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verfasst von XERXES, 21.12.2001, 14:10

December 20 - Gold $275.60 up 60 cents - Silver $4.39 up 8 cents


Silver Roars Back / Is J.P. Morgan Chase in Trouble?


I received feedback today that a very successful oil future's trader is making a killing selling gold and silver futures every time that I project a very positive technical outlook and suggest in Midas that these markets are ready to move higher.

Good for her. It is startling that could be the case 100% of the time over the past 40 months, except for the short-lived runaway moves when The Gold Cartel temporarily lost control of their rigging.

Yesterday, was no exception. With Argentinians seeking refuge in The South Pole during their chaos and gold/silver and the shares ready to rock to the upside, the cabal swung into action and knocked them on their keester, thereby keeping investment interest in the precious metals to a minimum.

While yesterday's sharp price setback was most maddening, it could not be more clear to me that The Gold Cartel is in the most serious of trouble.

The silver buyers were not shy in expressing the same opinion. Silver came right back at them today, which is MOST UNUSUAL. Gold and silver have never been able, or allowed, to rally right back up after steep price corrections. NEVER in the past few years!
March Silver:


http://futures.tradingcharts.com/chart/SV/32

AIG, the silent cabal member, was a silver borrower and was on the sell side during the Comex session. It is costing them. The one month lease rate eased, but to an astronomical 10%.

Last week I suggested there was a big, big buyer in silver and the name of the buyer would probably be revealed to us late this week. Not yet. That is good news. It means the silver buyer is still in there accumulating. I was also told we would be surprised when we found out who it was.

John Brimelow's Thursday utterings:

Indian ex duty premium: AM $5.69, with world gold at $275.50 (PM not supplied by Reuters). Deep into legal import territory, and a number of commentators remarked on the stabilizing effect of physical demand yesterday:"Good physical buying support(ed) the price below $276 and the market ended of the lows.."(Standard NY).

Yesterday's"surprising sell off" powered by"relentless" fund selling (Standard) embarrassed a number of previously optimistic observers: as an exasperated Richard Russell remarked:"Gold got clobbered again. Manipulation? You make the call" (Russell was also again willing to assert his newly confessed suspicions about the integrity of the Stock Market:

"I've been hearing talk over the years of Fed manipulation in the stock market. Some talk of the"Plunge Protection Team." I don't believe the Fed itself buys SΠfutures at critical areas, but I do think the Fed may manipulate through the services of outfits such as Goldman Sachs. Of course, you have to remember that everyone on Wall Street has a vested interest in a bull market, and I wouldn't put it past Goldman or Merrill or Morgan Stanley or any other outfit to buy SΠfutures at critical areas.

For instance, right now I believe the Dow is at a critical level, and I'm talking about 9978. I believe the"interests" would like very much to keep the Dow ABOVE 9978 and preferably above 10000. Thus we could see a lot of manipulation in this area"

UBS Warburg reasonably suggests that the barrage yesterday blasted some new longs out of their positions, worsening the slide by triggering stops. Quite possibly true: but open interest actually rose 466 contracts suggesting there was a good deal of fresh shorting as well.

A well followed precious metals analyst draws some humour from JPM ("JP More Gone")'s belated admission that they did not fully disclose their Enron exposure."Maybe Santa will deliver that system threat gold bugs have wanted for Christmas". And indeed the JPM chart is looking ominous again.

JB

In recent weeks I have put out CARTEL CAPITULATION WATCH and SILVER/GOLD ALERTS. I have also expressed my strong opinion that something is very wrong in financial land. Everything remains in play the way I see it.

One look at beleaguered Treasury Secretary Paul O'Neill tells us the story. You can see the pain in his face; he would not be a very good poker player.

How O'Neill can say the siege in Argentina has probably been factored in the markets is beyond me? I wonder if Argentina's Finance Minister, Domingo Cavallo, factored not being allowed to leave the country in his life just a few weeks ago? They must be really panicked in Washington.

