Beiträge von Schwabenpfeil

Hard to understand why this is not a bigger deal:

SEC Tells Fannie Mae To Restate Earnings

Accounting Practices Faulted; $9 Billion Loss Could Result

By David S. Hilzenrath and Carrie Johnson
Washington Post Staff Writers
Thursday, December 16, 2004; Page A01

The Securities and Exchange Commission's top accountant last night told mortgage funding giant Fannie Mae that it should correct its past accounting, a directive that could erase 38 percent of the profit the government-sponsored company has claimed since the beginning of 2001.

Fannie said last month that if it was required to make such a correction, it might have to record $9 billion of previously unreported losses.

"Fannie Mae's accounting did not comply in material respects" with two major accounting rules, the SEC's chief accountant, Donald T. Nicolaisen, said in a written statement. Instead of following requirements, "Fannie Mae internally developed its own unique methodology," Nicolaisen said.

Nicolaisen's statement was a powerful rebuke to District-based Fannie Mae, which had appealed to the SEC after another agency accused it of manipulating accounting estimates to achieve desired financial results and deliberately violating other accounting requirements to make its earnings smoother….

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CARTEL CAPITULATION WATCH

The DOW keeps on rising, this time to 10,705, up 14. The DOG took a rest, losing 16 to 2146. The March bond, which is trading at a point discount to December, lost 1 ½ points to 112 17/32, making yesterday’s launch into new high ground all the more mysterious.

US economic news:

08:30 Jobless claims for w/e 12/16 reported 317K vs. consensus 342K
Prior week revised to 360K from 357K.
* * * * *

08:30 Q3 Current Account deficit reported $164.7B vs. consensus $170.6B
Prior revised to $164.4B deficit from $166.2B.
* * * * *

08:30 Nov. Housing Starts reported 1.771M vs. consensus 1.98M; Building Permits 1.988M vs. consensus 2M
Prior Starts revised to 2.039M from 2.027M; Permits to 2.018M from 1.984M.
* * * * *

10:30 EIA reports natural gas inventories (61)bcf vs. consensus (68)bcf
For reference, year-ago data was (134)bcf. Prior week's data was (88)bcf. Jan. nat'l gas futures move lower in initial reaction.
* * * * *

12:00 Dec. Philadelphia Fed index reported 29.6 vs. consensus 20.5
Prior reading 20.7.
* * * * *

14:11 - FOMC minutes indicate that some members see actions becoming more tied to data
The minutes note that "several members commented that policy actions would likely become increasingly dependent on incoming data" and that "this might imply a more gradual path of tightening going forward than that of the last several months...or it might mean that the Committee on occasion would need to firm policy more rapidly". Though these were still minority views, it does appear that the FOMC might be edging away from its recent auto-pilot strategy of tightening unless the data markedly deteriorated, and toward a strategy of letting the data determine when and how much to move.
* * * * *

The John Brimelow Report (early morning edition)

India unfaltering buyer: Bears look to vacations
Thursday, December 16, 2004

Indian ex-duty premiums: AM $8.39, PM $8.21, with world gold at $442.30 and $441.05. Very ample for legal imports. The rupee finished a little firmer today, at $1 = R43.915. Further strength is confidently expected.

With only a little extra help from the rupee today, Indian buyers, often thought of extremely price sensitive, weathered the c. $5 rise in world gold since yesterday with significant calm. They look set to press world gold higher.

World gold rose smoothly throughout the Asian day, peaking at $442.70, $2.35 above the NY close as Europe opened. It then sold off some $2 until, interestingly, the pre-NY market activated just before 7 AM.

Numerous Commentators are suggesting (hopefully) the inclination of the US “Funds” to go on vacation precludes the possibility of a year end rally. This is simply not a relevant consideration for the key buyers, in India, and the Middle East.

JB

March British pound
http://futures.tradingcharts.com/chart/BP/35

This morning the pound was at its highs and gold was $14 off its highs of a couple of weeks ago.

The dollar closed at 82.62, up .86. The pound fell 1.12 to 192.02.

Gold left two gaps on the downside on Monday and Wednesday. It filled the latter today, by wiping out yesterday’s gains. If gold holds this area, like I expect, it should shoot for the big one it left on the upside.

Early in the trading game today, gold was holding its own and rebuffing the dollar gain as physical market pricing supported the price. However, the euro fall became so pronounced that funds and locals pounded the short side. Gold finally caved in before rallying $1 on the close as locals covered.

