Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

The number of shares outstanding in the Sprott Silver Trust have been reduced slightly. The cash levels in that fund are very low. A new tranche of units from their shelf is indicated.

I would be quite surprised if plans are not underway, with the sticking point being the negotiation for large quantities of silver available for delivery at these prices in some reasonable timeframe.

MF Global Sold Assets to Goldman While It Was Looting Their Customer Accounts

It turns out that MF Global sold hundred of millions in assets to Goldman in the last two business days before its bankruptcy. It is not clear that MF Global actually received the payment for the sale, or if the funds were held by their clearing agent and banker, JP Morgan, who knew that they were going to be bankrupt.

That revolving line of credit at JPM of $1.2 Billion is about the size of the missing customer funds.

I wonder if JPM withheld payment on the sale of Goldman assets, and took customer assets as collateral for the credit line. As MF Global's banker they were at the center of most if not all of these transactions.

The idea that the customer money was 'missing' is ludicrous. It would be more correct to say that the ownership of the money was disputed, and was in the hands of JP Morgan and perhaps Goldman.

These are serious offenses. But it becomes even worse if JPM afterwards sought to withhold the stolen funds and cover up the transactions, impeding an official investigation. And then their legal maneuvering afterwards to cut the customer interests in the courts is of course beneath contempt.

Nasty business indeed. I wonder how long the Obama Administration and the Congress are going to cover this up. I am sure the details are known to the regulators already.

I still remain hopeful that the customers will receive their funds. I am not so confident at all that justice will be done. At least the UK has placed the last minute London traders bonuses at the end of the queue.

As far as the restoration of sound markets and money, the looting is only just begun.

Reuters
MF Global sold assets to Goldman before collapse: sources
By Lauren Tara LaCapra and Matthew Goldstein
January 3, 2012

(Reuters) - MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co , one of the sources said.

The sale of securities to Goldman occurred on October 27, just days before MF Global Holdings Ltd filed for bankruptcy on October 31, the ex-employees said. One of the employees said the transaction was cleared with JPMorgan Chase.

At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.

JPMorgan spokeswoman Mary Sedarat said the bank did not withold money because of the line of credit. She declined further comment on details of the transactions.

JPMorgan has fought aggressively in bankruptcy court to protect its interests, and received a lien on some of MF Global's assets in exchange for granting the firm $8 million to fund its bankruptcy costs. The lien puts JPMorgan's interests ahead of MF Global customers who have not yet received an estimated $900 million worth of money from their accounts, which remain frozen as regulators search for missing funds.

The hastily crafted transactions and the seeming inability of MF Global to recoup some of the money in the sale to Goldman may start to explain why so much money remains unaccounted for at the futures firm.

It is unclear what type of assets Goldman bought from MF Global, but the securities were worth hundreds of millions of dollars, the former employees said. The sources spoke on the condition of anonymity...

Read the rest here.

Gold Daily and Silver Weekly Charts - Big Rally From Year End Mark-To-Market Boogie Woogie

It appears that the theory that the big shorts were slamming down gold and silver into the year end *might* be valid, given the huge rally today.

But it is too soon to say for sure. I have drawn a short term downtrend line on the gold chart that is a 'must take' for the bulls.

If they can take it out, that's a nice bull flag there on the chart that gets activated.

Non-Farm Payrolls report on Friday and the Euro-whiz kids meet again on the 9th to puzzle through their Gordian knot of a currency and political system.

I read the book Currency Wars by Rickards over the holiday. It was interesting, and is worthwhile for those not familiar with the money and metals markets. His history of the currency wars and old is enlightening. There is not as much 'meat on the bone' in this book as there was in Econned for example, and it is an easier read, but Rickards knows what he is talking about and says his piece well.

I took a 'test' that estimates one's political orientation last week, and it confirmed that I am still almost dead center, just a little to the liberal side but not much. I thought that this was the case and was glad to see the confirmation. 2012 is not going to be a good year for moderates.

