Short Selling Banks Covering on Gold?

http://www.gotgoldreport.com/2013/10/short-selling-banks-covering-on-gold.html#tpe-action-posted-6a0120a6002285970c019b00261fd9970d

SEC Charges 23 Firms With Short Selling Violations in Crackdown on Potential Manipulation in Advance of Stock Offerings

I gave this presentation last month and last night, on September 16, 2013:  https://docs.google.com/presentation/d/1ugCIbX9Z5jXVZg3HVJhUXZYh4Yk0FbkFrFn4fnbLar8/edit#slide=id.p

This morning, on September 17, 2013: this announcement was released by the SEC:

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539804376#.Ujh3DT_hdw5

Beware the analyst with an agenda

http://aschoff.blogspot.com/2007/04/jonathan-aschoff-from-brean-murray-hes.html

Provenge is a drug to help prostate cancer patients in the late stage of disease. Dendreaon[sp] the company that makes Provenge is a bio tech company who recently received a positive recommendation from the FDA advisory committe[sp] that Provenge is safe and the the drug work[sp] to prolong survival.
Aschoff's firm had a sell or 'short' recomendation[sp] on this stock - target price of 1.50.
After the recommendation of the FDA approval pannel[sp] the stock flew up to 18 dollars. Aschoff has been on what seems to be a personal war path against Provenge ever since.
Friedman Billings analyst Jonathan Aschoff says he was just trying to get the real story when he impersonated a doctor in early March.

Here's another article.
http://www.marketrap.com/article/view_article/91112/jim-chanos-jonathan-aschoff-and-more-on-the-dendreon-saga

When the FDA’s advisory panel voted in favor of Provenge, most Wall Street research analysts were predicting a bright future for Dendreon. But as naked short sellers piled on with ever increasing gusto, hedge fund managers continued to whisper in reporters’ ears. And two Wall Street analysts did more than whisper – they shouted, day after day, that Dendreon’s treatment for prostate cancer was doomed.

One of these analysts is named Jonathan Aschoff, and he works for a financial research outfit called Brean Murray Carret & Co. The day after the advisory panel vote, in an interview with Reuters, Aschoff made the long-shot prediction that the FDA would not approve Provenge, but would instead ask Dendreon to supply additional data showing that the treatment was safe and effective–a process that could take years. Soon after, Aschoff told other media outlets that the FDA would set a “dangerous double standard” by approving Provenge because the treatment “did not meet its primary goal in two Phase III trials.”
During the first days of April 2007, Aschoff was everywhere, continuously repeating this notion that the FDA would set a “dangerous double standard” by approving Provenge. On April 9, Aschoff reiterated his “sell” rating for Dendreon, setting a target for the stock at a mere $1.50, which implied that the stock would lose more than 90 percent of its value by the end of the year. Reuters, Associated Press, CNBC and other media dutifully reported Aschoff’s comments as though they shed light on the merits of Dendreon’s prostate cancer treatment.

Aschoff’s performance raises a few basic questions. The first is, how did a Wall Street analyst know that it would be “dangerous” to approve a medical treatment? It is an odd day, indeed, when the media turns to Wall Street for wisdom on matters of science and health.
The second question is, why was Aschoff so confident that the FDA would not approve Provenge? Given that the FDA had followed its advisory panels’ decisions in 97% of cases, and in 100% of cases involving drugs for dying patients, Aschoff’s prediction seemed rather far out. What did he know that the rest of the world did not know?

One more question: Which hedge funds were paying Aschoff’s bills?

Note: shares of DNDN recently peaked above $58 after FDA approval, and have settled in at $36 as of today.

See disclaimers in the side bar.

Disclosure: no current position in DNDN, last exit was at $58. A family member still owns shares of DNDN.

Adrian Douglas pre-CFTC hearing

https://marketforceanalysis.com/index_assets/CFTC%20HEARING%20ON%20METALS%20MARKETS.pdf

SUMMARY
1) Comex data show that the price of gold and silver are suppressed
2) There is a direct correlation of price suppression and the positions of two US
banks
3) The Bank Derivatives Reports from Treasury Dept. Office of the Comptroller
of the Currency (OCC) indicates these two banks are JPMorgan Chase and
HSBC
4) Appropriate enforcement action is required

Beware of fake gold bullion

With the decade-long surge in gold prices, it's inevitable that gold counterfeits are proliferating. Some conspiracy theorists believe even official central bank gold inventories include tungsten, which has the same density as gold, and therefore harder to detect when embedded inside gold bullion bars.

