Explaining Today's Silver Surge
A few days ago, Eric Sprott decided to take advantage of the record premium over NAV of his physical silver fund PSLV (or for some other arbitrary reason) and to issue a $300MM follow-on offering, whose proceeds would be used to buy up silver to add to PSLV's existing physical holdings. Naturally, as soon as the news broke, the premium dropped to about 10%, making PSLV holders unhappy. This is not the first time that Sprott has done this: as a reminder after his April 2011 follow on offering in PHYS, we were fully expecting a comparable physical sequestration to occur via PSLV, to wit: "It appears to have already had an impact on silver, which jumped by $20 cents to another 31 year high on the news, as the market now likely expects a follow on offering in PSLV as well imminently." About 10 months later, it finally happened. As was to be expected, any short-term gains focused investors obviously became angry that by collapsing the premium, which we speculated was shortage driven, they have suffered a hit to their P&L (expressed in dollars of course, which as a reminder to the holders, should be largely irrelevant, especially to those who believe a PM-based barter system is imminent). Yet they forget the flip side to the equation: the money taken out of the premium, would be promptly used to take silver out of (hyper hypothecated) circulation, in other words, in the closed system, the drop in Premium would translate in a rising price in the underlying. Which according to UBS is precisely what has happened, and why silver moved as much as it did. Quoting from FMX Connect: "Today’s incredible move was the culmination of a comment made by UBS analyst Edel Tully. He stated that hedge fund manager Eric Sprott may be in the market buying spot futures in a private letter to his clients." And even as the premium dropped, the price of spot silver increased by over 5%, on the speculation of silver being taken out of the market and delivered to Sprott.
Bill Maher "Applauds" Ron Paul, Calls Paul Detractors "Brainwashed Liberals"
When Bill Maher, hardly a
conservative, says that he applauds Ron Paul on his positions, and
calls those Paul detractors in his audience "brainwashed liberals" it
is safe to say we have seen it all. And so, once again, Ron Paul is
officially cool.Gold Matches USD Weakness As Silver Jumps
Equity
and credit markets traded in a narrow range with late day ebullience
(as VIX collapsed but we note implied correlation did not) pushing them
to marginally new multi-month highs and tights respectively. The
markets tracked one another very closely as did HYG (the high-yield
bond ETF) but into the close HYG sold off quite notably (relative to
the day's action). Financials staged a late-day advance (responsible
largely for the move in the index along with Energy names) as average
trade size picked up right at the end suggesting covering at the end. The
relatively calm in equity, credit, and FX markets (especially post
Europe's close) was not at all evident in the commodity markets where
Silver jumped dramatically (up over 8% on the week) while Gold
gently pushed higher (+1.7% matching USD's weakness on the week). Oil
was the week's biggest loser (down 0.5%) as Copper clung to 3% gains on
the week. Treasuries ended the week at their high yields (30Y +19bps)
with the curve considerably steeper (and 2s10s30s up nicely) which
supported risk assets broadly as opposed to oil's weakness (and
stability in FX carry pairs) which did not.Ten Year Note Interest Rate Rising
Trader Dan at Trader Dan's Market Views - 4 hours ago
The Ten Year Note Interest Rate has been trading in a range between 1.80
and 2.10 or so for the better part of the last three months. Rates would
move higher on improving economic data coming out of the US or China but
then retreat on any sour news particularly coming out of Europe.
This week saw rates drop on Monday and stay stagnant on Tuesday but for the
remainder of the week, they were on a tear higher. This is attributable to
changing sentiment in regards to the global economy, especially in relation
to fears surrounding the European debt situation. When traders saw French
and ... more »
Got Silver? An Overlooked Factor That Will Affect Supply This Year
Dave in Denver at The Golden Truth - 7 hours ago
*Although the Bureau of Economic Analysis (BEA) reports that general
business activity in the United States has recovered its pre-recession
levels, no major independent economic series confirms that circumstance.
