Oldtent Archives 2009

Commodity exchanges can dump gold debts on ETFs

Snip:

“GATA board member Adrian Douglas discloses in the report below, titled “The Alchemists,” that the New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

The Gold Cartel is desperate to suppress gold and keep the dream of a “strong dollar” alive along with maintaining low interest rates by using a mechanism described by Professors Summers and Barsky in their research paper “Gibson’s Paradox and the Gold Standard.” The London Gold Pool used real gold to try to suppress the gold market, and it failed. The paper IOU is going to be even less successful. Imagine what will happen to the gold price when the holders of the paper IOUs go looking for physical gold instead. The Gold Cartel has built a dam on the river of physical gold demand, thinking that it is clever enough to defy the laws of supply and demand. Wait until the dam bursts to experience gold fever such has never been seen before.
Buy real gold and silver before the dam bursts!”

www.gata.org/node/7586

Comment: For those of us ‘breaking news’ junkies this article is a little dated. (July 11, 2009). I did find it a good read and worthy of some continued thoughts on the topics mentioned. I ran across this little gem while trying to get some sort of figure on how many billions have been diverted away from gold and silver stocks and the physical itself by these paper tiger ETF’s. The search for the answer continues….

www.gold-eagle.com/editorials_08/katz083109.html

www.istockanalyst.com/article/viewarticle/articleid/3447512

Comment: Another advantage of being a goldbug - Christmas often comes in Sept.

Fractal Gold Report for September 1, 2009

By David Nichols
dnichols@fractalpublishing.com

In Friday’s report I mentioned that once a market pattern has broken above a clear consolidation triangle, it will typically come back down to test the boundary lines. And this is precisely what played out on the 150-minute chart on Monday, with a little twist, as gold actually tested both the continuation of both the upper and lower boundaries.

It has been an unusually tight and precise consolidation period for gold over the last few weeks, as prices have essentially been bounded by $960 on the upside and $945 on the downside, and it has been adhering faithfully to the clear boundary lines of the triangle.

I believe I have a good idea why market consolidation patterns settle into such equilibrium-seeking triangle patterns, but it is still striking to see it develop in real-time with such precision. In the parlance of chaos theory and non-linear dynamics, these boundary lines are the “limit cycle” of the pattern.

It can be useful to identify the limits of a pattern, as we can then know when a new rush of energy is coming in, and likely starting a new trend, especially when the fractal dimension confirms the interpretation.

Of course nothing is carved in stone in financial markets, but it does look like this was the final test down to $945 — at last — and gold is in position to follow-through above $960. This was the fourth test down to $945 since that last spike up, and typically a market will break out after the third or fourth test.

We’re also seeing an uptick in volatility in gold, which is typically a precursor to a fresh surge of energy.

Monday was Day 36 for the pattern, and the daily chart shows how the candles have started to lengthen after the tight range through Day 34 last Thursday. The daily fractal dimension is still way up there, at 68, so if gold can just find the spark to get through $960, it is in position for a very swift ascent.

On the bigger pattern, gold has been knocking on the big upper boundary of the weekly consolidation triangle for many weeks now.

It looks like we will see a “fractal echo” of the 150-minute pattern (highlighted above) on this weekly chart. That is, gold should break up to $990, and then come back down to quickly test the boundary lines of this triangle.

Then, finally, gold should be in position to rocket higher. All along I’ve been maintaining that gold will particularly benefit from a strong economic recovery, and with the economic leading indicators hitting 38-year highs, such a strong recovery is a given at this point.

Gold will be one of the main beneficiaries of this recovery into the 64-month high scheduled to hit in January 2011.

Dear Friends,

China tells the Wall Street OTC derivative manufacturers and distributors to go straight to hell.

China has invoked a “Stop Loss” on these fraud ridden instruments.

If you create a specific performance contract that you know under even the slightest pressure cannot perform, you have committed fraud.

My English bull dog Mia, bless her soul, figured out the non-performance characteristics of these financial WMDs.

This will have a MAJOR impact on the sociopath US manufacturers and distributors of OTC derivatives like CDSs that struck the world over with these weapons of mass financial destruction.

This could roll the financial world one more time.

Doing the right thing is never easy. Doing the right thing takes character and courage.

The Chinese are doing exactly the right thing and exactly what the West should have done years ago when long term capital flopped.

Now the rest of the BRIC nations will follow suit.

China’s actions here are another reason why China is headed for the largest economy on the planet.

While the West enriches the creators of this disaster, China herein tells them, to go straight to hell, and that they will not get their money to enrich themselves more. China has invoked a “Stop Loss.”

