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Saturday, 28 January 2012

States of Jersey policy is fundamentally flawed

It is now a few months since the incumbents were elected and they have had time to settle in and begin to publish what they see as the justifications not only for their salaries but for the existence of the government in Jersey.

The number one stated priority is 'job creation'. It is very easy to create work, work that does not need to be done. We already have the highest percentage of people employed in government funded jobs anywhere in the world. Of course in recent years they have become adroit at pretending that these government jobs are not government jobs at all, at least for the purposes of statistics but fundamentally anyone whose income is either paid directly by the government or by government funds paid to a third party is a government employee.

There is already a government career path (notionally of last resort) mapped out for every person who has resided in Jersey for five years; that of welfare case. As a job it is fundamentally unfulfilling, there are hoops to be jumped through, forms to be filled in, numerous unsuccessful applications to be made, your income is subject to the whim of power mad, social security staff who feel free to re-write the law with impugnity if the intended recipient does not prove to be subservient enough or merely for their own perverted amusement.

However these jobs are of the utmost importance to the entire system. If there was no one to assist how could all these civil servants justify their salaries.

As an island we have been developing likely candidates for many years; sub-standard education where it is more important that no teacher be shown in a bad light than anyone receive an education. The next stage was to slowly destroy all industry in Jersey; the first to go was Tourism when the government decided they knew better than the hotel owners how the Tourism industry should be run. There are a few hardy souls who have survived despite the odds in spite of and not because of the government.

The finance industry has slowly been driven from Jersey. All the jobs which local school leavers used to walk into have been regulated out of the island and the authorities are pushing new business away with over-regulation.

The retail industry is groaning under ever increasing taxation as the GST cash point is used over and over again to not only squeeze more money in but force sales outside the island. The ever increasing parking charges mean that people simply do not use local businesses.

Only one sector is doing well, the government sector which continues to grow exponentially although at least they are now bothering to try to hide the fact. This is the one sector which should be being pruned.

The same old problem and the same lack of insight on the part of our politicians.

Friday, 27 January 2012

Ozouf is a left wing, pinko, proof positive

Philip Ozouf in his
pre-hair transplant days
An utterly transparent attempt at public opinion management has transpired in the last week which simply cannot go unmentioned.

Firstly the Managing Director of local construction firm Camerons publicly stated in the press that he is so incompetent at his job that he requires public funding to the tune of £40 million or so otherwise his company will have to close.

My first concern is why a Managing Director of any firm would publicly admit that he is not capable of operating his company, clearly the shareholders of Camerons have to be concerned. Secondly, one wonders what difference his salary makes to the viability of the company.

The very next day, Ozouf bravely agrees with the news that he has only just heard the day before in the paper and agrees to spend £40 million pounds on 'New Deal' type public works to save the 'construction industry' in Jersey.

I have examined the construction industry before and now more than ever, we actually do not have any need for one at all. There are so many empty offices, flats and warehouses built already that will never be filled. There are millions of pounds worth of projects which have been granted planning permission which simply are not being built. The reason is simple - it is not economically viable to do so. You cannot simply build things for the sake of having something to do, any development has to make commercial sense.

We have 100,000 people in our 80 square miles which is unanimously agreed is too many. We have an over-inflated property market, with falling house prices. The reality of house prices is much worse than is reported for the following simple reason.

When properties are sold now, the vendor gifts the buyer the 20% deposit in order to secure the mortgage. So on a £250,000 flat the real value of the transaction is £200,000. With the deposit (a notional £50,000) being given by the vendor to the buyer who gives it straight back to the vendor. All the i's are dotted and the t's are crossed, the bank is happy their is sufficient security to cover the loan, (although there is not) but the reported sale value of £250,000 is an outright lie, which is then used to mislead the public that things are not as bad as they really are.

So we have the Managing Director of Camerons scrounging off the government like a welfare case (although I am sure he gets more than £90 per week) and the 'right wing', 'free market' Treasury Minister acting like a left-wing pinko and stumping up taxpayers money to support the director's lifestyle.

Something simply does not add up... is there a 10% commission going to a certain someone or group of people that we will never know about? I'm trying to think of a reasonable alternative basis for this decision to be made this way.... I'm open to other peoples ideas, but at the moment I just cannot see any good reason for these developments in which the major players are acting out of character.

Wednesday, 25 January 2012

In Brightest Day, In Darkest Night...

No evil shall escape my sight!

Super-heroes don't do committees
Their power rests with the individual
At the last election we were told that people voted for Sir Pip because they wanted change, because they wanted someone who would take the fight to the bureaucrats and solve the woes of the people.


The Pip Bailhache the People of Jersey thought they were electing

However the reality appears that Pip Bailhache is no super-hero who armed with his Green Lantern ring and the power of his will alone will successfully battle the evil forces of bureaucracy and indifference. How did anyone come to believe that he could?

Superman embodies not only superior physical perfection but the appellation 'super' applies to his morality as well. Just as he is empowered beyond ordinary human physical frailty he likewise possesses emotional stability, uses rational thought and reaches moral conclusions at each and every step, effortlessly. With great power there is great responsibility. His reign as pop icon has lasted for over seventy five years and looks in no way set to end soon. There is a lasting appeal in perfection, before Superman there was religion, all of which set out a path to spiritual enlightenment, even though the twist and turns of the road may differ.

For the origins of Superman or 'uber-mensch' we must look to Nietzsche, the German philosopher who recognised the need for humanity to be organised and led by these super men who would transcend personal drives to work for the benefit of the community they served alone. The truth is that with great power usually comes shocking irresponsibility, especially if power is held for too long.

Sir Pip has held power for far too long, lived in an ivory tower and is out of touch with the people of Jersey... nothing could be clearer to those who take the trouble to examine the facts, sadly things are not yet bad enough to make people look at the way things really are.

Appointing him Chair of an Electoral Commission is a pointless exercise, he simply does not favour any real change, and why would you when the current system is one that you can manipulate to great effect? Instead he would have us pay for a commission to discover that what we have really is the best of all available options. Some change.

Tuesday, 24 January 2012

The Only Tool Left is Hyper Inflation

Southern Europe Permanently Crippled, The Only Tool Left is Hyper Inflation

Any perusal around the world these days features Southern Europe crippled, preparing for the inevitable Greek Govt Bond default. It features a crippled US housing market, a mockery of statistical accounting in the US Gross Domestic Product, the plight of the COMEX with established veterans clearing out desks (not trading), the extreme physical demand reported by the London Trader, and the indictment of the SLV iTrust Silver Fund tool used by the cartel. The survey does not look favorable toward stability. The banking, economic, and political leaders have not pursued reform and remedy in any remote sense.

