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The world’s leading silver expert David Morgan joins The Doc & Eric Dubin this week to discuss: 

  • The Fed tapers official QE another $10 billion- gold & silver whacked the day after the FOMC statement yet again
  • David breaks down gold and silver trading over the first half of 2014:  Gold & Silver still base building a Major Bottom
  • Is the next banking crisis beginning? Banco Espírito Santo’s share price halved on  Thursday
  • Be right and sit tight?  David explains why the PM markets will scare you out or wear you out
  • We ask David how he sees the end-game for the dollar playing out- will we see a deflationary crash, or a hyper-inflation monetary collapse,  and how will PMs protect wealth against both?
  • On the Brink?  Washington driving West towards direct conflict with Russia

The SD Weekly Metals & Markets With The Doc, Eric Dubin, and David Morgan is below:


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What?  Traders worry?

We recorded this week’s show Thursday afternoon, only hours after Banco Espírito Santo’s share price more than halved.  As we all know and would expect, the financial press has been parroting official sector denial about the gravity of this problem for well over a month.  But fears of a deflation contagion is spreading.

Add on top of this Argentina’s latest debt default, a whole swath of disappointing corporate earnings reports, continued Fed tapering (now down to $25 billion in asset purchases per month), raging geopolitical tensions and the stage was set for a big hair-cut for the general equities market.  The Standard & Poor’s 500 Index declined 2% while the VIX index measuring volatility leaped 27% after a multi-month downtrend in the face of astounding levels of investor and speculator complacency.

Market volatility is rising after the S&P 500 ended its longest stretch of calm since 1995. Including today, the index has posted gains or losses of more than 1 percent three times in the past two weeks, compared with no equivalent moves during the 62 days through July 16th.

VIX - 3 years - July 31 - 2014

Deflationary bust or inflation blow-off:  David Morgan’s Take

With this as backdrop, our visit with David Morgan couldn’t have been better timed.  David is a “big picture” thinker, and he’s well versed in market history.  Ultimately, he believes an inflationary blow off will develop and I share his view.  But there’s a distinct and rising probability we might see a deflationary implosion first, which will usher in another tidal wave of fiat debt creation to float the Western financial system.  That cycle played out during the last financial crisis, but with a large percentage of the impacts of inflationary credit expansion simply canceled out as bad debt transitioned to “money heaven,” courtesy of undertaker Ben Bernanke.

It’s a bit disconcerting to watch oil dive right along with gold, silver and the general equities market.  West Texas Intermediate Crude slid 1.78% today, primarily driven by economic slowdown concerns.  But we’re probably also seeing a modest increase in the pricing in of rising probability of a deflationary “accident.”  We’ll have to keep a close eye on the credit default swap market, credit spreads in general and the smoke billowing out of Portugal because we already see plenty of smoke and it’s just a question of how big the fire will prove to be.  With a combination of a bail-in of depositor funds and bond holders taking a hit, the powers that be will probably succeed in ring-fencing Banco Espírito Santo and, in turn, protect against associated counter-parties becoming a long chain of falling dominoes.  It’s safe to assume Janet Yellen isn’t having a good week.

Tune in to the show for David’s big picture take on the perennial inflation/deflation debate.  Click here to visit his website.

gold - july 31

silver - july 31 - 2014

Gold and silver whacked

The last two weeks have been irritating to say the least.  Historically, gold is almost always taken to the woodshed and beaten down during the initial phase of significant geopolitical events.  Add to this the concerted effort to take gold under $1,320 and then $1,300 to ensure the bullion banks not having to pay long options speculators and viola, another month of farcical COMEX trading comes to a close.  Pity.  The first half of July saw significant departures from normal cartel capping patterns we reported on, which underpinned our expectation that higher prices would continue through the entire month.  Nevertheless, the cartel hasn’t been able to engineer sustained price declines during 2014 and early August will likely prove no different, with an upside reversal in the near-term.

Given the escalating turmoil on the geopolitical front, be sure to check out the Geopolitics section of The News Doctors this weekend;  click here.  I will be hand selecting insightful reports and publishing all weekend.

Thanks for tuning in!  – Eric Dubin, analyst, TND Managing Editor and occasional Flying Wombat.

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    • Hyperinflation needs money velocity. The banks the Fed doll out QE to don’t lend it to the “traditional” economy, at least not via metrics that affect rigged GDP/GNP/DOW/NASDAQ numbers. No velocity, no hyperinflation. ‘Tis as simple as that. Their algorithms can keep this dog and pony show going as long as they need to :/ 

    • Wait a minute: Hyperinflation is simply a loss of confidence in the currency. Increased money velocity is a natural byproduct of hyperinflation. In other words, high velocity doesn’t HAVE to come first!

    • @exeter No, hyperinflation is a very specific condition if you’re a believer in the “Quantity Theory of Money,” which I don’t know if I am, but for the purposes of this explanation, I’ll pretend I’m a traditional Misesian “Austrian Economist” or a traditional “Keynesian Economist,” as they both believe in the QToM.

      Hyperinflation requires two conditions: An increase in the money supply COINCIDING with increased money velocity. This is its definition. It’s not simply “a loss of confidence in the currency.” The money being printed HAS to be spent for hyperinflation to occur; no increased circulation of the increased money supply, no hyperinflation. Plain and simple. If the banksters decide to start actually lending QE domestically to people who will spend it, then yeah, hyperinflation, here we come. But they’re not doing that; they’re lending to foreign powers and propping up foreign Central Banks.

      Could that inflation “come home” at some point? Possibly, but when that day approaches, the criminals will just change the rules yet again.

    • @CerebralIndustrialComplex Thanks for the reply!
      I wholeheartedly agree that hyperinflation must “coincide” with a very high money velocity. Although at a quantum level, my position is that potential scenarios exist where hyperinflation would precede increased money velocity. For example, there could be an unforeseen event that destroyed all confidence in the US dollar tomorrow on a moment’s notice. In that case, BANG!, velocity would go from today’s low level to skyrocketing almost instantaneously.
      My original response was based on the assumption that “Hyperinflation needs money velocity” — to me, that infers money velocity must be present first. I don’t think that is true; I believe there are scenarios (however rare) where confidence can be lost in a currency regardless of how much of it is printed.
       

  1. “Ultimately, he believes an inflationary blow off will develop and I share his view.  But there’s a distinct and rising probability we might see a deflationary implosion first, which will usher in another tidal wave of fiat debt creation to float the Western financial system.”
     
    While this is certainly possible, it is also likely that the banksters will stick to their usual formula of giddy inflation / let the good times roll / Roaring Twenties approach which is THEN followed by a deflationary depression.  This plan has been followed multiple times in various 1800s “Panics”, which we today call recessions, and the biggest panic of them all, The Great Depression.  Given this, perhaps the plan will be to throw so much money around that the economy gets a BIG shot of adrenalin, is more than sufficiently goosed, and then collapses afterwards.  While the Fed can easily goose the currency supply to create inflation, it is more difficult to withdraw money from the economy to get the desired deflation.  But, with the experience that the banksters have gotten over the years, I have no doubt that they will be able to achieve this… again.  After all, it HAS been 80+ years since the last time they pulled this trick and stolen VAST amounts of wealth from America’s citizens.  It surely must be about time to try it again.
     
    “It’s a bit disconcerting to watch oil dive right along with gold, silver and the general equities market.  West Texas Intermediate Crude slid 1.78% today, primarily driven by economic slowdown concerns.”
     
    It doesn’t bother me at all to see commodities making sector moves in the market.  Whether that is up or down, it is reasonable in light of the fact that commodities ARE a specific sector and should have a great deal in common with each other.  Their general tendency will be to move in the same general direction, unless specific events disrupt this usual tandem movement.  That stocks are moving in tandem with this at the moment is a bit odd but is perhaps explained by the current geo-political brouhaha in Ukraine, Syria, and Israel.  
     
    What is most interesting to me in all this is that the US$ is acting so strongly.  Could it be that the US Gov has FINALLY gotten its act together and is behaving in a financially responsible manner?  Nope, that’s not it.  Well, could it be that the Fed is printing less money these days?  Nope, that’s not it either.  OK, so there’s really only one other item left and that is the dollar is rising because it floats against the other major fiat currencies of the world and they suck MORE than does the US$ at the moment.  Yes!  That IS it!  When the US$ becomes stronger, virtually all other assets decline because they are denominated in US$.  A stronger dollar buys more goods, just as a weaker dollar buys fewer goods.  This also applies to other currencies with them tending to move in a direction that is in opposition to the US$’s movement.
     
    Added to this is that we can think of gold as the “un-dollar” or “non-dollar”.  Gold and the US$ almost always move in opposition to one another.  A stronger dollar buys more gold while a weaker one buys less gold.  We see this primarily in the “price” of gold, although to be correct here it is not the price of gold that changes.  It is the value of our floating currency.  Consider gold to be THE world’s monetary standard, even though there is no real gold standard these days.  If the value of gold is fixed, then it is everything else that floats against it, moving up and down vs. gold as economic conditions change.  It is very common in scientific work to choose one thing in a system as the standard and then compare everything else in that system to the standard.  IMO, gold fills this need in the monetary system.  Central Banks think this as well because in spite of their anti-gold rhetoric, they own a LOT of gold and they have continued to hold gold long after gold ceased being the official  money standard.  Despite Bernanke’s comments to the contrary, banks do not consider gold as a mere asset or as a commodity.  If they did, they would store other commodities in their vaults and they do not.  They store GOLD in their vaults because in their tiny little black hearts they KNOW that GOLD IS MONEY… and where else but in a vault would one find money in very large amounts? 
     
