Silver Below $22

Sun, May 19, 2013 - 8:41pm

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Hagarth · May 19, 2013 - 11:21pm

Lehman is sort of a zombie

Lehman estate demands millions from nonprofits

Martin Z. Braun | Bloomberg News

NEW YORK – Almost five years after Lehman Brothers Holding Inc. filed for bankruptcy and set off the global financial crisis, managers of the bank’s estate are demanding millions of dollars from retirement homes, colleges and hospitals.

After selling most of its assets, Lehman now says it was shortchanged by scores of nonprofits that were forced to pay to exit derivatives that were unwound after the firm filed for Chapter 11 protection.

The Buck Institute for Research on Aging in Novato, Calif., gave Lehman $2 million in October 2008 to cancel a swap contract used to manage fluctuating interest rates. Lehman says it wants $12.1 million more and has assessed at least an additional $4.7 million in interest, the research center said in its most recent financial statement. The amount Lehman is seeking is more than half of what Buck spent last year researching Alzheimer’s, Parkinson’s and other diseases.

Lehman is sort of a zombie-like bankruptcy entity: Instead of looking for brains, it’s looking for cash,” said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll in Louisville, Ky.

“Lehman doesn’t care. They have a duty to maximize their return to their bankruptcy creditors. If you’re Mother Teresa, they’ll go after you,” he said.

Mary McEachron, Buck’s chief administrative officer and general counsel, declined to comment, except to say the dispute hasn’t been settled. Kim Macleod, a spokeswoman for Lehman in New York, declined to comment about the talks.

Before the financial crisis, Wall Street banks and insurers peddled financial derivatives known as interest-rate swaps to governments and nonprofits that bet they could lower the cost of borrowing. There were as much as $500 billion of the deals done in the municipal-bond market before the credit crisis, according to a report by Randall Dodd, a senior researcher on the Financial Crisis Inquiry Commission, published by the International Monetary Fund in 2010.

After Lehman filed for bankruptcy and the market for some municipal bonds collapsed, nonprofits and state and local governments paid more than $4 billion to Wall Street banks to exit the swaps, according to Bloomberg News. Some officials said they weren’t aware of the risks involved in the trades.

In Lehman’s case, the battle over swaps shows how far it will go to collect money for creditors, including public pension funds and municipalities that held its bonds. The disputes are taking place in confidential mediation sessions set up by the bankruptcy court in 2009. The aim is to settle disagreements faster, without costly litigation.

Once the world’s fourth-largest investment bank, Lehman filed the biggest bankruptcy in U.S. history on Sept. 15, 2008, after suffering billions in losses on subprime mortgages. It had more than 1.7 million derivative trades with thousands of banks, hedge funds, companies, municipalities and sovereign nations when it filed for protection from creditors.

A derivative is a security whose price is dependent upon one or more underlying assets. Common types include futures contracts, options and interest-rate swaps.

Lehman tacks on interest of almost 14 percent annually on unpaid swap debts, said Phil Weeber, director of risk management at Kennett Square, Pa.-based Chatham Financial, who is advising corporate clients in mediation with the bank’s estate. The rate is based on Lehman’s cost of funds, which is the London Interbank Offered Rate plus 13.5 percent. Lehman’s claims are now almost double the original amount, based on the interest they’re charging, he said.

“Lehman, from the very beginning, said they were going to use an assertive legal strategy to protect the estate,” Weeber said. “That’s what they’re doing, and they’re very good at it.”

Harvey Miller, the Weil Gotshal & Manges partner who has been Lehman’s lead lawyer since the bankruptcy, also declined to comment on the negotiations. The New York-based law firm was paid $3.9 million in February, or about $140,000 a day.

Under bankruptcy law, lawyers and managers of a failed company have a duty to raise as much money for creditors as they can.

Lehman exited bankruptcy in March 2012 and is still liquidating. It has distributed about $47.2 billion and wants pay creditors $65 billion by about 2016. Creditors will get an average of 18 cents on the dollar.

Some of Lehman’s former clients have stopped fighting. Colorado’s Housing and Finance Authority settled a dispute over swaps with Lehman as of March 2012 for an undisclosed sum, according to its most recent financial report.

Others, such as Simmons College in Boston and Havenwood-Heritage Heights, which runs a retirement community in Concord, N.H., are balking at Lehman’s demands.

Simmons, a 5,000-student liberal arts institution, paid Lehman $5.5 million to exit three swaps in January 2009. It held back $800,000 for out-of-pocket expenses, the college reported in its June 30, 2012, financial statement.

