Archive - Apr 2011 - Story

A week ago we noted something peculiar: in one day, COMEX
depository Scotia Mocatta (one of five in the world) saw a 25% transfer of silver from "registered" (or deliverable physical) to "eligible" (or "undefined" - a distinction discussed previously, and also below). We said: "Canada's largest bullion depository (and one of five total) reclassified
a whopping 5.2 million ounces of silver from Registered to Eligible
status. In order to get a sense of how big this amount is, which amounts
to just under $238 million at today's fixing price, it represents just
over 25% of the total silver stored at Scotia Mocatta, and about 5% of
the total silver held across all depositories."  The reason then given was: "due to a reporting reclassification, 5,287,142 t oz was moved from Registered to Eligible." To our (lack of) surprise, a quick glance at today's silver holdings at the Comex confirms that the trend of reclassification is continuing unabated, and total "physical" silver across the entire Comex universe has now plunged by almost 20%, or from 41 million ounces to 33 million ounces, in the span of one week! And while last week it was Scotia Mocatta, today it is HSBC and the Delaware Depository, and the reason given: "Adjustments include reporting classifications of t oz that were moved from Registered to Eligible.  Please see Special Executive Report reference 5736 for additional information.  http://www.cmegroup.com/tools-information/advisorySearch.html#." And a further drill down reveals the following link. Many have speculated that there could well be a run on physical silver. But for those looking for a smoking gun, this is probably as close as you will get to one, short of JPM actually declaring "force majeure."

If you are confused why at one point every word the Chairman said was the equivalent of one pip lower for the DXY and 10 cents higher for gold, wonder no more. Here is Citi's Steven Englander asking, and explaining why the USD just hit a new cyclical low.

RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 27/04/11

"Mr. Chairman, first, thanks for doing this. This is a tremendous development." Steve Liesman

BERKSHIRE SAYS COMMITTEE FOUND SOKOL LZ TRADING VIOLATED TERMS
BERKSHIRE SAYS SOKOL'S PURCHASES VIOLATED CO. POLICIES

And next, David Sokol takes down Charlie Munger.

There's your whopper of a YTD stock. Just don't try to buy anything with the proceeds from those booked (cause they are booked right?) gains.

All you need to know...

GOLD FUTURES RISE TO RECORD $1,522.80 AN OUNCE

The below Bloomberg TV interview with Paul O'Neill pretty much jumps the shark in Mutual Assured Destruction. Whenever someone says "people who are threatening not to pass the debt ceiling are our version of Al-Qaeda terrorists. Really. They're really putting our whole society at risk" it is obvious that the issue is beyond rational and has crept up into the demented extreme of demagogy. This one statement may have just doomed the whole debt hiking debate as nobody will cede to being perceived as not only a terrorist but, what is far worse, a weak terrorist by the general population.

On the face of it, American households were not that affected by the bursting of the housing bubble. If we look at the Fed Flow of Funds report, the Balance Sheet of Households and Nonprofit Organizations, we find that net worth only declined by about 11% ($7.3 trillion) from 2007 to 2010: a $2.9 trillion decline in financial assets and a $4.9 trillion decline in tangible assets, i.e. real estate and consumer durable goods...Before the housing bubble, households owed about $5 trillion in mortgages. The housing bubble came along, introducing the fantasy of home-as-ATM-cash-withdrawal-machine, and mortgages ballooned to over $10 trillion. Back at the top of the bubble, the middle class had $6 trillion more assets on the books. Considering the Mortgaged Middle Class now owns about $6 trillion in net assets, then the bursting of the housing bubble caused their net worth to drop by 50%.

Remeber when, oh yesterday, gold was plummeting and everyone knew, just knew, the rally was over? Well, you may want to save some one ply dollar paper yet. The market took a sniff at the FOMC statement, and the robotic consensus is: more QEasing.

A perfect reminder of what will happen when SkyNet finally faces carbon based competition.

A redline comparison of the March and April FOMC Statements.

Just as the top calling momo crowd confirmed amongst each other that this time was the absolutely, positively high in WTI after the black gold dipped by $2 earlier, we got DOE reports confirming that far more oil was being used than expected, and also a totally unforeseeable announcement out of Yemen (where the president is leaving amicably remember, who can doubt that), that
five Yemeni anti-government protesters shot dead by plain-clothes gunmen, while dozens wounded in Sanaa, per Reuters. Surely this is merely a way for Saleh to celebrate the fact that he has only 28 days left in power. Oddly enough that is not how WTI took it, which shot up from $110 to $113 in seconds. And this is nothing compared to what is about to happen between 2:15 pm and 3:00 pm when various robots will know what Bernanke said, and more importantly meant, before he even said it.