Tuesday, March 13, 2012

The Government Data Farce Continues

The naked shorts in silver, who had the upper hand by sending silver back below $35, are going to be in for a real surprise by the speed and strength of the silver market when it turns  - James Turk, KWN interview LINK
A quick comment on today's "robust" retail sales report.  More appropriately labelled, "robustly reported" retail sales report.  First, don't forget that this is a Government-calculated and reported number.  In this report, the second footnote states: 
Estimates are concurrently adjusted for seasonal variation and for holiday and trading day differences, but not for price changes  LINK
Please note:  "adjusted for seasonal variation" AND the effect of inflation is NOT removed.  So these numbers, aside from the the likely problematic data-gathering, statistical compilation and mathematical formulas of "seasonal adjustment," are inflated by real inflation. In other words, the numbers reflect gross dollar sales, not growth in unit sales.  Even if you adjusted them by the Government-calculated CPI, they would still be overstated because the Government CPI number is fraudulently incorrect by several multiples.  John Williams - who does exhaustive work on the Government numbers - had this to say about the number:  "With overall consumer inflation in February likely accounting for more than half of the 1.1% headline monthly sales, the residual reported sales would not be statistically significant."

Let's say that there might have actually been a small increase in retail sales - again, I would argue that on  a real-inflation-adjusted basis, unit retail sales likely declined.  But what might be driving a growth in the nominal number, besides inflation and "seasonal adjustments?"   Take a look at this chart of consumer credit - the numbers come from the Fed, the chart from John Williams' Shadow Stats report:

Nothwithstanding the fact that the massive growth in student loans is - in and of itself - quite horrifying, but you'll note that it looks like the so-called household "deleveraging" is coming to an end.  In fact, as we've discussed in the past, the "deleveraging" was really the erasing - writing off - of credit card, auto and mortgage debt by the big banks.  If your pour through the numbers in the report that I linked above, you'll see that a preponderance of spending took place in food and gasoline.  These are necessities that people often use credit cards to purchase.  Ergo, the growth in consumer credit.  To the extent that retail sales are "growing,"  the "growth" is fueled by 1) inflation and 2) the purchasing of necessities on credit.

When you dissect the numbers - and remove the Orwellian stench draped around them by the media - you can really see that this retail sales report is not only problematic, but actually reflects fundamentals problems in the system.

Perhaps this is why gold and silver have rallied a lot higher today after the initial aggressive attempt by the paper manipulators on the Comex to hit them hard when the retail sales report was released.  The precious metals usually smell the "truth" emanating beneath the b.s.  This metals market reminds me a lot of the character of the market in late 2005, when silver was trying to break through $7.75 to get to $8.  I used to trade silver pretty much around the clock back then.  I remember they kept trying to take silver down below $7.50 (I also vividly remember Gartman saying gold would go back to $450 from $550 - note:  gold ran from $550 to $735 and Gartman missed the entire move).  After several aggressive attempts to smash poor man's gold, silver made 7 month run that took it over $14.

Myself, several long-time colleagues AND several respected analysts all believe that the metals market is "percolating" for a big, extended move higher.  Again, there will be a lot of volatility (like today), but at some point in the near future, we will likely see a move that takes gold and silver back over their highs of last April and likely continue significantly higher.


  1. Well - it seems its immaterial the farce. It's no point when the gold bugs are waiting for QE to infinity. Do you think the Fed and powers are so stupid - firstly it's less costly to be active in the markets and doing QE without acknowledging it.

    Now the gold bugs are in a corner - you were the ones banging on the QE thing constantly and how stupid that was.

    Now the target for the FOMC's stance is oil more so than anything else but that isn't budging but gold and silver are the most affected.

    How on earth anyone would claim that there is a big move imminent and it will be news related - aka Turk - is also beyond me - and new buyers to appear. Well!!!!

    Ontop of that the European markets have closed at an 8 month height eventhough there is apparently this debt crisis going on.

    How wrong can you be.

    And the biggest thing for the gold bugs is that they are reliant on the "invisible hand" to change tack - when the commercials are fully loaded.

    So this whole bull market isn't as a result of all these tin foil hats but the people with power and the levers. Those are also the ones being accused of manipulation. Isn't that ironic.

    1. I Have No Choice but to Own Stocks: 'Black Swan' Author

      He said Paul's plans, including making drastic cuts in government, ending corporate bailouts and abolishing the Federal Reserve [cnbc explains] can "cure the fundamental issues. He’s against the issue of novocaine. If you have a severe problem, you do root canal. That’s the only choice you have. You have to start with a government budget that is in control. You don’t gamble with future generations' money."

