Whew!

OK, it appears that the coast is clearing. The entire MFing Global fiasco had the potential to seriously pressure the commodity markets but...at this moment...it looks like we're going to survive.

It had the potential to get ugly. Yesterday, when we were getting the waterfall declines in the metals, I feared that another September rout was on. Silver could have dropped $5 again and gold could have dropped another $100. This would have ultimately led to more margin hikes and...well, you get the picture. Why, you ask? Simple:

1) MFing Global clients are restricted to "liquidation only".

2) This seriously disturbs the normal, fragile equilibrium of buyers vs sellers.

3) Knowing this, other paper silver holders attempt to "get ahead" of it all by selling.

4) This prompts MFing Global clients to sell.

5) This leads to more selling pressure.

6) Maybe JPM helps things along with a few, new shorts.

7) Down it goes. No buyers means no bids. Serious, cascading waterfall.

This is what I feared yesterday morning as I helplessly observed the action through my Iphone. Miraculously, however, silver and gold both stopped and reversed, right at critical support. This is very encouraging. Maybe silver is finally at a point where fundamentals are being recognized. Instead of waiting for even lower prices to develop, buyers stepped in and turned the tide. Again, this is very encouraging.

Now, by no means is this over as the MFing Global situation appears to be a rabbithole of corruption. However, the moment in time where the imbalances existed that could have crashed both silver and gold has passed. As the title of this thread states: Whew! One caveat, though. I'm going to be out and unavailable all morning again tomorrow. Yesterday marked the second straight panic-type event that has occurred while I was away from my post, the other being the selloff of 9/22. Let's just hope that tomorrow doesn't make it 3 in a row!

As mentioned above, things look encouraging. You can see it on both of these charts. IF these rallies can continue, both metals will move through their highs of last week and will be set up for further extensions of the gains. I'm still expecting $1810 in gold and $37 in silver sometime this month. A move through last week's highs will make those goals look easily attainable.

http://www.tfmetalsreport.com/blog/2780/there-he-goes-again

paper_11-2pmgold.jpgpaper_11-2pmsilv_0.jpg

Two other things. First, a potentially fascinating interview of James Turk by Eric King. Here's a link to some text. The full audio has not yet been posted so I advise you to keep checking the link until it is:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/2_James_Turk_-_What_You_Need_to_Know_About_Gold_Suppression.html

Eric also just posted some notes from speaking with Peter Schiff today. A must read:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/11/3_Peter_Schiff_-_Bernanke_%26_Fed_to_Ignite_Gold_%26_Oil.html

And I think this next item is kind of funny. Trader Dan and I have joked that we might be "brothers from another mother" in that we so often see the same chart patterns and share the same thoughts. Last weekend, I planned to write an entire column on commodity inflation, specifically cows and pigs. The weekend passed, I ran out of time and it never got written. I even still have the marked-up charts on my desk but I just haven't had the time to post them. Well, Trader Dan to the rescue! Dan has written a fabulous piece that, for all intents and purposes, states and shows most of the things I wanted to cover. Below is the link. Thanks, Dan!!

http://traderdannorcini.blogspot.com/2011/11/fallout-from-qe-rising-meat-prices.html

OK, that's all for now. As stated above, I won't be able to post again until after the Comex close tomorrow. Like Tuesday, though, I will be adding thoughts to the comments section of this thread if conditions warrant. Thanks again to all Turdites everywhere for making this such a special site!   TF

p.s. I forgot to add this. I received this email last night. Thanks, JB. Much obliged!

Hey Turd,
  My name is JB Slear, the COMEX Gold/Silver delivery boy for Jim Sinclair at www.JSmineset.com . I used to trade thru REFCO before its collapse into oblivion, none of my clients lost any of their money during its collapse. I'm certain there are a lot of people who might be scared stiff about their commodity holdings. If you feel it prudent, I would be honored to answer any questions your people might have in regards to MFG and their apparent risks. Please feel free to post this if you're ok with it .. Your people can call toll free866-443-0868 ext 0. One of us will pick up and answer any questions they have ... Happy Trades To You!!
JB Slear
CEO Fort Wealth Trading Co LLC
www.FortWealth.com
866-443-0868

410 Comments

Sandiaman's picture

first

first

vonburpenstein's picture

second

and wupty doo

silvergoldsilver's picture

MF

More than meets the eye right now.  I'll keep you updated.

¤'s picture

Thanks Big Yellow Hatted One

Thanks for your efforts and foresight for making this site possible.....and those updates.

Avocado Lover's picture

Fifth?