    “With a combination of a bail-in of depositor funds and bond holders taking a hit, the powers that be will probably succeed in ring-fencing Banco Espírito Santo and, in turn, protect against associated counter-parties becoming a long chain of falling dominoes.”
     
    The problem here is that once we get to discussing derivative losses, we run face-first into the fact that derivatives are highly leveraged.  In some cases the leverage amounts to somewhere between 30 and 50 times the original investment.  In other cases, it is MUCH higher than this… hundreds of times, even.  It is not difficult to “do the math” and quickly discover that there isn’t enough money to be squeezed out of the depositors or the bond holders of a bank with very large derivatives obligations.  In fact, it is likely that this will amount to a relatively small fraction of the derivatives liability.  
     
    Think of this in terms like JPM bank having a net worth of about $215B but a derivatives liability of $72T… which is better than 334 to 1 in leverage.  Put another way, if JPM were to take a derivatives hit equal to 0.03 cents on the dollar of their holdings, they would be bankrupt with 100% of their equity required to meet those derivatives obligations.  If we look at JPM’s total assets, which includes money deposited with them as well as the value of their bonds, of about $2.5T, things look a bit better but this is still leveraged about 30 to 1.  
     
    Given all this, a full-blown derivatives collapse cannot be paid for with a bank’s assets or those of their customers.  The bank’s management has literally bet the company AND their depositors and bond holders money on the smoke-and-mirrors financial instruments called derivatives.  Now, expand this across the entire financial sector and it is easy to see why this is such a tremendous threat to the entire world $70T economy.  There simply is not and cannot be enough money on the entire planet to handle a complete derivatives collapse, should one occur.
     

    http://www.zerohedge.com/news/2013-04-29/728-trillion-presenting-bank-biggest-derivative-exposure-world-hint-not-jpmorgan

     

    http://en.wikipedia.org/wiki/JPMorgan_Chase

    • Ed,

      The April 2009 period through today has been massively inflationary for financial assets, particularly when one considers said assets had to counter the deflationary bust.  That already represents the “inflation first” portion of the bankster formula.  It could very well keep on keeping on!  But given the derivatives and connected bond market bubbles, it’s entirely possible to see problems at a specific banking institution – or a handful of them – trigger a derivatives implosion on account of ridiculously levered and under-collateralized counter-parties.  A number of things could then develop:  1)  The big one on the order of 2007-2009 or MUCH bigger;  2) something that’s ultimately contained given bail-ins (which can only work for a limited situation w/ just a small number of busted banks) and more importantly, hyper-liquidity from central banks.

      Either way, we’d be talking about deflation ripping through the markets and make no mistake, many investors and speculators all around the world were thinking about these possibilities and acting accordingly during this week’s trading.  That is why oil’s move is important, because part of the reason it is diving is on account of the fact that it’s mega-sensitive to economic trends and I contend the decline wasn’t just a reflection of generic, renewed concern about an economic slowdown and lower oil demand reflecting investor sentiment about economic statistics, etc., but also the compounding of the probability for an economic slowdown should the global financial system witness Portugal serving as the catalyst for falling dominoes, which would then spill over into the real economy, compounding a slowdown.  In fact, silver’s pathetic inability to sustain a bid Friday even though gold leaped higher also fits into this thesis because it’s far more deflationary-sensitive to the downside versus gold.  Ultimately, it’s exceedingly difficult to make that assessment about Friday’s silver trade given how easy the silver market is susceptible to manipulation.  For all we know, Friday’s silver performance could have been due to a proactive JPM hissy fit, kicking silver down further.  But silver’s move Friday does match the thesis.  Oil, being more difficult to manipulate given that it’s a vastly larger market, needs to be “listened to” when the tape sends signals.  I presented the decline in the context of a bleeding-edge signal, and through August it’s going to be critical to keep an eye on credit default swaps, credit spreads, etc.

      Like you, I remain mostly in the camp that we’ll continue to see much more financial asset inflation before we get sustained deflation on account of a derivatives-driven conveyor belt that sends financial assets to “money heaven.”  But it’s clear that in the very least, the risk of a serious deflationary intermission before still further central bank driven credit creation lunacy is what we’re seeing contribute to the whacking of financial assets last week, and no, commodities markets do not all move together at the same time.  Friday’s divergence between gold and oil/silver speaks to that fact.  Listen to their message.  The tape is speaking. 

      Obviously, we’re talking about a very short period of time, which makes these signals less meaningful.  But I’m trained to spot them and to look for the start of trends yet to be visible to most.  That’s what I’m pointing out.  …a shift visible between the behavior of differing assets that has information value.  If, for example, gold goes up next week but silver can’t get out of its own way, all the while seeing oil under further pressure, that would probably be still further manifestation of even more investors and speculators tweaking their holdings to reflect their view of increasing probability for a deflationary intermission  in the very least, and the need to be on the deflation watch, keeping a close eye on credit default swaps, credit spreads, etc.

      More later . . .

      Thanks,

      Eric Dubin

    • Ed, I had posted on SD probably 1 1/2 to 2 years ago that all of these large central banks were dancing in lockstep with each other.  They are each printing and devaluing their currencies equally in order to keep the illusion there is no large inflation or currency devaluations.  At the same time, the trick is to control assets such as gold within a trading range. 
      Everyone always points to gold and silver but sure there are many other assets and commodities which they are holding within a range by using derivatives and high speed algorithms.  We are starting to see some cracks in this model as items like food prices are spiking by 20% and 50% per year.  It’s really hard to hide this type of price spikes as many of these items are not controllable like gold with 100:1 derivatives.  Now we’re beginning to witness numerous sectors pushing for wage increases such as the fast food workers.  In short, the model they are using will only work for so long because it cannot control all asset classes including simple items like steak, milk and eggs. 
      It was also my concern about 2 years ago they would crash the entire gold and silver sector before allowing prices to rise.  Once again, we see this happening as more and more majors have layoffs, cutbacks and lose production.  It’s turned into a slow painful grind. 
       

    • @Flying Wombat
       
      Eric,
       
      “The April 2009 period through today has been massively inflationary for financial assets, particularly when one considers said assets had to counter the deflationary bust.  That already represents the “inflation first” portion of the bankster formula.”
       
      Yes, it has and I have pointed this our numerous times.  This IS the inflation that Bernanke was mumbling about not existing.  The thing is, though, that the banksters have some set routines that they go through and in them inflation always comes first and then it is always followed by deflation.  While that is an established pattern of bankster behavior, I think that we can all admit that it is not the only pattern they can use.  In fact, as we approach the fiat paper Ponzi scheme end game, it is likely that all sorts of things will be different as the wheels come off this cart and it begins to leave the road.
       
      “But given the derivatives and connected bond market bubbles, it’s entirely possible to see problems at a specific banking institution – or a handful of them – trigger a derivatives implosion on account of ridiculously levered and under-collateralized counter-parties.”
       
      Agreed.  This is a financial time-bomb of far greater magnitude than has ever existed before in human history.  They are what Warren Buffet once called “weapons of financial mass destruction”.  Well, that was in his earlier days before he got a seat at the BIG table and started toeing the line for the elites.  He doesn’t talk about things like this any more.  My view of these derivatives is like a long line of mountain climbers who are roped together for safety.  The big players are at the front of the group with them decreasing in size as the line strings along behind them.  This analogy works well because it any of the big boys at the front of the string fall, they will drag everyone else down with them.  If a few of the smaller guys at the back fall, the bigger ones up front can pull them up to safety.  But, a derivatives implosion would be more like an avalanche that just blows them all away, regardless of size or position… and it’s sudden as well as overwhelmingly powerful.
       
      “The big one on the order of 2007-2009 or MUCH bigger”
       
      This is something that very much concerns me.  In looking back at the 2007-08 financial collapse, it is clear that nothing from that time that we now know were the biggest problems have been fixed.  Too big to fail is even larger.  The derivatives book is double the size it was back then.  Market manipulation continues on a grand scale and with little to no repercussions for those doing it.  Banks are still under-capitalized because of their leverage.  Yes, they have more capital now but it isn’t keeping up with their derivatives exposure.
       
      “Either way, we’d be talking about deflation ripping through the markets and make no mistake, many investors and speculators all around the world were thinking about these possibilities and acting accordingly during this week’s trading.”
       
      Deflation is a terrible thing if one is a producer or seller of goods.  But, if one is a buyer, it is terrific!  Most Americans would far rather face deflation than inflation, IMO.  If one has money, deflation means that they can buy more goods and services for the money they have.  My grand parents told me that in the 1930s, the stores were packed with goods but few people had the money to buy them.  Money was in very short supply… “dear” was the term they used for it.  As a person who has a reasonable amount of money, deflation does not terrify me like it does some.  If anything in the financial world really scares me it is run-away inflation.  That simply gobbles up the money we have and leaves us destitute.
       