Since the largest central bank of all--the Federal Reserve Bank, has not had an independent audit since 1953, who knows how much gold resides in Ft. Knox and the official US government mints. Add to the list of suspicious gold inventories at the COMEX and LBMA vaults, as well as the gold ETF's, which are allegedly backed by physical gold.

There is a growing disconnect between the countervailing forces for pricing: paper gold contracts are constantly sold short by the bullion banks in futures exchanges, while demand for physical demand remains high, propping up prices. Something has to give, and it will eventually.

Meanwhile, watch this video on how tungsten-filled gold bullion is detected.

http://www.youtube.com/watch?v=ZKczs-7BFRI

According to jsmineset.com:

BullionAnalysis LLC has developed a technological application that is unique to the precious metals market, for the purpose of determining if your bullion has been counterfeited by including tungsten alloy. This technology is completely safe and non-destructive to the precious metal, and will be effective on everything from fractional ounce coins all the way up to the full size 100, 400 and 1,000 ounce COMEX bars of gold and silver.

Their technological application has been developed in response to the growing threat to the bullion community from tungsten/lead alloy adulteration. Tungsten (19.25 g/cm3 density) has a density nearly identical to gold (19.32 g/cm3 density), and lead (11.35 g/cm3) will have a density very close to pure silver (10.45 g/cm3). Lead can also be alloyed with lighter elements to match even closer the density of silver. The threat arises from unscrupulous individuals and possibly institutions that have been removing precious metal from the center of bullion bars and replacing it with tungsten or lead alloy. Modern computer-aided machine tools are then used to seamlessly re-smooth the surface of the bullion product to hide any trace of the theft that has just happened.

Traditionally, the use of a density calculation (mass divided by volume) has been the solution to verify the assay purity of bullion. Unfortunately the insidious use of tungsten and other alloys that match the densities of gold and silver make this test completely useless for this type of problem.

Their new detection technologies are unique to the bullion market. They can detect tungsten/lead and other impurities and cavities that are hidden at any depth inside the bullion product and it is 100% completely non-destructive and safe.

In addition, they are able to produce tamper-resistant holographic-sealed assay certificates with the analysis results for the bullion item, that bear a digital image of the bullion product and show the serial number and hallmark if present. These tamper-resistant assay certificates could then trade with the bullion product and give both buyers and sellers a sense of real security.

At the present time they are focusing their efforts on delivering this service to depositories and institutions and plan to expand their services to cover retail gold and silver investors in the near future.

SEC mulling curbing limits on short selling

http://finance.yahoo.com/news/Ahead-of-the-BellSEC-poised-apf-4172165911.html?x=0&sec=topStories&pos=3&asset=&ccode=

In addition to restricting short selling, the SEC needs to expand their enforcement of naked short selling, including elimination of the market maker exemption (so-called the "Bernie Madoff exemption" after the infamous Wall Streek crook), which enables them to create phantom shares. This method of "married puts" allows shorts to deploy illegal bear raids on stocks without actually shorting the underlying shares, and keeps their illegal price manipulation activities under the regulatory radar.

See Chapter 2 of Deep Capture on how the "married puts" strategy works. In fact, reading all 15 chapters will help investors understand better how the markets are rigged.

COMEX December gold and silver options

COMEX December gold and silver options expire tomorrow, Monday, November 23, which usually means the commercial shorts will go into overdrive to manipulate the price down. However, given the physical shortage, gold has been gapping up in anticipation of this date. Combined with the backwardation of gold as I blogged last Friday here, the price of gold is increasing this evening (in Asian Monday morning trading).

Should rumors of COMEX defaults on gold and silver actually occur, the exchange may just retroactively invalidate all delivery contracts, and merely slap a fine on short sellers who settle via cash. Physical buyers will be stiffed, despite receiving a cash premium.