Their only tool left is hyper inflation. The central banks of the Western nations have coordinated Global Quantitative Easing, as the USFed concealed its own QE3. Operation Twist was an enormous ruse, to cover the grand disposal sale (dump) by USGovt creditors and maintain a semblance of stability in the USTreasury market. The global financial crisis continues for a simple reason. No financial reform or remedy has been attempted, only bank-owned bond redemption and colossal aid to the financial sector that controls government ministries and law enforcement. Therefore, the crisis hurtles toward a series of climax events. The Chinese are accumulating physical Gold still in a big way. US finance minister, the diminutive Geithner admitted to the Chinese officials that the USGovt has no more tools left with which to stimulate or lift the USEconomy and its fumbling financial sector. An honest admission, except that hyper monetary inflation remains the all-in-one tool.

The Greek default could trigger some grand unintended consequences. Despite all the planning in the controlled event, likening it to the demolition of a 50-story hotel in an urban center, the better image might be to attempt to hold within a corral 500 cats released from a large truck. In no way can the technocrats, central banks, and bank officials contain the animal spirits coming. The only solution in the end will be the most massive hyper inflation project in history. They must recapitalize the broken banks of Europe, where fallout will surely extend in non-trivial manner to London and New York. Two major pressures will work to lift the Gold & Silver prices. The Commitment of Traders report on commercials points to a significant sequence where they covered their Gold shorts and Silver shorts since the summer months. The road is prepared for a big rise in price after some closing notes are played on the Dollar Death Dance. The acute financial crisis in Europe and the West in general demands some important decisions to manage the Greek default. Look for talk of a monetary solution but action perhaps in a vast recapitalization program for the big banks. A footnote, the Citigroup earnings included a $1.5 billion release from their Loan Loss Reserves. The funds will be needed to cover bond impairment and mortgage related lawsuits. They also had a nice bump in the Credit Value Adjustment, a blatant accounting fraud that exploits gradual impairment to their own corporate bond value. Accounting for banks is a farce.

SOUTHERN EUROPE PERMANENTLY CRIPPLED

Although the entire southern rim is deeply affected, a look at Italy is telling as a microcosm of continental illness. Italy has imposed capital controls on the banks. Movement of funds is being closely monitored. Money cannot be withdrawn in volume at the bank windows. Borders have cameras and registries at the customs checkpoints. Italy has gone fascist with blazing speed, the most blatant indication is the installation of Monti as prime minister. Its banks are ready to capsize, like the cruise liner. The effects of the Fascist Business Model are being acutely felt in Italy. Nothing goes without monitor. The credit card companies must report to the fiscal authorities all transactions carried out by Italians, in the country and abroad. Limits have been imposed on bank withdrawals of 10,000 Euros, equal to US$13,000. Cameras have been installed by finance police at the border checkpoints with Switzerland to register all license plates. In addition, currency sniffing dogs have been deployed at the border. The Monti regime can be seen imposing Fascism, plain and simple. Their opening salvo was to attack private capital by raising the capital gains tax. The situation is degrading rapidly. The wealthy of Italy have a new game in removing money from Italy and to escape themselves.

The Italian Economy
The irony is thick, the tragedy stirring. The Italian cruise liner Costa Concordia went aground, a fitting symbol of the nation of Italy succumbing, a toppled elected regime in a sea of liquidity. Individual decks named after nations went underwater, liquidity of a different type. Parallels between the financial structure and ship structure, along with perceptions and reactions, are interesting. People believing such an accident as incredible in the 21st century need to awaken to reality on the mainland. Italians will make the same comments when their banking system collapses, in the wake of their elected political leadership being dismissed from the helm. The cruise liner was badly off course, as the captain changed paths to salute friends on the nearby island (mistress?). So is the Italian banking sector, hardly alone as the Spanish fleet of banks is also off course, taking on water, the banks derelicts at sea.

The ship crew was not trained for such accident, having advised passengers to return to their cabins incredibly. Neither is the Italian system prepared to handle rough waters, given the most egregious nepotism in all of Europe. Half of million gallons of fuel are being retrieved before salvage operations begin, in an effort to avoid an environmental disaster of contaminated beaches. Contrast to the toxic paper running through the Italian banking system. The ship's insurers may be liable for total costs of about EUR 405 million (=US$500 mn) as a resuilt of standing policies. Unlike the ship liability, the Credit Default Swap contracts, the debt insurance flagships, are forbidden to kick in for awards at docks. The ship's problem might be more low hull draft and high center of gravity ship design, much like the inefficient stream in Italian business practices and the high bank leverage.


THE BIG EVENT IN GREEK DEFAULT

Any bank or credit analyst worth his or her salt expects a Greek Govt Bond default. The event is inevitable, unavoidable, and a certainty. All solutions to date have been patchwork applications of tourniquets and needlepoint stitching, with full acquiescence to the banker class. The concept of a new Euro Bond to supplant the toxic bond is ludicrous, which exhibits the ignorance of the central bankers on conceptual constructs pertaining to monetary matters. The concept of a leaning upon the Intl Monetary Fund for a grand issuance of Special Drawing Rights is again ludicrous. A basket of water-logged debt-soaked currencies does not make for a viable raft to float any bodies in any seas. The contagion from a forced accord on Greek bonds will have a notable fallout value effect to Italian bonds, even to Spanish bonds. If the accord ignores the effect traveling with light speed to Italy, the plan is doomed from the outset. The default in Greece should trigger a Credit Default Swap event and award payments. But decisions might follow the trend seen to date, where contract law is trampled upon. The supposed redefinitions of debt securities were a travesty, not yet sufficiently challenged by the legal warriors and the court system. Then consider that the biggest creditor to Italy lies within the major French banks. A likely collapse of French banks in the wake seems the path that nature will take.

The contagion would spread to the London and New York bank centers, where insolvent hollow banks have stood for three years. They have long lost their credit engine role, thus the economic stalls in reverse gear. Lastly, any solution, apart from a new monetary system, must address the dire need for recapitalization of the Western banking system. The accord must begin with Europe. The accord must begin with $2 trillion or more to rebuild banks. A figure of $5 trillion is floated. The accord must dispose of the entire sovereign debt and its toxic paper from Southern Europe. Expect the greatest event in modern financial history before too many more weeks or months, the sovereign bond default and bank recapitalization. The impact on the USDollar could be profound and life altering for the planet. Expect unfortunately for half measures that sidestep any new monetary system and proper role for Gold. The half measures in the accord will bring great new attention on Gold, which should be at the core of the solution, both in the currency and banking system.

