Posts Tagged ‘JPMorgan’
by Tyler Durden
January 1, 2012
When it comes to the fabled President’s Working Group on Capital Markets, also known as the Plunge Protection Team, the myths about the subject are certainly far greater than any underlying reality. To be sure, vast amounts of popular folkflore has been expounded into the public arena, with most of it being shot down simply due to it assuming conspiracy theories of such vast scale that the human mind is unable to grasp the complexity, and ultimately the inverse Gordian Knot makes an appearance with the claim that vast conspiracies are largely untenable simply because it is impossible to keep a secret from so many people for so long. Yet what if the secret is not a secret at all but is fully out in the open, and is only a matter of interpretation, and contextualizing? Why just 3 years ago it would appear preposterous to allege the capital markets are a ponzi and that the Fed does everything in its power to keep stocks higher. Well, what a difference three years make: now the Chairman himself in a Washington Post OpEd has admitted that the sole gauge of Fed success is the loftiness of the Russell 2000, neither unemployment nor inflation really matter now that the Fed’s third mandate has been fully whipped out. Furthermore, Keynesian economics, and the entire top echelon of the educational system have also been represented as a paradigm which merely perpetuates the status quo as the alternative is the realization that the whole system is a house of cards. As for the global capital markets being nothing short of a ponzi, we merely point you to the general direction of Europe, the ECB and its bank, where the monetary interplay is nothing short of the world’s biggest pyramid scheme. Yet the PPT, or whatever it is informally called, does not exist? Consider further that only recently did it become known that the former SecTres Hank Paulson himself was exposed as presenting material non-public information to a bevy of Goldman arb desk diaspora hedge funds, headed by with none other than the head of the President’s Working Group on Capital Markets Asset Managers committee David Mindich. So, if contrary to all the evidence that there is some vast underlying pattern, if not a conspiracy per se, one were to take the leap of faith and take the next step, where would one end up? Well, most likely looking at the Exchange Stabilization Fund, or ESF, which Eric deCarbonnel has spent so much time trying to unmask. Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the organization that so many have been trying to expose for years? Watch and decide for yourself.
As a reminder deCarbonnel is not some tinfoil hat clad sub-basement dweller – it was his input that led us to the realization that in attempting to control the Treasury curve, the Fed will, and already has, experiment with selling puts on various Treasury maturities in an attempt to generate reflexivity whereby the synthetic determines the value of the underlying (something ETFs are now doing oh so well), the value naturally always being higher, higher, higher irrelevant of what underlying demand there is (and as we showed last week, with a record amount of international outflows in the past month, the demand, at least from abroad, is just not there). So what does Eric assert?
After months of work, the video series on the Treasury’s Exchange Stabilization Fund is finally finished!
Why you should watch these five videos:
It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA’s black budget, and is the architect of the world’s monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse…
So while nursing that New Year’s Day hangover, take some time and watch this series of videos. If nothing else, they even if merely the extended ramblings of some person that one can quickly dismiss as merely the latest lunatic, they do present an alterantive reality to what so many may be accustomed to. After all at the end of the day imagination, the ability to think outside the box, and to see patterns where previously there were none, is the greatest threat to the ending status quo by far.
Read the entire article HERE.
Morgan Stanley On Why 2012 Will Be The “Payback” For Three Years Of “Miracles” And A US Earnings Recession
by Tyler Durden
Yesterday, we breached the topic of the real decoupling that is going on: that between the macro and the micro (not some ridiculous geographic distribution of the US versus the world), by presenting David Rosenberg‘s thoughts on why Q4 GDP has peaked and why going forward it is energy prices that are likely to be a far greater drag on incremental growth than the preservation (not the addition as it is not incremental) of $10 per week in payroll taxes (which only affects those who are already employed), even as company earnings and profit margins have likely peaked. Today, following up on why the micro is about to return with a bang, and why fundamentals are about to become front and center all over again, albeit not in a good way, is, surprisingly, Morgan Stanley’s Mike Wilson, who has issued his loudest warning again bleary eyed optimism for the next year: “Think of 2012 as the “payback” year….when many of the extraordinary things that happened over the past 3 years go in reverse. I am talking about incremental fiscal stimulus, a weaker US dollar, positive labor productivity, and accelerated capital spending.” Said otherwise, 2012 is the year when everything that can go wrong in the micro arena, will go wrong. And this is why Morgan Stanley being bullish on the macro picture! As Wilson says, his pessimistic musing “tells the story for what to expect in 2012 assuming the situation in Europe doesn’t implode. In other words, this is not the macro bear case.” If one adds a full blown European collapse to the mix, then the perfect storm of a macro and micro recoupling in a deleveraging vortex will prove everyone who believes that 2012 will be merely a groundhog year (in same including us) fatally wrong.
Lastly, when it comes to predictions Morgan Stanley (which called the EURUSD short the hour Goldman put it on as a long) should be taken far more seriously than Goldman, which merely wants to be on the other side of its clients.
The complete very troubling forecast from Morgan Stanley:
by Mark H. Melin
December 21, 2011
Commodity Customer Coalition founder James Koutoulas is requesting that MF Global bankruptcy Judge Martin Glenn investigate three potential legal issues that are said to have occurred in transferring of MF Global assets. The key issues include the fact that JP Morgan was able to purchase MF Global bonds at a discount without any open bidding process and the assets were apparently sold without disclosure to or approval from the U.S. bankruptcy court or trustees. The third issue centers on JP Morgan seeking special favors from the Federal Reserve to receive priority treatment over investor segregated fund accounts.
The first such non-transparent movement of assets occurred when JP Morgan is said to have purchased MF Global’s Sovereign Debt at a significant discount without an open bidding process, paying $0.89 and later selling that debt to investor George Soros for $0.95. No one is going to complain about JP Morgan generating profit. However, purchasing assets of a bankrupt firm without an open bidding process or disclosure to the bankruptcy court and trustees is where JP Morgan may be in trouble, according to Mr. Koutoulas. This sale could be subject to clawback provisions, legal experts speculate. (On December 9, 2011 The Wall Street Journal reported the fact that bonds were moved to KPMG London office, which was the bankruptcy administrator, but at the time the article did not discuss sale details or approval through the bankruptcy process. See “Corzine’s Loss May Be Soros’s Gain” by Gregory Zuckerman and Dana Cimilluca.)
The key issue is that such transfers is the bonds were purchased at a discount without open bidding and the process was not disclosed to or authorized by the U.S. Bankruptcy Court, according to Mr. Koutoulas. “Who gave JP Morgan permission to purchase those bonds at a discount without open bidding?”
The second questionable movement of assets is said to have occurred when JP Morgan purchased MF Global’s stake in the London Metals Exchange (LME) without proper disclosure. The event was widely reported at a basic level on November 28, 2011. The larger issue, however, appears to center on the fact that such a transaction was not approved by the U.S. bankruptcy court and trustee.
“Was this disclosed in court?” Mr. Koutoulas rhetorically asked. “No. Was their trustee approval? No.”
The third issue occurred in congressional testimony Thursday, December 15, 2011 where it was discovered JP Morgan asked the Federal Reserve to write a letter claiming that the segregated funds should not be categorized as client money.
“How many letters like this have they asked for in the past? I want all the statistics regarding the number and content of letters,” Koutoulas questioned. “JP Morgan wanted a ‘get out of jail free card’ from the Fed. Guess what? That doesn’t fly with me.”
“Their hubris is so severe. They think we don’t know the industry, like we are Occupy Wall Street radicals or something and don’t have a clue or message,” Mr. Koutoulas said, noting that the CCC is comprised of experienced industry participants who understand the financial services industry from the inside.
