Net Asset Value of Certain Precious Metal Trusts and Funds

Tomorrow eyes will be on the Non-Farm Payrolls report.

The sovereign debt crisis looms large although largely ingnored for now in the United States of Amnesia.

Informed sources and major players are assuring Wall Street that the US Congress will reach a deal on the debt limits, and what transpires for now is to impress the various constituencies as to their seriousness in dealing with the problem.

SEC Charges JPM with Regularly Rigging Muni Bond Markets Across the Country For Years

Such serious charges of bribery and corruption that are settled with fines and no admission of guilt despite overwhelming evidence often initiated by the States, is a merely the cost of doing business when one is occasionally discovered in an ongoing confidence game.

This global financial cartel robs billions from the public on a regular basis across a wide range of financial and commodity markets.

The fines are paid, a highly compensated individual takes the nominal 'punishment' while keeping the proceeds, the politicians and regulators are paid, and the fraud continues on.

As Bloomberg TV snarkily observed today, the $238 million dollar fine represents less than ONE day's take for JPM, only six hours work in the markets. The stock was up on news of the favorable settlement.

Where is the reform? Where is the justice? Where is the deterrence?

Why not ban the institution who failed to control itself and its employees from participation in Federal Reserve banking subsidies and in government financial markets for some reasonable period of time?

Better yet, why are those who speculate in and manipulate the markets for their own gains with one hand, also taking cheap subsidy money from the government to 'improve the economy' and economic confidence with the other? Where is the repair of the public trust betrayed? Is this yet another fallacy of the efficient and perfectly rationale, self-regulating markets?

It is hard to determine what Obama really is, what he stands for, behind the artfully crafted, histrionic façade. He seems at times to be a sort of Herbert Hoover, or even a Neville Chamberlain, consistently giving ground to the bankers' bully boys. Or is he just another power groupie like so many others these days, without principle or character, wishing to 'get his share,' wishing to be accepted?

I suspect that like most of the politicians and bureaucrats he is without a moral compass, rationalizing a grotesque selfishness above honor, oath, and duty, despising the many, worshipping at the altar of greed.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

SEC
SEC Charges J. P. Morgan Securities with Fraudulent Bidding Practices Involving Investment of Municipal Bond Proceeds

Washington, D.C., July 7, 2011 – The Securities and Exchange Commission today charged J.P. Morgan Securities LLC (JPMS) with fraudulently rigging at least 93 municipal bond reinvestment transactions in 31 states, generating millions of dollars in ill-gotten gains.

To settle the SEC’s fraud charges, JPMS agreed to pay approximately $51.2 million that will be returned to the affected municipalities or conduit borrowers. JPMS and its affiliates also agreed to pay $177 million to settle parallel charges brought by other federal and state authorities.

“JPMS improperly won bids by entering into secret arrangements with bidding agents to get an illegal 'last look' at competitors’ bids,” said Robert Khuzami, Director of the SEC's Division of Enforcement. “Municipal issuers and investors didn't stand a chance against the fraudulent strategies JPMS and others used to guarantee profits."

Elaine C. Greenberg, Chief of the SEC's Municipal Securities and Public Pensions Unit, added, “When powerful financial institutions like JPMS conspire with each other to intentionally violate regulations designed to ensure fair investment prices, the integrity of the municipal marketplace becomes corrupted. Rather than playing by the rules, the rules got played.”

Typically, when investors purchase municipal securities, the municipalities temporarily invest the proceeds of the sales in municipal reinvestment products until the money is used for the intended purposes. Under relevant Internal Revenue Service (IRS) regulations, the proceeds of tax-exempt municipal securities generally must be invested at fair market value. The most common way of establishing fair market value is through a competitive bidding process in which bidding agents search for the appropriate investment vehicle for a municipality.

The SEC alleges that from 1997 through 2005, JPMS’s fraudulent practices, misrepresentations and omissions undermined the competitive bidding process, affected the prices that municipalities paid for reinvestment products, and deprived certain municipalities of a conclusive presumption that the reinvestment instruments had been purchased at fair market value. JPMS’s fraudulent conduct also jeopardized the tax-exempt status of billions of dollars in municipal securities because the supposed competitive bidding process that establishes the fair market value of the investment was corrupted. The employees involved in the alleged misconduct are no longer with the company.

According to the SEC’s complaint filed in U.S. District Court for the District of New Jersey, JPMS, acting as the agent for its affiliated commercial bank, JPMorgan Chase Bank, N.A., at times won bids because it obtained information from the bidding agents about competing bids, a practice known as “last looks.” In other instances, it won bids set up in advance for JPMS to win (“set-ups”) because the bidding agent deliberately obtained non-winning bids from other providers, and it facilitated bids rigged for others to win by deliberately submitting non-winning bids.

Without admitting or denying the allegations in the SEC’s complaint, JPMS has consented to the entry of a final judgment enjoining it from future violations of Section 15(c)(1)(A) of the Securities Exchange Act of 1934 and has agreed to pay a penalty of $32.5 million and disgorgement of $11,065,969 with prejudgment interest of $7,620,380. The settlement is subject to court approval. (This judgements to 'not do it again' are routinely ignored even by their own records. Why do they even bother?)

