Posted at 3:11 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

I am a bit pressed for time today as the price action in the various commodity futures that I trade is keeping me on my toes. Some of the commodity markets are following the US equity markets higher today while some of them are not, notably gold and most of the metals. Gold in particularly is not trading “right” today. By that I mean the correlation between it and the US equity markets has been pretty close recently. When the equities are moving higher, gold has been moving higher in what I am calling the reflation trade. The opposite also has been holding true. Today, the equity markets were initially higher and yet gold still got  whacked again.

Generally, we have been seeing the Dollar and the US equity markets going in opposite directions as well. Today that changed with the Dollar moving slightly higher while the equities were also moving higher. That brought in selling into gold after the market had recovered most of its overnight losses. About 30 minutes before the close of pit session trading in New York, gold was hit once again. So too were the mining shares. The war against gold obviously continues. Interestingly enough, the equities faded off their highs just about the time gold was getting ready to close in the pit.

The volume in the gold is getting quite anemic. It looks more like a holiday trade than a normal business day trade. Spreads between bids and offers at times are as much as 7-8  points at times even in the most active month. The contraction in open interest is taking its toll on liquidity. Yesterday saw another drop of over 1900 contracts bringing the total to an almost laughable 264,796. I say laughable because who would have envisioned that during a time of such incredible financial duress, the interest in gold would be collapsing. That just goes to show the extent of the de-leveraging trade. Again, we are talking about the phony paper gold market and not the real deal.

Technically gold is treading water holding just above support near the $760 level basis February. Failure there and it will retest $740. Upside resistance is first at $780 – $785 and then at $800.

We had another 285 deliveries assigned this morning with HSBC the largest stopper followed by Bank of Nova Scotia. Fortis Clearing is providing the brunt of the selling. Total deliveries so far this month are 11,758 contracts or 1,175,800 ounces. That is a nice chunk of gold but we still need some more taken out.

Open interest in the December contract still is a bit high for this late in the contract’s life which could mean that there are more than a few players left who intend to take delivery. The total remaining as of yesterday is 2,118. That is 211,800 ounces of potential physical gold purchases. More guys still could come into that month yet if they knock prices much lower so stay tuned.

A quick comment about the price action in so many of these markets which can aptly be termed, “schizophrenic” – they have become the domain of day traders and scalpers. Drawing too much in the way of assumptions from price action in regards to the fundamentals is a waste of time. They will go in whatever direction the most money happens to get thrown at them on any given day. If the biggest order of the day is one that says in effect; “Jump off the edge of the canyon and follow me” – guess what – They all will do exactly that!

Newsletter writers in particular, who are forced to make daily recommendations to their readers are to be pitied. What they write one day, they have to take back the next only to eat those words the day after. Better to sit on the sidelines and wait and see if some semblance of sanity comes back after the new year. I have chatted with a few of my trading pals and the consensus is becoming just that. Take a long vacation and let the rest of these guys chop each other to pieces, particularly the hedgies.

Click chart to view today’s action in Gold as of 12:30pm CDT with commentary from Trader Dan Norcini

December0308Gold1230pmCDT

Posted at 11:59 AM (CST) by & filed under General Editorial.

Dear Friends,

Gold last evening was trading at $780. On the Comex it was trading at $765. That has to motivate you to fight back.

Gold moved back, influenced by the firming euro.

Gold is a currency and the Comex cannot change that, however you have the power to change the COMEX.

Respectfully yours,
Jim

Posted at 11:30 AM (CST) by & filed under Jim's Mailbox.

Subject: RE: If the COMEX is to be busted, it is the bankers themselves who will do it.??????

