Duty, Honor and Bravery - Not in short supply in Japan

Picked up this story on the BBC. I'm humbled by this selfless act.

Yasuteru Yamada said people from all walks of life were welcome to join the group
A group of more than 200 Japanese pensioners are volunteering to tackle the nuclear crisis at the Fukushima power station.
The Skilled Veterans Corps, as they call themselves, is made up of retired engineers and other professionals, all over the age of 60.
They say they should be facing the dangers of radiation, not the young.
It was while watching the television news that Yasuteru Yamada decided it was time for his generation to stand up.
No longer could he be just an observer of the struggle to stabilise the Fukushima nuclear plant.
The retired engineer is reporting back for duty at the age of 72, and he is organising a team of pensioners to go with him.
For weeks now Mr Yamada has been getting back in touch with old friends, sending out e-mails and even messages on Twitter.
Volunteering to take the place of younger workers at the power station is not brave, Mr Yamada says, but logical.

"Even if I were exposed to radiation, cancer could take 20 or 30 years or longer to develop. Therefore us older ones have less chance of getting cancer.""I am 72 and on average I probably have 13 to 15 years left to live," he says.
Mr Yamada is lobbying the government hard for his volunteers to be allowed into the power station. The government has expressed gratitude for the offer but is cautious.
Certainly a couple of MPs are supporting Mr Yamada.
"At this moment I can say that I am talking with many key government and Tepco people. But I am sorry I can't say any more at this moment. It is on the way but it is a very, very sensitive issue politically," he said.

Certainly it is likely more workers will be needed.
The plant is still spewing radiation, nearly three months after an earthquake and tsunami knocked out its cooling systems, triggering explosions.
Its operator, Tepco, has now confirmed three of the reactors probably suffered meltdowns.
The plan is to bring the plant to a cold shutdown by January, although some experts believe that is over optimistic.
To cope with the disaster Japan has raised the radiation exposure limit for emergency workers from 100 millisieverts to 250 millisieverts.
But Tepco announced this week two workers at Fukushima might have already been exposed to more.
Many of Mr Yamada's veterans are retired engineers like him.

Michio Ito used to be a primary school teacher but is spending his retirement helping out in a cafe that offers work experience to people with learning difficulties.Others are former power station workers, experts in factory design - and even a singer and two cooks - Mr Yamada says they will be useful to keep his team amused and fed.
He is keen to swap his apron for a radiation suit.
"I don't think I'm particularly special," he says. "Most Japanese have this feeling in their heart. The question is whether you step forward, or you stay behind and watch.
"To take that step you need a lot of guts, but I hope it will be a great experience. Most Japanese want to help out any way they can."
Mr Yamada has already tried on his old overalls for size.
He says he is as fit as ever - with a lifetime of experience to bring to the task.
And he laughs off suggestions his proposed team is comparable to the kamikaze pilots who flew suicide missions in World War II.
"We are not kamikaze. The kamikaze were something strange, no risk management there. They were going to die. But we are going to come back. We have to work but never die."

What if ....

.... the facts change. Will you change your mind?
It's a simple question that everyone answers "Yes" to. But would you? Can you?
Are you capable of holding two opposing arguments in your head knowing one has to be wrong? Simply to fully understand the other persons argument completely. 
Well that is the position we find ourselves in here at Screwtape sometimes. Do we release the story or information even though it may not agree with our personal investment goals, or even the general good?  

Every trade has two sides. So you have to ask yourself why is the other guy selling that stock, house etc etc.  What is the motivation of every person posting a story, opinion, stock tip etc etc.
We will be publishing a couple of articles this week to force you to think and not take the easy way out of getting investment advice from anonymous bloggers. 

I am not telling you all this to drum up attention. I am telling you to keep what I have written here in mind when you read the articles.  

Edit: Victorthecleaner has written an excellent article here: Backwardation and Declining COMEX Inventory that is well worth reading. 

SLV Database #2

(Guest Post by Warren)

A quick update from the SLV database. I was looking at the SLV inventory over the last two weeks of April. I cobbed together this chart (click for larger view) which compares the closing price of SLV vs. the inventory held according to the ounces published. It's a bad graph, but one of my first composite charts so be kind.

The graph is curious because on the 20th of May, the number of bars held takes a big drop and then peaks again on the 27th April with the high in silver (the gap in the middle is the easter holiday).

I have always wondered about the bars which disappear and then show up again. It stands to reason that because the 1000-oz bars are quite heavy, that movement in and out of the vault will probably be more like allocations rather than actual shipping (as highlighted by Bron).

So using the 13th April bar list as a reference point, I set out to find out how many bars showing up in 27th April list, were already present in the 13th April list, with a temporary absence of leave on the 20th April (in between).

After crunching the numbers in the bar serial numbers database, I have an answer - 8.3 percent of the amount added to the inventory between 20th April and 27th April. i.e. between those dates, some 9,954,185 oz of silver was added to SLV, and of that amount 1,197,039.8 oz (8.3 pct) was already sitting in the vault on the 13th April (14 days before). The table in the database for those date ranges is called "SLV_Analysis" so you can check my maths if you want - the connection information for the database is here.

I used this exercise to cut my teeth on the data processing and I give no personal guarantee about any numbers, this exercise was about 5 hours of work. I'm happy to share any details if anyone is interested (and again, the data is all there if you want to check).

What to conclude? Not much - approximately 1197 bars probably never left the vault and went 'dark' for a few weeks while SLV shuffled its data around, reappearing 14 days later. Either that or those bars left the vault and then got redelivered within a few weeks. I am personally more inclined to think that they have shitloads of silver - more than you can imagine - and they shuffle the allocation as best as they see fit to manage the price and futures, all that stuff, to make lots of money from hapless investors. Certainly it's more likely a change of ownership registration than a physical move, but it means that we've got more hard work ahead to identify these dark pools of silver. If anyone out there has any comments that can enhance my understanding, please let me know your thoughts, many thanks.