In a related enforcement action, the SEC barred former JPMS vice president and marketer James L. Hertz from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any penny stock offering. This sanction is based on Hertz’s December 6, 2010 guilty plea to two counts of conspiracy and one count of wire fraud for engaging in misconduct in connection with the competitive bidding process involving the investment of proceeds of tax-exempt municipal bonds. The Commission recognizes Hertz’s cooperation in the SEC’s investigation and investigations conducted by other law enforcement agencies...

Gold Daily and Silver Weekly Charts

Metals are trying to stick a bottom here after being pushed down artificially last week for Comex options expiration.

There is some inclination of the perception managers and sorcerer's apprentices to hit the metals around a Non-Farm Payrolls number, especially if it is below expectations, in order to provide reassurance that all is well in the paper chase.

SP 500 and NDX Futures Daily Charts - VIX

Market is ignoring bad news and is focused on the Non-Farm Payrolls Report on Friday, and the beginning of earnings season next week.

Net Asset Value of Certain Precious Metal Trusts and Funds

Could the manipulation of gold and silver prices last week for option expiration at the Comex have been any more obvious?

The divergence between the paper markets and the physical economy is becoming increasingly stark on a number of fronts. This is a phenomenon that often marks the late stages of a control fraud, or a Ponzi scheme, as it begins to lose traction and confidence.

Gold Daily and Silver Weekly Charts - La Douleur du Monde

Gold and silver had rather healthy rallies today after the artificial pounding which they had taken in pre-holiday markets in honor of Comex futures options expiration.

Mining shares tended to outperform the metals as the relationship between the miners and the metals began to converge again to a more normal correlation.

This afternoon all the safe havens including the dollar took a leg up as it became clear that the banking cartel will not allow Europe up for air.

The looting will continue until reforms are enacted and criminal penalities for rigging markets and defrauding the public are enforced.

I remain long the metals and miners and short the broad indices, although I did make some adjustments today and took some mining profits off the table, with their associated hedges.

SP 500 And NDX Futures Daily Charts

Stocks levitated on light volumes ahead of the ADP report on Thursday and the June jobs report on Friday.

Moody's downgraded Portugal's credit rating around 2 PM NY time, and this took some of the wind out of the market's sails. Nice of them to wait until after the European close to do so. The agencies remain the creatures of Wall Street, and possibly, of US government policy.

This rally is full of air. But try not to get in front of it.

Obama speaks this evening on the efforts of the US to reach a budget agreement that raises revenue in addition to cutting spending before the Treasury exhausts the ability to meet its obligations.

There are those who foolishly desire such a default, as yet another opportunity to loot the real wealth of the nation, and to foment unrest as an occasion to increase their power.

Such is the way to tyranny.

Currency Wars: Moody's Cuts Portugal Four Notches to 'Junk'

The ratings agencies have been and are still the creatures of the Anglo-American banking cartel.

Until there is reform, there will be no security, no growth, and no peace.

Reuters
Moody's cuts Portugal ratings by 4 notches to junk
Tue Jul 5, 2011 2:11pm EDT

NEW YORK, July 5 (Reuters) - Moody's Investors Service on Tuesday cut Portugal's credit rating by four levels to Ba2, two notches into junk territory, saying there is great risk the country will need a second round of official financing before it can return to capital markets.


Reuters
FOREX-Euro snaps six-day advance as Moody's cuts Portugal
Jul 5, 2011 7:36pm BST

NEW YORK, July 5 (Reuters) - The euro slid against the dollar and the Swiss franc on Tuesday, snapping six straight days of gains, after Moody's cut Portugal's credit rating to junk.

Weak euro zone data and concerns on China had already weighed on risk sentiment and boosted safe-haven currencies. Concerns about Greece have not faded despite the approval of 12 billion-euro loan by euro zone finance ministers, and the Moody's downgrade of Portugal only added to risk aversion.

Moody's Investors Service cut Portugal's credit rating by four levels to Ba2, two notches into junk territory, saying there is great risk the country will need a second round of official financing before it can return to capital markets.

"This renews the question of whether or not just Greece but the other peripherals are likely to need more bailouts," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey. "These issues were not extinguished last week. There was a nice dose of water poured on them, but they are still smoldering, and this is like adding gasoline to those smoldering ashes."

The euro dropped 1.7 percent against the safe-haven Swiss franc EURCHF=EBS to a low of 1.21150, francs, pulling back from a five-week high touched on Monday on trading platform EBS.

The euro was down around 0.8 percent against the dollar at $1.44267 EUR=EBS on EBS, taking a breather from recent gains made after Greece approved tough austerity measures last week. The euro had gained more than 2 percent against the greenback last week in its best weekly performance since January.

On Monday the euro hit a one-month high versus the dollar at $1.45800.

Traders cited talk of stops through $1.44400-$1.44500 ahead of bids $1.44300/$1.44350.