      “That is why oil’s move is important, because part of the reason it is diving is on account of the fact that it’s mega-sensitive to economic trends and I contend the decline wasn’t just a reflection of generic, renewed concern about an economic slowdown and lower oil demand reflecting investor sentiment about economic statistics, etc.”
       
      The situation with oil is terribly complex and MANY things influence its price and availability.  A pretty good case can be made for virtually any position involving oil.  I am not saying that your position is incorrect, only that it is but one of many possibilities.  It very well might be the bleeding edge indicator you say that it is.  I really don’t know and am open to the possibility.  But, is this kind of indicator actionable?  What are you doing with your finances because of this info that you were not doing before you got it?  Off-hand, I can’t think of how it could be applied but perhaps you can.  If so, I would like to hear more.
       
      “Ultimately, it’s exceedingly difficult to make that assessment about Friday’s silver trade given how easy the silver market is susceptible to manipulation.”
       
      Agreed.  You mentioned a thesis and like a thesis, one day in the market or one page in a thesis does not a complete picture make.  But that’s the way that these things tend to go.  We just do not get a complete picture.  We get a glimmer here or a few dots there and it is up to use to try to figure out what it means, if anything.  It’s a tough job, for sure.
       
      “… and no, commodities markets do not all move together at the same time.  Friday’s divergence between gold and oil/silver speaks to that fact.  Listen to their message.  The tape is speaking.”
       
      No, they do not but they TEND to do so.  At any given time, virtually anything can and will happen that is not part of the general tendency.  The trick is if we can figure out whether something is just an anomaly or something that is actually meaningful.  This is terribly difficult in a manipulated market.  I freely admit that I am not good at this and this is one of the reasons why I frequent Silver Doctors and other great web sites.  I need to see more than my own perspective in these things and I can find that here quite often.  :-)
       
      “Obviously, we’re talking about a very short period of time, which makes these signals less meaningful.  But I’m trained to spot them and to look for the start of trends yet to be visible to most.  That’s what I’m pointing out.  …a shift visible between the behavior of differing assets that has information value.”
       
      Which is exactly what many of us hope that you will continue to do.  Believe me, Eric, we are taking in this info and are trying to integrate it into the picture we have about the markets and the things that are happening in them and how this might all shake out in the shorter and longer terms.  While this is not an easy task, it is made easier by the info we get here.  But there will be discussion about the various points and we will not necessarily agree.  That’s fine from my point of view, as I can learn from either position.  Ascertaining the likely future is a very difficult task.  We will all miss the mark in some ways but by working on this together, we should get a better understanding of it all.  Not that we will get a complete picture of it but we should get a much better one than we can get on our own.
       
      “… and the need to be on the deflation watch, keeping a close eye on credit default swaps, credit spreads, etc.”
       
      Indeed so.  The default of Argentina’s bonds or the collapse of the Espirito Santos bank in Portugal could be the kind of fuse that leads to a derivatives implosion.  I believe that we will see more events like this as the process of a derivatives collapse comes closer to reality.
       

    • @PowerBall
       
      “We are starting to see some cracks in this model as items like food prices are spiking by 20% and 50% per year.  It’s really hard to hide this type of price spikes as many of these items are not controllable like gold with 100:1 derivatives.”
       
      Agreed and this is exactly the kind of thing that we should expect to happen as the end game to the paper Ponzi scheme approaches.  Yes, it can take a long time to arrive but it will at some point.  Unfortunately, it is very difficult to know just when that will be.
       
      “In short, the model they are using will only work for so long because it cannot control all asset classes including simple items like steak, milk and eggs.”
       
      Indeed so.  They can tell us that inflation by their measurement is 1.6% until they are blue in the face but that will not make a bit of difference to those who shop for food, fuel, tuition, insurance, and health care or pay their taxes and are seeing double digit price gains in these items… but not in their take-home pay.  No matter how soothing the words, reality means more to most people and right now reality is saying that inflation is not coming, it’s here… now. 
       
      “It was also my concern about 2 years ago they would crash the entire gold and silver sector before allowing prices to rise.”
       
      This is a valid concern and many of us probably share it.  But the technique that is used for this still relies on the manipulators having SOME metal in their possession.  What happens when they no longer have any metal with which to create the manipulation?  IMO, the manipulation will either shift to those who do have metal or it will end.  I would like to think that it will end but that might not be the case.  People do this because it is profitable.  As long as gain can come from it, we are likely to see it continue.
       

  2. @Ed_B
    There simply is not and cannot be enough money on the entire planet to handle a complete derivatives collapse, should one occur.
    It’s not should but When. I believe it’s very close and it’s starting very shortly. Keep Stacking

    • @Marchas45
      I agree. We’re talking “when,” not “if.”  But again, we could have a derivatives-driven deflation intermission.  Guess I’m coining a term — “deflation intermission.”

      Your comment makes for a good segue for me to explain further because I think I might have lost a few people.  I was talking about what might happen in the short- and intermediate-term –  which can include a “localized” derivatives bust without total systemic contagion.  It wasn’t as clear in the audio because as fate would have it, my phone connection to the Doc went dead exactly when Dave and I started talking about deflation/inflation, and part of what I said was lost. That’s also why it sounds a little odd when we’re talking about deflation/inflation and then, all of the sudden, we jump to discussing Bill Murphy’s JPM silver theory that SD Metals & Markets covered a couple of weeks ago. So it goes… The audio and write-up could have been more clear and I would have written more in the write-up had I reviewed the audio before publication, which is something I don’t do because Tyler edits the audio many hours after the Doc and I record. Hopefully, I’m making up for “hole” in the comment section :-)

      In any event, we can easily see a derivatives daisy chain that can be contained IF it’s small enough for the time being – i.e., just as Cyprus triggered a “localized” impact to derivatives last year.  In fact, the global financial system probably could take a hit a few times larger than Cyprus, put the living fear of god into traders, resulting in actual short-term, very large financial asset price declines on account of deflationary forces.  But then, enter the central banks, with a few bail-ins sprinkled in for good measure and probably with regulators declaring credit default swap contracts not applicable (again, that happened re. Cyprus!), returning to another round of financial asset inflation (again, think post-March 2013 Cyprus through 2014). It would depend on how fast central banks move, and the magnitude of their move.  

      Ultimately, with the counter-party situation, the highest probability outcome conforms to “when,” not if/should.  It certainly doesn’t help that many within the powers that be are totally delusional about their bail-in model’s efficacy — I say “many” because it is likely many others among them are not delusional but just hide the fact that they know the model isn’t worth spit against a systemic, falling dominoes scenario because available funds to theoretically bail-in are tiny compared to an aggregate crash of a systemic counter-party disaster.

      – Eric Dubin

    • @Marchas45
       
      I figured you’d snap at that bait, Charlie.  lol
       
      I agree that a derivatives implosion will occur at some point because it is basically an unstable and unsustainable system.  Like an out of balance engine that is running ever faster, it will implode because it must.  We really are just talking about when… as in how much time it can be held together with chewing gum and bailing wire.  But we have all been surprised before by how long this crazy financial Rube Goldberg machine can be held together.  If the past is any guide, it will be longer than we think!  But this does not mean that we can slack off in our prepping.  Every day we get without a collapse is a blessing that we must not waste.  Time only has value when it is USED for good purposes.  Letting it slip by unused means that we might as well not have had it at all.
       
      Whether or not it is close is something on which we all have an opinion… and none of us knows for sure.  My thought remains the same as it was a couple of years ago… and that is that we will see a major financial collapse of some kind between April 2014 and July 2015.  I hope and pray that this is not the case but just have that crazy “hair-rising-on-the-back-of-my-neck”, “someone-is-watching-me” feeling about it.  We’ll see.
       
      @Flying Wombat
       
      “But then, enter the central banks, with a few bail-ins sprinkled in for good measure and probably with regulators declaring credit default swap contracts not applicable (again, that happened re. Cyprus!)… “
       
      Isn’t a credit default swap the most marvelous invention ever?  They get sold and the buyer never collects on it.  Just when one thinks that they might have to pay out on this insurance policy, along come some regulators declaring that they don’t have to make good on this obligation.  What a deal.  It’s like selling insurance and never having to pay off any claims!  ;-)
       

  3. As long as there is a COMEX where paper nothing silver can play like real silver paper nothing scam silver will always hammer physical silver to the point the miners must shut down. When those who use silver can’t get physical silver the price will shoot up until silver comes out of the walls to meet the demand and miners go back in business. Paper nothing silver is criminal and cowardly. The silver market where nothing paper silver has an unfair advantage over miners proves we live in a fascist run world that is a cxnt hair away from animal existence. Nothing is going to change until every fascist parasite gets his/her head cut off and the COMEX is shut down for being animalistic and subhuman. Its taken me 28 years to understand what’s going on with the COMEX. What ever it takes to get rid of the COMEX, even the extinguishing of the planet, will be a price will spent. 

    • COMEX can exist just fine. We should just stop using it’s data to determine the price of physical.
      COMEX should follow physical prices, not the other way around. COMEX should not be the slightest of indirect factor.

      We all complain,  but no-one proposes a new system of price finding. No-one works on a plan to extract the very last bar from stockpiles, and into strong hands.

