My Dear Extended Family,
Because of the volatility you experienced in gold today, and the absolute fact that it was an MSM cover operation of today’s covert operation, which was one of the largest injections of QE liquidity into the Euro banking system ever, you must know the facts.
I have done the following interview with Eric King of www.KingWorldNews.com in order to shed light on what really took place which, market wise, is confirmed by the general equities ho-hum action while the mindless algorithms drove gold lower.
Click here to listen to the full audio interview…
I would not bother and ask you to please use your precious time to listen to this unless I felt the message was critical for maintaining a correct understanding of exactly what has taken place.
Courtesy of Eric King of www.KingWorldNews.com
Today legendary trader and investor Jim Sinclair told King World News that today’s action was a cover-up by the Federal Reserve and the mainstream media. Sinclair also laid out for KWN readers globally the exact sequence of the cover-up and how it was orchestrated. Here is what Sinclair had to say about the shocking events that took place today: “The power behind the equity markets right now is liquidity and everybody knows it. It’s not improving earnings and it’s clearly not a broad globally improving economy, but rather improving liquidity.”
Jim Sinclair continues:
“If, in fact, what Bernanke attempted to tell the investment world today, that QE may not be necessary because of a modest improvement in the statistics of unemployment, if that was truly to be believed, then the stock market should have been off 800 points while gold was gold was down $100. Because the same thing moving the stock market is what’s moving the metals and that is pure liquidity.
When asked about Jean-Marie Eveillard’s comments earlier today on KWN that central banks were desperate and intervening in the gold market, Sinclair responded, “Let’s go by the intervention that started out in the morning….
Click here to read the full interview…
The following is a summary of key statistics gathered from FDIC press releases regarding bank failures during 2011. The numbers are as follows:
Total Bank Failures: 92
Combined Assets: $35.97 billion
Combined Deposits: $32.06 billion
Total Estimated Cost: $ 7.18 billion (approx. 22% of deposits).
Loss Sharing Remains Prevalent
Throughout 2011, the FDIC continued to enter into loss sharing agreements as a means of resolving the majority of failures involving larger institutions, and continued to agree to share losses on a high percentage of the assets taken over.
Of the 92 failures in 2011, 58 were resolved by way of the FDIC entering into loss sharing agreements with the acquiring banks.
The total asset value of the 58 failures resolved by way of loss sharing was $27.13 billion, approximately $468 million per bank on average.
The total asset value of the 34 failures resolved without loss sharing was $8.84 billion, approximately $276 million per bank on average.
In the 58 resolutions in which the FDIC employed loss sharing, the acquiring banks took on $26.82 billion of the failed banks assets and the FDIC agreed to share losses on $18 billion, approximately 67% of the value of the assets taken over. That means the FDIC continues to take on the lions’ share of the risk that the failed banks’ hardest-to-value assets will turn out to be worth less over time than originally estimated.
The total value of assets under FDIC loss sharing agreements since 2008 is now approximately $202 billion.
Failures Continue To Show Dramatic Asset Overvaluations
The FDIC’s press releases regarding each bank failure provide a means to approximate the extent to which bank management has overstated the value of the failed bank’s assets. Combining the statistics from many different failures over time, we can get a sense of what has become the “permissible” level of overvaluation in the wake of the Financial Accounting Standards Board (“FASB”) having rolled back fair value requirements in April 2009.
The level of FASB-blessed overvaluation is determined by comparing the asset values reported by management to the actual, present market value of a given bank’s assets. In the case of banks that have just failed, a realistic estimate of the actual, present market value of their assets can be obtained by subtracting the FDIC’s estimated cost of protecting depositors from the amount of deposits reported at the time of the failure.
For all of 2011, the FDIC estimated it would cost $7.18 billion to protect the combined $32.06 billion in deposits at the 92 failed banks. That means the FDIC estimated the market value of all the failed banks’ assets to be about $24.88 billion. Comparing this number to the reported asset values, the indication is that bank management overstated asset values by $11.09 billion, or 45%.