I read somewhere today that sociopaths and psychopaths in business are not a problem because people just shun them eventually so the market is naturally self-policing and self-correcting. Ah, if only this pretty piece of idealism was the case. Of course it is just another variation of the efficient markets hypothesis .

This used to be a favorite argument of Bill Buckley and William Rickenbacker when they used to discuss the issue of market regulation.  Anyone who has been in security or fraud investigation knows it is utter nonsense.

Conmen are like cockroaches.  And the better class of white collar crooks are exceptionally devious and manipulative, and often set up sinecures and monopolies that are rather long-lived in addition to their various frauds which are easily replicated and recycled from place to place.

But people keep drifting back to the assumption that information is symmetric and transparent, markets inherently fair, and most people are good. Like a dog returns to its vomit, so idealists and the deluded return to the natural goodness of business and markets to justify some of the most outrageous howlers of arguments over and over again.

The number one son and his friends are home from University so this dad is deep into computer repairs and cooking favorite meals. It does not get much better than this.

SP 500 and NDX Futures Daily Charts - Pop Go the Weasels

Market popped with a big gap open and then chopped around finishing slightly lower than the open on the day, but still significantly higher on light volume. If you were long coming in to today you could make money.

The Non-Farm Payrolls for December is on Friday and there is another Europe meeting on the 9th so these events may cap a new rally until they unfold.

The Fed announced a new 'communications campaign' wherein they will release their economic outlooks. Consider how bad their forecasts have been in the past this looks like just a broadening of their jawboning reach for the management of market perceptions.

The big gap open set up the potential for an 'island top' if we get a gap down on the open tomorrow. So the ball is definitely in the bulls court. Since the volume is so low they can easily take the ball and run if there is no overnight news of the disturbing kind.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds

Corrections In The Gold Bull Market

Here is an excellent review of the corrections in this gold bull market by my friend Brian at ContraryInvestor.com.

The Most Significant Developments of 2011 with Trends in 2012

As always the four great variables in human history are weather, disease, war, and religion.  The first two are of God and the latter of men.

Weather spans a wide range of natural phenomenon including earthquakes, and similarly religion includes secular movements and philosophies such as fascism and communism,  essentially godless religions that involve the ordering of the relationship of the individual with a higher power that is not supernatural.

I do not address stocks, including the miners, specifically as I see that investment sector as extraordinarily risky. Tell me what the Fed and ECB will do and I will tell you how stocks will perform. That is the nature of this market.   The pricing of stocks remains largely inefficient, and often with a fraudulent intent.

As I am comfortable with stagflation as an economic forecast, stocks most likely will not perform well in real terms. However, they could be targeted by the Fed as they implement nominal GDP growth and it puts more weight on selective inflation within the stagnant real economy.

Stocks tend to play the role of a variable hedge in my forecast and my own portfolio. The bigger investments are bonds, including cash which is a bond of zero duration, and alternative currencies like gold and silver, oil and income producing physical assets.

The most significant development of the past year has been revelation of fraud and the growing power of the monied interests to subvert reform and the rule of law.

1. Wall Street dropped some of its pretense to fairness and softer forms of fraud and resorted to overt theft as MF Global stole significant sums of money, bonds, and bullion assets directly from customer accounts, under the eyes of the regulators, and transferred the money to its global bankers who refused to give it back.

Trend: Theft by the financiers will continue and intensify. The victims will be vilified to blunt public reaction.

2. The Eurozone came under unremitting assault by the ratings agencies and their associated banks and hedge funds. The Euro is an inherently 'difficult' currency to manage and has always been more susceptible to broad swings in value. This is because it is an economic union without a comprehensive political and financial union. It more closely resembles the original thirteen states of the US under the Articles of Confederation than it does a comprehensive Republic.

Trend: The Eurozone will continue to struggle to find a balance between political and financial factors, and will evolve into a stronger union of fewer members. Germany and France will continue to emerge as the great Western European power. The UK will be preoccupied by its own set of severe internal problems and regional unrest as austerity bites deeply. The UK will begin to act as more of an Anglo-American agent in the Eurozone. It may take on more of the character of an Orwellian state.