      If don’t know a price setting solution myself. But de-coupling COMEX and the fix from price setting seems key.
      Since few believe or testify that silver should be lower, why not re-set it at $25/oz or $40/oz and see what happens? Most mines will still not make crazy money at those levels.
      The bakery won’t sell an item they need to make a loss on to get it sold, at least not when fresh. Silver is eternally fresh, and miners should not be forced to sell now.
      Somehow all the mining shares bought are not bringing them in a position to buy up their own stock, run the market dry. Which should be their right, and their strategy. Find funding to start stockpiling themselves, let bankster stockpiles be used up first.

    •  
       
      As long as the COMEX allows Peeps/Banksters buy and sell silver he/she/it do not own the COMEX will be used as a cheap scam for a few to totally and completely rig the silver market to steal $s. Parasites want to make $s in rising market? Cut back selling parasite paper shorts, silver price rises. Parasites want to make $s in falling market? Increase selling paper nothing shorts. Parasites want to run miners out of business, steal mining company shares and Peeps physical silver, as parasites do now? Parasites merely pile on the paper nothing shorts until mines close. Buy miner shares for nothing. The COMEX is a low scam just like the Federal Reserve. Until these parasite scams are stopped, there is no financial system. Well. We live in a NAZI financial system. A NAZI  financial system, only reason for honest Peeps to live is to stop the parasites’ NAZI lame financial Fed and COMEX scams. Because the end game of the parasites with a rigged financial system as we have now is NAZI parasites killing people which will lead to the destruction of the planet. The sick logic of NAZI parasites killing Peeps? Less Peeps more $s for NAZI parasites. 
       

    • By focussing on teh regulations and workings of COMEX, you are lending credibility and authority to COMEX to be a orice setting mechanism.
      I don’t think futures contracts are bad, just these should not be price setting. Ask a consortium of mines what their average sales price is ATM. Then let COMEX contract holders gain or lose based on that. Seems way more logical to me than to let contracts being moved over and under a table set the price for those digging up and buying physical.
      Another price setting mechanism is direly needed. Let the mines do it. If they set it too high, they lose revenue, or will be undercut by stackers and stockpiles. But only physical transactions can be involved in price setting. And paper contract are nog good-as, they are paper. A truck needs to drive from A to Bwith certified PM on board in a price setting transaction. Being from a bank to a private vault, mine to private vault, mine to factory, etc.

    •  
      Asking mines to volunteer information is too loose. Buying and selling silver on futures must be like old time banking. If he/she/it wants to sell silver in the future, then the entity puts up an equal amount of silver on deposit. If mines want to sell future, then their reserves and individual mine would have to be put up as collateral and discounted. NAZI parasite COMEX is not sound banking and is just a way for lame scammers to steal and must be stopped or the planet dies. We are seeing now the NAZI parasites plotting to murder millions or possibly billions of peeps because their lame Federal Reserve and COMEX scams are Ponzi schemes.  NAZI parasites know they must kill billions of Peeps or when the Peeps figure out their Nazi parasite lame scams humans will kill them, Nazi parasite lame Ponziers. The world has a choice, chop off the heads of the Nazi parasites, owners of the Fed and COMEX, or be killed by the owners of the COMEX Fed. 
       
       

    • @XC-Skater
      Why shouldn’t physically settled futures contracts like COMEX be a price settlement mechanism?  You are talking about physical delivery of metal!
       
      Two ways this works, as a buyer or a seller.
       
      Buyer:
      I use silver and buy futures for September delivery.  When september comes i have two options, stand for delivery or sell my futures and buy physical.  What i choose to do has solely to do with the premiums.  i stop delivery at zero premium,  so then i look at the cost to get that metal to me and compare it to buying physical metal from another source.  Whether i stand or buy from another source depends on which one is cheaper.
       
      Seller:
      I produce silver and sell for September delivery.  When september comes i either deliver my metal or buy my futures back and sell physical elsewhere.  What i choose to do depends solely on the premiums.  I deliver at zero premium, so then i look at the cost to get my metal assayed and in deliverable form, and cost to get it to the warehouse and compare that to selling the metal to another customer.  Whether i deliver or sell elsewhere depends which one is cheaper.
       
       
      What is wrong with that sytem?  in the end game, futures equal physical and thousands of contracts are settled that way every expiration.

    • @anon123
      The current initial and maintenance margin that exists means you have the full value of your position, plus another days move, on deposit. That means if you don’t make a margin call your position is closed and clearinghouse keeps your money to offset losses in your position, only loser is the person whose position was closed.

      In effect, the mine who sells in advance is putting their business at risk. If prices move higher they will be forced to make margin calls (note this is offset when you sell physical for a higher price). If they can no longer make margin calls their position is closed and that entire loss disappears.

      Simple example….
      Mine sells 1 mln oz at $20 for next year. The palm readers end up being right and silver goes to $45. That mine now has sent $25 mln + a bit more to chicago to margin their positn. If the market goes up another 20c they need to produce $200k to cme, if they cant do it the position is closed. They just lost a very real $25 mln. this is really not a problem if they can produce and sell that 1 mln oz to a refiner at $45 because that is what they wanted (they sold $45-$25 pape loss = $20… their original sale). if the market dropped back to $20 then they in effect are selling at -$5 and likely they will be shut down and someone else will run, similar to if they put up the entire mine as collateral as you mention… but in this case the mines financiers are the ones that lose vs. the exchange taking a risk on a private business.

    • If we come up with ways to take the manipulation tools out off COMEX, such as margin (100% downpayment in actual physical only, etc) I think the banksters will find a loop hole. And we’d never get our suggestions implemented anyway.
      I honestly think we should be able to find prices in a different way than futures. How did prices get found before futures came into existence? I suppose miners and prospectors would not offer supply if it wasn’t worth it to them. If you earn less panning all day in a cold creek than splitting rocks or driving a carriage, the choice is simple. You quit supplying. Price must rise to get supply as demanded.

    • Futures came out from the desire of both producers and users to have a way to manage risk in the future.

      There are other ways to find price, there is the swaps market where buyers and sellers agree on prices in the future (you and i don’t see this, it is an opaque market), there are forward cash markets between buyers and sellers as well which you and. i also don’t see. But when you have the most information about what a commodity is worth is in the spot market, premiums do that work. When we crashed from $30 to $20, the premiums told us that silver physical was not worth much less than $30 immediately after the crash as plenty of people were willing to pay higher premiums for ownership.

      Really none of us use futures, we are subject to what the dealers are willing to sell us silver at, and they are willing to sell us silver at numbers that let them make a margin.
       
      As to your 100% downpayment… that means you should require that for every long contract as well?  That increases the cost for both the long and the short, people will move off exchange to the opaque swaps market where the margin rules are much looser, liquidity will drop in the futures markets which people like SD bullion use to hedge (at least that is what i gather from many of the docs comments in these interviews). If you take away liquidity the bid/ask price widens, which means that as long as the seller selling to you is a hedger or bases his price off the CME, you and i will pay more premium for our silver. One other negative about the swaps mkts, f your counter-party defaults then too bad so sad. I wouldnt want the person i am buying from to have that kind of risk as if i send them money and they get hosed, i might get hosed in return.

    • @undeRGRound
      This *is* how it works. You are dealing with a physically settled market. When you start talking indices like The Fix (which I have been saying is prone to manipulation for over a year now), and also LIBOR (we know what happened there), then prices are what people say they are because that is what people say they are.

      With physically settled people look to what the commodity is actually really worth today, and arbitrage the markets. If it was truly broken as you claim you would not see any deliveries ever occur.

    • No, Mikey, you constantly explain how it is SUPPOSED TO WORK 
      but it is FUBAR.  
      I wish these forums had a polling feature… 
       
      This whole site is based upon the existence of MANIP-MANOP! 
      Some folks presence here is like a satanist attending a catholic mass… 
       
      Now you got me repeating myself! 
       

    • I am curious of your experience trading that would lead you to believe this.  I traded physically settled commodities for many years and people said the same things about manipulation of those, except you know what, almost always the price of the futures was the price of the physical when adjusting for freight and quality.  
       
      Not saying it is perfect, not saying it is the right tool for people wishing to take wealth away from the system, but to say it is broken is ignorant of how those markets work. 
       
      I am willing to look at evidence otherwise but don’t show me waterfall charts down or I will show you the same charts in the other direction.  There is one piece of evidence that would be very condemning on the futures system today, and that woudld be evidence that the PHYSICAL price of silver being different than the PAPER price in the spot markets for like quantity and quality.  Nobody (get that, NOBODY) has produced any evidence to that fact in the 5 years I have been listening to the manipulation of these markets.

    • Hey RGR.
      F-U-B-A-R?
      Fully Unappreciated Barbarous Ancient Relic.
      Is this just another name for GOLD? .. :P
      …just jokes, I know what it really means .. it’s the new name for the Congress right? :P

    • Mikey, that’s fine. You always try and frame my side of the argument as an easily battered straw man and roundly ignore the evidence that has been presented many times here on SD. Like the several times the Crimex has traded (in paper only) the equivalent of the entire US Silver Mine Annual Output in a matter of minutes? 
      Plus, I have not seen HARD evidence yet, but still looking for the un-reconciled but registered trades that drive the market (usually LOWER) in the short term, but get evaporated later… I’d bet an ASE right now that unmatched shorts affect the market, but if they are not picked up by a matching long, they disappear. 
      Like I said, the whole of SD (with a few exceptions) is based on the premise of MANIP=MANOP.

