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April 16, 2011
Issue 143  -  Corruption, the Ultimate Bull Market  
 
 
There is a growing trend of the elite.  They are using the world as their playground to get richer and more powerful.  This is done by socializing risk while the rewards are privatized.  This has only accelerated in the last 15 years.  A lot of that was enabled by the repeal of Glass Steagall which allowed banks to trade for profit instead of just being a bank which only does the basics.  There are fewer and fewer banks that just perform normal banking functions.  I've mentioned the impossible nearly perfect Goldman Sachs trading record and the other banks are just attempting to keep up.  This effort to "outperform" their peers has led to all types of nonsensical instruments that really serve no purpose other than producing bank profits.  A lot of these "profits" are just commissions for setting these ridiculous instruments up.  This huge increase in profits has allowed further buying of congress and the laws passed. 
 
Because they can make large donations to the politicians running the country, they have an almost perpetual "get of jail free" status.  The banks are almost untouchable.  Don't believe it?  How many bankers went to jail for the 2008 crisis?  Zero.  I'm sure they were all squeaky clean during that debacle, right?  What's this.......the Fed was bailing out foreign banks:
 
 
Foreign Banks Tapped Fed’s Secret Lifeline Most at Crisis Peak

By Bradley Keoun and Craig Torres - Apr 1, 2011 10:51 AM ET

U.S. Federal Reserve Chairman

Ben S. Bernanke’s two-year fight to shield crisis-squeezed banks from the stigma of revealing their public loans protected a lender to local governments in Belgium, a Japanese fishing-cooperative financier and a company part-owned by the Central Bank of Libya. Dexia SA (DEXB), based in Brussels and Paris, borrowed as much as $33.5 billion through its New York branch from the Fed’s "discount window" lending program, according to Fed documents released yesterday in response to a Freedom of Information Act request. Dublin-based Depfa Bank Plc, taken over in 2007 by a German real-estate lender later seized by the German government, drew $24.5 billion.

The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record. The disclosures may stoke a reexamination of the risks posed to U.S. taxpayers by the

central bank’s role in global financial markets.

"The caricature of the Fed is that it was shoveling money to big New York banks and a bunch of foreigners, and that is not conducive to its long-run reputation," said

Vincent Reinhart, the Fed’s director of monetary affairs from 2001 to 2007. Commercial Paper

Separate data disclosed in December on temporary emergency- lending programs set up by the Fed also showed big foreign banks as borrowers. Six European banks were among the top 11 companies that sold the most debt overall -- a combined $274.1 billion -- to the Commercial Paper Funding Facility.

Those programs also loaned hundreds of billions of dollars to the biggest U.S. banks, including

JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. and Morgan Stanley. (MS)

The discount window, which began lending

in 1914, is the Fed’s primary program for providing cash to banks to help them avert a liquidity squeeze. In an April 2009 speech, Bernanke said that revealing the names of discount-window borrowers "might lead market participants to infer weakness."

The Fed released the documents after court orders upheld FOIA requests filed by Bloomberg LP, the parent company of Bloomberg News, and News Corp.’s Fox News Network LLC. In all, the Fed released more than 29,000 pages of documents, covering the discount window and several Fed emergency-lending programs established during the crisis from August 2007 to March 2010.

Public Outrage

"The American people are going to be outraged when they understand what has been going on," U.S. Representative Ron Paul, a Texas Republican who is chairman of the House subcommittee that oversees the Fed, said in a Bloomberg Television interview.

"What in the world are we doing thinking we can pass out tens of billions of dollars to banks that are overseas?" said Paul, who has advocated abolishing the Fed. "We have problems here at home with people not being able to pay their mortgages, and they’re losing their homes."

David Skidmore, a Fed spokesman, declined to comment. Fed officials have said all the discount window loans made during the worst financial crisis since the 1930s have been repaid with interest.

The Monetary Control Act of 1980 says that a U.S. branch or agency of a foreign bank that maintains reserves at a Fed bank may receive discount-window credit…

 2. Well it looks like all the B.S. from Japanese (and American) authorities that "everything is OK at Fukushima" is complete B.S., as I suspected from the start. So Japan will have to entomb Fukishima in concrete and hope everyone doesn’t die of cancer, including all the 13 million people in Tokyo, one of the most important cities in the world? I guess it’s not newsworthy, and don’t worry the U.S. economy will not be effected at all.

 
So how is it that foreign banks were using the Federal Reserve discount window more than domestic banks?  It all makes sense if you remember that the central banks are all interconnected in their desire to protect their monopoly.  So the Fed has just as much interest in foreign banks as domestics.  They are a private company after all, and they are partially owned by foreign entities.  Doesn't make it right, it just is the way things exist. 
 