There is every reason to believe that over-valuations of this degree prevail throughout the banking sector and are not limited to this group of failed institutions. Almost all of the banks that failed in 2011 had been under close scrutiny by their federal regulators for a significant amount of time prior to their failures. It is reasonable to infer that under such close scrutiny, bank management would not have been emboldened to value assets more than permissible under current FASB standards.
If we assume that overvaluations of even half this level – say 20% — prevail throughout the banking sector, there is barely a single institution that would remain solvent were its assets valued at market. This is one more reason to believe what we read constantly on this site, that QE to infinity is the only option for Western Central Banks and there will be no end to the flood of liquidity any time in the foreseeable future.
CIGA Richard Belfanti
I thought you might be interested in my article published by Forbes today.
Also, I understand from Elizabeth Currier that the Committee for Monetary Research and Education has invited you to speak at the next dinner in New York on May 17th. I am on the board of that organization and, of course, it would be a great honor to have you participate.
I will be there.
Jump the Creek for Silver
I agree with Jim, silver more a game than monetary solution, but it’s still one heck of a game.
Paper silver keeps chewing through resistance (swing highs) on increasing volume. The absorption of supply, i.e. the breach of resistance on increasing volume, illustrates what Richard Wyckoff described as a technical sign of strength (SOS). The 9/22/11 gap from 36.22 to 38.34 represents one of the last point of supply for silver before the test of $50. Silver’s trading action in and around the gap will help establish a time frame for the retest.
Silver ETF (SLV)
Click here to visit Trader Dan’s website…
Today was Fed Chairman Bernanke’s chance to testisfy before the Congress’ Financial Services Committee. Here is a quick synopsis of his comments as I see them.
"The economy is getting better based on what we can see of the employment numbers but it is not growing at a fast enough clip to justify any immediate change in our accomodative monetary policy. The uptick in hiring has been helped by this policy and any change to it at the present time is not warranted. Real Estate is still a concern. Us fiscal condition is dire and faces a serious challenge at the end of this year. Inflation is not a concern although temporary rises in energy prices bear monitoring".
There you basically have it.
Based on this testimony, gold and silver were murdered. The supposed reason? – We are told that traders were expecting QE3 to be imminent and were disappointed because the usually dovish Bernanke did not sound quite as dovish as before. Thus the metals were hammered mercilessly lower.
Excuse me – but as a trader who watches these markets each and every day for more hours than I would prefer anymore, I have not seen any analyst explain the reason for the heretofore rally in the metals as traders EXPECTING AN IMMINENT QE3 program to launch.
The reason for the rally has been expectations by the market that Central Banks would keep the liquidity spighots open for the foreseeable future (near zero interest rate policy coupled with QE out of Europe and the UK) and thus create an environment in which there was little opportunity cost for buying the metals. This has been generating RISK TRADES in which traders/investors buy both stocks and commodities and generally sell off the Dollar, which was particularly pronounced after a rush back into the Euro once traders were convinced that the immediate fallout from the Greece debacle was past.
Comments this morning trying to explain the sell off in gold mentioned the failure of the metal to make it through the $1800 level and downside stops as the culprit but ironically they are deathly quiet in regards to silver, which only yesterday had staged a MASSIVE UPSIDE BREAKOUT on strong volume out of a congestion zone. Yet today we saw a nearly 8% wipe out in silver which completey erased yesterday’s breakout and then some.
Click here to read the full article…
Jim Sinclair’s Commentary
CIGA Green Hornet hits a bull’s eye. This is the game changer for Africa which will accelerate my prediction of a new role for the continent politically, socially and economically. Tanzania has big natural gas fields which will shortly power the grid. The African Giant just woke up.
