Infinite Unknown

- Precious Metals Plunge And India’s Industrial Production Crashes (ZeroHedge, Dec. 12, 2011):

The metals space has had a rather disconcerting start to the week this evening with Silver and Copper dropping almost 2% from their opening levels and then Gold following suit. All this as the USD inches very gradually up tracking almost perfectly with Crude for now. These moves seem very liquidation-like in their velocity but have for now stabilized at the lows. The last few minutes saw some of the ugliest macro data we have seen in a while come out of India as it’s Industrial Production growth missed expectations by a mile falling to levels only seen in the middle of the global economic shutdown in Q1 2009. So another leg in the EM-will-save-us-all stool just got kicked out and still we are to believe the US will decouple and ‘muddle-through’?

The metals are ‘decoupling’ from oil for now and it was interesting that the reaction in Gold was ‘delayed’ a few hours on the simultaneous drop in Copper and Silver. They are extending their losses now after the India IP print…

ES is leaking back from its highs but is trading in a narrow range so far and maybe 3-4pts rich to broad risk assets for now.

Charts: Bloomberg

Tags: Commodities, copper, Economy, Global News, Gold, India, Oil, Silver

See also:

- Eric Sprott To Buy $1.5 BILLION In PHYSICAL Silver

Flashback:

- James G. Rickards of Omnis Inc.: Get Your Gold Out Of The Banking System

- US DEPARTMENT OF HOMELAND SECURITY HAS TOLD BANKS – IN WRITING – IT MAY INSPECT SAFE DEPOSIT BOXES WITHOUT WARRANT AND SEIZE ANY GOLD, SILVER, GUNS OR OTHER VALUABLES IT FINDS INSIDE THOSE BOXES!

- Eric Sprott Fights PM Manipulation Fire With Fire: Calls Silver Producers To Retain Silver Produced As “Cash”

In what is likely the most logical follow up to our post of the day, namely the news of the lawsuit between HSBC and MF Global over double-counted gold, or physical – not paper – that was “commingled” via rehypothecating or otherwise, we present readers with the monthly note by Eric Sprott titled “Silver Producers: A Call to Action” in which the Canadian commodities asset manager has had enough of what he perceives as subtle and/or not so subtle manipulation of the precious metal market, and in not so many words calls the silver miners of the world “to spring to action” and effectively establish supply controls to silver extraction to counteract paper market manipulation in the paper realm by treating their product as a currency and retaining it as “cash”. To wit: “instead of selling all their silver for cash and depositing that cash in a levered bank, silver miners should seriously consider storing a portion of their reserves in physical silver OUTSIDE OF THE BANKING SYSTEM. Why take on all the risks of the bank when you can hold hard cash through the very metal that you mine? Given the current environment, we see much greater risk holding cash in a bank than we do in holding precious metals. And it serves to remember that thanks to 0% interest rates, banks don’t pay their customers to take on those risks today.” And the math: “If silver miners were therefore to reinvest 25% of their 2011 earnings back into physical silver, they could potentially account for 21% of the approximate 300 million ounces (~$9 billion) available for investment in 2011. If they were to reinvest all their earnings back into silver, it would shrink available 2011 investment supply by 82%. This is a purely hypothetical exercise of course, but can you imagine the impact this practice would have on silver prices?” And there you go: Sprott ‘reputable’ entity to propose to fight manipulation with what is effectively collusion, which in the grand scheme of things is perfectly normal – after all, all is fair in love and war over a dying monetary model. Who could have thought that the jump from “proletariats” to “silver miners” would be so short.

From Eric Sprott

Silver Producers: A Call to Action

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Tags: Banking, China, CME, Commodities, Economy, Eric Sprott, Eric Sprott Management, Global News, Gold, Government, HSBC, MF Global, Silver, U.S.

The banking sector is lobbying hard to stop regulation of food speculation

- How Goldman Sachs started the food speculation frenzy (Ecologist, Sep. 13, 2011):

US Investment bank Goldman Sachs convinced government officials in the early 1990s to allow it to start gambling on the price of food. Alan Bjerga explains how they did it

In 1991, Goldman Sachs had an idea that changed commodity-trading forever.

J. Aron & Co., Goldman’s commodities trader, wanted to enter into a swap with a pension fund that wanted to add commodities to its portfolio. Raw goods were looking attractive at the moment. Inflation had risen more than 6 per cent the previous year, and the economy was in the recession that, in 1992, would elect Bill Clinton president.