Hope so!

ewc58's picture

Dave from Denver on Bernank today

Armageddon was yesterday - Today we have a serious problem

Has Bernanke Lost His Mind?

I just saw this headline come across the tape:   "Low interest rates benefit savers too:  Bernanke."  He goes on to explain that low interest rates are stimulating economic growth and savers won't get decent returns on their savings until the economy strengthens.  Here's the LINK  The dude lost me on that one.  In fact, that has to be one of the most insanely idiotic statements I have ever heard - and everyone who heard and believed it is dumber for having done so.

One of the exercises I try to do is, when someone says something that seems stupid on the surface, I try to intellectually understand why they are making that particular statement.  Let me get this straight:  if I have my money in a CD earning a fixed 1%, my money will grow in value if the economy by some miracle of some other-world higher power grows?  I can understand trying to sell an idea by spinning the logic, but Bernanke's reasoning there is outright retarded.  I truly think the guy has lost his mind.  Either that or he's treating some malady with high grade medical marijuana.  Okay maybe he's not stoned because he would not be able to make that statement and keep a straight face - perhaps he takes copious amounts of prozac or xanax. Read more

backseatdriver's picture

SGS

How is the Bears reunion coming along?

BSD

ewc58's picture

Dan Norcini's turn...

Fallout from QE - Rising Meat Prices

The talk today is of the subtle but significant shift in the FOMC in regards to another round of Quantitative Easing or QE. It appears the formerly hawkish dissenters from this madness have been brought in to heel with the Fed perhaps ramping up expecatations that they will act in some form as conditions worsen in Europe. 

Signals are still unclear and there is a lot of conflicting information swirling in the financial air which is leading to further instability and volatility in our financial markets.

I find it less than honest that those advocating another dose of financial morphine into the system are pointing to the lack of inflation as a signal that the Fed could engage in further money creation without unduly impacting prices in general. My response to this is "Bullsh_t".

Read more

backseatdriver's picture

Thanks TF

Just Thank you...for everything.smiley You are the bomb!

BSD

C F's picture

It's called: 

It's called:  M-O-P-E

Management of Perspective Economics

Ben is the Chief Mopehead...the mother of the mope.

¤'s picture

Dan's site

Just tried logging in to leave a comment and for some reason it still won't let me log in from my google account.

Anyway, I kept it short and would've (if I could've) mentioned MOPE only to see it above on here by    C F....well done!yes

I Run Bartertown's picture

Trader Dan/ Inflation

Surely he must be mistaken. I saw a big chart that said inflation won't start until 2014.

I told the cashier at the grocery store "Look at my chart, dammit!!!!"

But I still had to pay. For shitty little containers that hardly have anything in them. Next time, I'm going to print the chart bigger ... and hide behind it while stuffing my shorts full of overpriced meat. And the cold will be sure to stifle any possible meat inflation I might notice while I'm doing it.

¤'s picture

EU Ultimatum: Greece to take it or leave it

Nov. 2, 2011, 7:30 p.m. EDT

Sarkozy says aid tranche depends on Greece

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — French President Nicolas Sarkozy said late Wednesday that a sixth tranche of aid won’t be paid to Greece unless the country decides to adopt the European proposals outlined last week to help the region out of its sovereign-debt crisis, according to reports.

Greek Prime Minister George Papandreou said early this week that there would be a a referendum on the proposals, with his government also now set to face a no-confidence vote, taking markets — which had believed the euro zone was in agreement over the deal — by surprise.

G-20 meets amid Greek crisis

Greece's decision to hold a national referendum on the recent bailout deal is the focus of discussions.

Sarkozy said Wednesday that, if Greece does hold a referendum, it must take place as quickly as possible. The vote is now expected to be held on Dec. 4-5, according to reports.

German Chancellor Angela Merkel said that action on the proposals outlined last week will be speeded up and that Europe is prepared in the event that Greece decides to exit the euro, the reports said.

Both Sarkozy and Merkel were speaking after emergency talks held with Papandreou in Cannes ahead of a summit of leaders from the Group of 20 major economies.

Christine Lagarde, managing director of the International Monetary Fund, said...

http://www.marketwatch.com/story/sarkozy-says-aid-tranche-depends-on-greece-2011-11-02

ewc58's picture

I'm looking forward to seeing Margin Call: here's a review

Triple Lutz Report–Episode 106

Posted in Precious Metals, Crisis Investing, Living off the Grid, Gold, Silver by creditmatters on November 1st, 2011

Join us today for a review of the new Wall Street thriller Margin Call. With an all star cast including, Stanley Tucci, Kevin Spacey, Jeremy Irons, Demi Moore and Simon Baker. Zachary Quinto puts in an Academy Award performance. 

