Be Wary

Thu, Dec 8, 2011 - 4:51pm

It's been a crazy day. Sorry that it has taken me this long to update but the first chance I've had.

First of all, I hope that all of you saw this from last night's post. For simplicity's sake, here's a C&P:

"First, read this:

One of the things we failed to notice prior to the unexpected beatdown in gold in September was that lease rates had moved significantly into negative territory prior to the attack. One of the articles we referenced back then was this one, linked below:

Anyway, here's the point. At -0.5%, lease rates are again near the level they were when gold was savagely attacked last September. One could say that the current, European dollar funding shortage is to blame. Maybe it is and maybe this is just a temporary phenomenon that will not impact the short-term price of gold. However, maybe its a precursor of another big selloff. The banks on the other end of the lease can use the borrowed gold to flood the market with sell orders. I took a bit of grief for not accurately predicting and warning of the September massacre. It gold crashes again over the next few days, don't say you weren't warned this time."

As if on cue, the PMs were savagely beaten today. Gold is off about $50 from its intraday high. Silver is down about $1.50. Is this the next stage of the same, coordinated, central bank, negative lease rate selling like we saw in September? Apparently, I'm not the only one who thinks so:

Look, I know that I just gave you a rather optimistic forecast for December. That was based, however, on what we knew at the time and the current position of the charts. Listen to me now: BE VERY CAREFUL. If you are foolish enough to be trading leveraged, paper metal on the Comex, trying to make some Christmas fiat, BE VERY CAREFUL. Gold, in particular, is in a very precarious position.

You all know of the importance I place on 1705-1710. Well, now that level also corresponds with the lower trendline of the pennant from the September lows. IF 1705 gets taken out overnight or tomorrow (which appears highly likely), buyers will pull bids and gold will rapidly drop toward 1680. IF 1680 fails, gold could fall all the way to 1550. If you are long futures or even something like the UGL and gold falls $150, you're going to get your ass kicked. So, let me say this again for emphasis: BE VERY CAREFUL and watch the 1705 level VERY CLOSELY.

Silver is on pretty shaky ground, too. At this point, I can't imagine it not going to 31 and, if 31 fails, it's going to test the lower end of its range near 30. IF that happens and 30 fails, we may finally see the drop all the way to the long-term trendline that we discussed off and on for the past several months. A drop of this magnitude would take silver all of the way to $25. Again, BE VERY CAREFUL.

OK, onto some other important stuff.

One of the reasons I got behind schedule today is this:

I read this and thought...well, screw it, I'll call Jim myself. We finally connected a few hours ago and we spent a little over an hour discussing current events. Like Santa, Jim is very concerned that the MFing Global situation is going to cause a system-wide crash of epic proportions. This idea of "rehypothecation" MUST BE STOPPED! If it is allowed to continue, a precedent will have been set that enables creditor firms to raid and steal your assets.

Let me explain. Recall that the bankruptcy law changes of 2005 reordered the subordination of creditors. It used to be that bondholders were the most senior of creditors in a bankruptcy. Now, derivative holders are the most senior...senior even to bondholders! If there was ever a more devious, pro-WallSt law created, I'm not sure I've seen it. Anyway...if a firm comingles or "rehypothecates" its assets with clients assets and then uses these funds to buy CDS, the derivative (credit default swap) holder (counterparty) can lay claim to the brokerage or clearing firms assets if that firm declares bankruptcy. Not just the firm's assets but their clients' assets, as well. This is the justification that JPM is using for stealing the MFing Global clients' funds.

If this is allowed to stand, the next time a firm fails (think BoA or Wells or Citi or any bank, broker or mutual fund company), a company like JPM or whomever is the counterparty on the bankrupt organization's CDS, will have precedent to step in and keep (steal) client money to settle their claims. THIS IS OUTRAGEOUS!

I mentioned above that the conversations that Jim and I have are off the record. He did allow me this one quote, however: "If you have money invested anywhere, leave only the amount of money in the system that you are willing (or intend) to lose." Your ultimate risk is that you may wake up one day and find that your life savings have simply vanished.

Look, I could be all wrong about this. Maybe everything will be OK. Maybe this rehypothecation thing is no big deal at all. Please don't take my word for it and then act in haste. Do your own research. Draw your own conclusions. I'm just someone who has been given access to people and information that I never in a million years would have dreamt I'd have. I have a duty to pass along to you what I think. Consider this information but do your own homework, too.