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Tags: Banking, Commodities, Economy, Food, Global News, Goldman Sachs, Government, Politics, Society, U.S.

Hmmh.

- Trading Of Over The Counter Gold And Silver To Be Illegal Beginning July 15 (ZeroHedge, June 18, 2011):

One small step toward Executive Order 6102 part 2, and one giant leap for corruptcongressmankind.

From: FOREX.com <info@forex.com>
Date: Fri, Jun 17, 2011 at 6:11 PM
Subject: Important Account Notice Re: Metals Trading
To: xxx

Important Account Notice Re: Metals Trading

We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Sincerely,
The Team at FOREX.com

So far we have only received this warning from Forex.com. We are waiting to see which other dealers inform their customers that trading gold and silver over the counter will soon be illegal.

It appears that Forex.com’s interpretation of the law stems primarily from Section 742(a) of the Dodd-Frank act which “prohibits any person [which again includes companies]from entering into, or offering to enter into, a transaction in any commodity with a person that is not an eligible contract participant or an eligible commercial entity, on a leveraged or margined basis.”

Some prehistory from Hedge Fund Law Blog:

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Tags: Barack Obama, Commodities, Economy, George Bush, Gold, Government, Law, Obama administration, Politics, Silver

- 20 Questions To Ask Anyone Foolish Enough To Believe The Economic Crisis Is Over (Economic Collapse Blog, May 26th, 2011):

If you listen to Ben Bernanke, Barack Obama and the mainstream media long enough, and if you didn’t know any better, you might be tempted to think that the economic crisis is long gone and that we are in the midst of a burgeoning economic recovery.  Unfortunately, the truth is that the economic crisis is far from over.  In 2010, more homes were repossessed than ever before, more Americans were on food stamps than ever before and a smaller percentage of American men had jobs than ever before.  The reality is that the United States is an economic basket case and all of these natural disasters certainly are not helping things.  The Federal Reserve has been printing gigantic piles of money and the U.S. government has been borrowing and spending cash at a dizzying pace in an all-out effort to stabilize things.  They have succeeded for the moment, but our long-term economic problems are worse then ever.  We are still in the middle of a full-blown economic crisis and things are about to get even worse.

If you know someone that is foolish enough to believe that the economic crisis is over and that our economic problems are behind us, just ask that person the following questions….

#1 During the 23 months of the “Obama recovery”, an average of about 23,000 jobs a month have been created.  It takes somewhere in the neighborhood of 150,000 jobs a month just to keep up with population growth.  So shouldn’t we hold off a bit before we declare the economic crisis to be over?

#2 During the “recession”, somewhere between 6.3 million and 7.5 million jobs were lost.  During the “Obama recovery”, approximately 535,000 jobs have been added.  When will the rest of the jobs finally come back?

#3 Of the 535,000 jobs that have been created during the “Obama recovery”, only about 35,000 of them are permanent full-time jobs. Today, “low income jobs” account for 41 percent of all jobs in the United States. If our economy is recovering, then why can’t it produce large numbers of good jobs that will enable people to provide for their families?

#4 Agricultural commodities have been absolutely soaring this decade.  The combined price of cotton, wheat, gasoline and hogs is now more than 3 times higher than it was back in 2002.  So how in the world can the Federal Reserve claim that inflation has been at minimal levels all this time?

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Tags: Commodities, Debt, Economy, Food, GDP, Global News, Government, Inflation, Politics, Poverty, U.S., Unemployment

European dry spell and commodities speculation combine to push up average cereal costs by 71% to record levels

The dry riverbed of the Loire near the Anjou-Bretagne bridge in Ancenis, western France. Photograph: Stephane Mahe/REUTERS

Food prices are expected to hit new highs in the coming weeks, tightening the squeeze on UK households and potentially triggering further unrest in developing countries unless there is heavy rainfall across drought-affected Europe, the United Nations has warned.

The average global price of cereals jumped by 71% to a new record in the year to April, more than three times higher than a decade ago, according to latest UN figures, prompting its Food and Agriculture Organisation to warn that Europe faces a pivotal few weeks.

With the dry spell forecast to continue for several weeks across Europe, Abdolreza Abbassian, senior grains economist at the FAO, said: “Europe is entering a very critical month. We can’t do without rain any more. If the current situation continues prices will respond very aggressively.”