Mr. Koutoulas seeks to solve the problem with JP Morgan without dragging the issue through court. In speaking to JP Morgan, Mr. Koutoulas said “Listen, you are buying vulture MF Global claims at $0.86 ½ on the dollar. Why don’t you pay a fair price of $0.97 ½ take the customers out of the bankruptcy and we will indemnify you from any class actions resulting from this.” A vulture claim occurs when an MF Global claimant such as a farmer or small business person is in desperate need of cash and sells their claim to someone such as JP Morgan, who purchases the claim at a lower rate than the value at maturity. In this example if JP Morgan purchased the claim at $0.87 and all clients were eventually “made good” JP Morgan would receive the par value of $1.00. With the MF Global bankruptcy proceedings apparently moving along much quicker than expected, JP Morgan stands to potentially make a quick 13% return on such vulture claims.
Mr. Koutoulas reports that JP Morgan would not even discuss the issues. “I can see that you disagree with me,” said Mr. Koutoulas, whose organization represents over 7,000 MF Global clients, mostly professional investors. “They won’t even meet with me and talk with me.”
Mr. Koutoulas is currently working Pro Bono and many of the lawyers are working at a highly discounted rates and requested that industry participants donate to help . “I need professional litigators and bankruptcy attorneys backing me up,” said Northwestern Law School grad Koutoulas who also operates Typhon Capital Management, which is an NFA-registered Commodity Trading Advisor and Commodity Pool Operator. “We’ve had an outpouring of lawyers who want to help,” Mr. Koutoulas said, sitting with a young Yale Law School grad as we spoke.
In calling on MF Global presiding bankruptcy Judge Glenn to investigate these issues, Mr. Koutoulas is rallying the futures industry to boycott use of JP Morgan. “Call your FCM and if they are using JP Morgan say ‘We won’t do business with you if you work with JP Morgan,’” he said, requesting that industry participants get on Twitter and follow the #BoycottJPM hash tag.
BY METAL AUGMENTOR
There is a new boiler room operation in town and it doesn’t involve slick-haired Wall Street scumbags with mafia connections but rather anonymous hedge fund managers and shady characters with no permanent homes or the guts to identify themselves.
And so these shorts without names or homes have found their latest target, Silvercorp Metals (NYSE/TSX: SVM). Unfortunately for them, this time their target doesn’t walk or smell anything like a duck. In fact, some of the anonymous allegations against Silvercorp are so stupid that they raise questions about all the past allegations the shorts have made against the long parade of Chinese companies listed on U.S. or Canadian exchanges. We all know them so let’s not get into names. What matters is that a “research” outfit by the lofty name of International Financial Analysis & Research Group (IFRA) has supposedly documented information on many of these companies by visiting corporate offices, production facilities and sales outlets along with conducting interviews with competitors, partners and customers. Given their work has now been confirmed as sloppy at best in the matter of Silvercorp, all of their prior work must now also be considered doubtful. We are actually quite shocked to learn of this — as recently as last week we still believed these “investigative” efforts were credible. It sucks to be naive but it’s much worse to remain that way.
At this point Silvercorp and several individuals (see here and here) along with the odd newsletter and broker have already provided a litany of rebuttals to the anonymous allegations. And yet they keep popping up with slight modifications and incessant repetition. Unlike the other rebuttals, we are not going to be nice here and give the shorts undeserved respect or benefit of doubt. We are going to call it instead exactly like we see it in true Metal Augmentor fashion.
First off, however, we don’t believe it is appropriate or productive to paint all short sellers with the same broad brush of manipulation and abuse. Shorts can serve a legitimate purpose in a stock market: to counteract pump and dump operations, to strengthen price discovery, to make sure valuation is reflective of market consensus (for good or bad), etc. Anybody should be able to form and share either a long thesis or a short thesis on a stock. One or the other thesis will eventually turn out to be correct and a free market is an efficient way to arrive at the right answer. The defamatory abuse that is taking place at this juncture, however, is not how a free market should work. Instead, it is exactly how a mob hands out justice: hang first and never ask questions later.
The false allegations that have been made are no different from a pump and dump except in reverse. Actually, there is a difference: a pump and dump is illegal only in securities trading whereas defamation is unlawful in virtually every human interaction. In most countries, you haven’t broken a law if you tell everybody what a great baseball player or poker player your loser nephew is … but if you wrongfully accuse him of being a rapist or a thief, then you are liable for damages arising from his lost reputation. It was only a matter of time before the shorts encountered a nephew who is actually not a loser or a rapist or a thief. Silvercorp be his name.
While it is important that shorts should be tolerated, abusive short-selling practices should be vigorously counter-balanced by seeking redress in court for civil damages as well as by bringing market regulators into the fold. Regulatory changes should restrict the abusive and manipulative aspects of short-sided speculation by, for example, requiring shorts who publish negative information to declare in regulatory filings their positions above a certain threshold level and by forcing these shorts to maintain their positions for a certain period of time so that the accused company has a chance to fully respond. In particular, we believe there are licensed investment professionals and registered investment advisors presently active in the United States who need to lose their credentials for their key roles in this gross abuse of the markets.
Look, we are no friends of companies run by reckless promoters who make selective disclosures, much less fraudsters. We have identified companies in the past that have subsequently gone under primarily as a result of undisclosed risks or negative factors. One company, Sterling Mining, even had a deposit that is geologically very similar to Silvercorp’s Ying property: the Sunshine Mine in the Silver Valley of the Coeur d’Alene Mining District in Shoshone County, Idaho. The problem there was that it was an old mine with most of the silver being left over mainly as side and crown pillars in old stopes while future production was burdened by a 7% NSR royalty. We suggested to management that they conduct exploration with an eye toward making a new discovery while negotiating a buyback of this royalty prior to announcing plans for production. They claimed the royalty would never have to be paid because of their arcane interpretation of the law. The rest was history.
We did all the original legwork to discover the facts in the Sterling Mining case including talking to former mine personnel, reviewing SEC and bankruptcy filings of the prior mine owner — the (also) defunct Sunshine Mining Company — and even pulling property records. Sure enough, those 7% royalty holders came looking for their NSR payments just as Sterling Mining was going into default. In fact that royalty is still pestering Thomas Kaplan’s new Sunshine Silver Mines (page 60).
We are aware of other companies that are still operating despite having some serious skeletons in the closet — and again we identified these problems by conducting original research. So we know how to properly do this stuff … while most of the short sellers are grasping at straws.
Here is a suggestion. The goofballs, hippies and know-it-alls who have piled on to attack Silvercorp should take a look at the historical production that came out of the aforementioned Coeur d’Alene camp (not to mention the current happenings at Hecla’s (NYSE: HL) Lucky Friday) before they pipe up again about the SGX mine in the Ying District having grades that are “too good to be true”. In fact, only a true mining ignoramus would compare a mesothermal vein deposit featuring massive sulfides and silver sulfosalts to a typical silver mine containing unremarkable epithermal veins or worse (from a comparative standpoint), a low grade disseminated silver deposit. These ignoramuses might wish to consult at least the Imiter Mine in Morocco for remarkable grade epithermal silver (about 30 ounces or 1kg/tonne) as well as Tahoe Resources’ (TSX: THO) Escobal and MAG Silver’s (TSX: MAG; AMEX: MVG) Juanicipio. These are among the few comparable vein deposits worldwide with overall silver grades at least as good as the SGX mine, which the shorts claim is misrepresented by the company as 845 g/t. The 845 g/t is actually the measured portion of the high grade resource at 300 g/t cutoff for the SGX mine from 2009. As such, it is basically irrelevant.
In reality, the actual high-grade reserves of the SGX mine in the current mine plan are less than half that number –410 g/t to be precise. Apparently our intrepid mining experts don’t understand the differences between how various resource categories are reported or the distinction between an estimated cutoff grade in a resource block and the actual cutoff grade used for ore reserves in the mine plan.
In the case of the SGX mine, the cutoff grade for measured and indicated resources is 300 g/t silver-equivalent, meaning that the reported resource tonnage is constrained to ore blocks that are at least that grade. There are no economic parameters applied to the 300 g/t cutoff number so it will tend to remain the same over time. By contrast, the economic cutoff grade for proven and probable reserves at SGX is about one-half the resource grade thanks to low mining costs and high silver prices. This is why the average mined grade at SGX doesn’t even look that remarkable for an underground deposit. We’re happy to explain all this to the shorts in a way that even a kindergartner can understand. Unlike the experts purportedly consulted by them, we’ll even try to avoid ridiculous claims like the one where 68 million ounces of “equivalent silver” is supposedly too low (“they should have more resources”) to support a company with even just a $100 million market cap. Our fees are reasonable.