      Your operating theory is based on the “assumption” that the PMs market is fairly traded. 
      I’ll save the real zinger pic for later, if needed :P
      …and NO, my name is not BRUCE! :D
       

    • Now we are back to discussion!
       
      “Like the several times the Crimex has traded (in paper only) the equivalent of the entire US Silver Mine Annual Output in a matter of minutes?”
      Surely someone has presented that case, and we’ve seen no evidence of any wrongdoing.  Did you know the CME just fined Deustche Bank $60,000 for being 32 contracts over their position limits intra-day (i.e. out of limits for a period of hours)?  8,032 instead of 8,000.  $60,000 is nothing to the bank, but is a steep penalty for very little potential gain.  Seems to me that is evidence they are watching, paying attention, and willing to slap hands for even small offenses.  Why would they turn a blind eye to the big one?

      Also, while this silver is a huge volume to be traded, remember places like this only like to show the times when it is sales, not buys.  When you have a lot of speculators that all trade off a lot of the same technical indicators, you get groupthink, and big moves.  These guys aren’t afraid to go from a limit short position to a limit long position.  Whether this is ‘fair’ is a discussion point and I will likely disagree with you for the sole reason that in the spot market the price of futures is equal to the price of physical, again adjusted for quality, quantitiy, and geography.  If you can show me where that has not been the case I will reconsider my argument.  At expiration physical = futures, everything else is noise and opportunity (for buyers or sellers).
       
      “Plus, I have not seen HARD evidence yet, but still looking for the un-reconciled but registered trades that drive the market (usually LOWER) in the short term, but get evaporated later…”
      There is probably a reason you haven’t seen the evidence.  Every trade has a buyer and a seller.  If you sell, you must buy it back.  If you have even hints of evidence that someone sold and then didn’t have to buy it back… boy that would be something, but that isn’t how a futures market works.  What happens to that person who is long on the other side of the trade?  

      “I’d bet an ASE right now that unmatched shorts affect the market, but if they are not picked up by a matching long, they disappear.”

      I think I would take that bet, but you need to clarify.  If you are saying people sold futures and then get washed out without ever having to buy them back, I will take that bet, unfortunately you won’t accept proof as the only place it could come from is CME, so let’s just pass this time.  However, if you mean people showing fake orders to the screen that never trade… that is something completely different called spoofing the market… i.e. i pretend that I am willing to sell a ton of a commodity, but before my orders are filled I cancel them.  There is no trade (and therefore not really an unmatched short), but it appears to the market that there is a huge seller.  CME also just fined a trader for this, I do not recall how much or who, but again an indicator they are watching and doling out fines for bad behavior.  
       
      Like I said, the whole of SD (with a few exceptions)  is based on the premise of MANIP=MANOP.

      Maybe it was, or still is to you, but to me it is a site where I can see news I know I won’t see in other arenas.  Also, just like any other news provider, I consider my source and their motives (i.e. The Doc is financially rewarded when people buy silver from him… hmmm sounds a lot like the situation at the London Fix).  Personally I really don’t have a problem with that, it’s capitalism and it is up to everyone to do their own homework.   
       
      As long as the futures = physical in expiration, and as long as we see a lot of deliveries occur, it tells me that people are arbitraging to ensure that the futures = physical.  When that stops something will be broken.
       

  4. is the Comex toast? trading on borrowed time ? can the Ponzi go on forever? what will the replacement  company  model look like ? Buy from US  and take delivery 100% guaranteed in any large City Bank  in the World  ! by Air Service

    • Then let them trade “widgets futures” instead of “paper PMs”. 
      At least BitCoin pretends no connection to anything in the physical. 
      At least BitCoin is honest about their virtual only status. 
       
      I have seen the phyzzz price depart much higher than electronic paper. But then TPTB’s machinations pump up the U$DX (harder than HFT in commodities, so it takes time) and play around with other indicators. They work like hell to get that PM sentiment low. Another side benefit of a slow economy is that the industrial usage is lower, making the stacker’s market more liquid, and cheaper. Good for us, (and I’m not complaining!) but bad for the latecomers who started stacking in 2011 :(
       
      Actually, right now, all my LCS have huge premiums. 
      $6.95 for ASE!!! Others want $35-40 for Silver Dollars! (Morgan and Peace) 
      All LCS I visit are way over spot. ALL!

    • @undeRGRönd
       
      Agree on the high spot prices locally.  The cheapest silver dollar I’ve seen recently was a cull / smoothie peace dollar for $24.  Most are over $30.  VF or better are over $40.  Want a BU silver dollar under $50… fuggetaboudit!  
       
      Heh heh… all this makes me wonder at the price I could get for some AU grade Morgans I have.  Maybe it’s time to convert them into some BU grade ASEs?  Two ASEs for 1 Morgan should be about right.  :-D
       

  5. Inflation or Deflation?
    All that really matters is that Imports will inflate … wages will stagnate … and US companies and Capital (Gold) will offshore quicker rather than returning home. However there are lots of cheap future laborers from Mexico being imported right now to TRY to counteract this basic fact, maybe they will get a factory job working under a Chinese foreman? Militarized police are for the Whites and Blacks who won’t live like slaves for multinationals. Too bad because NAFTA = American Slavery, everyone with a brain knew this decades ago, but 0.001% of the Whites will be 5 times richer at least. 
     
    As for Exports, what do we export? Hypothetical F-35 iron pigs? Plenty of dumb anglophile colonies out there willing to kill their airforces at least. All I can think of for exports is sub-standard weaponry and perhaps GMO Corn … everything else has been copied by Asia because ‘US’ ‘Capitalist’ Corporations don’t identify with a Flag, only a bottom line, so we all pay for R&D and it simply gets exported to a Patent Office in Shanghai and what would you know, the company finds its Asian competitors funnily up to speed real quick on tech advances.
     
    Is a US Corporation that profit-operates out of a PO Box in Switzerland or the Isle of Jersey really a US Corporation? … LOL.
     
    It’s quite obvious that just as the Soviets collapsed in the late 80′s and 90′s because their ideology was fatally flawed, also the ÜS is collapsing because of its own neo-liberal ideology towards Private Corporations and Cartels being a superior animal to state owned enterprises (I will be called a Communist for this statement, but “bring it on!!!”) … has Lockheed Martin done anything lately but help bankrupt the country quicker? Would the mistakes in the F-35 design have occurred at all if there was NO LOBBYING involved in weapons manufacturing because it was state owned?
    I can sum it all up with the following quip: ‘$1000 Pentagon Hammer (Made in China)’ … made a mockery of Capitalist Fundamentalist ideology … like I said, I will be hammered for this statement (with a $1000 Pentagon hammer no less, “bring it!” … :P)
     
    Morgan said: “Inflation is not a rise in prices and only a rise in the money supply”
    … in a world where the USD was NOT the World Reserve Currency linked to Petro-Dollar trade, enforced by the biggest military machine the world will EVER see (and false flag attacks aplenty) this might make sense, but it obviously makes less sense given the difference between the USD and EVERY other Fiat that ever existed on planet Earth. The politics of the USD make it different (unfortunately). The USD is backed by the biggest Military, not Gold.
    “Inflation is not a rise in prices and only a rise in the money supply” … this statement is completely detached from reality. Monetary Inflation and Price Inflation are BOTH forms of inflation, whether or not they are cause and effect, and neither accommodates CAPITAL DESTRUCTION. If Capital destruction is occurring quicker than monetary inflation then all that is happening is a WEALTH TRANSFER to the Banks and Govt, and an overall deflation (but $ denominated Total Debt remains constant and only reduces at bankruptcies). Thus a deflationary period can occur whilst Monetary Inflation is in progress. And if Private Savings are being lost (Capital Destruction) then this takes $$$ out of the hands of the 99% (Consumers) which causes a loss in Velocity of Money, thus an internal industrial deflation occurs and price wars then cause momentary price deflation (and wage deflation) whilst US companies go bankrupt. The long term result is a dependency on Imports and then the long awaited Price Hyper-Inflation will occur.
    This is why I cannot take Morgan seriously, he speaks a form of Flat Earth Economics (FEE for short)
     
    The US Ideology: “Tax the poor, subsidize the Super Rich, and blow up the budget!” … oh and give another $250mill to Israel to restock its iron dome system ………. ahhh, ‘Capitalism’ and ‘Sovereignty’. We are an Epic Fail of a monstrosity.
    The Supreme Court, Congress, and the Executive are a metastasizing cancer on the face of the US and planet Earth in general … The Lobbyists are the 4th Pillar of Government, and they run the show in the District of Criminals, the first three pillars are just rubber stamps and a jack boot for the biggest lobby’s (Israel plays its part in US demise, and then who will help them? … ludicrous).
     