Hi Bill,

I do not know who started this idea of “busting” the Comex but like I mentioned in my commentary today – our campaign is to have gold buyers systematically buy the gold that they had already planned on buying every time the bullion banks smash the paper price down with their sell orders. By so doing this, the paper shorts are being served notice that the very strategy they use in the gold market, namely selling strength and buying weakness, is now being turned against them. Only this time around, the onus is on them because they will be forced to actually acquire enough physical gold to deliver the metal to buyers who buy into the weakness with the express intent of taking physical delivery of the gold. Come delivery month, the paper shorts get assigned and must either have the metal to sell or have to get out. The longs who intend to take delivery can just sit tight which means that the paper shorts now have NO ONE TO BUY FROM and thus are forced to bid the market higher in order to exit.

Either way, the longs win. Remember the silver market of the Hunt Brothers’ day and how they trapped the paper shorts.

Trader Dan

Dear Dan,

I totally agree. The intention is NOT to bust anything.

The word bust is WRONG. Bust is the mindset of the predators who have attacked gold shares.

If BUST is the mindset of this initiative we are acting just like the Demonic Hedge Fund managers and their law-breaking broker intermediaries.

What we want is a level playing field.

A level playing field simply requires 21,000 contracts taken into delivery, and REMOVED FROM THE COMEX.

The Comex will never default or be broken. It is simply impossible in a practical sense. The Comex in the final analysis will transmute to a cash gold exchange. This will stop the activity that was clear in the Comex pre-US session and this morning

All the best,
Jim

Trader Dan,

I think your quote last night came from a famous trader of the 20s named "Sell em Ben Smith," a friend of my Dad’s. He and Bert cleaned up on the 29 break and after the 30s rally. Next time I get the honor of talking with you, I have a story about "Sell em Ben Smith."

Regards,
Jim

 

Jim,

The easy assumption for many is to assume that inflation is dead. The price at the pump has collapsed and price of oil creates inflation, right? Rising oil prices do not cause inflation. Inflation is caused by too much money chasing too few goods and services. As global monetary policy prints money to provide needed “liquidity,” it is absolutely essential to remember that monetary inflation always precedes price inflation.

While the alphabet soup of monetary aggregates, M1, M2, and M3 has receded from the recent highs, they continue to grow at alarming year-over-year rates. According to shadowstats.com M2 the arithmetic year over year growth rates for M1, M2, and M3 are roughly 8%, 8%, and 11% respectively.

 

Click here to view the charts…

 

History suggests that mature, stable economies require only a 2-3% per annum growth in money.

Excessive money growth, however, does not necessarily mean an increase in widely followed inflation measures or tangible goods. As long as excessive money growth can be redirected from traditional inflation measures, it can be largely hidden from the public.

One of the main conduits that redirected monetary inflation has been derivates (also known as ABS, securitization, SIV, etc). Jsmineset.com recently indicated that most recent BIS figures on derivatives going back one reporting period at one quadrillion, one thousand one hundred and forty-four trillion.

The recent collapse and ongoing failure of the OTC derivative market has not only crippled the financial economy but it also ability to redirect monetary inflation away from traditional inflation measures. If the redirection conduit has been closed, where will all the freshly printed money go? Unless a new financial creation arises from Frankenstein’s financial laboratory, history suggests that it will be:

(1) Out of the dollar
(2) Into Gold and precious metals
(3) Despite popular opinion right now, eventually into tangible goods such as commodities, energy, and base metals.

Regards,
CIGA Eric

Jim,

It’s bad enough to be in a car accident, but getting billed for the police and/or fire department response can make matters worse. Your insurance may not cover that.

CIGA Rusty Bayonet

‘Crash taxes’ add hefty fees for aid
By Peter Lewis

Imagine you’re cruising down the road when you hit a patch of black ice and slide into a guardrail. A passing motorist calls 911. Soon firetrucks and police arrive.

Weeks later, a $1,400 bill does, too — for the cost of the police and firefighters who answered the call. What’s worse, it’s not covered by insurance, and it might scar your credit if you ignore it.

Sound implausible? It’s happening in a number of towns, cities and counties in at least 24 states. And given today’s cratering economy (and property-tax revenue), more strapped local governments may be tempted to authorize so-called accident response fees.

More…

Posted at 6:51 PM (CST) by & filed under General Editorial.