A local outfit named Crown bought 4,000 Feb $400 gold puts for 50 cents. Don’t know what that is all about.

The gold open interest rose 4047 contracts to 320,076. Tomorrow’s COT numbers should be quite interesting.

Have no idea what’s going on with silver. It is disappointing to see the warehouse stocks beginning to build. They have risen to 104,536,159 ounces over the past week. The silver open interest gained 327 contracts to 102,098.

As the day wore on, the euro was really clobbered, closing at 132.52, down 1.64. However, it made a low of 132.08 and was trading near that level when gold closed on the Comex.

March euro (plunged and filled its gaps on the downside)
http://futures.tradingcharts.com/chart/EC/35

While this gold charge and retreat is tiring, it is perfectly normal action following the huge sell-off from $455 and the resulting spec liquidation. The standard for gold to complete a bottoming pattern is two weeks on these spec flush outs. Traditionally it takes that amount of time to compose itself before making a sustained move higher again.

AM Fix $441.25
PM Fix $439.50

One of the aggravating aspects of watching gold trade on a daily basis is seeing the extent to which The Gold Cartel is leaning on the price relative to foreign currencies. Because of the price suppression scheme, the price of gold in euros lagged on its way up to $455 and then tanked when the US gold price collapsed. This becomes apparent when viewing gold versus the pound too:

February gold
http://futures.tradingcharts.com/chart/GD/25

Bill,
To continue Derek’s Titanic analogy of yesterday…the dollar has supposedly bounced because the RECORD third quarter deficit of 164.7 Billion dollars was not as bad as analysts predicted!! So the Titanic is sinking but you should by shares in the White Star Shipping Company because the gouge in the hull is only 20 feet below the water line and not 25 feet as originally thought.

Makes me wonder why NASA spends billions of dollars looking for signs of intelligent life elsewhere in the Universe…they should check out their technology on planet Earth first, there could be some shocking results!
Cheers
Adrian

December 16 – Gold $436.50 down $4 – Silver $6.67 down 13 cents

Gold Dragged Down By Euro Rout

Happiness is that state of consciousness which proceeds from the achievement of one's values...Ayn Rand

GO GATA!!!

The battle goes on. Gold followed through nicely after yesterday’s surge and was holding its own when the euro fell apart. The main reason given was the US current account deficit was not as bad as expected. Adrian sees it this way:

I HAVE A GREAT FAITH IN MY WORK, THAT IS WHY I HAVE BEEN DOING IT SINCE TWENTY YEARS.

IN A FEW DAYS TIME WILL BE ANSWER ON ALL ABOVE PREDICTIONS.

TRADE WITH FAITH AND CONFIDENCE BUT TRADE CAREFULLY (trade with small money on my recommended area and I am sure you will have great return in the next 6 months) AS I WARN THAT "HIDDEN AND INVISIBLE TIME HAS ALREADY ENTERED FOR THE NEXT 39 MONTHS OF UNPREDICTABLE PERIOD."

Best recommendation for the next six months -

Buying side - Today's rate - SILVER (6.72), PALLADIUM(186), CORN(206), SOYBEAN(540), COFFEE(94) AND COTTON(42)

Selling side - STOCK MARKET (10700)

Avoid - Currencies and oil for time being. Soon I will starting guiding on these because currently they are moving in "no zone."

SAVE THIS EMAIL AND WE WILL TALK IN THE MONTH OF MAY 2005.

THANKS & GOD BLESS
Mahendra 14 Dec 16.17 Santa Barbara
http://www.mahendraprophecy.com

Stock Market - My final date on collapse of stock market is in next week on 21 December. I know many must be very disappointed with my stock market prediction. During the first quarter of 2004 I recommended get out from buying position when Dow was at 10721, after that It went down and came back twice. In Jan 2000 many of my followers got very unhappy with me (though I advised them to buy tech stocks 1996) because market was rising continuously in the months of Jan and Feb 2000 and I recommended to get out from Technology stocks in December 1999, finally it happen in the month of March 2000, since then they have been saying that I saved them from big disaster. I am not trying to convince on my market prediction because since last 12 years I never came wrong on this and I know this time also I will be right. Timing wise I was off by three months in 2000 so let see this falls is coming from 21 December or not.

