Sunday pre-game 11/27

*Update: Please be sure to see victor_the_cleaner's arguments in the comments as to why he thinks the euro zone is unlikely to fall apart. Discussion welcomed.

Happy Thanksgiving, everybody. While my family was stuffing themselves with turkey, I was busy poring over these charts, and this is what I came up with.

I'm bullish on the metals this week, which I guess puts me in a minority of one. In fact, if silver doesn't jump overnight, I will buy some out of the money call options on SLV tomorrow. Yes, I agree, this chart looks bad (and recall the falling wedge I also drew on this same chart last week which suggested a fall to $26):

But, look at this YTD chart with daily closing points only:

Then, one of my long term charts also indicates we're at strong support:

The $SILVER:$USD chart is also about at major support:

While the $US10Y:$SILVER chart (a proxy for the worth of a coupon payment in silver) looks like it will make one quick move to the top of the purple channel before a rally, or else, follow the new dotted channel down this week.

On the weekly gold chart (first chart below), I suppose a fall to $1630 may be in the cards, although it might be the case that (on a closing basis) the lower black trend line has shifted up $50, which would be similar to how the 144 day MA on the daily chart appears to have shifted up by that amount (see how the purple dotted line on second chart below has been strong support since January):

Monthly gold looks to me like we're at strong support to close out November, ready for a breakout to the purple line in the months ahead:

And the $GOLD:$USD chart looks about ready for a rally, which one would think would come more from gold strength than dollar weakness:

I think how you play the metals here (or whether you play them at all) really comes down to your risk appetite. A catastrophe (e.g. out of Europe) seems at least an order of magnitude more likely than even in the recent past, in which case, in the short term, the metals might plummet. But I think the probability on an absolute level is much smaller than is being screamed from the rooftops. And barring a cataclysm, I don't think the metals can be pushed down much further. Let's see if I'm right.

Monday Night Charts

Once again I had a crazy week, though I'm happy to say I'm all moved in to my new place (though unfortunately now several work weeks behind) (lesson learned: moving sucks, which is a special case of the general law, everything takes 10X longer than planned). See, I decided to make a contrarian play and buy a condo. That's what contrarian investing is all about, right? Do what seems really counter-intuitive, even retarded to common sense. Since it seems obvious to me that soon (maybe in a few weeks) there's a good chance we'll all be skinning rodents with bowie knives and looking for animal hoof prints full of rainwater to slake our dysentery-driven thirst, what could be a wiser move than buying a well-appointed condo?

Speaking of contrarian indicators, I'm really enjoying the bearishness I perceive on the metals. I saw a comment from our friend Yukon Cornelius the other day, on Turd Ferguson's site, saying, basically, that the fear and dejection even there means it's probably a good time to buy. I agree. So long as these corrections continue to go as they have the past 3 years, with no serious technical damage, they are simply wonderful trading opportunities. Look at weekly gold: i predicted last week that we'd hit $1730 (center of lower channel), which was indeed where we closed the week. Then, had I had time for my typical Sunday preview yesterday, I would've said: it can go either way here, back up or back down to either trend line, but with options expiry on Tuesday, I'm betting on down. (I really would've said that, though if gold had gone up today, I probably wouldn't have told you I was going to say that). Now a continued fall to the bottom of the channel is very likely, although it may not necessarily happen this week. Be prepared for when we get there. This week, it would be around $1630.

On the daily chart, I'm really working in some nice colors, which is something that you must admit sets me apart from others who enjoy popping off about technical analysis.

Here's the interesting thing. The 144 day moving average (pink) is at $1650. So, my best guess is we compromise between the daily and weekly charts, and go down to the purple line this week, maybe tomorrow.

The great news is that the 200 day moving average (gold) (which is nearing $1600), is now at the red dotted line. That red line has been inpenetrable support since Jan 2009. So, if that gets broken, it means something catastrophic has happened, (although the term black swan should be retired because, let's face it, with criminal nihilists like Corzine and venal incompetents like [your senator's name here] running the show, some kind of world-historical catastrophe is a virtual certainty eventually, not some six sigma event or "tail risk" that the idiot savant (idiot saquant?) economists who will have blood on their hands like to talk about. A lot of good people around the world are going to suffer immensely for what? i'll tell you what, so that a bunch of glad-handing shit-eating politicians, effete parasitic bankers, and aspergery egghead economists, simple if not soulless creeps almost to a man, can live their sick dreams.

Here's the $GOLD:$USD chart, which looks like it should bounce off 21 in time for another gold rally.

As far as silver is concerned, it stubbornly refuses to fall out of this channel (on a closing basis) that I presented after the September takedown (actually I had posted the channel months earlier).

This version of the same chart (different trend lines) also shows support at 31.5, and as I mentioned last week, very strong support at $30 (on a closing basis):

But even if it goes down to $26, I'm not worried, because it means we have a descending wedge, which is bullish, and will signify a breakout within months. There is no silver bubble, and we are trading about as low as we can go, barring a cataclysmic deflationary collapse.