To those who believe a COMEX default will never occur, refer to the London Metals Exchange default on nickel in 2006. Buyers did NOT receive the physical inventory, and short sellers merely had to pay a 10% fine above spot price.

http://www.lme.com/4670.asp

Should such a default occur with gold or silver, the price of physical gold and silver will soar, as will paper certificates allegedly backed by the precious metals. There will be huge dislocations in financial markets worldwide should such a default on COMEX occur. Gold bugs ridiculed for their conspiracy theories will have the last laugh.

The CFTC is also reviewing enforcement of position size limits in the energy and precious metals pits, which would force bullion banks to drastically reduce their concentrated permanent short positions. This will also catalyze gold and silver price spikes.

HSBC forecast on gold

In my previous blogs, I provide evidence that a couple large commercial banks collude with the US government to artificially suppress the prices of gold and silver at the COMEX exchange. JP Morgan and HSBC are the two culprits with the largest short positions--hence, the title "permanent" bears.

Here's an HSBC research report on gold:

http://www.reuters.com/article/hotStocksNews/idUSTRE5745S120090806

To their credit, HSBC raises their price projections for both gold and silver, for the same reasons we have outlined: central bank spending, US Treasury printing of dollars, and USDollar debasement. The price targets are curious though: they were upgraded, but to targets already below current spot prices.

They are hedging their opinions--an admission that the prices of precious metals will inevitably rise, but they use low price targets so as to attempt to suppress prices. The operative word is "attempt". Shorting gold and silver has been a disastrous trade for the last decade, as gold soared from $250 to $950.

These banks have had persistent large short positions all these years. So how come they aren't bankrupt? Here's a hint. Previous to their implosion in the spring of 2008, Bear Stearns was one of the perma bears. Credit default swaps, derivatives insuring collaterized mortgage obligations, tanked as home borrowers defaulted on their mortgages. I believe derivatives in the precious metals market alao led to Bear Stearns' demise.

How JP Morgan and HSBC continue to thrive while their money-losing short positions in gold and silver is beyond me. But I have a feeling that when "fail to delivers" come home to roost, we'll have another financial earthquake of epic proportion.

NASDAQ investigating

Share of DNDN dropped 45% before being halted--prior to their announcement of Provenge results at the AUA. NASDAQ allegedly launched an investigation, according to CNBC. This is an obvious case of stock price manipulation, and some parties will be prosecuted--probably short-sellers looking for an escape from losing positions.

Investors/traders with stop loss orders got taken out--at much lower prices than they planned, and will have legitimate complaints. Whether they can recoup their shares or money is yet to be determined, but this only validates what I have been reiterating all along: never, ever tell your broker what your stop loss limits are--you will be taken out of your position by unscrupulous market makers and large funds. Keep the stop loss in your head. There are numerous stop loss orders, including stop-limit and stop-market orders which you should be aware of, but I will never tell them to my broker, despite conventional wisdom claiming stop-loss orders are necessary for risk management. Often, stop loss orders are disastrous, as today's action in DNDN painfully illustrated.

Educators Cratering

My put options on a for-profit education company gapped up big on Tuesday, as concerns about fraud and business practices surfaced. My investment thesis about these educators remain intact: students are better off attending junior colleges as they avoid the $70,000 student loan debt they incur by attending these for-profit schools. If they are going to shell out that type of tuition dollars, they are better off attending accredited universities. While I won't go so far as to declare these for-profit schools scams, I will say job prospects for graduates are sketchy at best. Factor in a tough job market, and you can imagine their ability to repay these massive student loans is minimal.

These company stocks have had a long, explosive two-year run up, against the backdrop of a declining stock market. The conventional wisdom is that these schools thrive as unemployed individuals go back to school, seeking to upgrade job skills. This prevailing investment thesis has worked, but the run is over, as graduates face a rising probability of defaulting on these student loans.

I normally don't short shares, as your losses can theoretically be unlimited if stock prices keep climbing, but I have used put options to limit my losses. Even if the time value of options decreases, puts and calls allow investors to realize much bigger profits. Having said that, the put options have been immensely profitable, because the price declines have been swift, as the price action has broken support levels.

I would posit that put options on the market overall have been very profitable. I chose to short this educational segment due to:

1) overall market weakness: if a rising tide lifts all boats, a receding tide sinks most boats.
2) this for-profit educational sector has had a terrific run up the last 2 years
3) this sector looks especially vulnerable fundamentally due to lack of government subsidies going forward, questionable sales practices, poor value proposition education-wise
4) poor price action and volume technical indicators
5) and most damning, heavy selling by company insiders.