NOTE: This analysis indicates the SLV Serial Bars data is about right. If it were claiming all the bars were brand new, that would be unusual, and if all the inventory showed up a second time, that would indicate shenanigans, but a 8.3% seems about right.

[Update: 2012]

Since this analysis, we got a bit more sophisticated. For a full list of all future articles in this series, please check out http://screwtapefiles.blogspot.com/p/bullion-bars-database.html

Miners' scale

Guest Post by GM Jenkins

Historically speaking, how badly are the miners performing, really?

I noted in a previous entry (The Invisible Hand) that on April 8, something fishy happened, wherein gold and silver shot up to all time highs, but the miners had completely "decoupled." This proved prescient.

Someone knew something. Until the May 1 massacre, the metals-to-miners ratio increased at what seemed an unprecedented rate. Turd has conjectured that TPTB "allowed" silver to shoot up, knowing margin hikes (and the egregious May 1 stop-triggering) were in the works. That seems right.

However, that metals-miners decoupling seems to have ended, and we're back to the miners performing pretty shittily, but at least tracking the metals respectably. So I decided to look at how gold has compared to the ^XAU index historically.

In other words, at any given time in the last 15 years, how many shares of ^XAU could you buy for an ounce of gold?

I charted the 20 day exponential moving average of the $GOLD:^XAU ratio, and was surprised at what I saw. Yes, you can buy more ^XAU shares for an ounce of gold than ever before (leaving aside the 2008 market crash). That means gold is indeed at a high historical value relative to the miners. But ... that appears to be the result of a long term trend.

For the first 5 yrs on the chart, gold is increasing in value relative to the miners at an even faster rate than over the last 5 years. So, whatever the case may be with ETF's siphoning off demand, and Trader Dan's hypothesis of hedge funds shorting the miners, over the long term, nothing that unusual is really taking place.

The $GOLD:^HUI ratio is lightly visible in the background. That ratio is certainly more volatile and exaggerated. Today, an ounce of gold buys you 2.85 shares of ^HUI. In 2000, it could buy you around 5 (values not shown on vertical axis). From 2001-2004, that number crashed, as the miners outperformed gold. But those three years are the only years where that pattern is obvious. And since 2004, the long term trend of the $GOLD:^HUI ratio has been either sideways or up.

Rapture day TODAY! 6PM (local). THIS IS NOT A DRILL!

So get praying you worthless heathens who may have lapsed in your faith.
Some of you however shouldn't bother as you have no souls (Gays, Muslims, Jews etc). There are some simple things those of us who have been chosen must do before lift off. Remember be humble with your interactions with those who will not be joining us.

1. If your significant other is Gay, Muslim etc. then they won't be joining you. It would be appropriate to leave them to care for your cat. It's something that should be handled with a little tact.

2. If you ever had the wish to drive a Porsche, Ferrari etc. now it would be a good time to take that test drive. If you already own a good car now would be a good time to top off the fluids. You know your neighbor (suspected Democrat) will not take care of it. Just look at his lawn!

3. It's not too late to call your boss and tell him what an asshole he is. It wouldn't be appropriate to rub his nose in the fact that he will not be raptured. Remember be humble and offer to pray for him.

4. It is OK to play practical jokes however. So make sure you order Pizza for everyone you feel will be raptured. Imagine the look on the Pizza shops owner when he figures out all his deliveries are to the raptured. Other harmless practical jokes are OK too and I am sure Jesus would encourage them. My personal favorite is to order "Out" magazine to be delivered to co-workers at work in clear plastic. If you order a 6 month subscription that should be good until Judgement day when they will be thrown into the fiery pits of hell.

5. You should probably take out a lot of Puts on all communication and airline companies. Obviously the banking sector (being run by mostly Jews, Lizard people and their servant the Vatican) will not suffer any disruptions.

To QE or not QE. That is the question.

Lots and lots of chatter on whether we QE or don't QE.
Deflation blabber rising to new heights (again).
Lot's of talk about getting in front of steam rollers and getting flattened if you go long gold or silver now. It's all crap. Nothing more and nothing less than crap. It's noise. Nothing more nothing less than noise. The reasons why we will get more QE have been laid out in a million essays all across the intertubes so there is no need to repeat them. The bottom line is we are broke and printing is the easy option.

The biggest fear is there will be a gap or or the Bernanke will allow a market dive in order to get the go ahead for QE. The FOMC meetings. More noise. The internal struggle within the Fed more crap and noise. If you are still in doubt do a little reading this weekend and you will come to the realization the USA is boxed in. The world knows it and they are taking steps via their central banks to secure as much gold as they can.
When the markets look a little shaky Bernanke or one of his minions whips out the QE3 carrot out. You get a peek at it but not so much that you are sure you are going to get the carrot. When you start to worry that you won't get the carrot he will take it out of his pocket to give you another peek at it.

The question is when not if we get QE3.

The EU wants Portugal's gold to pay off their debts. Not going to happen because it would require a change in their laws for this to happen.
The EU is suggesting Greece sells a few Islands or whatever else they can get their hands on to pay their debts.
DSK arrested and some are suggesting it was because he dared suggest a new basket of paper money that would end the Dollar as world reserve status. Probably right but he is still a lousy example of a human being.

The sell in May and go away mantra is in full swing and the HUI has been taking a merciless beating. Accepted common wisdom would tell you to get out now while the going is good. So you have to look around and ask yourself what are the big boys doing? What is the smart money doing? We know Sprott dumped a bunch of PSLV in favor of mining stocks and he is so far on a loser on that one. Even buying into miners in Bolivia for example APE. There is still the threat of nationalization in Bolivia.

