The US-based producer Price Index (PPI) is corrupted in obvious ways. The distortions continue on all inflation measures. Take a simple approach. From early October to mid-November, crude oil has risen from $75 to $98, while the PPI energy component put out by the clownish USGovt officials is highly negative. Even the commentators find it hard to report the Producer Price Index without raising eyebrows, even questions of doubt. The distortion is overwhelming. The official PPI for October was listed as minus 0.3%, down from the plus 0.8% in September. No credibility whatsoever can be given to the PPI energy component, reported as negative last month, an utter falsehood. The gimmicks are visible in the open to the dullest observer. – Jim Willie
Saturday night, I had dinner with a friend of mine who trades commodities on the CME. He has been doing that for a number of years. He told me that he can’t believe that the CME is not standing behind the traders in the MF Global fiasco. Many of the small traders keep personal money in their trading accounts, funds that they need to pay their bills. Now, these accounts are frozen. He told me that many of the traders will not come back to the CME. The markets are unraveling. Gerald Celente lost over $100,000 in this tragedy. Bill Fleckenstein, our friend from Seattle, and a seasoned pro also lost money. John Corzine should be prosecuted for mis-appropriating client funds. Madoff went to prison but watch Corzine get off scott-free. He is too tight with Obama and the Democratic leadership, sponsoring $35,000 a plate Obama fundraisers. If you still feel safe with your money in banks or brokerages, think again.
Jim Willie has a lot to say about what is happening:
BANK OF AMERICA HAS ENGAGED IN PREDATORY ACTION AGAINST MF-GLOBAL VICTIMS. THE SNAKES ARE FEEDING OFF THEIR CLIENTS. IF NOT IN THE UNITED STATES, THE GANG OF BIG US-BANKS WOULD BE DECLARED AS CRIMINAL, PROSECUTED, AND LIQUIDATED, WITH EXECUTIVES GOING TO PRISON.
The villains are graduating to predators against their neutralized victims. Bank of America is actively soliciting holders of claims against MF Global to buy them at distressed prices. The victims who have begun lawsuits against the busted firm have begun to field offers from the insolvent giant BOA, itself the most significant money-laundering bank. The audacity is beyond description. Bear in mind that BOA is a debtor party operating with JPMorgan. Together they are attempting in court to weaken the claims of the other holders of debt, which certainly include clients whose assets were likely stolen. The thief in my view is JPMorgan itself. See the Cafe Americain article (CLICK HERE). A lawsuit has begun against the decision to form a board of creditors for review, due to blatant conflict of interest. Bring on the RICO law applications designed to carve up assets by criminal organizations. However, these gangs control the USGovt.
WITNESS THE END OF THE C.O.M.E.X. AS THE ONLY GUARANTEED OUTCOME. IT WILL TAKE TIME. EXTREME EVENTS ARE DUE. DESPITE HOW THE EXCHANGE WILL TRANSFORM INTO A CASH & CARRY MARKET WITHOUT MARGIN OR LEVERAGE, THE DIVERGENCE MUST COME FIRST. THE PAPER PRICES WILL DIVERGE FROM THE TRUE PHYSICAL MARKETS UNTIL THE ENTIRE EXCHANGE IS DISCREDITED AND SHUTS DOWN. THEN COME THE LAWSUITS.