Only the BEA’s overstated and heavily-politicized gross domestic product
(GDP) measure makes that claim. December readings on real
(inflation-adjusted) retail sales, production and housing all showed
patterns of slowing growth or contractions, either month-to-month or
year-to-year, with levels below pre-recession highs.* - John Williams,
Shadow Statistics
Silver is h... more »
Silver on Track to Challenge $32.50
Trader Dan at Trader Dan's Market Views - 8 hours ago
ON Wednesday of this week, silver finally managed to get a CLOSE above
strong chart resistance at the $30 level. The next day, while it was unable
to advance much, it refused to back down below that resistance level and
eked out another close above $30. Two consecutive closes above a strong
chart resistance level and the bears had no choice but to begin running.
Fresh money is now chasing them out as it appears that the hedge funds are
beginning to move back into the grey metal after having fallen out of love
with it in December of last year.
The technical chart picture is much impr... more »
One Of 2011's Best Performing Hedge Funds Sees Gold At $2,500 Shortly
While it is early to determine if the ongoing breakout is finally in anticipation of upcoming episodes of direct and indirect monetization by the Fed, ECB, or any of the many other pathological currency diluters in circulation, it is obvious that precious metals have found a new bid in recent days. Is this then, the beginning of the next surge in gold and silver to record highs? It remains to be seen, but one entity, the Duet Commodities Fund which was one of last year's best performers, has already made up its mind. 'Our central forecast in gold remains constructive as our long term view targets $2,500 in 2012. Our core view is that gold will head higher to the $2,500 range driven by consequential USD weakness once the EU crisis dissipates and the US steps into the limelight. A weaker USD is not undesirable in the world order as everyone (especially China) understands that the US consumer is the driver for global consumer confidence and consequential consumption led demand." Wow - someone in this market can actually think one step ahead of the inevitable ECB LTRO/monetization, and realize that the Fed will in turn have to escalate to that escalation. Gold, er golf clap.Your Wages Will Be Cut In Half
NYSE Volume Down 27% From Jan 2011 OPEX
While
much will be made of the spurt in volume today - to its highest of the
year - we present without too much comment the comparison to last
January's OPEX volume. Today's volume is an incredible 27% below the January 2011 Option expiration volume...
Another week, another record bet on EUR currency collapse: this even in a countertrend week, when the EURUSD actually soared by over 300 pips. In other words, not only did shorts not cover, as some have suggested, they doubled down on losing positions, in the process bringing total net non-commercial spec contracts to -160K from -155K the week prior. As a result, should the EUR snap over the psychological barrier of 1.300 which it almost did in the overnight session by 15 or so pips, or should the CME hike EUR margins, we may promptly see a move in the pair comparable to the 300 pip surge experienced when the expanded QE1 was announced on March 18, 2009.
Survival Of The Unfittest: Japan Or The UK?
The
spread differential between Japan sovereign CDS and UK sovereign CDS
(both denominated in USD) is near its widest on record (Japan 55bps wider than UK).
Furthermore, Japan's CDS trades notably wider (101bps in 5Y) than its
bond's yields (which are the domestically held and subdued by local
savings unlike the USD-denominated CDS market) while UK CDS trades 24bps
inside its Gilts 5Y yield - quite a difference. Flows have surged into
both the Japanese and British markets as AAA safe havens 'were' in
demand (until the all-clear appears to have been signaled recently?).