Soros dumped Gold in favor of ????? Did he redeem for physical?
JPM are holding a lot of meetings with a lot of miners.
Pimco out of treasuries and their portfolio of hard assets is growing in one fund while their Bonds funds sit there in cash. Charging admin fees to the clients while doing nothing with their cash btw.
He is supposedly short bonds as well which is interesting because the Fed is the one selling the puts. 

Take a look at your favorite miners and look at the 14 day RSI on them over a period of at least a year and that will show you how beaten up they are.

The politicians talk about deficits like they know what the hell they are talking about. Rand Paul talking about trillions in deficit cuts. Republicans talking about billions in cuts. It's all crap. They know it's crap and they are just playing to the percentage of the population that is still completely clueless and is still buying this good cop/ bad cop routine. The percentage of the population that still buy the Red / Blue argument.
Ron Paul saying we should sell our Gold to pay our debts. What he is really doing is trying to bring the Gold argument to the public level. He would no more exchange the gold reserves of the USA than he would sell his own guns or Gold.

Geitner has shown his hand to the world by starting the process of going cannibal on Public Pensions. The stage was set with public anger being whipped up against the Unions and public workers.  I don't see anyone up in arms about this as it is assumed to be temporary. It's temporary until it's not.
It also sends a message to our Creditors that we will steal from our workers and their children if necessary to pay our debts. It kicks the can down the road a few more inches.

I'll leave you with these charts from "Uncommon Wisdom" I received this morning. Place your bets. Unless you are trading futures and in and out of the market then screw your courage to the sticking point.

The value of the value of a bond

Guest Post by GM Jenkins

**With due apologies to our many millions of visitors globally, I'm not letting this one go. I inverted the ratio from my previous post, because it makes more sense to me this way.

What's the value of putting your money into a bond, if you measure value in ounces of silver?

Today, the yield on a 10 yr treasury note rose to 3.18, meaning if you have $100 lying around, you can basically make a risk-free $3.18. But how many ounces of silver can you buy with your guaranteed winnings? You can't even buy a 1/10th ounce coin. Ten years ago, putting $100 into a 10 yr treasury note would've gotten you a silver eagle.

So, to review, on September 11, 2001, you could've bought 1.0 ounce of silver. On September 11, 2010, you could buy only 0.14 ounce. That's a steady decline of 20% a year. But September 2010 is when the decade long trend appears to have ended (and gotten worse).

Until then, look at how well the black trend lines delimit the value of your yield, measured in silver. The few times the ratio escaped the black lines, it fell violently back into the channel... until Turd's Bottom (Jan 26, 2011) when the ratio notably refused to re-enter.

Since then, the ratio appears to be bounded by a significantly steeper rate of descent (see purple dotted lines).

For our many loyal paying subscribers, I will give you actionable advice based on this chart that will earn you millions, guaranteed. For everybody else, I will offer the prediction that the ratio will either find resistance at the purple dotted line, or if that fails, the nearest black line, or if that fails (probably in a scenario that proves deflationists right), the top black line. I don't see it hitting the blue line again before that, though.

*However, soon, the blue line will go through 0. Which means that if/when the ratio hits the blue line again, you'll be able to buy a grand total of 0 ounces of silver for your dollars earned from investing in US bonds.

**A commenter astutely points out: "You won't have the problem of hitting the zero line (at least, not right away) if you use charting paper that has multiple log cycles on the vertical axis instead of just one." (Thank you, Don). So, I guess what I called the zero line here is really 0.05, and you can keep going an equal distance down on the y-axis to 0.025, 0.0125, 0.0063, ... forever (i.e. this shitshow has a ways to go yet). And seeing as the y-axis is ounces of silver, soon your yield will buy you the shavings from a 1964 dime. (At which point Japan will announce another record purchase of treasuries, like yesterday.)

New taxes heading our way

One of the recurrent themes here on Screwtape files is what happens in Ireland will happen here. Time and again the Irish govt has led the way in outright theft and crony capitalism.
Corporate and Banking bail outs are hardly a new thing to the Irish people. Before the Celtic tiger was born Irish citizens subsidized industry, farming and civil service jobs for the boys. An example of some of the subsidies are in the form of equipment, plant, low taxes and even cheap electricity for corporations. All in an effort to make Ireland competitive. It worked. The only way for the average guy in Ireland to get a piece of the pie was to start a business or buy a home or several homes. In other words speculate.

During the Celtic Tiger the Government was for the first time in decades running a positive balance and instead of giving back the people what it owed them they simply expanded government and social benefits. They expanded social benefits so much so that Ireland became the go to destination for indigents all over the world. Come to Ireland and get a free apartment, cell phone, money for kids that are living in another country. The list was endless. People who were genuine refugees were always welcome in Ireland and no one ever had a problem with it. But the numbers were in the hundreds per year. Suddenly the doors were thrown open and people were just flooding the system by the thousands. The government was renting hotels all over the country to house people. Even before the banks blew up there was trouble brewing in the govt balance sheet.

The banks looking to get a piece of the pie did what they do best either fudge their customers accounts to steal from them with bogus little surcharges or speculate in the markets they knew best and that was housing. They did both.

Inevitably it blew up. The government decided it was in the best interests of the country to bail out the banks because if they didn't then no one would lend the govt money. The notion was everyone tighten their belts and this will blow over soon. Except the banking problem just kept getting bigger and bigger. It is now at the point where the money cannot be repaid. 

There is nothing left except to keep finding new and inventive ways to tax the population.
The latest slap in the face for the fiscally conservative saver in Ireland is they are now going to be taxed on their pensions.  This is just after pension benefits were cut.
Of course there are exceptions to every rule. In this case the government workers are not going to have to put up with it.