NOTE: STOCK MARKET INVESTOR'S ARE VERY UPBEAT BECAUSE THEY HAVE A GREAT FAITH IN MARKET AND FED BUT ON OTHER HAND METAL INVESTOR'S LOOK SCARE AND LOST BECAUSE THEY DOESN'T HAVE FAITH AND CONFIDENCE METALS.

From my friend Mahendra last night:

Dear Members,

Few of my members have asked me on future move of Palladium because it has been moving down.

Here is my view - I am expecting it to move up very strongly from Friday and once again I am confirming it reaching $370 soon. My outlook for next year is also very positive. Last year, I recommended at $180 and we all know that in March this year it reached $340. Prices of palladium should turn around in the next 72 hours.

Grain should be in your buying list.

Metals looks very positive from here. I am ignoring all negative noise from expert because I see they (gold/silver) performing strongly so no need to waste my important time to listen wasteful commentary (FROM EXPERTS!!!!).

Natural gas look positive as I mentioned in my newsletter.

Avoid trading in currencies, dollar may fall quite fast now to new low before it start gain in near future.

Analysis:

Living conditions might be a bit more comfortable these days for the Wall Street planet people crowd. Unfortunately, a meteor is headed their way and is on course for a direct hit. Next year, when it becomes apparent their planet is in big trouble, they will be streaming our way. By then our real estate values will be quite expensive.

***
Santa Claus is buying gold like crazy this year, increasing demand and siphoning off supply from the Chinese, Indians, Arabs, etc. It is driving The Gold Cartel nuts. If he keeps this up, we will be the ones smiling in a couple of weeks.

GATA BE IN IT TO WIN IT!

MIDAS

The XAU rose a stupendous .85 to 100 on the nose. The HUI popped above 220, then went straight down and couldn’t close above that key level. It finished at a pitiful 219.38, up only 3.41

The latest on the tale of two planets:

*The Wall Street planet:

There is no inflation. The stock market will continue to roar ahead no matter what. Bond yields will continue to drop because economic activity is so strong. The dollar retreat is great for exports and will not inhibit foreigners from investing in the US. Just see the bond market action today. (What was all that strong dollar policy talk demanded by this planet’s people years ago all about?) Iraq is a huge success with democracy right around the corner, to spread throughout the Mid East. Gold is a barbaric relic and of little interest. Those who speak of gold price-rigging are conspiracy nuts. The Wall Street planet people are making money in the US stock market and smiling, while bowing to CNBC’s Lawrence Kudlow for his brilliance.

*The GATA-like planet:

Inflation is far higher than reported by Washington. The US stock market has been pumped up, is very overvalued, and likely to tank next year. The dollar has a long way to go on the downside, which will give impetus to foreigners to pull out of our financial markets. Talk of a strong dollar policy is farcical. The bond market is being pumped up by The Working Group on Financial Markets. Interest rates are going much higher, unless the stock market falls apart, when the exasperated foreigners finally pull the plug. Iraq is a disaster, which will have dire financial market consequences for the US next year. Gold will be the "go-to" investment of choice next year all over the world. The rigging of the gold price is clear as a beautiful sunny day in the Colorado Rockies. The GATA-like planet people continue to watch their gold share positions drift off into oblivion, even as gold stays comfortably in 16-year high ground. Those of us in the gold shares are grumpy and can’t believe how gold could go up so much this year and how the shares could go down so much.

In the past 10 weeks alone on the foreign exchange, our revered greenback has shed another 10% of its worth. Look at the steady decline on this next chart:

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/dva1215B.jpg]

The average American, if he thinks about currency crises at all, thinks about them only in terms of highly indebted Third World nations, such as Argentina, Brazil, etc. What poor Joe Sixpack doesn't realize is that Uncle Sam is now the world's largest debtor, and his debts are growing exponentially. Will poor Sam be forced to deal with his debts the way his Third World neighbors often do—by defaulting on them? I wouldn't rule it out.
So who cares if the dollar charts' internal indicators point to a possible rally? The dollar has staged periodic rallies all the way down for the last three years.

To say the dollar is "heading" toward a crisis would be like the captain of the Titanic saying after his ship hit the iceberg that it was facing a "potential" disaster. That's crazy. The disaster was the collision itself. The ship was in crisis the moment that block of ice ripped a hole in her hull.

