Bart Spills the Beans

Sooner or later it had to happen. I mean, you can’t keep a lie going forever [unless of course you’re talking about the “grassy knoll”].

In a stunning admission that the CFTC is nothing more than a repository for resumes on your way to a better, more corrupt profitable high paying government job, Commissioner Bart Simpson Chilton admitted in a speech on December 8, 2010 that the CFTC “had proof” that one trader held more than 40% of the open interest in the silver futures market.

Really Bart?

And pray tell readers, who do you suppose that might be? I’m sure JP Morgan is putting no pressure on the toothless, ineffective and corrupt CFTC to suspend or delay position limits, or other regulatory measures that might actually prevent markets from being manipulated. Why, this is Amerika.

Except for being the first time it actually did anything, can you think of any reason why the CFTC would drag its collective feet? Hey, if it was you or me that held 40% of the entire short position in a market, do you think for one minute they wouldn’t be crawling up our ass demanding to know what we were doing and why, and then forcing us to liquidate? All in the name of “fairness” don’t you know.

Well, imagine for a hypothetical minute what would happen if JPM had to exit all those shorts. Silver exactly where in price 2 minutes after this is announced?

So, you can imagine the financial ass-whipping that would ensue. We can’t have this in “free markets”. “How do you expect us to make money and spend part of it on government corruption if you don’t allow us to manipulate a market?”

Back in the fall of 2008, I was told that if I voted for McCain, fat-cat “Wall Street types” would ruin the markets by stampeding the “little guy” into oblivion and ruining it for everybody. Hey, they were right!

-vegas

Get Ready Mr. Morgan

It’s gonna get interesting in the next few weeks. If J.P. were alive today he would surely have his panties in a bunch. Never one to stand idle while his firm takes a hit, I’m betting he would be a tad madder than the above photo indicates.

Unable to continue manipulating the silver and gold markets due to various class-action lawsuits and CFTC scrutiny, the clock is ticking ever faster to the December delivery clusterfark for messengers Morgan & HSBC.

On Monday, open interest in Dec. silver stood at approximately 17,000 contracts [86,000,000 oz.]. The Comex [division of CME] reports approximately 48,000,000 oz.  available for delivery. Open interest in Dec. gold stood at approximately 59,000 contracts [5,900,000 oz.]. The Comex reports approximately 2,600,000 oz. approved for delivery.

I got in touch with my chief math guy, Jethro Bodine, just to make sure I wasn’t fudging the numbers. After showing me [for the umpteenth time] his diploma, he assured me naught from naught is still zero and subtracting a higher number from a lower number means you got problems.

With all the POMO [Permanent Open Market Operations] by the Weimar Fed, they’re gonna need all the printed money they can get from “Helicopter” Ben to stem the ass-kicking they’re gonna get come delivery.

Of course, they can always deliver the physical metal, but that is becoming somewhat of a problem since deliverable product is scarce. Instead, expect the dual evil empires to kick the can down the road to Feb. 2011 [gold] and March 2011 [silver], hoping like hell we get a break so they can cover.

If that doesn’t work, expect the next bank bailout at the end of Q1 2011. Soooooooo sorry Mr. Morgan, you lose!!

-vegas

Gold & Silver Update: Hide the Children

Things are gonna get reallllllllllll interesting the next week or so. Don’t believe what you might see and hear from the talking heads on CNBC and Bloomberg, which by the way will look and feel something like this:

From King World News, I am including a link for your perusal. In a nutshell, the silver shorts are all Fed supported large banks [hello JP Morgan & HSBC], and more significantly demand out of Asia is “insatiable”. Read the entire post here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/11/10_KWN_Source_-_Asian_Buyers_Have_Silver_Shorts_Checkmated.html

While I generally discount stories of large “mystery” buyers, the recent lawsuits against JP Morgan & HSBC finally shed light on what has been an open secret in the trading community for a very long time; viz., these two along with Goldman et al are government supported market manipulators that do not want precious metals prices going higher. They exist to prey on retail traders in the “paper” futures markets and give cover to spendthrift governments.

However, with the gig all but totally up, the U.S. government simply cannot hide the fact that they have embarked on total monetization of the U.S. currency. [See my remarks in earlier blogs for Weimar Ben’s actions if you haven’t already.] It makes perfect sense that the Chinese are stockpiling silver [and just about everything else] for future needs. Put yourself in their shoes: going forward at 9% - 10% internal growth, with total debasement of the dollar thrown in as well, where do you think prices are going to be in 3 – 5 years since mine production has slowed and costs are rising? Yeah, that’s what I thought!!

Take the tens of thousands of futures contracts these banks are short in the gold and silver December 2010 maturity, coupled with insatiable demand, and you end up with a total melt-up clusterfark. Say hello to the next big bank bailout!!

Exit question part I: If you were short numbers like these, would you not engineer a “run-the-stops-on-the-downside” like we saw yesterday and today in gold and silver, in a last ditch effort to save your firms ass, hoping to send prices low enough into the stops so you could get out or at least get lower prices for your losses?

But wait, it only gets better.

Today, the Weimar Fed announced the buy back for notes and bonds over the next month. Starting Friday, the Fed buys $105 BILLION in 18 almost daily operations over the next month.  Let the asset price rise orgy begin!!

I caught up with my head mathematician this morning,

and doing some serious cipherin’ I figure this means another 10% - 15% rise in just about every asset class from stocks, precious metals to Barbie dolls by the December futures expiration!

The way I see it, the shorts had yesterday and today to ride the back of the large banks to force the gold and silver markets lower. I’m talkin’ about quick, very vicious spikes down that get your stops filled no where near where you might think. Yesterday and today were not the days to get long; too much risk. By the end of tomorrow though, I will be long, expecting the front-running of the Feds printing money monetization to start in earnest by days end or sometime Friday.