The action begins at a mythical Wall Street investment bank that has just discovered that the billions of mortgage backed securities they hold will soon become worthless.

The resulting loss will bankrupt the firm and pretty soon it devolves into a case trying to save a major bank at the expense of everyone else. Highly recommended

Spoiler Alert!

Listen Now:

icon for podbean  Standard Podcasts: Hide Player | Play in Popup | Download | Embeddable Player

Bstone's picture

Gold to hit new high Nov. 29th.

Gold will hit a new high on November 29th 2011. How do I know this? Because that day is my B-day and I  am feeling pretty lucky.

You heard it here first, Gold spot will be 1960 - 2000 on November 29th.

WheelerSilver's picture

Take that Mr. The Ben Bernank!

If Mr. The Ben Bernank's flapping face fails to send the metals into a tail spin I would consider that a very positive outcome! I'm hoping the white stuff can hold over 34 through the weekend as that number has pierced the major resistance. If we can claw and scratch through 35 and hold... well that would be VERY encouraging! Take that Mr. The Ben Bernank!

Thank you for another valued post TF!

_______________________

http://www.wheelersilver.com

~Handmade Quality Bullion~

even steven's picture

Nowhere to Run, Nowhere to Hide

From James Howard Kunstler: "Meanwhile, more than a few banks find that they are catastrophically short of real funds. They can't actually continue the daily churn that constitutes their hypothetical business. Interbank lending would tend to freeze. Suddenly, we are right back at the edge of the same abyss that opened up when Lehman Brothers went up in a vapor three years ago. Only this time it's Lehman Brothers times X.

     There are really only two outcomes I can see in all this. Either money becomes extremely scarce or the money that's there becomes worthless. In either case you're broke, and what remains for all these nations is a fight over the table-scraps of the late and great industrial orgy.
     I know a lot of people think that technology will save us from all this. The story line there is that we'll all be "connected." We'll all network up over the smart-phone and "communicate" and "share" and "innovate." Connection has become a pointless end in itself. It's what you do when the world is collapsing around you. Wouldn't it make more sense to learn how to grow potatoes and train a mule?"
 
even steven's picture

Chinese Silver Investment Going Parabolic

"Chinese commercial banks are now selling silver to investors in the hundreds of tons. One example is the Industrial and Commercial Bank of China Ltd (ICBC), China's biggest lender which launched paper silver trading for individual investors in August of last year. The other large Chinese Banks have also introduced silver trading. The trading volume of ICBC's paper silver products alone reached 300 tons in the first half of 2011, almost four times the figure for the whole of 2010. That's right, one Chinese bank alone sold 300 tons or over 10.5 million ounces of silver in only 6 months. In only their first year of trading, ICBC bank alone will sell over 20 million ounces of silver which alone would represent over 2% of the total amount of silver mined on earth for the entire year."

http://www.financialsense.com/contributors/dan-collins/2011/11/01/chinese-silver-investment-going-parabolic

Ferd Torgerson's picture

This is What I Call an Earnings Report

TORONTO, Nov. 2, 2011 /PRNewswire/ - YAMANA GOLD INC. (TSX:YRI.to - News) ("Yamana" or "the Company") today announced its financial and operating results for the third quarter of 2011.

HIGHLIGHTS FOR THE THIRD QUARTER 2011

  • Production of 279,274 gold equivalent ounces (GEO)(1) at cash costs of $94 per GEO(2)(3)
    • Gold production of 230,986 ounces
    • Silver production of 2.4 million ounces
  • Significant financial and operational increases over the third quarter of 2010
    • Production increased 4% to 279,274 GEO
    • Revenue increased 22% to $555 million
    • Record adjusted earnings(2) increased 63% to $190 million, $0.26 per share
    • Cash flow generated from operations(5) increased 57% to $330 million, $0.44 per share
    • Generated cash margin of $1,603 per ounce(4), an increase of 36%
  • Cash and cash equivalents at September 30, 2011 were $570 million, a 73% increase from the beginning of the year
  • Cash flow generated from operations(5) increased 66% to over $945 million, $1.27 per share, as at September 30, 2011
  • Dividend increased for the second time this year to $0.20 per share annually

"We continued to focus on delivering growth across all measures, enhancing shareholder value and generating significant cash flow in the third quarter.  We continued to make progress at our four development projects and we will see a first gold pour at Mercedes before year end.  We also increased cash balances while further reducing debt.  We have consistently said that the objective of the Company is to generate increasing cash flow and as our cash flow reaches a new sustainable level, we would evaluate further return of value to shareholders with the dividend," commented Peter Marrone, Chairman and CEO. "To that point, along with our other accomplishments in the quarter, we are pleased that we have increased our dividend for the second time this year and are now at a level of $0.20 per share annually which represents an over 60 percent increase in the last twelve months. This further increase of $0.02 per share will take effect at the end of this year and coincides with our newest mine coming into production."

