Stanley Cup Final Game 7: One Moment, One Game... One Win

There is only one focus in the Village on the Edge of the Rainforest today. It will be either the heights of euphoria... or the depths of despair.

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Standard Chartered: "Three Factors Will Drive Gold To $5,000"

I trust faithful readers will forgive the recent indulgence in posts about hockey, the Stanley Cup and the Vancouver Canucks. As with real estate, the topic of hockey has consumed the Village on the Edge of the Rainforest lately.

But that doesn't mean our attention is completely diverted away from real estate, the global economy and the interest in Gold/Silver as a result of sovereign debt.

And today our attention is caught by a report released by Standard Chartered Bank.

Standard Chartered provides personal and business banking services in Asia, Africa, the Middle East, UK, Europe and the Americas and their recent report, "In Gold We Trust",  looks at actual gold breakeven prices, production bottlenecks, central bank interest, and Chinese and Indian buying, and comes to the conclusion that $5,000 gold may just be a matter of time.

• "The limited supply comes at a time when central banks have completely changed their tune on selling down their gold stocks and now appear likely to accelerate their net buying programmes. China is way behind the curve. Currently, only 1.8% of China’s foreign exchange reserves is in gold; if the country were to bring this proportion in line with the global average of 11%, it would have to buy 6,000 more tonnes of gold, equivalent to more than 2 years of gold production. We believe that these factors – limited gold production, buying by central banks and increasing demand from India and China – can potentially drive the gold price to US$5,000/oz."

Standard Chartered joins the growing list that believes the significant move to Gold/Silver is only a matter of time.

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Stanley Cup Final Series Game 6: Boston 5, Vancouver 2

Sigh... another collapse in Boston. Final game this coming Wednesday night.

Below are pictures of one of the outdoor viewing party venues in the downtown core of Vancouver.  This is near the CBC and downtown Library (click to enlarge):

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Tonight is Game 6 in the Stanley Cup Finals...

Tonight is Game 6 in the Stanley Cup Finals and Vancouver has a chance to win the Stanley Cup in Boston.

It has been 96 years since a team from Vancouver last won the Stanley Cup.  Should the Canucks be fortunate enough to end the Series tonight, the explosion of joy in Vancouver will make the celebrations at the end of the Olympic Games seem like a high school dance.

With that in mind, today we remember Gold Medal Sunday on February 28th, 2010 when Canada captured the Gold Medal in hockey.  The compilation above captures the joy as it happened across Vancouver.

May similar joy echo throughout the Village on the Edge of the Rainforest tonight. Go Canucks Go!

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More on Operation Empire State Rebellion

Back on March 12th we made a post about the hacker group 'Anonymous' and a youtube video they distributed announcing "Operation Empire State Rebellion". Above is their original clip:

We haven't heard much from since that post, but they have resurfaced with this latest clip:

Will they amount to anything?

Who knows?  I do agree with their assesment that the Federal Reserve is the source of many of the financial problems we currently face. 

I also believe that the Federal Reserve, established in 1913, will be disbanded, probably sometime during the term of the US President elected in 2016 or 2020... but that's a topic for another day.

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Has the unwind begun?

"The 2008 financial crisis was a financial earthquake whose depth and breadth we still do not understand nor appreciate."

Faithful readers will recognize this oft-repeated statement which I never tire of re-stating.

In Europe the continued insolvency of the PIIGS (Portugal, Iceland, Ireland, Greece and Spain) continues.  And as wrangling continues about how Greek bailout #2 is to proceed, the European Central Bank and Germany are at polar opposites on what to do.

And as the rancor over what to do heats up, Eurogroup President Jean-Claude Juncker has made some interesting comments.

The Eurogroup is a meeting of the finance ministers of the eurozone.  And Juncker has just attempted to deflect and redirect attention from the internal problems of Greece within Europe to the financial troubles of the United States.

How?