    I smell a new World War as the Five Eyes become the new NAZI’s fighting for ‘freedom’ and ‘democracy’ (read, Corporate and Political Dynasties)

  6. To add to that last post.
    I bet the $250million given to Israel to recharge it’s iron dome missiles was actually simply a barrel of pork for the US MIC Corporation that supplies those specific missiles … probably the same MIC Corporation that now has an incentive to supply Hamas with $2million or so Bonus to refresh it’s own rockets for the next round.
     
    Investing $2million with Hamas in order to get $250million in sales out of the US taxpayer is a good deal. If the sales make $22mill profit then this is a 1000% return on investment; not to mention this MIC Corp will get to gloat that it is employing some US workers (or some new Mexicans) and the Senator gets some more $$$ for his next campaign donation as long as he votes to give Israel another ‘gift’. Also the US GDP figure looks bigger as long as higher wars means more weapons sales.

    Dead people don’t show up on the MIC bottom-line at the end of the day so this is a ‘business neutral’ peculiarity of this trade, and in fact more dead Palestinians creates more Arab Rage = Higher future missile sales, so we could call these dead Palestinians a Key Performance Indicator (KPI) that we need to analyze closely when weighing up this MIC Corps future stock price. Hmmm, whether to invest?

    This is the true language of the current US Economy.
    GOD = Guns, Oil and Drugs. IN GOD WE TRUST! …or at least the MIC trusts.
    We will be reaping a whirlwind for all of the blood that has been and is being shed real soon, and it will not be pretty.

  7. The easy fix to the problem is to shut down the mines and have a real shortage then the paper scum bags will have no choice but to raise the price . Even if the mines cut production down to 50% it will cuase the market to raise the price it’s that simple at what point do the mines draw the line in the sand ? They have the power to do this very easy and they should in fact they are stupid not to just close the door on the paper scum bags even if they just slow down production for 30 days it will bring the paper boy’s to there knees silver should be selling for 90.00 an oz and it will get there in a Blink of an eyes as if they reach out to all stackers and tell them the plan not to sell there physical silver for less than the set price and this game will be over . It does not make sense for them to keep selling under the cost to make it . The time is now to stop playing the paper game and force them to raise the price the demand is there and growing every day so all the miners have to do is set the price and not sell it any cheaper.
     
     

    • @Rulerman
      The problem is that most of the Big Miners will never do this as their Boards are stacked with Bankers or Bankers’ minions, who keep the Mines running near Cost on purpose because the real profit is banked at the Commodities Futures level, and by people such as Mark Rich who sit in a palace in Switzerland counting the mostly untaxed profits … the profit goes to the same banks/oligarchs in the profit centers, the Mines are simply where the workers live and die at subsistence. Why would a Mining Concern in South Africa attached to Anglo-American banking interests want to make the South African end of the gravy train look profitable? They might have to pay tax to the South African Government!
       
      The only miners who would heed your advice Rulerman would be the little guys, and then they would shoot themselves in the foot. Miners need to keep their staff on the payroll, especially the smaller guys. High staff turnover kills a business model and is a quick way to get unprofitable.
       
      Also, most small miners needed to raise capital publicly in order to get into operation, and Dividends must flow regularly, because the Big Boys based on their virtual supply monopoly can always ride out what would be tantamount to a strike from smaller guys … the smaller guys work for peanuts eternally and there is no way out until the monopoly game collapses. Any smaller fish who goes bust is gobbled up by a Shark and the Sharks simply get fatter and get control over more of the market share for physical … which they can direct towards their ponzi market of choice which they also profit off of.
      Look at the Directors on the boards of Big Mining Industry and Big Finance, you will see the same names or the same business associates of known oligarchical circles.
      It is a bit of a spiders web but it all spells World Plantation! … Neo-Feudalism.

    • I am curious, why should silver be selling for $90 per ounce?  It seems like there is plenty to trade at $25 / oz and pick your choice of round.
      Your silver may not be for sale until $90, that is fine.  Mine isn’t for sale at these prices either.  However, if I was making the stuff, and my well being depending on selling, I would be selling at these prices or looking for new employment.  It would seem to me most logical people would do the same, so clearly the miners must be illogical?

  8. I would think a shut down driving the price much higher would make there banker’s much more money because the price would be might higher no ? If not what is the answer then to get the price up so they can make money and so can we ?.

  9. What is it going to take to brake the hold they have on the physical market to go higher?  I know everyone likes cheap silver but this makes zero sense that they have to sell there silver below cost . The one thing I do see is 19.00 is the bottom as they can’t or won’t take it lower .

  10. A couple of minor but quirky things that may not mean anything but could be wild cards
    The Argetinian debt is about $29 billion.  A small consortium of banks could pay that off with the agreement they get long term commodity contracts against Argentinian production   Or a group of extremely wealthy people ranging from Ellison, Gates and his foundation and Warren Buffett,  they could pass the hat or kitty, buy the debt and own a tidy bit of Argentina—a country named for Argent, aka silver. It has some of the most productive farmland in the world. Ellison paid $300,000,000 for Lanai.  He knows a good value when he sees it.
    The BES fiasco could be ringfenced by bail-ins, pension thefts and a one time wealth tax .  The paper work is set up for that pretty much anywhere in Europe
    The Kurds are selling and shipping thei roil production for $50 a barrel.  5 container ships filled with Kudsh oil are transiting to their buyers ports.  If they try or start to under cut oil market prices, it could be deflationary or add to that fire.  
    Minor items but could be factors in the next few weeks.

    • AG said: “Or a group of extremely wealthy people ranging from Ellison, Gates and his foundation and Warren Buffett, they could pass the hat or kitty, buy the debt and own a tidy bit of Argentina.”

      Never going to happen with these uber-rich individuals as they only make large bets on sure things that will ultimately make significant money. The only thing one can be sure about in Latin America is that sooner or later any significant assets, especially those held by foreigners, will be nationalized.

  11. FUBAR  Financially unenlightened bastards as rulers
    @Cyberspace Void. I see a group of oligarchs owning South Africa, pitting workers against unions against white people against black people with the rulers taking the rake and toke from these deadly battles. As @WillNotBeASlave notes It’s called the Neo-Feudal Planetary Plantation, AKA Agenda 21, aka the boot of the master stamping down on the neck of the people forever
    We may have evolved a bit in the Enlightenment and the industrial revolution but when the elites and oligarchs realized that the people were getting ahead of themselves and tasting a bit of the good life, that HAD TO END.
    Feudalism, Feudalism, Uber Alles. Ringfence the sheeples then became easy. Just build a nice corral, fill it with sweet grass, wait until the corral is filled and then WHAM… close the fence. Arbeit Mach Frei. Working the homies to death for the last 900 years.
    The USA is being ring fenced. Every person with a dollar in his bank account, every person who owes the IRS a nickel, every person who gets arrested for not complying with the nanny state (see the post below) every person who thinks for themselves (a new type of pre-crime) is not permitted to leave the country. The government lets in millions of new sheep at the southern border (2 legged bioweapons) but try to leave the USA without your slave card, aka passport. The USSA government has made it clear that no other country is allowed to accept American bank accounts. Even wire transfers are being ringfenced.
    Once the sheep are firmly in the pen the shearing begins. Baaaa Got mutton?

  12. @WillNotBeASlave   It just occured to me, as a follow on to @Mikeyj80 comment  I do not understand the COMEX as fully as others on this site, but in my viewing the COMEX seeks a price, fair or not, with two parties to each side of the trade
    So how about this thought?   You mentioned the Hamas getting $2 million for their weapons system and $250 million for Israel.  In my own strange way it occurs to me that this is a mirror image to the COMEX.  
    That is over 100 to 1 leverage, similar to the leverage of silver and gold paper trades to physical. The century-long destruction of personal and business wealth by artificial paper trading of mission critical commodities parallels the destruction of humanity over the last 100 years. 270,000,000 people died from Democide in the 200th century. That is a 10 to 1 leverage over the deaths of the soldiers fighting in the field. As one moves up in rank the chance of dying drops by orders of magnitude. It’s easy to kill people when someone is isolated from the trade. When a general has a rigger behind the trigger, the scale of death assumes a near vertical ascent.
    But I digress.

    The US Military and government buys positions on both sides of the trade with FIAT and weapons then allows the trade of missiles fired and bombs dropped to determine the outcome while setting the price. The outcome to this worldwide destruction is not material to the game players since they both the ‘house’ and the players. It’s a parimutuel betting parlour of death.
    In this case the price in is blood, mangled bodies and human travail.  
    When the ghouls roll the dice they use bones—carved from human skeletons 
    Just saying.
    But when we are the capital, collateral and corpus of the global casino, that stinks.  
    There the old saying ‘When you side down at a high stakes poker game and don’t know who’s the fish within 10 minutes,  you are the fish’
     

    • @AGIIXK
      Couple clarifications, the leverage in the paper markets is not near 100:1, at least in the exchange cleared trade (even including options).
      Also, COMEX does not seek a price itself, but rather provides the platform that two parties (edited) can seek a price as you mention.

    • “Also, COMEX does not seek a price itself, but rather provides the platform that two buyers can seek a price as you mention.”
       
      TWO buyers???  How about a buyer and a seller?
       

    • @Ed_B
      Good catch and I don’t want to be the one fanning flames due to misspeaking which I did!  I meant two parties to a trade, as you mention, the buyer and the seller.