The critical point here is that these two nations have devastatingly unsustainable debt/GDP ratios (which show no sign of deleveraging - unlike the US - ignoring unfunded liabilities) with both at just about 500% in total debt/GDP, and yet in general UK trades far better than Japan. McKinsey's 'Debt and Deleveraging' note today points to significant increases in leverage for Japan, Spain, and France (and
UK in the middle ground of rises in leverage for now). Of course none
of this matters as clearly this debt will never be paid back and/or
interest coverage will approach 100% of GDP (and perhaps that is the
100bps premium in CDS for JPY devaluation probability?).Guest Post: You Can't Fool Mother Nature For Long: Mainstream Media
Present-day journalism in America has an unspoken double-standard. Any "news" story or analysis based on press releases from Central State fiefdoms such as the CBO, Medicare, BLS, etc. is accepted without reservations or independent inquiry, or indeed, even basic journalistic skepticism, while any reports that are critical of the Status Quo are treated quite differently: sources are treated as suspect, critical comments are always countered with official assurances, high-visibility "experts" are tapped to dismiss the criticism, and finally, the story is buried: it runs on a public-service broadcast in the wee hours of the morning, it is relegated to page B-19 in the newspaper, and it briefly appears at the bottom of a list of web stories that is quickly "refreshed" before too many people can spot it. This gives the Corporate Media "plausible deniability" when critics question the veracity and quality of its analysis. The Corporate Media digs up the buried story and presents it as "proof" of hard-hitting journalism. We now live in an era of unmitigated propaganda that is accepted much as propaganda in wartime: we all know it's been censored or gussied up with positive spin, but we accept it as "necessary" because the Status Quo is under threat.IBM Accounts For The Entire Upward Move In Dow Jones Index Today
Wondering
why with the S&P and Nasdaq both down, the DJIA is up 60 points?
Wonder no more: courtesy of a few strategic index-weighing
calculations, IBM is responsible for 59.4 DJIA points, or virtually the entire up move in the most popular stock index.
One company, the one which Warren Buffett so strategically picked last
year to invest in, now biases the entire market to make it seem that
"all is fine."UBS analyst Edel Tully, finally caught wind yesterday that Sprott was making a huge purchase which “may” have an impact on silver prices. Tulley noted in a letter sent to his clients that the run up in silver prices could be tied to buying of physical metal by the Sprott Fund. Silver finished the week up 7.9% and up 14.7% month to date. Someone let Edel in on a little secret called SilverDoctors.com. Heck yes it’s making a dent into silver prices! The only thing different from what was reported by the Doc on November 22nd and today is that it was a lot harder for Sprott to lock up physical silver!
Read More @ SilverDoctors.Blogspot.com
In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world. But when it comes to offshore banking, what Mitt Romney is doing is small potatoes. The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks. According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks. And that figure does not even count any money being held in Switzerland. That is a staggering amount of money. Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars. So why do the global elite go to such trouble to hide their money in offshore banks? Well, there are two main reasons. One is privacy and the other is low taxation. Privacy is a big issue for those that are involved in illegal enterprises such as drug running, but the biggest reason why people move money into offshore banks is in order to avoid taxes. Some set up bank accounts in foreign nations because they want to legally minimize their taxes and others set up bank accounts in foreign nations because they want to illegally avoid taxes. You would be absolutely amazed at what some large corporations and wealthy individuals do to get out of paying taxes. Unfortunately, the vast majority of the rest of us don’t have the resources or the knowledge to play these games, so we get taxed into oblivion.
So why do they call it “offshore banking”?
Read More @ TheEconomicCollapseBlog.com
Ron Paul South Carolina Whistle Stop
Steve Forbes: Bernanke Out. Ron Paul for Chairman of the Federal Reserve – SchiffRadio Exclusive
by Thorsten Polleit, Mises.org:
I.
The ongoing financial and economic crisis has not only stoked fears that it will end in inflation — as central banks will print up ever-greater amounts of money — but it has also given rise to a diametrically opposed concern: namely, that of deflation.
For instance, in December 2011 Christine Lagarde, head of the International Monetary Fund (IMF), warned that the world might risk sliding into a 1930s-style slump, such as the Great Depression.
This episode was characterized by worldwide defaulting banks, a shrinking of the money supply (or, deflation), which in turn led to falling prices across the board, sharply falling production and drastically rising unemployment.
Read More @ Mises.org
I.The ongoing financial and economic crisis has not only stoked fears that it will end in inflation — as central banks will print up ever-greater amounts of money — but it has also given rise to a diametrically opposed concern: namely, that of deflation.