Lastly, I must touch upon the Iran drone thing. We all heard last weekend Iran claimed to have shot down an unmanned, U.S. spy drone.

Then, earlier this week I read this:

I was incredulous. Could Iran really have been able to electronically "hijack" a U.S. spyplane? No way! Well, sure as shit, they did! Take a look at this:

First of all, for those who claim that debka is unreliable and full of shit...maybe not! I've always maintained that debka gets their info directly from sources within The Mossad. Therefore, the site must be read daily. Next and more importantly, the hijacking of a U.S. spy drone is extraordinarily bad news for the U.S. First, just the fact that it actually happened is bad enough. Then, the realization that U.S. military technology infrastructure can be so easily compromised is frightening. If you can hijack a drone, can you launch a missile? Lastly, I fear that this realization will force the U.S to retaliate, either directly or through the allowed action of Israel.

The point is...MENA war continues to get much closer to reality with each passing day and a war between the U.S., Israel and Iran would have serious, global implications.

We often talk about "when the shit hits the fan". Well guess what, between the euro crisis, rehypothecation and MENA war, the shit is hitting the fan right now. Whether or not it all grows into a massive, global shitstorm this week or this month, is irrelevant. It has started. We are in it right now and it's only going to get worse. Continue to prepare accordingly.


About the Author

turd [at] tfmetalsreport [dot] com ()


Dec 9, 2011 - 10:44am

Does the squeaky wheel in the

Does the squeaky wheel in the UK, get the Greece?

Dec 9, 2011 - 10:58am

Eurodeal minus the UK

Eurozone deal leaves Britain isolated

Here is my paraphrase which is not cut and pasted.

According to the article David Cameron asked for what was thought to be unacceptable. He wanted a way to exonerate the UK from financial services regulation. This (UK financial service regulations) according to Sarkozy were at least partly responsible for the problems the EU is now facing. This refusal to agree to all treaty changes according to Mr Cameron is because he feels he must "protect British national interests". For more:
Dec 9, 2011 - 11:00am

Really Stoneeh... the LBMA said that?

Well now that IS a reliable information source...

Sure glad we have you around for that, and to remind us with alarming regularity that the rest of us are complete idiots. Please never leave us. Where would we be? Just a rudderless ship left to the vagaries and whims of the currents and breezes of the day...

Oh Captain, my Captain.

Dec 9, 2011 - 11:02am

Another Data Point


Ferd Torgerson
Dec 9, 2011 - 11:05am

December 9, 2011

A date that will be remembered as the day that the Turd canned hammy.

Dec 9, 2011 - 11:08am
Dec 9, 2011 - 11:08am
Dec 9, 2011 - 11:12am

War on Terror is turning into a Rout !

From Tunisia to Talibanistan.....terrorist regimes are in deep doo doo ! Even Russia is feeling the heat ! Chicoms and Norkoms next ? If you don't want to give Bush and our guys the credit....that's your call....but don't you dare give it to the Traitor in Chief ! The Muslim world was ripe for a little modernization I'd say ! Sorry to all of you in deep denial with Dennis Kucinich ! Monedas 2011 Comedy Jihad Hillary Come Home And Clean Up Our Electoral Process !

Dec 9, 2011 - 11:12am


Some things one can't explain... And I mean really- - who here would have had the mental wherewithal and presence of mind to actually take 3 seconds to type the Latin (or was it the Greek? OMG :-) into a search engine like that magical Google thing-y to see what it translated to?

Nope, the meaning surely would have remained a Mystery of the Ages if not for your kind translation services above.

There are none so blind as those who refuse to see(k).

Even when Google is right at hand.... Yeesh...

Dec 9, 2011 - 11:17am


Thanks. I wasn't trying to be wise about it. I just didn't know last night and didn't have the energy right then. My apologies if it seemed like I had a 'tude going. I did look it up later and then came across some other fairly common greek/latin sayings.

I personally like Carpe Diem. It might be corny but it's a mostly positive attitude and frame of mind.

I didn't post that saying above towards you. My apologies if it seemed that way. I just saw your comment after the fact and I'm in catch up mode right now on here and the markets.