Here is an example of how China will act with regards to the dollar late this fall. You can take that to the bank if you can find a solvent one in the USA, GB or Euroland.

The Wall Street types who are talking heads surmise that China thinks and will act like the Wall Street Weenies. They are so very WRONG.

Screw with China and you will get bitten in the ass by a real dragon. China leads the BRICs.

This will have a MAJOR impact on the sociopath USA manufacturers and distributors of OTC derivatives that struck the world over with these weapons of mass financial destruction, enriching themselves in the process by many trillions.

If China’s banks were the losers on these instruments then the winners, now not getting paid, are the sociopath USA manufacturers and distributors of OTC derivatives. These instruments were not created between Chinese banks, but made and packaged primarily in the good old US of A. Think it out. This is a stop loss for the Chinese.

I was correct 10 years ago when people denigrated me. I am correct on the price of gold as people still denigrate me.

I will have the last word with all these jealous fools.

Respectfully yours,
Jim

 What can the Wall Street boyz actually do to the largest holder of UST’s?

He who has the gold makes the rules.

commies sticking it to fascists….its a quenella! wj

….Should be Interesting to see How Guithner and the Goldman Alumni handle the Chinese “Problem” eh ?

….. I love it !

….Who woulda thunk it 20years ago…we’d one day be rooting for the Commies….China and Russia….to stick it to the Good Old Boys !

 Thanks for providing that article. Santelli on CNBC briefly mentioned it today - very briefly.

 Looks like China is giving Wall Street the finger - good for them.

buy all thoes bank stocks with the proceeds and be rich i say rich i say…..
wj

Betcha that paint tastes better then that poison crap toothpaste I been using!

lol. The kids will never know the difference.

Please forgive the length. This was e-mailed to me with no link.

A little good history.

Ha……thats a hoot…..looks like the Chinese are giving the middle finger to Goldman and the Boys….

………………..Bout time Somebody did…..

Chord, I use a toothbrush for that dryish paint.  The kids don’t mind, I just tell ‘em it’s the organic toothpaste.

if they got any belikens in the placentia hotel, aguila and i will will hang out as long as necessary. you know we always are available to take one for the team.

rno

Mon Aug 31, 2009 7:42am EDT

Beijing’s derivative default stance rattles market

* State-owned firms may default on commodity hedges - report

* Bankers dismayed, confused by report; seek more details

* Lawyers question legality of the move

* Traders suspect lurking losses may have prompted warning (Adds analysts comments)

By Eadie Chen and Chen Aizhu

BEIJING, Aug 31 (Reuters) - A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday as they feared it may set a damaging precedent.

The State-owned Assets Supervision and Administration Commission, the regulator and nominal shareholder for state-owned enterprises (SOEs), told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday.

While the details of the report could not be confirmed, it was Monday’s hot topic in financial circles from Shanghai to Singapore as commodity marketers feared that companies holding underwater price hedges could simply renege on the deals, costing banks millions of dollars in profit.

The warning from SASAC follows a series of measures from Beijing this year to crack down on the sale of derivative products by foreign banks to Chinese enterprises, principally big consumers, who bought protection against higher prices last year only to watch the market collapse — leaving them with losses.

While many companies including top airlines have come clean on the losses, some analysts fear another wave may follow.

“I wouldn’t be surprised if more state firms emerge with big derivatives trading losses, otherwise SASAC wouldn’t come out with such a radical move,” said a Hong Kong-based derivatives analyst, who like most other industry officials and bankers declined to be named due to the high sensitivity of the issue.

A SASAC media official said on Monday that he was waiting for the “relevant department’s” official comment before he can clarify to media. A government official said that the Bureau of Financial Supervision and Evaluation under SASAC was handling the issue. The official declined to be named and did not elaborate.

Spokespersons at Goldman Sachs (GS.N) and UBS (UBSN.VX) declined comment, and media officials at Morgan Stanley (MS.N) and JPMorgan (JPM.N) were not immediately available for comment. All are major global providers of commodity risk management.

No bank were named in the Caijing report. The SASAC media officer also declined to identify any specific banks.

“It’s a handful of companies who are being encouraged by regulators to re-negotiate,” said a second banking source. “It’s outrageous, but it’s China, so everyone is treading very carefully.”

DAMAGING PRECEDENT

For banks that are hoping to sell more derivatives hedges in China, the world’s fastest-expanding major economy and top commodities consumer, the danger goes beyond the immediate risk to existing contracts to the longer-term precedent that suggests Chinese companies can simply renege on deals when they like.

The report follows an order from SASAC in July that required all central government-controlled state companies engaged in trading derivatives to make quarterly reports about their investments, including details of holdings and performance.