      Can America live with austerity? "We are doing it to the Greeks," he said. "We should do it to ourselves. We want jobs, we want a healthy economy. I want to live in a country that has the energy to rebuild things. This is gone. We have a metastatic government...You need to do something drastic."

      The whole system "is rotten," he added. "The advisers around [President] Obama who were part of the problem were friends with the bankers. I don’t trust the Republicans with deficits. Look at what we had under the Republican administrations including George [W.] Bush. I want the main problems to be addressed and I want a major cleanup.

      "I don’t care about [Ron Paul's] chances. I support him. We have no other solutions. It is my duty as a citizen and as a taxpayer who doesn’t want to be hoodwinked in the long term by bureaucrats."


    2. Rule - $150 to $170 Oil, Gold, Fraud & Dangerous Times

      “This strengthens the power between sovereigns and allegedly private sector banks, which are increasingly instruments of central power. This is also very bad for savers who put money in banks and the banks turn around and stupidly lend the money to sovereigns. The sovereigns then turn around and bail out the banks, in effect nationalizing savings and risks.

      As I said, it’s a very dangerous set of circumstances and everybody needs to understand this behavior for what it is which is fraud, Eric. I am assuming your readers because they are your readers, will equate the set of circumstances we described with regards to Greece as fraud.

      I am similarly assuming that the same people will look at the bailout of the US banks, AIG, people who bought houses they couldn’t afford, and the people who loaned money to people who couldn’t afford the houses they bought as fraud. If your readers concur those things are fraud and the liquefaction of those losses, in terms of QE or counterfeiting as fraud, my suspicion is you have to be a goldbug.

      I also don’t understand how a sovereign entity like the United States can take in by way of revenues, less than 40% of what it spends. The US then makes up the 50% of the difference by encumbering our children’s future and the other 50% by counterfeiting. How people can observe the events we are witnessing, understand them to be fraud and counterfeiting and not be a goldbug.”


      @ How wrong can you be....you're someone's little helper,eh?

      They just don't appreciate that you get tired
      They're so hard to satisfy, you can tranquilize your mind
      So go running for the shelter of a mothers little helper
      And four help you through the night, help to minimize your plight


  2. Everything known before hand. For the next time we know we can't invest using Embry's advice foremost but Turk is starting to run close behind. Goldman and JPM telegraphed this FOMC move. So what they going to do - raise rates???

    Embry - and his comment that this year will be one heck of a year for gold and silver. He might have been in the bull at the beginning but as sure as...he doesn't know cycles.

    So tinfoil hats "hoping" for nothing.....QE to infinity what a laugh

  3. And by the way - this year will be the year of the banks. they are the ones who really needed the QE but seems not. They are doing just fine.

    The Gold and Silver has reached its top and those calling for 10 000 are just nuts because its not aloud to happen - even if gold "should" be there.

  4. And all this London trader bullshit about massive physical at 1680 is absolutely useless information. This move was so predictable. Watch 1650 go and the Alf Fileds will have to go back to the drawing board.

  5. Anonymous 1... total incoherence you spout. I don't feel in a corner at all with my PM's... it is by far the paper bugs and CB's that are in the corner, having to ultimately print up most of the money needed to keep Gov't debt growing, supporting all the transfer payments. The Emperor will be naked soon enough.. not sure how long.. could be months, could be a year or two. Doesn't matter really... in the end the paper markets you talk about will bow to the physical markets you fail to mention. Can't wait for that PAGE replacement to start trading fully backed, physical Ag contracts. Your trolling has failed....

  6. Well I guess people frequenting Gold bug sites will not open themselves up to changing times. JPM buy back and dividend increase. When last have you seen miners do that.

    You guys just don't want to see the change - the dam has burst - and 2012 will be a disaster for gold and silver. Embry was wrong. You thought that Dec was bad but described as low volume. Here we are at same levels - not silver and at higher volume.

    And another thing - its really just a trade and the best trader has absolutely no physical and still gets the juice. Physical will be bag holders.

    1. What the fuck is your problem? Gold Resource - GORO - just announced yesterday that they are implementing a program that gives the shareholder an option to receive his dividend in gold. GG pays a monthly dividend. Several companies now tie their dividend to the performance of gold or silver. You are the one who is clueless.

      It's juvenile to think if a market doesnt' go straight up that it's busted. That tells me you grew up trading internet stocks. How'd that work out for ya. You want something goes straight up? Trade AAPL. Let me know how that works out for ya.