U.S. HOUSING PERMANENTLY CRIPPLED

The US-based shadow home inventory is vastly larger than estimated. The bank owned inventory is enormous, but so is the variation in those estimates. What is certain is the vast overhang of home inventory held by banks, and the steady flow to replenish the hidden inventory tumor, prevent any bottoming process to prepare for any recovery. Accurate housing data is hard to come by. The housing crisis is arguably a national emergency, which crushed both the banking system and the USEconomy. The USGovt-owned Fannie Mae still prevents the public from gaining access to loan data in detail, probably because multi-$trillion fraud is buried. It is far too difficult to obtain data from Freddie Mac also, and the MERS title database remains a black hole. My Jackass loose estimate has been tossed around frequently of one million bank owned homes in inventory, unsold, hanging over the market, rendering clearance and stability an absolute impossibility, with more home seizures always in the pipeline. The market cannot digest such an overhang, and cannot stop the price decline, especially since new foreclosures keep the flow into REO bank inventory. Banks refuse to clear their inventory, and are encouraged to hold that inventory since 0% financing is offered by the USGovt. If the shadow inventory is much larger than one million homes, then housing prices have much farther to go before they hit bottom, which has dire consequences for communities, homeowners, and the broader economy. It also means the US banking system is deader than dead.

On December 21st, less than one month ago, HousingWire reported that CoreLogic projected shadow inventory to be 1.6 million homes throughout the entire United States. Definition of a shadow inventory property varies widely. For example, the Wall Street Journal published an article last November, in which inventory size varied from the CoreLogic higher estimate to about 3 million by Barclays Capital. Other estimates are approximately 4 million by LPS Applied Analytic, roughly 4.3 million by Capital Economics. But the highest calculation comes from the source of most impressive methodology.Laurie Goodman of Amherst Securities offers the estimate of between 8.2 million and 10.3 million homes. Hers is regarded by many experts as having the most carefully crafted model, despite being the most dire of estimates. Michael Olenick of Naked Capitalism has his own large reliable database. He has been on the job in analyzing liability to taxpayers, investors, and banks. He submits his assumptions in calculations, an honorable practice based in integrity. The Olenick analysis arrives at a total close to the Goodman range. Using a more narrow definition of what constitutes shadow inventory, he estimates 9.8 million homes are in bank inventory, or suspended animation within the system, waiting for liquidation, suppressing price further. Long past critical mass, only radical out-of-the-box solutions will work. Massive loan forgiveness is the only solution, but it will never be done. USGovt ownership of one quarter of American homes is more likely. Conclude as inevitable that the nation will soon face widespread bank failures and even more staggering loss in home values, since the overhang of home inventory will force home prices down another 20%, my ongoing estimate that has been repeated and repeated ad nauseum. The problem is so great that the mortgage bond market can no longer be described as having viable parties and counter-parties.Too much bond counterfeit. Too much duplicate income streams used in mortgage bond securitization. Therefore, the principal parties do not want liquidations or scrutiny. See the Naked Capitalism articles (HERE).

U.S. GDP CALCULATION A TRAVESTY

Grossly Distorted Procedures on GDP calculations must be explained. Both hedonics and imputations contribute to one third of the entire reported Gross Domestic Product. The Chinese have long complained that half of the US GDP is mythical, due to interchange of debt paper across desks. The USEconomy is a fraction of its stated size, and it is stuck in chronic recession. A big hat tip to Michael Shedlock, whose analysis is excellent in focused economic sector topics. He provides an excellent overview on Hedonics and Imputations, to reveal their corruption of thought, whose concoctions he labels Grossly Distorted Procedures. Shedlock wrote, "Hedonics is a way of accounting for the changing quality of products when calculating price movements. For example, today's computers are 2 to 3 times faster and have more memory than models produced just a few years ago. If someone can buy a better computer today than last year for the same price, have not prices really fallen? Here is another example. Is it realistic to compare the price of a 1955 Chevy with the price of a 2005 Toyota with air conditioning, DVD player, anti-lock brakes, seat belts, air bags, side air bags, power steering, power brakes, etc? To say that cars have gone from 1955 prices to 2005 prices and calling the ENTIRE rise inflation is obviously wrong although many inflation alarmists do just that. Sorry folks, but that is not a straight up valid comparison. Would you be willing to drive to work a Model T ford today? If not, then comparisons of car prices today versus 1920 or 1950 or whenever are pretty absurd."

The USGovt makes unilateral decisions on value, in order to offset the rise in production costs from energy and materials, even labor. They justify their methods by pointing to manufacturing efficiency and economies of scale in production. They use the falling technology prices as justification for other abusive methods to reduce prices from inherent value on features which actually are subjected to strong price pressures. Shedlock rightfully points out how the potential greater hedonic abuse has entered into methods applied to the Gross Domestic Product, a mainstay not to be cut out. The accounted size of the USEconomy is subjected to vast distortions in the calculations. As the measured price inflation is kept low by force, the estimated GDP result is lifted higher by the same force. The lie in the CPI has been 6% to 8% for the last few years. That means the GDP has been running consistently negative in the most profound and harmful economic recession in American history. My analysis relies upon the indefatigable work of the Shadow Govt Statistics group. They measure the GDP as one quarter versus the same quarter a year ago to demonstrate a clear downward trend, a chronic recession. Conclude that the US GDP has been in decline by 4% to 6% for consecutive years. Shedlock has reported by means of Bureau of Economic Analysis data, that the US GDP is artificially lifted by a whopping $2.257 trillion in hedonic adjustments, equal to 22% of the entire GDP. That portion of the US GDP is pure myth. The United States is the only major country that hedonically adjusts its GDP, or needs to. The USEconomy is among the weakest in the entire industrialized world from industrial gutting and chronic consumption and pursuit of asset inflation.

The other major abuse is Imputations, a part of GDP calculation that the USGovt fabricates in estimated value where no cash changes hands. The imputation derives from homeowner self-paid rent and checking account services. These are pure fairy tale absurdities. For example, homeowners are assigned an imputed rent, that they pay to themselves as though renters. The BEA treats homeowners as businesses, which pay rent to themselves for the service of shelter. Be sure to know that mortgage payments and property taxes are also accounted for, a double counting process steeped in corrupt accounting. Self-paid homeowner rent tallies a ripe $153.8 billion in imputed rent as part of the GDP calculations. There is more. Free checking account services from banks are not to go without abuse. Self-paid check account services tallies a ripe $335.2 billion in imputed bank services. The beneficiary is in Personal Income data reported by the clownish USGovt stat labs.

