwittingly helped make five men multi-billionaires

    There was a time when few people in Hong Kong begrudged the city’s property tycoons. Most citizens respected their disproportionate share of luck and the determined way they had taken advantage of the system. Some even saw them as heroes with superlative acumen. But that was then and this is now.

    Perhaps the tipping point was in 2009-10. A property boom was starting just as the government’s earlier moves to keep land off the market inevitably resulted in a shortage of new apartments. The developers used marketing practices designed to make the most of such scarcity.

    Cartels also operate in other parts of the economy. Bid-rigging is common in the construction sector, as is price-fixing in construction materials, driving schools, container terminals and so much else. It all adds up to less competition: in other words, you pay more. Incautious small investors can also lose out, thanks to some tycoons’ approach to corporate governance and such practices as transferring assets from public to private entities cheaply or listing poor-value spin-offs. But the harm goes beyond our pocket books; the ‘property hegemony’, as the post-80s generation dubs it, is now clearly rotting our hearts and souls. Walk along the street in many middle-class neighbourhoods and you will often see four, five, six or more real estate agents where there used to be a hairdresser, a stationer, a photocopy shop and a mom & pop store. Property in Hong Kong is a pyramid scheme and there can be so much fast, easy money in it that it doesn’t make sense to invest in productive, let alone innovative, enterprise. As with all pyramid schemes, it periodically crashes; the losers are the little guys who are left in negative equity with a mortgage equivalent to 10 years’ salary and a little concrete box an hour away from Central.