“Our fear is that we still haven’t seen the worst of food inflation in vulnerable countries and that could be coming. One way or another, rising food prices bring hardship on their people and you can’t rule out the possibility of further food riots. A lot depends on the next few weeks and it’s impossible to predict how Mother Nature will behave,” Abbassian added.

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Tags: Commodities, Drought, Economy, Environment, Europe, FAO, Food, Food Prices, Food Riots, Global News, Inflation, U.N.

‘BTFD!’ (Buy the f****ing dip!)

(… but only in the form of physical gold and silver.)

30 years ago, Bunker Hunt, while trying to demand delivery for virtually every single silver bar in existence, and getting caught in the middle of a series of margin hikes (sound familiar), accused the Comex (as well as the CFTC and the CBOT) of changing the rules in the middle of the game (and was not too happy about it). Whether or not this allegation is valid is open to debate. We do know that “testimony would reveal that nine of the 23 Comex board members held short contracts on 38,000,000 ounces of silver. With their 1.88 billion dollar collective interest in having the price go down, it is easy to see why Bunker did not view them as objective.” One wonders how many short positions current Comex board members have on now. Yet by dint of being a monopoly, the Comex had and has free reign to do as it pleases: after all, where can futures investors go? Nowhere… at least until now. In precisely 9 days, on May 18, the Hong Kong Mercantile exchange will finally offer an alternative to the Comex and its alleged attempts at perpetual precious metals manipulation.

From Commodity Online:

The Hong Kong Mercantile Exchange (HKMEx) has received authorisation from the Securities and Futures Commission and will make its trading debut on May 18, 2011 with the 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong.

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Tags: China, COMEX, Commodities, Global News, Gold, Government, Morgan Stanley

Don’t blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street’s at fault for the spiraling cost of food.

Demand and supply certainly matter. But there’s another reason why food across the world has become so expensive: Wall Street greed.

It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there’s value, there’s money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).

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Tags: Agriculture, AIG, Banking, Barclays, Bear Stearns, Commodities, Derivatives, Derivatives market, Deutsche Bank, Economy, Financial Crisis, Food, Global News, Goldman Sachs, Inflation, JP Morgan Chase, Lehman Brothers, PIMCO, Wall Street

As any MSM brainwashed sheep can clearly see there are no shortages and silver and gold are in a bubble.

ROFL!

Got silver and gold?

Expect gold at$10,000/oz and silver above $500/oz (with corrections in between).

Over the past hour Zero Hedge has been inundated with reader comments notifying us that Ampex has, validating the earlier post speculating about a possible silver shortage at the metals distributor, launched a “reverse ïnquiry” in which it will pay “you $3.00 over the current spot price of Silver for your Silver American Eagles. ANY year, ANY quantity!” and “We will pay you $38.00 over the current spot price of Gold for your Gold American Eagles. ANY year, ANY quantity!” So aside from this first public confirmation that one of the biggest wholesale retailers of precious metals is now inventoryless [sic], we can certainly see why Asia has decided to take silver down in the afterhours electronic session.

Submitted by Tyler Durden on 04/25/2011 19:22 -0400

Source: ZeroHedge

Tags: Commodities, Economy, Global News, Gold, Silver

There is nothing inherently wrong and certainly nothing “illegal” about J.P. Morgan Chase gaining a vault license for storing and taking delivery of gold/silver/platinum/palladium from the futures markets known as NYMEX/COMEX. However, the speed, timing and manner in which the exchanges just granted it troubles us.

The process of being approved as a licensed vault or weigh-master/assayer for the NYMEX/COMEX futures exchange usually involves a careful security inspection of the vaults, a full report of that inspection, and a completely transparent package submitted to the U.S. Commodity Futures Exchange Commission (CFTC) for approval. This process will ordinarily consume considerably more than 45 days. Apparently, such correct and careful practices apply only to banks and independent storage facilities that are not J.P. Morgan Chase.

Some vault operators are more equal than others. JPM appears immune from processes that everyone else must suffer through. On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan’s application to become a licensed vault facility, using a “self-certification” process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both “weighmaster” and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.

As a smaller player, the NYSE-Liffe exchange uses COMEX licensed depositories for delivery and storage of its metals. The new JPM vault, therefore, will also qualify to accept delivery of metal coming from the maturity of NYSE-Liffe gold and silver futures contracts, including the smaller 1,000 ounce silver contract.

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Tags: Banking, COMEX, Commodities, Economy, JPMorgan, Silver