Well Juncker has continued the theme we highlighted yesterday with China's credit rating agency Danong and said that which no one wants to say publicly:

• "Not withstanding the euro zone's problems, the deficit and overall debt in the U.S. and Japanese economy are substantially higher than in Europe. The debt level of the USA is disastrous. The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy."

As this blog has stated repeatedly... the defining issue of the next decade is going to be all about sovereign debt.

Not just in Europe, but all over the world... particularly in the United States.

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Stanley Cup Final Series Game 5: Vancouver 1, Boston 0

Another wild post-game in downtown Vancouver after the Game 5 win...

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Ratings agency from China says what everyone already knows

Dagong, the infamous Chinese rating agency, came out today and said what  everyone already knows but is afraid to say out loud:

• "In our opinion, the United States has already been defaulting....Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies - eroding the wealth of creditors including China, Mr Guan said."

The Dagong announcement follows on the heels of various reports from earlier this week which are urging China to not only pull its US holdings, but to minimize its USD exposure in total.

You can read the full story about Dagong's downgrade here.

This comes just after the German credit rating agency Feri lowered its rating on US debt by a full notch, from AAA to AA.  Feri becomes the first Western agency to downgrade US government bonds!

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Stanley Cup Final Series Game 4: Boston 4, Vancouver 0

Ouch again!

Vancouver loses 4-0 in Game 4.  It's a best of three series now.

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COMEX Physical Silver hits fresh all time lows

The Physical Silver watch at the COMEX continues as news is received that the physical ("Registered") silver held in COMEX warehouses has dropped from just over 41 million ounces on on April 20 to a new low of 28,773,375 ounces today.

This is a further drop of 2.9% from the total we outlined last Thursday and represents a decline of 30% over the last 6 weeks.

Critics have argued that the 'supposed' 41 million ounces were never actually there to begin with which is why the COMEX has been facing a short squeeze in the delivery months of Dec 2010, March 2011 and June 2011.

The latest 'adjustment' is due to a withdrawal of physical from both Brinks and Scotia Mocatta, as well as the ongoing reclassification of 438,708 ounces of Registered into Eligible silver over at HSBC.

With each passing week the COMEX appears to be more a slick county fair Carney game as opposed to true method of price discovery for Silver.

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Stanley Cup Final Series Game 3: Boston 8, Vancouver 1

Ouch!

Vancouver gets pasted 8-1 in Game 3 and the downtown core was a creepy quiet as anticipatory party-goers headed home in a sullen mood.

The turning point, a late hit by Canuck Rome on Bruin Horton.

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Mike Maloney wonders if it is time to "Man the Life Boats"

And a great interview with Schiff and Walker on Lou Dobbs...

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Collapse in US housing prices now greater than during Great Depression

The UK newspaper, the Independent, had a poignant article yesterday.

The paper notes that the ailing US housing market passed a grim milestone in the first quarter of this year.  Housing in the US has now deteriorated to the point that the collapse in house prices is now greater than that suffered during the Great Depression.

"The brief recovery in prices in 2009, spurred by government aid to first-time buyers, has now been entirely snuffed out, and the average American home now costs 33% less than it did at the peak of the housing bubble in 2007. The peak-to-trough fall in house prices in the 1930s Depression was 31% – and prices took 19 years to recover after that downturn."

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BMO on Gold: "The only gold bubble likely to burst is the bubbling ridicule of gold"

In another sign of the changing attitudes on Gold comes this treatsie from BMO Capital Markets

As this blog repeats over and over, the story of this coming decade will be all about sovereign debt and it is sovereign debt that leads Don Coxe of BMO Capital Markets to make this clear cut declaration about Gold:

• There is a new torrent of warnings of a "gold bubble."
• We have been hearing that story from concerned clients, partly in response to George Soros's highly-publicized liquidation of his holdings of the gold ETF: GLD.
• Another factor has been the debate about Barrick's move into copper, which is being partially financed by a large bond issue. Despite Peter Munk's passionate and articulate defense of that strategy at Barrick's annual meeting, many observers seem to wonder whether this is a warning sign from the long-standing pre-eminent gold miner that gold's future is problematic.
• The financial press has been including many sneering observations that gold is a useless speculation on infl ation that is unlikely to occur. Why own an inflation hedge that pays no income?
• We dissent from that tiresome scorn: those trained in Keynesian economics about the "barbarous relic" never bother to reflect that Keynes expressed almost childlike faith that central banks, acting pursuant to the Bretton Woods agreement of which he was a major architect, would always exercise restraint in monetary policies that would make gold passé.
• The Seventies proved him horribly, hopelessly wrong.
• But the Eighties and Nineties made it look as if he would ultimately be proved right.
• However, the history of major monetary policies since then—and particularly since 2007—makes the case for gold appears as cogent as it was in the Seventies. This time, there’s no chance the Fed will drive interest rates to double-digit levels to fi ght infl ation and protect the dollar. It may be that, after years of getting by on Financial Heroin, the economy lacks the energy and élan vital to survive even normal interest rates—let alone Volcker rates.
• As for the most basic argument—that gold is not an investment, because it pays no income—that seeming tautology is, at root, inherently false.
• Gold has always been an alternative currency. It is resuming that role as central banks switch from the sell to the buy side.
• A unit of paper currency pays no income.
• It can be exchanged for bonds, deposits or stocks that pay income, but a holder of a million euros or dollars in a safe deposit box earns no income on the hoard—just as a holder of a million dollars' worth of gold earns no interest.
• The big difference is that the inherent value of the paper euros or dollars will fluctuate in response to the changes in those currencies' values against other forms of paper money, and all currencies must decline in purchasing power inexorably in response to longer-term infl ation. According to our favorite skeptic on Received Wisdom, Stephanie Pomboy of MacroMavens, the S&P's performance since 2000 defl ated by the gold price move in that time is a minus 82%, compared to the more reassuring nominal return.
• Leading central banks now target infl ation at 2%, saying that anything less could lead to defl ation and Depression.
• As Harry Truman, one of the most shrewdest and most candid of Presidents, observed in response to Keynesian demands that the US target an "acceptable" rate of infl ation that would do no harm, but would be economically stimulative.
• "You can't. That's like being a little bit pregnant."
• Gold's market value most certainly fluctuates. But so does the purchasing power of paper money. Its inherent value almost never rises, but its slow decline can seem almost imperceptible. However, if commodity-spawned inflation comes roaring back, paper money’s value will plummet.
• With global money supplies growing at cancerous rates, this would not seem to be a propitious time for sneering Keynesians to dismiss gold's rise as "a bubble." How many of them warned that the Japanese bubble, or tech bubble, or housing bubble would burst with disastrous consequences?
• Why do they argue that there will be no inflation from Fed and Bank of Japan policies—for which there are no precedents, and which make Seventies central bank policies look almost as tight-fisted as Paul Volcker?
• Gold has—for millennia—been the one commodity that can always be used to buy other assets or goods and services.
• It will always have that basic—and completely useful—function.
• The only gold bubble likely to burst is the bubbling ridicule of gold.

And as faithful readers know, this follows BMO strident declarations about the future of Silver, as outlined here.

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Game 2: Vancouver 3, Boston 2 (OT)

There are various venues set up around town where the people of Vancouver can gather to watch the Stanley Cup Finals at free outdoor venues.  One of those venues is on Granville Street (which has been closed for the games).  A big screen has been set up at Georgia Street and huge crowds gathered for both Games 1 and 2 (click on image to enlarge)...

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'King' Richard Brodeur

As the City on the Edge of the Rainforest is consumed by it's hockey team's quest for the holy grail of the sport, the Stanley Cup, so it is with your faithful scribe. 

I trust you will allow this temporary indulgence.