Lehman disagreed with the amount, and more than three years later notified the college that it wanted to negotiate a settlement through mediation.

Havenwood-Heritage Heights paid a termination fee of about $420,000 in 2009. The nonprofit disclosed that Lehman wanted $1.9 million more as of Dec. 31 – an amount equal to what the retirement community spent on food and utilities that year, according to its financial statement.

Havenwood has 409 independent-living units, 55 assisted-living units and 95 skilled-nursing-facility beds.

Kalimah Redd Knight, a spokeswoman for Simmons College, declined to comment on the negotiations. Michael Palmieri, president of Havenwood, didn’t respond to telephone calls requesting comment.

“Counsel for the community continues to be of the view that there is strong legal basis for the community’s position that it properly terminated its Lehman Swap on Sept. 16, 2009,” Havenwood said in notes accompanying its financial statement.

Many of the disputes are based on differences of opinion on the value of the contract when it was terminated, Weeber said. Nonprofits, municipalities and companies argue that they would get less favorable terms from new counterparties than they did from Lehman and therefore should owe Lehman less, he said.

“A lot of it goes to what is the value of the replacement trade,” he said.

When the disagreements can’t be settled out of court, Lehman has sued.

SilverSurfers · May 19, 2013 - 11:21pm


Turdistan. Jessie had, force sales or market manipulation. Then, 5 minutes later it seems it was rewording, suggesting he is afraid of getting sued. Who would think of doing that? I wonder. The pussy world of gold, at least there is one, manning up, and chowing it down.

Ringo Starr - It Don't Come Easy
CLE807 · May 19, 2013 - 11:25pm


In all honesty where would we rather be right now. Silver at 40, 60, 100? The only benefit to that would be that we could set back and feel good about ourselves. This is a gift, and I hope TPTB can keep this charade up for as long as possible. We all know where ends. Ask yourself would you rather be able to add cheap metal to you stack or stick your chest out and say "I told you so"?

The Watchman · May 19, 2013 - 11:26pm
Zoltan · May 19, 2013 - 11:27pm

Double OT Loved the Trololo Hat Eating

First of all I have it on good authority that we are all geeks (from Mrs. Z) Please put up the half eaten hat on Gold Dog's Raffle. Anyone want a good deal on a V12 Jag from the 80's (less than that in kilometers) please send me a PM. Need to get me some Trololololo tshirts. They are the shit (I hear this is a good a thing). Thank you Turd. You are the man. Z

Hagarth · May 19, 2013 - 11:28pm

@Occasnltrvlr Worse than you think

Now that you have come to that conclusion, read my above post to see what a Bankrupt Bank will do to its clients afterward.

Sure certain banks will fail. But just wait until they go after the little guys derivative hedges to pay their debts. 

This is going to be a SLAUGHTER for many many many years after. 

Any wonder why there is an attempt to rig peoples perceptions? 

Louie · May 19, 2013 - 11:30pm

Who has silver for sale?

Any of the reputable dealers have silver in stock for immediate delivery?

Tulving seems to have pulled all inventory, both gold and silver. 

Not interested in pre-ordering for possible future delivery. Who has it (for close to spot) that can deliver soon? Anyone have any leads?

TechTrade · May 19, 2013 - 11:35pm

Cheap Metal

It's only good adding "cheap metal" if at some point it goes higher. All those who stacked and bought "cheap" at 30, and 26, etc., aren't thinking it's so great now. How cheap will tonight look if it's at 18 by August. Or 15? Regardless of how much the fundamentals seem to favor an eventual appreciation of gold and silver (and hey, I bought my physical on that basis, just like everyone else), you also have to be realistic and look at the worst case. "What If" silver at 50 was it? What if silver drops to 15, or 10 and then stays there for 5 or 10 years? I have insurance, I'm hedged short for the short-term decline to 18. Hell, bring it on, actually. But if there's not some point of bottoming on the monthly chart and indicators in that 15-18 area within a reasonable time frame, I'd have to at least consider lightening my exposure and look for something with better and more realistic terms. 

After all, you can always buy back in on a stop once / if upward momentum comes back. Trying to pick a bottom in this market - it will kill you, without a doubt. With this kind of downtrend, there will be a bunch of basing required to get it turned around. There will be plenty of opportunity to buy, once the safe hits the ground and settles. With this gap down, classical chartists I would think be saying that silver will fill the gap at 22, and then head for lower prices. I think these type of chartists / position traders saw that weekly low close on Friday, and just said sell, sell, sell tonight. From what I've seen so far, they're on the right side of things.