      To this day, the PM sector has outperformed EVERY other asset class for the last 11 year.

      Wake up and smell the coffee. By the time the sheeple realize they should be buying gold, silver and mining stocks, they won't be able to afford much.

    2. Dude.. don't get so worked up by the troll. You have to realize that the forces of evil actually have trolls working sites like this, trying to add some little increment of weight to the alternate reality they are creating. Think about it.. who in their right mind would call a physical holder a bag holder right now, with all the money printing going on? This troll is simply an agent of the ponzi.. Nobody else would have the energy to come here and post this crap, over and over again.. get used to it.

      I just received a 1 Kg (32 oz) Lunar Dragon... I could not be happier. There is only one truth... the Emperor has no clothes.

    3. Bugs as in Bugsy Dimon?

      Politics: J.P. Morgan Chase's Ugly Family Secrets Revealed
      By Matt Taibbi
      March 13, 2012

      In the "vast majority" of those instances, the actual debt was "lower that what Chase was representing," her suit stated.
      Linda subsequently found an enormous range of errors. Some judgments, she told me, were not judgments at all. In some cases, she said, Chase actually owed the customer money.
      When she brought these concerns to her superiors, what do you think their response was? They told her and others to shut up and just sell the stuff anyway. Her boss, Jason Lazinbat, allegedly told her "she had better go along with the plan to sell the misrepresented asset."
      Think of the consequences of this: because Chase was so anxious to make money off this debt sale, countless credit card borrowers would now have collection agents chasing them for money they did not owe. The debt-buyer, too, was victimized by being sold accounts it could not collect on. It is almost impossible to estimate how many man-hours of pointless court proceedings would be lost because of this decision.


    4. Ya I hear ya on the troll. I usually ignore them but I had some xtra time so I figured I issue a rebuttal.

      I don't have to post those comments but I don't want to be accused of editting and I'm firm believer in the 1st Amendment

  7. Ann Barnhardt & W Pollock Re John Locke and Future Trends

    The contract between people and their government has been broken. This means that we have to take responsibility for the current condition as we take action towards change. We are collectively responsible for our governance which we have delegated to an elite band spanning congress and private sector oligarchs. There are 310 million of us vs Under 1000-3000 key oligarchs! By failing to remove our defective government we are giving our tacit agreement to a system that is immoral and working against our survival interests. Informed consent was a foundation point of representative government. Our leaders have forsaken us because we have acquiesced to their lies as we delegated away our freedom and property.


  8. 1 Kg Lunar Dragon here.. yeah, I wouldn't want to stop the trolls either.. on free speech grounds, or otherwise.. I think their presence actually points to increasingly desperate nature of the situation. The guy is actually trying to sell us on paper Gold and Silver vs. Physical.. amazing stuff really when you think about it. The presence of this troll is data to me.... I love more data.

  9. Bank Stress Tests and Other Acts of Faith

    If the bank has an EC to T1RBC ratio much greater than 1, the model is
    telling you that the risk taken by the enterprise exceeds the ability
    of the nominal regulatory capital to support it. Notice that JPMorgan
    and not Citigroup ("C") is the outlier when you look at the group
    based upon EC, followed by State Street ("STT"), Toronto Dominion's US
    units and Goldman Sachs ("GS"). Note that the IRA ratings are a
    mechanical survey with all the participants treated the same.

    So when I look at the Fed stress tests, which seem to be the result of
    a mountain of subjective inputs and assumptions, the overwhelming
    conclusion is that these tests are meant to justify past Fed policy.
    Policy like allowing large banks to pay dividends and, especially, move
    loan loss reserves back into income by most of the TBTF banks.
    Significantly, US Bancorp and smaller institutions have generally not
    played this dangerous game with loan loss reserve releases back into
    income because they could easily cover the dividend.
    Then again, look at the mere $62 billion loss on first lien mortgages in the supervisory stress scenario. Since real estate is half the total $13 trillion balance sheet of the US banking system and more like 3/4 of total exposure if you include RMBS, how does the Fed manage to keep total real estate losses below $150 billion in the stressed scenario? Again, the Fed party line is that there is no problem with real estate. But to be fair to the Fed, they are looking at the same baked and spun disclosure from the TBTF banks as we all. There were reports that the Fed initially wanted to ignore the 2009 FASB rule changes in fair value of illiquid assets, but banks pushed back and insisted on "new GAAP" as the rule.


