Bill Murphy on why the physical silver crunch may be coming to a head and the implications on Capital Account:
Tag Archives: JPM
COMEX: The March to Irrelevance
A very thorough explanation of the emerging irrelevance of the COMEX due to the permanent beach of trust highlighted in the MF Global fiasco.
Essentially the claim is that JP Morgan, in its rush to seize collateral, stole the precious metals held in COMEX vaults which rightfully belong to MF Global clients.
This is what is generally referred to as theft. However, the banking elites, who reserve the right to steal for themselves, prefer to call it “rehypothetication,” which simply means that something is pledged as collateral a second time. In this case, MF Global pledged the same collateral to their clients and JP Morgan.
When push came to shove, guess who MF Global and the CME Group (the owner of the soon to be defunct COMEX) threw under the bus?
It is becoming painfully obvious that the degree of fraud and theft required to keep the bankrupt financial system running is reaching a crescendo. What will December 31 bring?
Readers are advised to convert their paper assets to something tangible before their account becomes the victim of another bankrupt Wall Street firm’s margin call.
Click the link below to see the gory details rehashed at goldseek.com:
SilverDoctors: Silver Open Interest Drops Slightly to 108,858, Backwardation Holds Steady
Silver’s price manipulated, from $40 to $26 to ??? The blow off is nigh:
http://silverdoctors.blogspot.com/2011/09/silver-open-interest-drops-slightly-to.html?utm_medium=twitter&utm_source=twitterfeed&m=1
We’d like our gold now, Chavez Calling JP Morgan’s bluff? Bank Stocks Tanking, as Palestine flares up on cue
8/18/2011 Portland, Oregon – Pop in your mints…
It is 66 degrees on a mid-August afternoon in Portland. As a banker friend of ours put it, “we hope you are enjoying the mild winter.” The truth is, were it not August, we would be quite enjoying the weather. Unfortunately people have certain expectations about the weather, hence the widespread belief that man can control and reverse trends like global warming or cooling. August in the Northern Hemisphere should be hot.
But its not.
If people are upset at the weather, then they must be seething at what is occurring in the financial markets. The relative calm in the financial markets has vanished like free beer at a NASCAR event. A 400+ drop in the Dow today and an even more significant drop in the price of oil and financial stocks, coupled with a rise in gold, silver, and Treasury Bills? (yes, you read it right) on the surface are evidence of a classic “flight to safety.”
But what is going on? Why such a massive flight to safety on what would otherwise be a calm August day, so fit for reflection and the pondering of life as one knows it? We don’t know exactly why all of this occurred today but suffice it to say, none of it should come as a surprise.
For instance, it should come as no surprise that banks are completely broke and at this point, worse than worthless, as they are destroying real wealth. The modern bank is built on the assumption that the currency regime and the demand for debt denominated in that currency will increase infinitely. Demand for debt in US Dollars began to wane about four years ago and as far as we can tell is not coming back anytime soon, at least not in the quantities (nor at the margins) necessary for the modern megabanks to exist on their current scale.
Hence, the banks are toast. Short them if you can after the next round of short covering passes.
The FED unwittingly made matters worse for the banks a couple of weeks ago when they announced that short rates would be near 0% for at least two years. The FED has given up, and they have done it in the worst possible way. Rather than standing ready to bail water out of the waterlogged currency ship, they have turned the spigot on full blast and walked away.
The FED will probably not be around in two years.
In yet another twisted irony that is a by-product of the current insane “debt is money” currency system, these low short rates, which in theory should be a boon to banks, will drown the banks with large deposits that they cannot lend except at razor thin margins to sub-prime borrowers such as the US Government.
Yes, society’s aversion to debt has fundamentally changed the banking business from one which primarily benefits from usury to one that must redefine itself as a trusted custodian of assets. This change seems to be happening overnight, and the banks are completely unprepared.
Case in point, it appears that Hugo Chavez, Venezuela’s democratically elected dictator has been moved to repatriate his country’s roughly 211 tons of gold held by foreign banks. He has already issued a demand to the Bank of England and rumor has it He will soon issue a demand to JP Morgan, which reportedly holds 10.6 tons of Venezuela’s gold.
The problem is, JP Morgan only has 10.6 tons of gold in custody on liabilities of roughly 100 times that amount. This would not be a huge problem except for the fact that thanks to the internet the entire world now knows this. Leave it to Chavez to strike at the heart of US imperialism. Things should begin to get interesting.
JP Morgan’s short position in physical Silver is even more frightening. If JP Morgan’s skills as a custodian is any indication, it appears that the modern banks are unable to provide this service. Protect your assets accordingly.
And speaking of frightening, almost as if on cue, violence in Palestine began to escalate again after attacks on Israeli civilians, the deadliest in two years, led Israel to retaliate by launching an airstrike against Gaza earlier today.
Our instinct tells us that a major event is unfolding in Palestine ahead of the UN’s statehood vote and it just may coincide with the collapse of the Western Currencies.
Coincidence? Most certainly. And a very sad coincidence indeed.
Stay tuned and Trust Jesus.
Stay Fresh!
Email: davidminteconomics@gmail.com
Key Indicators for August 18, 2011
Copper Price per Lb: $3.95
Oil Price per Barrel: $81.83
Corn Price per Bushel: $6.99
10 Yr US Treasury Bond: 2.08%
FED Target Rate: 0.09% ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce: $1,825 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.00%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.5%!!! UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average: 10,991 TO THE MOON!!!
M1 Monetary Base: $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base: $9,478,200,000,000 YIKES!!!!!!!
72 Hour Call for June 23, 2011
Today’s Call: Nymex Crude Oil to rise. Currently $91.92.
Rationale: Oil was oversold today on the announcement to release 60 million gallons of oil into the global supply from strategic reserves with 30 million gallons coming from the United States reserve. The 60 million gallons does not even represent one day’s worth of global oil consumption. In other words, this is a token announcement. The world has more of a money supply problem than an oil supply problem. Both are policy problems which will not be soon resolved. These problems will keep the price of oil in dollar terms on an upward trajectory.
Result of Call for June 20, 2011: JPMorgan to fall. Was $40.48., Currently $40.20. Good Call.
Calls to Date: Good Calls: 31, Bad Calls: 25, Batting .553
Key Indicators for Thursday, June 23, 2011
Copper Price per Lb: $4.05
Oil Price per Barrel: $91.92 A FAILURE TO INFLATE
Corn Price per Bushel: $6.80 MONETARY POLICY IS NOT WORKING
10 Yr US Treasury Bond: 2.91%
FED Target Rate: 0.09% FED IN PERMANENT DESPERATION MODE
Gold Price Per Ounce: $1,521 BENEFITING FROM PERMANENT UNCERTAINTY
MINT Perceived Target Rate*: 2.25%
Unemployment Rate: 9.1%
Inflation Rate (CPI): 0.2%
Dow Jones Industrial Average: 12,050
M1 Monetary Base: $1,895,400,000,000 RED ALERT!!!
M2 Monetary Base: $9,086,900,000,000 YIKES!!!
*See FED Perceived Economic Effect Rate Chart at bottom of blog. This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy. This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.
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