It seems like the IMF direction or participation is being allowed and the market mostly feels it's positive from the looks of it. For now.

Take care Dude.

Dec 9, 2011 - 11:21am

It can't be emphasized

It can't be emphasized enough, people need to read the terms of their account agreements! Re-hypothecation is a feature of margin accounts, if you ever signed a margin agreement you could be a victim too. Also be aware of whether your account agreement permits your broker to send your securities to UK where there are no limits on re-hypothecation.

In my view if your assets are with a firm that trades on its own account they are at risk, regardless of cash vs. margin account. Stick with a broker that is just a broker, nothing else.

Dec 9, 2011 - 11:24am
Dec 9, 2011 - 11:27am

Hey Stoneeh

Squirrel Nut Zippers "Put A Lid On It"
Dec 9, 2011 - 11:29am

As everyone loses their shirt over Europe....

U.S. Government Debt Maturity Schedule

$2.5 Tril to be rolled over in 2012. Lol.

Dec 9, 2011 - 11:29am
Dec 9, 2011 - 11:29am


Negative lease rates bullish? Negative lease rates are an indication of a rigged or distressed pricing system. How is that bullish?

I know you've read Victor the Cleaner, so I'm going to quote from his work. From March of this year -

"Since nobody leases their gold without charging a fee, a negative GLR is nonsense. So how come the LBMA reports consistently negative GLRs?

How is the GLR calculated? It is derived from the GOFO Gold Forward Offered Rate (GOFO) and the London Inter Bank Offered Rate (LIBOR). GOFO is the interest paid on a swap of gold for US$, i.e. the interest paid if one lends gold and borrows US$. GOFO is determined by the LBMA in a survey of the leading market makers.

A possible answer is that LIBOR may have been rigged. As of a week ago, US, UK and Japanese authorities were investigating several banks for allegedly having manipulated LIBOR, the London Inter Bank Offered Rate."

Read about LIBOR rigging here and here

Given all that's been going on with European banks lately and the links provided above, I'm betting that, yup, LIBOR''s being rigged.

EDIT: Link to Victor

Dec 9, 2011 - 11:35am
Monedas Boardwalk
Dec 9, 2011 - 11:44am

Boredtalk !

Man up ! Don't give anyone that power over you ! I'll check out Stoneh after coffee and take whatever action I deem necessary ! I enjoy challenges....and we have a Gold Mine here ! Monedas 2011 Comedy Jihad Grinch Buster !

Dec 9, 2011 - 11:51am


Got one for you too.

Video unavailable
Dec 9, 2011 - 11:55am

Just shut up and stack !

I don't even want to pollute my magical mind with all that crap ! If Boredtalk and Stoney spent a little more time stacking....they'd be up here in the Emerald City on the Hill....looking down and laughing at the world below ! You don't have to sniff every financial fart to get the big picture....that's why you guys will never be Generals ! Monedas 2011 Comedy Jihad General Staff Christmas Comunique !

Dec 9, 2011 - 11:57am


Everything is in place for the end of this monetary system and the announcement of a new gold referenced system. They have laid the ground work with the bankruptcy laws of 2005 to take your money first when TSHTF. They found a new way to keep the COMEX from exploding in the MF Global collapse by just confiscating physical gold and silver and customer accounts. Bernanke has utilized every tool in his toolbox listed in his 2002 speech except one, the revaluation of gold. When will this come to an end?

TPTB would not be concerned about getting paid first after a collapse if they intended to hyperinflate to oblivion because then the money would be worthless. TPTB obviously don't intend to hyperinflate to the collapse point and will pull the plug and announce a new gold referenced standard before they do so.

The purpose of spending so much fiat to kick the can has got to be so they can get cheap gold. If gold prices decouple from the paper market, that motivation disappears and there's no reason to wait to announce a gold revaluation.

A global conflict reduces banker's political control and destabilizes the situation. If it looks like one is imminent, they will make their move and announce a new gold referenced standard.

Our canary in the coal mine is gold. If the price of gold surges quickly, you know central banks and people in the know are getting every last bit they can before the announcement. That's your signal to get the last of your money out of the system and into something tangible. Gold won't be available at this time, but food and other tangible items will.