Other peoples money

This post is going to be a series of bullet points. I am going to put the dots out there and you guys can make what you want of them

1.Per Bloomberg
"JPMorgan Chase & Co. (JPM) is in “detailed” discussions with administrators to MF Global about acquiring its 4.65 percent holding in the London Metal Exchange, Sky News reported, without saying where it got the information." 2 days ago

2. LME has a few offers on the table from GS, JPM, MF Global (yes, you read that right) etc. This was a story from the Financial Times a few weeks ago. Below is the list of current shareholders with trading rights on the exchange.
3. If JPM acquires the MF Global shares it will be the largest shareholder of LME with 10.9 %
Shares of LME rarely come on the market. 
4. However, LME shareholders are expecting bids for the exchange worth more than £1bn, giving MF Global’s stake a potential value of as much as £47m ($75m).
5. LME is also considering being it's own clearing house
6. MF Global is dead and 600 Million is missing. Presumed to be residing with JPM who just happens to want to increase it's control of LME in the future and MF Global in the short term.

unfinished. Will add more later.

Herman Cain is a satrirical genius. Gold. Justice.

I was randomly flicking through the channels early this morning and came across this. It is the funniest thing I have seen in ages. Herman Cain's campaign is apparently an art project. Satire that goes beyond the clumsy scribblings of Jonathan Swift or Plato. High brow art that Banksy would be envious of. Enjoy!

Noteworthy stuff from Matt Taibbi in which he wonders why Wall St. gets bailouts and poor people get Jail time. Obviously Mr. Taibbi is Commie.
The cliff notes version is this vile, evil Woman lied on her application for food stamps and said she had no criminal convictions (drug conviction). She was caught in this web of lies that threatened the financial stability. Possibly the very fabric of of society. Fortunately she was caught and forced to pay back the $4300 and got a jail sentence of 3 years. It is unfortunate the Judge didn't force her to pay for her incarceration and foster care for her children as that will be extremely expensive and heap more burden on the state. Fortunately, in this country we value honor and justice above money so we won't concern ourselves with the math.

Full article here

The big picture

Demand for gold is rising by 6pc a quarter as investors around the world become concerned about the debt crisis. They are accumulating the metal to protect their wealth and this has pushed prices to a record, the World Gold Council said. Various forms of gold are being bought: some are buying into gold funds, while others prefer bars and coins.
Demand from central banks in 2011 may be the most since at least 1970.
Gold climbed to a record $1,921.15 (€1420) an ounce in London on September 6 and is heading for an eleventh consecutive annual increase. Central-bank and government-institution purchases jumped more than sixfold to 148.4 tons in the quarter, the council said.
Central banks may buy 450 tons for this year -- the most for any year since at least 1970.

Bill Downey has a couple of self explanatory charts from he also has some noteworthy commentary on his site. So click the link and take have a read.

Contingency plans being put in place for Euro Collapse

Merkel and Sakozy are known to have discussed Euro implosion and/ or two tier Euro system etc. so it's no surprise international businesses will do the same.

ONE of the world's biggest travel operators may ask Irish hotels to sign contracts agreeing to pay it in punts if the euro collapses or Ireland exits the eurozone.
TUI Group runs both and, booking rooms for well-known hotel chains including the Radisson, Clarion and Jurys Inn and tickets for the venues The O2 and Grand Canal Theatre.

The request has caused uproar in Greece, and the head of the Greek tourist board said no hotelier should sign it.
"TUI Travel always seeks to avoid any possibility of being adversely affected by currency and macro-economic situations and plans accordingly," a spokeswoman said. "This may mean that from time to time we seek amendments to contracts with our suppliers".

*****Expect to see this trend accelerate*****.

All you need to know

Jim Sinclair has a little something, something from Alf Fields.
"Once this correction has been completed, Intermediate Wave III of Major THREE will be underway. This should be the largest and strongest wave in the entire gold bull market. The target for this wave should be around $4,500 with only two 13% corrections on the way."
Alf Fields latest

Now where have I seen this 40 years in the desert Moses theme before

Moving swiftly along;
Martin Armstrong also has a little something to say on the matter

Bart Chilton on CNBC this morning talks about MF Global and Ponzi Schemes

Photo from outside the Paris Stock exchange with fake EU500 notes.  

Monday pre-game 11/14

Hello friends, and sorry I'm late with my weekly metals preview -I've been busy moving. In fact, I'm only half done so I will have to be brief.

I held my gold position into the weekend, which was risky. I'm looking to take profits this week. A test of $1730 this week seems likely (see dotted blue line on weekly chart below). I expect it to hold.

Similarly, on the daily chart, we're at upper resistance:

I expected silver to have a more emphatic upwards move after breaking out of its symmetrical wedge last week,

but as long as it stays over $34 (above lower trend line of wedge), I'm very bullish.

On the long term chart below, note how the red line continues to be strong support.

Also note the steep-sloped purple dotted lines have crossed the $30 level. In my opinion, it will take a serious deflationary catastrophe or some hardcore manipulation to send silver below $30 now.

Iceland's new banking disaster

Naked Capitalism has a great piece on the current state of Iceland. While we all thought they voted themselves off the hook by telling the UK, the Netherlands, IMF etc. to go $$^^$# themselves it appears that a vulture fund(s) bought the debt at pennies on the dollar and is now going to chase individuals in Iceland through the courts. This is the same script that these vultures used in Africa. Buy debt that was assumed to be junk then chase either the country or it's citizens through the courts and force a settlement way above the pennies paid. These vulture funds are onions wrapped in enigmas in that no one knows who these animals are.
The Icelandic people are now faced with emigration or 50 years of debt because the Krona isn't worth a damn and they can't discharge their mortgage through bankruptcy.

Creative Destruction by Martin Armstrong

Copyright Martin Armstrong All Rights Reserved November 9th, 2011
Italian Head of State Berlusconi Pledges to Resign
What is Really Going On? Is this schumpeter’s Creative Destruction?

