“When I find I’m wrong I change my mind. What do you do?”
John Maynard Keynes
Larry Summers decided not to subject himself to impolite questioning during a Senate confirmation hearing in order to become Chairperson of the FED. Even Mr. Obama’s Senate Democrats were heard to be sharpening swords to go after Mr.-Yes-I-Collected-$5-Million From-Shaw-Group-Hedge-Fund one year to talk about investing. Nor were the Demos impressed with Mr. S’s handling of the 2008 financial crisis. And certainly Larry wanted to avoid having to parse the details of his $135k payment from Goldman Sachs in 2002 for ONE afternoon speech. Some ornery Senate Finance Committee member might even accuse him of taking a mega bribe for writing the statutes to repeal Glass Steagall, and deregulate derivatives. Sheesh, what’s the smartest man in the room to do? (Is he still smartest when he’s asleep?) http://www.forbes.com/sites/eamonnfingleton/2013/09/15/the-best-news-for-america-this-year-larry-summers-drops-out-of-fed-chairman-tussle/
Speaking of things political, the Constitution was signed in Philadelphia on this date in 1787. It went into effect on March 4, 1789. Things were a tad slower then, when political representatives had to get to the new nation’s capitol on horseback. Today, our politicos have become the back end of a horse. Our formerly useful Constitution also required that U.S. money be based on those gold and silver metal objects, but that’s sooo 1787. Quite a few of the other old Constitutional language…like the Amendments, don’t apply anymore either, so don’t worry, be happy. http://en.wikipedia.org/wiki/United_States_Constitution
Meanwhile, Back at World Events
There were developments in the world of precious metals (PMs) last week. Not developments that the main stream media would notice, but significant developments none the less. A couple of JPM employees found themselves in a double secret witless protection program carried out by the those clever cover uppers at the Commodity Futures Trading Commission (CFTC). The JP Two had sent a whistleblowing letter to the CFTC in JUNE, 2012 explaining how JPM had been rigging the silver market. No big deal. Nothing to see there.
The CFTC sprang into action a year ago, and buried the report…and apparently them. No need for the CFTC to go public mentioning incriminating evidence against a big time bank. Oh, wait, the CFTC had announced back in 2012 that they’d been studying the silver manipulation issue for 4 years. And the implication was they didn’t have any evidence. This was their third silver investigation. As of 2013, no public utterances by the CFTC on silver rigging just yet. And no sight of the whistlers. There ya go. Move along. Old news.
King World News broke the whistling story Friday the 13th, in an interview with Andrew Maguire, himself a former whistleblower at the CFTC hearing on precious metal manipulation back in March of 2010. They ignored him big time. http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/13_Morgan_Whistleblowers_Confess_Bank_Manipulates_Gold_%26_Silver.html
Chris Powell posted it for GATA: http://www.gata.org/node/13010
Last week, there were rumors that the GLD ETF had decided NOT to allow anybody to get actual physical gold out of the trust, which I believe was one of the big bullet marketing points in selling shares of that turkey.
Also, India raised import taxes on gold from 10% to 15%…in a further attempt to support their sorrowful Rupee. Serious, sober Indian citizens bought 162 tonnes of gold in the month of May. My HP 12 C calculator says that would be 1944 tonnes annualized…a lot. http://www.zerohedge.com/news/2013-09-17/india-escalates-gold-capital-controls-hikes-duty-gold-jewerly-imports-15
And finally there was a video released on YouTube showing that our very own U.S. Mint has been “hedging” silver with a “trading partner” since 2006. Huh? I thought all the Mint did was make currency and coins. Get silver, mint coins, and sell them at a premium above the spot price to their big dealers. Why hedge? They’re just supposed to mint coins and pass the cost along to customers.
The video goes on to mention more old news that the State of South Carolina (probably in September of 2011) had decided NOT to invest in gold and silver because it was a “manipulated.” And they named the guys who were doing the manipulating. JPM and HSBC figured prominently. Nothing out of the bureaucratic box there. Just a rebel government stating something obvious. http://www.youtube.com/watch?v=p1tCtGoqqKo&feature=youtube
So If All These News Stories Happened, So What?
1. The CFTC “may” have to make a public statement on why they’ve disappeared a whistleblower story…and the whistleblowers for over a year. I’m not sure the CFTC has any credibility as a “regulator” anyway, but it would undoubtedly be an interesting press conference.
2. The selfsame CFTC could possibly be held to account for purposefully delaying the charges of manipulating the silver market. But by whom? And punished how?
3. GATA and all the “Silver Conspiracy Nuts” will have been proven RIGHT! (The South Carolina Commission that stated they wouldn’t invest in the PM markets “because they were manipulated” will be proven right too.)
4. JP Morgan could be sued some more for…rigging markets. (This claim has already been alleged by pretty much everybody with brains in the Northern Hemisphere.) Hello, PI lawyers? Are you listening? Trillions worth of silver class-action lawsuits filed by parties such as investors, coin dealers, stockbrokers, ETF’s, mining companies, jewelry companies, industrial manufacturers, and nations that hold bullion. And on and litigationally on. It would be a lifetime annuity for outside law firms.
5. JP Morgan currently holds $120 billion, more or less, in gold and silver derivatives that could actually trade at a fair (read – MUCH higher) price or be defaulted upon. Can you say short covering panic?
6. It’s probably too much to hope for, but JPM could collapse, bringing about the collapse of most of the other giant banks around the world, and hence a reset financial game. JPM has $70T in derivatives. US banks in total have $200T in derivatives. Oh well, it’s just numbers.
7. Perhaps, dare I say it, that the stupidly huge, electronic SWIFT, derivatives based, non-Constitutional global paper currency systems that are allowing the banks to control our political lives could also collapse. But, Big Uncle Brother Sam could probably stop that from happening…for a while. As it is, politically, the U.S. may have just had our “Suez Canal” moment like the British did in 1956, when the Brits found out they didn’t run the world anymore. Putin uncrossing Obama’s Red line on Syria may have been that “Oops, no more power” moment.)
Two extra bonus notes: Time Magazine, that noteworthy bulwark of Eastern fallibility, just put a Wall Street Bull with a party hat on the cover. As Barron’s intoned, “Time with a bullish cover is usually a month away from saying, “The stock market has just collapsed.” As contrary market indicators go…it’s the gold standard.
And the BIS, one of the few voices that warned about possibly awful events in 2008 ahead of time, is breaking out with similar warnings. They predict even bigger bad news, globally even. http://www.arabianmoney.net/category/hedge-funds/ And let’s not forget that pesky old debt ceiling debate, and political stalemate in the nation’s capitol.
Just another mediocre week of economic news where gold and silver were trashed from $1386 down to $1308. And significant PM whistleblower news got buried like Elvis on a bad bathroom day. No big deal. Don’t think about it.
Hey, new TV shows start this week. Where’s that island that everyone goes to survive on? Can I get a hut there? Gee, is there anything else I could do to protect myself?