(For Record, Before This Too Disappears) Bloomberg: Gold Fix Study Shows Signs of Decade of Bank Manipulation

The direction of the manipulation, researchers Rosa Abrantes-Metz (New York University’s Stern School of Business Professor) and Albert Metz (a managing director at Moody’s Investors Service) argue, is predominantly DOWN.

Oh what a surprise. (Not.)

After the UK's Financial Times pulled at a lightening speed a similar article accusing the London Gold Fix participants for manipulating the gold price, I feel the need to save the article for my personal record, as one of the last "conspiracy theories" may turn out to be not "conspiracy theory" but reality.

(But who cares about reality these days?)

The banks setting the gold fix are Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC, and Societe Generale. Bloomberg says these banks has set up a committee to consider reforms. (Much like TEPCO trying to explain how the nuclear accident happened.)

From Bloomberg News (2/28/2014; emphasis is mine):

Gold Fix Study Shows Signs of Decade of Bank Manipulation

By Liam Vaughan Feb 28, 2014 1:07 AM PT

The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.

Unusual trading patterns around 3 p.m. in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behavior and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper.

Video: Are Gold Prices Being Manipulated by Banks?

“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality,” they say in the report, which hasn’t yet been submitted for publication. “It is likely that co-operation between participants may be occurring.”

The paper is the first to raise the possibility that the five banks overseeing the century-old rate -- Barclays Plc (BARC), Deutsche Bank AG (DBK), Bank of Nova Scotia, HSBC Holdings Plc (HSBA) and Societe Generale SA (GLE) -- may have been actively working together to manipulate the benchmark. It also adds to pressure on the firms to overhaul the way the rate is calculated. Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the $20 trillion gold market for signs of wrongdoing.

Union Jacks

Officials at London Gold Market Fixing Ltd., the company owned by the banks that administer the rate, referred requests for comment to Societe Generale, which holds the rotating chairmanship of the group. Officials at Barclays, Deutsche Bank, HSBC and Societe Generale declined to comment on the report and the future of the benchmark. Joe Konecny, a spokesman for Bank of Nova Scotia, didn’t respond to requests for comment.

Abrantes-Metz advises the European Union and the International Organization of Securities Commissions on financial benchmarks. Her 2008 paper “Libor Manipulation?” helped uncover the rigging of the London interbank offered rate, which has led financial firms including Barclays Plc and UBS AG to be fined about $6 billion in total. She is a paid expert witness to lawyers, providing economic analysis for litigation. Metz heads credit policy research at ratings company Moody’s.

The rate-setting ritual dates back to 1919. Dealers in the early years met in a wood-paneled room in Rothschild’s office in the City of London and raised little Union Jacks to indicate interest. Now the fix is calculated twice a day on telephone conferences at 10:30 a.m. and 3 p.m. London time. The calls usually last 10 minutes, though they can run more than an hour.

Unregulated Process

Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set.

Traders relay shifts in supply and demand to clients during the call and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, where the results are published. At 3 p.m. yesterday, the price was $1,332.25 an ounce. The process is unregulated and the five banks can trade gold and its derivatives throughout the call.

Bloomberg News reported in November concerns among traders and economists that the fixing banks and their clients had an unfair advantage because information gleaned from the calls provided an insight into the future direction of prices and banks can bet on spot and derivatives markets during the call.

All Down

Abrantes-Metz and Metz screened intraday trading in the spot gold market from 2001 to 2013 for sudden, unexplained moves that may indicate illegal behavior. From 2004, they observed frequent spikes in spot gold prices during the afternoon call. The moves weren’t replicated during the morning call and hadn’t happened before 2004, they found.

Large price moves during the afternoon call were also overwhelmingly in the same direction: down. On days when the authors identified large price moves during the fix, they were downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time, the authors found.

There’s no obvious explanation as to why the patterns began in 2004, why they were more prevalent in the afternoon fixing, and why price moves tended to be downwards, Abrantes-Metz said in a telephone interview this week.

“This is a first attempt to uncover potentially manipulative behavior and the results are concerning,” she said. “It’s down to regulators to establish why there are such striking patterns but banks have the means, motive and opportunity to manipulate the fixing. The results are consistent with the possibility of collusion.”