Dear Friends,

Taking delivery is one thing, but leaving the delivery at the COMEX is another. Leaving the gold at the COMEX warehouse does something but NOT MUCH. In order to level the playing field you must take the delivery OUT OF the COMEX warehouse.

Do not for a moment buy the disinformation that if you take delivery of a 100 ounce gold bar from the COMEX that is has to be re-assayed to sell it. That is DISINFORMATION as it is a COMEX rule put in to dissuade you from, taking delivery out of the warehouse. You get registered bars by serial number in COMEX delivery exactly how you would get from any international bank. Those bars, after examination, will not be questioned in the selling process away from the COMEX.

I am giving you today the cost of storage of gold at the Zurich Airport Free Zone in SEGREGATED FORM. A German Bank purchased this depository with offices in Switzerland. After having checked every international storage point for you, the charges are reasonable. Shipping it there is totally legal. Having valuables in a safe depository is not having a foreign account. Please confirm that point with your tax or general attorney.

You will shortly get the cost of shipment and insurance by Brinks or a similarly rated shipper of valuable as soon as I am able to compare charges to see you are treated as any other professional would be.

Jim,

I called Tom Kelly whom I spoke with this morning at Brink’s regarding storage. I spoke with him to get information just on transport to and from as follows:

NY to Zurich – he would need to have the exact business info/addresses for to and from locations. Each sealed package/container must not exceed 50-60 pounds and you would need to advise them how many there are. You need to submit this to them via email and it takes a few days to get a response.

Dar-Zurich – he would need to contact their offices with the above information and to get clarification on whether they could actually transport the gold.

Regards,

CIGA Anna

Jim Sinclair’s Commentary

With this information you need not place a financial intermediary between you and your gold. You do not need to buy certificated gold in Australia or send any money to a website.

You handle the entire situation yourself with the help of JB. I will be teaching JB how to see that the gold is properly transferred from COMEX delivery to the shipper, making your life even easier. JB has promised me that he will not solicit your business in speculative dealings but simply aid you in taking delivery and shipping to an international depository where it will be held in segregated form.

Don’t think for a moment that using Australia or the Internet offers you any privacy because if the boys want to know you can be sure the records of an Australian, Canadian or US website can be secured by the proper authority or for that matter any authority today.

I believe in doing things in the light of day.

Please be assured I have no financial relationship with either the depository, the bank that owns it or CIGA JB Slear, either directly or indirectly.

Anyone wishing a sworn affidavit concerning the above will receive it.

Click here to view the depository website for your respective country

Click images to enlarge storage rate data in PDF format.

VAL_LAGER_2008_E_Page_1 VAL_LAGER_2008_E_Page_2 VAL_LAGER_2008_E_Page_3

Trader Dan says:

The more buyers that can be recruited to this effort, particularly buyers of large size, the more difficult the life of the paper shorts will become. Short of taking delivery of the actual metal, preferably pulling it out of the warehouses, the shorts can reign supreme over this market. What’s more – they are doing this with impunity as they pay no price financially to do so and profit quite handsomely I might add. Strip them of the metal and they are cooked. Then they will have to compete on a level playing field like the rest of us. Who was it that said, “He who sells what isn’t his’n, must pay the price or go to prison”? If the paper shorts are selling what doesn’t exist, namely tons of actual gold, forcing them to show us the actual metal will work to modify their behavior.  This is the only way to keep the Comex gold market honest.

Speaking of deliveries, another 307 deliveries were assigned this morning. I can tell you that 43 of those were retenders by Greenwich Capital Markets. The total so far this month is 11,473 contracts or 1,147,300 ounces. I want to see the warehouse totals over the next couple of days before commenting on that. Time is needed to actually move the metal that is going out.

Posted at 6:25 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

When Pakistan blows, which it will, it will cause tremendous dislocation in the Middle East. Crude will rise from wherever it is trading by $100 in 60 days.