Shedlock has reported by means of Bureau of Economic Analysis data, that the GDP is artificially lifted by a whopping $1.635 trillion in hedonic adjustments, equal to 13% of the entire GDP. Shedlock cites the total fabrication folly was a staggering 35% of the reported US GDP in 2003!!See the Global Economic Analysis article (CLICK HERE).

SIMPLE EVIDENCE OF RECESSION

US-based railway traffic is down hard, contradicting the vacant claims of an economic recovery in the United States. The slowdown is across North America, the worst brunt felt in Mexico. The Assn of American Railroads reported intermodal volume for the second week of January totaled 193,812 trailers and containers, down 9.3% versus the same week last year. The Eastern half of the nation was notably slower. The slowdown is across all North America. Canadian railroads reported cumulative volume of 40,281 trailers and containers for 2012, down 9.8% from last year. Cumulative volume on Mexican railroads for 2012 into only January is 10,857 carloads, down 15.2% compared to last year. Conclude that North American is in a severe deep recession, with the worst brunt felt in Mexico. Talk of recovery is Orwellian in its deception. My favorite data series to demonstrate recession is the USGovt payroll tax withholdings. They continue in decline. It is a pure series without adjustment. The USEconomic recession is the New Normal, Mr El-Erian.


CORROSIVE COMEX DRYING UP

Ann Barnhardt confirmed the COMEX is going into obscurity and irrelevance. Players are exiting. Risk of theft is perceived. Trust has gone. Metal inventory will vanish next from honest players in retreat, seeking more legitimate arenas. The normal methods of risk hedging are going away, turning to private means, or quitting altogether. Ann Barnhardt made a huge splash last month in her decision to shut down BCM Capital brokerage firm, for fear that client funds were at great risk of theft. She outlines many carefully laid points. Here are some of her main points with fortified evidence. Notice the point about high frequency trading, which indirectly indicts the GLD & SLV (gold and silver) funds, whose inventory is likely connected to futures arbitrage schemes, as their bullion metal is drained. Notice the perceived spread of futures hedge exposure at the market peripheries. Barnhardt compared events of MFGlobal and JPMorgan to economic treason and betrayal of the American system. Here are some of her main points.

The futures markets are withering and dying on the vine, as business is totally evaporating. Many explicitly state that they are done trading and hedging with futures, both speculators and hedgers.
The volume increases in recent months were due to the veritable fungal infection of the market that is the high frequency algorithm trading systems.

Nobody in the trading pits believes the statistics that come out of the USGovt or the Federal Reserve. Anyone who believes them must be mentally disabled (her words).

Exposure to futures is itself contagious. If producers enter into a private treaty forward delivery contract with a grain elevator or a feedlot, they would still be exposed to the futures market, and to the risk of a futures market collapse, or even just another wealth confiscation. If any contract participant utilizes futures contracts in risk hedge, all parties are exposed. Even private treaty forward contracting is exposed, since someone along the line laid risk off on the futures market.

LONDON TRADER

The London Trader is back with more splendid bountiful information, sharing volumes behind the veil of anonymity. The paper thin COMEX must react to gigantic physical demand, he reports in a recent interview. The staggering Gold demand is creating great shortages in the physical market. Here is the shocker, although it should not come as such a surprise. Compliance departments have widely banned participation in the COMEX anymore. It is drying up as a market. The Chinese have exploited the lower Gold price that resulted from the European distress and the American accommodation. They have grabbed huge physical supply. The anonymous London Trader pitched in a full month after the MFGlobal crime scene cordon tape has been overrun. He opened by describing a compressed coiled spring in both the Gold & Silver markets, from huge physical demand. He actually described the COMEX as no longer a credible marketplace.Gold represents power and the Eastern Hemisphere is gathering in that power. The displacement of Western Gold to Eastern vaults is a major symbol of the Western decline. Here are some of his extreme comments that portray a system entering a collapse phase.

The Big Banks are trying to defend their massive short positions, like with 25 million SLV shorted shares. To meet the silver delivery demands, the cartel is borrowing heavily from the SLV, which will be gradually drained of metal in inventory.

The panic in Europe with a broken system is creating huge Gold demand. The demand for Euro Gold in London is so intense that it brings shock to some veterans. It is creating grand shortages for metal in London. The physical Gold market is being exhausted by European Gold buyers.

The COMEX paper discovery price system has become a joke. No serious players interested in taking physical delivery use the COMEX anymore.

Since the CME did not backstop the MFGlobal clients, entire Compliance Departments prohibit usage of the COMEX. International funds and hedge funds starting in January will go elsewhere, and thus avoid the COMEX.

Expect a powerful move once Gold rises above the $1650 level, as shorts cover in open fear. Above that point look for a very large tranche of unfilled wholesale orders to push the price a lot higher with their bids. The Chinese are Gold buyers at all these prices, $1600, $1700, or $1800. They are buyers, never sellers, and public stories pure nonsense about their retreat.

The Chinese have recently taken another roughly 150 tons away from the Western central banks. The Western central banks essentially donated that Gold in an attempt to prop up their paper currencies. They have exploited the recent pushdown in the Gold price. The Chinese are using Gold accumulation as an indirect maneuver to introduce the Yuan (remninbi) to center stage.

INDICTMENT OF SLV i-TRUST SILVER FUND

The SLV exchange traded fund is drained of silver bars from the back door. Numerous blemishes can be identified. The fund cannot stand scrutiny. It is one of the most effective criminal fraud vehicles ever designed. Thousands of investors have been duped, buying what they believed was physical gold & silver, when they have aided the cartel in suppressing their prices. Their inventory is routinely raided from custodial shorting practices that have become glaringly clear in recent months from simple tracking of inventory and short interest. The SLV fund, formally called the iShares Silver Trust, contains much slippery language in its prospectus. The SLV provides funds for itself and custodian costs (managed by JPMorgan) by selling bullion, from the same fund. They actually achieve a benchmark price target for silver based upon their own sales. Their prospectus carefully states that the SLV share price reflects the value of the trust's silver holdings, NOT the spot silver price. It is a circular practice of self-fulfilling price achievement in suppression efforts.