Exit question, Part Deux: What does $108 Billion dollars go into within 30 days that won’t lose its value but keep appreciating?

One more tidbit: yesterday the Intercontinental Commodity Exchange [ICE] announced that accounts can use gold for margin purposes.

Over the next month, this is going to be one hell of a ride up. Hide the children.

-vegas

Greatest Data Week Ever: Some Observations

The celebrations have begun in the U.S. The parties have started and people are giddy with joy. You couldn’t find this much happiness unless you were at a Wayne Newton shindig in Las Vegas. With the U.S. mired in recession, TOTAL unemployment at 17%, what possibly could make people this giddy?

After getting his backside severely slapped by voters, Obama’s taking 3,000 people to India for 10 days. If you wanted to, you couldn’t get much farther away from the U.S. by going to India. By my reckoning, this means the average TV viewer with no cable doesn’t have to look, or hear, from the Bamster for at least a couple of weeks.

Look at it this way: your wife announces she is going to visit her mother 15,000 miles away for 10 days; the kids are safely ensconced at Camp Itchygumma for the month, and you live in a luxury apartment above the best strip club in town. Oh Joy, Hallelujah!!! [Have a nice trip honey, and tell your Mom I said Hi!!]

Make no mistake dear readers; this is a dangerous trip for BHO. Why, yesterday I read with horror that since he’s going to be wandering around the sub-continent, there are many dangerous coconut trees ready to drop real, live coconuts on his saintly dome. Natch, the Indians are scurrying around the Taj stripping every coconut tree within 100 miles so this doesn’t happen.

But I don’t think this goes nearly far enough to protect all the liberals in the entourage. Therefore, I am calling, NO DEMANDING, that the Indians put the following sign up everywhere “The One” might visit:

After all, it doesn’t get much more dangerous for tone deaf, out-of-touch, not-a-clue liberals than falling coconuts.

***

By now, everybody knows what the Weimar Fed did. 

Using some “back of the envelope” math, it means everything you earn and everything you save is gonna be DEVALUED by at least 10% going forward. ETA is about 6 – 9 months. Think your 401k or IRA is doing well because the stock market is inflated up a little? Chew on this: since the start of 2010, the S&P valued in silver is down 29%.

Here is how you can save yourself and your family: I’m inserting a link here for “e-dinar”, a company providing a 100% gold- and silver-backed online payment system and related exchange services. For more information, follow this link:

http://www.e-dinar.com/html/

I highly recommend them for accumulating gold, silver, and platinum. Their reputation is impeccable and their service is very good. The fee structure, copied from their website is as follows:

As you can see, there is only a 1% annual fee to hold and store gold, silver, and platinum. You simply won’t find a better deal anywhere in the world. Located outside the U.S., Euroland, and the other high-tax snoop countries, your holdings are safe, secure, and most importantly private.

***

On the first Friday of every month we go through the same NFP shenanigans. As most traders know, Non-Farm Payrolls data is a complete guess. One thing you can always count on from highly paid and useless analysts is the word “unexpectedly” prefaced before any data analysis.

In order to get to the bottom of this mess, I sent my own highly paid and useless staff to Washington, D.C. After 2 weeks in the Honeymoon Suite at Motel 6; far, far too many nights out ‘til 4 A.M., they reported back that, yes indeed, they had infiltrated the Bureau of Labor Statistics and attended a very high-level staff meeting. While I couldn’t quite make out their report, written on a cocktail napkin with purple lipstick, the super-secret photo they smuggled out pretty much said it all:

And you sometimes wonder why I don’t like trading on NFP Friday?

-vegas

I am shocked, SHOCKED!

Remember the classic scene in the movie “Casablanca” where the head Nazi wants Rick’s nightclub to be shut down? And so, with Humphrey Bogart standing there wondering what the hell is going on, Claude Rains announces “I am shocked, shocked that there is gambling going on in this establishment”. Then immediately, Peter Lorre walks up and says “here are your winnings for the night”.

So, I know many of you are going to have to suspend disbelief at what I am about to announce. In good conscience I have to warn you with the following:

 Yesterday, in the Southern District Court of New York, plaintiffs Brian Beatty and Peter Laskaris [cases 10-08146 and 10-01857] sued J.P. Morgan and HSBC for MANIPULATING THE SILVER MARKET.

The reaction, upon hearing this news, of random passerby’s out my front window pretty much says it all:

Defendants are accused of the following [from the complaint]: 

                         "between in or about March 2008 and continuing through the present, Defendants have  combined, conspired and agreed to restrain trade in, fix, and manipulate prices of silver futures and options contracts traded in this District on the COMEX division of the NYMEX. Defendants thereby have violated Section 1 of the Sherman Act, 15 U.S.C ¶1. Also during the Class Period, individual Defendants have intentionally acted to manipulate prices of COMEX silver futures and options contracts. Such conduct violates Section 9(a) of the Commodity Exchange Act, 7 U.S.C. ¶13b."

What makes this case so interesting, besides the various allegations, is that the plaintiffs seek class action status. So, all you guys who have traded silver since March 2008 and lost money, here is your “lottery ticket” for remuneration plus treble damages.

What’s the world coming to when two of the largest market manipulators and crooks most respected Wall Street firms get accused for simply “making a market”?

Exit question: where the hell are the CFTC, NFA, SEC, and the Treasury Department? Oh wait, that’s right I remember; they watch porn for 8 hours a day from their office computers. You gotta have priorities after all.

-vegas