As you look deeper into this web, you see government and banks intertwined.  Take a look at this story from GATA:
 
The New York Times reported today:
 
March 18, 2011, 7:54 pm 

Former Goldman Programmer Gets 8-year Jail Term for Code Theft

By AZAM AHMED
 
 
Sergey Aleynikov, who said he meant no harm, received a shorter sentence than prosecutors had sought.

A former Goldman Sachs computer programmer convicted of stealing source code from the firm was sentenced on Friday to more than eight years in prison, capping a case that had shone a rare spotlight on the world of lightning-fast computer-driven trading.

In December, a federal jury in Manhattan found the programmer, Sergey Aleynikov, guilty of stealing proprietary computer code in software that places trades based on algorithms that spot tiny discrepancies in stock prices. Such trading earned Goldman about $300 million in 2009.

Before leaving Goldman for a new job at a start-up, Teza Technologies, federal prosecutors had claimed, Mr. Aleynikov secreted the code onto a server in Germany to get around the investment bank’s security systems.

The prison term, while at the low end of federal sentencing guidelines, was four times what probation officials had recommended. Prosecutors had asked for as much as 10 years.

 
The computer programmer who got caught stealing Goldman Sachs' computer code for market-rigging operations has been sentenced by a federal judge to an astonishing eight years in prison. The most telling detail about the case may be, as the Times reports seemingly without awareness, the speed with which federal agents acted against the code theft. In early June 2009, the Times reports, the programmer copied the code from the Goldman Sachs computer system to a computer system in Germany. On July 2, 2009, the programmer delivered the code to his new employer in Chicago. He was arrested by six FBI agents the following day at the airport in Newark, New Jersey. The investigation was wrapped up within a month, perhaps in less than three weeks. Would the theft of computer programming from any other company (OK, except maybe JPMorgan Chase) be pursued so vigorously by the federal government when Osama bin Laden and do zens of murderers, bank robbers, and rapists remain on the loose? And was the government really obliging Goldman Sachs here, or was it taking care of itself, the market-rigging computer program really being part of a government operation, considered a matter of national security, like another market-rigging operation, the gold price suppression scheme?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

 
There have been many stories of Goldman Sachs "running" the market in conjunction with the Fed and this story kind of fits that theory.  This employee stole a market rigging software program, and instead of looking into the possible illegality of the program, the thief is the only focus.  He is QUICKLY tried and convicted while the nature of the programming is forgotten.  I believe the government runs the markets to a large degree.  Since the government can't control the markets with their own resources, they use the banks.  Was this a program being used by Goldman to perform the orders of the Fed?  We will probably never know for sure, but the circumstantial evidence is great. 
 
I've been watching the gold and silver stocks for years and the movements and trading patterns just don't seem logical in a large amount of time frames.  For instance, Silver Wheaton, a stock I occasionally buy options on, is probably the most silver sensitive stock in existence.  The nature of their business is DIRECTLY tied to the silver price.  Their whole business model is to finance other mining companies construction costs in exchange for silver at a flat rate in the $4-5 an ounce range once the mine is producing.  Therefore, anytime silver moves higher, their profit goes up proportionately.  Yet, there are occasions where silver is up 1% and Silver Wheaton is flat.  In fact last Friday, silver was up nearly 2% while SLW was down .6%.  That is illogical and should be impossible.  This screams of manipulation.  Of course you should just take advantage of these occasions to buy more "on sale."  Silver Wheaton is an outstanding company and is undervalued with silver at $10 below current levels.
 
Government Chicanery
 
As you watch what the government does and more importantly doesn't do, always try and see the underlying motive.  How about this one from GATA:
 

26 March 2011

Emergency Unlimited FDIC Coverage Extended to Clearing Accounts Until 2013

Someone brought this to my attention, as I had not heard of it. It is not so much what they are doing, but why now?

With recovery supposedly at hand, and the financial crisis over thanks to Ben and Timmy, I wonder why they would enact unlimited FDIC coverage for what sounds like checking accounts and commercial clearing accounts.

The only thing that occurred to me was that in the event of a bank run, it might be intended to prevent another short term credit seizure such as was experienced in the financial crisis.

But why now? And why use FDIC to do take on this unlimited liability, far in excess of what it was intended to do? I doubt very much that this is designed to protect individuals per se, given the exclusions.

Curious. Perhaps I am missing something here.
Temporary Unlimited Coverage for Noninterest-bearing Transaction Accounts - FDIC

From December 31, 2010 through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account and the ownership capacity of the funds. This coverage is available to all depositors, including consumers, businesses, and government entities. The unlimited coverage is separate from, and in addition to, the insurance coverage provided for a depositor’s other accounts held at an FDIC-insured bank.

