Eric Sprott, who according to some catalyzed the initial move lower in silver following his sale of PSLV units, to be followed by a bullish clarification that he transferred all proceeds into other silver holdings, was on Max Keiser late last week in an interview that anyone interested in the silver market should listen to. Among the key summary highlights: "I will be a buyer of silver today. I will be a buyer of silver tomorrow. We have not lost any faith in what has happened to silver." As for what happened with that instantaneous $6 dollar drop in silver on May 1: "In my mind it was just one of those raids that we experience from time to time. There was no particular reason for it. And then we end up with 5 margin rate increases. It just reeks of someone manipulating the price of silver down. I have no fear of silver here. Yes it will be parabolic, but it's going to be way more parabolic than what we have today... I believe that gold today is the de facto reserve currency. It's outperformed everything for 11 years. Silver has always been a currency, people are now treating it as a currency, and it's a very, very small market. There is no way that with roughly $50 billion of silver inventory around that we can make it a currency, so I see the price going much higher." And on the ridiculous recent trading volume in silver: "One of the things we should look at is the trading of silver in the paper markets, I mean the Comex and the SLV. Last week it averaged 1.2 billion ounces per day. There is only 700 million ounces mined in a year. There is only 33 million ounces of physical silver that is available for delivery by the commercial shorters. If something like 3% of the people that were trading silver in one day demanded physical delivery, there would be no silver on the Comex.... The key market is the physical market. I don't think this raid is going to work." Much more on Sprott's views of the silver raid and the silver market in general in the full interview.
Submitted by Tyler Durden on 05/16/2011 09:45 -0400
It's official: the US credit card has officially been maxed out, just as we
predicted on Wednesday, and throughout Q1 and Q2. The United States is expected to reach the legal limit on its debt later on Monday and
will start dipping into federal retirement funds to give the country more room to borrow, a Treasury official said. As Reuters reports further, The U.S. Treasury will settle $72 billion in maturing bonds on Monday, which will push the country right up against its $14.294 trillion borrowing cap, the official said. To all those who thought only the insolvent government of Ireland will plunder pension funds, our condolences.
The U.S. is in a peculiar state of suspended animation: nothing is actually moving, we're all frozen in an extended moment of disbelief, denial and crisis, waiting for something to finally break loose. We know the present isn't sustainable, but we go through the motions of phony "reforms" and "trimming the deficit" as if another 1,000 pages of "reforms" will fix what's broken in the economy or that trimming $50 billion from $1.7 trillion annual deficits will actually matter. The wheels visibly fell off the bubble-debt-fraud economy four years ago in mid-2007. It's worth recalling that the U.S. won a global war (World War II) in less than four years, yet now we are pleased to borrow and and squander an extra $1 trillion a year just to keep our fragile state of suspended animation from being disrupted by unpleaseant reality. In a nutshell, here's the reality: the entire "prosperity" of the past decade was a false prosperity, constructed entirely of money borrowed by the private sector based on the rising value of McMansions and strip-malls that made no sense except as speculations based on the Federal Reserve's credit-bubble policies and Wall Street's systemic financialization of that debt based on fraud and misrepresentation of risk.
Submitted by Tyler Durden on 05/16/2011 14:41 -0400
I’ll come to the point. Despite talk of a recovery, the economy is badly underperforming. Growth last quarter came in at just 1.8 percent. We’re not even creating enough jobs to employ new workers entering the job market, let alone the six million workers who lost their jobs during the recession. The rising cost of living is becoming a serious problem for many Americans. The Fed’s aggressive expansion of the money supply is clearly contributing to major increases in the cost of food and energy. An even bigger threat comes from the rapidly growing cost of health care, a problem made worse by the health care law enacted last year. Most troubling of all, the unsustainable trajectory of government spending is accelerating the nation toward a ruinous debt crisis. This crisis has been decades in the making. Republican administrations, including the last one, have failed to control spending. Democratic administrations, including the present one, have not been honest about the cost of the tax burden required to fund their expansive vision of government. And Congresses controlled by both parties have failed to confront our growing entitlement crisis. There is plenty of blame to go around. Years of ignoring the drivers of our debt have left our nation’s finances in dismal shape. In the coming years, our debt is projected to grow to more than three times the size of our entire economy. This trajectory is catastrophic.