I'm off downtown for Game 2 tonight. 

On the blog we take a moment to remember the first run for the Cup and the hero of that year, goaltender 'King' Richard Brodeur.

Finally (click image to enlarge), is the outcome written in the clouds too?...

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Tonight we remember Game 1 of the 1994 Stanley Cup Final

A couple of 2011 Game 1 post-game celebration pics from Wednesday night (click to enlarge)...

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The opening montage from Game 1 of the Stanley Cup Finals at Rogers Arena in Vancouver

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The COMEX supply of Silver continues to decline, Scotia loses 60% of it's Silver

Faithful readers may recall that back on April 28th we made a post about the COMEX losing 20% of available Silver to 'reclassification'.

Part of that 'loss' came when Canada's own Scotia Bank, our nation's largest bullion depository, reclassified a whopping 5.2 million ounces of silver from Registered to Eligible status.

Scotia Bank precious metals division (Scotia Mocatta) transferred 25% of the silver it possessed from the "registered" category (or deliverable physical) to the "eligible" category (or "undefined").

And when Scotia Bank moved 25% of it's silver from 'registered' to 'eligible', it took that silver out of the COMEX pool that was available to be delivered.  This move dropped the vault's true holdings from 11.8 million ounces to 6.5 million. And the 5.3 million ounces that ScotiaMocatta moved represented 5% of the  COMEX supply (at the time) of 44 million ounces.

This 'reclassification' was dismissed as a routine move that happens from time to time and that it was only a temporary condition that would soon correct. 

Curiously this was followed by reclassification's from two other depositories, HSBC and the Delaware Depository.

When all was said and done the 'reclassified' silver reserves dropped the total "physical" silver at the COMEX by almost 20%, or from 41 million ounces to 33 million ounces.

And the 33 million ounces is down from over 100 million ounces just over a year ago.

Now... there are those who that the COMEX does not even have that 33 million ounces.  They way that what is stored 'on the record' is actually an accounting sleight-of-hand and that the silver has been leased out or spoken for in some other fashion in the giant fractional reserve silver game being played by the big bullion banks.

This, critics allege, is why the COMEX has been having so much difficulty providing delivery of physical silver on futures contracts in a delivery month.  Records of silver deliveries in and out of the COMEX vaults don't match the contracts being settled leading critics to charge the COMEX is settling contracts, not with physical silver, but with cash payouts plus a sizable cash premium.

The problem with this, of course, is that cash settlements prevent the COMEX from functioning as a true discovery vehicle for the price of silver.  If the COMEX is unable to deliver physical silver at these prices, then the price of the metal would rise to seek the level at which physical silver becomes available (i.e. the level at which those who hold it are prepared to part with it).

Thus the levels of Silver on hand at the COMEX is of keen interest to those who invest in Silver.

Are the 'reclassifications' really temporary or are they indicative of a problem with the silver supply?

Well the latest COMEX warehouse data appears to indicate the problem may not be as 'temporary' as those at the COMEX would like you to believe.

For the first time ever total registered silver has dropped below 30 million ounces.

This comes after yet another 1,456,488 ounce "adjustment" of warehoused silver from Registered To Eligible at Scotia Mocatta.

As of June 1st, total Scotia physical silver was now 4,740,447 ounces, a 24% drop overnight, and a massive 60% drop from the total which we profiled on April 28th.

Curiously the total silver totals at the Scotia Mocatta vaults has barely budged. The only thing that has changed is the shift from real silver to "Eligible", or that which has no warehouse receipt issued against it. This Silver has been described as "a private arrangement" which has nothing to with the Comex.

But the fact of the matter is that Scotia Mocatta has lost 60% of its physical Silver in one month to 'reclassification' and the total available deliverable Silver at the COMEX is now below 30 million ounces.

That means that if 6,000 contracts stood for delivery (each contract represents 5,000 ounces), the COMEX doesn't have enough physical Silver to fulfill the delivery.

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