BrotherJohn gives the excellent analysis in clear understandable terms, with focus on SLV fund shenanigans. A big hat tip goes to him. The SLV fund does not hold sufficient silver bars to correspond to all shares outstanding, but that fraud is carefully permitted under its prospectus and current legal structure. Track the shenanigans in a fine classroom style forensic analysis in YouTube video form by BrotherJohn (CLICK HERE). He covers a wide range of topics. Here are some of his main points. Adam Hamilton, are you paying attention?

The SLV fund has 300 million shares, each worth one ounce of silver, valued at almost $9.0 billion. But it has over 25 million shorted shares, or 8% of the float.

The practice of shorting SLV shares keeps the Silver price suppressed, enabling inventory raids from the fund. Around 25 million shares are short on SLV. Any suspicion that JPMorgan is the predominant party holding short shares would probably be correct, the shares provided by Bank of America, which owns a surprising 22 million shares, always a willing player to help push down the silver price.

The SLV fund rigs their own market, pushing silver to a desired lower price. In fact, the number of silver ounces per share is falling consistently, just over 0.97 oz in recent weeks. Check out September 30th, when the silver price fell hard from 40 to 30 per oz. The SLV fund had numerous big sellers that day in their listing.
A smoking gun is revealed on May 5th, when the silver price was busy falling from 48 to 34 per oz. The SLV fund had a single day volume of 300 million shares on that day in May, equal to its entire float.

Conclude that naked shorting was taking place in coordinated fashion with a leveraged arbitrage between the fund and the COMEX using futures contracts. Leverage must be involved. Many fingers point to such arbitrage since the volumes are so great.

The lessons and signals are vividly clear. Purchase and invest in Gold & Silver bars and coins, the mainstay for financial survival and avoidance of debt serfdom. The crisis is working toward a series of climax events stretched over the next year. The outcome will be shocking. The events will awaken the masses finally, who are all too often perplexed and dismayed while many place their heads in the sand. The Gold & Silver prices are heading multiples higher. Efforts to confiscate by government will in all likelihood backfire, raising attention, pointing out value.

Monday, 23 January 2012

Money is all in US politics... Or is it?

Gingrich undoubtedly knows what the people want to hear
And has no problem saying it, even when he knows it will not
be delivered on. For politicians such as Gingrich and Bailhache
power is the end, rather than the means to the end.
With the third result in, and the first result clarified...

IOWA - Santorum
NEW HAMPSHIRE - Romney
SOUTH CAROLINA - Gingrich

The news that Ron Paul came fourth has been heralded as a sign that it is time for him to leave, of course Gingrich came fifth in both Iowa and New Hampshire and remained in the race. Like Santorum in Iowa, Gingrich has thrown most of his resources in securing a win in South Carolina and heads onto Florida where Romney has been spending heavily for the past few months.

The Florida result which was bought up earlier than normal and has resulted in Florida losing half its delegates to the Republican Convention was supposed to secure outright victory for Romney early on the back of three other wins in the first three States. Florida is a key marginal state which in the recent past has determined the president. This will not now be the case. Politicians consistently fail to understand that people do not like to have candidates thrust upon them, whether it be in Blaenau Gwent the perennially safe Labour seat where the Labour party candidate selected by Westminister lost the election to the local party's choice in a show of rebellion in 2006. The South Carolina result is the Republican party saying

Three of the four candidates will be competing in Florida and the result may well see one of them leave the race, but Ron Paul has eschewed the establishment campaign trail and is focusing instead on the Caucus states which occur shortly afterwards: Nevada and Maine on Feb 4th and Colorado and Minnesota on Feb 7th. This is a play book taken straight from Barack Obama in 2008 who campaigned his own way rather than following the establishment path.

There is a lot of coverage reading a lot into what has happened, but for me one thing is clear. The voters of the US can be easily swayed, Santorum won Iowa simply by expending money on the campaign there, Gingrich came from nowhere in South Carolina to top the poll simply by spending money.

One thing that is clear is that the strict limits placed on election spending by the States of Jersey is undemocratic and is just another plank supporting the status quo and preventing the much needed change from occurring.

Sunday, 22 January 2012

Statute vs. Law


After my last post there were a few comments which I felt merited a whole posting in response

Well Antje, the problem is that the basis of English Common Law is substantially different to the Civil Law which exists in Europe. I have addressed this issue before here but basically

In Common Law (which applies to England and Wales and many former British Colonies including the US) there are only two laws: 1) Do what you say you are going to do and 2) And it harm none do as you will. Everything else is just an interpretation of those laws which has been passed down for thousands of years and seriously codified for more than the last thousand. The Common Law is built on the wisdom of generations, statutes are the passing whimsy of egotistical meddlers seeking to garner votes at future elections.

So for example assault, which is a cause of action or something which may give rise to a proceeding in a Court, under common law encompasses everything from merely placing someone in fear of their personal safety to the more severe forms of assault.

All legislation passed by governments is NOT law, but legal statute and only applies to bodies corporate or otherwise and not to men and women,  (in my case it applies to the legal fiction MR DARIUS JAMES PEARCE if I choose to accept the offer, but not to the man commonly known as Darius of the Pearce family).

Now that means many things which are 'illegal under statute' are not in fact unlawful - there is a difference in the meaning of the terms unlawful and illegal, they refer to quite distinct things.

The Common Law protects personal freedom and liberty, whilst statutes seek to restrict personal freedom by preventing certain behaviour which harm no one this includes things like driving without a seatbelt or indeed a license, the personal use of narcotics etc. which whilst potentially harmful to yourself, harm no one else.

Now if you drive under the influence of alcohol and injure someone then you have broken the law, but if no harm occurs then you have merely transgressed a statute which is illegal but clearly you have chosen not to accept that contract offered to you by the government.

Under Common Law you are responsible for your own actions and must endure the consequences and are expected to be capable of making informed choices. These days with information so much more readily available there is even less need for statute.

As a Libertarian I believe that no one has the right to tell me what I can and cannot do, so long as I respect everyone else's right to life, liberty and happiness and stick to my word.

So all statute is forcing me to behave in a manner contrary to the Common Law with the threat of violence, incarceration and/or financial hardship... the statutory system places me in fear of my own safety, liberty and happiness and so is an assault upon my person. I am compelled by fear alone to submit to it, if I do not choose of my own volition and after due consideration of the arguments to follow it.

Trust me if they legalised heroin tomorrow I would not be using it and I doubt many people would. I, nor anyone, has the right under Common Law to tell another person that they cannot use heroin, I can only tell them that they are foolhardy if they do. These people are not criminal they are sick and they should be treated that way. Statute would imprison them.