Bafin, FCA

Deutsche Bank, Germany’s largest lender, said in January that it will withdraw from the panels setting the gold and silver fixings. German financial markets regulator Bafin interviewed the Frankfurt-based bank’s employees as part of a probe into the potential manipulation of gold and silver prices.

“In general, research that finds certain price patterns does not as such constitute evidence of manipulation,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former Barclays economist. “However, it might encourage interest in finding out more about the sources of these price patterns.”

‘Appropriate Oversight’

The five banks that oversee the fixing set up a steering committee and will appoint external advisers to consider reforms before EU legislation on financial benchmarks’ regulation and oversight comes into force, Bloomberg reported last month.

Britain’s Financial Conduct Authority is also scrutinizing how prices are calculated. The regulator published a report this week outlining its remit for regulating commodities including gold, saying that while it’s responsible for commodities derivatives, it doesn’t regulate physical commodities.

“Abusive behavior can occur in the physical commodity markets which in turn can have an impact on, or be directly linked with, financial market activity and prices,” the FCA said in the report. “The regulatory regime -- both in the U.K. and internationally -- needs to be adapted to ensure robust and appropriate oversight.”

To contact the reporter on this story: Liam Vaughan in London at lvaughan6@bloomberg.net

To contact the editors responsible for this story: Heather Smith at hsmith26@bloomberg.net; Edward Evans at eevans3@bloomberg.net

Also from Bloomberg, Tokyo-based Bitcoin exchange Mt. Gox has filed for bankruptcy in Japan. Bitcoin is a virtual currency based on trust of the users, much like the paper-based fiat currencies of the world.

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Extreme Gold Sell-Off Caused by Extreme Volatility of Japanese Government Bonds?

Gold and silver crashed on no apparent reason whatsoever on Friday, and it continues in Asia on Monday.

After reading the article at Zero Hedge (4/12/2013), at least now it all makes sense to me. Instead of unwinding the JGB positions in the new-normal extreme volatility because of the Bank of Japan meddling, financial institutions are selling other assets to raise cash for margin calls for their JGB holdings. And those assets of choice seem to be gold and silver.

Gold investors can thank Haruhiko Kuroda, the ex-Finance-Ministry-bureaucrat Governor of Bank of Japan, for doing everything he can to create inflation which he calls "price stability" (1984, anyone?) for the opportunity to add to their positions at an extremely low price considering the money printing that has been going on for the past 4 years by the central banks in the US and Europe.

Japanese financial media like Nikkei Shinbun is all excited with Kuroda's regime, calling it "different dimension (異次元)", as in Twilight Zone. Indeed.

From Zero Hedge, emphasis is original:

Japanese Bonds vs Gold: Is This Why Commodities Are Selling Off?

Japanese bond volatility appears to have crossed the Rubicon. As we noted here, the Japanese Ministry of Finance warned that a rise in JGB volatility could cause a significant sell-off in JGBs (since banks will be hampered by their VaR models-driven risk limits, which have literally gone off the charts in recent days, and be forced to reduce holdings to meet those risk limits). It seems however, that since the BoJ is set to buy more JGBs than will be issued in the next several years as noted yesterday, that financial institutions are chosing to live with the record vol noted previously, opting to raise cash buffers and liquidity reserves instead of selling bonds in order to meet surging margin demands on their JGB holdings.
 The synchronicity between the price of gold (and other commodities) and the volatility of Japanese bonds makes this risk-driven perspective very clear. This leaves the question, what happens when the Japanese (or in fact global - since front-running the BoJ has been a big winner until a week ago) banks run out of 'other' assets to sell and their VaR models continue to demand more capital in reserve?

Since QE2, gold (and other commodities) have moved in inverted-lockstep with Japanese interest rate implied (and realized) volatility as the JGB margin demands oscillate.

For some reason unknown to mere mortals, Kuroda and his boss Shinzo Abe seem to think they can control everything, achieve just the results they order.