  10. nothing goes up in a straight line - well conversely nothing goes down in a straight line. what i found is that this religious blogging about gold is also a farce. forever harvey writes about the strain on physical in a delivery month. what a damp squib the silver one is turning out to be... the same as any non delivery month.

    and much about this qe farce - with europe japan and boe recently doing qe and gold can't move what does it tell you - its reached its limit-

    oh and by the way i agree nothing goes up forever and a straight line - well that's re assuring for the hui and xau - well done.

    well alf fields analysis has to be revisited at 1650, we nearly there. that is the breakdown of his analysis

    1. John Doody on Gold Stocks: “Mama Said There Would Be Months Like This”

      Jim welcomes back to Financial Sense Newshour John Doody PhD, editor of the Gold Stock Analyst. John discusses the recent weakness in the gold stocks and sees opportunity in today’s market. He notes three factors that determine value when investing in a gold stock.

      John Doody brings a unique perspective to gold stock analysis. With a BA in Economics from Columbia, an MBA in Finance from Boston University, where he also did his PhD-Economics course work, Doody has no formal “rock” studies beyond “Introductory Geology” at Columbia, taught by the University’s School of Mines. An Economics Professor for almost two decades, Doody became interested in gold due to an innate distrust of politicians. In order to serve those that elected them, politicians always try to get nine slices out of an eight slice pizza. How do they do this? They debase the currency via inflationary economic policies.


  11. everyone else is term a troll or sheeple etc.

    So lets invent a new word for those that use the following - moon shot, smoke under the hood, short are in for a religious experience, analysts out to lunch. Miners will trade like internet stocks blah blah blah

    GORO dividend - big deal - by now miners should have had the chance to do more than JPM did last night.

    It's only a trade - nothing else - as long term investment one must be nuts.


      This Klepto is still on the lam
      All others would be in a jam
      With justice now bought
      He'll never be caught
      He may have perfected "The Scam"!!!

      The Limerick King


    2. Is MF Global Getting a Free Pass?

      It’s sure starting to look as if Jon Corzine is going to get away with it.

      By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing.

      Let’s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. Customer money is supposed to be sacrosanct.


  12. And by the way you all must have noticed that - most miners with an exception of only a few - are back to 2003 levels. Isn't that the same as the Dow etc having gone nowhere.

    And for the London trader mentioning big physical buying around 1680 on the pumping site Kingworldnews. Seems that is immaterial and people are just to happy to sell some physical.

    All this bravado on gold bloggers sites. Everyone else is a troll.

    1. Price is manipulated...

      Why I’m leaving Goldman Sachs

      It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.


    2. Guy Who Rented All 94 Rooms of Aspen Hotel for Party Scores Awesome New Goldman Job

      Verschleiser also made a bundle burning Bear's bond insurers, whom he bet against after inducing them to insure his crappy mortgage bonds, nicknamed "Sack of Shit" bonds by one of the funny dudes in his department. Verschleiser reportedly bragged that he made $55 million shorting his own bond insurers in the space of three weeks. Those interested in the whole sorry story should check out reporter Teri Buhl's excellent Atlantic magazine piece entitled, "E-mails Suggest Bear Stearns Cheated Clients Out of Billions."

      Read more: http://www.rollingstone.com/politics/blogs/taibblog/guy-who-rented-all-94-rooms-of-aspen-hotel-for-party-scores-awesome-new-goldman-job-20120312#ixzz1p5oKSRub

      ....so makes you wonder what wouldn't they do?

  13. Our new visitor, Bankster Troll Boy, and his misguided notion of "no more QE" proves he does not understand the stark facts presented in the article below. The US Shadow Banking system experienced its 15th consecutive quarterly contraction, from an all time high of $20.9 trillion to just $15.1 trillion. The Central Banksters have been continuously printing -- and will continue to print -- their counterfeit fiat. It is "Print or Die" for them and the Global Financial System. Read Troll Boy. Educate yourself.


    Is This The Chart Of A Broken Inflation Transmission Mechanism?


    ".... when it comes to secular market moves, today's little bout of JPM-related euphoria will be truly transitory if not accompanied by much more printing. After all the chart below is exponential and demands a sacrifice soon: perhaps the PBoC will step in briefly, although unlike the other central banks, China's money tends to stick within its own system. As such a far bigger calf will be required."

  14. I was taught to buy the margin call sales...

    Another Record ECB Margin Call Impairing Gold Again?

    This is concerning since it would appear we had a good week for collateral (risk assets) in general, so we can only imagine what garbage is clogging the ECB's balance sheet. The side-effect of this appears to be (as we pointed out here) that Gold (the banks' remaining quality collateral) is being sold to cover these margin calls just as it was in September 2011 (though lease rates have not squeezed as much this time).