East Africa hits it big in oil, gas boom Published: Feb. 29, 2012 at 11:13 AM
MAPUTO, Mozambique, Feb. 29 (UPI) — East Africa is emerging as the new hot zone for oil and natural gas exploration, with major discoveries by Anadarko of the United States and Italy’s Eni in the Indian Ocean off Mozambique and by Norway’s Statoil off neighboring Tanzania.
Even war-wracked Somalia, further north in the Horn of Africa, is part of the drive for energy resources in the region, with a Canadian company, Africa Oil, expecting to start producing within the next couple of months in the northern autonomous enclave of Puntland.
But the big prize there is the offshore oil and gas fields that Somali officials say contain more than 100 billion barrels of oil, more than Kuwait. If that’s the case, Somalia, torn by war since 1991, would become the seventh largest oil nation.
Deposits of similar magnitude are believed to lie under the Indian Ocean along the coast of East Africa, enough to transform the ramshackle economies of countries like Mozambique, an impoverished former Portuguese colony.
In Uganda, the big Lake Albert oil field, discovered in 2006 by London’s Tullow Oil, is expected to start production soon, eventually reaching 150,000-350,000 barrels per day.
Jim Sinclair’s Commentary
Follow the money, and you find your way directly back to the US Federal Reserve.
QE to infinity is guaranteed.
$2111 gold will offer gold opposition from the interveners as $1764 gold is doing now. However, gold will exceed both easily.
ECB hands out $712-billion in loans to banks DAVID McHUGH
Published Wednesday, Feb. 29, 2012 5:42AM EST
The European Central Bank has made €529.5-billion ($712.4-billion U.S.) in low-interest loans to banks in the second round of a massive credit infusion that has been credited with easing the euro zone debt crisis.
The offer of credit for three years was taken up Wednesday by 800 banks. The uptake was modestly higher than the €489-billion ($657.9-billion U.S.) handed out to 523 banks at a first offering on Dec. 21. Banks used some of the money from the first round of loans to buy government bonds.
That lowered borrowing costs for hard-pressed governments struggling to maintain large amounts of debt, and eased fears of a market meltdown from Europe’s troubles with too much government debt.
The ECB loans, given against collateral such as bonds or other securities, cost banks the average of the ECB’s benchmark rate over the life of the loan. Right now that’s 1 per cent.
Analysts had expected the amount of new loans to come in just under that for the first offering.
The first offer of three-year, low-interest credit to banks on Dec. 21 has been credited with easing fears of a financial meltdown in the euro zone due to lack of confidence with governments with too much debt and too little growth. The cash infusion removed fears that banks in Europe might have collapsed because it couldn’t pay off bonds or other debt coming due. Following the first credit infusion, bank funding markets frozen in late 2011 began to thaw , as some banks have been able to issue new debt.
My Dear Friends,
Please do not be bothered by today’s intervention. The following news is what creates the absolute need for QE.
It is the thesis of my Formula of 2006 of no major recovery that gives the foundation to my thesis of QE to Infinity.
Treasury Yield Descending Signals Slowdown By John Detrixhe and Daniel Kruger – Feb 29, 2012 8:55 AM MT
The $10 trillion market for US Treasuries is signaling that the economic recovery may be poised to weaken even as consumer confidence rises toward pre-recession levels.
Yields (USGG10YR) on 10-year Treasury notes, the benchmark for everything from mortgage rates to corporate bonds, fell as low as 1.89 percent yesterday, down from this year’s high of 2.09 percent on Jan. 23, according to data compiled by Bloomberg. The yield averaged 2.76 percent in 2011 and 3.19 percent in 2010.
As an example, there was additional confirming news today concerning QE, if you follow the money, financed by swaps emanating from the US Fed.
Swaps are short term in nature but can be extended at each due date to infinity. Never let the word Federal Reserve Swap fool you.
This day’s fall in gold is pure window dressing. Do not be concerned.
CIGA Ken’s Commentary
Could this be a right shoulder coming into place?