But the reported letter opened several important questions that could not immediately be answered.

“If we were among the banks receiving that letter, we would be very angry. But now the key is to find out more details on the letter: In whose name the letter was issued, the government or the corporate’s? And under what was the reason for defaulting?” said a Singapore-based marketing executive with a foreign bank.

The source, whose bank did not receive a letter, said that Air China, China Eastern and shipping giant COSCO — among the Chinese companies that have reported huge derivatives losses since last year — had issued almost identical notices to banks.

“If it’s in the name of the government, the impact will be very negative,” said the source, who declined to be named.

Beijing-based derivatives lawyers said the so-called “legal letter” has no legal standing — SASAC as a shareholder has no business relationship with international banks.

“It’s like the father suddenly told the creditors of his debt-ridden son that his son won’t pay any of his debt,” said a lawyer from the derivatives risks committee of the Beijing Lawyers Association.

It’s also unclear why Chinese state firms, which have complained that their foreign banks sometimes did not disclose full information of potential risks when selling them complicated products, did not seek redress through the courts.

“If that is the case, these firms should seek through legal measures to safeguard their rights, instead of turning to the authorities for political interference,” said a different lawyer.

SASAC took over the job of overseeing SOEs’ derivatives trading from the securities regulator in February after several Chinese firms reported huge losses from derivatives.

I like Ferrets idea of using cheap throw them away brushes for no hassle cleanup but if you are like me and like to use good brushes here are a couple tips for you.

Try to keep the brush wet with paint as it is usually the heal of the brush which becomes difficult to clean. When I’m taking a break my brush is left in the separate plastic bucket (with handle that I use on the ladder) with enough paint to cover any part of the brush that has had paint in it.  Sometimes a little wire brush helps in the cleaning process.

For oil based paints, after you clean out the brush with mineral spirits at least 3 times (or until the spirits are clear) I always store the brush in engine oil. You can rub all the bristles with the oil and store in a rag or in a container with oil in it and let the brush hang in the oil. ( drill a small hole in the handle and use a small toothpick like dowel to hang it.) And don’t forget to spin the brush to get any spirits left out before you use oil.

Of course you will have to clean the oil out before next use but it is easier to clean the oil out than the paint. The brush bristles will be very soft and almost the feel of a new brush.

Or, you can pay someone else to paint and have no clean up!

sometimes painter chordy, trying to be helpful.

….PS…Watching Gold This Summer has been like watching paint brushes dry

Cheap chinese brushes, way to go!  Although actually it is holding up quite well.  Probably still have it if I ever reach Equisetum’s age.

Good to see you posting.  Love to Mrs L.  Good luck with the repairs.

I thought this was a gold forum, and here we are discussing paint!

Ferret, another trick for epoxy is to dip the brush in epoxy solvent, then put a few drops of solvent in a good plastic bag. Wrap the bag around the brush tightly and close with a tie. Put the whole thing is an airtight tin, and then in the freezer. When you take it out even a week or two later the brush will be fine. And of course the reason for the tin is to be absolutely sure Mrs F won’t complain that her organic steaks are tasting of epoxy.

Incidentally, I bet you are delighted to see Tan doing so well! (horrors!)

We just arrived in Kota Kinabalu where we are now indulged in that old sailing sport of mending your boat in foreign ports. It never bloody stops, does it?

Yes I have electricity …when I uncovered another error of omission by the law firm I decided to go look for the gumba that has been buying a lot of our sand and gravel..made it to his door but he was across the way and due back any minute which turned into over an hour ..Farmgal started getting figgity..so we left…one of my major no no’s [when you have something zeroed in stay with it] but in deference to her ..ahhhh I wound up with his private number anyway….I gatta hang out at Placencia Hotel more often ….it will help us all in the long run….

FGC note…Maybe TCG works for one of these outfits…

GOLDMAN SACHS (DECEMBER 11)

* Goldman Sachs raised its three-month gold price forecast to $700 an ounce from $690, its six-month price view to $785 an ounce from $730, and its 12-month forecast to $795 from $710.

* “We are raising our gold price forecasts in line with Goldman Sachs economists’ currency revisions toward a weaker U.S. dollar outlook,” the bank said in a research note.

* It added it now sees silver at $10.04 in three months, against a previous forecast of $9.90, at $11.08 in six months, against $10.30, and at $10.30 in 12 months, against $9.20.

JP MORGAN (DEC 11)

* JP Morgan said it sees gold at an average $867 an ounce in 2008, falling to $800 an ounce in 2009 but bouncing back up to $825 an ounce in 2010.