    • @AGXIIK
      “I would rather earn 1% off a 100 people’s efforts than 100% of my own efforts” - John D. Rockefeller
      I think the biggest problem with trying to put ones finger on the specific problems of the world is that most people don’t even want to attempt to create a Macro View of the new globalized economic systems. International Capital does not pledge allegiance to any Flag.
      In the early 1900′s a Milk producer for instance received 80% margin on his products END SALE amount to a consumer. Now with all of the bureaucracy, distribution extortion cartels, retailer extortion cartels, and financial usury cartels (plus the rest) the average Milk farmer is lucky to make 1%-2% of the END SALE amount to the consumer for his product, even though he is doing 80% of the real work.
       
      People fail to see the connection between Milk and Silver and Gold. It is an apt comparison at the end of the day. The average Silver and Gold miner is carrying as many parasites on his back as the average Milk farmer. Essentially, all industries have become much more of a daisy-chain involving more and more desk dwellers to the point that corporate accountants and lawyers crowd out all the profit, and then ensure that the profit is banked in tax havens so that Governments where the heavy actual work is done cannot even reinvest in the infrastructure that all the businesses relied on in the first place to make the whole daisy-chain possible.
       
      This is simply Neo-Feudalism on a Planetary Scale, and because all of the pieces in the daisy-chain are so complicated for the average person to understand, and because the takers of the largest slices of profit are hidden even from the legal system using jurisdictional daisy chains (as I so often talk about), the average Joe simply gives up and works for nothing. Fair Price it is called.
       
      Modern Planetary Neo-Feudalism has a simple logic:
      1] Almost All Costs are pushed continuously towards the Laborer/Operator; the guy the entire business is built on the back of, until he is barely working to sell his products and labor at his Cost Price.
      2] Almost All Profits are pushed continuously towards people who are the most detached from the Laborer/Operator, the guy making the most is sitting at a desk in a micro-state/Switzerland, who ‘works’ 2hrs a day and has 8 ski trips a year because life is so stressful after all.
      3] The infrastructure being worn out in the process of this business has to be paid for (and repairs/upgrades etc..) by a country making NO TAX from the guy who banked all the profit in a tax haven, and as such the Income Tax of LABORERS has to be raised to pay for the infrastructure (Roads, Bridges etc…).
      4] Ironically the whole ideology here is Neo-Liberalism, and can be found in people such as Ayn Rand and Alan Greenspan (who was a groupie of Ayn Rand), even though their ideology was apparently all about Shrugging the weight of the World (to her simply the ‘Government’) from a workers shoulders … even though the biggest problem is actually Corporate Parasites that buy out the Govt, and if there was not any Govt then these Corporations would be the ones funding the Private Armies that kept the unfortunates on the plantation (British Colonies case point … Cecil Rhodes and the Rothschilds etc…) … thus the Corporations WOULD BE the ‘Government’. spelt: I R O N Y :P
       
      The PM’s Futures Markets claim to be of benefit to the Mining Industry (hedging risk), but because the amount of ‘Paper’ Commodities have always proportionally been increasing over time compared to the Physical Market (as a %age) the Paper %age has been able to dominate the Physical Price.
       
      As long as the amount of people willing to buy into the Futures Market increases disproportionate to Mine Output, the price of the Physical Product IS (FACT) Perpetually suppressed by a FIAT UNIT of ‘Product’ that required NO EROI, LABOR or MINER INVESTMENT. This is essentially exactly the same concept as Central Fractional Reserve Banking where Fiat is created by a privileged party as if it had been earned like the rest in circulation.
       
      Macro-Economically: Futures Markets suppress Physical Prices as long as the leverage is increasing, and as such turn all of the worlds Miners into a slave industry, working in an industry where the profit margin of actually doing the REAL WORK is constantly reduced to breaking point.
      Micro-Economically: Futures Markets claim to hedge risk but in reality are just a craps table for the majority of traders never interested in buying/selling any physical product.
       
      And how to keep people piling into Futures in order to keep the Ponzi going? Same Bankers and their cronies control people on the boards of Retirement Funds and Hedge Funds (etc…) who are herding their clients into a sheep pen for a future shearing date … CLIENTS = MUPPETS … and if all else fails, and it WILL FAIL, then The Whores in Congress have all been bought for peanuts in comparison to the profits the Big Boys made off of this Ponzi, and the Congress will transfer the Debt straight onto the back of the Tax Payers (ie, the 99% Laborers and their families who were already only breaking even).
       
      Micro-Economically I can understand why people defend the Futures Markets as being simply a mechanism for clean capitalism. A donkey thinks the same way about a carrot on the end of a stick … Macro-Economically a different picture emerges that makes the so called ‘benefits’ of these markets existing a heresy against honest capitalism where hard labor is supposed to be the backbone of incentive. Sitting at a desk in Switzerland screwing millions of people on a spreadsheet is NOT a form of WORK, it is simply slave driving. Neo-Feudalism.
       
      If Switzerland, Liechtenstein, Isle of Jersey, Isle of Man, Cayman Islands, and the City of London were swallowed up by a fissure overnight, the next day things would have improved for the other 99.99999% of Planet Earth :P sounds mean, but it is actually a very benevolent dream.
      It’s about time for God’s Jubilee!!! “Debt, What Debt???” :) ahhh, happy thoughts.

    • @WillNotBeASlave
       
      This is about the best thumbnail explanation of the creeping feudalistic system which has evolved today of ANY one I’ve ever read or heard of…  in a sense, there is the producer and there is the consumer… ANY interference with the loop that is created in that relationship is simply FINANCIALIZATION… which, at it’s best, is a parasitic LEECH on the productive value of the original transaction.  The cost of this leeching has NO CHOICE but to be shouldered by the original exchange itself…
      Well Said!

    • Thinking about this a bit further, it occurs to me that this ‘financialization’ I alluded to in the previous post that results from the ‘perversion’ of the original producer/consumer relationship (what we, in essence, call a derivative) really has no limits, does it?  Being simply an outgrowth of the original relationship, and no longer dependent on the original relationship itself, it should become quickly apparent that there is absolutely nothing to prevent it from carried to extremes.  Say… One to one and a half QUADRILLION dollars??? In the end, it not only sucks the producer dry, it takes down the whole world as well…

    • @Sovereign Economist
      “FINANCIALIZATION” … Exactly! It sums up everything I said in one word :)
      You must be one of the few who at least tries to stand back far enough from the planet to make the connections between the different economic components of Planet Orwell, and who is really stomping on who’s face (to use an Orwellian turn of phrase).
       
      In fact there’s quite a lot of this type of thought criminal on SD … I like it! But you can bet we are up the top of some ‘list’, even if it is just at the NSA-GCHQ web-bot compiling stage … LOL. I’d hate to see what is in my ‘file’, it’s probably stamped with a White Rose all ready.

  13. Another one more thing
    @Mikeyj80.   In the last two years the US DOJ and other agencies in this country have levied over $50 billion in  fines for just about every criminal action a bank can take  via it’s trades.  
    From COMEX to LIBOR to commodities to mortgages to human lives (dead banker life insurance policies) and yet no one has been arrested.  I started a contest around June 1 and wagered 3 ounces of silver, one for each category
    1.  Most numbers of bankers arrested from June 1 to August 30
    2.  Country with the most number of bankers hauled off in chains
    3.  Highest ranking banker to be arrest
    Thus far @Uglydog is the only one with the correct answers.   ZERO ON ALL THREE COUNTS
    In my prior contest there were 15 bankers killed from from March to May 2014.
    And a half a dozen in the months prior to that
    The question that shouts from the rooftops (when bankers are not jumping from them) is not whether  trades are ‘legal and acceptable’.  It is clear they are not.  Bankers are killed if they know to much.  THEY ARE NOT ARRESTED
    The criminality of these trading systems is clear to anyone who can read and has a basic understanding of how they work, the rule of law or absence thereof, and the end results
    These trading platforms are criminal enterprises what are set up by banksters to rig the system.  These people will pay their usual and customary tithe to the gummint, like B of A, HSBC and UBS for laundering trillions in cash for their criminal cohorts.  the COMEX and all other systems are just as tainted.  When a trading system is corrupt and polluted by the worst of the worst actors and players, the price that issues from the trading tape in useless, immaterial and has nobearing on reality.
    Argue as you may your points, the facts are pretty clear that anyone outside the trading pits is not going to get useful information. They may trade on this corrupted information but it is no more than a game where betters wager on which turd exits the toilet bowl first.

    • “yet no one has been arrested.”
      This would get to the heart of it.  Corzine voted to steal clients money and gets a golden parachute, makes me sick.  However, there are plenty of people who trade and make money legitimately.
       
      Also, as far as information to be gleaned from COMEX, what really do you expect to learn?  COMEX tells you about paper prices and you can see the arbitrage in the delivery market.  Want to know what physical markets for raw silver/gold, newly refined silver/gold, etc?  Well, if you find that let me know.  I can assume most will act economically and can draw conclusions from what I see, but that is far from the whole story.

    • Um…. he’s not the only one. Check my post/response, I said there would be zero on all 3 counts. Still stand by my response, there will be nothing done. Bunch of crooks and thieves. 