A noninterest-bearing transaction account is a deposit account where:

interest is neither accrued nor paid;
depositors are permitted to make an unlimited number of transfers and withdrawals; and the bank does not reserve the right to require advance notice of an intended withdrawal.

Note: Money Market Deposit Accounts (MMDAs) and Negotiable Order of Withdrawal (NOW) accounts are not eligible for this temporary unlimited insurance coverage, regardless of the interest rate, even if no interest is paid. (lol
)
Later - here is an old description that probably fits the bill:
"The FDIC's action is one aspect of its Temporary Liquidity Guarantee Program (TLGP). The full account coverage is aimed primarily at business accounts that need to keep larger balances for covering payrolls and meeting other business needs, but it extends to all non-interest-bearing transaction accounts, whether they are held by businesses or by individuals and households. The FDIC's goal is to help depository institutions retain such accounts, giving small and medium size businesses a reason to keep their balances with their current financial institutions. That would help the institutions maintain their liquidity, and thus enhance their ability to make loans."

Unlimited FDIC Coverage for Checking Accounts - Banking Questions

So it is a measure to prevent another seizure in the credit system in the event of a major bank failure triggering a financial crisis. Do you think it covered JPM's $22 billion bridge loan to AT&T for its purchase of T-Mobile?

Do you think Goldman has a program to sweep all of their funds and their partners' personal money into accounts such as this at the first sign of trouble? Just as GE pays no taxes, expect Wall Street to take no pain, in the very troubles which they have caused.

As an aside, I would have used the FDIC and the government to backstop 100% of all customer money in the banking crisis, and let the banks themselves go through a debt reorganization, taking the executives, bondholders and shareholders to the woodshed, in the manner in which Sweden had dealt with its banking troubles. In the US, UK, and Ireland we saw the opposite approach: save the banks, and the people be damned.

But then again, I am not a major contributor to the campaign coffers of Washington, nor a member of the old boy network, and chances are, neither are you. So there you are.

As bad as this has been, if you think the worst is over you are probably just being wishful, maybe a little naive. There is still some meat on your bones, and the wolves are insatiable.

 
Believe me, this is NOT a casual announcement.  Raising the insurance on bank accounts to an unlimited status has a purpose.  We just don't know what it is.  Note the lack of publicity on this announcement when compared to the raising of this same limit in 2008 and that was only a doubling of the limit.  That action was ALL over the news and yet this, MUCH larger action, is barely even reported.  Why?  Only to keep your attention off the most important events.  More than likely this is being done to protect large money interests.  You can be damn sure it's not to help you.
 
How about that big budget deal?  That was something, huh?  $38 billion in cuts, not bad.  Or was it....
 

Congress: When $38 billion becomes $350 million

“A budget estimate released yesterday says that the spending bill negotiated between President Obama and House Speaker John Boehner would produce less than 1 percent of the $38 billion in claimed savings by the end of this budget year,” the AP says. “The Congressional Budget Office estimate shows that the spending bill due for a House vote today would cut just $352 million from the deficit through Sept. 30. About $8 billion in cuts to domestic programs and foreign aid by then are offset by nearly equal increases in defense spending.”

Roll Call calls the debt-limit fight a test for Senate Minority Leader Mitch McConnell. It also reveals some strategy being mulled by Republicans: “allowing a debt limit increase to pass with just Democratic support as a way to make Democrats solely responsible for what likely will be a politically challenging vote and also to pressure Democrats to agree to ‘serious spending reforms.” But “several conservative GOP Senators with tea party ties on Wednesday were unwilling to rule out using the filibuster as a tool to get Democrats to agree to spending reforms such as statutory spending caps and a balanced-budget amendment that they are demanding as part of any increase in the debt ceiling.”

 
It's all become such a show.  Theater is how I like to describe it.  Both parties are deceptive and really only interested in one thing...getting reelected.  I thought this cartoon was the perfect picture for the past two weeks:
  
 
 
 
That is almost a perfect illustration of how much is actually being "cut" and a great demonstration of what a con the politicians continually pull on the populace.  Don't know if you heard about this but it is quite interesting.  Did you know that the Libyan "rebels" actually took time out of their war to establish a central bank?
 

Libya: All About Oil, or All About Banking?

Ellen Brown
www.webofdebt.com/articles
April 8, 2011

Several writers have noted the odd fact that the Libyan rebels took time out from their rebellion in March to create their own central bank – this before they even had a government. Robert Wenzel wrotein the Economic Policy Journal:

I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising. This suggests we have a bit more than a rag tag bunch of rebels running around and that there are some pretty sophisticated influences.

Alex Newman wrotein the New American:

In a statement released last week, the rebels reported on the results of a meeting held on March 19. Among other things, the supposed rag-tag revolutionaries announced the “[d]esignation of the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and appointment of a Governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”

Newman quoted CNBC senior editor John Carney, who asked, “Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.”