Before moving on from the grades at the SGX mine, let’s look at the pile of rocks the fine folks at IFRA collected from the roadside between the Ying mine and mill.
Wow, what can we say! What an impressive pile of random rocks that probably did not fall off an ore truck! Many of them are clearly weathered with smooth edges or showing signs of air exposure (oxidation of iron sulfides) and as such they do not appear to be the product of very recent mining activity. Our guess would be these rocks are larger fragments from the fill material that was used to construct an all-weather road capable of supporting heavy truck traffic. The rocks could have come from the mine as well — perhaps barren or low grade development material — but they do not appear to be representative of high-grade veins (or even medium-grade ones).
Here is how ore might look like at various grades coming out of a silver-base metal vein (these are from my personal collection and also have some iron staining that would not appear as extensively discolored on freshly mined rock):
Notice a few things. One, the material tends to be angular since it was literally blasted out of whole rock by explosive force. Two, it doesn’t have rounded edges from weathering. Three, it has clear vein textures (bands of different colors) instead of typical rock composition. Four, there is some sparkly stuff representing sulfides (these rocks are high grade overall but there are also lower grade portions). Five, oxidation is in spots and bands confirming this to be vein material. All in all, we’d estimate that 75% or more of the rocks in the IFRA “sample” photograph did not “fall off a truck” that was transporting freshly-blasted ore from the SGX mine to the mill.
Now about those trucks. It is claimed they use 13 tonne “Hercules” models at Ying that cannot possibly carry 30 tonnes of ore … at least according to some random guy they spoke with. Oh brother! The shorts would realize their folly if they actually had any experience with trucks or even just bothered to spend 5 minutes conducting bona fide, unbiased research. Had they done that, they would have been able to recognize the clear difference between a light duty model and a heavy duty one. Things like box size and tire size easily give away the difference. Behind big boxes and big tires are big axles, big frames and big hydraulics. Only the cab remains the same size despite the 30 tonne truck sometimes having a larger engine.
The truck on the left is apparently the ironically-named light duty “Hercules” while the one on the right is an undeniable beast with muscular tires and a gigantic box in comparison. I wouldn’t quibble with the claim that the lightweight on the left would struggle to carry 30 tonnes — even though we are talking about just a few kilometers between mine and mill at relatively low speeds. The truck on the right, however, is a 30 tonne truck if there ever was one. Such a truck would no doubt be easily capable of transporting 40+ tonnes at slow speeds on dirt roads in its massive box (18 x 7.5 x 6 feet enclosing 20 cubic yards of rock by our estimate). The red trucks on the ferry (see full picture here) are equally massive and are also clearly 30 tonne beasts … obvious to anybody who isn’t blinded by the glitz of the fast and fabulous short-selling lifestyle.
Now let us discuss a slightly-uncomfortable truth. We now know that a 5% equity interest in Henan Found, the Chinese joint venture between Silvercorp and a state-owned enterprise (SEO) we’ll call Henan Non-Ferrous, was sold at an “auction” to an affiliate of the SEO. The “selling” price was approximately US$7 million and so the shorts would have us believe this is a good indicator of the fair value for all of Henan Found. In turn this would mean that the SGX mine might be worth no more than US$100 million. There is only one problem with this hypothesis. This was a very strange auction. There were 3 bidders. Each of these 3 bidders deposited 20 million RMB (almost half the opening bid) and also had to submit an “operating plan” for approval by Henan Non-Ferrous prior to being accepted as a bidder. After all this trouble, the bidders managed to bid up the price all the way to $45.5 million RMB between the three of them. The furious action must have left the 2 losing bidders gnashing their teeth — after all, you don’t often see an auction where the winning bid soars above the opening price by a massive 1%! In fact, we’re pretty sure nothing like this happens outside the competitive bidding process for privatizing state-owned assets in China. Of course China still doesn’t hold a candle to the competitive bidding that took place as the Soviet empire was dismantled in the early 1990?s. In sum total, the auction for 5% of Henan Found had an outcome that was as certain as the sun rising in the East.
There is much more that we could pick apart but we’ll look at just one other thing for now. It has been alleged that Silvercorp cannot possibly have completed the amount of exploration and development work that it claims in prior years given how little all of this work supposedly cost. This is an interesting allegation given that China works from an economic standpoint mainly because costs are so low there. To wit, in fiscal 2011 Silvercorp reported that it spent just US$11.3 million in exploration and development to accomplish the following according to page 8 of the MD&A:
The Ying Mine incurred $11.3 million exploration and development expenditures (FY2010 – $6.7 million). With that, 38,870 metres (FY2010 – 34,816 metres) of tunnel, 38,254 metres (FY2010 – 28,746 metres) of diamond drilling, and 935 metres (FY2010 – 1,387 metres) of shafts, declines and raises were completed. The mine development works completed will effectively sustain the Ying Mine’s production level.
Based on the above, it is claimed by the short sellers that drilling costs at Ying appear “under-reported by 3.9x”. We don’t know how it is possible to determine this about drilling since the shorts’ own surveys of local drilling contractors arrived at an assumed price of 225 RMB/meter (US$35/meter). The total for drilling 38,254 meters would therefore be about US$1.3 million out of the US$11.3 million. Similarly for shafts, declines and raises the shorts’ contractor surveys arrived at an assumed cost of 15,000 RMB/meter (US$2,300/meter) totaling US$2.2 million for the 935 meters.
That leaves 38,870 meters of tunneling or sometimes also known as “drifting”. For some strange reason the shorts use an assumed cost of 6,750 RMB/meter (US$1,053/meter) for this drifting and therefore they arrive at a total cost of US$41 million. But, there is only US$7.8 million left for drifting expenses after deducting drilling and shafting costs of US$1.3 million and US$2.2 million, respectively, from the total exploration and development for the year of US$11.3 million.
Of course once again it never occurs to these shorts that a simple explanation may exist to their big questions and red flags. Indeed, such a simple explanation means that their short thesis is that much weaker so they would rather prefer there isn’t an explanation at all. Let’s ruin their fun anyway, shall we? At under US$200 per meter (US$7.8 million divided by 38,870 meters), the drifting at Ying would indeed be some of the cheapest development work conducted since the old timers who got paid in whiskey and liked it that way. In fact, we don’t doubt that the contract rate for drifting can sometimes be as high as 12,000 to 15,000 RMB — about US$2,000 per meter — in China for a typical production scenario involving major drifts that require access by large mining vehicles.
Silvercorp’s Ying project, however, is anything but typical. Let’s start with the tunnels that are 2 meters by 2 meters. These tunnels are barely tall enough for the average Westerner with a hard hat and just wide enough for two of them to pass each other. One tonne “tricycle trucks” zip back and forth through these claustrophobia-inducing tunnels like ants in a colony. Meanwhile ceilings are only intermittently secured by rock bolts or timbers due to good ground conditions along with the minimal size of the headings themselves. A small crew of miners could advance such a tunnel at the pace of 2 meters a day. At the calculated cost per meter of drift (US$7.8 million divided by 38,870 meters), the combined wages of this crew would be on the order of US$200 per day after expenses, which breaks out to a significant individual amount for the hardest working crew members. Meanwhile the laid-back miners still prefer to be paid in whiskey, like always.
Let’s also consider that the pocket-like nature of the high grade ore shoots requires much of the drifting to be done on the vein itself: the famous refrain of drill for structure, drift for grade. This style of development can result in quite a bit of “development ore” being accumulated while production stopes are being accessed and prepared for mining. The next part is mere speculation but we’ve had personal experience with similar instances of it at other projects. To wit, such “development ore” might not meet the minimum cutoff grade (approximately 160 grams or 5 ounces per tonne silver-equivalent) per the mine plan … but that doesn’t mean it must necessarily go to waste. Indeed at $40 silver, a tonne of such rock contains metal worth about US$200, which as you’ll recall from above is about the same that the entire crew earns during a hard day of work!