Full report here:

http://finance.yahoo.com/news/Yamana-Gold-Announces-Third-prnews-4063697498.html?x=0&.v=1

ewc58's picture

Miner short levels back up: from Bill Murphy's update today

Short Report

Bill:
The crooks are back to their tried and true dastardly deeds! The short level is back up after a dip down last week. At the end of last week the short level of the mining stocks that I watch was down to 38%. That was a recent low. The first two days of this week saw the average short levels back up to 42% of daily volume on my eight representative stocks!

The ones who went short last Friday must have cleaned up on Monday and Tuesday this week after gold and silver saw yet another Sunday night smack-down! The short level for AU, GG, NEM, RGLD and SLW is over 50% this week! Way to go CFTC! They want to go slow so as not to do any harm to the shorts!

They protect the shorts very nicely don’t they? The encouraging thing yesterday was that these mining stocks recovered to end the day yesterday even to slightly up! That is good news and today looks promising as well. I am still down 25% for the year on my mining stock investments.

The urge to go totally physical is certainly enticing with the year’s performance favoring the metals over the shares of good mining companies. Maybe this will be the week for the shares to make a comeback.
Dan Mason

 

Stormdancer's picture

Silvergoldsilver

SGS, your post ingtrigues me.  I'm certainly looking forward to any color you can add to the MF Global affair.  In spite of Ann Barnhardt's impassioned argument for Corzine as a sort of trojan horse sent into MF by Goldman for the purpose of destroying it, I'm still leaning toward the idea the Corzine was a victim of cannibalism.

I outlined the "second string" ideas from the financial side earlier, but I believe I can also discern manuevering from the political side.  Paulson is obviously playing from the Neocon side of the political field and Corzine is most definately playing the neoliberal (they're both fascists of course) side.  The Necon/financial players most certainly prefer to have one of their boys in the Whitehouse and nailing Corzine settles old scores while undermining Obama.

Dunno if I'm right of course, and I haven't one single significant "connection" that would be able to provide any supportive information.  Maybe you do? :)

All I know is that at least conceptually speaking, method, motive and opportunity are lining up in fine logical fashion.

If I'm correct and cannibalism is the more accurate characterization of this situation, it would mean we're at the stage where the rewards of cannibalism outweigh the risks, and we'll likely see more of it...soon.  It will mean that the end of the great Keynesian experiment is entering its denouement.  Whenever it actually does come, now or later, I expect the denouement to be very bloody.  Chaos is a great time to settle old scores...and there are many lurking just under the genteel facade that currently dominates the halls of the PTB.

If Corzine were a trojan horse I'd have expected the MSM storyline to begin downplaying any criminal speculations and at first it appeared that was the case.  The first allegations of missing customer funds came in at $950 million, dropped to $900 million, then $700 million.  As I took note of that I thought "here we go...closing ranks...money sneaks in the back door from the FED or whoever and the story evolves to "stupid arrogant risk taker" but no criminality.

Today's revelation of $1.5 BILLION missing seemed to put the skids to that and turned me firmly back to the cannibalism thesis.

MSM reports/interviews have guests openly describing comingling company and client funds as illegal and prosecutable.  No soft-pedaling from the spin doctors.

Anyway, PM's certainly have weathered this part of the storm rather admirably as Turd outlined, but I'm not convinced this is anywhere near done...not even close.

Keep us posted SGS :)

codematrix's picture

Nov. 4, 11

I copied this comment from Harvey's recent blog post.  This sounds scary.  Read below.  Also, I have this bad feeling about Nov 7, 11. 

codematrix

------------------------------------------------------------------------------------------

Harvey, MF Global appears to be short 1.5 billion per Zero Hedge.

http://www.zerohedge.com/news/mf-global-client-theft-estimate-doubled-15-billion

The liquidation order says customer accounts that are NOT transferred by November 4th (Friday) will be liquidated in the market.
 

Here is the court motion:
http://dm.epiq11.com/MFG/document/GetDocument.aspx?DocumentId=1442293

Here is Part 11.
11. The Trustee has determined that the Account Transfers will contribute to the prompt satisfaction of customer claims and the orderly liquidation of MFGI. Without effecting these transfers, the positions are required to be liquidated promptly and in an orderly manner. As set forth more fully below, the customers’ positions are required by Part 190 Regulations to be liquidated if they are not transferred to a transferee FCM before the close of business on Friday, November 4, 2011 (the fourth business day after the entry of the MFGI Liquidation Order). The liquidation of these customer commodity positions in all likelihood will negatively effect the net value to the customers and the markets in general.