Submitted by Tyler Durden on 05/16/2011 13:50 -0400
In the funniest piece of news today, we have Bill Gross accusing a "
blogger" of spreading misinformation that Pimco, and especially the firm's Total Return Fund is short Treasurys, in order to defend himself from CNBC that he is underperforming the market in the current bond rally (somehow Roswell flying saucers got mixed up too). While it is unfortunate that Gross will actually not man up and tell the truth (and yes, you can be off by a month or a year in what is a correct call Bill - there is no shame in that, and you certainly don't have to defend your view to a bunch of teleprompter reading CNBC marionettes). Well, guess what: PIMCO is short Treasury, as disclosed by both Market Value and Duration Weighted Exposure. And while one can hide, if one so desires for disgruntled LP purposes, behind semantics, and Gross can say he is not notionally short cash Treasurys, he most certainly has a sizable synthetic short exposure. Those who actually wish to do the forensic analysis on the April TRF portfolio, will not that that his duration of the various sectors shows he is selling some long dated swaps/swaptions to obtain his negative US Govt exposure given his market value of govt holdings was -9,628 MM, dollar duration was -189,340 resulting in an avg duration of 19.7 yrs. And while HY exposure has been moving out the maturity spectrum as well, from 2.6 yrs to 3.0 yrs to 3.4 yrs, his cash has grown shorter from 5.6 yrs to 4.3 yrs to 4.0 yrs over the past 3 months. Perhaps next time anyone interviewing Gross will ask something more substantial than textbook "finance for retards/CNBC anchors" questions and demand an answer from the bond titan just how many hundreds of billions in UST short equivalent eurodollar notionals he has on his books? And while we wish we had an updated TRF holding (the last one is as of December 31, 2010), even using even stale data, we find that
at the end of 2010 TRF had $608.3 billion in Net Futures held SHORT (
link),
and $588 billion in Eurodollar positions, which is precisely where his marginal synthetic rate bias/exposure is contained. Yes. This is a short equivalent position.
Following last week's news that as we suggested US stagflation is starting to shift to China, SocGen's Patrick Legland looks at the consequences of what a Chinese slowdown in H2 would look like for the country, and the world. Cutting to the chase: buy Chinese CDS, and sell hard commodities. That said, the risks to the global economy, should China implode, are far vaster, and we fail to conceive how the central planning cartel would ever allow this to happen, or the PBoC for that matter, considering today's earlier news of not one but two failed Chinese auctions.
Submitted by Tyler Durden on 05/16/2011 12:32 -0400
As Daily Telegraph reporter Jon Swaine notes via Twitter, DSK has been denied bail, and has been remanded to stay in custody until the next grand jury hearing which is due for May 20. Looks like DSK will now be mugshotted and stay in jail for 4 days. And so the IMF continues to be headed by a man about to spend 72 hours in prison.
Submitted by Tyler Durden on 05/16/2011 12:17 -0400
ABC has released the details of the full complaint issued against DSK: "International Monetary Fund chief Dominique Strauss-Kahn allegedly forced a New York City hotel housekeeper to perform oral sex and submit to anal sex, in addition to allegedly attempting to rape her, according to a complaint filed today by the office of Manhattan District Attorney Cyrus Vance. The complaint charges him with two counts of criminal sexual act in the first degree, one count of attempted rape, sexual abuse in the first degree, unlawful imprisonment, sexual abuse in the third degree and forcible touching. The complaint is a terse charging document, less than a full page in length. It charges that he forcibly touched the housekeeper's breasts, attempted to pull off her panty hose, twice "forcibly made contact with his penis and the informant's mouth" and that "the defendant engaged in oral sexual conduct and anal sexual conduct with another person by forcible compulsion."
Submitted by Tyler Durden on 05/16/2011 11:54 -0400
Well, it's not the Taiwanese animation geniuses from Next Media Animation (yet), but it will do for now. Everyone still confused by what happened to DSK on Saturday is encouraged to watch this animated version (sorry, no bears). Ignore the Chinese: it speaks for itself.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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