LTRO Financing a little higher than expected/gold and silver bombed after Bernanke threatens to limit QEIII
Here's a chart you won't see anywhere in the mainstream media - not the right, and certainly not the left. According to Rasmussen's 2012 Presidential Election Matchups, which pit Obama against any of the four GOP presidential candidates, while the balance of challengers certainly appear to have no chance of defeating the incumbent (something we touched upon yesterday), today, for the first time, Ron Paul has managed to unseat the standing president, by a thin margin of 43 to 41, for the first time in this series.
Unless February 29th is the new April Fool’s Day, I’m pretty sure Alan Dlugash locked up DOTY with this remark:
People who don’t have money don’t understand the stress. Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”
While hardly needing a full-on onslaught by an Austrian thinker, when even some fairly simplistic reductio ad abusrdum thought experiments should suffice (boosting global GDP by a few million percent simply by building a death star comes to mind), Diapason's Sean Corrigan has decided to take MMT, also known as "Modern Monetary Theory", to the woodshed in his latest missive in a grammatical, syntaxic (replete with the usual 200+ word multi-clause sentences) and stylistic juggernaut, that only Corrigan is capable of. So sit back in that easy chair, grab your favorite bottle of rehypothecated Ouzo, and let the monetary hate wash through you.
A month ago, Zero Hedge readers were stunned to learn that unemployment among Europe's young adults has exploded as a result of the European financial crisis, and peaking anywhere between 46% in the case of Greece all they way to 51% for Spain. Which makes us wonder what the reaction will be to the discovery that when it comes to young adults (18-24) in the US, the employment rate is just barely above half, or 54%, which just happens to be the lowest in 64 years, and 7% worse than when Obama took office promising a whole lot of change 3 years ago.
If this rally runs out of steam, history suggests the next move down could plumb depths not seen in years.
If the market rolls over here, the next bottom might be a lot lower than most players think possible. After all, the “news” is all positive: Europe’s debt crisis is now resolved; employment in the U.S. is trending up, GDP is growing nicely, etc. etc. etc.
As food for thought, here are two charts, courtesy of frequent contributor B.C., that suggest the good news might not only be priced in, but it might abruptly cease flowing.
The first chart is of the S&P 500 from 1973 to the present. The current rally has stalled right at a multi-year line of resistance, and a potential A-B-C pattern in a long-term channel suggests a return visit to the March ’08 lows around 666, or perhaps even lower.
Read More @ OfTwoMinds.com
Poll after poll in recent months has indicated that Americans have a high level of concern over Barack Obama’s eligibility to be president, with one poll showing fully half of the nation wants Congress to investigate the question.
But reporters for the traditional media – networks, major newspapers, major news corporations and conglomerates – mostly have giggled when talk turns to the serious question of just what the U.S. Constitution requires of presidents.
Nevertheless, media organizations from all political persuasions are seeking admittance to a news conference to be held by Sheriff Joe Arpaio of Maricopa County, Ariz.
The event is tomorrow at 1 p.m. Mountain Standard Time in Phoenix, 3 p.m. Eastern, and will be live-streamed by WND.
The topic of discussion will be an investigation by Arpaio’s Cold Case Posse into concerns about Obama’s eligibility. It’s the first time an official law enforcement report has addressed many of the allegations about the presumptive 2012 Democratic nominee for president.
Read More @ WND.com
[Ed. Note: Part 1. Part 2. Part 3. Part 4. Part 5. Part 6. Part 7. Part 8. Part 9. Part 10. Part 11. Part 12. Part 13. Part 14. Part 15. Part 16.]
The Financial Survival Network:
Leap Day, February 29, 2012 was a momentous day for the precious metals markets. Gold and silver were slammed from 10am EST onward. Millions of ounces of unbacked paper gold and silver stampeded into the markets, destroying all weak holders in the process. But one must wonder how many real weak metals holders are left. Federal Reserve Chairman, Ben Bernanke testified before Congress today, and coincidentally, precious metals raids often occur before, during, and after his testimony.
