Friday, May 6, 2011

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!


  1. Hey Dave...everyone is in on it...they want all of us to dance to their tune. How did this guy get to be bond king with this logic? He's basically saying there's a fire in the building that blazing out of control..WE'RE ON THE FIRST FLOOR....let's run to the top floor! wtf? more QE, buy bonds???

    From Reuters, quoting Bill Gross, who previously did not believe in another round of QE:


  2. As I seem to recall, it took Mr. Harry Markopolos nine years of poking, proding and pleading wih the SEC to investigate Madoff before anyting was done, can we expect the CFTC to do any better concerning the silver shorters?

    Best bet-buy physical, take posession physically, let COMEX run dry and then sell when everybody and his brother is trying to get aboard te silver bullet train.

  3. Bill Gross meet Thomas Kaplan..hope you have a big sewer!

    A Billionaire Likens America's Fiat Money To Double-Ply Toilet Paper

    By DAVID PIETRUSZA, Special to the Sun | May 6, 2011

    Mr. Kaplan likened America’s fiscal policy since 1971 to the actions of Wile E. Coyote in the “Road Runner” cartoons, who runs over the cliff so fast it takes him a moment to realize there’s nothing beneath his feet. America's previously robust economy and the position of the dollar as the world's reserve currency has delayed, Mr. Kaplan suggested, but will not prevent its downward plunge. “We’ve passed the tipping point,” he later warned.

    “All paper currency,” said Mr. Kaplan, is “toilet paper currency”; the dollar is, on occasion, “double-ply."

  4. I'm not a big investor like the people here...but has the US treasury bond futures ever had these kind of margin increases? Just wondering... ???

  5. I'll say one thing - those scheming, short selling bastards definitely knocked my portfolio down this week to the tune of 20%.

    I only trade hard commodities (oil, gold, silver, and other metals) by my analysis of the US dollar it will eventually be impossible for the Fed, Comex shills and the other crooks to keep a lid on any of it - I'm looking for $2300+ gold, $125+ silver, $230+ oil and $8+ copper, and that should be just the beginning if I have my figures correct.

    What's your take?

  6. Conway I think your numbers for gold and silver will prove to be low over the next 3 or 4 years. I don't really follow oil and copper other than to keep track of where they trade but your numbers look good

  7. Anonymous I don't know. I'm surprised they increased the margin on Treasuries like that. Maybe to make them more expensive to borrow and short.

  8. If you have time over the weekend read the full story of Bunker Hunt(the playboy article) at the end of this link over at ZH. Forget the cornering aspect and the right wing zealotry...look at the players, the tactics(offshore vehicles), the regulators, the geography..if you don't see the threat, historical biases, and lengths these players will go to protect their're blind!

    BTW,take a look at the supply figures back then..compared to today...hmmm..

    How The CBOT, Comex And CFTC Coordinated To Break The Last Silver Price Surge

    Some excerpts...
    "Annual production in 1974 was
    only about 245,000,000 ounces, while annual consumption was about 450,000,000 ounces. Exactly how much the total world supply amounted to was anybody’s guess. Estimates ranged from 600,000,000 ounces to 800,000,000 ounces. Of that total, only 200,000,000 ounces was believed to be available for delivery against silver futures contracts."

    "Herbert went over to the Philippines and got a favorable response from President Marcos. But the International Monetary Fund, which lent a great deal of money to the Philippines to buy crude, said it would not recognize silver as part of the country’s national resources. In effect, the IMF ruling meant that the 20,000,000 ounces of bullion would be worthless in trying to get loans. With that, Bunker’s scheme fell through. Great Western sold its bullion in early 1977 for $88,500,000, thus offsetting a substantial part of the revenues lost due to the collapse of the sugar market. Still, the company continued to operate in the red."

    "But Bunker’s assurances that he was willing to cooperate as much as possible apparently mollified the CFTC officials; the C.B.O.T., however, concluded that it was time to act. In a move aimed directly at the Hunts and the other big buyers, the Board of Trade raised the margin requirement and declared that silver
    traders would be limited to 3,000,000 ounces of futures contracts. Traders with more than that would have to divest themselves of their excess futures holdings by mid-February 1980. With that, the battle lines were drawn. Bunker let it be publicly known that he thought the C.B.O.T. was changing the rules in the middle of the game, and vowed to fight the limits all the way. Privately, he regarded the C.B.O.T.’s action as another conspiracy against him by the Eastern establishment. And for once, he had a good prima-facie case."

    "The boards of both the Chicago and the New York exchanges were composed not only of “outside” directors but also of representatives of the major, usually Eastern-based brokerage houses. Later testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective regulators. At the same time, though, the C.B.O.T. restrictions made Bunker even more bullish on silver, because, as he put it, “they show a silver shortage exists.”

  9. When the president is lawless, and the congress is lawless and corrupt and all other government entities are corrupt, what do you think will become of the United States or any other country?

  10. Dave,

    I did not post anything for long time, but I am your loyal daily reader.

    You mentioned about India and people are buying G/S hand over feet. I would like to second that.