When the company's biggest supporters and executives are selling their own shares at high prices, the average investor should sit up and take notice.

The return of the gold standard? Why gold is poised to explode...

Blue-collar, white-collar, manufacturing, services, etc.---it doesn't matter what type of jobs--the more the merrier, altho it would be nice to have higher-skilled job growth.

If you think about it, who invented the internet? (No, it wasn't Al Gore). It was a British scientist educated in Switzerland (or it was a Swiss educated in the UK). But as far as monetizing the technology, most of the $$ were generated here, as well as accompanying technologies and services. It's okay to be a consumer-oriented economy, as long innovation continues domestically.

I think that's what dawg was sarcastically inferring--we can't go backwards.

To be honest, the only way we go back to real economic growth--without inflation and the abuse of leverage, is to go back to the gold standard. History has shown time again that when sovereign governments abandon gold-backed currencies, paralyzing hyperinflation becomes the unintended consequence down the road. With fiat currencies, central banks are permitted to print money unjudiciously--most of the time to try to dampen deep recessions (sounds familiar?). Deflation and avoidance of The Great Depression category 5 is the concern du jour, but the Coming to Jesus day will arrive soon enough, and we will all pay for these bailouts, literally with higher taxes and a higher cost of living (and accompanying lower standard of living).

Think about it: with our reserve banking system, a 20% run on demand deposits would make every single one of our major banks insolvent. This is not just a mortgage crisis, a credit crisis, etc.--it's a crisis of confidence. And with flimsy fiat, finance-based economies, confidence is everything (since there is no gold backing up the currency).

Of course, resetting of a new gold standard would mean a level of around $1500/ounce, which would cut everybody's cash accounts in half, but that's what it would take. It happened in the early 30's, when FDR declared gold would be set at $35/oz, instead of the previous $20/oz. The federal government then went on to confiscate all individually held gold (with the exception of wedding rings), or citizens risked 10 years of prison and a $10,000 fine. All that gold is now at Fort Knox. This was due to the profligate Treasury printing presses during the easy money 20's, which in turn caused the Great Depression of the 30's. (See any parallels?).

I could go on and on about what's going on with the currency and gold markets right now, with the manipulation and placating of short-sellers, but I'll summarize with this: if JP Morgan and Citibank are openly predicting $1500/oz gold for next year, and if they are accumulating gold bullion as we speak (as are Dubai, Saudi and Chinese governments), then why are they selling short gold? Could it be they want to keep its price artificially low, in order to boost their purchases? Thing is, it's a dangerous parlor game, as short sellers have to deliver against futures contracts, and there are rumors that these shadow contracts entail no deliveries. But that is precisely why the two major banks are accumulating physical gold bullion, because when the shorts are covered (i.e. gold explodes upward in price), their inventory will (partially) offset their losing sales contracts.

Another compelling case for gold: The Treasury is printing trillions of dollars for bailouts--equal to half the US GDP. What happens when you have oversupply of a commodity--including a local currency? It removes scarcity, plummeting that currency. What happens when your currency is devalued? Gold soars--it's a mathematical reality, not some wild rantings of a gold bug.

Look, gold has been the absolute worst investment vehicle from 1980 - 2000.

But in the 70's, it was the absolute best--even with inventory costs taken into account. Gold went up 23-fold in that decade. Gold mining shares went up twice that level. If many prognosticators are saying this run is much worse than 73-74 and 78, what does that say about the price of gold? Does anybody think post-2008 will be a replay of the roaring 80's and late-90's stock market booms? Or are we headed for a very subdued 70's-like stagflation scenario? You decide.

BTW, the Big 3 is old news, despite the headlines. I called their demise 18 months ago, and their shares are down a nice 98%. It's done, finito. The next shocks will be a result of de-leveraging and the precipitous decline of most currencies and US long-term debt. Whoever buys US 10-year notes or Treasury bonds is going to get crushed. Taking on all that risk (after all, one could argue the US government is insolvent), and yet earning 2% on your money? When inflation rears its ugly head, and interest rates are in the double digits, those bonds will be worth less than Monopoly money.