India demands Pakistan hand over terror suspects
Tue Dec 2, 7:16 AM
By Ramola Talwar Badam, The Associated Press

MUMBAI, India – India picked up intelligence in recent months that terrorists were plotting attacks against Mumbai targets, an official said Tuesday, as the government demanded that Islamabad hand over suspected terrorists believed living in Pakistan.

A list of about 20 people – including India’s most-wanted man – was submitted to Pakistan’s high commissioner to India on Monday night, said India’s foreign minister, Pranab Mukherjee.

India has already demanded Pakistan take "strong action" against those responsible for the attacks, and the U.S. has pressured Islamabad to cooperate in the investigation. America’s chief diplomat, Secretary of State Condoleezza Rice, will visit India on Wednesday.

The diplomatic wrangling comes as the government faces widespread accusations of security and intelligence failures after suspected Muslim militants carried out a three-day attack across India’s financial capital, killing 172 people and wounding 239.

The only surviving attacker has told police that he and the other nine gunmen had trained for months in camps in Pakistan operated by the banned Pakistani militant group Lashkar-e-Taiba.

More…

Jim Sinclair’s Commentary

Are Narco States reliable sources of energy?

37 killed in Tijuana over 3 days
Toll includes 4 children and 9 decapitated men; police chief fired
The Associated Press
updated 7:27 p.m. MT, Mon., Dec. 1, 2008

TIJUANA, Mexico – At least 37 people were killed over three days in the Mexican border city of Tijuana, including four children caught in shootouts and nine men found decapitated, the state attorney general said Monday.

More than 200 people have been killed in the past month in Tijuana, where officials say rival cells of the Arellano-Felix drug cartel have been waging a bloody battle across the border from San Diego.

Tijuana’s police chief was fired Monday after the wave of violence. A statement from the office of Tijuana Mayor Jorge Ramos says Alberto Capella was replaced by his second-in-command, army Cmdr. Julian Leyzaola.

No reason was given for Capella’s abrupt dismissal.

Baja California state Attorney General Rommel Moreno said three police officers were among the nine decapitated men, whose bodies and heads were discovered in a poor Tijuana neighborhood. Their police credentials were found stuffed in their mouths.

More…

 

Jim Sinclair’s Commentary

There is no doubt about the advent of Fiscal Stimulation, but you can doubt the number on the extremely low side to what is to come by June 2009.

Obama pledges to work with governors on economy

(CNN) — Plagued by rising unemployment, falling tax revenue and increased demand for state services, the nation’s governors met with President-elect Barack Obama and Vice President-elect Joe Biden on Tuesday to press for federal money to ease their fiscal strain.

Obama and Biden told those at the National Governors Association meeting that the federal government needs to build a deeper relationship with the governors in order to put America on the path to long-term prosperity.

"Change is not going to come from Washington alone," Obama said.

"It’s going to come from all of you. It will come from a White House and statehouses all across the country that are working together, and that’s the kind of partnership I that I intend to forge as president of the United States," Obama said at the conference in Philadelphia, Pennsylvania. "I hope that this is the beginning of laying that foundation."

Obama said he wants the governors to help draft his economic plan instead of just helping to implement it.

More…

 

Jim Sinclair’s Commentary

With the cost now at $8.5 Trillion does it not seem that $700 billion is a false flag audit?

$700 billion bailout to get first audit
Government Accountability Office to deliver an oversight report to Congress on the $700 billion bailout plan.
By David Goldman, CNNMoney.com staff writer
December 2, 2008: 6:02 AM ET

NEW YORK (CNNMoney.com) — The federal government’s $700 billion financial rescue plan will get its first official review Tuesday.

The Government Accountability Office will present Congress with a report Tuesday on the bailout’s progress and the Treasury Department’s handling of the program. It is the first of a series of reports that the GAO must submit to lawmakers on a bi-monthly basis, as one of three oversight components required by the Emergency Economic Stability Act.