3. The Federal Reserve is expanding its power as a monetary authority and regulator of the financial system in an extra-Constitutional manner. The Fed is determined to fight the deflationary forces of global trade and credit contraction by expanding its balance sheet. They have little fear of inflation. Hyperinflation is highly unlikely in the absence of an exogenous shock. Stagflation is the new normal disguised somewhat by government statistics.

Trend: The Fed will start a new program of 'nominal GDP targeting' without stated limits in size of activity, as it will be defined by the scope of its objectives. The bond bubble will continue particularly in the long end of the curve. It will falter and breakdown at some point, but this is not likely in the near term unless some external standard is imposed or exogenous force intervenes.

4. A currency war is well underway in the aftermath of the closing of the gold window and the erosion of the Bretton Woods agreement, into an uneasy floating exchange rate system known informally as 'Bretton Woods II.' This currency war manifests in currency devaluations and pegs in support of mercantilism, particularly in the developing countries. It is a form of neo-colonialism supported by the great multinational corporations.

Trend: Global trade will begin to come under greater political assault as the exchange rate mechanism fails to impose a reasonable balance on the flows of goods and capital. The SDR is the most likely replacement for the US dollar as the world migrates towards a dual currency regime with one currency for domestic only use and an international unit for the settlement of world trade. The composition of the SDR will be a major point of contention between the BRICs and the Anglo-Americans.

5. The US political process is dominated by Big Money, a system in which a small number of people choose the candidates which will be allowed on the final ballot despite great pretense of a selection process and primaries. Despite the usual emotional heat expressed by a minority on each side in any competitive process, the end result is that no candidates can be chosen without being vetted and approved by the monied interests. This tends to continue to promote and support a status quo.

Trend: There may be a third party candidate, and perhaps one other fourth party of any real significance, but the end choice will be between Obama and Romney who are the corporate candidates. Strong voter dissatisfaction will cause minority parties to secede from the two major political parties, including at least one crypto-fascist movement and one progress movement. Watch for a rising current of racism, and attempts to make prejudice socially acceptable, and a growing class hatred. There will be major riots and demonstrations each summer from now until 2020 or a return to representative government.

6. As the global monetary regime continues its change, the US dollar continues to be stretched thinly. Despite all the odds and strong opposition from Western central banks and monetary authorities, gold has sustained an eleven year bull market.

Trend: Gold is in a bull market that will last until around 2020, or until the global monetary system reaches a sustainable equilibrium with a replacement for the US dollar as the reserve currency that is acceptable to the new economic powers. Silver and gold will continue to move with significant volatility as their prices increase. Bonds are the current asset bubble. At some point this may break as the housing market has done, and this will have a negative impact for gold if interest rates on the short end turn positive. This may not happen if inflation increases faster than interest rates rise.

7. China and Russia have replaced their command and control communist economies with command and control oligarchies. The power of China is the exploitation of labor, and of Russia, natural resources. Despite their calm outward appearance, there is significant turmoil beneath the surface, often regional in nature.

Trend: The governments of the world will continue to be shaken by the restructuring of the world economy. Change and calls for reform will most often be met by repression, often harsh. The world will continue to develop into three or four spheres of influence, with the greatest unrest and limited wars on the fringes of those spheres. The most frequent conflicts will be where Europe meets Asia, and Asia meets the subcontinent.

I hesitate to put forward such a gloomy outlook, but this is in keeping with the forecast I put out in 2005 and it seems that most of the trends have occurred and even intensified. This is a period of great change, and this presents both risks and rewards.

And as always, against the backdrop of great events, while nations rise and fall, the life of the ordinary family goes on. 'There are these three things that endure: faith, hope and love, and the greatest of these is Love,' for it is the highest likeness to God in this world.

Warren Pollock Interviews James Kotoulas on MF Global and JP Morgan's Role In Its Bankruptcy