That confidence is definitely not coming from their experience at Fukushima, that's for sure. For that pesky problem that's leaking all-beta water, they are setting up a committee to study the problem so that people, particularly those in Fukushima, are assured, in the fine comical tradition of Sir Humphrey Appleby.

(I actually burst into laughter when I read the news about this committee. Every single word of the news I have heard and watched in episodes of Yes (Prime) Minster...)

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OT: Gold Going Vertical After the US Fed FOMC Meeting

that announced the ZIRP (zero interest rate policy) at least until the late 2014, with indication that the US central bank may further "accommodate" (QE3) the still-sluggish "recovery" of the US "economy". Probably just in time for the re-election campaign to be mounted in earnest by the incumbent.

Zero Hedge has a comparison of December and January FOMC statements, here.

As Japan could easily tell to Ben "Bernank" Bernanke, once ZIRP, always ZIRP. Or at least 2 decades and counting.

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Circuit Breaker on Korean Stock Exchange

Trading halted for 20 minutes on Kospi. That means it has dropped 10%. The Korean central bank is stepping in. It feels like a total panic in Asia.

Global sell-off continues.

Hang Seng down 1,500 points.
Nikkei down 390 points.

The consumer price rose by 6.5% in July in China, highest percentage rise in more than three years. In other words, a bad number for the market.

Riots spread all over the country in the UK.

Gold hit US$1,745, and hitting all-time high in other currencies. 1 ounce of gold is 1,225 euro, 134,536 Japanese yen, AU$1,736, 1,067 British pound.

Pandemonium.

It may continue, as my personal contra-indicator (a certain financial network owned by GE) is still trying to spin it positively and bottom-pick. Someone said Bank of America is a buy here.

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OT: Gold on the Move, Again (Thanks Ben, and Gold Is Money)

(These days, OT - other topic - means anything other than Fukushima... But this blog WAS once a financial blog..)

Gold jumped to a record high near $1,590 as the Federal Reserve chairman Ben "Black Hawk Helicopter" Bernanke indicated a further stimulus (digital printing of the Federal Reserve notes, fiat money) to create more inflation. (Remember, to him and the like-minded Fed economists who despise anyone without a PhD in (Keynesian) economics, inflation is growth, and a rising stock market is the economy.)

From Reuters (7/13/2011):

(Reuters) - Gold surged to a record near $1,590 an ounce on Wednesday as the possibility of more Federal Reserve stimulus coupled with Europe's deepening debt crisis fueled bullion's longest winning streak in five years.

Bullion's gains accelerated after Federal Reserve Chairman Ben Bernanke said the Fed is ready to ease monetary policy further if economic growth and inflation slow much more. Silver rallied nearly 6 percent, moving in tandem with commodities, U.S. stock markets and risk assets.

....Gold option volatility rose sharply on Wednesday, as bullion investors bet that underlying future contract prices could extend a record rally on signs of more Federal Reserve stimulus coupled with Europe's worsening debt crisis.

COMEX gold options floor trader Jonathan Jossen said one investor sold a huge position in $1,600 December call options and then bought twice as much in $1,750 December calls. Heavy call purchases suggest buyers expect underlying gold futures to rise further.

That option strategy is called "call backspread". Someone's expecting a very big and volatile move and wants to profit very handsomely.

In the meantime, the Fed chairman was put in a very uncomfortable position trying to deny gold is money but say totally fiat Treasury bills are financial assets.

From Forbes blog (Agustino Fontevecchia, 7/13/2011):

Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday. The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold. When asked whether gold is money, Bernanke flatly responded “No.”

...As Bernanke began to sermon Rep. Paul on the history of the Fed (“we are here to provide liquidity [in abnormal situations],” the Chairman said), he was interrupted.

“When you wake up in the morning, do you think about the price of gold,” Rep. Paul asked. After pausing for a second, Bernanke responded, clearly uncomfortable. that he paid much attention to the price of gold, only to be interrupted once again.

“Gold’s at about $1,580 [an ounce] this morning, what do you think of the price of gold?” asked Rep. Paul. A stern-faced Bernanke responded people bought it for protection and was once again cut-off, with Ron Paul once again on the offensive.

“Is gold money?” he asked. Clearly bothered, Bernanke told the representative, “No. It’s a precious metal.”

