Archive - Dec 7, 2011

Following late November's disastrous 10 year Bund auction, in which the goal seekers saw everything from a failure of the repo market to the Bundesbank trying to fail the auction on purpose, yet which was nothing more than a simple case of little demand and high supply, today, following a steady leak wider in yields in the entire bund curve, Germany sold €4.09 billion in 1.25% 5 year bonds, with the maximum amount of €5 billion selling easily following bids for a total of €8.67 billion. The Buba retained €0.91 billion, which it always does, and is not an indication of some ulterior motive to have the ECB bailout Europe. As expected the Bid To Cover was a soaring 2.1x compared to 1.5x on the last 5 year auction on November 2. In other words, a stunning success and demonstrating what happens when you actually have demand for paper following a decline in prices. Below are the Wall Street responses to this strong auction. So that takes care of that. What is more important, and why futures are down is that as expected, yesterday's deux ex FT was promptly denied by Germany after a "senior German official" spoke to Reuters and said they are "not sure if summit will reach conclusion on using IMF funds in eurozone crisis" and "can't forsee running EFSF and ESM simultaneously". They have also said they are "more pessimistic than last week on overall summit deal". In other words, look for many moresuccessful Bund auctions as things resume their downward trajectory all over again.

Today, gold and silver mining stocks offer the best value by far of any sector in any stock market anywhere in the world. Due to the recent massive volatility that bankers have introduced into the PM stock sector, and the fact that commercial investment advisers worldwide have erroneously re-educated millions of people with the concept that volatility equals risk, the majority of people worldwide will miss a massive opportunity in gold and silver mining stocks over the next several years due to their misguided belief that gold and silver mining stocks cannot escape the throes of banker manipulation.