To stay with the overused analogy, the Good Ship Dollar has already struck a drifting mass of ice, which is comprised of the triple deficits and an uncontrolled Greenspan money machine. So the damage is done. The crisis is already upon us. See what I mean? The only real difference between this country and a banana republic is that our President and his treasury secretary aren't running around in sombreros! (Maybe they can't afford them. If sombreros are anything like oil, food, natural gas and other basic commodities, they're probably getting fairly pricey.)

My point is that a dollar crisis is not "coming." It's already here. We're up to our indebted necks in it.

Some people declare, "The market never does the obvious." They ask, "Isn’t anticipating a dollar rout the ‘crowded’ trade? If almost everyone believes a dollar crisis is inevitable, can it really happen? Can a couple of billion dollar holders possibly be right?"

To which I reply, "You're damned tootin' they can!" The only thing getting ‘crowded’ is the exit. In fact, the very thing that will continue exacerbating the dollar debacle is the fact that it is indeed obvious and that there are so many dollar owners watching their money continue to devalue.

This isn’t sour pessimism. It’s just a willingness to acknowledge what IS. People everywhere—including some pretty powerful foreign central bankers—are starting to unload their dollars precisely BECAUSE they see what's coming. I doubt they're convening with their colleagues and concluding, "We don't have to worry. The crisis is so obvious, there's no way it can happen."

Besides, what could they do to stem the dollar's decline? Buy even more of them!?? Get real. I mean central bankers may be sinister and power-hungry...perhaps even stupid. But they're not masochistic. And they always look out for number one. They will offload their excess dollars into every rally, thus ensuring that no rally will last. Smart citizens will do likewise before the exits become jammed and the crowd becomes an unruly mob.

In summary, Bill, it seems to me that until the U.S. shows some fiscal restraint and begins living within its means—a foreign concept to most Americans—I believe only one reasonable conclusion can be drawn: The U.S. dollar is heading for a disaster of Titanic proportions.

Watching as the hold fills with water,
Derek

Derek Van Artsdalen from San Antonio:
Watching today's U.S. dollar action, I'm convinced that those who predict a "developing," "potential," or "coming" dollar crisis are not being honest with their readers or themselves.

This morning, the dollar is down about three-quarters of a point—so far. Only God knows where it will end the day.

But does it matter? In the last three years the Dead Presidents Collection has lost about a third of what little value it still retained after decades of miserable Federal Reserve "management."

Here's a 3-year picture of this sad tale:

[Blockierte Grafik: http://www.lemetropolecafe.com/img2004/dva1215A.jpg]

What baffles me is how anyone could view this chart and take comfort that "the dollar is due for a rally." Now that's what I call taking life's lemons and making lemonade!

On the gold coin front:

Bill, check out Tulving http://www.tulving.com/goldbull.html

He's buying Pre 2005 Gold Eagles for $445.00 thats $9.00 over spot. Then if you scroll down to where he has Pre 2005 Gold Eagles for sale you will see 1 ounce SOLD OUT, 1/2 ounce SOLD OUT, 1/4 ounce SOLD OUT, He still has 1/10 Gold Eagles listed $46.05 ea. for mint tube of 50 coins.
Brian

From a posting by Heinz on the Silicon Investor website last evening, which confirms the negative gold sentiment, of which I have been pounding the table on of late:

http://www.siliconinvestor.com/readmsg.aspx?msgid=20850260

the Rydex pm fund has lost 50% of its assets from the top (mostly due to outflows).

i closely watch money flows in the sector, and institutional buyers and other big traders have been scooping up the gold stocks sold by small traders.
the sector put/call open interest ratio is close to a 52 week high.

gold timers have reduced their exposure from nearly 80% to less than 20%.

i also closely watch 8 different gold analysts with various approaches (technical, fundamental or a combination). of those, 2 are currently bullish, one doesn't know what to think, and 5 are bearish. this is the highest proportion of bears in this (admittedly small) sample since the '01 lows.

the gold futures put/call OI ratio is close to a 52 week high as well.

short interest in the sector has recently risen sharply after a brief dip over the summer months.

conclusion: the bullish consensus on gold, but especially gold equities, is far lower than everybody assumes. in fact, it can be said that skepticism is extremely high at the moment (no doubt partly on account of recent poor sector performance). a medium term rally in the sector has become highly likely at this point.

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On the GLD note:

I was surprised you didn't excerpt any of Chapman's views on the gold ETF in last nights James Joyce Table commentary.

