The Doc contacted CFTC Commissioner Bart Chilton this week regarding the delay by the CFTC and the SEC in enacting position limits in silver, as well as the CFTC’s silver manipulation investigation, which is now in it’s 4th year.

As the CFTC’s Commissioner’s have recently come under extreme criticism by the silver community, with long-time supporter Ted Butler finally throwing in the towel last week and calling for Chilton and Gary Gensler’s dismissal, we offered Bart the opportunity to speak with The Doc to update readers on the progress of both the silver investigation as well as the implementation of position limits.

Commissioner Chilton has deferred a live interview until the silver investigation is concluded ‘in the next 2-3 months if not sooner‘, but has allowed SilverDoctors to publish his response regarding these inquiries.

Bart Chilton: Silver Investigation to Conclude in 2-3 Months

The new Basel III rules are set to make gold a Tier 1 asset for commercial banks- compared to the Tier 3 ranking it holds currently.  This means PHYSICAL gold will count as capital the same as a treasury bond.
Demand for physical metal will increase substantially from this ruling, but you won’t hear it mentioned on CNBC.

The big new thing in gold – capital adequacy ratios

Ross Norman looks at the implications for gold of an increased focus on the assets banks are allowed to hold as tier one capital.

EURO-STOXX-BANKS-chart.gifOn Wednesday, May 16th, it was reported that Greek depositors withdrew as much as €1.2 billion from their local Greek banks on the preceding Monday and Tuesday alone, representing 0.75% of total deposits.1 Reports suggest that as much as €700 million was withdrawn the week before. Greek depositors have now withdrawn €3 billion from their banking system since the country’s elections on May 6th, seemingly emptying what was left of the liquidity remaining within the Greek banking system.2

According to Reuters, the Greek banks had already collectively borrowed €73.4 billion from the ECB and €54 billion from the Bank of Greece as of the end of January 2012 – which is equivalent to approximately 77% of the Greek banking system’s €165 billion in household and business deposits held at the end of March.3 The recent escalation in withdrawals has forced the Greek banks to draw on an €18 billion emergency fund (released on May 28th), which if depleted, will leave the country with a cushion of a mere €3 billion.4 It’s now down to the wire. Greece is essentially €21 billion away from a complete banking collapse, or alternatively, another large-scale bailout from the European Central Bank (ECB).

Submitted by SD Contributor SRSrocco

The U.S. Financial situation is in much more dire straights than Europe.  How precious metal investors (some on this site) are taken by the MSM BAMBOOLZEMENT is beyond me.  I also recommend listening to The Doc’s new interview with Harvey Organ.  He explains in easy to understand detail of just how much leverage there is in the Gold and Silver markets as it pertains to paper contracts and actual metal.

This is why I get a laugh at the folks who keep focusing on the so-called SHORT TERM BEARISH CHARTS or NEWS in gold or silver.   All in all, it really doesn’t matter.

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The Baltic Dry Index is rolling over, falling 3.65% Wednesday to 950.  The BDI has failed to even make it near the top of its massive downtrend channel before beginning its next leg down and has rolled over at critical support/resistance, meaning it’s likely only a matter of time before the BDI challenges its all-time lows near 630.

Gold fell and tested support at $1,530/oz but then bounced very sharply and rose by nearly $40 from $1,532/oz to $1,570/oz. US stocks and commodities remained under heavy pressure and the benchmark S&P 500 ended down 1.43%.

Gold consolidated on yesterday’s gain in Asia and during European trading it is challenging resistance at $1,570/oz.Gold is set to incur its 4th month of losses which has not been seen in nearly 13 years. Interestingly while gold in dollar term is off 6% in May, the sharp fall in the euro means that gold has again risen in euro terms and is up 0.3% in euro terms in the month.

Meanwhile, stocks and commodities have had a torrid month with sharp falls seen and gold outperforming nearly all major equity indices.

Bloomberg reports tonight that JP Morgan’s CIO unit may have mis-marked derivatives by hundreds of millions of dollars- meaning the unit consistently valued at the bid vs. the ask or vice-versa vs. the pricing/valuation given by its credit default swaps dealer.

In layman’s terms, this means that JP Morgan’s CIO unit was valuing its IG9 derivatives and hedges above their actual market value in order to prop up valuations and earnings, and thus bonus packages.  Hundreds of millions of dollars overvalued.

While hundreds of millions of dollars is likely chump change compared to The Morgue’s $8 billion in already admitted losses related to the IG9 10 year index, and likely substantially more in interest rate swaps losses, this is a MEGA issue for Jamie Dimon & JP Morgan’s management for one reason: in the words of former Lehman Brothers’ CFO Sanford Bernstein: ‘I’ve never run into anything like that, That’s why you have a centralized accounting group that’s comparing marks” between different parts of the bank “to make sure you don’t have any outliers.

It will be supremely ironic if Jamie Dimon ends up being forced out as CEO of JP Morgan not due to silver manipulation, IG9 losses, IR swap losses, or even mortgage fraud, but because he failed to ensure proper accounting and valuation of the bid vs. ask of a small tranche of delta hedges.

Submitted by SD Contributor Marshall Swing

Silver COT Report 5/25/12

Commercials sold off -1,018 longs but managed to cover -1,704 shorts to end the week with 45.89% of all open interest and now stand as a group at -76,110,000 ounces net short, another huge decrease of almost 3,000,000 ounces net short from the previous week.  No one seems to comprehend what these criminals are up to in their strategy to get out of net short positions.

Our apologies for the delay in this week’s COT report due to the holiday weekend.

Submitted by SD Contributor Marshall Swing

Gold COT Report 5/25/12

Commercials bought a significant 2,134 longs and covered -1,185 shorts to end the week with 55.21% of all open interest and now stand as a group at -13,559,800 ounces net short, another significant decrease of over 350,000 ounces net short from the previous week.