GM, made a good analogy the other day about shareholders, mining stocks and slowly boiling a frog. Similar thing with Irish Citizens. It's death by paper cuts along with the boiling frog. Yes, it's coming to a state near you and then the Fed govt will get in on the act. It's the only way out except to keep devaluing the dollar against everything else. If the average Irish guy had invested in Physical metals for his pension he would have a decent return but more importantly it would still be his and not subject to the greed, stupidity and corruption of his elected officials.
Nice knowing you Ireland.

Edit: One last thing. (AD 2008) Approximately 70% of all Irish mortgages are classified as variable. Think about that for a second. Even the threat of Debtors prison won't be enough to stop the loans going belly up. When they blow up who will be holding the bag? The Banks? No as the govt promised to keep them afloat. The taxpayer? No because if the draconian 1850's legislation is not removed from the books then the people will have no choice but to leave. Even if it's removed from the books people are still broke. Eventually this domino will fall.

Edit: Well that didn't take long. http://www.zerohedge.com/article/treasury-confirms-debt-ceiling-be-breached-today-will-tap-pension-funds

Armstrong on Raj and Gold

For the JPM Apologists

There has been a lot of negative Silver sentiment out there lately. 

A lot of the JP Morgan apologists point to another set of stellar results as proof that they are not the big Silver short. 
Sorry, the bigger and more complex the company the easier it is to hide, twist and generally make the numbers say whatever you want. It's called creative accounting. Good numbers from JPM mean as much as good numbers from Enron, Greece or any Irish Bank. They have already proven to be dishonest when it comes to accounting even to themselves. (See my post on JPM and their recent settlement in Mass)

Larry Edleson makes the argument that the big boys are taking us for a ride. Run that sucker up and hide the metal in Switzerland etc. thereby creating an artificial shortage. Then as all the fools rush in to buy that silver then you dump all the metal into their waiting arms. Cha-Ching!
It's possible of course. Much like it's possible JPM are neutral or even long on Silver but then if true then their execution sucked. It really, really sucked as they ran it too high too fast and then let the price drop like a rock. Sorry Larry it doesn't even pass the first smell test.

Tune into radio "way out there"

Put your tin foil hats on and tune into radio "way out there"
This is an exercise in game theory more than anything else. Sometimes think tanking something like this is useful for showing possible outcomes. Sometimes not.

This link shows how long the game (opening a Comex competitor) has been in motion.

From zero hedge we learn there is to be new Gold exchange in Hong Kong.
Nothing exciting about that as they try to compete for the worlds attention and trading DOLLARS for gold.

There is a theory out there that the Chinese are the ones shorting the Silver market using JPM as their flunky boy. Simply to allow them to accumulate cheaply. Makes sense in the same way as the USA is buying up cheap oil while our own reserves are capped by the all powerful tree huggers. Despite 8 years of rule by an Oilman Decider those all powerful eco liberals still had their way.
A few months back china announced they were allowing bank accounts to be opened here in the USA in Yuan. Open to all nationalities.

Supposedly they encourage their citizens to buy Gold and Silver. 

They have bonded warehouses set up in Hong Kong and Shanghai and the usual pickpockets are present and accounted for JPM etc. Of course the pickpockets get a little piece of the new exchange so they won’t rock the boat. The fact there was so little rocking of this boat lends a little credence to the Chinese Silver short theory. You don't want to piss off your biggest customer. There is a lot of money to be made playing middleman in this game.

If I was planning to pull the biggest heist, end game, blackmail the world to my bidding I would deliberately open a price gap between the London/NY exchanges and Hong Kong and allow all the metal to be sucked out of the Anglo warehouses for deposit in HK and from there to the bonded warehouse in Shanghai.
Denominated in Dollars of course. When they are finally ready to show their hand they will settle in Dollars and keep the Gold. If this is the plan they will screw over all their US partners in crime.

The Chinese can now very quietly start dumping their dollars closer to home in an exchange that they run and trade them for real money.
Of course you don’t want to take everything otherwise instead of a gold standard you end up with an oil standard.
It’s not much use if you are the only one holding Gold.

Once china has everything in place militarily (done) and financially then they will be calling the shots and will force the USA to stop printing and start acting like grown ups. It opens up other possibilities like the Chinese may revalue gold rather than wait for the Fed.

So lets see if a price gap opens up.

Interest, in silver

Guest Post by GM Jenkins

When we talk about the price of silver, we are of course talking about a ratio: how much the world values an ounce of silver compared to how much the world values a federal reserve note (FRN). Right now, the world's population values an American Eagle about 40 times more than it values a benny buck.

Other ratios might be more illuminating, however. For example, at any point in time, instead of swapping x FRNs for z ounces of silver, you can swap x FRNs for treasury notes and get x+y FRNs back in 10 yrs. What does the ratio of z/y look like?*

Note how well the lower two trend lines capture the movement of this ratio for the entirety of the decade's bull market ... until the center trend line was finally broken for good last August (see grey dots).

Note also that the ratio was a leading indicator: it started its steady ascent in April 2010, four months before the dollar price of silver did. In fact, only when the ratio broke through the center trend line did silver's August 2010 price explosion begin (see grey dots).

Note how the ratio tested the center trend line during "Turd's Bottom" in January 2011, and how previous resistance became support (whereas the center trend line had failed as support in 2008). That's when the ratio blasted past the upper trend line, only to come right back down to it, where it hovers today. Thus, this chart gives you information that the silver price chart doesn't: a clear demarcation of 2 phases of the silver bull market: the period from 2001 through Fall 2010, and everything afterwards.

Finally, note how tightly this ratio tracks the price of silver. It's doesn't have to do that (e.g. 2003 - 2004, or 2009 - 2010), and it's not intuitively obvious why it does when it does. Are we looking at the fingerprint of manipulation here? I'll have to think about this some more.