So why do people go along with statute? I suspect it is largely due to fear. In Jersey we have a voting electorate which is predominantly over 65, who have placed their trust in the government for the whole of their lives. Now that we are seeing governments fail to live up to their promises. Those of us with many years until we receive our handouts just for being old, who know that the governments cannot possibly honour their promises and so would prefer not to take part in the ponzi social security scheme because we know we are the fools at the bottom of the pyramid who are just going to lose our shirts. The old on the other hand have no option but the blind faith that they have entrusted the government with to this day. Today's pensioners probably will get handouts for the rest of their lives, tomorrow's pensioners will not but they will pay for today's.

So what does the government do for us? Well very little really... if you tally up how much is paid to it and what you get in return then most people lose out. What if there were no welfare state? Well there was not one until 1945 and what we see today is an abomination compared to the original vision. People received charity, doctors gave free care to those who could not pay, families were more strongly bound because they only had each other to depend on. Companies such as Rowntree took far better care of their employees than is the case now. Government simply abrogates personal responsibility.

The purpose of the government is to increase the size and scope of government solely. The USSR collapsed under the weight of its own bureaucracy and now we see both the US and the EU following suit. The strength and future of a nation lies in the individuals that comprise it, not in its government. I do believe that this year is the end of the world, not in a physical destructive sense, but that this year we will see welfare states exposed for the hypocrisy and failure that they are.

Luckily we in Jersey have a fall back position, the system of Common Law; Gold, silver and copper (lawful tender) instead of money (legal tender); and the charitable nature of the men and women of the island. We do not need the government at all.

That's enough for now.... more on what the US election can teach Jersey another day (sorry Mike!)

Friday, 20 January 2012

And then there were four...

The elections for the Republican Party nominee has changed greatly over the past couple of days in the run up to the South Carolina Primary.

Two further candidates have now pulled out - Utah Governor Jon Huntsman and Texas Governor Rick Perry. Huntsman threw his weight behind Romney and Perry backed Gingrich.

Two debates have been held, the best of the first of these is in the following video



In the second, with just four participants Congressman Paul was again largely ignored by the debate moderator - a repeat of his experience in the previous Fox News GOP debate in Myrtle Beach.

The problem facing Ron Paul is that the mainstream media (MSM) cares more about providing opportunities for inter-candidate mud-slinging than in providing an atmosphere conducive to a substantive exchange of ideas. Paul has consistently come out ahead in forums that have favored intellectual debate on real issues, such as in his excellent debate performances in Iowa and New Hampshire.

In the closing minutes of the CNN debate, after continued refusal to extend an opportunity for Paul to speak (this time of the subject of abortion), the South Carolina crowd became angry and vocally protested with boos and jeers. Under pressure, John King reluctantly ceded time to Paul. For the second time during the debate, Paul pointed out to King that, as the only medical doctor on the stage, it should be natural to think to include him in the debate questions on health care. Paul said:

"John, once again, it’s a medical subject. I’m a doctor,” drawing cheers from the crowd. “I do want to make a couple comments because I can remember the very early years studying obstetrics and I was told — it was before the age of abortion - I was told that in taking care of a woman who is pregnant, you have two patients. I think that solves a lot of the problem about when life begins.”

Dr. Paul continued:

“I also experienced a time later on in my training in the 1960s when the culture was changing. The Vietnam war was going on. The drugs were there. Pornography came in and abortion became prevalent even though it was illegal. The morality of the country changed. The law followed up. When morality changed, it reflects on the laws. The law is very important. We should have these laws. Law will not correct the basic problem. That’s the morality of the people.”

With such honest and masterful answers, it is no wonder that the audience demanded more time for Congressman Paul to speak.

Following the debate, Congressman Paul sent an email to his supporters touting his performance. He wrote:


"My debate performance tonight is already turning heads. What the crowd saw tonight was my opponents savaging each other over and over in a desperate attempt to defend their Big Government records. Me? I wasn’t touched once. Because quite frankly, I can’t be. I’ve spent 30 years fighting against establishment politicians – like my opponents – to finally put an END to politics as usual."

The brazen efforts by the MSM to silence Paul cannot be denied. And yet political pundits still pontificate in their spin rooms as to why Paul supporters behave like angry hornets. Tonight, the audience in South Carolina sent a message to the media elite. Ignore Ron Paul, and you're going to get stung.

And the final count from the Iowa caucus saw first place shift from Romney to Santorum.

With less than 24 hours to go to the South Carolina primary

Wednesday, 11 January 2012

US GOP Nomination Round 2


Quotes from the coverage...
Mitt Romney looks set to win as long as
candidates refuse to drop out of the race
"New Hampshire leaves us with Mitt Romney moving toward the Republican presidential nomination, and Ron Paul building a real movement for his ideas within the GOP. What the rest of the candidates are doing at this point is impossible to tell."
"In the meantime, Ron Paul deserves praise for a strong second place finish in New Hampshire. Paul, of course, won't win the nomination – but he will collect delegates along the way. Paul may not win the election, but his real goal is to win the argument. In that regard, Paul likely has won a convention speech for himself – and may help influence the Republican plank – and the direction of the party."
"After New Hampshire primary win, all is not rosy for Mitt Romney, Republicans Don't Love Him, Tea Parties Can't Stand Him, Low Income Men Can't Relate to Him"

Ron Paul Thanks the Union Leader for NOT Endorsing Him


So the first delegates to the Republican convention that will choose the party contender have been decided as follows MITT ROMNEY 7, RON PAUL 3, JON HUNTSMAN 2. The caucus from Iowa will not be finalised until later and may be affected as nominees drop out of the race but currently stands at Romney 13, Santorum 12.

All candidates have decided to allow one more roll of the dice in South Carolina on the 21st January with Perry, Huntsman, Santorum and Gingrich all still needing to prove that they have any credibility as potential winners. Ron Paul and Mitt Romney look set to see it all the way though to Utah on the 26th June. Others will likely pull out in the wake of South Carolina - or let's hope so otherwise Romney will win by default. Whilst Santorum in Iowa and Huntsman in New Hampshire have both committed the lion's share of their campaign funds, Newt Gingrich has held back and will spend $3 million in the next ten days on TV advertising in the run up to the poll and you have to assume that this will push him up in that State.

By the time of the Florida primary on the 31st January there should be just three or four candidates left in the race. If one 'conservative' candidate can emerge as a serious challenger then it could be a three horse race yet.