The bailout has received its fair share of criticism from lawmakers and economists. Some argue that Treasury should require banks to use their capital injections for lending to other financial institutions. With the credit markets still largely frozen, Treasury had hoped the fresh capital would encourage banks to lend, but some have used bailout funds to finance purchases of other institutions instead.

Other critics of the bailout have said the bailout does not address the housing market, which most economists point to as the root of the recent economic downturn.

More…

Jim Sinclair’s Commentary

Look at who is Famous!

DJ MARKET TALK: Comex Gold Moving Inversely To Dollar

1625 GMT [Dow Jones] – Comex gold is modestly higher on a day when the dollar is slightly lower. Feb gold is up $2.60 to $779.40 an ounce. The metal is moving inversely to the greenback at the moment, says J.B. Slear, CEO of Fort Wealth Trading Co. He eventually looks for further gains in gold. "The printing of dollars, and the lack of ability to print gold, will send gold prices higher," he says. Technically, gold could correct downward some more first, he adds. If gold were to close below $746, it could slip to roughly $716, but Slear looks for "very strong support" around this area. "If get up to around $800 by the end of this week, it will be a bullish connotation," he adds. He describes the metal as largely "coiling" sideways since August although in a broad range. (ALS)

More…

 

Jim Sinclair’s Commentary

There is such irony in measuring the drop in credibility of US Treasuries by quoting a measure which is an OTC derivative that is of the kind that was part of the package of crap that caused all the problems in the first place.

What an economic circus is taking place. God help us all.

US Treasury 10-yr CDS hits record high
Mon, Dec 1 2008, 11:34 GMT
http://www.afxnews.com

LONDON, Dec 1 (Reuters) – The spread or risk premium on 10-year U.S. Treasury credit default swaps hit a record high on Monday, extending a recent trend as market participants continued to fret about the scale of the government’s financial rescue programmes.

Ten-year U.S. Treasury CDS widened to 68.4 basis points from Friday’s close of 60 basis points, according to credit data company CMA DataVision.

Five-year Treasury CDS widened to 52.5 basis points from 46 basis points at Friday’s close, it said.

(Reporting by Emelia Sithole-Matarise)
((Reuters Messaging: emelia.sithole.reuters.com@reuters.net,
Email: emelia.sithole@thomsonreuters.com; +44 20 7542 6752)

Jim Sinclair’s Commentary

All I can say to this is Holy S***, these guys are in a total panic and bouncing off the walls.

Treasury Should Consider 100-Year Debt, BlackRock’s Fisher Says
By Thomas R. Keene and Michael J. Moore

Dec. 2 (Bloomberg) — BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion.

“If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

The Treasury last month tripled its estimate of planned debt sales in the final three months of the year to a record $550 billion as it attempts to fund bailouts for banks and fiscal stimulus programs to jump start economic growth. Treasury Secretary Henry Paulson told a conference in Washington Nov. 17 that the U.S. will issue some $1.5 trillion worth of Treasury securities in the fiscal year that began Oct. 1.

Fisher, Treasury undersecretary from August 2001 to October 2003, eliminated 30-year bond auctions in 2001 to reduce government borrowing costs after four years of federal budget surpluses. The U.S. hasn’t been in the black since. The government revived sales of the security in February 2006.

Treasury yields have plummeted as investors have flocked to the safety of U.S. government debt during the worst financial crisis since the Great Depression. Bonds rallied for a fourth day yesterday, sending yields on two-, 10- and 30-year debt to the lowest since the Treasury began regular sales of the securities.

More…

Posted at 6:15 PM (CST) by & filed under Jim's Mailbox.

Jim,

Your recent comment on Quantitative Easing cited an article "M3 where Art Thou" which used a 2008 graph of M3 from Capital Economics/Lombard Street Research which is so different from the figures estimated by both Shadowstats.com and Nowandfutures.com that clarification of who is right is essential for an understanding of what is happening to M3 and its related effects.

CIGA Ron M

Dear Ron,

Who do you think? The Establishment entity or those who have kept the calculations pristine from change and politically motivated adjustments. The answer to your question is that Shadowstats.com gives a more accurate M3.