After Paul interrupted him to note the long history of gold being used as money, Bernanke continued,”It’s an asset. Would you say Treasury bills are money? I don’t think they’re money either but they’re a financial asset.”

...The interesting exchange served as one of the few times Bernanke has been publicly pushed off his comfort zone by an elected official. Rep. Ron Paul brought up the issues that he’s famous for, namely, a sort of allegiance between the Fed and the nation’s most powerful institutions, the illusion of fiat money, and the gold standard. Bernanke, angered and bothered, had no option but to respond.

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Like a Broken Record: "Gold Rally Almost Over"

If you listen to the so-called experts and pundits, it was all over around $400, $600, $900, then $1,000, then $1,200, and $1,400, and everywhere anywhere in between those numbers, and $100, $200 correction is imminent.

Here's the latest broken record, from James Cordier, president and founder of Liberty Trading Group, courtesy of Yahoo Finance's "Breakout":

Gold has been shining brightly, but is the rally almost over?

James Cordier, president and founder of Liberty Trading Group, joined Breakout from Tampa, Florida to offer some contrarian thoughts on the screaming gold rally of the past year. The options trader sees the most precious of metals peaking in short order, saying this rally is in "the ninth inning." Cordier is using a classic options strategy to take advantage of other traders' aggressive bets on gold either collapsing or moving even higher.

While he doesn't see a gold rollover as today's business, Cordier is selling calls at the $2,100 and $2,200 levels above, and selling puts under $1,000. It's a play options traders call a "strangle," as it's a bet the price will be constricted between those two prices for the duration of Cordier's contracts. Here's how it works: Cordier gets to keep the premium he collected when selling the options short if gold stays within his range, meaning the puts and calls would both expire as worthless. If gold spikes above $2,200 or below $1,000, Cordier could theoretically get vaporized. He won't, because good options traders, like all good investors, have an exit plan. But the risk needs to be noted for those looking to go into the options-shorting business.

It's rather a big strangle. Mr. Cordier expects the price of gold to remain within that range ($1,000 to 2,200), and that's supposed to signal the "9th inning" and the end of gold rally.

Now you're warned. Yet again.

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All That Glitters...Gold Hits $1,500 Per Ounce

and gets beaten down to $1,495 or so. Next stop $1,550 or so, reverse head and shoulders on a longer-dated chart (6-month or one-year daily chart).

Thank you, Ben, for stoking the inflation in things we need, and the deflation in things we stored the wealth (like houses).

Congrats if you didn't listen to the MSM pundits proclaiming the imminent collapse of gold (and silver) prices.

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Gold at All-Time High, Silver 31-Year High

(Kitco News) - Comex gold futures prices ended higher and set a record-high close of $1,438.00 an ounce Wednesday. Meantime, May Comex silver futures set a fresh 31-year high of $37.29. Major world events of late are still underpinning the precious metals markets on safe-haven investment demand, even though the markets, overall, are calmer so far this week. Comex April gold last traded up $9.90 an ounce at $1,437.50. Spot gold last traded up $8.80 at $1,438.00.

Gold spot, which continues to trade, is currently at $1,440. Silver spot is at $37.38, according to Kitco.

As the utterly irrelevant US stock market continues to levitate, the world continues to burn or get irradiated. I guess you could say, on a relative term, the US is the best place to invest..

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(#Libya) Libyan Officials In Talks with EU Officials in Brussels (Sellout Time?)

(Update - more info from Reuters on my newer post; Gaddafi's officials are to take part in the EU/NATO meetings.)

That's #Gaddafi's officials, from what I can figure. Cutting deals to sell out anti-Gaddafi Libyans for the sake of "stability" (aka "status quo" favored by the so-called "democratic "West), perhaps?

Restore "stability" and prevent "human sufferings", I guess would be the noble aims that the officials - Libyan and EU whose member states heavily depend on oil from Libya - try to achieve. Never mind that there has been a one long "human suffering" (42 years) for the sake of "stability" of oil supply to Europe.

6PM in Tripoli is 8AM PST, 11AM EST in the US. Hmmm. That explains the sudden, violent reversal in the price of gold. (See the intraday chart of GLD, a gold ETF.)