Whatever happens Ron Paul will be affecting the politics of the Republican Convention with the threat of a third party bid carrying his 20 to 25% of the vote with him and away from any other Republican candidate.

It is difficult to filter through the media presentation to get a real understanding of what is happening in the US but the key issues seem to be crystallising as Government Spending, Unemployment, Foreign Policy and the perennial divisive issue of the right to life.

Thursday, 5 January 2012

The US Presidential Race begins

Like it hasn't already been going on for seven long months the first actual vote in what will be an eighteen month process to decide who will be the most powerful person in the world (only questionably these days of course) has begun in earnest. Well Iowa (and no I checked unfortunately there is no town called Earnest in Iowa).

And so it was on the 3rd January that Iowans stopped picking corn and picked there preferred candidate to contest the presidency for the Republican Party (or Grand Ole Party, GOP).

The 76 year old Dr Ron Paul is a hit with the under 35's...
In other words the ones who will have to pay
for today's excesses of their parents
Mitt Romney, the anointed candidate, hit first with 25% of the vote. Rick Santorum surged to second with a further 25% of the vote and Ron Paul finished third with 21.5% of the vote, leaving the rest of the field to split the rest between them.

John Huntsman finished seventh but remains in the race until the New Hampshire primary at least which will take place on the 10th January.

Michelle Bachmann, a native Iowan who finished sixth, dropped out of the race the next morning.

Rick Perry, Governor of Texas, finished fifth and after returning home to consider his position has decided to let the dice roll once more in South Carolina on the 21st January. Perry actually won some counties unlike fourth place finisher Newt Gingrich who likewise will see how New Hampshire and South Carolina go before making a decision.

The big test will be Florida whose primary is held on the 31st January and usually proves to be a key state in the eventual Presidential election.

So as candidate after candidate has surged then fallen away - Bachmann, Perry, Cain, Gingrich - Americans are really scraping the bottom of the barrel in an attempt to avoid a potentially divisive Paul vs Romney run off.

The media assault on Ron Paul began almost immediately with newsroom after newsroom re-iterating strongly that Dr Paul simply cannot win the election, in spite of the evidence to the contrary. Rick Santorum who had been written off for months is suddenly the media darling as the sheeple are encouraged to coalesce behind the latest big thing. If Santorum falls flat that only leaves Huntsman and as a former aide to the Obama administration he just does not have the support of the party.

The analysis of the vote is more interesting - Ron Paul was far and away the winner with the young voters which bodes well for the future.

Eighth place finisher New Mexico Governor Gary Johnson has dropped out and confirmed that he will run as a third party Libertarian candidate in the elections, subject of course to whatever happens to Dr Paul...

Monday, 2 January 2012

Ron Paul the great hope for Libertarianism in Jersey

Dr. Ron Paul faces the first test
in the Iowa Caucus 3rd January 2012
I was reviewing the history of opinion polls in Iowa and well it seems that the Gingrich candle burned brightly but has now burned out, the last of a successive number of waves pushing one candidate to the forefront only to fall away under closer scrutiny, the sort of scrutiny that is noticeably absent from Jersey politics.
Scrutiny which means that what you say is closely examined and you are questioned on the meat of what you are saying to see if a) you actually know what you are talking about and b) you really mean what you say.

Instead, in Jersey, we have a kind of mutual agreement - you tell us what we want to hear and we won't hold you to it.

But one man is trying to change that, and has been for the past thirty years or so. This is his third run at president. The last shot is in the barrel in the form of Rick Santorum but if the polls hold true and if as everyone believes the polls have consistently understated support for Ron Paul on the back of media pressure against 'the candidate who cannot win'.

If Ron Paul were to win and become president then truly this would be the 'end of the world as we know it', the excesses of government stripped away, cut backs in the US military spending, particularly overseas would likely have the same effect as when the same cutbacks were introduced by the Soviet Union in the 1980's. Countries around the world used to seeing lots of US military dollars shoring up their economies will be affected.

The US may not like it, but their situation precisely mirrors that of the Soviet Union some thirty years ago. Over-bureaucratisation, excessive spending pre-dominantly on the military and sluggish economic activity.

Paul's stated intention of reducing tax, with the ideal of removing Income Tax altogether, would be a body blow to offshore finance, which let's face it only exists because of inefficient and bloated governments around the world. Take away the problem and the 'offshore solution' no longer solves anything. But it would be a boon to US industry.

Jersey sadly is not. There are just too many people dependent on State handouts; every politician, every civil servant or person employed by States funded bodies and yes that includes the Jersey Evening Post, every pensioner and every income support claimant and their relatives. There was a time when people as a matter of pride refused to go cap in hand unless they desperately needed to, but now people feel 'entitled' and want to 'milk the system'. They pay in so why not take out... the more obvious question is, "Why pay in?".

The finance industry gave them the means for self-aggrandisement and how did the likes of Horsfall, Walker and Ozouf, small men with no merits to commend them to history, react? Predictably!

There is no government less efficient or more bloated than that of Jersey. But with so many people entirely dependent on it, they will never vote to change it. 

Those of us who hold the Libertarian persuasion must rely on outside events to force change upon this island and be ready, unfortunately, to move away at a moment's notice leaving the old and the dependent, to suffer the consequences of their own stupidity in placing trust in what passes for government in Jersey. Awaiting the opportunity to return when the property market has fallen to its underlying value (around 50% of current prices), when the people are ready to turn their backs on dependence and embrace the future.

It will be hard to see people suffer, but without the suffering how will they every learn? They will be enjoying the fruits of their lack of labour.

Sunday, 1 January 2012

The end of the Gold futures market?

Money in the bank is money loaned to the bank
Gold on paper is gold loaned to the holder
When buying gold make sure you take physical delivery
Divergence between paper gold and physical gold price is happening, the process begun. Actual physical shortages have kept the price up. Various tactics have kept the paper price down. The fraud cases and lawsuits make for unfavourable publicity for the COMEX.

Trust has vanished along with private accounts. The economic deterioration and asset market down-draft have led to margin calls, loan payment obligations, fading investor confidence, negative sentiment, and a desire to avoid loss. Hence the huge liquidity concerns, selling of good assets that command a strong price, and central bank encouragement of gold sales even with lease.

These forces conspire to push down the gold futures price from the discovery process, called the paper gold price. The paper Gold market is very different in its internal dynamics from the physical.