The euro strengthens against dollar after day of drama that saw the
Italian prime minister lose his majority in parliament as pressure mounts on the Italian bonds.
Unfortunately, what is going on behind the curtain is just sheer chaos. Europe now hinges on the Merkel Government in Germany. What has been done to Greece and now the financial chaos that spreads to Italy, on the one hand people can cheer that some progress seems to be unfolding, but in truth, these may be two heads of state that have just had enough. Berlusconi has been in court over 2,000 times. He has been said to have been linked with an under-age prostitute. Nothing has been able to get him to leave until this financial crisis. He has vowed to resign IF they pass these austerity measures. Nobody seems to see what is really going on? Here is an email from a good political source there right now in Germany. 

This is an email from a political contact there in Germany right now
“I can tell you that the political class here finds the failure of the European project to be
unthinkable. That being said, they absolutely told Greece that they would be thrown out of the
monetary union (not the larger EU) if they went through with the referendum. Their plan seems
to be to muddle through one crisis at a time and count on time to make things better. They look
to keep doing that as long as the Merkel govt is in election for 2 years, unless the govt
fails. That won't happen easily because both parties in the ruling coalition know they would lose
badly if elections were forced now.

So my take so far is that will keep doing what they have been doing until they can't any more.
How soon will that be?
You know better than me! “
Europe is in an authoritarian mood. Politicians everywhere are sitting on their hands because they
believe that if they do nothing and maintain the status quo mixed with austerity to save the bankers
somehow we will grow our way out of this one as before. The problem is they fail to distinguish between a private generated financial crisis and a Sovereign Debt Crisis where they are the problem. Berlusconi is pledging to leave because he has had enough and is not interested in going along with this insanity.  
The people are just not to be given a right to vote on any of this and if the system can grow out of it, in
two years everyone will forget about it – that’s the plan. To clarify why I have been critical of the
austerity in Greece and the property taxes, Schumpeter describes the Business Cycle as a force of
Creative Destruction. These are periods of tremendous economic transition. It is one thing to impose
property taxes and insist upon government reducing its work force that sound like solid conservative
economic advice for Greece. However, that presumes there are private sector jobs waiting in the wings.
What is taking place in Greece is that there is no private sector alternative at this time. Laying people off is one thing. To impose then property taxes that are due irrespective of income then subjects those
same people to massive waves of foreclosures for failure to pay the tax. The US Great Depression was so bad NOT because of the stock market crash, but (1) the sovereign debt crisis that wiped out savings and reduced capital in the USA contributing to over 3000 bank failures, and (2) the Dust Bowl that eliminated agrarian jobs when agriculture accounted for 40% of the civil work force resulting in the “hobo” lifestyle.
It was WWII that provided the “transition” reducing unemployment and transformed farmers into
skilled labor. The Great Depression after the Panic of 1857 was followed 4 years later by the US Civil
War, which was also the “transition” at that time relieving unemployment. 
Today, there is no plan. There is no transition, only austerity. The politicians are doing NOTHING
whatsoever for any reforms they reject because it would change the way they have been doing business
since WWII. Italy’s debt is bigger than Spain, Portugal, and Greece combined. It is too big to be bailed
out and there is no PLAN B to even address what happens if sitting on their hands blows up in
everyone’s face? Stay away from ALL government debt! This is a wave of Creative Destruction. We are in a transition to a completely new world ahead.

Robin Hood Tax (update)

Ireland's Minister for Finance Michael Noonan argued in favour of a financial transaction tax at today's Ecofin meeting and dismissed a compromise proposal that it should only be levied in the eurozone.

 “We think there should be a tax on the financial sector, after all countries all over Europe including Ireland have paid a lot of taxpayers’ money to support the banking system. There must be a day when it’s payback time for the taxpayer,” Mr Noonan told reporters after the meeting. 

"Robin Hood" seems to be gaining momentum. From this jackass though it's Obama style pandering to the voters whilst tossing banker salad.  The reason I say this is because he is one of the morons who was, and is, willing jeopardize the stability of Ireland to bail out the likes of Goldman Sachs. It also deflects talk from the appointment of another jackass who lost, then found, 3.6 Billion Euros from NAMA (the dumping ground of toxic assets in the Irish Republic) (more on that later).

It's out there now and not just a minor talking point. We are at the point in the cycle where govt.s are scrambling and willing to lie, steal and turn on each other and their banker paymasters to preserve themselves. See below especially the commentary on Greece and the imposition of property taxes etc. 
We are all slaves.
I am getting pretty pissed off with all the lies.

Italian PM ready to resign. Greece ready to default.

Berlusconi's notes during the budget vote in parliament.  One of the phrases he noted down was "I understand, I resign" 