People often regard the Jackass as crazy, until the next breakdown occurs and the past wild forecast seems obvious. The Jackass has long claimed that at least for precious metals market, the COMEX would eventually be discredited and shut down after an extreme divergence took place. The Gold & Silver prices would fall on the paper side, rise on the physical side, and finally the COMEX would shut down, empty of inventory, a carnival of corruption exposed. That day is coming. The details are always extremely difficult to predict. MF Global is the seminal event toward the inevitable COMEX end. Its reign of financial terror has limited days remaining. Attacks against it will feature lawsuits, brokerage house departures, charges of raided inventory, and discontinued inflow of client funds. Suspicions are ripe for criminality. Regulatory reaction is overdue, possibly to come from a corner of the USCongress, probably from a prominent agricultural state like Iowa or Nebraska or Illinois. To be sure, the end of the COMEX is near. The financial press is missing this story. This is Madoff times 100 applied to an important structure to American finance and business. This is AIG times 100 applied to risk management. Count the days. The thermometer for its destruction will be evident in a divergence forecasted by the Jackass for a few years. Watch the Gold & Silver paper prices descend from the corrupt futures arena, while the physical prices rise powerfully. The confirmation will be seen as inverted curves, called backwardized. The spot prices will dominate reality. The COMEX will become a game unto the thieves, marketing without product, stealing anything not nailed down, like MF Global cash accounts. The harsh spotlight will eventually be clear, even if the light is provided by torches.
UNDELIVERED GOLD & SILVER ORDERS TESTIFY TO A TOTALLY BROKEN AND CORRUPTED RUPTURED FUTURES CONTRACT MARKET. IT SHOULD BE SHUT DOWN AND TRANSFORMED INTO A CASH & CARRY MARKET. THE MF-GLOBAL RAMIFICATIONS ARE ABSOLUTELY ENORMOUS. WITNESS THE END OF THE C.O.M.E.X. AND THE L.B.M.A. IN A MATTER OF TIME. IT IS HARD TO PUT INTO WORDS THE BROKENNESS AND CORRUPTION OF THE FUTURES EXCHANGES. THEY ARE BLEEDING ON STAGE IN FULL VIEW WITHOUT PROPER PRESS REPORTING. THE REACTION UNDENIABLE IS THE ABANDONMENT BY HONEST BROKERS, A PROCESS BEGUN.
The CME has advised that 1.42 million ounces of registered COMEX silver inventory is unavailable for delivery due to MF Global bankruptcy, as well as 16,645 registered ounces of gold also unavailable for delivery. Keep in mind that these are under contract, and no Force Majeure has been invoked. That is a lot of bullion in breach of contract. The lawyers will be lined up very quickly to carve the metals exchanges into pieces. The COMEX is totally broken, unable to honor basic contracts, unable to deliver from committed legal contracts. The cash accounts are frozen, and being pilfered. The ransacking continues while delivery is obstructed. As JPMorgan and the authorized thieves continue to loot the 150,000 accounts held by MF Global, countless stories are coming to the surface. The Silver Doctors report that inventories at the London Metal Exchange are being liquidated. Not coincidentally, MFG had a big involvement in the London trading pits. One should be aware that a significant landmark event has occurred. A climax of theft is in progress, like a black hole vacuum. My view is that the COMEX and LBMA are both in the process of erupting in a climax event of corruption and ruin. The almost humorous part of the story is that many analysts and harsh critics find themselves victims, like Gerald Celente. He should still be admired for his courage, even if he trusted a system he viciously critized with his money. The Jackass would not touch the COMEX with a ten-foot pole, for fear of corrupted outcomes, the least of which would be loss from naked shorting, the worst would be loss from basic theft. See the Silver Doctors article (CLICK HERE).
TED BUTLER DECLARES THE FUTURES EXCHANGE MARKET IS AN UNMITIGATED DISASTER. EVERY PHASE OF THE CHICAGO MERCANTILE EXCHANGE AND ITS C.O.M.E.X. ADOPTED CHILD IS CORRUPT. CLIENT ACCOUNTS REMAIN IN LIMBO, SUBJECT TO MORE THEFT, BUT WITH SOME POSSIBLE DEGREE OF JUSTICE. THE PRECIOUS METALS MARKET IS POISED FOR A GRANDIOSE RISE, AFTER PERHAPS A FINAL DAY IN THE PROFITABLE ILLICIT DARK SIDE BEFORE THE SUN SHINES.
