Saturday, May 14, 2011

QE3, come on baby, print that shit!

Crimex news:

-ZERO-I sound like a broken record-deposits to the dealer

-ZERO deposits to customer, check.
-ZERO deposits to dealer, check.
-2 deliveries in a delivery month? Priceless.

The metals markets are starting to look like shit again (bullish) like they did in November.

As for the ETF's, I'll let Harvy take this one away with a great point:

"London has seen a flurry of activity where some physical players refuse to forward any of their gold contracts at the LBMA and instead take the physical totally out of London vaults. This causes the Bank of England to muster up supplies so it calls upon our illustrious hoodlums, JPMorgan, Goldman Sachs, to deliver gold to our buyers. They raid the GLD by taking shares and cashing them for gold and deliver upon the anxious investor. The problem is thus two fold:

the shareholders of GLD are losing "their gold"
the bank of England is also losing their gold.

Immediately after GLD was formed, we could not balance demand vs supply of gold. However
Catherine Fitts determined that the GLD got their original gold through a swap arrangement with the Bank of England. The Bank moved its gold over to the cubby hole of the GLD. The GLD deposited money into the Bank's account. The Bank of England can reswap at any time they wish. If you remove the GLD inventory then all BIS data balances perfectly. There is a further problem here in that the gold on deposit to the Bank of England is not really the Banks but depositors like the Arabs or other sovereign folk who desire to deposit gold for safekeeping. The Bank of England is a foreign depository for gold just like the Federal Bank of New York with one distinction. The gold at the Bank of New York is ear-marked gold and cannot be used by the Bank in lending activities etc. The gold at the Bank of England is not ear marked and they can use the gold for lending purposes just like you depositing cash into your bank. The bank can loan out your money and that is what they are doing with the gold. This is why a default here will be a much bigger bang and a default over at the comex."

COT report:

Gold: the JPM's added 16,484 contracts long and only covered 2, 037.
Silver: the JPM's added 2523 contracts long, and fuck me sideways added 1,399 MORE SHORT. HOLY FUCK. They didnt cover anything from $49-32? Not too sure what to make of this.

To QE3 or not to QE3, that is the question...

Either way we will see $75 in 2011. Most likely fall, when Benny turns up the presses again and floats JPM another 500 bill in electronic transfer if worthless digits (why spend money printing when you can click a button?)

More to come later, relax, have a beer, enjoy the weather (and if you have winds coming in off Japan, stay inside, it might get a little acidic out there soon.) Thank me lots!


  1. On the 13th I got:


    Margin requirements were raised on silver in Shanghai last night. This should
    have had a negative effect on silver, but silver is trading up.

    The above is an indication that in the short term silver has found a support.

  2. I'm sounding like a broken record too. The Asians have been buying this dip like crazy. Got paper??

  3. And the scheme continues. I think it will last until *next* year - people are still ok with dollars.

  4. @zepster: I politely disagree. We are in unprecedented times and the waterfall collapse in the fiats can happen at a moment's notice for no reason whatsoever. The average person may just get a notice of 15 minutes to adapt. There's no way to time this or conduct any technical analysis (just like the collapse of 2008)

  5. Just won another round of physical @ $58...
    and I feel like a winner, lol.

    Also I invested in corn and wheat buy options.
    (Im into radiation physics and the farmers will panic soon over the "alarming" although non-dangerous levels hitting their fields..)
    Still, corn can be used as ethanol fuel without taking into consideration the inherent Cesium-137, but McDonalds cant be without wheat bread, can they?

    Also, in case of ObamaNuke, it will probably send foodprices through the roof, dont wanna miss that satanic Doomsday jackpot!

  6. here's something interesting about silver margin decreases in Asia:

  7. SGS,

    How do you see $75 this year without QE3? $75 silver makes perfect sense with more QE, but doesnt conventional wisdom say PMs crash (at least in the short term) without more stimulus?

  8. Sean: We will get QE3, just dont know if its July, or the moon alice.

  9. @ Sean

    Why would PM's crash? We are in a totally opposite market than we were in 2008. In 2008, the hedge funds and investment banks were LONG miners and metals. When markets tanked, they had to reduce their net leveraged positions, and they sold everything but the kitchen sink. First ones out the door were metals and miners. Today, in 2011, the hedge funds and banks (at the behest of the US government) are SHORT metals and miners. In a market collapse, they can't liquidate positions they don't have. I think when QE2 ends, commodities and miners are going to see a flight to safety/quality and stay buoyant. When QE3 is brought in to get Obama re-elected, metals are going to the moon. That is why this bear raid just happened on silver. They want to knock it down, because they know it is going to explode back up soon. They would prefer it exploded from mid-30s than from $50.