Remember also that the miners use one tonne “tricycle trucks” to haul rocks around the mine, meaning that a single load could be worth up to US$200 in metals. And this is the stuff not going to the mill — in fact the mining crews are being paid to keep it out of the mill. Yet it would be safe to surmise that rock with such high value might be going somewhere other than the waste rock pile. For example possibly as a credit against the mining contract: a bonus, profit share or any of a wide range of possible arrangements that are not unique in the annals of mining history. Such netting can make a mining contract rate seem very low, which it is in Silvercorp’s case. In other words, nothing to see here kids, mosey along now.
Unfortunately our little short bashing must come to an end for today … but never fear because we continue to be on the case, correcting wrongs and championing truth wherever the dark forces of market abuse cast their evil gaze.
Read the entire article HERE.
By Eric Sprott & Andrew Morris
July 1, 2011
Sprott Asset Management
The recent bear raid on silver has left many concerned about the sustainability of its historic run. Silver, being a relatively obscure market for most mainstream commentators, attracted much attention in the ensuing days following the May 1 takedown. Indeed, though the 30% drop in silver occurred over only four days, seemingly all eyes were on silver, with commentators who could’ve cared less about the silver market only a couple of months ago, suddenly tripping all over one another to make the bubble call. Silver bubble 2.0? Hardly. Anyone who has been fortunate to have been invested in silver over the past few years would unfortunately be used to such blatant takedowns. The Chinese don’t call it the “Devil’s Metal” for no good reason. With so much talk these days about the risks of investing in silver, we think that perhaps it may be timely for us to weigh in on the matter. The silver market is riskier than ever, but for reasons the vast majority of pedestrian commentators have failed to grasp.
There is no doubt that speculative dollars have been flowing into the silver market. We note that in April record trading volumes were registered in the SLV1, Comex futures2, LBMA transfers3, and the Shanghai Gold Exchange futures4. In fact, converting the average daily trading volume in the aforementioned silver instruments to the amount of ounces of silver they are supposed to represent, there were on average, over 1.1 billion ounces worth of silver traded every day in the month of April5. Truly a staggering number when contrasted against the actual amount of silver available for investment. To wit, the world will only supply about 979 million ounces this year from mine and recycling of scrap, of which it is estimated that 657 million ounces will be used up for non-investment purposes6. So in effect, that leaves roughly only 322 million ounces available this year for investment purposes. Converting to days (recall that at least 1.1 billion ounces traded each day) it leaves only about 1.3 million ounces per trading day of available supply. So, we are essentially trading the amount of physical silver actually available for investment, 891 times over each day! It really begs the question; just what are people trading in these markets?
Consider the largest and most prominent of those markets – the Comex, which we believe has owned an effective monopoly on silver price discovery for decades. In fact, the Comex churned over 800 million ounces of silver futures and options on average each day in April7. Indeed, notwithstanding the massive but very opaque over-the-counter silver derivatives market, trading on the Comex dwarfs both the physical and the other (known) paper silver markets, combined. Despite its dynamics being relatively complex and generally not well understood by most, the world’s financial community continues to view trading on the Comex as representative of the fundamentals for the physical silver markets. A market built on a high amount of leverage, both the buyers and sellers of Comex futures and options contracts are able to establish a position in “silver” with pennies on the dollar in collateral and even more astonishingly, no physical silver backing the contracts at all. The following charts illustrate just how unreal these markets have become.
In chart A, we compare the total open interest in Comex futures and option contracts to the actual amount of silver held in registered inventories able to be delivered against those contracts, since 2009. In chart B, with the steeply-sloping line shows the ratio of open interest (i.e. paper silver ounces) per ounce of physical silver held in inventory. We believe the historical trend of rising open interest and falling inventories deserves considerable attention from anyone attempting to understand the silver market. And though we do note that since October 2010 the trend of rising open interest appears to have abated, the inventories have been evaporating steadily and thus the ratio of the two measures has continued to trend higher. In fact, since 2009 the ratio of paper silver to physical silver has increased fourfold from approximately 8 times to almost 33 times, where it stands today.
What is the significance of this discord between paper and physical supply on the Comex? Recall, that over 800 million ounces traded each day in April on that market. Further, consider that as at the end of April there were only 33 million ounces of registered inventories to back up all of that paper trading. Just imagine if a mere 5% of all of that buying actually stood for delivery; the entire inventories would be more than wiped out. Yet despite the steady erosion of these already scant Comex inventories – a characteristic which would surely be interpreted as most bullish in other commodity markets – the price of silver has actually declined since April. We endeavour to provide a framework for understanding this phenomenon below.
Those who were following the developments in the silver market in April and May (we note that there were many who were) will likely recall that the CME Group raised both initial and maintenance margins five times within less than a two week span effectively raising the minimum amount of capital required to participate in the silver futures market by 84%8. This is significant due to the amount of leverage in the futures market and also due to the losses resulting from the precipitous selloff which began on Sunday, May 1st, when several thousand contracts were wantonly dumped onto the very thinly traded after-hours silver futures market causing the silver price to plunge 13% within the span of less than 15 minutes9.
For example, consider a hypothetical speculative trader who went long, say 200 July 2011 SI futures contracts on April 28th. At that time this trader would have been required to post an initial margin of $2.565 million for a position of one million ounces of “silver” and thus would have been levered 18.5 times10. Below we present what the trade blotter for this trader might look like over the next few days assuming he maintained his position.
Following the initial trade, each day the trader’s positions would be marked-to-market and any losses or gains would be applied against his account’s equity balance. Should the losses on the position bring the equity balance below the maintenance margin level, the trader would be required to deposit the additional capital required to bring the equity in the account back up to at least the initial margin requirement level.
While the margin increases alone would have forced a decision for this leveraged long to either post the additional margin or close enough positions to bring margin balances in line with substantially higher requirements, the trader was actually fighting a battle on two fronts. This is because in addition to the margin increases, the trader was also experiencing massive losses to his capital due to a rapidly falling silver price. So it is also important to consider the extent of losses to the trader’s equity following the precipitous drop which began on the evening of May 1st. In our scenario, before finding a bottom around May 17th, the cumulative losses would have amounted to over $14 million, or over five times the initial margin deposit of $2.565 million that was required to take on the position on April 28th. This meant that with margin call after margin call, the capital committed to the position ballooned almost 700% by the time the silver price finally bottomed in mid May. The significance of such a dramatic erosion of capital on a leveraged position cannot be overstated, particularly in the context of rising margin requirements. The CME Group would know this very well, and so it strikes us as particularly suspect that they would continue to raise margin rates in the face of such a sharp selloff. A selloff, we might add, which emanated from highly unusual trading activity on May 1st that, in our opinion, just reeks of manipulation. How else can one explain the dumping of several thousand SI futures contracts within the course of 15 minutes, in one of the most illiquid hours of trading, without seemingly any regard for price or a fundamental catalyst to speak of11? Though we will let the reader connect the dots as to what the intent of the CME Group and the seller’s of SI futures contracts on May 1st really was, we can certainly observe what effect these actions had on the market by looking further into the weekly Commitments of Traders (COT) reports published by the CFTC.
The COT provides us with the weekly open interest held by various categories of silver futures market participants, and thus gives us clues as to how these participants reacted in response to these margin increases and ensuing volatility. We present the following table showing net open interest for the various categories, converted into silver ounces, which we obtained from the COT report for selected dates.
First, note how in the three weeks following the margin hikes, the speculative12 net long position dropped from 212.7 million ounces to 170.1 million. This very clearly indicates that the speculative longs, when faced with rising margin requirements and losses to capital, did close out a substantial amount of their long positions. The commercials who were short those 212.7 million ounces appear to have been taking every opportunity to cover their own positions. Rather than shorting further into the ensuing weakness, the commercials covered approximately 42.6 million ounces in the three week period.