An unmitigated disaster is in progress. The following are comprehensive thoughts by Ted Butler, the irrepressible indefatigable precious metals analyst. He is a true veteran. Any criticism of his idealism and frequent forecasts for incredible price breakout releases must be forgiven. His analysis is always solid, even if his forecasts are consistently lofty. Here is a stream of his thoughts. The significance of truly historic events is often not fully appreciated at the time they occur. The bankruptcy of MF Global is such an event. Its disaster comes on many levels, certain to result in changes in the commodities market, maybe its regulatory structure. For the first time in modern history, the main guarantee of the clearinghouse system has completely failed its most important constituent, protection of the customer base and its segregated accounts. They were violated and openly commingled. One should always stress that fund commingling is a serious criminal offense. So watch for prosecution, or lack thereof to boldly proclaim such illegal practices are permitted. The sacred nature of segregated accounts is the very glue that holds the futures market together. No longer is the US futures market regarded as having integrity. Almost all MF Global commodity customers are in limbo, accounts frozen, probably stolen. Promises of 65% redemption have surfaced. With a shuttered bank, the accounts are at least insured by the FDIC. Not here. The Butler accusations of the CME being a criminal enterprise are actually understated. The CME Group was the front line regulator for MF Global, responsible for auditing and insuring the customer funds, their guarantor. The Chicago Mercantile Exchange failed at every turn and permitted the account theft, even after learning of the vulnerability of the missing funds. The audacity of CME is amplified by its website boasts that between $8 billion to $100 billion in protection is available in the event of a clearing member failure. They lied. They failed. They are criminals in league with JPMorgan.
The entire futures market clearing system has been destroyed, as trust is gone. What makes the situation worse is the lack of comprehension by the financial press in recognizing the gravity of the profound damage and consequences. The bankruptcy trustee has snatched up full control of assets, like cash, unencumbered assets, registered warehouse receipts for silver, gold bars, and other commodities. They are lost in the legal bankruptcy system, subject to further theft, blamed on the chaos. Some quick action is required, starting with stripping the CME Group any regulatory powers that remain. A clear conflict of interest has plagued the futures market, in having a for-profit entity set its own rules and regulations. Contempt for its own member customers is shown. Among the victims are farmers and airlines that must hedge their risk. No longer can the CME stand before the USCongress and argue the legitimacy of being a self-regulatory organization. It failed before the world in grand style. Let’s see first if MF Global clients are given swift remedy, and secondly made whole. The Jackass expects neither, as cynicism has proven a very consistent reliable forecast tool whenever Wall Street is concerned. They have a near perfect track record of criminal fraud since the Robert Rubin era began, with impunity. The delays enable more complete theft.
The appearance of the big US banks on the creditor boards ensures more complete theft. One should assume that the longstanding investigation into the silver market will be terminated, for reasons of diversion or distraction, by bigger issues. For the last three years, the CME has owned the COMEX and hidden behind the CFTC curtains. Witness the destruction of the US-based futures market. For years, we did not know how or when the end would come, but what has unfolded so far seems like on the irretrievable path to shutdown. Butler closes by saying, “I am purposely confining my comments to the emergency at hand. There is no change in the silver outlook. It is still a crooked market destined to go much higher in the long run. The sooner the CFTC cracks down on the CME and then addresses the silver manipulation, the sooner those higher prices will come.” My belief is that a foreign-based assault is being planned. When an enemy is wounded, the time has come for a well-organized, well-planned, well funded, calculated attack that kills the beast. The US banksters have made countless enemies over the years, have defrauded countless victims, have dispersed thousands of phony gold bars to foreign locations, and have rigged the system for consistent illicit profits at the expense of countless aggrieved parties. The vengeance is coming swiftly, like a bonzai attack at dawn. The timing is unclear. More rational thought goes behind this expectation than hope. My deep desire is for justice against indescribable white-collar crimes.