*Actually, stockcharts.com doesn't allow two ratios, i.e. z/y = z/x : y/x, so my chart depicts x/z : y/x (since x/z is just silver price, and $UST10Y a proxy for y/x). Similar idea. I'd like to see z/y if anyone can do that (i.e. ounces of silver per dollar divided by $UST10Y) .

When freezing in frost, peeing your pants keeps you warm a while..

...and then the inevitable happens. Much the same way as bailing out a bank only to find out they lied about how much they needed and there really is no means of saving them except to make every one else pay for it .... forever.
This is the version the Wall St. Journal did not want to publish.
Written by the leader of the "True Finn party".  I am bringing it to your attention because it is extremely well written and expresses the frustration in Europe by the common man.
It's the frustration of knowing there will be a train wreck whether you switch tracks or not. It's giving rise to Tea Party squared in Europe. The politicians are dubbing this sort of thinking "popularism" as a means of ridicule and dismissing their concerns and to try and put them in the same league as "The rent is too damn high party".  Dangerous mistake for the Bankers and Politicians. They did that with Hitler.

MAY 9, 2011

When I had the honor of leading the True Finn Party to electoral victory in April, we made a solemn promise to oppose the so-called bailouts of euro-zone member states. These bailouts are patently bad for Europe, bad for Finland and bad for the countries that have been forced to accept them. Europe is suffering from the economic gangrene of insolvency—both public and private. And unless we amputate that which cannot be saved, we risk poisoning the whole body.
The official wisdom is that Greece, Ireland and Portugal have been hit by a liquidity crisis, so they needed a momentary infusion of capital, after which everything would return to normal. But this official version is a lie, one that takes the ordinary people of Europe for idiots. They deserve better from politics and their leaders.
To understand the real nature and purpose of the bailouts, we first have to understand who really benefits from them. Let's follow the money.
At the risk of being accused of populism, we'll begin with the obvious: It is not the little guy that benefits. He is being milked and lied to in order to keep the insolvent system running. He is paid less and taxed more to provide the money needed to keep this Ponzi scheme going. Meanwhile, a kind of deadly symbiosis has developed between politicians and banks: Our political leaders borrow ever more money to pay off the banks, which return the favor by lending ever-more money back to our governments, keeping the scheme afloat.
In a true market economy, bad choices get penalized. Not here. When the inevitable failure of overindebted euro-zone countries came to light, a secret pact was made.
Instead of accepting losses on unsound investments—which would have led to the probable collapse and national bailout of some banks—it was decided to transfer the losses to taxpayers via loans, guarantees and opaque constructs such as the European Financial Stability Fund, Ireland's NAMA and a lineup of special-purpose vehicles that make Enron look simple. Some politicians understood this; others just panicked and did as they were told.
The money did not go to help indebted economies. It flowed through the European Central Bank and recipient states to the coffers of big banks and investment funds.
Further contrary to the official wisdom, the recipient states did not want such "help," not this way. The natural option for them was to admit insolvency and let failed private lenders, wherever they were based, eat their losses.
That was not to be. As former Finance Minister Brian Lenihan recently revealed, Ireland was forced to take the money. The same happened to Portuguese Prime Minister José Sócrates, although he may be less forthcoming than Mr. Lenihan about admitting it.

Why did the Brussels-Frankfurt extortion racket force these countries to accept the money along with "recovery" plans that would inevitably fail? Because they needed to please the tax-guzzling banks, which might otherwise refuse to turn up at the next Spanish, Belgian, Italian, or even French bond-auction.
Unfortunately for this financial and political cartel, their plan isn't working. Already under this scheme, Greece, Ireland and Portugal are ruined. They will never be able to save and grow fast enough to pay back the debts with which Brussels has saddled them in the name of saving them.
And so, unpurged, the gangrene spreads. The Spanish property sector is much bigger and more uncharted than that of Ireland. It is not just the cajas that are in trouble. There are major Spanish banks where what lies beneath the surface of the balance sheet may be a zombie, just as happened in Ireland for a while. The clock is ticking, and the problem is not going away.
Setting up the European Stability Mechanism is no solution. It would institutionalize the system of wealth transfers from private citizens to compromised politicians and otherwise failed bankers, creating a huge moral hazard and destroying what remains of Europe's competitive banking landscape.
Some defend the ESM, saying its use would always require unanimity. But the current mess with Portugal shows that the elite in Brussels will seek to enforce unanimity through pressure when it cannot be obtained by persuasion. Abolishing unanimity is only a matter of time. After that we have a full-fledged fiscal transfer union that is obviously in hock to Brussels' anti-growth corporatism.
Fortunately, it is not too late to stop the rot. For the banks, we need honest, serious stress tests. Stop the current politically inspired farce. Instead, have parallel assessments done by regulators and independent groups including stakeholders and academics. Trust, but verify.
Insolvent banks and financial institutions must be shut down, purging insolvency from the system. We must restore the market principle of freedom to fail.
If some banks are recapitalized with taxpayer money, taxpayers should get ownership stakes in return, and the entire board should be kicked out. But before any such taxpayer participation can be contemplated, it is essential to first apply big haircuts to bondholders.
For sovereign debt, the freedom to fail is again key. Significant restructuring is needed for genuine recovery. Yes, markets will punish defaulting states, but they are also quick to forgive. Current plans are destroying the real economies of Europe through elevated taxes and transfers of wealth from ordinary families to the coffers of insolvent states and banks. A restructuring that left a country's debt burden at a manageable level and encouraged a return to growth-oriented policies could lead to a swift return to international debt markets.
This is not just about economics. People feel betrayed. In Ireland, the incoming parties to the new government promised to hold senior bondholders responsible, but under pressure, they succumbed, leaving their voters with a sense of democratic disenfranchisement. The elites in Brussels have said that Finland must honor its commitments to its European partners, but Brussels is silent on whether national politicians should honor their commitments to their own voters. In a democracy, where we govern under the consent of the people, power is on loan. We do what we promise, even if it costs a dinner in Brussels, a "negative" media profile, or a seat in the cabinet.
When in Europe's long night of 1939-45, war came to Finland with the winter blizzards, my mother was one of eight siblings being raised on a small farm in central Finland where my grandparents eked out a frugal living. My two young uncles rushed to the front and were both wounded in action during Finland's chapter of Europe's most terrible bloodshed. I was raised to know that genocidal war must never again be visited on our continent and I came to understand the values and principles that originally motivated the establishment of what became the European Union.
This Europe, this vision, was one that offered the people of Finland and all of Europe the gift of peace founded on democracy, freedom, justice and subsidiarity. This is a Europe worth having, so it is with great distress that I see this project being put in jeopardy by a political elite who would sacrifice the interests of Europe's ordinary people in order to protect certain corporate interests.
Europe may still recover from this potentially terminal disease and decline. Insolvency must be purged from the system and it must be done openly and honestly. That path is not easy, but it is always the right path—for Finland, and for Europe.

