SP 500 and NDX Futures Daily Charts - Fiscal Cliff

This is the end of the month.

Apply paint to tape, allow to dry.

Comex Open Saw 24 Tonnes of Paper Gold Dumped at Market - Sharks, with Laser Beams

 

I am open to more data and other possibilities, but it certainly looks like the infamous Dr. Evil strategy being employed for the Comex post-option expiration in which a large number of call options are turned into active December futures contracts, and then hit hard with a manipulative price effort the next day. I suggested that this might happen given the way in which the option market closed on Tuesday.  Such phenomena are like old friends now in these markets.

Funny too how roughly the same thing happened in the Silver futures about the same time. Silver is also post option expiration today. 

As you know I used to track the big price drops around key option expiration dates on the precious metal charts.

That is not the only possibility. It could also be some 'tape painting' as the big shorts knock the price down before they close the books on their losing positions for the month. But I am inclined to think it was a special post-expiration event.

And it *could have been* just an unfortunate accident that happened in two different and important global markets simultaneously.  Maybe it just 'vaporized.'

Not to worry, I am sure Bart Chilton and the stalwarts at the CFTC, who are closely watching the gold and silver markets, have already identified the seller(s), and examined their selling motivations, and the size and placement of their 'fat finger.' I am sure they will let us know about it, four or five years from now.

"Gold saw a massive 24 tonne sell order (7,800 contracts) at 08:20 a.m. New York time - bang on the opening of the world's largest gold exchange - which [saw] a fall of 2.25% in the market price.

If the selling was year-end profit-taking then it was inept. Dealers try and finesse big sell orders into the market to get the best (highest) price for the biggest volume they can and thereby optimize profit - that requires stealth. If on the other hand it was a "fat finger" episode as has been suggested with a broker said to be looking to roll his December gold futures contract then it was even more inept.

More likely this could be a short play, with the seller looking to trigger stops below the market at $1730 and thus extend the move significantly lower and thus increase his profits. If so, he certainly caught the market on the hop as the move is counter-intuitive with everything else that is going on in the economy.

Rising concerns about whether Democrats and Republicans can find common ground between tax increases and entitlement spend reduction remains to be seen. More importantly, the US reaches its law-enshrined debt ceiling of $16.4 trillion early to mid February 2012. That promises fireworks again as it did in August 2011 when gold hit an all time high of $1922 as the market stares into the abyss of a possible US debt default.

Against the current economic backdrop, a short seller would have to be quite brave. In short, we will not know the identity or the reason for the sale for a while. Longer term gold investors should not however be deterred - the rationale for buying gold is as favorable as ever and a degree of patience required.

Ross Norman, CEO, Sharps Pixley, London, Flash Crash in Gold - Whodunnit?

All Wall Street Knows Is...

How Iceland Restrained the Anglo-American Banks: CBC Interviews Ólafur Grimsson

As you have read here and elsewhere, there is the 'Japanese model' and the 'Swedish model' for dealing with a crisis caused by asset bubbles and fraud from an oversized financial sector and an overly powerful segment of monied interests. 

It is obviously a simplification to slot such a policy issue into two models, but it has some philosophical validity with regard to the resolution of the bad debt that follows such a period of financial recklessness by the Banks.

I should note that I have rarely if ever seen this sort of broader discussion of other policy alternatives in any mainstream US media, and certainly not during the presidential debates which tended to focus on soft issues, distractions, and style.

The Swedish model favors the disposition of the debt failures on the banks, and their management and bond holders.  The Japanese model seeks to sustain the financial status quo and their associated corporate cartels with public debt and social policy adjustments.

Iceland has famously followed the 'Swedish model.' Perhaps so well it may better be called the 'Iceland model.'

If it is not apparent, what made the difference was the resolute manner in which the people of Iceland rejected the deal offered to them by the Banks and their politicians.

Americans made some initial attempts to prevent such bailouts as in TARP, before their politicians caved in to the 'bullet and the bribe.'  But lost their fervor in the co-opting of the Tea Party movement, and even turned against the Occupy Wall Street movement in the face of a determined media campaign to portray them as outsiders, cranks, and radicals.  

As a smaller nation with a stronger sense of community, the Icelanders receive more of their information from diverse and direct personal sources, rather than through interpretation and packaging of the news by a few large media outlets. They also seem less disposed to make a 'war on the weak' amongst their own people than the larger, more impersonalized nations with less homogenous populations.

The US, the UK, and the rest of Europe are currently following the 'Japanese model' of pretend and extend, supporting those who benefited from the bubble, the wealthy elite, with sovereign debt and a policy of austerity for the public. 

