Gold Smells Blood

Posted: Nov 05 2010     By: Greg Hunter      Post Edited: November 5, 2010 at 12:30 pm
Filed under: USAWatchdog.com
Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,
One day after the Federal Reserve announced a $600-$900 billion second round of Quantitative Easing (QE2), gold and silver hit fresh all-time highs.  Yesterday, the yellow metal surged more than $40 an ounce to well over $1,390 before falling back a few dollars in after hours trading.  Silver, also, had a monster move!  It was up more than a $1.50 per ounce.  It, too, retracted slightly in after hours trading.  That surge in precious metals is a debilitating rebuke of the Federal Reserve’s wild and unprecedented money printing policies.   How bad is it, really, for the Fed to feel this is a good idea?  Gold is acting like a predator that smells the blood of wounded prey.  In this case, the prey is a much weakened Fed that seems desperate to keep its banking cartel afloat from the undertow of a sea of red ink.
It is reported that Sprott Asset Management bought 6.5 million ounces of physical silver at nearly $26 an ounce.  Respected financial blog Jesse’s Café American wrote yesterday about the deal, “Some might consider the price that Sprott paid to be a ‘leading indicator’ of where silver will be going. I think when the paper Ponzi scheme actually collapses silver will be much higher than that. After all, “he who sells what isn’t his’n must buy it back or go to prison.” Unless, that is, they are running the game. Then they just pay a fine and admit no guilt.” (Click here to read the entire post from JCA.) This kind of silver buying is a big plus for the physical market and a big negative for the often questionable paper market.
Big-time buyers are driving over-sized price moves in precious metals.  Hedge Funds, Sovereign Wealth Funds, big banks (like Goldman and JP Morgan) and Central Banks are now moving the markets in gold and silver bullion.  Movements like the one yesterday are not mom and pop retail buyers looking to purchase a dozen Silver Eagles or a Gold Eagle coins to put into a safety deposit box.
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ECB Rejects Request for Greek Swap Files, Citing `Acute’ Risks By Elisa Martinuzzi, Alan Katz and Gabi Thesing – Nov 5, 2010 12:29 AM PT
The European Central Bank refused to disclose internal documents showing how Greece used derivatives to hide its government debt because of the “acute” risk of roiling markets, President Jean-Claude Trichet said.
The ECB turned down a request and an appeal by Bloomberg News to release two briefing documents officials drafted for the central bank’s six-member Executive Board in Frankfurt this year. The notes outline how Greece used the swaps to hide its borrowings, according to a March 3 note attached to the papers and obtained by Bloomberg News.
“The information contained in the two documents would undermine the public confidence as regards the effective conduct of economic policy,” Trichet wrote in an Oct. 21 letter in which he rejected the appeal. Disclosure “bears, in the current very vulnerable market environment, the substantial and acute risk of adding to volatility and instability.”
The ECB is withholding the information six months after the European Union and International Monetary Fund led a 110 billion-euro bailout ($154 billion) for Greece. The government didn’t originally disclose the swaps, which were designed to help it comply with the deficit and debt rules it agreed to meet when it joined the euro in 2001. Eurostat, the EU’s statistics agency, is still trying to work out how Greece hid the deficit.
The Greek swaps fueled a financial crisis that threatened the breakup of the region’s currency. The government now says the swaps, some of which were arranged by Goldman Sachs Group Inc., may have caused “long-term damage” for taxpayers.
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Posted: Nov 05 2010     By: Jim Sinclair      Post Edited: November 5, 2010 at 12:36 pm
Filed under: Jim's Mailbox
Employers add 151K jobs, first gain since May

CIGA Eric
Don’t bother reviewing the headline numbers for deep economic meaning. Skewed collection and calculation methodology makes comparison of today’s headline numbers from the distant past (post 1992) completely useless. The direction and acceleration of the trends are still useful in gauging the strength of the economy recovery.
The direction of the trend continues to support an economic recovery. The recovery, however, is losing upward momentum.
Total Nonfarm Payroll Employment (NFP) And YOY Change:
This loss of momentum is revealed by the fact that job creation histogram remains below zero. This suggests that annual job creation (or destruction) has been unable to meet the demands of the labor force. That is, the number of jobs created has been unable to accommodate the demands (size) of the labor pool. Tweaking the size civilian labor force relative to job creation is one way to prevent the household unemployment rate from eclipsing 10%.
Job Creation Histogram (JCH): Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average:
The economy generated a net gain in jobs for the first time in five months in October, as businesses stepped up their painfully slow pace of hiring.
But the unemployment rate, measured by a separate survey of households, remained stuck at 9.6 percent for the third straight month.
Source: finance.yahoo.com
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