Another piece of information gleaned from the COT data is that despite what many commentators were hailing as a bubble caused by excessive speculation in the futures markets, the net speculative long positions had in fact been dropping over time. Even during the April run up preceding the five margin hikes, the net speculative long position actually decreased by 23%.
That commercial short position deserves further mention. What is unique and of interest to many silver market observers is not only the size of the short position on the Comex, which is dominated by those “commercials”, but also the concentration of the short interest. We provide the percentage of the total open interest held by the four largest short sellers on a net basis in the table above. Note that the net position of the four largest equates to 29% of the total open interest as of May 17th. Further we would also note that the concentrated short interest of the big four, though still quite high has actually dropped substantially over the past year coinciding with the signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the resultant public discourse on position limits. Comments from CFTC commissioner Bart Chilton acknowledging the “repeated attempts to influence prices in the silver markets,” and that, “violations to the Commodity Exchange Act (CEA) have taken place in silver markets and that any such violation of the law in this regard should be prosecuted,” perhaps have also had an impact on the behavior of silver market participants.13 And though the CFTC’s investigation into the silver futures and options market remains open after three years, we remain hopeful that its findings will further serve the interests of the investing public who rightly expect a fair and transparent silver market void of manipulative forces.
Could the drop in open interest and the reduction of the concentration in the commercial short open interest be perceived as an indication that those top four short-sellers are positioning for the inevitable imposition of position limits rules? Perhaps, and if so, it would follow that likely the short sellers seized the opportunity to further reduce their “liabilities” by buying up contracts in early May at a 30% discount.
Let there be no mistake, we view the current setup as extremely bullish. In our view, whatever froth and excess was present in the paper markets has likely been shaken out in the recent selloff. The remaining longs do not seem willing to part with their silver at these prices. These are the strong hands with longer time horizons that are likely not overly leveraged or are willing and able to withstand substantial volatility. Moreover, perhaps the “game” on the paper silver markets which has been meticulously documented over decades by Ted Butler14 and others, will soon be coming to an end.
What is perhaps most important is that despite what has recently transpired in the paper silver markets, the robust demand fundamentals for silver have not changed in our view. For confirmation of this, look no further than the physical silver market (i.e. the real silver market) which is providing us with evidence almost daily of a sustained bull market for physical silver. The US Mint recently stated that, “demand for American Silver Eagle Coins remains at unprecedented high levels.”15 Likewise for the Perth Mint16, the Austrian Mint17, and the Royal Canadian Mint18 as well. The Chinese, who were net exporters of silver only four years ago, imported 300% more silver in 2010 than 2009 and such large quantities of imports are expected to continue19. Last year, Indian silver imports increased nearly six-fold, and this year consumption is expected to rise nearly 43% according to the Bombay Bullion Association20. In Utah, silver (along with gold, of course) will now be accepted in weight value as legal tender21. According to Hugo Salinas-Price, a prominent Mexican billionaire, there is now “very strong support for the monetization of silver” in the Mexican congress22. We suspect the Europeans are likely to account for an increasing amount of silver purchases going forward as well. In fact, we just can’t imagine a better outlook for silver fundamentals. This really makes us question who could be short such massive quantities of silver and why? Particularly in those leveraged paper silver markets, where as we demonstrated, only a fraction of the outstanding notional ounces are actually available in physical quantity.
We have a very tough time understanding those bearish arguments against silver. We look at the real silver market, and based on the supply and demand data coming from the real, physical markets for silver, the fundamentals are only getting stronger. And yet there exists another silver market, which as we’ve shown, is not very connected to the physical realm at all. And though silver investors have for decades suffered the tyranny of a rigged paper monopoly over silver price discovery, it appears to us that the tides are turning. In the age of QE to infinity, investors are being more scrupulous with their capital and as such they are demanding physical silver in quantity. With more and more dollars flowing into the silver markets and a finite supply of physical to meet that demand, the theoretical losses for the paper silver short-sellers are near infinite. And with such a skewed and obvious risk/reward payoff vastly favoring the longs, we pose the following question. Who is most at risk in the silver markets: the buyers of a scarce and real asset that serves a growing multitude of purposes, or the sellers, who are short a quantity of silver which may very well not even be obtainable at anywhere near current prices? Let the Seller Beware!
Original Article HERE.
4 http://www.sge.sh/publish/sgeen/sge_price/sge_price_daily/index.htm5 Source: Bloomberg, CME Group, LBMA, Shanghai Gold Exchange. Figure also includes trading of Comex silver options which had registered a record open interest in the month of April.
6 Andrew Kaip, David Haughton and John Hayes. “A New Paradigm for Silver: Demand is Expected to Outstrip Production Growth,” BMO Capital Markets. April 3, 2011, p. 35. Note: “Non-investment” demand includes industrial, silverware, and photographic demand
10 A trader can always post more than the required amount of margin in his account.
12 For explanatory notes including definitions for each category of trader listed on the COT, please visit: http://www.cftc.gov/MarketReports/
14 For further information please visit http://www.butlerresearch.com/archive-free.asp
19 Andrew Kaip, David Haughton and John Hayes. “A New Paradigm for Silver: Demand is Expected to Outstrip Production Growth,” BMO Capital Markets. April 3, 2011, p. 17
After Getting Smoked On Treasuries, Bill Gross Joins The Ranks Of Silver Market Conspiracy Theorists
Jun. 24, 2011, 12:21 PM
Despite the imminent end of QE2 — and the fact that Bernanke has made it fairly clear that QE3 is not imminent — Treasuries keep grinding higher, moving against bond god Bill Gross, who has said they’re due to tank.
Nonetheless, he’s been vocal about his belief bondholders will get screwed in various ways, and that inflation is on the march.
Now he’s even getting conspiratorial.
Here’s the latest tweet from PIMCO (which is actually probably one of the best corporate twitter feeds).
Catch that about the silver?
Back in May, when silver was literally going parabolic, the CME hiked margins on speculators. Conspiracy theorists thought this was a deliberate attempt to keep the price down, though the CME (and others) noted that the exchange has established formulas for hiking margins when volatility spikes.
We’re not interested in joining that debate right now, though we’ll just note that Bill Gross (or at least PIMCO) has thrown his lot in with the conspiracy crowd.
Read the entire article HERE.
by Dean Henderson
June 1, 2011
Contributor to Global Research
(Part one of a four-part series)
The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP Amoco and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths. But their monopoly over the global economy does not end at the edge of the oil patch.
According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.
So who then are the stockholders in these money center banks?
This information is guarded much more closely. My queries to bank regulatory agencies regarding stock ownership in the top 25 US bank holding companies were given Freedom of Information Act status, before being denied on “national security” grounds. This is rather ironic, since many of the bank’s stockholders reside in Europe.
Buffet, Schwarzenegger and Rothschild
One important repository for the wealth of the global oligarchy that owns these bank holding companies is US Trust Corporation – founded in 1853 and now owned by Bank of America. A recent US Trust Corporate Director and Honorary Trustee was Walter Rothschild. Other directors included Daniel Davison of JP Morgan Chase, Richard Tucker of Exxon Mobil, Daniel Roberts of Citigroup and Marshall Schwartz of Morgan Stanley. 
J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of which reside in the US. They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.
CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches. He names N.M. Rothschild of London, Rothschild Bank of Berlin, Warburg Bank of Hamburg, Warburg Bank of Amsterdam, Lehman Brothers of New York, Lazard Brothers of Paris, Kuhn Loeb Bank of New York, Israel Moses Seif Bank of Italy, Goldman Sachs of New York and JP Morgan Chase Bank of New York. Schauf lists William Rockefeller, Paul Warburg, Jacob Schiff and James Stillman as individuals who own large shares of the Fed.  The Schiffs are insiders at Kuhn Loeb. The Stillmans are Citigroup insiders, who married into the Rockefeller clan at the turn of the century.