Regards,
Jim

Jim,

I would really hate to see a VAT but agree it is probably coming.

Monty Guild
www.GuildInvestment.com

A European-style tax?
Like it or not, there’s only one way we’re going to be able to pay for our ballooning deficit: a value-added tax.
By Shawn Tully, editor at large
Last Updated: December 2, 2008: 9:27 AM ET

NEW YORK (Fortune) — It’s highly possible, if not inevitable, that Americans will soon live under a radically different tax system – one that the pundits and politicians aren’t talking about.

It’s called a value-added tax, or VAT, and it’s been used for decades to pay the bills and sustain the immense growth of governments around the world, from France to Mexico to Australia. Created in 1954 by a French economist, the VAT is the most potent, efficient machine for revenue generation yet invented.

And if there’s one thing the U.S. government needs as the federal budget balloons, it’s a ton of new revenue. "The bottom line is that the income tax cannot support the level of spending that’s projected, something other countries faced years ago," said Roberton Williams of the Tax Policy Center, a non-partisan research institute. Today the VAT raises almost half of the total government revenue in France, and a similar share in most of the developed world.

More…

Posted at 2:56 PM (CST) by & filed under Trader Dan Norcini.

Dear CIGAs,

Today we are back into trading the “reflation trade”. Yesterday we were all trading the deflation trade. Tomorrow – who knows?

Today was a near perfect inverse of yesterday’s price action in the commodity complex. Yesterday the index funds and some hedgies were throwing away everything and anything that remotely resembled a commodity. I remarked that my quote board was a solid line of red. Today that same quote board is a solid line of blue – everything that looks remotely like a commodity is up. Okay – let’s try to deeply divine this incredibly sophisticated and complex trading program that is being employed by the marvelously inept modern hedge and index funds – ready?  Stock market UP – BUY COMMODITIES… Stock market DOWN- SELL COMMODITIES… I know it is hard to wrap your mind around such a complex algorithm, but I think that if we concentrate really hard and apply ourselves we will be able to grasp the vagaries of this amazingly sophisticated strategy. I sure am glad the best and brightest traders on the planet are handling this strategy as I for one would no doubt be lost in its complexities.

Seriously folks – we are all trading the US equity markets nowadays whether we actually trade them or not.

Even with the up day (thus far) in the equity markets, it does seem to me from watching the price action, that ongoing long liquidation and some small amounts of fresh  hedge fund selling are emerging on rallies in the commodity markets. That is being confirmed by yesterday’s release of the supplemental commitment of traders reports showing further index fund long liquidation across the entire spectrum of the commodity complex. The exodus of that money from the complex has seen open interest in many of these markets cut by more than 50% from its peak. That is a tremendous amount of selling. These guys were the ones that drove prices north when they first came in to buy as investors were clamoring for commodity exposure in their portfolios and now they are the ones driving prices south as those same investors sour on world of tangibles. Assuming there are any of them left when the dust settles, they will also be the ones driving prices back up again once the fallout from this quantitative easing begins and the Dollar gives up the ghost.

As a further point of reference, open interest took yet another big hit in yesterday’s price collapse dropping nearly 5,000 contracts to 266,000. We are now down to levels of open interest last seen in August 2005, more than 3 years ago! Gold was trading closer to $450 back then. I am beginning to think that the bulk of the index fund liquidation is coming to an end. A lot depends on whether or not the hedge funds decide to start building short positions in the gold market but as far as selling goes, the index funds are generally “long only” funds so once they have exhausted their selling and met all the redemption requests that they need to meet, the selling is going to either have to come from the hedge funds or the comex gold market is going to run out of sellers. If the hedge funds do not move in on the short side, gold is not far from a bottom. We just have to wait and see since attempting to ferret out just how large a long position the index funds had built up is pretty challenging since we do not have the appropriate data from the COT – instead we have to extrapolate from the current COT reports. Three year’s worth of positions dropped in less than a year is pretty revealing however.