Occasionally there is a comment on ZH worth reading and this one is one of them.
The situation in Athens is bad (I haven't been around the rest of the country).The city is clearly in a depression. But what I keep telling people who ask me about it is one has to put the Great Depression into context. There were soup lines and bread kitchens and those are the images that time conjures up. But you also had some of the greatest clubs in the world operating like the Cotton Club. So although there is a depression in Greece it's not the equivalent of the end of the world or War of the Worlds type scenario.
When one walks through Athens about 20% to 25% of all business have shut down. There are empty shops left and right. If one goes out to nightclubs you notice that although people do go out they'll only buy a drink and slow sip it. Any business operating will tell you that even if they are profitable they've been massively hit by new taxes. Most business are owed massive amounts of money by customers. Crime has gone through the roof. Roberries, assaults, burglaries are up hundreds of percentages. In fact the only businesses reporting bumper profits in Greece are security companies. Crime is massively underreported in the statistics (who would've thought Greece would provide false statistics about its crime) but when watching the news or reading the paper the amount of circumstantial evidence of higher crime is overwhelming. Also stories from friends and family abound of victims of crime.
The real turning point was the 28th of September in Greece. The 28th is the equivalent of the 4th of July in the US. It's known as "NO" day, which is the day Greece refused to surrender to the Axis powers. Citizens were attacking politicians and blocking military parades in every city of the country except Athens. The Athenian city marching band performed with black ribbons on their instruments. Students walking in the parade in Athens would hold up black handkerchiefs when passing the politicians on the stands outside the parliament. Here is some video footage:
So after the 28th my best guess is that all the politicians but especially Papandreou realized that they had completely lost legitimacy. The system no longer works in Greece. There is simply no light at the end of the tunnel for most people. You have to remember that Papandreou's government has been characterized by almost a split personality disorder. He got elected on the promise of "there is money out there". He kept repeating after each bail-out package that there wouldn't be anymore austerity, then he'd implement more austerity a month later. This has happened so repeatedly that the entire population thinks the man is incompetent. In the meantime since his reign began the Greek economy has shed over 300,000 private sector jobs. Sales tax has gone from 18% to 25%. The latest emergency tax, which was a 10% surcharge on monthly income and a property tax was included on people's ELECTRICITY BILLS!!! So if you didn't pay the tax they would shut off your electricity. It's just absolutely insane.
In the meantime the public sector hasn't shed a single-job. Now that the government is even considering cutting 30,000 public sector jobs by 2014 all hell is breaking loose on the streets again. So the situation is beyond insane. I actually agreed with Papandreou's referendum and the Greek people really should be asked "do you want to default or do you want more austerity". It is time for the people to make the responsible decision for themselves. And underlying a lot of the anger in Greece is the realization that despite all the austerity, the higher taxes, the firings, the constant riots, the rising crime, that more debt is still being added on and that there is no end in site. If you ask most people "will it be better ten years from now" they'll tell you no, it'll be worse.

Below a photo of what the Italian PM wrote.

Occupy Brisbane

The ‘occupy movement’ reached all the way down here to the antipodes, a long way from New York and it is unclear exactly what they hoped to achieve in this little country town. What they DID achieve was damaging the grassed area of city hall, with a bill to the taxpayers of an estimated $30,000. Some recursion there – where the taxpayer gets screwed picking up the bill for the damage caused by people protesting the taxpayer getting screwed. I would protest against the protesters except I’m too busy working to try and pay the bills and tax.

I haven’t seen the damage yet, but I suppose it is minimal – the local council here always looks for a way to give pork barrel contracts to their friends … like the $385 they want to charge for removing a small sapling blocking our new driveway which would take me all of two minutes to chop down myself except they won’t let me.

A few days ago outside our house we got a strange graffiti in the form of a Vendetta mask image spray painted onto a power pole. We saw them do it and were a little disturbed because it really looked like some kind of ‘death marker’. I still hope it was part of the Occupy Brisbane movement and not some secretive cultist symbol. Curiously the image has now disappeared – my assumption is the local police caught up with the vigilantes, charged them with graffiti and forced them to remove the images (which I assume were widespread, otherwise what was the point?). To all you 'occupy Australia' people planning your next series of brilliant moves, please keep off the grass. I'm still unsure about Brisbane's contribution to the global ponzi. And I still think the best form of protesting the system, is to possess physical gold :)

Good progress with the data routines – the download/extract/database load/cloud archive is now fully automatic. I am currently designing the unified serial bar number – i.e. a common unique key for all bars both silver and gold.

How Washington really works

Sunday pre-game, 11/6

There was a really important event yesterday.

No, not the ambiguous notice sent off by the the clowns at the CME (though anyone with any paranoid ideas why margins were lowered please feel free to share), but rather that the commissioner of the CFTC went onto King World News -- what can fairly be called a precious metals propaganda outlet -- to say explicitly that the silver market is manipulated.

Now, he has said similar things in the past, but by going onto KWN (which, the name notwithstanding, is not a "news" outlet), and speaking so emphatically, he immediately legitimizes the extreme view held by that websites proprietor and most of that websites guests and listeners. He doesn't necessarily have to agree with the view that the entire silver market is a criminal farce (he probably doesn't), but by appearing on the show for an extensive, sympathetic interview, he has granted GATA and the conspiracy theorists a major victory: their view can no longer be sneered at by the Jon "Go" Nadlers and Bob Moriarty's of the world, and moreover, if journalists continue to ignore their accusations, they are now guilty of shameful negligence and dereliction of duty.

Now to the charts. The black line I drew on the daily silver chart (posted a few days ago) continued to be resistance. Until that line is cleared, this silver correction is not over. How many more attempts will it get?

So, I'd be bearish on silver, except the following charts (with slightly different trend channels) suggest that a fall below $31 from here is unlikely.

Note how the red line was effective support at $33, as I predicted last week. Also note how the lowest black line should provide strong support at $31-31.5

$31-31.5 is also strong support on this chart:

On the daily gold chart, I've drawn a thick horizontal line at Jim Sinclair's $1764 level. Yeah, I too find his "angels" corny as hell, but they have predictive power (e.g. last week I said not to expect a big week in gold based on the $1764 level, which did indeed turn out to be resistance, repeatedly). Note also that I have drawn a dotted pink trend line; I predict that will be the new "line of best fit" for the 144-day MA (same slope, just shifted $50 up). Note also how the price of gold hasn't gone significantly below that line for almost a year.