Eustace Mullins came to the same conclusions in his book The Secrets of the Federal Reserve, in which he displays charts connecting the Fed and its member banks to the families of Rothschild, Warburg, Rockefeller and the others. 
The control that these banking families exert over the global economy cannot be overstated and is quite intentionally shrouded in secrecy. Their corporate media arm is quick to discredit any information exposing this private central banking cartel as “conspiracy theory”. Yet the facts remain.
The House of Morgan
The Federal Reserve Bank was born in 1913, the same year US banking scion J. Pierpont Morgan died and the Rockefeller Foundation was formed. The House of Morgan presided over American finance from the corner of Wall Street and Broad, acting as quasi-US central bank since 1838, when George Peabody founded it in London.
Peabody was a business associate of the Rothschilds. In 1952 Fed researcher Eustace Mullins put forth the supposition that the Morgans were nothing more than Rothschild agents. Mullins wrote that the Rothschilds, “…preferred to operate anonymously in the US behind the facade of J.P. Morgan & Company”. 
Author Gabriel Kolko stated, “Morgan’s activities in 1895-1896 in selling US gold bonds in Europe were based on an alliance with the House of Rothschild.” 
The Morgan financial octopus wrapped its tentacles quickly around the globe. Morgan Grenfell operated in London. Morgan et Ce ruled Paris. The Rothschild’s Lambert cousins set up Drexel & Company in Philadelphia.
The House of Morgan catered to the Astors, DuPonts, Guggenheims, Vanderbilts and Rockefellers. It financed the launch of AT&T, General Motors, General Electric and DuPont. Like the London-based Rothschild and Barings banks, Morgan became part of the power structure in many countries.
By 1890 the House of Morgan was lending to Egypt’s central bank, financing Russian railroads, floating Brazilian provincial government bonds and funding Argentine public works projects. A recession in 1893 enhanced Morgan’s power. That year Morgan saved the US government from a bank panic, forming a syndicate to prop up government reserves with a shipment of $62 million worth of Rothschild gold. 
Morgan was the driving force behind Western expansion in the US, financing and controlling West-bound railroads through voting trusts. In 1879 Cornelius Vanderbilt’s Morgan-financed New York Central Railroad gave preferential shipping rates to John D. Rockefeller’s budding Standard Oil monopoly, cementing the Rockefeller/Morgan relationship.
The House of Morgan now fell under Rothschild and Rockefeller family control. A New York Herald headline read, “Railroad Kings Form Gigantic Trust”. J. Pierpont Morgan, who once stated, “Competition is a sin”, now opined gleefully, “Think of it. All competing railroad traffic west of St. Louis placed in the control of about thirty men.”
Morgan and Edward Harriman’s banker Kuhn Loeb held a monopoly over the railroads, while banking dynasties Lehman, Goldman Sachs and Lazard joined the Rockefellers in controlling the US industrial base. 
In 1903 Banker’s Trust was set up by the Eight Families. Benjamin Strong of Banker’s Trust was the first Governor of the New York Federal Reserve Bank. The 1913 creation of the Fed fused the power of the Eight Families to the military and diplomatic might of the US government. If their overseas loans went unpaid, the oligarchs could now deploy US Marines to collect the debts. Morgan, Chase and Citibank formed an international lending syndicate.
The House of Morgan was cozy with the British House of Windsor and the Italian House of Savoy. The Kuhn Loebs, Warburgs, Lehmans, Lazards, Israel Moses Seifs and Goldman Sachs also had close ties to European royalty. By 1895 Morgan controlled the flow of gold in and out of the US. The first American wave of mergers was in its infancy and was being promoted by the bankers. In 1897 there were sixty-nine industrial mergers. By 1899 there were twelve-hundred. In 1904 John Moody – founder of Moody’s Investor Services – said it was impossible to talk of Rockefeller and Morgan interests as separate. 
Public distrust of the combine spread. Many considered them traitors working for European old money. Rockefeller’s Standard Oil, Andrew Carnegie’s US Steel and Edward Harriman’s railroads were all financed by banker Jacob Schiff at Kuhn Loeb, who worked closely with the European Rothschilds.
Several Western states banned the bankers. Populist preacher William Jennings Bryan was thrice the Democratic nominee for President from 1896 -1908. The central theme of his anti-imperialist campaign was that America was falling into a trap of “financial servitude to British capital”. Teddy Roosevelt defeated Bryan in 1908, but was forced by this spreading populist wildfire to enact the Sherman Anti-Trust Act. He then went after the Standard Oil Trust.
In 1912 the Pujo hearings were held, addressing concentration of power on Wall Street. That same year Mrs. Edward Harriman sold her substantial shares in New York’s Guaranty Trust Bank to J.P. Morgan, creating Morgan Guaranty Trust. Judge Louis Brandeis convinced President Woodrow Wilson to call for an end to interlocking board directorates. In 1914 the Clayton Anti-Trust Act was passed.
Jack Morgan – J. Pierpont’s son and successor – responded by calling on Morgan clients Remington and Winchester to increase arms production. He argued that the US needed to enter WWI. Goaded by the Carnegie Foundation and other oligarchy fronts, Wilson accommodated. As Charles Tansill wrote in America Goes to War, “Even before the clash of arms, the French firm of Rothschild Freres cabled to Morgan & Company in New York suggesting the flotation of a loan of $100 million, a substantial part of which was to be left in the US to pay for French purchases of American goods.”
The House of Morgan financed half the US war effort, while receiving commissions for lining up contractors like GE, Du Pont, US Steel, Kennecott and ASARCO. All were Morgan clients. Morgan also financed the British Boer War in South Africa and the Franco-Prussian War. The 1919 Paris Peace Conference was presided over by Morgan, which led both German and Allied reconstruction efforts. 
In the 1930’s populism resurfaced in America after Goldman Sachs, Lehman Bank and others profited from the Crash of 1929.  House Banking Committee Chairman Louis McFadden (D-NY) said of the Great Depression, “It was no accident. It was a carefully contrived occurrence…The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all”.
Sen. Gerald Nye (D-ND) chaired a munitions investigation in 1936. Nye concluded that the House of Morgan had plunged the US into WWI to protect loans and create a booming arms industry. Nye later produced a document titled The Next War, which cynically referred to “the old goddess of democracy trick”, through which Japan could be used to lure the US into WWII.
In 1937 Interior Secretary Harold Ickes warned of the influence of “America’s 60 Families”. Historian Ferdinand Lundberg later penned a book of the exact same title. Supreme Court Justice William O. Douglas decried, “Morgan influence…the most pernicious one in industry and finance today.”
Jack Morgan responded by nudging the US towards WWII. Morgan had close relations with the Iwasaki and Dan families – Japan’s two wealthiest clans – who have owned Mitsubishi and Mitsui, respectively, since the companies emerged from 17th Century shogunates. When Japan invaded Manchuria, slaughtering Chinese peasants at Nanking, Morgan downplayed the incident. Morgan also had close relations with Italian fascist Benito Mussolini, while German Nazi Dr. Hjalmer Schacht was a Morgan Bank liaison during WWII. After the war Morgan representatives met with Schacht at the Bank of International Settlements (BIS) in Basel, Switzerland. 
The House of Rockefeller
BIS is the most powerful bank in the world, a global central bank for the Eight Families who control the private central banks of almost all Western and developing nations. The first President of BIS was Rockefeller banker Gates McGarrah- an official at Chase Manhattan and the Federal Reserve. McGarrah was the grandfather of former CIA director Richard Helms. The Rockefellers- like the Morgans- had close ties to London. David Icke writes in Children of the Matrix, that the Rockefellers and Morgans were just “gofers” for the European Rothschilds. 
BIS is owned by the Federal Reserve, Bank of England, Bank of Italy, Bank of Canada, Swiss National Bank, Nederlandsche Bank, Bundesbank and Bank of France.
Historian Carroll Quigley wrote in his epic book Tragedy and Hope that BIS was part of a plan, “to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole…to be controlled in a feudalistic fashion by the central banks of the world acting in concert by secret agreements.”
