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November 11, 2011 / Hal (GT)

Alabama County falls, Fanny loss grows, and gold and silver fall today too?


Note:

This post was meant for yesterday, 2011-11010. But as I was composing it something went nuts with my system. Not sure what exactly, combo of things perhaps. But now things seem to be working so I will just add to this post at the bottom the stuff I find in regard to all things precious metals. Right now gold is up and showing some strength with the Dow rising too. Gold is $1776.40 and silver $34.57.

Yesterday’s section of stuff:

What gives, you ask. All the economic data out there continues to point toward gold and silver prices that should be rising and not falling back from their recent highs, right? Well, one would think so. But this is a era of volatility and the uncertainty is a lot like the wild west, shot first, check their hat later.

On the subject of gold and volatility – well, yeah, that is kind of the point of this blog – I was pleased to find that delivered to my Kindle first thing this morning was my pre-ordered copy of James G. Rickards’s book Currency Wars, I started reading the preface right away and I can see it is going to be an engaging and enlightening read. Here’s a quote that stems from the analogy of the war being a tug of war:

“In the contest between inflation and deflation, the rope is the dollar. The dollar bears all the stress of the opposing forces and sends that stress around the world.”

And speaking of stress. Right now the precious metals are under stress. ExactPrice, the little widget sitting on my desktop, is reporting that gold is at $1,746.20 and silver at $33.48. Volatility is to be expected.

Finacial Crisis 2.1> Fannie Mae taps $7.8 billion from Treasury, loss widens -> HT to @TheNvsibleHand. Contrary to the sound clip above from Gomer Pyle, this news is no surprise. The surprise is that our government continues to right taxpayer checks for their failures.

Alabama county files biggest municipal bankruptcy -> HT to @mikecane. I think we are going to continue to see more of this sort of thing in the future. Notice too, that each time we hear about another municipal failure it’s bigger than the last. That trend I imagine will only continue.

The Criminal Element, Part Deux <- TF Metals report worth reviewing dealing with the Comex and Gold.

Italian uncertainty pushing gold down – but the price fall shouldn’t last <- Amazing that uncertainty would mean that gold gets sold down but that does seem to be the case.

Updates on 2011-11-11: To all the Veterans, I thank you.

Ted Butler on the CME Group and Self-Regulation of Exchanges <- Worth a read.HT to @JessesCafe who twittered his post.

Ted Butler brings out a key aspect of the failure of MF Global that has received too little attention.

The self funding by the players of industry insurance is one of the main sticking points in this.

Why should the CME members pay back the MF Global customers, when they know full well what large institution illegally took the collateral, sold it, and is refusing to take the loss?

Rob Arnott – Defaults & Disorderly Contagion Around the World

With continued volatility in all the markets, King World News interviewed five time Graham & Dodd Award Winner, Rob Arnott, who oversees more than $80 billion as the Founder & Chairman of Research Affiliates.  Rob sub advises the Pimco All Asset Fund and mutual funds and ETFs for Schwab, Powershares and Nomura.  When asked about the latest crisis in Europe, Arnott stated, “It’s very simple, countries had an obligation to be fiscally solvent and to take responsibility for their own financial obligations.  And all they’ve done is thrown all of the Maastricht (Treaty) agreements out the window, which tacitly means that they are probably throwing the euro out the window.”

New gold bugs are young and restless <- This is something to think about in how attitudes are changing.

Eveillard – If Italy Sells its Gold Here is What Will Happen <- Which reminds me so some of the stuff in Jim Rickards’s new book.

Hathaway – Sell Side to get Slaughtered on Bearish Gold Calls <- All about the floor in gold and where we are going.

Price Irregularities in the Silver Market <- Go read.

Intra-day averages clearly show market intervention

You’ve seen it before, right? Suddenly, the price of gold or silver drops like a rock. For no apparent reason a chunk of its value is lost within minutes. In other markets however, these kinds of rapid declines are extremely rare.

Why do these sharp price declines seem to appear out of nowhere? Usually professional investors do their best not to execute large sell orders all at once in order to avoid moving the market so as to conserve profits. Nevertheless, in the precious metals market it seems some market participants are often clumsy, triggering abrupt price drops. The reason however is not clumsiness, but other interest: these players want to influence prices with their selling actions. Since August 5th, 1993, when these sudden price moves began occurring with statistically measurable frequency – a number of financial institutions have intervened systematically against precious metal markets.

Moral Bankruptcy <- This is a great read. This MF Global failure is one of those things that I think we will look back in time at and point to as a key turning point. What has happened here is going to continue to reverberate for years to come.

Ferguson – “As you know, I was out all day today. It was nothing earth-shattering. Just a long list of mundane tasks that needed to get done. Accordingly, I had a lot of time to think. Think about trust. Honesty. Responsibility. The present. The future. All of this stuff swirling around in my mind for hours. I had an idea of what I wanted to write tonight but I didn’t know if I could pull it off.

“I guess what got me started was MFing Global. OK, so I lost 3G. I can handle it. But do you know that one of your fellow Turdites lost thousands of dollars and 5000 ounces of physical silver? That’s incredibly disturbing. MFing Global clients were assured that their funds were held “separately”. They were assured by the CME that all would be well.”

Swiss brokerage adopts GATA’s view of imaginary ‘paper gold’

Don’t forget to watch the Scoop.it topic: Gold and What Moves it. I’ll post more frequent items there as I come across them.

So yesterday gold and silver fell. Today they have regained much of their losses.

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