Fwiw, I thought you might be interested in this post I made on an extremely active message board a few minutes ago:

Investors Hub - Zeev's Turnips Patch-No Politics (ZEEV)Post #334674

"The NYSE specialist for streetTRACKS is hedging in the COMEX market, so trading in the ETF comes back to the COMEX anyway," he said.

Overall, analysts say, investor appetite for gold remains strong enough that the market appears not to need to siphon trading activity from one area to another.

David Rinehimer, head of futures research at Citigroup Global Markets, said at a Citigroup Gold Investors Day forum on Monday he saw no indication that streetTRACKS had drawn liquidity away from COMEX futures, where open interest continues at near-record levels…..

For the full article:

http://yahoo.reuters.com/finan…15-13-33_n15351932_newsml

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A number of Café members sent me the latest on the ETF’s, with the sentence in italics catching their attention:

U.S. gold ETFs unlikely to steal volume from COMEX

Wed Dec 15, 2004 10:13 AM ET By Zachary Howard

NEW YORK, Dec 15 (Reuters) - New gold-backed securities traded on U.S. stock exchanges are unlikely to poach trading volume from the New York Mercantile Exchange's giant COMEX futures market, traders and analysts said on Wednesday.

Some market players have speculated that exchange-traded funds that track the price of gold will draw volume away from COMEX because the equities market as a whole is much more liquid than futures.

Indeed, individual investors and entities such as hedge funds and pension funds are more likely to enter the gold market via ETFs like bullion-backed streetTRACKS Gold Shares (GLD.N: Quote, Profile, Research) , proponents of those new securities say.

StreetTRACKS, sponsored by the World Gold Council, an industry body, offers investors an alternative to handling physical gold, which can be costly and complicated to store and insure.

The ETF made a much-hyped debut on the New York Stock Exchange on Nov. 18, when gold was at a 16-year high above $445 an ounce.

However, many gold sources see the influential speculative fund-type accounts that dominate the market sticking to COMEX trading because they are designed to track futures, not equities, while some of the ETFs' participants themselves also are hedging gold positions using COMEX futures and options.

"A large portion of funds that trade on COMEX are either CTAs (commodity trading advisors) or hedge funds, and they are futures-only funds," said Graham Leighton, vice president of precious and base metals at Societe Generale.

Those players probably will stick with trading on COMEX, rather than switch to ETFs, he said.

"The ETF is perhaps not big enough for pension funds," Leighton added. "You would have to build up an adequate open interest (in an ETF such as streetTRACKS) before the funds were probably allowed to trade."

Although turnover in streetTRACKS is high, gold market sources say the greater amount of gold backing the benchmark COMEX contract, versus the amount of bullion stockpiled in the streetTRACKS, should keep large players glued to COMEX.

Open interest in COMEX gold, which stood at a towering 22.6 million ounces of metal in the benchmark February contract on Tuesday, reflects much more gold than the roughly 3 million ounces of bullion currently stockpiled in streetTRACKS.

Open interest refers to the outstanding contracts for which an entity is obligated to the exchange because an offsetting purchase or sale, or delivery, has not been made.

One New York-based gold trader at a large bank said the debut of the ETF should actually draw new business to the COMEX market.

Speaking of Citigroup earlier, leading Gold Cartel activist caught in usual business activity:

Citigroup targeted in Germany in market manipulation probe
Wed Dec 15, 3:57 AM ET Business - AFP

FRANKFURT (AFP) - BaFin, the German financial market regulator, is investigating US banking giant Citigroup for possible market manipulation in the eurozone government bond futures market, the Financial Times reported.

BaFin was thought to be nearing the conclusion of an inquiry into whether Citigroup's bond traders manipulated the Bund (German government bonds) futures market on the Eurex exchange last summer, the newspaper said, quoting people familiar with the probe.

The German investigation had been co-ordinated with a separate inquiry by the British regulators, the Financial Services Authority.

If BaFin finds evidence of market manipulation, Citigroup could face a lawsuit and the ire of European governments, which pay fees to bank for underwriting their syndicated debt issues, FT said.

Controversial bond trades by Citigroup have been under investigation since August.

The US giant flooded the cash market with 11 billion euros (14.6 billion dollars) in sell orders, causing rivals to rush to hedge their exposure in the Eurex market for German government bonds by selling the futures. About half an hour later, Citigroup bought back four billion euros of the bonds at a lower price, raising suspicions of market manipulation, the newspaper said.

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