* “Shorter term deflation concerns should cap rallies to $850-900 near term and encourage a move below $800,” it said. “The second half of 2009 sees a more supportive economic
environment unfold.”

* The bank expects silver prices to average $14.90 an ounce in 2008, falling to $9.80 next year and $10.00 in 2010.

NATIXIS (DEC 11)

* Natixis said it expects spot gold to average $873 an ounce in 2008, falling to $830 an ounce in 2009.

* “The sudden upturn in oil prices may breathe fresh life into all commodities that are considered as a distinct asset class,” Natixis said in a note.

“Under these conditions, gold may benefit from being used as a hedge against a pick-up in inflation, but this is most certainly not the scenario that will dominate the months ahead.”

* “Physical demand is easing in certain traditional markets affected by the crisis, such as Abu Dhabi…. but supply is also easing, with gold sales by the ECB still down on last
year,” it added.

UBS (NOV 12)

* UBS said it sees gold at an average $873 an ounce this year. In 2009, it sees the metal at $700, down 15 percent from its previous forecast.

* “Gold will remain under pressure in 2009 from a combination of slowing demand for jewellery from important emerging markets and disinvestment as inflation slows and the dollar continues to strengthen,” it said in a note.

* The bank expects silver prices to reach $14.97, $8.40 and $8.95 in the same periods.

* UBS said it expects to see platinum at $1,565 an ounce in 2008, and cut its 2009 forecast for the metal by 18 percent to $900 an ounce, and to $1,100 an ounce in 2009.

* It expects palladium to sell for $348 an ounce in 2008, $190 an ounce in 2009 and $233 an ounce in 2010.

RBC CAPITAL MARKETS (NOV 10)

* RBC cut its gold price outlook for 2008 to $875 an ounce from $910, and its forecasts for 2009 and 2010 to $850 from $935 and $875 from $965 respectively.

* “The recent strength of the U.S. dollar, financial market turmoil and the increasing likelihood of a global recession have taken a toll on the prices of gold and gold equities,” it said.

* “We have also observed selling of gold bullion by institutional money managers forced to raise cash to meet fund redemptions, putting further downward pressure on bullion.”

* RBC also cut its 2008 silver price forecasts to $15.00 an ounce from $16.75, its price view for 2009 to $11.00 from $17.00 and its forecast for 2010 to $11.00 from $17.50.

BARCLAYS CAPITAL (NOV 6)

* Barclays sees gold at $877 an ounce, silver at $15.00, platinum at $1,577 and palladium at $353 in 2008.

* Next year, it sees gold at $848, silver at $10.30, platinum at $1,081 and palladium at $244 an ounce.

* “Macro-economic and financial concerns are still likely to trigger further safe-haven buying, but we believe the overall environment isn’t stacked as positively as it once was for gold,” Barclays said.

* “The focus of the platinum market remains firmly on the weak outlook for demand,” it added.

SOCIETE GENERALE (NOV 3)

* SocGen sees gold prices at an average $846 an ounce in 2008 and $650 in 2009, and silver at $14.61 and $8.13.

* “While the silver price has already dropped substantially from this year’s peak above $19, it should trend lower over coming months, with the price likely to drop below $8 during Q109,” the bank said.

* It said it expects platinum prices to average $1,571 this year and $750 in 2009, and palladium at $346 and $200 an ounce respectively.

-END-

Most of those banks, if not all, have been wrong about the price of gold for the last decade. They will be wrong again.

CARTEL CAPITULATION WATCH

It was familiar DOW action. After plunging 90+ points early, the DOW stopped its descent like hitting a brick wall. Then, late in the day it drifted back up, only closing down 48 to 9496. The DOG lost 19 to 2010.

Jesse…

US Equity Markets Look Dangerously Wobbly As Insiders Sell in Record Numbers

“Investors Intelligence’s latest survey of advisory services showed an impressive 51% bullish and a meager 19% bearish…the spread hasn’t been that wide since November 2007.” Alan Abelson, Barrons, Aug. 29, 2009

Next week we move into September, the riskiest month of the year for financial markets, with the federals escalating preparations for a flu pandemic, while Congress considers legislation providing a ‘kill switch’ on the Internet for President Obama to use in the event of ‘an emergency.’ There are widespread rumours of a bank holiday lasting one week after a market meltdown begins in the US, during which the banks would be restructured.

Risky times indeed, and those in the best position to know what is happening behind the scenes are hitting the exits in record numbers right now, running to cash, hard assets and currencies.

jessescrossroadscafe.blogspot.com/2009/08
/us-equity-markets-look-dangerously.html