CLE807 · May 19, 2013 - 11:35pm

15-20 days

jm bullion says 15-20 days

maples under 25.

Utilitarian · May 19, 2013 - 11:36pm

@Hagarth It is worse than you think

Included in the group of no more bail outs will be the FDIC. Just think about walking down the street after people loose their checking accounts, most of the bank accounts, overnight accounts for payrolls gone. ... These sites are our savings grace.

Thanks Turd

AlexCojones · May 19, 2013 - 11:50pm

Last LCS Report 4 Awhile

Drove out to East Phoenix Fri & Sat for AU/AG fix. Junk face plentiful at $18.70. Bought a few AU/BU Franklins, my new coin of choice thanks to JB. 50-70 slick silver dollars for $26 each (Buy at $24). Dozen nice 2013 Sunshine Buffalos at $3 over spot. One dozen; all the generic rounds. Always LOTS of numis. Friend bought a 2001 silver Panda for $39 and a 2013 for the same price.

50-60 gold coins of various weights. Some St Gaudens and one 50 peso. Today's prices for 1/4 oz AGE, CML and gold Panda for $367 each. Friend bought two 1/4 oz gold Pandas. Surprisingly few customers for a Saturday. Met a Vietnam vet named Quentin who was a USMC medic there in country, 1969-70. LCS owner also Viet vet (and holds two Masters degrees). As for myself, I kept Texas from being overrun by Chicoms.

Quentin told some graphic stories of graves duty, body ID, through teeth, for the badly disfigured. Gave Greg a copy of my novel, The Guns of Dallas as a going-away gift. Will miss my LCS.  Xavier's on Power Road. Always interesting people there.

Next Report: Kodiak Alaska


jolidacrown · May 19, 2013 - 11:50pm

Turd now joins MSM -

Turd now joins MSM - declaring metals have sunk lower than imagined - the u tube video may not have been a good idea - it will just float out there for all the naysayers to use at will.

Zoltan · May 19, 2013 - 11:51pm
bunnytoujours · May 19, 2013 - 11:52pm


i ' m a little drunk but this is very funny right now cheap silver oz. on me coming to you

chin up bastards

stealthbear · May 19, 2013 - 11:54pm

Hat trick letter

Anyone who subscribes to Jim Willie's Hat Trick Letter having problems accessing the site? I got on earlier this afternoon and started reading the current report, but had other things to do, so didn't get very far. I have not been able to access even the free portion of his website for the past 6 hours. I get a "403 forbidden" error when I try to access his free site and the paid portion.

The Watchman · May 19, 2013 - 11:54pm
Magpie · May 19, 2013 - 11:55pm

The mint has determined what the value is...

could we end up there, or lower, before the government begins confiscation?

Mamboni bunnytoujours · May 20, 2013 - 12:06am

Turd ate his hat? The bottom indicator?

Mixed emotions tonite. Glad I own physical. But, I'm wondering if the metals markets just died. TPTB are taking gold and silver to the woodshed with absolutely to concern about the real world consequences for Main Street. They will bankrupt every precious metals miner and every metals exchange at this rate. Is that the intent? They'll be able to seize every miner for pennies on the dollar and completely control production. Without a paper price discovery mechanism and the miners virtually nationalized, are they determined to wipe the metals off the markets entirely? Perhaps gold and silver go totally underground for private barter only. Perhaps they got tired of fighting the metals and decided on the final solution: extinction. It seems to me that the fates of gold and silver are in the hands of the BRIIICS now. It seems clear, at least to me, that TPTB in the west are no longer satisfied with price suppression. This is a contest to the death of gold and silver.

Go easy on the salt Turd - not good for the blood pressure.

The Watchman · May 20, 2013 - 12:11am
Jan Roos · May 20, 2013 - 12:11am

My Concern

If you look at this char you will see that Silver stayed under $9 from 1985 - 2006. That's 21 Years of silver doing nothing. What if they do it again at like $15? Why couldn't that happen again? Don't say shortages either because that has not been proved yet.

· May 20, 2013 - 12:12am

Planter- my 2 c on the symbolism

If a guy can stand- up, admit he was wrong, and poke fun at himself while doing it, that earns my respect. Few metals Gurus would have the integrity to stand by it, but TF did, with grace and good spirits. So I think I got. Different message then you did- to me, this symbolized character, and humility. Good qualities for a guy running this show to have.

ScottJ · May 20, 2013 - 12:15am

Massive volatility...

Massive volatility downwards (price swing with respect to time and to the average price swings that were once common even as little as 2 years ago) sets the stage for massive volatility in the other direction as well.