The US government had a historical distrust of BIS, lobbying unsuccessfully for its demise at the 1944 post-WWII Bretton Woods Conference. Instead the Eight Families’ power was exacerbated, with the Bretton Woods creation of the IMF and the World Bank. The US Federal Reserve only took shares in BIS in September 1994. 
BIS holds at least 10% of monetary reserves for at least 80 of the world’s central banks, the IMF and other multilateral institutions. It serves as financial agent for international agreements, collects information on the global economy and serves as lender of last resort to prevent global financial collapse.
BIS promotes an agenda of monopoly capitalist fascism. It gave a bridge loan to Hungary in the 1990’s to ensure privatization of that country’s economy. It served as conduit for Eight Families funding of Adolf Hitler- led by the Warburg’s J. Henry Schroeder and Mendelsohn Bank of Amsterdam. Many researchers assert that BIS is at the nadir of global drug money laundering. 
It is no coincidence that BIS is headquartered in Switzerland, favorite hiding place for the wealth of the global aristocracy and headquarters for the P-2 Italian Freemason’s Alpina Lodge and Nazi International. Other institutions which the Eight Families control include the World Economic Forum, the International Monetary Conference and the World Trade Organization.
Bretton Woods was a boon to the Eight Families. The IMF and World Bank were central to this “new world order”. In 1944 the first World Bank bonds were floated by Morgan Stanley and First Boston. The French Lazard family became more involved in House of Morgan interests. Lazard Freres- France’s biggest investment bank- is owned by the Lazard and David-Weill families- old Genoese banking scions represented by Michelle Davive. A recent Chairman and CEO of Citigroup was Sanford Weill.
In 1968 Morgan Guaranty launched Euro-Clear, a Brussels-based bank clearing system for Eurodollar securities. It was the first such automated endeavor. Some took to calling Euro-Clear “The Beast”. Brussels serves as headquarters for the new European Central Bank and for NATO. In 1973 Morgan officials met secretly in Bermuda to illegally resurrect the old House of Morgan, twenty years before Glass Steagal Act was repealed. Morgan and the Rockefellers provided the financial backing for Merrill Lynch, boosting it into the Big 5 of US investment banking. Merrill is now part of Bank of America.
John D. Rockefeller used his oil wealth to acquire Equitable Trust, which had gobbled up several large banks and corporations by the 1920’s. The Great Depression helped consolidate Rockefeller’s power. His Chase Bank merged with Kuhn Loeb’s Manhattan Bank to form Chase Manhattan, cementing a long-time family relationship. The Kuhn-Loeb’s had financed – along with Rothschilds – Rockefeller’s quest to become king of the oil patch. National City Bank of Cleveland provided John D. with the money needed to embark upon his monopolization of the US oil industry. The bank was identified in Congressional hearings as being one of three Rothschild-owned banks in the US during the 1870’s, when Rockefeller first incorporated as Standard Oil of Ohio. 
One Rockefeller Standard Oil partner was Edward Harkness, whose family came to control Chemical Bank. Another was James Stillman, whose family controlled Manufacturers Hanover Trust. Both banks have merged under the JP Morgan Chase umbrella. Two of James Stillman’s daughters married two of William Rockefeller’s sons. The two families control a big chunk of Citigroup as well. 
In the insurance business, the Rockefellers control Metropolitan Life, Equitable Life, Prudential and New York Life. Rockefeller banks control 25% of all assets of the 50 largest US commercial banks and 30% of all assets of the 50 largest insurance companies.  Insurance companies- the first in the US was launched by Freemasons through their Woodman’s of America- play a key role in the Bermuda drug money shuffle.
Companies under Rockefeller control include Exxon Mobil, Chevron Texaco, BP Amoco, Marathon Oil, Freeport McMoran, Quaker Oats, ASARCO, United, Delta, Northwest, ITT, International Harvester, Xerox, Boeing, Westinghouse, Hewlett-Packard, Honeywell, International Paper, Pfizer, Motorola, Monsanto, Union Carbide and General Foods.
The Rockefeller Foundation has close financial ties to both Ford and Carnegie Foundations. Other family philanthropic endeavors include Rockefeller Brothers Fund, Rockefeller Institute for Medical Research, General Education Board, Rockefeller University and the University of Chicago- which churns out a steady stream of far right economists as apologists for international capital, including Milton Friedman.
The family owns 30 Rockefeller Plaza, where the national Christmas tree is lighted every year, and Rockefeller Center. David Rockefeller was instrumental in the construction of the World Trade Center towers. The main Rockefeller family home is a hulking complex in upstate New York known as Pocantico Hills. They also own a 32-room 5th Avenue duplex in Manhattan, a mansion in Washington, DC, Monte Sacro Ranch in Venezuela, coffee plantations in Ecuador, several farms in Brazil, an estate at Seal Harbor, Maine and resorts in the Caribbean, Hawaii and Puerto Rico. 
The Dulles and Rockefeller families are cousins. Allen Dulles created the CIA, assisted the Nazis, covered up the Kennedy hit from his Warren Commission perch and struck a deal with the Muslim Brotherhood to create mind-controlled assassins. 
Brother John Foster Dulles presided over the phony Goldman Sachs trusts before the 1929 stock market crash and helped his brother overthrow governments in Iran and Guatemala. Both were Skull & Bones, Council on Foreign Relations (CFR) insiders and 33rd Degree Masons. 
The Rockefellers were instrumental in forming the depopulation-oriented Club of Rome at their family estate in Bellagio, Italy. Their Pocantico Hills estate gave birth to the Trilateral Commission. The family is a major funder of the eugenics movement which spawned Hitler, human cloning and the current DNA obsession in US scientific circles.
John Rockefeller Jr. headed the Population Council until his death.  His namesake son is a Senator from West Virginia. Brother Winthrop Rockefeller was Lieutenant Governor of Arkansas and remains the most powerful man in that state. In an October 1975 interview with Playboy magazine, Vice-President Nelson Rockefeller- who was also Governor of New York- articulated his family’s patronizing worldview, “I am a great believer in planning- economic, social, political, military, total world planning.”
But of all the Rockefeller brothers, it is Trilateral Commission (TC) founder and Chase Manhattan Chairman David who has spearheaded the family’s fascist agenda on a global scale. He defended the Shah of Iran, the South African apartheid regime and the Chilean Pinochet junta. He was the biggest financier of the CFR, the TC and (during the Vietnam War) the Committee for an Effective and Durable Peace in Asia- a contract bonanza for those who made their living off the conflict.
Nixon asked him to be Secretary of Treasury, but Rockefeller declined the job, knowing his power was much greater at the helm of the Chase. Author Gary Allen writes in The Rockefeller File that in 1973, “David Rockefeller met with twenty-seven heads of state, including the rulers of Russia and Red China.”
Following the 1975 Nugan Hand Bank/CIA coup against Australian Prime Minister Gough Whitlam, his British Crown-appointed successor Malcolm Fraser sped to the US, where he met with President Gerald Ford after conferring with David Rockefeller. 
Next Week: Part II: Freemasons & The Bank of the United States
Read the entire article HERE.
by Paul Ausick
April 29, 2011 at 10:30 am
One factor driving the price of silver through the roof is its use in industrial products. About half the world’s demand for silver comes from industries such as solar PV makers like Suntech Power Holdings Co. Ltd. (NYSE: STP), film manufacturers like Eastman Kodak Co. (NYSE: EK), and electronics products like plasma TVs. However, demand for silver as an inflation hedge is driving up silver prices for industries that use silver, and those higher costs contribute to slower economic growth.
About 25% of silver demand comes from investors, but they are now driving the bus as they seek a cheaper inflation hedge than gold. The iShares Silver Trust (NYSE: SLV) now holds about 11,000 metric tons of silver in its vaults. Global silver production for 2010 reached nearly 23,000 metric tons, a record high, and about 80% of global demand. The rest comes from recycling.