From Al Jazeera Libya Blog (3/9/2011):

6:08pm

Confirmed to Al Jazeera: Libyan envoys are meeting with European Union officials in Brussels.

1:37pm

Al Jazeera is getting reports that three of Liyan leader Muammar Gaddafi's private planes have taken off from a military airstrip near Tripoli.

Karl Stango-Navarra, a journalist based in Valletta, Malta, told Al Jazeera that the three jets are flying in three different directions.

"One is suggested to be Vienna, the other is supposed to be Athens in Greece, and the other is Cairo, Egypt," Stango-Navarra said.

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Silver at 31-Year High (Poor J.P.Morgan Chase)

As you can see in the silver chart to the left: $35.57 right now (Friday 3/4/2011, 1:18 PM PST).

Paper silver (SLV) closed today at $34.69, 2.47% discount compared to physical silver.

Gold also got the bid, US Treasuries, some. Still not many takers for the world "reserve currency", US dollar.

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Gold Nears All-Time High, Silver Hits Post-Hunt-Brothers High

thanks to the sudden, collective saber-rattling by the West over #Libya. Currently (9:33AM PST),

Spot gold: $1,429.10

Spot silver: $34.53

according to Kitco.com.

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Sell-Off of Gold, Silver, Oil Is Due to Margin Hike in Oil, Not Because of Gaddafi Being Shot

(There is no such news at Al Jazeera.)

So the likely timeline was:

1. Oil margins were hiked;

2. Oil plunged, taking other commodities including gold and silver with it;

3. Seeing that, equity traders speculated that Gaddafi must have been shot, in their effort to come up with the explanation for the oil drop before they heard about the margin hike;

4. But the momentum already triggered algo bots to go into "buy buy buy" mode.

They do anything and everything to prop up the stock market. Lies? What lies?

(Gaddafi's shooting alright, his forces are shooting hospital patients dead in Tripoli.)

For the true reason for the sell-off in the commodity space, here's Zero Hedge:

ICE Hikes Oil Margins For Second Time In A Week

And now, for the real reason for the oil plunge: the ICE has just announced it is hiking oil margins for the second time this week, this time increasing both Brent and WTI margins. The new Brent scanning range is 5200 compared to 4850 before, while the Oil WTI 1st month contract is hiked from 600 to 900. We expect the NYMEX will follow suit on its own WTI contract any minute. As usual, we continue to patiently await the Globex to hike margin requirements on the ES. The most recent update of the ICE Brent Scanning range and Tiering can be found here.

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Out of Nowhere, Gold Sells Off

Thank you, JP Morgue. Or several hedge funds blowing up, maybe. Or is it the rumor that Gaddafi has been shot?

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Gaddafi's Plane Loaded With Gold and US$ Ready to Depart for Zimbabwe?

From ABC News in Australia:

Leader 'preparing to flee' Libyan bloodshed

A political activist says Libyan leader Moammar Gaddafi is readying to flee the country, as violent civil unrest continues and rebels continue to take power of towns close to the capital Tripoli.

..... London-based Libyan political activist, Guma el-Gamaty, has told the ABC's Lateline that "quite reliable sources" believe Mr Gaddafi is readying to flee his country.

"Gaddifi's own private plane is loaded with gold bullion and lots of hard currency, mainly dollars, and is preparing to flee to Zimbabwe to stay there with his friend Robert Mugabe," he said.

"We think this could happen very shortly because the Security Council is threatening to impose a no-fly zone and we think that Gaddafi will try to escape before this no-fly zone is imposed, possibly by tomorrow.

The article also mentions a few speculations on how Gaddafi would end - escape, suicide, arrest. Whichever it may be, Libyans, get your gold and money back.

Libya has (or had) 143.8 tonnes of gold reserves as of December 2010, the second largest in Africa (the largest being Algeria at 173.6 tonnes)

BTW, the Swiss government has announced that they will freeze Gaddafi's assets. So that must mean the assets have been safely moved out of Switzerland, just like the case of Mubarak.

