An excellent article posted at Seeking Alpha The Manipulation of Gold Prices by: James Conrad December 04, 2008

There is no other leveraged commodity market where short sellers increase their positions, materially, as the price rises, and increase them even more when prices are exploding, except gold and silver. The reason traders don’t normally do that is that it exposes short sellers to unlimited liability and risk. Yet, in both March and July 2008, and on countless occasions over the past 21 years, vast numbers of new gold and silver short positions were temporarily opened up, with the position holders seemingly unconcerned about the fact that precious metals had just risen exponentially, and that there was a very real potential they would bankrupt themselves with unlimited upside potential. Normal traders would not expose themselves to such unlimited risks.

I conclude, therefore, that over the last 21 years or so, “fake” precious metals

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Wednesday’s action in the gold market world-wide was nothing short of a yawner from one end to the other. Ditto for silver. Volume was very low as well…so I wouldn’t read a thing into yesterday’s price action.

With deliveries into the December contract in both gold ands silver still ongoing, it should come as no surprise to anyone that the open interest in both metals was down again on Tuesday. This time gold o.i. fell another 1,938 contracts to 264,796. In silver, the open interest fell another significant chunk…2,609 contracts…to a new low of 82,434. These numbers should be in this Friday’s COT. As Ted Butler said in his commentary on Tuesday, we haven’t been at these levels of open interest for quite a number of years…as JPMorgan (NYSE:JPM) et al are breaking every commodity law in the book to cover their short positions.

Two days before Christmas…December 23rd…is options expiry

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The spot price of gold has fallen more than 20% from its all-time high, reached in March of 2008. But if you think that means demand has declined, think again.

Gold demand has in fact exploded, and not just here and there. Everywhere. Around the world, customers have been queuing up to strip coin shops’ shelves bare. Mints have been running 24/7 and still have been forced to ration coin shipments to their dealers. ETF vaults are bulging.

Now, the World Gold Council has confirmed the trend with hard numbers for the third quarter of this year. In a page-and-a-half press release summarizing 3Q2008 activity, the WGC had to use the word “record” ten times. Some highlights:

Dollar demand for gold in Q3 was a record US$32 billion, 45% higher than the previous record, set in 2Q2008. Identifiable investment demand, which incorporates demand for gold through exchange-traded funds (ETFs), bars and coins, rose to ...

The labor situation has become so dire that you can now hire an American Blue Chip CEO for a dollar – and a ride to work.

I’ve already reported in these pages as to how many of the top officers of the few remaining grand old Wall Street houses are forgoing bonuses this year. Now we hear that GM’s Rick Wagoner and Ford’s Alan Mulally have cut themselves back to a mere dollar each for 2009.

They are not the only folks willing to do a lot more for a tad less. One of the peculiar byproducts of these uncertain times is a sudden 1.3% increase in U.S. worker productivity.

It’s a Recession (At Least) After All

Last month (officially the 11th in our newly christened recession) saw another 250,000 jobs eliminated, making it the worst November since 2001. With unemployment hovering somewhere between 6.5%

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Consumer credit could be the next “aftershock” of this financial crisis, says Jason Simpkins. Banks have suffered big losses on mortgages, and are now looking to reduce their exposure to credit card debt. This could be the death knell for the American consumer, and deepen the US recession in 2009.

This from Money Morning:

U.S. consumers are already losing their jobs at an accelerating rate.

The same thing is now set to happen to their credit lines.

But with so many Americans already losing their main source of income – their jobs – at an ever-spiraling rate, will an economy that derives two-thirds of its power from consumer spending end up mired in its worst funk in decades because those same consumers are now losing their charge accounts?