History says: expect the weekly chart to at least touch the center black line (~$1780), before a correction down to the $1650 level (lower black line).

$1650 is also where the lower line of the wedge is on the monthly chart right now:

And a different view of the monthly chart. I think we're once again headed to the top of the blue channel.

Bill Downey Gold and Silver Daily Charts

In last nights website update resistance was listed at 1765-1777 and the high so far today is 1764. Support was listed at 1744-1755 and the low so far is 1750

Trades --- Long gold from 1724 --sold 1/2 at 1735 -- have stop at 1719 intra day
Long silver from 32.87 & 33.60 ---sold 1/2 at 34.30 --- have stop at 32.87

News this morning --- most equities down hard ---- metals in very choppy trade over last 12 hours.

Global leaders and G20 are meeting ---and My speculation is that something has to be worked out with the IMF over the weekend. So far Merkel said this morning that they can't come to agreement on IMF Funding.

Italy PMI 43 and Spain PMI 42 ------ going down and what can we expect when they go into Austerity program. This makes the German economic numbers today (which were not good) more important to the global condidtions. The credit tightning and austerity and the "liquidity" issue is coming to a head. There is news that ITALY REFUSED IMF AUSTERITY this morning.

In Greece --- the confidence vote is on for today as to whether he stays or goes.

The real issue here is do the BANKS have to sell off assets and cause FORCED selling? And what of the MF Global mess ? The customer segregated accounts were compromised --- and customers have not seen their funds transferred at the moment.

Going back to G20 and the IMF --- it would seem they have to come up with something overe the weekend. When the USA went off the gold standard --- there was a basket of currency created called SDR's --- special Drawing Rights. But it was never used as the Saudi's and USA made a deal ---- Oil will only be sold in US dollars ----thus keeping the US Dollars reserve status. But could there be an infusion of SDR's to bail out Europe ? It would seem that the G20 and IMF have to agree on something. I'm not sure what the impact is for gold ----------and whether its 100 dollars higher on Monday --- or lower --- or unchanged. The one thing that is sure is the noose is tighning on the "liquidity" problem.

Thus I'm very mixed on whether I want to to hold my trade position over the weekend. I'll send out an email before the close to let you know if I will hold the positions.

Going to the chart

Gold has reached important resistance just about reaching the 61% retrace --- but missing by a few dollars. The only decision really for me is whether I want to be long this weekend with the major "G20" meeting ---and it is a crisis meeting. From a chart perspective -- the move up since the low has been choppy and overlapping up until last week. The question is whether gold begins a pullback from this area ---- or from the 1800 area. While long term positions should be held -- the "trade" position is another question all together. The very short trend is still up ---- but coming under fire today as the UNCERTAINTY of the "liquidity" situation and decisions that will be made this weekend in G20 -- and whether traders want to remain long. I think the uncertainly could very well keep us in a choppy trade thru the day and I don't think we can rule anything out going into Monday. I'll email near the CLOSE of GLOBEX on my final decision on whether I'm holding over the weekend. Support for the remainder of the day in gold is the 1739-1747 area and resistance is the 1763-1773 area.

Gold Trends Intra Day Silver Update - Nov 4

It's the same story for silver as is for gold. Silver has been much weaker than gold so it is best to remain cautious.

The market looks a lot more vulnerable than gold.

Going to the chart

Price has reached the edge of the wedge --- and its decision time for silver. Support is the 32.50-32.90 area for today, but that is minor support. Resistance is the 34.50 area. The overall pattern still shows choppy and overlapping --- thus we should remain cautious. I'm mixed as to whether I want to hold "trade" positions over the weekend. I'll email near the Globex close when I make that decision. In summary -- the market is nervous and we can't rule out anything. It would seem this is the area that must be exceeded if there is to be some upside next week. REMAIN VERY CAUTIOUS. The "liquidity" situation is a serious one.  

Back into silver?

***Very Important Update: The reason I always go solo to Vegas to play poker is that few things annoy me more than having to listen to some dude talk ad nauseam about his bad beats. Well, re-reading this post, I've become that guy. So, unless you enjoy that kind of thing, please feel free to skip right to the chart, the take home of which is, I'm watching the black line and the three levels of horizontal support for cues to re-entry into this market. I'm keeping the post up though because what good is having a blog if you can't use it to vent hyperbolically on occasion? ***

I've been kind of pissed the last couple of weeks, feeling like a chump for being shaken out of my paper silver position last month. But hey, unlike the sneering holier-than-thou anti-silver crowd who will go to their graves denying manipulation, I am a natural skeptic who considers all viewpoints, letting data determine my theories and not vice versa.

Once silver saw a 42.5% fall from its September high (35% in two days), I decided to sell into rallies against my instincts, just in case silver really was the bubble the John Nadlers of the world have said it was ... Don't get me wrong- they strike me as the most contemptible of scumbags, men fit to hang, not to trust - but then the chart was what it was ... it looked like the canonical bubble chart we've all seen, and this recent cratering looked like the final bull-trap falling apart. I had to concede that maybe silver was indeed the industrially overrated, widely available, stupid investment the anti-silver bank mafiosos (and their loathsome groupie shills) have maintained.