Global industrial demand for gold is about 10% of total demand. Almost half of gold demand comes from jewellery compared with about 25% of silver demand. Gold demand for investment totals about 40% of the world’s total demand for gold. The SPDR Gold Trust (NYSE: GLD) holds about 1,130 metric tons. Mining contributed about 60% of the world’s gold supply in 2010, with most of the remaining supply coming from recycling.
Because so much more of the silver stock is used for industrial purposes, the price of silver is (or should be) more vulnerable to changes in the business cycle. Currently, however, even as the economy improves only slightly, the price of silver keeps surging.
These price surges result from increased demand from investors, certainly, but because the silver market is so much smaller, and less liquid, than the gold market there is some talk that silver prices are being affected by traders holding massive short positions or attempting to corner the market. These rumors may or may not turn out to be true, but one thing does appear to be happening: the demand for physical silver may overwhelm the supply.
For futures traders that’s not a crisis, but it is very nearly a crisis for industrial users of silver. If they cannot find a substitute for the metal, then they will either have to pay much higher prices and either eat the loss or charge their customers more. Either way, the economic recovery takes a hit.
Kodak reported a first quarter loss of -$246 million, much of it attributable to the silver it uses to manufacture film. Suntech has introduced a solar PV cell that uses copper instead of silver, but so far the substitute accounts for only about 10% of Suntech’s production and sales.
Demand for industrial silver is expected to grow by about 6.5% annually through 2015. If the demand can be met at all it will be at a very high price. Unless of course the bottom falls out of the silver market.
Silver is trading near $49/ounce this morning, and the iShares Silver Trust is up about 1.5%, to $47.91, near the top of its 52-week range of $16.73-$48.35. The SPDR Gold Trust is up about 0.5% after posting a new 52-week high of $150.34. Gold is currently priced at $1,541/ounce.
Read the entire article HERE.
Federal Banking Regulators Expose Massive Mortgage Backed Securities Fraud as Part of Fraudclosure Investigation
From the InterAgency Report:
The Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS), referred to as the agencies, conducted on-site reviews of foreclosure processing at 14 federally regulated mortgage servicers during the fourth quarter of 2010.1 This report provides a summary of the review findings and an overview of the potential impacts associated with instances of foreclosure-processing weaknesses that occurred industrywide.
Promissory Notes are “negotiable instruments” and have a face value similar to cash. The mortgage trusts all have clear criteria for the storage of the notes. All of the SEC filings I have read in regards to these trusts name a document custodian, usually the trustee. I have not yet seen even one trust prospectus or pooling and servicing agreement (PAS) where the servicer is named the document custodian. Here’s an example, of a trust where Bank of America is the servicer, Wells Fargo is the Trustee of Banc of America Mortgage 2006-B Trust (prospectus here). Note that instead of BoA as servicer for this trust, Wells Fargo as trustee is tasked with document custodian duties!
In addition, the Mortgage Loan Purchase Agreement will provide the Depositor with remedies against the Sponsor for the failure by the Sponsor to deliver the Mortgage Loan documentation required to be delivered to the Trustee or a custodian under the Pooling Agreement.
Wells Fargo Bank, National Association (“Wells Fargo Bank”) will act as Trustee and custodian under the Pooling Agreement.
Wells Fargo Bank will also act as custodian of the Mortgage Files pursuant to the Pooling Agreement.
In that capacity, Wells Fargo Bank is responsible to hold and safeguard the Mortgage Notes and other contents of the Mortgage Files on behalf of the Certificateholders. Wells Fargo Bank maintains each Mortgage File in a separate file folder marked with a unique bar code to assure loan-level file integrity and to assist in inventory management. Files are segregated by transaction or investor. Wells Fargo Bank has been engaged in the mortgage document custody business for more than 25 years. Wells Fargo Bank maintains document custody facilities in its Minneapolis, Minnesota headquarters and in three regional offices located in Richfield, Minnesota, Irvine, California, and Salt Lake City, Utah. As of June 30, 2006, Wells Fargo Bank maintains mortgage custody vaults in each of those locations with an aggregate capacity of over eleven million files.
Last fall, we got hints of the expected-yet-still-shocking revelation via a Countrywide/BoA employee, Linda DeMartini (testimony here), exposed the securities fraud practices in a depo taken during a NJ bankruptcy case, Kemp v Countrywide.
A direct quotation from the judge’s opinion in the bankruptcy case: “She [DeMartini] testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents.” That assertion certainly seems to suggest that the failure to transfer a promissory note from Countrywide Financial to the security trust in this case was not an isolated error—but a matter of policy at Countrywide Financial.
If mortgage-backed securities aren’t in fact “mortgage-backed,” investors who bought these securities from Countrywide could hold Bank of America accountable.
“If Countrywide’s practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities,” Gretchen Morgenson of the New York Times explained.
FROM PAGE 3 OF THE INTERAGENCY REPORT: The reviews also showed that servicers possessed original notes and mortgages. (NOTE THAT THE SERVICERS, NOT THE TRUSTEES ARE IN POSSESSION OF THE ORIGINAL NOTES & MORTGAGES)
FROM PAGE 4 (oddly it appears third party vendors where tasked with negotiable instrument document custodian duties) Third-party vendor management. Examiners generally found adequate evidence of physical control and possession of original notes and mortgages.
FROM PAGE 6 Furthermore, concerns about the prevalence of irregularities in the documentation of ownership may cause uncertainty for investors of securitized mortgages. Servicers and their affiliates also face significant reputational risk with their borrowers, with the court system, and with regulators.
FROM PAGE 7 (Keep in mind the financial sector’s propensity to fabricate evidence. Note the slippery language “may not have been sufficient” & “generally was sufficient”.): ..examiners noted instances where documentation in the foreclosure file alone may not have been sufficient to prove ownership of the note at the time the foreclosure action commenced without reference to additional information. When additional information was requested and provided to examiners, it generally was sufficient to determine ownership.
Read the entier article HERE.
Monday, 29 Nov 2010 | 9:56 AM ET
By: Sharon Epperson and Jessica Golden
The price of silver is surging and so is business at many coin dealers across the country. At Plaza Collectibles, an appraisals shop in Manhattan, owner Lee Rosenbloom says he’s seeing a tremendous demand both in new and older silver coins. “This is probably the strongest demand there’s been in the last 25 years,” he says. Silver prices have soared 60 percent in 2010, driven in large part by a strong investment demand, particularly strong buying of exchange-traded funds, or ETFs, backed by the physical metal.
“ETF demand has been an important driver of prices because investors have prepositioned themselves for this central bank buying by emerging markets” says Francisco Blanch, Head of Global Commodity Research at Bank of America-Merrill Lynch [BAC 11.31 0.19 (+1.71%) ].
Other leading gold analysts agree this buying frenzy will continue. Philip Klapwijk, executive chairman of the consulting firm GFMS, says he expects to see $4 billion on a net basis flurrying into silver and gold investment this year. Holdings in the largest silver exchange-traded fund, iShares Silver Trust, are near a record high, trading up 62 percent year to date (as of closing on November 23).
According to Blanch, the increase in silver prices has also been spurred by a rise in industrial demand, which is up 18 percent year over year. A hike in demand for silver from solar panels and pent up demand from the industrial sector is helping to push up prices. He expects to see further growth next year but at a slower pace.
For many investors, silver is a more affordable alternative to gold. Gold coins are traded based on a spot price that is currently almost $1,400 an ounce.
Silver coins are based on futures prices that are under $30 an ounce. “Silver coins are a relatively cheap gift and way for people to accumulate wealth,” says Blanch.
The strong interest in silver has created a record month for sales of the 2010 Silver American Eagle bullion coin, according to the U.S. Mint. Silver coin sales are up 22 percent compared to this period last year and 30 percent since 2007.
Alternative Investing – A CNBC Special Report
Yet, analysts say investors who want to get in on the action and are deciding between holding the actual silver metal or an ETF should weigh their options carefully, since coins ultimatley may cost a higher premium.
Read the entire article HERE.