Technically, gold bounced off of the ascending 20 day moving average and climbed back above the 40 day – both are positives. It has not been able to recover the 50 day moving average however – that is a negative. The shorter term moving averages are moving higher while the longer term moving averages are headed lower. That means short term the picture is friendly while the intermediate term is still negative. An upside crossover by the shorter term moving averages above the longer term moving averages will further reinforce the friendly technical picture but to really give the bulls control of the market, the 40 day and the 50 day will need to turn higher. Above those two moving averages, the 100 day comes in near the $833 level. That will be a noteworthy achievement if gold can best that level.

The HUI and the XAU are following the broader stock market higher today. I am still waiting for these to trade independently on their own merits.

Crude oil dipped sharply overnight to nearly $47 before it too rebounded with the higher stock market. It is struggling however to maintain its minor gains on the day. I would be surprised to see crude oil much lower than the lower 40’s. OPEC has a meeting scheduled in a couple of weeks so its price action over this period will determine what they may or may not do in regards to any potential supply reductions. I am sure there are quite a few sad faces among that group considering that it was not all that long ago that they were fetching an additional $100 per barrel on their product. Not that too many celebrate Christmas over that way but I suspect that among those that might, the stockings are going to be a bit light this year.

Incidentally, if you have not looked at a price chart of the long bond recently, do yourself a favor and do so. I was still sucking milk through a bottle the last time yields were this low. I would not be the least bit surprised, and this is the cynic in me, to learn that a good portion of the bond buying in the futures pits is actually front-running using bailout money to get into position for the Fed to begin buying across the yield curve to keep interest rates low. How else to explain the insane rush into US Treasuries in the face of nearly unlimited creation of US debt and collapsing yields? Since there is ZERO accountability for the use of this bailout money, what is to keep the recipients from using it to try to once again leverage it up for a “sure bet”? Answer – nothing!  These are the same people who would sell those worthless alphabet soup structured investment securities to their own grandmothers if they thought that they could make a quick buck from it. Do not be under any illusions as to what these conscience-deprived cretins are capable of.

Let me take a brief moment here to address an issue that seems to be coming up more often than not. I think some folks misunderstand what Jim and I, along with others, are attempting to do with our campaign to urge folks who want to buy gold in quantities of 100 oz or more to stand for delivery at the Comex. We are not trying to bust the Comex in the month of December. What we are attempting to do is to begin a systematic and sustained effort among potential buyers to REGULARLY buy their gold by entering long positions at the Comex and then taking delivery and doing this over and over again each time they feel prices are cheap or they have money to invest in gold. Every time the bullion banks raid the gold price, those who want to buy gold at a discount thanks to our “friends” there, can enter their long positions and then ride the contract into the delivery process. If enough gold buyers do this over and over again on a regular basis, the shorts will have been served noticed that their days of manufacturing unlimited amounts of paper gold with which they can attempt to drive the price lower are coming to a close. What it will do is force them to cover their shorts much more quickly effectively limiting the downside damage that they can inflict on the paper price of the metal.

The more buyers that can be recruited to this effort, particularly buyers of large size, the more difficult the life of the paper shorts will become. Short of taking delivery of the actual metal, preferably pulling it out of the warehouses, the shorts can reign supreme over this market. What’s more – they are doing this with impunity as they pay no price financially to do so and profit quite handsomely I might add. Strip them of the metal and they are cooked. Then they will have to compete on a level playing field like the rest of us. Who was it that said, “He who sells what isn’t his’n, must pay the price or go to prison”? If the paper shorts are selling what doesn’t exist, namely tons of actual gold, forcing them to show us the actual metal will work to modify their behavior.  This is the only way to keep the Comex gold market honest.

Speaking of deliveries, another 307 deliveries were assigned this morning. I can tell you that 43 of those were retenders by Greenwich Capital Markets. The total so far this month is 11,473 contracts or 1,147,300 ounces. I want to see the warehouse totals over the next couple of days before commenting on that. Time is needed to actually move the metal that is going out.