Well, as I've been bitching about of late, it's looking like a masterful chart painting job to me now. I said on Sunday $33 should be pretty strong support ... it was, and I entered into a small position at that point. But watch the black line on the chart below. If that's broken to the upside, I'm all in silver. And this time the fuckers won't shake me out if they run this thing down to $5.

Btw the circled points are the February 24 criminal raid, the Fukishima sell-off, the May massacre bottom, and the summer, pre-rally low, all buttressing the two nearest horizontal levels of support to watch.

India to bulid a Thorium Reactor

From the UK's Guardian Newspaper. About damn time someone started taking Thorium seriously.

India plans 'safer' nuclear plant powered by thorium

Use of relatively low-carbon, low-radioactivity thorium instead of uranium may be breakthrough in energy generation
    Thorium nuclear power plant in India : Engineers at Bhabha Atomic Research Centre (BARC) in Mumbai
    Engineers at the Bhabha Atomic Research Centre (BARC) in Mumbai, India. Photograph: Pallava Bagla/Corbis
    India has announced plans for a prototype nuclear power plant that uses an innovative "safer" fuel. Officials are currently selecting a site for the reactor, which would be the first of its kind, using thorium for the bulk of its fuel instead of uranium – the fuel for conventional reactors. They plan to have the plant up and running by the end of the decade. The development of workable and large-scale thorium reactors has for decades been a dream for nuclear engineers, while for environmentalists it has become a major hope as an alternative to fossil fuels. Proponents say the fuel has considerable advantages over uranium. Thorium is more abundant and exploiting it does not involve release of large quantities of carbon dioxide, making it less dangerous for the climate than fossil fuels like coal and oil. In a rare interview, Ratan Kumar Sinha, the director of the Bhabha Atomic Research Centre (BARC) in Mumbai, told the Guardian that his team is finalising the site for construction of the new large-scale experimental reactor, while at the same time conducting "confirmatory tests" on the design. "The basic physics and engineering of the thorium-fuelled Advanced Heavy Water Reactor (AHWR) are in place, and the design is ready," said Sinha. Once the six-month search for a site is completed – probably next to an existing nuclear power plant – it will take another 18 months to obtain regulatory and environmental impact clearances before building work on the site can begin. "Construction of the AHWR will begin after that, and it would take another six years for the reactor to become operational," Sinha added, meaning that if all goes to plan, the reactor could be operational by the end of the decade. The reactor is designed to generate 300MW of electricity – about a quarter of the output of a typical new nuclear plant in the west. Sinha added that India was in talks with other countries over the export of conventional nuclear plants. He said India was looking for buyers for its 220MW and 540MW Pressurised Heavy Water Reactors (PHWRs). Kazakhastan and the Gulf states are known to have expressed an interest, while one source said that negotiations are most advanced with Vietnam, although Sinha refused to confirm this. "Many countries with small power grids of up to 5,000 MW are looking for 300MW reactors," he said. "Our reactors are smaller, cheaper, and very price competitive." Producing a workable thorium reactor would be a massive breakthrough in energy generation. Using thorium – a naturally occurring moderately radioactive element named after the Norse god of thunder – as a source of atomic power is not new technology. Promising early research was carried out in the US in the 1950s and 60s and then abandoned in favour of using uranium. The pro-thorium lobby maintains this was at least partly because national nuclear power programmes in the US and elsewhere were developed with a military purpose in mind: namely access to a source of plutonium for nuclear weapons. Unlike uranium, thorium-fuelled reactors do not result in a proliferation of weapons-grade plutonium. Also, under certain circumstances, the waste from thorium reactors is less dangerous and remains radioactive for hundreds rather than thousands of years. That is a considerable plus for governments now worried about how to deal with nuclear waste and concerned about the possibility of rogue governments or terrorists getting their hands on plutonium. Also, with the world's supply of uranium rapidly depleting, attention has refocused on thorium, which is three to four times more abundant and 200 times more energy dense.. "Given India's abundant supply of thorium it makes sense for her to develop thorium reactors," said Labour peer Baroness Worthington who is patron of the Weinberg Foundation, which promotes thorium-fuelled nuclear power. She added: "However, many of the advantages of thorium fuel are best realised with totally new reactor designs such as the molten salt reactor developed Alvin Weinberg in the 60s. I hope India will also commit to exploring this option." India has the world's largest thorium deposits and with a world hungry for low-carbon energy, it has its eyes on a potentially lucrative export market for the technology. For more than three decades, India's nuclear research programme had been subject to international sanctions since its controversial 1974 nuclear tests. But after losing its pariah status three years ago as a result of the Indo-US nuclear deal, India is keen to export indigenous nuclear technology developed in research centres such as the BARC. There are still restrictions though. One problem is the "trigger fuel" the reactor needs to initiate operation. In the original design, this is a small quantity of plutonium. Instead the new reactor's trigger will be low-enriched uranium (LEU) – which India is permitted to import under the 2008 Indo-US deal. "The AHWR will eventually have design flexibility, using as fuel either plutonium-thorium or LEU-thorium combinations," said Sinha. "The LEU-thorium version will make the AHWR very much marketable abroad, as it would generate very little plutonium ... making it suitable for countries with high proliferation resistance." The LEU-thorium design is currently at pilot stage. For the first time last year, the BARC tested the thorium-plutonium combination at its critical facility in Mumbai, but is still some way from doing the same for the thorium-LEU combination.