MF-GLOBAL FALLOUT WILL BE DEEP AND FAR REACHING. SOME MAJOR FUTURES BROKERS WILL EITHER FOLD OR QUIT. THE PROCESS HAS ALREADY BEGUN WITH BARNHARDT CAPITAL MGMT. THE C.O.M.E.X. IS IN THE PROCESS OF LOSING THE TRUST OF ITS OWN CLIENTS. THE COMMINGLING AND THEFT OF CLIENT ACCOUNTS HAS TREMENDOUS CONSEQUENCES. THE C.O.M.E.X. WILL EVENTUALLY BECOME A CASH & CARRY STORE. THEN LATER SHUT DOWN AND PROSECUTED FOR BROAD CRIMINAL ACTIVITY. THE RISK MANAGEMENT BUSINESS IS LEFT VULNERABLE.
A message has been shouted from the hilltop that the entire system has been utterly destroyed by the MF Global collapse. The issue is trust, and security of account funds. Violations have ruined the sacred bond required of market investors. The first notable casualty is Barnhardt Capital Mgmt., which has ceased operations. Its head made a public statement of shutting down operations and offices, complete with reasons. Ann Barnhardt stated, “After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator. The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets, because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible, so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless criminal political cronyism.” She went on to make a bold statement that the firm would not re-open until the USGovt leaders are replaced, the system sufficiently reformed with adherence to and enforcement of the rule of law. See the Zero Hedge article (CLICK HERE).
This investment firm shutdown action is certain to be followed by numerous other firms. Thousands of account holders will close out and demand return of their funds before they are stolen, actually what is left of their funds. The Jackass believes a similar incident like MF Global will occur soon with mutual funds and stock brokerage accounts, then later a bigger incident with bank savings accounts and certificates. My warnings have sounded lunatic for a few years, but no longer. Private accounts will be stolen as much as possible by the Syndicate that has wrested control of the USGovt from the financial center grappling hooks. Witness a gradual methodical grinding climax in the death event being played out slowly. The COMEX is ruined. It will gradually transform into a theft arena, a killing field that victimizes the most trusting and the least aware. Many months from now, lawsuits will pile up until the COMEX is just a Cash & Carry market. The farmers and airlines and legitimate banks (selling mortgage products) need a utility for hedging risk, not a casino attached to USGovt corrupt appendages given license to pilfer. That is what we see today.
Finally, here are a few words on gold and silver, taken from Ted Butler’s report on Friday:
The price of gold and, especially silver, sold off sharply this week, with most of the damage coming on Thursday. For the week, gold was off $64 (3.6%), while silver was off $2.30 (6.6%). The numbers would have been worse for silver were it not for some snapback on Friday. As a result of silver’s steep underperformance this week, the gold/silver ratio widened out to almost 53.5 to 1, near the top end of where this ratio has traded year to date. This means silver is cheaper relative to gold and on a value basis this is an opportune time for gold-heavy investors to switch gold holdings into silver.
As always, my suggestion to switch from gold to silver and to buy silver with fresh cash is intended on a metal for metal switch or on a money on the barrel basis. In other words, no borrowing and no leverage. Yes, I understand the silver price action looks punk. I also understand that silver investor sentiment is weak, with countless stories suggesting a silver price smash dead ahead. But I also understand that in any investment the best time to buy is when things look rotten. The alternative is to wait until things look and feel better. Of course, that usually means buying at much higher prices, when confidence is restored and everyone is feeling fine.
As long as the facts point to an undervaluation in silver, both on an absolute basis and relative to gold, those facts will override sentiment on a long-term basis. Sentiment can change a lot easier than facts can change. It doesn’t seem that way in the midst of brutal price takedowns, but history has shown that the best time to buy silver is after it has been smashed in price.
Never, has it been more important to have a substantial portion of your wealth in physical gold and silver, safely in your possession.
Here is the 24-hour gold chart, heading into the opening in NY. This week is greeted with the “usual” Cartel takedown. Let’s see if it bounces back up or continues down as we approach the option-expiry on Tuesday.