Mr. Soini is the chairman of the True Finns Party in Finland


Two new essays from Martin Armstrong

The first one is on the Silver Crash

The Second one is "So you thought the Sovereign Debt crisis was over"
It hasn't been uploaded to the usual locations yet so I am going to do a little hunting for a freebie file hosting service and throw it up there.
Here it is:

PSLV premium may take a hit (update from original posted before Silver slam)

To anyone who bought PSLV on it's opening day congratulations you are smarter than the average bear. 
This is an FYI to anyone holding PSLV not a debate on whether the premium is simply true price discovery or a mini bubble.
Per Tom O' Brien Sprott is planning to dump some or all of his PSLV holdings. In  case you don't know who Tom is he is a self proclaimed Gold lover who has been calling a top for about a year or 10 in Gold. The video is here http://www.tfnn.com/hour01.html

Keep in mind this does not mean Sprott is getting out of Silver as he has plans to open a PSLV 2 in the future. However, depending on how he sells or the market reaction to this news the premium may take a hit. As always you have to do your own due diligence and if you are really concerned give PSLV a call.

Confirmed (sort of) From Zero HedgeSprott Silver Mutual fund

Bart Chilton on Silver, oil etc May 6th 2011

These are brief excerpts from Bart Chilton, head of the CTFC,  interviewed on Squawk Box this morning. In most cases I am paraphrasing because I'm a horrible typist and brevity. He is talking about commodities in general and not necessarily just Silver.

"There is more going on than mere speculation"
"HFT traders are a problem. (Cheetah traders)"
"We need to make sure prices are based on fundamentals"
"Silver was up to $50 and is now around 35" We re going to be taking a look at this.
Speculative Dollars are coming in especially in Crude. 60% increase in Crude and 20% in metals
Speculation having an impact on the way up and down.
Very concerned about manipulation
These markets effect everyday life. Large influx of speculators.
You can't say last week these commodities are going up because of an easy money policy and then we crash this week on a bad jobless report.
Flash crash last May was from algorithmic trade.
Very concerned about speculation. It's our job to make sure markets are based on fundamentals.
BQ :CME hiked margin requirements. "Necessary move to remove some of the speculation and to protect against excessive speculation as some of the speculators may not have the money to back up their speculation.
Cascading effect on back to back margin hikes and I agree that it was necessary as some of the longs may not have had the money to pay if they are called upon.

I'll put up the video if I can locate it.
Jobs report today: Expect some bullshit number followed by a revision.

Edit: Harvey Organ and others in the bug community consider Bart to be one of the good guys.  I personally think he is as well.

Personal Opinion:
We might be seeing some sentiment shift here. Only a blind man could look at the Silver chart right now and say; "Meh! it's perfectly normal". Even a blind man could see the current beat down is over done. People will be skittish and probably trade Monday and dump Friday until we reestablish the uptrend. Anyone looking at Oil has got to be thinking the same thing. 
CNBC etc crowing about the beat down just puts it on everyone's radar IMO. In other words talking about it is going to backfire. Silver is now considered cheap.
Those that were waiting have got be nibbling at this point. The recent sell off and loss of NAV in PSLV only makes it juicier once the whole story came out that Sprott didn't sell everything. Just a fraction of his holdings and only to recycle those dollars into the miners.

Silver corrections ... Just a little perspective

I snagged this from Casey research and as he points out the average correction is 19%
So if you were thinking of nibbling a little silver this might be a good starting point right here and now.
I will be doing a little nibbling tomorrow if I can find any good deals a little over spot through goldshark.com

Trend ain't our friend

Guest post by GM Jenkins

I've drawn a set of parallel trend lines on the 8 year log chart of silver, representing a growth rate of about 27% per year. The lines seem to capture silver's movement really well for the 5 years before it dropped off a cliff in 2008.

As I recently pointed out, silver's latest explosion (9/10 - 5/11) simply made up for the (manipulated?) events of Fall 2008, pulling silver back into its now extended exponential trend up.

That's the good news. The bad news is, silver touched the red dotted trend line in April 2004, April 2006, April 2008, and now in April 2011. Every time it has touched the red dotted trend line, it has fallen back down to the brown dotted trend-line before making its way back to the red.

Don't shoot the messenger, but if this pattern holds, we should probably expect silver to touch the blue/purple lines soon, and snake around the 30's for awhile...

*that is, unless the COMEX is about to default, SLV plummet to 0, and JPM go bankrupt, in which case none of this shit matters.