Bill Downey Gold and Silver Daily Charts

MF Global by Martin Armstrong

Copyright Martin Armstrong All Rights Reserved November 1st, 2011
The Collapse of MF Global
Jon Corzine, who ran Goldman Sachs Group Inc from 1994 to 1999, has demonstrated when you do not have the political game rigged; merely working at GS does not mean you are smarter than the rest and immune to market swings. This is yet another example of how corrupt things are in New York. Name one scandal that the SEC or CFTC have EVER prevented? I can think of none. All of a sudden it now comes out that hundreds of millions of dollars are missing because the firm FAILED to segregate their own funds from those of their clients. You see, this is PRECISELY what was done to me by Republic National Bank;
they used funds for their own benefit and NEVER entered any entries in the records to show they were
tapping into the funds. How is it possible that the SEC and CFTC NEVER manage to ever find this stuff inthe New York banks that they regulate? Are they being paid off? Are any funds in a NY bank really safe?
You can only image what “MF” is now being called with those initials. Corzine tried to build MF into an Investment Bank like GS recruiting Michael Stockman, UBS AG’s former chief risk officer for the
Americas, Richard Moore, once Citigroup Inc. (C)’s head of European fixed-income, and Jon Bass, 49,
also previously of UBS, where he was a member of the investment bank’s board. With top talent, MF has gone belly up to such an extent, that the Australian futures exchange had to close because MF had somany open positions.
MF Global filed for bankruptcy protection after reporting a record quarterly loss and disclosing $6.3
billion of bets on the sovereign debt crisis. MF Global employed 2,870 people globally, according to their court filing for bankruptcy. Corzine remained bullish on the firm to the end, but when a trade goes bad, something you get married to a position and become blind. Corzine was also the former New Jersey governor who started at Goldman Sachs in 1975 on their bond desk before Goldman became an
aggressive trading firm in the ‘80s. Corzine became MF Global’s chairman and chief executive officer in just March 2010. He began to hire aggressively adding some 800 people when Wall Street banks shed 120,000 jobs. He was concentrating his hiring in the credit field while cutting equity jobs in Europe and Asia. He was trying to rebuild GS in its early days getting a base in fixed-income. He just a few weeks ago added high-yield bond trader Drew Meany from BTIG LLC.
As always, there is more to the story. We are also watching the collapse of the CDS market – those
things that cost $700 billion to bailout. The NY Banks are wiggling out of paying off on sovereign debt
issues on Greece. The clever issuers are reneging on the Greek CDS be saying a 50% haircut is not a
DEFAULT and thus is not covered. What is now taking place is the CDS prices are collapsing for you
cannot trust the banks that issued them. Yields are now rising even on Italy and a new phase of the
Sovereign Debt Crisis seems to be unfolding.
Speaking to institutions that bought the CDS to protect their investments, the most likely result is you
just have to sell and get out. Thus, yields on the sovereign debt are rising even in the face of ECB
intervention that has failed in the case of Italy. The CDSs are collapsing and smart guys are selling them while they can. So do NOT watch the CDS prices as any indicator of what is really going on. The CDS gave false insurance relief, but now when people expected to cash in, the banks change the rules. And you think you can sue their ass in New York? Good luck!
MF has lost a fortune and more than $6 billion in losses in Sovereign Debt issues shows if you shake
hands with the NY Investment Banks, you better count your fingers when you are done. MF stands for
the proposition that you can have the right idea and still lose.
The twist about they were using client funds to trade themselves, I would like to know, how can these
institutions do this and nobody picks it up until it’s too late? In my own case, $50 million vanished in an account where there was to be no trading. When I asked what happened to the money, the broker
slipped and said they must have put the Fannie Maes back in the wrong account. They were using my
accounts to fund their own trading. Because Republic was being sold to HSBC, they got away with it.
Now the MF had no buyers, this time it is out in the open. It is real dirty behind the curtain.

Ruh Roh! Shaggy take the Gold and run

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Some Charts from Bill Downey

Cash is king for most idiots today. My words not Bills. Got to for Bills words.