  10. I love The Greater Fool Theory.

    Dot Com stocks. The Greater Fool Theory.

    Housing Bubble. The Greater Fool Theory.

    Silver ? The Greater Fool Theory again, however The Greater Fools are those still in fiat.

  11. SB: here is one thing. Most people don't know what is going on. Oh, hell yes they are picking their favorite "Idol", but gold & silver? Even though they don't know why, fiat will dominate 99% of the sheeps lives. As long as they have their $200 cell phones, can surf the 'net...what the hell do they care? That is why I am so concerned for our future. Don't think you should be concerned? Have you ever gone to a Wal-Mart or a dollar store at the beginning of a month? Those people make up a very large percentage of the population. Before I get attacked: I do shop at both places. Nothing wrong with it (shopping there). But, I get to observe people when I am there, and it is F'n scary! Don't let this small community of a few hundred cloud your judgement on/of 310,000,000 +/-

  12. so if JP Morgue is adding more short positions, then are we truly fooked for the next 6 months+?

    why would they do this and not cover?

  13. Total guess: JPM isn't covering because
    1) they will cover after forcing metals lower because they know that the markets will crash and they can cover at that time
    2) they never need to cover - COMEX will change the rules before a default: see what happened to the Hunt brothers in 1980. If the COMEX will become irrelevant... then it won't matter what COMEX does ultimately. JPM is covered.
    Physical is your only protection since price will be discovered with or without the COMEX.

  14. fwiw,

    i listen to most everything chapman is on during the week, 6+ hours, maybe he's not THE greatest man in metals but he def has more interesting stories than anyone else about where he's lived, that he caddied for joe kennedy, NAVY INTEL, Wall street investor, and where he's lived abroad... been listening to him for years.... anyhow he about guarantees QE3, and says if they dont name it that the same results will happen one way or another

  15. is "QE to infinity" a made silver bull confidence story like the "comex has no silver"?

  16. @ waffen... “A default would inflict catastrophic far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment...Even a short-term default could cause irrevocable damage to the economy." -timothy geithner-

    does this seem like a story to you?

  17. 2pac.. that is a reference to default.

    if QE ends it doesnt 100% mean default, or atleast thats my point, we do not know that to be the case.

    Geitner's comments were in regards to the debt ceiling right?

    I want to believe and certainly did believe that we will have QE to infinity. But this may not be the case just as the "comex has no silver" appears to have bene wrong.

    Are we 100% certain the fed does not have another way out?

  18. SGS - Thanks for the response. I enjoy the blog and love the bear vids.

    IS - Dont take much from my post - I'm here to learn. I'm a new to this game and have only started educating myself in the past few months. The majority opinion, based on what I've read, is that we will see a correction in PMs and stocks after QE2... at least until round 3 is announced, in which case prices take off.

  19. Colin, I have followed and had many correspondences with Bob Chapman over the years. After doing my research I have come to the conclusion he is nothing but a penny stock scam artist. Here is some background info*SEC-1635577&symbol=*SEC&news_region=C*SEC-1802816&symbol=*SEC&news_region=C*SEC-1525786&symbol=*SEC&news_region=C

    He always says on radio shows that he owns no stocks and he is only paid by subscribers but that is obviously a lie. A few weeks ago he was claiming that silver would have no resistance at $50 and a comex default was upon us soon. At that point I knew we were in for a correction.

    Bob Chapman is basically a cheer leader who is wrong more than right. He uses whatever numbers Jim Sinclair and James Turk have for his targets and most of the other info he gives is available on any conspiracy site for free.

    His stock picks are either obvious such as AEM, SSO, G and MFL or are extremely risky penny stocks that are usually nothing but shells with no resources defined.

    Look at the 5 year chart for v.kps. You will see it peaked at $15 ($1.50 before 10:1 rollback). Right at its peak Chapman emailed all his subscribers( including me) to load up on KPS because the train was about to leave the station. I dumped all my KPS shares when I received the email since I had already figured Chapman out at that point. I'm pretty sure Bob dumped his shares as well. Many subscribers were burnt because Bob kept telling them to buy all the way down.

