Silver Breaks its Golden Shackles

https://marketforceanalysis.com/article/latest_article_02511.html

The stunning revelation from the data analysis was that if on any day I knew what the price of gold was I would be able to calculate the silver price from the equation of the relationship! How is that possible in a free market? It simply is not possible and so the conclusion is that silver is not in a free market but is manipulated to move algorithmically with the price of gold.

Since September 2010 silver has broken its golden shackles. The algorithmic trading that kept the price of silver subdued for seven years has been completely annihilated.

On Friday silver closed in complete backwardation on the Comex. Spot silver closed at $29.075/oz while FEB 2011 closed at $29.064/oz and DEC 2015 closed at $29.026/oz. I believe this is the first time in history that this has happened. Silver traded in backwardation between the spot price and futures contract up to one year out during the blatantly manipulative precious metals bashing of January, but now the entire futures structure is in backwardation. This is a sure sign there are shortages of silver because it means that buyers will pay a premium for silver delivered sooner rather than later.

Signs of shortages have also been apparent from a shrinking silver inventory on the Comex in the face of rising prices. The registered inventory stands at a paltry 43 Mozs. In addition there is lots of anecdotal evidence that there are tight supplies everywhere. There are reports of refineries refusing to take new orders due to insufficient silver feedstock.

News out of China recently showed that China's net imports of silver quadrupled in 2010 to 3,500 tonnes (112 Million ozs). China has traditionally been a silver exporter. For example, in 2005 China made net exports of 3,000 tonnes of silver.

The US mint reported last week a record month in silver eagle sales in January of 6.4 million ozs.

This update of my previous work adds more fuel to the fire that the dynamics of the silver market have dramatically changed. Because silver has been suppressed for so long we do not know what its free market price should be, but we are going to find out soon and I strongly suspect it will be many multiples of the current price.

F.D.A. Declines to Approve Diet Drug

http://www.nytimes.com/2011/02/02/business/02drug.html?_r=1&hp

“It seems like the F.D.A. is heeding the lessons from the past,” said Dr. Sanjay Kaul, a cardiologist at Cedars-Sinai Medical Center in Los Angeles, who applauded the agency’s rejection of Contrave.

“The F.D.A. is trying to send a message to the pharmaceutical industry that repackaging old drugs is not the way to go,” said Dr. Kaul, who was a member of the advisory committee minority that voted against Contrave in December. “You’ve got to come up with some new innovative ways of addressing this objective.”

If true, why did Dr. Kaul want to approve Qnexa, Vivus' obesity drug, which combines phentermine and topiramate, while rejecting Arena's Lorcaserin, which is an innovative single agent?  Phentermine has been linked to adverse cardiovascular side effects, while extensive valvulopathy clinical trials revealed no statistically significant increased risk with Lorcaserin?

Berlusconi MP Caught Picking Out Hookers On iPad During No Confidence Vote

http://www.zerohedge.com/article/berlusconi-mp-caught-picking-out-hookers-ipad-during-no-confidence-vote

Peak Theories On Whether Gold Is On The Mend

http://www.zerohedge.com/article/peak-theories-whether-gold-mend

Fed denies policy is causing food rises

http://www.ft.com/cms/s/0/5c4aeaea-2fbd-11e0-91f8-00144feabdc0.html#axzz1D6u3CF3f

Asset purchases by the US Federal Reserve do not cause rising food prices in countries such as Egypt, the central bank’s chairman Ben Bernanke said on Thursday.

“I think it’s entirely unfair to attribute excess demand pressures in emerging markets to US monetary policy, because emerging markets have all the tools they need to address excess demand in those countries,” he said.

Mr Bernanke’s comments are a firm retort to critics who argue that by driving down US interest rates with quantitative easing the Fed is pushing capital flows into commodities and emerging markets.

Name That Lie: Recent Fedspeak Soundbites

http://www.zerohedge.com/article/name-lie-recent-fedspeak-soundbites

Ben Loses the Long End (of the bond yield curve)

http://www.zerohedge.com/article/ben-loses-long-end

Jim Rogers Tells CNBC To Change Its Name To CommoditesNBC, Sees Oil At $150, Is Short Nasdaq ETFs, Expects More Governments To Collapse

Classic Jim Rogers interview on CNBC:
http://www.zerohedge.com/article/jim-rogers-tells-cnbc-change-its-name-commoditesnbc-sees-oil-150-short-nasdaq-etfs

U.S. Treasury urged to consider 100-year bond

This would be the ultimate sucker bet.  Tie up your money for 100 years by lending it to a bankrupt government.  No thanks.

http://www.reuters.com/article/2011/02/02/usa-debt-bond-idINN0221347620110202

Top Wall Street firms are urging the U.S. Treasury to create new products for American investors and have suggested an ultra-long bond with a maturity of 100 years, according to minutes from an advisory committee meeting released on Wednesday.

The Treasury's debt advisory panel, which includes executives from JPMorgan Chase (JPM.N) and Goldman Sachs (GS.N), recommended at a meeting on Tuesday that the government develop products for three different investor classes: banks, pension funds and insurers, and retail investors.

The new offerings would be a way to pump up domestic demand for the government's securities. Although around half of U.S. debt is held by domestic investors, heavy reliance on foreign creditors such as China, with just under $900 billion in U.S. Treasuries, is causing some concern in Washington.

Ya think?  Since foreign buyers are stepping away from the US Treasury bond market, now the big banks want to jam retail investors with worthless IOU's.  The hubris among the financial elite is remarkable.