Click here to view today’s action in Gold as of 12:30pm CDT with commentary from Trader Dan Norcini

December0208Gold1230pmCDT

Posted at 9:51 PM (CST) by & filed under In The News.

Where is the outrage!
By Greg Hunter 12/01/08

The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that "getting out while the getting was good." Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many "lending" facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has congress asked the banks for a plan make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …"the big banks are going to need more capital!!!! " More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!

This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM. I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a "price discovery" and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what "assets" the banks are unloading on the government. I suspect these "assets" are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be "helpful". THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is that this money printing will "unclog" the credit markets and get things back to "normal." These toxic "securities" or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new "normal" and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!

Jim Sinclair’s Commentary

Alf has been spot on now for a significant time. It might be interesting for the Elliot gang out there to study his work. For that matter, it might be interesting for everyone.

You have to understand that no chart work will tell you what the Exchange Stabilization Fund will do. Today’s action demonstrates short term limitations to TA.

Alf field’s Elliott Wave Chart of Gold Shows Gold To Be In Elliott Wave 3 Up
Monday, 22. October 2007, 21:05:09

The Elliott Wave chart of gold from the article Elliott Wave Gold Update 16 by Alf Field shows gold to be in an Elliott Wave 3 Up.

Elliott Wave Gold Update 16 by Alf Field

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Jim Sinclair’s Commentary

The only meaningful tool left for the Fed is "Benign Neglect" of the US dollar. That means not referring to it in public addresses with glee and not softening declines via the Exchange Stabilization Fund when it tries to break down out of its recent technical money flow up trend. Basically, this means putting a muzzle on the Media Spin Team as they have no clue that a rising dollar, for any reason, is totally contra-productive to all other methods of anti-deflation employed in central bank moves. The trend in the dollar will become market related. Market related means rejoining its long term down trend.

Gold is a currency and it will be proven once again in the inverse to the dollar very soon.

Gold’s primary excuse for existence is monetary.

Gold priced at $248 reflected its monetary performance.

Gold at $1650 will be a totally monetary event.

The monetary boss spoke today and the equity market regurgitated.

You can be sure it is panic time at the Fed in which every tool, even the tools of last resort will be employed. Today was an example of just that

This headline should be changed to “Dow Plunges 680 Points As The Chairman Of The Federal Reserve Presents His Plans To Avoid An Equity Implosion.”

Dow Plunges 680 Points as Recession Is Declared

The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.

But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.

The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.

Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.

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Jim Sinclair’s Commentary

This is the understatement of the century

India warns of ‘grave setback’ to Pakistan ties

MUMBAI (AFP) — India warned on Monday that the Mumbai attacks had dealt a "grave setback" to relations with Pakistan, as the United States urged Islamabad to show "absolute" cooperation with India’s probe into the assault.

"What has happened is a grave setback to the process of normalisation of relations and the confidence-building measures with Pakistan," Minister of State for External Affairs Anand Sharma told AFP.

Sharma said the Islamist gunmen who launched their devastating attack on India’s financial capital on Wednesday evening were "all from Pakistan" and stressed that it was time Islamabad delivered on its promise to prevent Pakistani soil being used for attacks on India.

India and Pakistan , both armed with nuclear weapons, have fought three wars and were on the brink of a fourth over a 2001 militant assault on the Indian parliament.

Pakistan has denied any involvement in the latest attacks which left more than 170 dead and threatens to derail a slow-moving peace process launched in 2004. Pakistan President Asif Ali Zardari has urged India not to "over-react."

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Jim Sinclair’s Commentary

Yeah sure!

Pakistan denies TV reports envoy to India summoned
Mon Dec 1, 2008 5:50pm IST

NEW DELHI, Dec 1 (Reuters) – Pakistan denied on Monday Indian TV reports its envoy to India had been summoned, an embassy official in New Delhi said.

"We have not been summoned. It was a pre-planned, routine meeting."

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