How can they transfer them all if they are short of money?

Friday is a mass liquidation day for 50,000 commodity accounts??? And the CFTC has no issue with this?
 

Am I reading this right?

-----------------------------------------------------------------

Bay of Pigs's picture

Gold Forecasters

Not a great article but I did enjoy this part.

“When we look at gold five years from now, we will say gold was wildly cheap,” said Jason Schenker, the president of Prestige Economics LLC in Austin, Texas, and the fifth-best forecaster tracked by Bloomberg. “What happens to gold is going to hinge on what happens to the dollar, and that is going to be influenced by what happens in Europe and monetary policy.”

http://www.bloomberg.com/news/2011-11-01/top-gold-forecasters-see-bullion-rallying-to-record-by-march-commodities.html

AinT's picture

MF liquidation

I read somewhere this morning (Can't remember where as I have been reading about 20 websites over the last two hours or so) that they are planning to liquidate MFGlobal on Friday. Could it be that we haven't seen the real commodity sell off effect of this clusterfuck yet?

Ahhhhh codematrix's post above is what I read, thanks mate.

Stormdancer's picture

Holy Cow codematrix!

Now add this.  I'd no sooner hit "send" on that last post and someone with more street cred than I'll ever have weighed in on the cannibalism thesis too...Bruce Krasting at ZH just posted this:

On MF

Quote:
...

My guess is that the missing customer cash was grabbed by one (or more) of the big players in the global bond market. MF did not sign off on the cash grab. The banks moved on them and their customer accounts. MF had no say in the matter.

Given Corzine’s relationship with Goldman, I put them high on the list of probable plug pulling bankers...

Quote:

...If you think this sounds far fetched consider what happened at Refco:

Refco’s forex brokerage arm, Refco FX, LLC, was holding over 17,000 retail customer brokerage accounts at the time that Refco declared bankruptcy shortly thereafter. In the bankruptcy proceedings, Bank of America and other large creditors managed to convince the bankruptcy court that Refco’s customers were actually unsecured creditors because of Refco’s failure to segregate its customer accounts from their own general funds, despite telling customers that it had done so...
 
Oi!  And another!  At least this one is amusing to read :):
 

Emperor Corzine’s Goldman clothes

Quote:
...

Once upon a time, there was an emperor who had been thrown out of the kingdom of New Jersey and was seeking another place to rule. Corzine, for that was his name, opened his wardrobe at home one day and spotted some clothes glimmering at the back.

Years before, when the emperor had ruled the illustrious merchant house of Goldman, he had also been forced to leave. To compensate him, the Goldman merchants had woven a suit and cloak out of what they assured him was their finest fabric. “These clothes will shield you always,” said Paulson, the partner who had taken the emperor’s wreath. “If implied volatility spikes in the ducat options market, put these on and all will be well.”

More

On this story

Emperor Corzine donned the Goldman clothes and regarded himself in the mirror. His cloak looked threadbare and he thought he could spy his naked legs through the cloth. “That is impossible,” he said to himself. “Goldman garments last forever, even in public service. My eyes are deceiving me.”

The emperor wandered along Wall Street and saw that the passers-by were staring at him, so he told them where his clothes had come from. They immediately realised they were seeing things...

 
Stormdancer's picture

One more thing - ReachWest

Reachwest has been hammering (rightly so) the knock-on effect of destruction of trust in other brokers currently presumed to be healthy.  Worth thinking about for sure.  Krasting's article fleshes out that thesis as well...

Turd Ferguson's picture

wtf?

MODERATOR

we've got to get to the bottom of this...fast!

Response to: Nov. 4, 11
Stormdancer's picture

Freak me out...I never

Freak me out...I never thought I needed to stock up on Depends...I think codematrix just proved I need to :)   Phew!  Wow!  I'm a true blue Turdite now!!!

Edit:  I'm making a new rule!  No calling yourself a "Turdite" until you've baptised yourself!

FIRST!   *snicker*

eff you atarangi!  You ain't the only one on this planet that can wax eloquent about the beauty of a smooth BM!

Bay of Pigs's picture

The Bernanks comments

today putting the blame on the SEC and CFTC are looking very ominous right now.

I might be selling all my miners tomorrow. This is some very serious shit if it goes down like this.

FUBAR.

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