China to raise gold, silver reserves in 2011

http://www.commodityonline.com/news/China-to-raise-gold-silver-reserves-in-2011-36118-3-1.html

Governments stockpile food staples

http://www.ft.com/cms/s/0/cf0a73bc-2a44-11e0-b906-00144feab49a,dwp_uuid=a955630e-3603-11dc-ad42-0000779fd2ac.html#axzz1CqlD65y8

Governments across the developing world are stockpiling food staples in an attempt to contain panic buying, inflation and social unrest.But the hoarding is driving agricultural commodity prices even higher. The cost of wheat, the world’s most important staple, reached a fresh two-and-a-half-year high on Thursday, after countries from Algeria to Saudi Arabia announced extraordinary purchases.

Chinese Gold Demand Stuns London & Hong Kong Traders

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/2/2_Chinese_Gold_Demand_Stuns_London_%26_Hong_Kong_Traders.html

Evidence QE 2.0 is not working

The Fed instituted QE 2.0, a plan to purchase $600 billion of US Treasury securities, in order to suppress interest rates and stimulate an economic recovery.  The bond market isn't behaving, as the vigilantes are coming to the realization that Bernanke's injection of liquidity is purely inflationary, which will dampen growth, as the USDollar is debased.  Hence, yields are rising, exacerbating our humongous debt problems.  His war on deflation will eventually create hyperinflation, in my opinion.

Click on image to enlarge.

See disclaimers in the side bar.

Disclosure:  no position in US Treasury bonds.

Newmont Expands Nevada Growth Potential With Acquisition of Fronteer Gold

 Newmont Mining acquired Fronteer Gold at a 40% premium today.

http://finance.yahoo.com/news/Newmont-Expands-Nevada-Growth-prnews-3301254663.html?x=0&.v=1

See disclaimers in the side bar.

Disclosure:  exited shares of FRG today at $14.36 for a 600+% profit.

A Tale Of Outright Fraud From An Ex-Member Of Citi's Corporate Derivatives Team

http://www.zerohedge.com/article/tale-outright-fraud-ex-member-citis-corporate-derivatives-team

Scotia Mocatta Sells Out Of All Silver Bars

http://www.zerohedge.com/article/scotia-mocatta-sells-out-all-silver-bars

Marc Faber Calls Bernanke A Liar, Thinks US Inflation Is Running Up To 8%, Believes Pakistan Will Fall Next

http://www.zerohedge.com/article/marc-faber-calls-bernanke-liar-thinks-us-inflation-running-8-believes-pakistan-will-fall-nex

Fed passes China in Treasury holdings

http://www.ft.com/cms/s/0/120372fc-2e48-11e0-8733-00144feabdc0.html#axzz1CqdbTfkB

The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures.

Based on weekly data released on Thursday, the New York Fed’s holdings of Treasuries in its System Open Market Account, known as Soma, total $1,108bn, made up of bills, notes, bonds and Treasury Inflation Protected Securities, or Tips.

According to the most recent US Treasury data on foreign holders of US government paper, China holds $896bn and Japan owns $877bn.

“By June [the Fed] will have accumulated some $1,600bn of Treasury securities, likely to be in the vicinity of China and Japan’s combined holdings,” said Richard Gilhooly, a strategist at TD Securities. “The New York Fed surpassed China in the past month as the largest holder of US Treasury securities,” he noted.

Japan downgrade: The beginning of the end?

http://finance.fortune.cnn.com/2011/01/27/japan-downgrade-the-beginning-of-the-end/

Two years ago I was pounding the table about Japan circling the drain, and was labeled a doomsdayer.   Today, CNN and Fortune Magazine are reporting it.  That's about as mainstream as one can get.

One subtle clarification of the otherwise well-written article is in order.  The author mentions that owners of Japan government bonds (JGB) are the following:

Money manager Vitaliy Katsenelson and Devin Stewart, a senior director at the Japan Society in New York and a Carnegie Council Senior Fellow, agree with Bass. The way they see it, Japan has never meaningfully flirted with a loan default because it has always been able to borrow money from its own life insurance companies, pension funds, and banks.

While it is true that financial institutions are buyers of JGB, they are merely custodians.  The real owners are Japanese citizens who have had said JGB jammed down their throats by a corrupt government, enticing them to take on outsized risks by lending to a bankrupt nation in exchange for minuscule returns of 1% (or less, in some cases).

As noted in the article, the end game will not be pretty, as other developed countries will also encounter this demographic and fiscal problem--including the UK and the US.

CBO: Social Security to Run $45 Billion Deficit in 2011

http://www.cnsnews.com/news/article/cbo-social-security-run-45-billion-defic

Eric Sprott - Expect $50 Silver, Gold Possibly $2,150 by Spring

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/28_Eric_Sprott_-_Expect_%2450_Silver%2C_Gold_Possibly_%242%2C150_by_Spring.html

All 100 Ounce Silver Bars Will be Gone in a Matter of Days

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/27_All_100_Ounce_Silver_Bars_Will_be_Gone_in_a_Matter_of_Days.html

Jim Rickards - BoE Governor is Right, We Are in a Depression

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/27_Jim_Rickards_-_BoE_Governor_is_Right%2C_We_Are_in_a_Depression.html

FDA declines to approve Orexigen diet drug

http://finance.yahoo.com/news/FDA-declines-to-approve-apf-1752455254.html?x=0&.v=11

The mathematics of hyper-inflation

http://www.financeandeconomics.org/Articles%20archive/2011.02.01%20Inflation%20maths.htm