For instance, in December 2011 Christine Lagarde, head of the International Monetary Fund (IMF), warned that the world might risk sliding into a 1930s-style slump, such as the Great Depression.
This episode was characterized by worldwide defaulting banks, a shrinking of the money supply (or, deflation), which in turn led to falling prices across the board, sharply falling production and drastically rising unemployment.
Read More @ Mises.org
from King World News:
With
gold closing the week at the $1,665 level and silver at $32, today King
World News interviewed Ben Davies, CEO of Hinde Capital, to get his
take on where the gold & silver markets are headed. When asked what
he is focused on right now, Davies remarked, “We’re looking at this
year being a year of sovereign defaults. That’s where I’m focused and
from that I have to try to derive what asset classes are going to do. I
think of the monetary system, at the moment, as a coin. There are flip
sides of the coin and one side is credit, deleveraging or deflation as I
call it.”
Ben Davies continues: Read More @ KingWorldNews.com
With
gold closing the week at the $1,665 level and silver at $32, today King
World News interviewed Ben Davies, CEO of Hinde Capital, to get his
take on where the gold & silver markets are headed. When asked what
he is focused on right now, Davies remarked, “We’re looking at this
year being a year of sovereign defaults. That’s where I’m focused and
from that I have to try to derive what asset classes are going to do. I
think of the monetary system, at the moment, as a coin. There are flip
sides of the coin and one side is credit, deleveraging or deflation as I
call it.”Ben Davies continues: Read More @ KingWorldNews.com
from DollarVigilante.com:
Here at The Dollar Vigilante (TDV), we’ve got a saying: it’s all been done before.
All nation states start out small and the better of the bunch are born
in liberty and dynamism, freedom of thought, freedom of trade and a
willingness to take chances. And they all follow a similar path on the
way down as the state grows ever more all encompassing – they come to
believe their own propaganda, that they can do no wrong and that they
will reign forever. Corrupt and decadent, they lose the essential
qualities that allowed them to thrive. It has been seen time and time
again – brutal laws, price controls, travel restrictions, currency
devaluation, all in order to prop up the vampire-like elite.
The United States is no different. Born in a fight for liberty from a distant power, the USA, because it held to its founding principles became a great world power in their own right by the late 19th century. Sure there was faults. Native Indian genocide… Slavery. But on the whole, it was a fairly decent idea.
Read More @ DollarVigilante.com
Here at The Dollar Vigilante (TDV), we’ve got a saying: it’s all been done before.
All nation states start out small and the better of the bunch are born
in liberty and dynamism, freedom of thought, freedom of trade and a
willingness to take chances. And they all follow a similar path on the
way down as the state grows ever more all encompassing – they come to
believe their own propaganda, that they can do no wrong and that they
will reign forever. Corrupt and decadent, they lose the essential
qualities that allowed them to thrive. It has been seen time and time
again – brutal laws, price controls, travel restrictions, currency
devaluation, all in order to prop up the vampire-like elite.The United States is no different. Born in a fight for liberty from a distant power, the USA, because it held to its founding principles became a great world power in their own right by the late 19th century. Sure there was faults. Native Indian genocide… Slavery. But on the whole, it was a fairly decent idea.
Read More @ DollarVigilante.com
from The Economic Collapse Blog:
A
vast army of heavily armed criminals has embedded itself in every major
city in the United States. In fact, nearly every community in America
is now affected by these thugs. Drugs, theft and brutal violence are
all part of the every day lifestyle of the members of this army. They
aggressively recruit our young people and floods of illegal immigrants
are joining their ranks. Once civil unrest erupts in America, they will
go on a crime spree that will be absolutely unprecedented and they will
burn large areas of some U.S. cities to the ground. So who am I
talking about? I am talking about the rapidly growing gangs that are
terrorizing cities all over the nation. The FBI tells us that there are
now 1.4 million gang members involved in the 33,000
different gangs that are active inside the United States. The number of
gang members in the U.S. has increased by 40 percent
since 2009. Just think about that. That is absolutely astounding.