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Gold Goes Vertical Intraday

Below is the intraday chart of GLD, a gold ETF about 1/10 of the price of physical gold.


WTF happened?? Or is it just the money from today's POMO?

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Gold Price Drop Caused by One Single Trader Liquidating His Outsized Futures Positions

You've got to be kidding me, but that's what Zero Hedge is reporting.

Meet The Man Behind The Liquidating Hedge Fund That Blew Up The Gold Market

Over the past several weeks there had been rumors that the reason for the precipitous drop in gold was primarily driven by a hedge fund liquidating its futures positions. This has now been confirmed: "Yeah, that was just me liquidating my spread position," Mr. Daniel Shak, [of SHK Asset Management] 51 years old, said in an interview. "I had a significant, fully margined position. The dollar amount of the gold liquidation was very small, it was just a lot of contracts." Of course in the extremely jittery gold market, the kind of persistent marginal gross selling of contracts was all that was needed to spook weak hands into a consistent dump of the precious metal, which as we pointed out was beyond overdone. Judging by this morning's jump in the PM complex, SHK's liquidation is now not only over but about to promptly reverse as daytrading momos realize they were duped by one single guy. Look for gold to resume its upward advance as investors realize that the gold dump was nothing more than an ongoing futures position liquidation.

And what kind of positions did this punk liquidate? Citing WSJ:

A huge trade by a tiny hedge fund has sent shudders through the gold market.

Thanks to the nature of futures trading, Daniel Shak's $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa's annual gold production.

But as gold prices started falling this year, the trade, which was a combination of being long and short gold contracts—bets that prices will both rise and fall—started going bad. Monday, he liquidated his position, and is returning money to clients.

As a result, the number of gold contracts on CME Group Inc.'s Comex division plunged more than 81,000, to about 500,000, the biggest single reduction ever. While his trade didn't account for all of the contracts, an average daily move is about 3,000 to 5,000 contracts.

Yes, position limit is so unnecessary, isn't it?

And this is Mr. Shak, in case you see him on the street and want to talk to him about his career-ending trade.

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COMEX Raises Gold/Silver Margins Again

If you are wondering why gold and silver have been selling off for the past few days while the news of shortage of the physicals is everywhere, here's the answer:

The COMEX hiked the margins on gold and silver again, along with a boatload of commodities that are rising thanks to Ben and the Inkjets printing digital money with abandon which is leaking mightily into M2. The new margins will become effective after the market close on Friday.

From Zero Hedge:

Wonder why the smart money was rushing headlong out of gold and silver over the past few days, and especially today in the AM session? Here is your answer: in tried and true fashion the Comex just hiked margins in gold, and silver by about 6%, and threw in a few other commodities to mask things up. And unlike the last time it did it, when it could at least pretend to justify its actions with the surge in gold price, this time with the PM complex dropping, we wonder what excuse the CME will use this time. Initial and Maintenance margins were just increased in everything from 10 Tr Oz Gold Futs, Comex 100 Gold Futures, Comex Miny Gold and Silver, E-mini Gold and Silver, Comex 5000 silver futures to Silver trade at settle. Also added were Copper, Iron Ore, propane, butane, and other nat gas. Most notably, and confirming that the administration and the money printing authorities are terrified by the surge in crude, the CME also hiked margins in various refined products and coal. The official scramble to "contain" the aftermath of Bernanke's lunacy is accelerating. We wonder when REDI, Prime Brokers and E-trade will comparable collapse purchasing margin for stock trading accounts. Of course, as with all other such superficial market interventions, the impact is shallow and is overrun in a matter of days.

And no...there was absolutely no leak this time. We promise.

Oh but gold and silver are "safe haven" commodities, and since the economy is recovering so fast and everything will be OK, or so our dear leaders are telling us, we don't need "safe haven" any more, do we?

Here's M2, from St. Louis Fed's FRED:


Consider it as buying opportunity, if you have fiat money to spare.

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Deposed Tunisian President Fled with 1.5 Tons of Gold

or so says Tyler at Zero Hedge, citing Le Monde (with Google translation). It seems it was the wife of the president who had the wits about her to grab 22% of Tunisia's gold reserve and run:

The family of ousted President Zine El Abidine Ben Ali of Tunisia would have fled with 1.5 tons of gold. It is an assumption of the French secret services, who try to understand how the day ended on Friday 14 January, which saw the departure of President and his family and the downfall of his regime.