Yes, things are out of control and are hitting the fan, but no, we are unlikely to collapse just yet. The markets are still reacting to rumors and an announcement of another round of easing would reset the can kicking. I will leave you with an example. Central banks know they are running out of time, so they announce QE3, which is slated to begin in earnest in March of 2012. Even if they have no intention of further printing, this gives them three more months of can kicking during which they buy gold. Does anyone really think they won't use this one time trick at the very end? They have unlimited paper to prevent a spontaneous collapse, and have this one time only head fake up their sleeve when the game is near the end. Until they play that card, or war intervenes, I don't believe we will have our collapse.

Dec 9, 2011 - 12:00pm

Bored Walk !

I guess you guessed right....that's me with the accordion !

cpnscarlet Smiddywesson
Dec 9, 2011 - 12:01pm

@Smiddywesson - nice opening

@Smiddywesson - nice opening for a 30 min-old newbie. Welcome.

Dec 9, 2011 - 12:02pm

Good news story

Paralympian un-paralyzed

Perhaps if the financial markets get in a crash, we can see the same results.

Smiddywesson ScottJ
Dec 9, 2011 - 12:05pm

Like it.  However, there's at

Thanks, I have watched the site for some time but neglected the comments. When I read them I knew it was a good site to join.

Dec 9, 2011 - 12:07pm

Hey Monedas...

I was kinda thinking more this type of Board Walk

Dec 9, 2011 - 12:09pm

hypothecation, rehypothecation

So what does all that re-hypothecation fine print mean to all of us who don't use margin? Does that mean our accounts are at risk too?

Dec 9, 2011 - 12:13pm

The Zero Percent Non-Solution

New from Jeff Nielson/ BBCa

The U.S.’s 0% Folly

The U.S. is more fundamentally insolvent than Greece, yet Greek interest rates are fifty times higher than those of the U.S. This is obviously market fraud, and on a scale never before seen in human history. I (and others) have explained the mechanism here on several occasions: the fraudulent manipulation of the credit default swap market. It’s old news.

However, what no one has pointed to yet is how the U.S. has totally squandered its last chance to avoid either debt default, hyperinflation, or both. I’ve mentioned previously what the fate of the U.S. would be if its own interest rates had been fraudulently manipulated to the same levels as that of Greece.

Interest payments alone on the national debt would be more than four times total government revenues. This means the U.S. would have to completely shut down every branch and department of the U.S. government – including its entire military, and even Congress itself – and would have to totally end all government transfer payments. And even after that, taxes would have to be quadrupled merely to pay interest on its debts. This is what the Wall Street terrorists did to Greece.

Conversely, the same fraudulent mechanism which has been used to push-up interest rates all across Europe has been used in reverse, to fraudulently minimize interest rates (and payments) for the world’s biggest deadbeat-debtor. And what has the U.S. government done with these extra years of ultra-light interest payments – courtesy of Wall Street? It has squandered every second of that time and every dollar saved in interest payments, in more of the petty partisan squabbling which has characterized the U.S. government as the world’s most dysfunctional “democracy” (for lack of a better word).

Read more: The U.S.’s 0% Folly

Fr. Bill ouchtouch
Dec 9, 2011 - 12:16pm

Hypothecation of Money Market funds at Edward Jones

ouchtough wrote:
It can't be emphasized enough, people need to read the terms of their account agreements! Re-hypothecation is a feature of margin accounts,

Several here have noted that hypothecation and rehypothecation is a feature of margin accounts, warning Turdites that if they have margin accounts they are vulnerable to having their assets hypothecated and so forth.

I am a trustee of an elderly Aunt who has her assets with Edward Jones. I'm meeting with the account customer service dude next week, but in preparation for examining in detail all customer agreements that Auntie has with EJ, I've discovered that she gives EJ permission to hypothecate her assets in an Edward Jones Money Market account!

My suggestion is to get digital copies, if possible, of all customer agreements you have with any institution with whom you deposit assets of any kind, and do a word search on the text for this term: hypothecate. You may be surprised.

aurum argentum
Dec 9, 2011 - 12:16pm


If everyone gets really screwed with money being stolen by banks etc., how will the military stop 200 million people from going butt wild rioting. I think the Fed will print until they can't print any more. And then will print more. Then there will be some kind of reset. How many years can they postpone the end? 5? 10?


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