Make it stop and fair weather friends

My Mother always told me you can always tell who your real friends are when you need a favor. It works the other way as well. The guys who you thought were friends always seem to have their hands out when they need you and make you think you need them. My Mom is always right. Keep that in mind when taking advice from "friends" who find all sorts of errands to run when things are bad or who turn around and say "I never said that" even though you know they did.

Anyway, back to silver leaving aside all the fundamental reasons for holding silver and they have not changed take a look at Bill's charts below if you want to know where silver is going. We all make mistakes so it's time to man up and accept them as mistakes. My mistake was waiting too long to trade in some of that Silver for Gold. But I was willing to let it ride. I still am.

So you have a pile of Silver and you are asking yourself whether you should call Apmex or beat feet to the coin store.
Only two questions to ask yourself
Why did I buy it? and
What has changed besides the price?

Japan is still radioactive
The Dollar is still junk
Europe still has a debt crisis
The Middle East is still run by lunatics
Your home is still falling against any measure.
The White House is looking more retarded by the day and the politicians are still clueless shills for the banks.
and if you think the Osama boys are going to sit quietly then I have some Chinese made Antique coins to sell you.

So when does the pain end? Well take a look at Bills charts to get an idea. Massive support at $32 if we get that far. It would have been nice if Silver had run to $100 this month but it is not to be so we have to get back to reality now and be patient.

If guys like Sprott decided to sell a small portion of their physical and parlay it into shares then that sounds like a smart thing to do.

If guys like Jim Rogers say this; "They should have a rest. These commodities have been going straight up for several weeks, several months. It is good that they rest. Anything that goes straight up, usually goes straight down.

The things that have nice long term up-moves are the things that go up, consolidate, go up, consolidate, go up, consolidate. So, I hope that what we are seeing here is overdue normal correction in commodities and other things as well."

Then take heart the bull run is just getting started and remember these guys think on longer time lines than you or I and make their decisions on fundamentals not wishful thinking.  Fundamentally Silver is still a winner and these guys are betting millions not 20 or 30K.

Gold Mid Week Wednesday.


The longer term gold chart shows an important trend line hit this week near 1575 --- a pullback into Mid month has potential. Support is the 1478-1501 area and 1514-1524 going into Wednesday.

Silver Update Mid Week Wednesday


After hitting the 1998 projection line --- silver has dropped nine dollars to an important trend line. Look for support at the 37-41 area this week. (Ideal low would be 39.50-40.60)

SLV Database (Guest Post by Warren)

Time to test some claims again. Todays spotlight of scrutiny turns to SLV, the world’s largest stockpile of physical silver. For those of you looking for conspiracy, you will NOT find it here. What you will find, is analysis and questions of CLAIMS being made. The people running the trust CLAIM they have 366 million ounces of silver. Others CLAIM they don’t. Who is correct? And darn it, there’s money to be had depending on who is right or wrong.
Following GM Jenkins fine example of putting a chart to opinion, here is an anecdotal chart drawn from information available in the blogosphere. Note that each party has their own line of reasoning backing their stance (if I have unfairly presented anyone here, let me know):

First, why does it matter? Well first up – it’s a very big pile of silver. If the real silver is there as CLAIMED by the iShares Silver Trust, then most of the other stories we’ve been hearing don’t make sense. After all, it’s a simple case of whoever wants physical silver just buys a bunch of SLV shares and redeems them at spot price. No premium-laced cash settlements necessary. No 22% NAV premium required. No tightness of physical market. No delivery problems.
Now, I could write a book (or a very good action movie) about all the various counter claims – unless living under a rock then you are familiar with them already, and therefore I won’t discuss them in depth. Instead I want to focus on doing some hard concrete objective analysis. I also want to expose the methods for my research, to demonstrate that I’m not making any conjecture. Then I want to go to the extra step of making this accessible.
Here’s the gambit:

  1. SLV publish their bar serial numbers in a new PDF every week. Very transparent.
  2. There’s a lot of (public) information there, but it’s difficult to study because of the format.
  3. Let’s collate this information so that we can analyse it better (a relational database).
  4. Let’s put the database online and open it to the public so that anyone can access the info.
  5. Let’s graph this data and slice and dice it.

I’ll be working on the premise that good forgery is very difficult to do consistently – particularly with large amounts of data. I have no way of telling whether some interns have a full time job fabricating data records to make it look real – we can only look at the data presented to us and see if any anomalies exist.
I need to advise that some earlier studies have been done on the same. I currently am aware of at least two:

  1. The excellent weekly analysis of the Silver ETF bar numbers, here. We are very appreciative of the folk at http://About.Ag/ as they shared a bunch of data with us. You should check out their site for a very detailed and comprehensive analysis of all things related to silver.
  2. The Project Mayhem July 2009 investigation, who tried very hard to conjure a duplicates bogeyman, but has since been really well dissected by Bron Suchecki here.

Given that some analysis already exists out there, my strategy is slightly different and there are 4 phases to this project:

  1. (DONE) Construct a database and make it publicly accessible (using SQL Azure).
  2. Make a general call out there for all historical silver bar serial number files that people might have – both from SLV and other funds.
  3. Some kind of website component that people can put on their website to do an easy bar serial lookup (e.g. an investor could verify that a bar they received from SLV was actually held in their stock).
  4. Over time, with enough data it might be possible to cross-reference data from various funds and check for any multiple claims on the same metal.

The most important element of this is that it’s all independently verifiable. What is there is merely a copy of what was previously publicly available. If you have TSQL skills, or you can hire a data monkey who does then you can easily check and double check the claims that I make about the claims. There’s nothing to hide here, you can test everything yourself. If you don’t have access to your own data monkey then I can help (in exchange for some benny bucks).