According to information gathered in Tunis, Leila Trabelsi , the president's wife allegedly went to the Bank of Tunisia to look for gold bars. The governor refused. M me Ben Ali had called her husband, who had also initially refused, then surrendered. She then flew to Dubai, according to French news before leaving for Jeddah. "It seems that the wife of Ben Ali is a party with gold" , said a senior French official. "1.5 tonnes gold, that makes 45 million euros" , translated source.

As of December 2010, Tunisia had 6.8 tonnes of gold as the reserve. So the president and his wife simply took 22% of the nation's gold reserve and fled.

Physical gold and silver seem to be disappearing fast from the market, even without the Tunisian president's wife. Bullionvault.com has run out of silver in Germany.

But don't worry, people, it's just another "bubble", as this expert at this august institution (item No.4) assures us.

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Hilarity of the Day: China Telling US to Sell Gold To Balance Budget and Reduce Trade Deficit. Hahahahahaha...

Saw the link at Mish Shedlock's blogsite. The linked article (at Bloomberg) says:

The U.S. should cut its government spending and sell some gold reserves to balance its budget and fund its recovery, the People’s Daily overseas edition reported, citing Xia Bin, an adviser to the People’s Bank of China.

The U.S. has to resolve its “twin deficits” in the government budget and the current account, Xia was quoted as saying. Three ways that may help the U.S. achieve that target include reducing military expenses, selling part of its gold reserves and relaxing some export limits on technology, he said.

“The U.S. has more than 8,000 tons of gold reserves; why can’t it sell some of it since the country wants to raise funds for economic recovery but doesn’t want to add more burden to the fiscal deficit,” Xia told the newspaper. He didn’t mention whether China would be willing to purchase any gold from the U.S.

Well let's see.

The US is supposed to have 8,000 tons of gold.

1 ton equals 32,150 troy ounces.

8,000 tons equal 257,200,000 troy ounces.

With gold price at $1,360, that would be worth $349,792,000,000.

About $350 billion.

Do you know the budget deficit of the Obama government this year alone?

$1.3 trillion.

Do you know the national debt amount?

It is fast approaching $14 trillion, and that doesn't even count the unfunded obligations.

I don't think so, Mr. Xia. Selling gold wouldn't do a batsh-t to deficit reduction. As to the current account deficit, I know a good way to erase that deficit, and that is for the US to stop buying junks from your country.

Well, looking at the mob scenes on this Black Friday, I guess I'm just kidding myself...

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What Caused Precious Metal Sell-Off? CME to Blame?

It was not just gold, but other precious metals, too. Particularly silver, which hit $29 intraday and ended the day below $27.

Now, we may have a culprit whose mischief on behalf, no doubt, of the major bullion banks known to be very, very short silver caused the damage today not just on silver but across the board precious metals, dragging the stock market down along the way.

All it took was for the Chicago Mercantile Exchange, who operates COMEX, to change the margin requirements for silver.

SLV, an ETF that tracks silver, tumbled on almost 6 times the average volume.

From Zero Hedge:

PM Selloff Reason: CME To Raise Margin Requirements For Silver From $5,000 To $6,500

And if that doesn't work, there is always confiscation.

"CME confirmed silver margins raised from $5000 to $6500 (30%) effective 11/10 settl - no other metals effected"

Presumably, this affects the maintenance margin. And is a lovely way to kill paper longs.... but not shorts, of course.

This is also the last remaining self-regulating way for the market to tell the genocidal lunatic in the Eccles building to go fornicate himself, and his excess liquidity.

In case you don't know, "the Eccles building" is located at 20th Street and Constitution Avenue, N.W., in Washington, D.C., and it houses the Federal Reserve.

I don't think it was the "self-regulating way for the market", but "self-regulating way on behalf of J.P.Morgan Chase and HSBC".

It's getting to be a wild, wild world out there in the financial markets...

Zero Hedge has the actual announcement from CME.

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