The US and the UK seem likely to do so since they are the home ground of the banking cartel and the financial status quo, but the path that Europe is taking is a bit of a surprise considering they are supposed to be progressive and 'socialists.'  It is no wonder that many of the key decision making slots are being 'handled' as they are by the monied interests, and their friends in big media are weaving a campaign of pride and nationalistic divisiveness to harness the darker side of human nature.  It has worked before, at least twice in Germany during the last century, as you may recall.

Neither approach is easy or perfect.  But it does seem that one is more just and effective than the other.

Net Asset Value Premium of Certain Precious Metal Trusts and Funds - Sprott 'All In' Silver

I was very surprised to see that the Sprott Physical Silver Trust has taken their cash levels, newly replenished by a follow-on offering, down to less than $2 million US dollars with the acquisition of additional ounces of silver bullion. They recently raised at least $270 million in a follow-on offering.

Their press releases do not clearly indicate if the underwriters actually executed on their additional allotment which would have brought this to $310 million. All of it has apparently been used to purchase silver bullion.

No one can say that Eric Sprott and his team is not bullish on silver at these prices.

I have not been able to independently calculate the current 'burn rate' on salaries and expenses because of the persistent activity of expansion, but it does seem that another offering is in the cards for sometime in the first quarter of 2013, unless there is some unbooked cashed still coming or a future redemption of units.

From their September 30, 2012 financial release:

"Operating expenses for the period July 1, 2012 to September 30, 2012 amounted to $377,778 (not including applicable Canadian taxes) compared to $173,762 for the same period in 2011. Operating expenses for the period from January 1, 2012 to September 30, 2012 amounted to $1,343,411 (not including applicable Canadian taxes) compared to $701,448 for the same period in 2011.

The increase in expenses was primarily due to higher legal, audit and listing fees over these periods, as well as an increase in the bullion storage fees associated with the higher volume of physical bullion held by the Trust. Operating expenses for the period from July 1, 2012 to September 30, 2012 amounted to 0.13% of the average net assets during the period on an annualized basis, compared to 0.08% for the same period in 2011.

Sprott Silver has not yet updated their listing of silver bars in inventory from this most recent expansion. As they stated in their press release:

"As of November 12, 2012, the Trust has contracted to purchase a total of approximately 7.127 million troy ounces of physical silver bullion. Once the Trust has taken delivery of all the silver bullion, it will publish the serial numbers of all bars held by the Trust on its website."

So it appears that Sprott Silver is telling the global bullion market, 'stand and deliver,' in London good delivery bars of silver, and not paper promises.

I took my own cash levels down considerably this morning, although I do remain hedged.

Bear Raid In Gold and Silver After Option Expiration

As I noted yesterday, a large number of options were 'in the money' for the Comex option expiration. As you know, these options become active futures contracts on the following day.

"The metals went out on a quiet expiration, with a decent amount of options closing in the money. They will be converted to active futures contracts tomorrow. I expect some market action on this."

It is not unusual for the market manipulators to deliver a serious 'gut-check' to the holders of those contracts, especially those of the spec variety, to try and shake them out of their positions in a forced selling of stop-loss orders and margin calls.

Just another facet of financial repression, times of general deception, and the ongoing war on the public interest.

Let's see what the rest of the week may bring.

War on the Weak, the Elderly, the Disabled, the Outsider

“You may choose to look the other way, but you can never say again that you did not know.”

William Wilberforce

"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people."

Theodor Adorno

Gold Daily and Silver Weekly Charts - Quiet Option Expiration

Today was the last trading day of the month for most US firms.

To preserve and protect, the Wall Street monopoly that is, those vigilant folks at the Gensler CFTC have acted to prohibit Americans from punting their opinions on Intrade. This decision did not take the requisite four years it seems to take that august body of regulators to do anything of benefit for the average American investor.   CFTC Decides to Shut Down InTrade For Americans

The metals went out on a quiet expiration, with a decent amount of options closing in the money. They will be converted to active futures contracts tomorrow. I expect some market action on this.

Nov. 27 Comex December gold options expiry
Nov. 27 Comex December silver options expiry
Nov. 27 Comex December copper options expiry
Nov. 28 Comex December miNY gold futures last trading day
Nov. 28 Comex November copper futures last trading day
Nov. 28 Comex December E-mini copper futures last trading day
Nov. 28 Comex December miNY silver futures last trading day
Nov. 30 Comex December gold futures first notice day
Nov. 30 Comex December silver futures first notice day
Nov. 30 Comex December copper futures first notice day
Nov. 30 Nymex December palladium futures first notice day

Fed Warns of Risk of Financial Cyber Attacks