  Database Server: erwzbgqjg0.database.windows.net
  Database Name: BullionBars
  User Name: slvreadonly
  Password: *12345screwtapefiles

If you have access to some OLD serial bar lists which you may have downloaded in the past and would like these to be added to the analysis data, please get in contact me at this blog, we would love to have a larger data picture.

If you have some ideas for some charts and graphs, requests changes and ideas: Submit Ideas Here

Disclaimer: I don’t accept any responsibility for the accuracy of the data however it is easily verifiable from visiting the source of the original documents (listed in the database). I may change the database schema and data at any time and I may revoke access to the public login if I desire. Making the database public is NOT an acceptance that the SLV bars are real. Do not make any trades based on the information I present, however please feel free to use the information as part of your own due diligence.

Currently I have loaded data from mid-March 2011 to present, with more historical data to come (I am in possession of files from July 2010 onwards). I’ve done a little bit of analysis so far. Here is a quick profile of bar weight distribution. Dead boring – there is nothing to see here except that the shape is pretty close to what you would expect and is the classic distribution of bar size.

Then something more interesting, here is a chart of inventory by ‘country of origin’ for the refiner who produced the bars. This graph goes not currently show movement in-and-out (or movement over time), but one thing is clear – it has lots of silver from Russia and China. Again this only proves that SLV claims to have lots of silver which originates from refiners in Russia and China. Someone might be able to call the significance on that – I don’t have enough knowledge to make a judgement. Note these don’t necessary represent new bars being made, just a representation of what SLV claims to hold @ April 27.

Wading through all the data has been quite an exercise – there are a lot of records. On the surface it looks quite real to me, and the idea about JPM being long physical silver looks real when you stop to think about it. Personally we have to come up with a better theory … for example let’s say they do have the silver but can’t release it because it forms the collateral for all their leveraged paper trading then that also makes sense of what we’re seeing, and the real value for that underlying silver is worth more to them, than an 80% premium, i.e. perhaps everyone is right but for the wrong reasons. The key to this whole thing appears to be ‘derivatives’ and I’m trying to find the right interpretation of it. Discussion is encouraged and I’ll be adding extra dimensions to my analysis and database over time, but I would really welcome some notes from Amber/Wynter_Benton if you’re out there. And Kid Dynamite, just so you know – my database does not PROVE the silver is there – it simply makes the existing CLAIMS more accessible for analysis (to everyone). Paul D. Bain, I’m interested in some of your theories too if you had a comment (you owe me one).

The Invisible Hand

Guest Post by GM JenkinS

A lot of explanations out there about the shitty performance of the mining stocks since the silver price explosion of last September (or even earlier). There's Dan Norcini's idea that hedge funds are going long metal and short stocks. Another idea is that ETF's (including leveraged ETFs) have siphoned away interest from mining stocks. Other reasons relate to the fundamentals of the companies and things like hedging and dilutions. And all those explanations were satisfying enough ... until Monday, April 11.

Let's go back to Friday, April 8. That day, many major mining stocks made all-time highs, and the sector looked to have finally recovered from its doldrums. Here come the momentum traders, right?

Wrong. The following Monday, the price of silver fell around $0.75, but quickly recovered, finishing the week $3 higher.

Since that Monday, however, mining stocks have disconnected from the price of silver. Looks to me like the prices of mining stocks were capped. Caveat emptor.

What's worth reading so far today

Well Osama is officially dead. Good. Expect retaliation. Bad.
Already people are questioning if this is a hoax because he was buried at sea. Not everything is a conspiracy or a distraction. He was buried at sea not because of any religious thing. They dumped him in the sea because they don't want a shrine created out of his grave. He was the terrorists rock star.
I'm sure there will be plenty of video evidence forth coming that he is actually dead. I'm sure people will pour over it and say it's fake.

Zerohedge has numerous articles about Silver today. None of them are worth a damn.  Except this one;

We spent a good portion of the weekend here pouring over scenarios but none of us saw a waterfall scenario in the chicken entrails. Silver and Gold both opened with good bids and then they attacked Silver running the stops looking to take out as many leveraged longs as possible to cut their exposure. Then they ran into trouble as stink bids started kicking in and the vultures who see blood in the water and jumped right in. The beat down was so obvious there is no way to spin it as anything but an all out assault by JPM, HSBC etc. Maybe they covered some shorts. If they didn't then they have exposed themselves to more pain in the coming weeks.
This is my long winded way of saying they have actually done us a favor. It may not appear that way but now we have had our blow off. If they had done this on Monday morning our shares would have been decimated. The fact that they have done it in the thinly traded market exposes them as not Master of the Silver pit but tricksters. One trick ponies who are running out of options and a lot weaker than we have thought up to this point.
They are on the ropes.

The reason I have called attention to that particular article is make sure you read it and understand the implications. Chinese companies not in the banking business are lending money to speculators who are blocked from trading the Real Estate market and are now looking for somewhere to gamble. Guess where they are putting this money to work? You do know the Chinese are more degenerate as gamblers than anyone else on the planet right? No offense intended to my Chinese friends but you know it's true.

An update on the Bolivian Mining situation: http://www.greenleft.org.au/node/47466
Looks like Morales is boxing himself in politically but he can ill afford to scare away foreign investors. 
Bottom line read it an digest before coming to any decisions on your Bolivian exposure.

Another good article here: http://www.istockanalyst.com/business/news/5104076/the-miami-herald-the-oppenheimer-report-column
It looks like Morales is picking a fight with Chile. It's an old tactic past governments in Chile have used. As I pointed out above Morales can ill afford to scare away foreign investment so he is going back to doing what he does best and that is finding a common enemy everyone can agree on and that's Chile. I expect the miners will make some concessions and life will go on for them in Bolivia.