The Portuguese credit ratings cut followed another setback for Greece on Monday when ratings agency Standard & Poor's warned it would treat a rollover of privately held Greek debt, now being discussed, as a selective default.

Greece also needs a second aid package worth some 110 billion euros, which euro zone finance ministers said would be made final by mid-September.

Falls in the euro accelerated after the Markit Eurozone Purchasing Managers' Index showed growth in the euro zone's dominant services sector slowed to its weakest pace since October.

Euro zone retail sales data was also lower than forecast.

One factor capping losses in the euro was Thursday's ECB policy meeting, An ECB rate increase has been well factored in by the market, analysts said.

Price moves post meeting will hinge on the language that ECB President Jean-Claude Trichet uses at his news conference after the formal announcement, with investors focused on what he says about inflation.

"Dropping the reference to 'strong vigilance' would signal a short pause at least in the tightening cycle and likely see the euro rally fade again," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

Earlier, Chinese media reports about a possible rate rise in China this weekend and a report by rating agency Moody's saying the scale of problem loans to local governments in China may be much bigger than previously thought also hurt risk appetite, lifting the dollar as well.

On Liberty

"We have gathered here to affirm a faith, a faith in a common purpose, a common conviction, a common devotion. Some of us have chosen America as the land of our adoption; the rest have come from those who did the same. For this reason we have some right to consider ourselves a picked group, a group of those who had the courage to break from the past and brave the dangers and the loneliness of a strange land.

What was the object that nerved us, or those who went before us, to this choice? We sought liberty; freedom from oppression, freedom from want, freedom to be ourselves. This we then sought; this we now believe that we are by way of winning.

What do we mean when we say that first of all we seek liberty? I often wonder whether we do not rest our hopes too much upon constitutions, upon laws and upon courts. These are false hopes; believe me, these are false hopes. Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can even do much to help it. While it lies there it needs no constitution, no law, no court to save it.

And what is this liberty which must lie in the hearts of men and women? It is not the ruthless, the unbridled will; it is not freedom to do as one likes. That is the denial of liberty, and leads straight to its overthrow. A society in which men recognize no check upon their freedom soon becomes a society where freedom is the possession of only a savage few; as we have learned to our sorrow.

What then is the spirit of liberty? I cannot define it; I can only tell you my own faith. The spirit of liberty is the spirit which is not too sure that it is right; the spirit of liberty is the spirit which seeks to understand the mind of other men and women; the spirit of liberty is the spirit which weighs their interests alongside its own without bias; the spirit of liberty remembers that not even a sparrow falls to earth unheeded; the spirit of liberty is the spirit of Him who, near two thousand years ago, taught mankind that lesson it has never learned but never quite forgotten; that there may be a kingdom where the least shall be heard and considered side by side with the greatest.

And now in that spirit, that spirit of an America which has never been, and which may never be; nay, which never will be except as the conscience and courage of Americans create it; yet in the spirit of that America which lies hidden in some form in the aspirations of us all; in the spirit of that America for which our young men are at this moment fighting and dying; in that spirit of liberty and of America I ask you to rise and with me pledge our faith in the glorious destiny of our beloved country.”

Judge Learned Hand, 21 May 1944

Gold Daily and Silver Weekly - La Douleur du Monde

With Greece and the end of QE2 under its belts, it was 'risk on' for Wall Street as the VIX plummeted and the safe havens of gold, bonds, and the dollar were shunned by funds eager to squeeze the shorts in the equity markets.

What next? Today was very light volumes with Canada Day and the July 4th holiday weekend, and next week will likely also be light trading, with many North Americans away on holiday.

Let the market come to us. The short term trend reversals look overdone, but they may not be over because they suit the FED and the government quite well.

This *could* be a kind of stealth QE3 - market interventions through third parties and jawboning.

And yet at the same time there has been a 'stunning plunge' in commercial gold shorts.

SP 500 and NDX Futures Daily Charts - VIX Drops to Lows, Zynga Files $1B IPO

A coincidence of the Greek crisis and the end of QE2 had a lot of bears leaning into the short side of the market. When Greece was finessed for the short term, and the end of QE2 did not produce the forecast immolation, the short term trends turned sharply, and it was 'risk on' with the dollar and gold and bonds weakly falling and stocks soaring.

So what next? In the short term this equity move looks a bit overdone, but until volumes pick back up it may drift even higher unless something happens. I think it would be hard to be too cynical about this market and the US governance model in general. Lies, easy money, oath-breaking, and double dealing seem to be prevalent.

Zynga Files One Billion Dollar IPO

Late breaking Friday after the close news, the SEC is escalating their investigation of St. Joe's and names chairman Bruce Berkowitz.

Overall the problems in the economy and the financial system are not being dealt with effectively at the source, and the coverups continue. Any time a reform, or even an assertion of the law and justice, is undertaken, the financiers respond with threats of crashing the economy. This is due in large part to their faithful servants in the Republican and Democratic parties, and the weak-kneed American president.

Have a pleasant holiday weekend Americanos, and we'll see how Asia opens on Sunday evening your time.