    Yesterday (Akshya Tritiya) was one out of 3.5 auspicious days when it is recommended to buy Gold/Silver (i.e. Money) as per Hindu calender. So price knocking by the cartel was really auspicious. Dopes on Water Street have no idea how much of the metal would go in small hands. I have seen people would buy 5 grams 2 grams gold on a monthly basis. So called educated people in India have somewhat forgotten about Real Money and investing in the stock Market and Bonds. The Portfolio Manager never recomends them Gold?silver. If someone comes with this idea, only 4-5% money would go in some Gold ETF. But not so educated and farming community is on Gold and Silver.

    I am happy to say that I made a friend buy 2000 Oz Silver during this correction at about $39.

    There is going to be 3rd round of buying if cartel pushes it to 32.

    If this fellow from a small Indian city could gather courage to buy 3000 Oz during the correction, then, I feel there could be another 100's or 1000's more people who are going to do the same.

    That is Hand Over Feet. Can you believe that ?

  11. word from my dealer is they cant keep up with orders thursday friday 100:1 buy to sell ratio for physical.

    Hoping for $40 bounce by friday, unless they raise margin tuesday, wednesday, thursday, friday, saturday, and sunday this week.

  12. Jim Sinclair already said that Margins could go to 100%, so they have 5 more days to fill in shortfall to make it 100.

  13. Crime pays...

    Monday, May 9, 2011
    The Injustice of Justice: Why Goldman Sachs and Others Go Free

    One in particular who does is New York Tijmes op ed columnist Joe Nocera. In an article he published on May 6th, You Call That Tough?, he says,

    Are there any lies that amount to crimes? When it comes to financial executives, it sure doesn’t look that way.

    He is basically saying the samething I am saying. When it comes to criminal behavior of the bankster gang, our laws are interpreted differently. A lie that defrauds someone lands some in prison. Lies that bring down an entire economy, wipe out a majority of middle class, create a RRecession (yes it was a double capital R recession) causing more foreclosures, unemployment, hunger and homelessness then we have seen in decades. Even more by sheer numbers of people (not percentages) the what we call the Great Depression.

  14. James Turk - “Silver Will Hit New Highs in a Matter of Weeks”

    When asked about silver specifically Turk stated, “At times like this it is important to stand back and take a look at the big picture. So the key point here Eric is to focus on the chart (above) which does a great job of illustrating this. If we put last week’s price drop into context and focus on all of the factors that have been driving silver higher for ten years, it’s logical to conclude that the big price jump in silver is still ahead of us.

  15. Hi Dave - thx always for your blog. This dollar index rubbish is getting to me. It compares rubbish with rubbish. It would be great if you developed your own - against real economies with surpluses or one without the euro/pound/yen. Because where I live our currency is getting stronger even when your dollar index is showing that the dollar is. And then show it in the upper right corner with your metals. Thx


  16. Greshams law in motion...let's see who wants to play follow the leader...

    Sprott Launches Physical Silver Mutual Fund, Will Likely Soak Up Much Marginal Silver Inventory

    And another major source of physical demand in the already very undersupplied silver market appears. Just released from Sprott Asset
    Management, who recently added to the perfect storm in silver by cashing out on the record PSLV premium and converting proceeds to
    miner stocks: "The Sprott Silver Bullion Fund is an innovative offering, being the first mutual fund in Canada to invest primarily in
    unencumbered, fully allocated silver bullion. The Fund's objective is to seek to provide a secure and liquid investment for investors
    seeking exposure to silver bullion without the inconvenience associated with direct investment." We can't wait to discover how many
    tons of silver this mutual fund will soak up imminently, and where the always exciting adventure of "COMEX registered silver" takes us

  17. Anonymous re: sprott link: thanks. wondering what the difference is between this fund and PSLV. I'm guessing the new on is more like CEF only pure silver (i.e. you can't take delivery but they buy silver and keep it in one place unllocated).

    Anymous re: dollar index alternative - great thoughts there. i wish i had time to create and tack something like that. I think kitco shows the in relation to all the major currencies, not just the ones in the dollar index basket.

  18. While the fed is scarce on seems gold is short on supply

    So Much For John Burbank Turning Bearish On Gold

    So here it is: "The biggest reason to stay in gold is because central banks around the world can see the writing on the wall long term, which is that the dollar will be devalued one way or another and that Congress has no appetite for hard decisions which would be deflationary in nature, and therefore, make the dollar higher than gold and not as much of a necessary holding. You also have the Chinese consumer, who has become a very large buyer, matching almost the Indian consumer and I think quite clearly, will exceed the Indian consumer. I think ultimately, physical gold is the story. It is a scarcity story. The more the U.S. dithers and the more the Fed is willing to print money, as opposed to dealing with inflation properly, the more this trend will happen.

  19. How do you say poor bastards in Vietnamese?

    Vietnam's Banks to Convert 30 Tons of Gold to Cash
    Source: Vietnam Business News (5/9/11)

  20. Hi Dave, very nice share, thank you

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