Just since 2009, the number of gang members has increased by 40 percent.
The FBI says that 48 percent of all violent crime in this country can
be directly traced to gangs and that this is a national crisis that is
progressively getting worse. Unfortunately, the federal government
refuses to secure our borders and is allowing new waves of illegal
immigrants to enter the United States every single day. A substantial
number of those illegal immigrants end up involved in these gangs. Yet
the federal government just stands by and allows it to keep happening.
One day, the foolishness of this policy will be evident to all.
Read More @ TheEconomicCollapseBlog.com
A
vast army of heavily armed criminals has embedded itself in every major
city in the United States. In fact, nearly every community in America
is now affected by these thugs. Drugs, theft and brutal violence are
all part of the every day lifestyle of the members of this army. They
aggressively recruit our young people and floods of illegal immigrants
are joining their ranks. Once civil unrest erupts in America, they will
go on a crime spree that will be absolutely unprecedented and they will
burn large areas of some U.S. cities to the ground. So who am I
talking about? I am talking about the rapidly growing gangs that are
terrorizing cities all over the nation. The FBI tells us that there are
now 1.4 million gang members involved in the 33,000
different gangs that are active inside the United States. The number of
gang members in the U.S. has increased by 40 percent
since 2009. Just think about that. That is absolutely astounding.
Just since 2009, the number of gang members has increased by 40 percent.
The FBI says that 48 percent of all violent crime in this country can
be directly traced to gangs and that this is a national crisis that is
progressively getting worse. Unfortunately, the federal government
refuses to secure our borders and is allowing new waves of illegal
immigrants to enter the United States every single day. A substantial
number of those illegal immigrants end up involved in these gangs. Yet
the federal government just stands by and allows it to keep happening.
One day, the foolishness of this policy will be evident to all.Read More @ TheEconomicCollapseBlog.com
While
economists broadly do not favour a return to such a system, the general
population in the US seems to be increasingly warming to the idea.
by Ross Norman, MineWeb.com:
There was a time when politicians kissed babies to show they had the common touch and a real connection with ordinary folk. With the outcome of the US elections finely poised, gold and a return to a gold standard is seen as a potential vote-winner – today they are embracing gold, not babies.
In South Carolina 33% of voters are gold standard supporters, with 18% warm to the idea while only 11% are against and 6% cool on the proposal. Gold is a clear 3-1 vote winner.
To be fair, Republican presidential candidates Newt Gingrich and Ron Paul have both consistently been strong supporters of ‘hard money’ but their advocating a “gold commission” to consider a return to a gold standard is interesting at two levels – firstly in what it tells us about the mood in the USA – and secondly by its potential impact on the gold market itself.
President Nixon moved the US out of the gold standard in 1971 and brought to an end the Bretton Woods system of monetary management introduced in 1946 where currencies were pegged to each other and the dollar was pegged to gold at a price of $35/ounce. The proposal is to back US dollars with gold (and possibly silver).
Read More @ MineWeb.com
by Ross Norman, MineWeb.com:
There was a time when politicians kissed babies to show they had the common touch and a real connection with ordinary folk. With the outcome of the US elections finely poised, gold and a return to a gold standard is seen as a potential vote-winner – today they are embracing gold, not babies.
In South Carolina 33% of voters are gold standard supporters, with 18% warm to the idea while only 11% are against and 6% cool on the proposal. Gold is a clear 3-1 vote winner.
To be fair, Republican presidential candidates Newt Gingrich and Ron Paul have both consistently been strong supporters of ‘hard money’ but their advocating a “gold commission” to consider a return to a gold standard is interesting at two levels – firstly in what it tells us about the mood in the USA – and secondly by its potential impact on the gold market itself.
President Nixon moved the US out of the gold standard in 1971 and brought to an end the Bretton Woods system of monetary management introduced in 1946 where currencies were pegged to each other and the dollar was pegged to gold at a price of $35/ounce. The proposal is to back US dollars with gold (and possibly silver).
Read More @ MineWeb.com
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