Greek Default by Martin Armstrong

Copyright Martin Armstrong All Rights Reserved November 1st, 2011
Greek referendum deepens euro zone crisis
Prime Minister George Papandreou decided to let Greeks vote on a bailout package -- a move that
shocked the markets, infuriated Europe’s Leaders, and threw Greece's entire euro zone membership
into question. The leaders of France and Germany have scrambled complaining that Greece was trying
to renege on the 130 billion-euro rescue deal that was just agreed at the summit just a week ago. The
November Panic Cycle seems to be on target and this is now more than just the fate of Greece, but of
the entire Eurozone. Italian bonds have fallen as yields are up 450 basis points. 
What the European leaders refuse to consider creating a single debt and insisting upon austerity that
will risk sending Greece into civil war or a dramatic shift to a nationalistic policy as was the case with
Hitler when similar austerity pressure was placed on Germany is placing the entire Eurozone at risk.
The Greek opposition demanded a snap election and financial markets took this badly, albeit too late to
save MF Global. Shares in banks nosedived as investors fled to the safety in the German bonds. The
efforts by the European Central Bank to support the Italian bonds keeping rates from rising utterly failed showing that the emperor has no clothes. 
French President Nicolas Sarkozy and German Chancellor Angela Merkel simply do not understand the risks they are taking could lead to the entire disintegration of Europe. You cannot kick the Greeks when they are down forcing austerity upon them instead of structural reform toward encouraging private business and shifting away from government employment. It is hard for Americans to understand because they are burdened with property taxes. This type of taxation is among the worst. If you lose your job and your house was paid off, you are still thrown out on the street because government still demands its taxes to line the pockets of government employees. You have no liberty. You home is not your castle for you can never really own anything when the state can take it away in the blink of an eye all in the name of making things better for you. The Greeks had no such tax. 
Thanks to the Euro Crisis,
unemployment is rising and now they insist upon property taxes that will result in making Greeks
homeless. And this is the solution to save the bond markets?
Most European leaser say the Greeks “must be crazy” and never look at the other side of the coin. This
whole thing is not working and whether the rest of Europe cuts Greece out of the Eurozone or the
Greeks cut the cord themselves, the markets are showing they believe Italy and then Spain will be next.
Europe is simply disintegrating and as that takes places, German exports to Europe will also collapse
sending Germany down the rabbit hole as well.
Europe would have to consider turning off the flow of money which is keeping Greece afloat. Greece at this point should just default and restructure its economy from the ground up. Europe just does not get it and they will never create a single debt to match the single currency that would retain the economic unity and each state going forward would stand alone on future borrowing. That is the ONLY way to save Europe as a whole.
European stocks were hammered and they punished the euro. Normally, the stock market rises as the
currency falls in a sovereign debt crisis. Right now, capital is running to the dollar and German bunds.
There is a risk in European stocks where companies dependent upon European trade could lose out in
this one if Europe breaks up for the trade barriers will return. European stocks will require close
examination sorting the wheat from the chaff.
The possibility of a disorderly Greek default spreading as the ECB’s attempts to prevent the debt crisis
CONTAGION are revealing the truth in Europe just as the Japanese kept waiting for government
promises to support the markets as a failure. Now Japan is trying to intervene to prevent the rise in the
yen cutting off their exports and worsening the economy. Meanwhile, Euro zone banks exposed to
Greece and other troubled economies have fallen sharply such as UniCredit, which collapsed by more
than 12.5% and France's Credit Agricole which fell by almost 10%.
Papandreou, whose ruling Socialist party has suffered several defections, has simply said he needs wider political backing. Politicians have to step aside for they are only voting for maintaining their own power and keeping the debt game going without any consideration of what they are really doing. This will no doubt send a wave of panic behind the curtain among G20 leaders meeting in France this week trying to convince China into throwing the euro zone a financial lifeline. If China does that, the entire world will be at risk because there is no long-term sustainability left in this current system of perpetually borrowing forever with no intention of paying anything off.
US leaders and economists are walking in the dark for they fail to comprehend that the Marxist-
Keynesian agenda is dead. In 1931, the first to fall was Austria. The US will not be immune from a Greek default because it will eventually become a CONTAGION taking down Italy and Spain and then capital will look around and ask who is next.
We are at the point of no return. Most politicians are lawyers. They are not even businessmen. They do
not have a clue what they are doing and pray that the economy will just grow out of this mess and it will be all over and back to borrowing as usual.

Switch on the printing presses

A couple of things lining up here. Keep in mind we are dealing with Sovereign, Credit crunch and bank default here.

Greece is screwed. Papaendrea is simply trying to be populist and abdicate responsibility for what happens next by calling a referendum. It's looking more likely that an interim govt. is going to be formed. Either way Greece is screwed because they are looking at 10 years of austerity right now as things stand. The Greek population understand this. The whole country may abdicate from Europe  which will of course leave them in an even worse position as no one would lend them a damn thing. They would be left to fend for themselves much the same way as Argentina and more recently Iceland have done. Decisions, decisions.

By forcing a haircut no one in their right mind wants to lend to lend to them so Greek bonds will have to be bought directly from the ECB or the Chinese lend and get get some sort of concessions. maybe a port or two or a shipping fleet as the Chinese specialize in Junk when it comes to ship building. Pun intended.
As soon as the EU late night meeting meeting was over on Wednesday there were flights headed to Bejing looking for 1.6 Trillion Euros.

What the Chinese had to say was telling. I'm paraphrasing here but they said "We support the Europeans but they need to get their house in order politically". In other words centralize your govt. and get your shit together. There has been no mention of going to the Fed.  It would be political suicide for the US govt to lend more money to the Europeans right now.

Portugal and the rest of the PIIGS figure this is as good a time as any to point a gun at their own heads in order to renegotiate their terms to get a similar deal etc. and threatening to pull the trigger. The rest of the PIIGS are also in a sad state as is the UK etc. To expect politicians to act rationally and in the greater interests of the EU is not going to happen. Please invert the picture below and remember if I owe you a thousand bucks I have a problem but if I owe you a Billion bucks you have the problem. So the rest of the PIIGS are pulling the "Nobody move or the Nigger gets it" con.

But there is one more piece of info to take note of and this chart says it all.
The Chinese might be ready to crank their own printing press right about now. The pressure is on as their own forced contraction appear to have worked.

So where are we at. Germany and France have tried to play hard ball but now they are dealing with Greece and Italy. If France Sovereign debt and Bank problems start to spin out of control then the ECB will print. Hell everyone else does it.
USA Printed. Swiss printed. Japan printed. China will print. Next up ECB and the UK. Then it's Ben's turn again.

EDIT: Just to be clear Europe needs, by their own estimation, 1.6 Trillion.
China needs Europe as it's their biggest market. Nobody right now is willing to lend that money. Solution: Print it. One last kick of the can. Or issue debt that cannot be repaid.