Volatility implies volatility not lack of action... especially this type of movement.

Strongsidejedi ScottJ · May 20, 2013 - 12:18am

@ScottJ - good to see you on the board

ScottJ - good to see you on the board with those good comments again.

I agree with your assessment.

I think we're in for some heavy duty "winds of war" type of events in the next six weeks.

I'm not predicting outbreak of major skirmishes and violence, but the presages of war.

On the other hand, I expect continuing suppression in gold and silver futures contracts over the next months.

ScottJ · May 20, 2013 - 12:21am

Probably close to major economic event...

Than many think. I have even questioned my orignal timeline but lets be honest and logical for a second. Once the bond markets go everything is going to get dicey instanteously quick... you can't fix lack of confidence with more manuevers that caused the lack of confidence in the first place.

 Look for war to escalate in this time period.. and for those who move against the petro-dollar to be blamed in some manner. Do not be fooled or swayed by your emotion too much.

HappyNow Jan Roos · May 20, 2013 - 12:23am

Jan Roos - silver could very

Jan Roos - silver could very well repeat the 20+ years' performance that you see on the chart. If that happens then $14 or so is a very likely number.

If that worries you then don't wait for someone to argue with you that it "can't happen". Instead take action now.

Mickey · May 20, 2013 - 12:25am

ZLS just making a parabolic move up

Is this the final blow off for ZLS?

Lurker · May 20, 2013 - 12:27am

No shortage at these prices :-(( has ASEs available for less than $4 over paper spot. I would have hoped for some divergence in paper and physical prices at these levels. PSLV now has a negative premium. What is going on here? If there is truly any kind of a shortage, why are we not seeing it being reflected in the prices?

AlexCojones · May 20, 2013 - 12:27am

Thanks Watchman - Really Appreciate That

And here's one from me to you -

Really applies to ME, since in many ways I'm like the Cowardly Lion when it comes to the open road.....

Karankawa · May 20, 2013 - 12:28am

@ The Watchman

Submitted by The Watchman on May 19, 2013 - 11:51pm.

What is so impressive about Ghandi, is that he had the faith to stand his ground so very elegantly for so long. Change did come because of his efforts but I don't think that was his true accomplishment, his teachings are recorded for history. The same with Dr. Paul.

I can plug in a 'spot' price of silver and measure my worth by their system tonight. It's obvious to me that a country that once carried honest money in their pockets has been ripped off on a massive scale.

The bad guys HATE the idea of people trading value for value. The current system can't endure that thought. Hense all the political BS (that is going wrong) with people waking up.

I pity the common folk in Aphganistan that just want to live their lives and settle their own differences amongst themselves, they have been occupied for a very long time. Watching this was both heartwarming and terrifying, but I'm glad I watched it.

Please understand that I'm replying in support of your excellent efforts here.

Only when people establish their own values as to what they will trade, will this morally corrupt system cease. We are one step closer, because this take down is shaking out a lot of people that bought in, for the right reasons ... but really didn't understand it.

If they sell tomorrow, they are the true losers.

Regardless of what happens to the price of silver (which I think in becomming key), people are waking up to the corrupt monetary system.

G. Edward Griffen has been exposing this for a long time. Ron Paul hit the scene and educated a lot of young people to realize the big picture for their future.

Of course their grand parents mostly just want to post Obama Bad FWD's, forgetting everything about our countries foundation. Normalcy Bias is All They Know. And the people on EBT cards are the same. It's the SYSTEM that is important.

It's an age old battle, and we are winning the culture war.

The bad guys crush the paper price of silver, because they can't control it's exchange. Exchange of Value for Value is what America was built on, and why we aren't Aphganistan.

Watchman, I don't frequent this site every day, but when I do I always find your 'picture worth a 1000 words' absolutely informative.

Thank you for your efforts, Sir.

ScottJ Strongsidejedi · May 20, 2013 - 12:30am



I do not think the major war-time event will happen until some sort of bond crisis manifests, which won't happen just yet in my opinion (a few more warning signs will probably play out before that.. im looking at Syria and Yemen bringing in eastern world vs western world tension)... but the pressure is building... comparable to the moments before a volcanic explosion.

Timing may matter in terms of what you do before the volcano erupts, but once it erupts, if you are not 2 steps ahead of it you will be engulfed. Arguing about when it erupts is fine and dandy, but you better not be too late if you are able to act on your knowledge beforehand.

With that said... mentally preparing yourself may be just as if not more important than physically preparing oneself...

I am always lurking :)

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