    • @AGXIIK
       
      “Thus far @Uglydog is the only one with the correct answers.   ZERO ON ALL THREE COUNTS”
       
      Yep.  But then again, this prediction is not exactly rocket science, is it?  The current regime does not bring charges against anyone who shares their illicit earnings AND is of their same political stripe.  Those to their right, even a little, and those who are too greedy to share their ill-gotten gains WILL be prosecuted by the US Dept of Just US.  The banksters know how this game works and they are pretty good at it after several decades of practice.  Their business model has them making billions of dollars illegally, getting caught, paying millions in fines for the most part, refusing to admit ANY wrong-doing but also promising not to do it again (with fingers crossed behind their backs?), and off they go, ready for yet another screwing of whomever they can get their little rat-claws into.  I mean, this IS how the game works, is it not?  Note that at NO time is JAIL TIME ever mentioned.
       

  14. This just in  The Portugese government is arranging a plan to stop the blood letting issuing from Banco Espirito Santo
    The plan includes creating a ‘Bad Bank’  (Oxymoron IMO) to contain the bad debt, dead bodies and toxic waste–my edit)  and a good bank created by the bailout/bailin capital pool built from the 2011 time period
    Let the looting begin.   
    BTW   can any one tell me why Spain’s 10 yr bond is 2.56%, the portugese 10yr bond is 3.69% and the Japanese 10 year bond is .53%    
    We are in a real crap storm when rates revert to the mean and beyond.
    Trade that if you will but someone’s ass if going to get bitten

  15. I frequent many sites, and one of them is Rick Ackerman. He has been saying for years that first there will be a major deflationary implosion followed very shortly after by a hyperinflation explosion.

    I guess we will see how this plays out….

    • “I guess we will see how this plays out….”
       
      That we will.  But as we approach the bottom line in all this, it probably doesn’t much matter whether inflation or deflation comes first because it is very likely that BOTH of them WILL come.  Me?  I’m rooting for deflation to come first so I can buy some nice land at a very cheap price BEFORE the inflation arrives.  :-)
       

    • @undeRGRönd
       
      “Just cuz you’re holding CASH 
      (or your wifey is)”
       
      Yes, I am… and metal too.  Either way, I am ready to buy, buy, buy… when the time is right.  ;-)
       

  16. @WillNotBeASlave.   You post was very interesting and readable. It makes sense.  The oligarchs are not concealing their plans for us and US.
     @Mikeyj80  My reference to the COMEX as a center point of corruption is to use it as an allegory to how we, the people and what little wealth, freedom (or illusion of same) and privacy we have is being traded on bourses throughout the world
    I am certain that the slave trade had its own COMEX and derivative systems, even if they were handwritten on pieces of paper and sent by runners to the human trading pits.
     The idea of the US Military Industrial COMEX trading in the lives of the vast majority of people on this planet, as is emphatically noted by Paul Craig Roberts as he excoriates the collective US Mulishness Dunderhead Complex for playing nuclear war gamesmanship with Putin, just amplifies my point that all indices, all trading platforms and all participants are guilty of high crimes and misdemeanors, all of which would have been a capital offence just 2 years after the formation of America
    We, the people, NO NOT CARE one whit whether a man or woman working the trading pits or corner offices of a TBTF bank are purportedly innocent.
    INSOUCIANCE IS NOT INNOCENCE
    Armed with more than pitch forks and burning brands, hemp rope and knives, our modern day equivalents, will burn these insects out of their hives, smash them to goo  on the floors and then set fire to the entire edifice of lies and corruption

    If it was in my power I would hit with a two pronged force. One for Wall Street and one for DC.
     Both would be smoking pits with body counts that’s make the Cambodian killing fields look like a walk in the park  But then, as you know, I am bit more than roiled up over this global destruction of humanity.Think what Carthage looked like after Scipio laid waste to that city.  As @Proverbs1616 notes, my tenor has changed.  
    Another way to put it is this simple.  Don’t piss me off. You do not want to see me mad.

    • understood @agxiik, many people, myself included, respect your posts and knowledge, that is why i feel it is important that even small nuances be crystal clear. Propogating half truths does not get us closer to the truth. I understand these mechanics, that does not make me better or worse. You understand banking mechanics, i dont think that makes you better or worse.

      Despite disagreeing with you many points, I dont wish to hit you with anything, sorry you feel that way.

  17. WillNotBeASlave   Alan G an Ayn Randian groupie.
    I can just picture Alan Smeaglespan roiling around in an Objectivist Mosh Pit with Ayn, Nathanial and maybe Wm FBuckley.
    Types like this are capable of anything including the currency scams that Alan set loose on the world as well as the software for Derivatives trading.  That gremlin is still alive and breathing. I wonder what keeps him awake at night other than dreams of Ayn the concubyn and his very much younger wife

    • @AGXIIK “Ayn the concubyn”
      That is a good one!
      Many Neo-Liberals would make awesome Thelemics; “Do as thou wilt, shall be the whole of the Law!”, a Hellfire Club feels like home for these people. Marx and Rand had two things in common, they both hated Christianity, and both had stupid bi-polar ideas on the correct economic model for a society that partially works enough to survive its own stupid ideas.

  18. @mikeyj80   I was not venting at you. Sorry about that inference.
    I am just pissed at how things are evolving in the world and the dangers posed by these sons of bitches. I appreciate your input and clarification on the subjects at hand
    I use the financial markets as a whipping post to amplify on my contention that there is so much corruption in the world today that few have a chance to catch their breath.  The average joe is drowning in BS.   
    No worried on my part as to your posts  
    I like to  use  the complexities of the market, mostly designed to trap the unwary to  hammer  where I can, from COMEX to COTS (which just today were commented on as being totally fabricated)
    BTW   Even if the market is purportedly honest, it uses mechanisms that are part of a greater corruption paradigm that involved banksters and politicians dead set on separating the rubes from their savings.
    The situation today reminds me of the old saying from,  (I think) the Music Man when Stubby Kaye (I think) says to Frank Sinatra (I think) ‘If someone bets you $100 that the Jack of Diamonds will jump out of a new pack of bicycles and squirt cider in your ear, don’t take that bet unless you want an ear full of cider’
    Why I remember that is unknown but when someone tells you to take the most improbably impossible bet, telling you it’s a sure thing you’ll win a C note,  the chances are that the bet is rigged, the fix is in and you’ll be lighter of $100
    In my case, I’ve fallen for more than a few lines like that.
     Being a former banker, I was an easy touch for a convincing line and plausible story.
    Not so much now.  
    My mission is to save people from the inanities, insanities and foolishness of the markets.  

  19. roger that @mikeyj80
    @WillNotBeASlave  Whooo Faaah!  Thelemics—now there’s a word I had to look up.  A real Wm FBuckley one
    Ayn’s polemics for thelemics was really more of an inverse Neo-Theism, relying on liguistic thaumaturgy as the platform for thelemites-in-training.  She rounded up a multi-generational cadre of adherents.   Jeff Berkwick is one of them and will tell you that anarcho-capitalism is perfect for everyone—that is everyone who buys his newsletter and picks up a few acres in the New Galt’s Gulch.
    When I looked up thelemics there were several other words that jumped out.  This was just for fun.  Thanks for the new word.
    acolytes, catamites, sodomites—-thelemites  
    That rabbit hole reminds me a bit about the movie  Eyes Wide Shut and L. Ron Hubbard weirdness
    A person who believes in nothing will believe in anything
    When I get that notion in my mind I beat myself in the head with a 100 oz of AG.  It clears everything up

    • @AGXIIK
      OK, if you really want to freak out about Thelemics read the following and don’t be eating any snacks whilst you read it (lol);
      http://en.wikipedia.org/wiki/Cake_of_Light
      …especially the bit at the end that says;
      “Some commentators have interpreted this to mean that the “blood” component mentioned in the second portion of this quote may be formed from menstrual blood or semen.”   
      [NOTE: 'some commentators' are correct, this is discussed in Thelemic literature quite clearly]
      Sounds a lot like the Borborites (aka as the Phibionites), a first/second century Gnostic Heresy…
      http://en.wikipedia.org/wiki/Borborites
      …especially the Sexual Sacramentalism section that says;
      “Epiphanius says the Borborites were inspired by Sethianism and had as a distinct feature of their rituals elements of sexual sacramentalism, including smearing of hands with menstrual blood and semen, and consumption of the same as a variant of eucharist.”
       
      So I guess when a person is a full blown Libertine and is bored with life they move onto the next logical hobby, feeding on human excretions of different kinds and branding it a religious sacrament (the opposite of sacrality)
      There is nothing new under the Sun … the old Nicolaitains, as described in Revelation, at it again!

    • Truth is always stranger than fiction … I stopped reading fiction when I was about 18yrs old :]
      Also, it makes a person not want to let their kids out of their sight until they are about 20yro … LOL.
      It’s like society decided that allowing proto-Charles Mansons to develop within their community was a sane thing to do. Anyone caught doing things like this 500-300yrs ago would have been either exiled or given the witch test; sink you’re innocent, float you’re guilty … today its just the ‘Liberal’ in-thing to let every unconscionable freak show crap all over Western Civilization with their nihilism and out right Satanism.

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