Midas has been all over the Morgan/Enron mess from the get-go. The latest came out around ten EST last night. Prime time exposure, eh?:


JP Morgan Chase's Enron Exposure Widens


NEW YORK (Reuters) - JP Morgan Chase & Co. (NYSE:JPM - news), the No. 2 U.S. bank holding company, on Wednesday said its stake in bankrupt energy giant Enron Corp. that is secured by assets stands at $965 million, or more than double the amount it previously disclosed.

Seeking to recoup some of that money, JP Morgan Chase said it has filed lawsuits against several top insurance companies that issued contracts, or surety bonds, guaranteeing Enron assets.

JP Morgan Chase's filing shows it has sued insurers including Chubb Corp. (NYSE:CB - news), CNA Financial Corp. (NYSE:CNA - news) and Citigroup Inc.'s (NYSE:C - news) Travelers Property Casualty unit.

New York-based JP Morgan Chase is one of several big financial institutions holding investments in the failed energy company that might never be regained. Once high-flying Enron filed for Chapter 11 bankruptcy earlier this month, after questionable financial dealings collapsed the company.JP Morgan Chase -- which has already acknowledged about $600 million in unsecured exposure to Enron -- had previously said its secured stake in Enron"included'' $400 million, but did not make public secured amounts beyond that. The surety bonds at the heart of JP Morgan Chase's lawsuits against its insurers were issued to guarantee obligations of Enron North America Corp. and Enron Natural Gas Marketing Corp. under prepaid forward natural gas and crude oil contracts, JP Morgan Chase said.

"At issue in the case is approximately $1.1 billion, of which JP Morgan Chase's share is approximately $965 million,'' the bank said in a statement."The litigation seeks a declaration that the insurance companies are required to pay under the bonds.

''Payment is due Dec. 21, the bank added.

In addition, JP Morgan Chase said a"European financial institution'' it did not name has failed to pay it on a $165 million letter of credit backing an Enron-related swap contract. Indicating more legal action, JP Morgan Chase said it ''intends to seek enforcement of the letter of credit.''

Officials from Chubb, CNA and Citigroup could not be reached for comment late Wednesday.

-END-

How interesting - Morgan suing Citibank. This, after Morgan sued Enron for $2.1 billion. Enron was a fellow LBMA member and a partner with Goldman Sachs in the fledgling electronic gold exchange. Signs of the Gold Cartel going into disarray?

Uh Oh! This afternoon the Morgan story was updated saying its exposure might be quite a bit more than put forth last night:


12/20 14:48
J.P. Morgan's Enron Exposure May Exceed $2.6 Bln, Investors Say
By Michael Nol and Mark Lake

New York, Dec. 20 (Bloomberg) -- J.P. Morgan Chase & Co. shares fell amid concern the second-largest U.S. bank's exposure to bankrupt energy trader Enron Corp. is more than the $2.6 billion it has disclosed.

The stock fell $1.25, or 3.3 percent, to $36.75 in afternoon trading after the company yesterday said potential losses tied to Enron's collapse are more than twice the amount it announced in November.

The new details added to speculation that J.P. Morgan hasn't identified all the risks linked to its relationship with what was once the biggest energy trader. The bank made loans, provided letters of credit and guaranteed bonds for the Houston company.

``It remains to be seen whether this is the full disclosure or not,'' said Robert Morris, chief investment officer at Lord Abbett & Co., which owns more than 5 million J.P. Morgan Chase shares and has been buying more in recent weeks. ``I hope it is.'' ….

``The difficult thing to figure out is the ripple effect,'' said Jay Willadsen, a financial services analyst at Independence Investment Associates Inc., which holds J.P. Morgan shares. ``You think your exposure is x, but it's really x plus y plus z.''

-END-

What will Morgan's exposure be next week, $5 billion? As presented in Midas commentary, one has to wonder what kind of counterparty and derivative problems are flying all over Wall Street and the banking/power sectors? What we do know is that the big players surrounding Enron continue to disclose MUCH bigger problems than they first let on.