It’s interesting to note the purchasing power of silver has been increasing over the past 50 years. In the early 1960′s one silver dollar bought about four gallons of gasoline. Today, the same silver dollar buys around 8 gallons, but it has gone as high as 12 gallons. So much for paper based “assets.”
You have probably seen Peter Schiff on television, not once but many times. Among the legions of indistinguishable talking heads out there, he stands out. He makes sense. He draws attention to reality. He is disregarding of the opinion conventions that prevail on the financial news networks and just comes right out and says what few others are willing to say.
He gets away with it because he makes sense, is super articulate, and is aggressive in getting his message out. Even if you don’t watch television (I don’t, not much), he has his own radio show, Youtube network, blog, social media accounts, and much more. You could probably spend a good part of your day living alongside the mind of Schiff and still not hear it all.
He is also the author of How an Economy Grows and Why It Crashes. I assure you that there is nothing else like this on the market today. In many ways, it is a work of genius. Imagine learning the complexities of macroeconomics and the business cycle through a series of cleverly drawn cartoons that illustrate a kind of economic parable.
Read More @ WhiskeyAndGunPowder.com
by Angela Monaghan, Telegraph.co.uk:
The ECB intervened to ease credit conditions in the European banking system by offering cheap three-year loans to banks to boost liquidity.
It takes the total of the ECB’s funding “Bazooka” under its long-term refinancing operation (LTRO) to more than €1 trillion, after the Bank provided €489bn of money in late December. Mario Draghi, president of the ECB, has said that the first round averted a “major, major credit crunch”.
Sir Mervyn King, governor of the Bank of England, on Wednesday told the Treasury Select Committee that the ECB’s scheme had provided a crucial source of funding to banks, particularly in southern member countries of the eurozone, which had experienced a bank run in the second half of last year.
Ratings agency Standard & Poor’s said the ECB’s move had limited the risk of a bank failure.
Read More @ Telegraph.co.uk
You cannot make this stuff up. The Cheyenne, Wyoming Star-Tribune reported last week that state representatives advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse of the United States. The task force would look at the feasibility of Wyoming issuing its own alternative currency (OK, good so far), and “examine conditions under which Wyoming would need to implement its own military draft (Really?), raise a standing army (to fend off looters from Idaho, no doubt), and acquire strike aircraft and (wait for it…) an aircraft carrier”.
Now, folks, there are some pretty bizarre hypothetical scenarios where you could see, maybe, California thinking about buying an aircraft carrier, but one of the last states that needs one is Wyoming. I know Cheney is from Wyoming and all, but, it’s a land-locked Rocky Mountain state that doesn’t even have a decent-sized lake!
And perhaps it goes without saying, but, one of the reasons the U.S. economy will eventually collapse is because they bought too many aircraft carriers and stuff like that, as opposed to letting people spend their money in more profitable ventures. So, how do Wyoming state legislators justify this?
Read More @ DollarVigilante.com
If you want to get paid for doing something stupid, just turn to the U.S. government. The U.S. government is paying researchers to play video games, it is paying researchers to study the effects of cocaine on Japanese quail and it has spent millions of dollars to train Chinese prostitutes to drink responsibly. The amount of money that the government wastes is absolutely horrifying. Do you remember all of that political wrangling over the debt ceiling deal last year? Do you remember how our politicians told us that there were cutting spending as much as they possibly could? Well, it was all a giant lie. As you will see below, the U.S. government is spending money on some of the most stupid things imaginable. What makes all of this even worse is that we are going into enormous amounts of debt in order to pay for all of this. We are borrowing billions of dollars a day in order to pay for stupid stuff that no government on earth should ever be paying for. Trust me, you are going to find it hard to believe some of the stuff in this list. It is almost inconceivable what our politicians are doing with our tax dollars.
The following are 30 incredibly stupid things that the federal government is spending money on….
Read More @ EndOfTheAmericanDream.com
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