    ALV/REM is another shell Chapman recommended at the stock's high point and has done nothing but go down since. I am pretty sure Bob had cheap free shares in ALV/REM since he claimed the stock would go to $20-$40 in the near future (6 months). He recommended it at $1.30

    "We believe this stock could be over C$20.00 by September and we believe there is a strong possibility that this project could be favorably looked upon by a major mining company as an acquisition.

    We wouldn’t be surprised if there was a spin-off of the copper, lead, zinc deposit, which would add additional value to the company. It could be at higher gold and silver prices – we just might see C$40.00 a share."

    Bob Chapman is getting pretty popular with the increase in metal prices and his appearance on Alex Jones, but don't fall for his Bullshit claims about being 97% correct.

  20. Picked up 200 oz of some phizz this week on the lows!!! Print baby print and die USD$

  21. IslandStyle - Commodities are only going up because of QE. Once that is removed prices will certainly moderate and there will be no so-called "flight to safety." Especially not to the miners. The miners weren't even safe during the huge bull run silver just put on much less once silver starts moderating in price. SGS is right - It's going to take QE3 to really light another leg up, and it most likely will come, because the alternative is a deflationary death spiral. Between here and there however there is a great chasm of uncertainty.

  22. My personal thought on the QE is that we will have more no doubt. However, I don't think they will call it that. I think they will back door it somehow. Don't know how exactly. Manufactured crisis? Somebody needs a huge bailout later this year? I don't think they'll come out and call it QE3.

  23. I feel like a Cubs fan when it comes to AG.. "Wait til next year"

  24. So, my (admittedly basic) understanding of all this is:
    Short term (next couple of months) Drop in Silver spot price.($25-30???)
    Long term (3 months +) the spot price is going to go through the roof? ($75+??)
    Please correct me if I'm wrong here.

  25. ADDlestrop: noone knows. Well, that bitch Blythe, JPM, HSBC, GS and the Fed do...but they ain't talkin' Good luck

  26. Addlestrop: if you're wondering if you should buy physical bullion, then the answer is yes. HOWEVER, long store food and many, many cases of water should come first. As much as I LOVE and believe in precious metals, I can't eat the damn things. efoods direct has delicious long store food (BTW, I make NO MONEY out of recommending them).

  27. Thanks Ledbedder!
    Now would someone mind clarifying "covering their positions" and the implications of this.
    Muchly obliged.

  28. ADDLESTROP: "covering their positions". In a very quick sentence: do the opposite of the position (long, short, straddle, etc.) you are currently in.

  29. So say silver hits $500/oz won't everything else be costing x times more as well? Isn't all the stuff that is using silver in it's products going to cost a whole lot more? If we go hyperinflationary, won't having a home/car loan with a fixed interest rate be a plus because you can pay it off with worthless fiat?

  30. Bongo:
    Yes, yes, and yes...IF we go into hyperinflation. If we dont, a $300K mortgage at 17% doesn't sound so delicious.

  31. Well, I meant having that fixed rate at something a little lower, not getting one after things start to go ballistic (if that's even possible any more). Paying off a $300k mortgage with funny money when a loaf of bread costs $500 and a used car is a 1/2 a mil sounds like a good way to stick it to the banksters. Maybe that's one of the many reasons they aren't making many loans right now. Just a thought.

  32. Physical vs paper divergence - check out small order price at Apmex for ASEs:

  33. It was Aussie/Asian trade May 1st that started the tumble in Silver. There could be a repeat tonight. A rapid unwinding that would drive many Silver investors out never to return.
    As well this would aid in the goal of deflationary event to aid implementation of QE3 without interruption of funds.

  34. "Physical vs paper divergence - check out small order price at Apmex for ASEs"

    The premium is $5.29 on coins they may have paid a higher price for a few weeks ago. Yes premiums have risen quite a bit in absolute terms but as a percentage of spot they're still pretty close to what they were a year ago. Am I wrong about that?

  35. These premiums may be just because the online dealers don't have the kind of inventory on hand that a dealer like CMI has. They jack up the prices because they have to make up the loss in the price of silver if they paid more. CMI has contracts and their premiums are steady. My guy and I have discussed this a couple of times, most recently on Friday.