The really important question is whether these huge debacles can be contained? It also brings us back full circle to understanding the significance of the Gold Cartel's rigging of the gold market. One of the reasons the gold price was rigged was to keep interest rate volatility down (Gibson's Paradox) and to give impetus to Robert Rubin's strong dollar policy. With a rigged gold market and a constantly strong dollar, J.P. Morgan Chase built up a 23 trillion dollar derivative rate position that is ON THEIR BOOKS RIGHT NOW!

That unfathomable mega-position is one that cannot tolerate interest rate and general market VOLATILITY as they are SHORT volatility. That is why the dollar stays around 116.22 and gold is not allowed to rise no matter what happens in the world. Morgan and fellow bullion bankers that are short thousands of tonnes of gold have serious problems at the moment, which no one in Wall Street is talking about. If the dollar gets hit and gold rockets, some of these institutions will be"tapicoa." Sound Taps!

The short gold positions could do some in, but it is increased gold/dollar and interest rate volatility that could spell doom for J.P. Morgan Chase. As is, the interest rate volatility in the long bond is higher now than it was during the LTCM crisis. The highly regarded Jim Bianco of Bianco Research in Barrington, Illinois points out the volatility on 30 day Treasury options is higher than during the UAL failed buyout in 1989, the Gulf War in 1991 and during the Orange County risis in 1994.

In his December report, Bianco also rolls out a chart comparing Primary Treasury Dealer Net Borrowings to Equity Margin Debt (he phrases it Net Borrowing over Net Lending). In 1990, they were both 20 billion. Around midyear 1999, they were both around 275 billion. Today, the Net Borrowing number has risen to 550 billion, while the Net Lending number has dropped to 150 billion. Quite a contrast.

Bianco titled the chart: Speculators: Bonds Vs Stocks with the following commentary:

This means that the Treasury market is a lot more leveraged than it was just 10 years earlier. How did this happen? A significant part of this leveraging has occurred in the last two years. This coincides with the Treasury's buyback operations, which we believe to be no coincidence. The buy back operations contributed to this leveraging.

As the deficit started turning into surpluses in the late 1990's, the Treasury issued new securities and used this money to back higher-yielding Treasury securities issued in the late 1970's/early 1980's. This operation makes economic sense. However, it also has the effect of subsidizing the bond dealing community ("welfare for bond dealers"). The buyback operations meant issuance was higher than it would be without it. Furthermore, investors began to allocate more money to the equity and credit markets throughout the bull market of the 1990s. In an attempt to"make up" for these lost investors, the U.S. Treasury further increased their buyback operations. In effect, this increase in buybacks kept the number of dealers higher than it would have been had the Treasury cut back even further on their auction schedule. Nonetheless, the number of primary dealers is currently at an 18 year low.

Dealer operations are similar to leveraged hedge funds. This means they have a great need to borrow securities. Since the Treasury was subsidizing the dealer community, the number of dealers grew in relation to the amount of Treasury securities outstanding. The leverage associated with these dealer operations also increased.


Th effect of this leveraging means that the Federal Reserve are now hypersensitive to anything that effects the leverage community, including the dealer community.


-END-

Anybody seen Greenspan making speeches lately like he used to do on a weekly basis? Anyone seen any politicians buddying up to Robert Rubin in Washington these days?

The rigging of the 30 year Treasury bond market by the Treasury and gold rigger, Mr. Peter Fisher, has backfired in the worst of ways. Just what they could not have happen HAS HAPPENED. Interest rate volatility is sky high and it is threatening to blow up J.P. Morgan Chase's 23 trillion dollar interest rate derivative positions. The most significant amount of Morgan's interest rate derivative positions began around mid 1999, which just happens to coincide with massive increase in the Treasury Dealer Net Borrowings cited by Bianco.

The nightmare of nightmares may be here, RIGHT NOW!

The Fed's printing press is nonstop, we are fighting a WAR, the Enron problem is growing, Argentina will soon be the biggest default in history, the economic news in the United States is worsening by the day. What is the U.S. doing about it all:

RIGGING THE DOLLAR AND THE GOLD PRICE. If the dollar tanks and gold soars, we have The Titanic. That is because the sky high interest rate volatility will rocket to the moon. Good grief, it is.