Before you dismiss the possibility, consider this: The U.S. economy weakened across all regions since the middle of October as it became

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Currencies trade in a tight range…  Another new plan to help homeowners…  RBNZ and Riksbank slash interest rates! The Governorator speaks!… And Now… Today’s Pfennig! It’s going to be a Tub Thumpin’ Thursday in Europe for sure, given the Central Banks of England and the Eurozone are meeting and will probably cut interest rates to levels that haven’t been seen in a while! The automakers are in deep dookie folks, according to them, and are in need of funds / bailout money right now! The head of Ford believes his company can withstand the recession, but fears for GM and Chrysler… The UAW has made some concessions to help the automakers, but it could be a case of too little, too late…

Well… Another day of doldrums in the currencies, with the bias, what little there is, to buy dollars. The stock jockeys received some manna from heaven yesterday when

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Time to look at gold again ...brimg style=WIDTH: 480px alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/aa0ff38d-9bb9-44a5-bba5-8be30d8f6977/gold.png _width=75 _height=75brGold is drifting sideways, trying to decide if it wants to rally or head lower. I'm keeping an eye on it. And now let's look at a chart of the gold's doppleganger (in the short-term, anyway), the US dollar ...brimg style=WIDTH: 480px alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/aa0ff38d-9bb9-44a5-bba5-8be30d8f6977/gold.png _width=75 _height=75brMore sideways drift. In this case, the dollar looks to be testing overhead resistance, while gold is testing downside support.brbr Here's another great chart A href=http://jessescrossroadscafe.blogspot.com/STRONGfrom Jesse /STRONG/A...brA href=http://2.bp.blogspot.com/_H2DePAZe2gA/STdzmR5vXjI/AAAAAAAAGpM/SR6MTOop3NM/s1600-h/DXVLT.pngimg style=WIDTH: 480px alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/aa0ff38d-9bb9-44a5-bba5-8be30d8f6977/DXVLT.png _width=75 _height=75/AbrClick on the chart for a bigger image.br brHere is more news I'm reading (it's pretty depressing)br A href=http://www.telegraph.co.uk/finance/newsbysector/industry/mining/3543370/Metal-prices-fall-further-than-during-Great-Depression.htmlSTRONGMetal prices fall further than during Great Depression /STRONG/Abr The price of key industrial metals has fallen further over the last four months than occurred during the worst years of Great Depression between 1929 and 1933, according to research by Barclays Capital. A href=http://www.bloomberg.com/apps/news?pid=20601207refer=energyamp;sid=aLSKH4zJGsj8STRONGOil Will ...

HIDDEN VALUE

Dear Value Seeker,

Yesterday, the “Big Three” automakers came to Washington with a plan: ask for even more money.

GM wants $18 billion, with $4 billion for December’s bills.

Chrysler says it needs $7 billion in the next few months.

Ford is after $9 billion…but only as a precaution. It feels pretty confident it can make it without help.

After all, Ford’s sales fell only 31% year-over-year in November. GM and Chrysler both saw sales for the same period tumble by over 40%.

In exchange for $34 billion in taxpayer money, the automakers promised major restructuring, reduced labor costs (that’s right, it’s promising to fire employees in return for taxpayer backing) and the sale of some product lines.

The CEOs even said they would even work for $1. (Never mind that their salaries only make up about 10% of their overall pay packages.)

But decades of waste and mismanagement aren’t forgotten

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ETFs As The World's Playground

Kirk Shinkle, one of the most experienced and artful markets reporters on the national scene, takes an interesting look at ETFs as they've "evolved into a playground for index designers, offering easy access to esoteric corners of the market and far-flung reaches of the globe."

Shinkle, who now writes for U.S. News & World Report, takes an entertaining jaunt around the globe to see all of the sectors and countries ETFs provide access to these days. Along the way, he bumps into our own Matt Hougan for a quick observation.

You can read the story here.

 

Corporate Bonds Set To Rocket? Now that the largest bond fund manager in the world is making plans to enter the exchange-traded funds marketplace, it's worth noting that its top corporate fixed-income manager is predicting banner times in 2009 for the asset class.

Mark Kiesel tells Bloomberg News that despite the fact corporate bonds are heading

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We’ve been mostly in cash since July and are searching for a good time and place to recommit to risk assets. Bonds seem a better beginning than stocks. We’ve committed about 1/3 of our target bond allocation during November.

PIMCO has been saying for a while that investors need to be high in the capital structure in these perilous times — meaning quality bonds. Bill Gross re-emphasized that point in his December letter, where he pointed out that the deleveraging of stocks, government intervention and investment in operating companies, and other factors change the rules and the future for stocks — making bonds a better place to be for now.

We share that general view, but are also concerned that the money supply expansion through rescue programs by the US and other governments sets bonds up for problems down the road due to inflation and interest rate increases. 

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