On the other side is the desperation among central bankers to cover debt securities up for sale or rollover funding. They resort to utter hyper inflation by monetizing the many types of government and agency bonds. They are obligated to aid their banker cohorts in buying impaired bonds of diverse type that have proved toxic. The compelling need to stimulate economies, to redeem toxic bonds, even to recapitalize and nationalize the big banks adds to the monetary inflation outcome.

Therefore, two sides are in opposition in the quintessential battle between monetary hyper inflation and restoration of bank system integrity to avert collapse. The chronic insolvency has recently met rising illiquidity. The desperation is setting in. The gold cartel has benefited significantly from the fresh Libyan gold supply (144 metric tons) and Greek gold supply (111 metric tons), not to mention the ample Dollar Swap Facility.

It is the bankers New Gold, with destabilizing need for replenishment. The fresh supply from the two broken nations has greatly aided the COMEX, enabling new sales, aided by negative gold lease rates. The strong forces on each side push the divergence wider between physical and paper gold price.

Add some strange pepper in the dynamics. The inelasticity on the supply side is prevalent in the paper market, while the inelasticity on the demand side is prevalent on the physical market. As price falls, the mining firms are stuck with a liquidity crunch on their forward sales gone bad, urged on by Wall Street advisors. A huge amount of money is required to cover their losses. Their mining operations suffer from lack of funds, and projects are curtailed. The high gold price entices rogue governments to nationalize their gold industries, reducing supply further.

The incompatible forces work to pull the COMEX in two directions.

ILLICIT USAGE OF CLIENT FUNDS AS COLLATERAL

The hypothecation battle will bring sufficient publicity to aggravate the divergence. As more assets are seen as involved in the illicit collateral security grab process, the physical assets will be removed from the system for basic self-preservation. The client funds have begun to flee, in reaction to the MF Global crime scene. Investors are pulling money out of hedge funds at a rapid rate.

The COMEX will be increasingly isolated. Clients funds were redeemed to the tune of $9 billion in October, almost four times as much as they pulled in September, according to Barclay Hedge and TrimTabs Investment Research. The redemptions are the largest for the hedge fund industry since July 2009, when $17.8 billion was returned. The Barclay Hedge office put lipstick on the mongrel by commenting on how investors have lost patience with lackluster investor returns. The other half of the story resembles a crime scene.

DYNAMICS OF PAPER VERSUS PHYSICAL BASIS

Grand divergence dynamics are becoming clear. Ann Barnhardt explained in detail how the COMEX will not default, but rather fall into irrelevance, as it is shunned from lost trust. She laid it out in credible detailed form with numerous factors coming to play. The physical basis market has separated from the paper futures market.

The consequences and implications of the recent major scandal are far reaching. The harsh forces from the MF Global failure and theft of private segregated accounts will arrive in time. Hundreds of COMEX clients were denied the chance to receive delivery of Gold & Silver, only to see their accounts go missing, their pockets picked. On its face, evidence mounts that JPMorgan simply converted 614k ounces of MF Global client silver into JPM licensed vaults. Witness evidence of cash and metal theft in plain view.

Ann Barnhardt explained how the COMEX will fade away into oblivion. Its final chapter will be marred by a grand price divergence, where the futures market price declines from avoidance, while the cash physical market price holds steady then rises. The expected path of drained inventory, a slew of lawsuits, and shutdown appears not to be in the offing. The MF Global fallout reveals the alternative route occurring. The MFG backlash is in progress. The COMEX will likely be ignored from distrust of delivery and suspicion of further thefts, as clients remove funds and close accounts.

Barnhardt offered many cogent arguments with detail on the entire process. Here are her main points. They apply to Gold & Silver. She runs the Barnhardt weblog:  http://barnhardt.biz/

Arbitrage is set to kick in. Players will buy at the cheaper corrupt paper market in COMEX and sell in the higher honest physical market.

The connection between the futures markets and the underlying cash physical market is being lost. No longer are such holdings considered safe, trust gone. Ownership of bars is in dispute. Arbitrageurs exploit the market interaction dynamics evident in price gaps.

As players flee, the paper futures prices will decline. The cash physical market will hold steady. The divergence will come. The physical market will then dominate from trust. The cash dealers will ignore the futures prices, no longer a valid price discovery. Later, they will even raise the physical prices. Then later still, the parabolic spike comes for physical Gold & Silver.

THE GREAT SHUN BY MINERS

Asset management funds are appealing to mining firms for direct metal supply. They are bypassing the COMEX in a new trend. Miners seek a fair price and the funds seek a reliable supply. The Sprott Funds have revealed how their precious metal was sourced from mining firms last year. The official exchanges are being cut off as a result. The divergence between physical and paper gold price is widening. See the Ashanti story as typical. Their CEO Mark Cutifani reports that funds are coming directly to them as mine producers, seeking metal supply for their investments.

Major gold buyers are emerging from the Middle East and Asia. At the same times, new markets are flowering. New gold centers are forming, like in Hong Kong and Dubai. Vast increases in gold product exports are taking place from Japan. Some gold price arbitrage is at work also. The more attractive fair price paid in Shanghai reached $50 above the more controlled London price, a record price difference to encourage the international arbitrage.

Chinese gold imports from Hong Kong hit a record high in October, up 50% from the previous month and up more than 40 times from October of last year. The divergence between physical and paper gold price is widening.

THE BIG SQUEEZE, THE BIG BYPASS

A major squeeze is on that capitalizes on the artificially low COMEX price and the higher honest physical price. A gold trader informed that some multi-$billion purchase Gold orders have been in the process of filling at or near the $1600 price per ounce. The price is forcibly being kept low so as to enable some significant completed deals ready at $1900 per ounce. They must clear. The true physical price is between $1900 and $2000 per ounce.

Gold bars will change hands from certain loyal large banks to private hands in Asia. These banks are being pressured out of their gold, as they contend with deep insolvency, reserves requirements, falling sovereign bond values, depositors exiting, and more. The buyers are well funded and motivated. If the gold cartel insists on pushing the price down, then they open the door for major volume sales at the artificially low bargain price that will work to drain the COMEX. This is consistent with mining firms removing supply lines to the COMEX.

Several months ago, the anonymous London trader offered some ripe information about the Chinese accumulating gold bullion from the major metals exchanges. He is back to offer an update. Credit again goes to King World News. The Chinese are removing bullion metal from both Exchange Traded Funds, the GLD and SLV. They will be gutted next year. Investors beware. Many large buyers are large Chinese sovereign wealth fund entities. The paper gold market based in futures contracts has diverged from the physical market. Credibility is being lost quickly.

The divergence between physical and paper gold price is widening!!!