Keep in mind it was the sharply rising gold option volatility that caused the Ashanti hedge book problems. That was one medium sized gold producer in Ghana, Africa. The only reason Ashanti got bailed was out because of the collusion among The Gold Cartel and central banks. Who is going to bail out J.P. Morgan Chase's $23 trillion worth of interest rate derivative positions?

Let's return to the Argentina chaos. One of the main reasons for the rioting, killing and defaulting is the rigging of the gold market. If the gold market were not rigged, the U.S. dollar would be much weaker. MUCH weaker. The Argentine currency is pegged to the dollar thanks to the advise of the IMF. Because the U.S. won't let the dollar fall (and gold rise) to protect J.P. Morgan Chase and the rest of the bullion bankers, Argentina can't export.

The result: near revolution.

The eloquent Hugo Salinas Price, a GATA supporter and CAFÉ member, warned of this Argentine problem on August 23,2000 on his website:


http://www.plata.com.mx/plata/english.htm


The main American Export and Argentina's problem


By Hugo Salinas Price

The main export of the U.S., is paper. It's very fine stuff, made by a famous papermaker.

Last June, the U.S. again exported an important amount of this paper, as they have been doing every month for many years. It appears that this year, exports of paper may amount to $400 billion, perhaps more. The paper is very valuable; June's exports amounted to only about 392 cubic yards in volume, but worth about $30 billion.

This paper is exported in small rectangles. Each one is engraved and says:"One Hundred Dollars". A cubic yard holds about 765,000 pieces.

So, June's export of paper of 392 cubic yards amounted to about $30 billion.

The whole world loves these pretty papers, so they have been going up in value.

The U.S. exchanges these papers for cheap goods all over the world. Every time the papers go up in value, the U.S. gets more stuff in exchange. The U.S. doesn't have to worry about exporting other stuff; if they want more foreign goods, they just export more paper.

Argentine has a Currency Board, so their money is really these pieces of paper. To buy things outside Argentine, they have to use the papers exported by the U.S. to their country; but of course, when they buy things, quantities of papers leave Argentine and business falls off. Unemployment spreads as the economy contracts.

Argentine cannot export papers like the U.S. - it doesn't have the paper concession - it has to export things; and since it is using a currency that is going up in value on world markets, well, of course Argentine costs go up, too, with regard to people who would like to buy stuff from Argentine. This is an uncomfortable position for the Argentinians. They have to lower prices, lower costs, lower wages, fire workers, or close down businesses.

But, the Americans are having a great time! A wonderful thing it is, to export engraved paper. There seems to be no end to the world's desire to own these engraved bits of paper. In the meantime, the Argentinians are having second thoughts about using U.S. papers as their money.

Those who dream of dolarizing Mexico, please take note!

-END-

You have heard me say many times before: The gold scandal will be the most disturbing financial scandal in U.S. history because the perpetrators have hurt so many people around the world and violated laws of conscience, ethical behavior and the U.S. Constitution.

Worse, if the gold fraud is not stopped soon, the malignant cancer spread by The Gold Cartel could eventually bring on problems in the United States similar to those occurring in Argentina today. Sound far-fetched? So was the collapse of Enron!

As presented above, the side effects of the rigging of the gold market can cause a financial calamity of epic proportions. If it occurs, the U.S. stock market could easily collapse. When the American public realizes much of their hard earned money is gone and there is no hope of getting it back (as is the case with the Enron employees and investors), there will be riots in this country. Wall Street will face a siege much like what is going on in Argentina.

Let us pray at this spiritual time of year that somebody in Washington wakes up and puts an end to the gold fraud and market in rigging before it is too late.

I am out of here tomorrow morning for Aspen, Colorado in the Rocky Mountains to visit my Mom, sister Kris and her tribe. I wish all of you a very Merry Christmas and a Happy Holiday season.

Will be back December 27.


MIDAS





 


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• Warm anziehen! - XERXES, 21.12.2001, 14:10