Precious Metals

Coghlan Capital today announced the launch of MetalsTrades, a unique service for gold and silver traders and investors. In addition to intraday traders this specialist service is ideally suited for traders or institutions that have or are looking to establish core positions in gold or silver and would like to hedge or capitalize on intraday moves in these highly volatile instruments. The service provides access to real-time calls and commentary from well known metals trader, Andrew Maguire.

Silver and particularly gold rose sharply on the release of the higher than expected UK inflation data. It showed that UK inflation quickened to 26 month highs at 4.0%. Currency debasement and higher food and energy prices are leading to an inflation surge in both developed and emerging markets. The Chinese inflation data appears to be even more misleading and manipulated than that in western economies. Many governments are attempting to manage consumers perceptions regarding the significant increase in the cost of living as fiat currencies are debased. Silver is now less than 2% from its 30 year nominal high of $31.25/oz seen at the start of the year and looks set to challenge and surpass this level in the coming days due to continued robust physical demand (both investment and industrial) and the fact that the futures market is seeing some big money go long again after the recent correction. Silver remains in backwardation with spot trading at $30.68/oz while the July 11 contract trades at $30.55/oz and the December 14 at $30.40/oz.

Traders take note. The inflation trade is back in full effect. It is overstretched in some areas, but that state can last quite a while. And we you consider the idiocy coming our of the Fed (QE 3!?!?!) and the ECB, it’s not surprising. Until someone reigns these lunatics in, commodities will be ramping higher, trumping even stocks’ performance.

Doug Kass appeared on CNBC today and attempted to present a bearish case on gold (along with his 3rd, or is that 33rd, case for a market top...) based on a verbatim recitation of half of Howard Marks' letter that we posted as a must read over the weekend. Naturally, had he recited the other half, he would have had to defend a diametrically opposing view, as that is the difference between great minds, who present both sides to the argument, and, well, everyone else. Nonetheless, we thank the bottom and top-ticker for offsetting some of the fervor his far more amusing boss at theStreet has imparted on gold, and which we find extremely worrying, as any time Cramer stands behind an asset, it is time to sell, no matter how much we like it. That said, and since we enjoy providing Doug and others with reading material for their "original" content for the next time they appear on CNBC, here is an excerpt from Bert Dohlmen's latest letter which explains not only why gold is an "investment for the ages" but also ties it in with the much discussed here topic of commodity manipulation: a far more important concept that we are surprised receives far less attention on such momentum chasing shows as Fast Money.

Both gold and silver are having a rough day to say the least. After a forced slide in the gold complex pushed the metal to sub $1,380, fueled in part by recurring rumors of a large macro/commodity fund taking profits ahead of the year end, numerous stops were triggered, bringing it to nearly $1,370, almost $50 below the all time high reached, oh, yesterday. And since traders are now desperate for volatility, which has disappeared from stocks, the daytrading crowd has taken over both the precious metals space... and the bond market. That said, momentum chasers entering the gold and bond market may have the makings of the greatest comedy witnessed in markets in the past several years.

Since Zero Hedge posted (unsolicited and uncompensated) the "Crash The JP Morgue" now-viral video late last night , it appears that among the tens of thousands of viewers who have subsequently gone to the goldsilvergold.com website, there have been quite a few conversions. So much so that as of today, the company is not taking any orders and is sold out of all products. The company goes on to say that it will not be accepting any new orders until December 6. We can only hope that the profits JPM will make in its copper market manipulation will be sufficient to offset the ever increasing pain it will experience courtesy of what is gearing up to be a massive margin call.

Sorry, Ben, can't feed Wall Street cake and then dilute it too. Gold's dramatic surge to fresh all time highs, more than makes up for the spike in the S&P. As a result, intraday, the S&P500 expressed in the only real currency left (one can hear the giant sucking sound as people leave fiat in droves) is down. In other words, on a relative basis there was more capital going into precious metals, and more specifically, away from linen and other infinitely dilutable paper, than going into stocks.

A little under two years ago, there was a big debate in the precious metals community, in which two groups of individuals were arguing for and against possible silver market manipulation, via arbing the COMEX and the OTC. On one hand you had such distinguished economists/bloggers as Mish (here and here) and Jon Nadler of Kitco (here) claiming there is no such thing as a COMEX-OTC arb because markets are ultimately efficient, and the second a trade is effected in one market, it implicitly affects all other markets, making spread arbing, and thus "manipulation" impossible. On the other hand, you had C.Loeb making precisely the opposite argument (here). After a brief flare up, the debate died down, with a partial win acceded to Nadler, who ended the debate with the following rhetorical statement: "Also, by the way, why not NAME the sinister manipulative banks in question? Why not ask them outright as to the motives behind their positions (or better yet, who their clients were) and whether or not they acted in a "willfully nefarious" manner? Conclusion: One can take any database and make it suit their conspiracy argument. That, however, does not make for proof of any kind." In other words, Mr. Nadler was asking for a bank to confirm it was arbing the COMEX-OTC spread, which in turn would unwind his defense argument, and lend credence to the claim that some players, due to their massive scale or otherwise, succeed in manipulating the silver (or gold) market by profitably spreading the legs of the trade in two completely different markets and arbing this spread. For the longest time people looked exclusively at JPMorgan for clues. Boy, were they wrong... and are they about to be surprised that in addition to almost blowing up the world, AIG FP has admitted that it itself, as the defacto risk mastodon and suicide bomber under Joe Cassano, with "$426 billion in total on and off balance sheet risk equivalent delta," was precisely just this spread manipulator. But don't take our word for it. Take AIG's.

This article was inspired by a conversation in January 2010 with fellow directors of the Gold Anti-Trust Action Committee: Chairman Bill Murphy, Secretary/Treasurer Chris Powell, and Directors Adrian Douglas and Ed Steer. In speaking about the growing role of the exchange traded funds in the precious metals market, it was clear that the disclosure that the precious metals ETFs described below were providing to investors was inadequate. However, was there a material omission under securities law? I found the issues complex. Understanding the commodities markets can seem daunting to someone like myself with a securities background. Meanwhile, the securities markets and related legal and regulatory issues can be unfamiliar to those with a background in commodities. I decided to ask my attorney to help me gather the relevant information into one document to make it easier for GATA supporters and other interested parties—whether from the commodities or securities markets—to examine these issues and to better understand and price these securities. - Catherine Austin Fitts, Solari Report