Another anomaly involves the official justification for taking up arms against Libya. Supposedly it’s about human rights violations, but the evidence is contradictory. According to an articleon the Fox News website on February 28:

As the United Nations works feverishly to condemn Libyan leader Muammar al-Qaddafi for cracking down on protesters, the body's Human Rights Council is poised to adopt a report chock-full of praise for Libya's human rights record.

The review commends Libya for improving educational opportunities, for making human rights a "priority" and for bettering its "constitutional" framework. Several countries, including Iran, Venezuela, North Korea, and Saudi Arabia but also Canada, give Libya positive marks for the legal protections afforded to its citizens -- who are now revolting against the regime and facing bloody reprisal.
...........
 
 

Another provocative bit of data circulating on the Net is a 2007 “Democracy Now” interview of U.S. General Wesley Clark (Ret.). In it he says that about 10 days after September 11, 2001, he was told by a general that the decision had been made to go to war with Iraq. Clark was surprised and asked why. “I don’t know!” was the response. “I guess they don’t know what else to do!” Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland.

The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked. Kenneth Schortgen Jr., writing on Examiner.com, noted that “[s]ix months before the US moved into Iraq to take down Saddam Hussein, the oil nation had made the move to accept Euros instead of dollars for oil, and this became a threat to the global dominance of the dollar as the reserve currency, and its dominion as the petrodollar.”

According to a Russian article titled “Bombing of Lybia – Punishment for Ghaddafi for His Attempt to Refuse US Dollar,” Gadaffi made a similarly bold move: he initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar. Gadaffi suggested establishing a united African continent, with its 200 million people using this single currency. During the past year, the idea was approved by many Arab countries and most African countries. The only opponents were the Republic of South Africa and the head of the League of Arab States. The initiative was viewed negatively by the USA and the European Union, with French president Nicolas Sarkozy calling Libya a threat to the financial security of mankind; but Gaddafi was not swayed and continued his push for the creation of a united Africa.

 
Notice the red highlighted countries.  These are countries who are not participating in the global elite banking system. So now you can scratch #2 off this list as we will move in and take ov.....errrr..I mean help them.  Yeah, that's right, help them.  It's not a coincidence that now a 2nd of these 7 is being "brought to justice?"  I doubt it.  Don't play in the elites sandbox and you are punished. 
 
Metals
 
Of course my conviction is that the powers that be want nothing more than to see gold and silver just go away.  They are, it looks like, running into a wall in their manipulation schemes.  As gold and silver rocket to new highs, their desperation grows:  (from Harvey Ogden) 
 
 
Let us see what happened at the silver comex:

The silver open interest rose again yesterday despite the mini raid to 145,772 from 144,923 yesterday.
This is of course, basis Monday night. The bankers were definitely not happy with this and their decision after last night's emergency midnight meeting was to go all out and throw infinite contracts at the longs in the hope that the OI and price would falter.  The front options delivery month of April saw its OI fall from 32 to 11 for a drop of 21 contracts.  We had deliveries of 21 contracts so all of the deliveries were accounted for in the delivery notices.  We lost zero oz to cash settlements.  The next front month of May of which I will spend quite a bit of time with you, fell marginally from 67,178 to 64,269.  This is to be expected as we are getting closer and closer to first day notice.

Get a load of this next data.  The estimated volume today was a totally unheard of 121,269 contracts.
This total in oz is 606,345,000 oz of silver.  In annual silver production this is about 100% if you exclude China's production.
 You you include China then it represents  86.6% of annual global silver production in one day. And this bourse is not the biggest in silver, that belongs to the LBMA over in London England.
The confirmed volume yesterday, the day of the mini-raid was even more earth shattering:  132,213 contracts.
 
 
Think about this.  The total amount of contracts traded in ONE day represented all of the silver produced by all countries excluding China.  In one DAY!  This isn't real.  This is a scam.  A manipulators trick which is, I'm happy to say, failing miserably at this point. 
 
This won't stop them though, until it blows up.  Looks like they just bought a little more time.  Here is a long article but well worth the read:
 

Will JPMorgan Now Make and Take 'Delivery' of Its Own Silver Shorts?

153 comments  |  by: Avery Goodman March 22, 2011  | 
   
There is nothing inherently wrong and certainly nothing "illegal" about J.P. Morgan Chase (JPM) gaining a vault license for storing and taking delivery of gold/silver/platinum/palladium from the futures markets known as NYMEX/COMEX. However, the speed, timing and manner in which the exchanges just granted it troubles us.

The process of being approved as a licensed vault or weigh-master/assayer for the NYMEX/COMEX futures exchange usually involves a careful security inspection of the vaults, a full report of that inspection, and a completely transparent package submitted to the U.S. Commodity Futures Exchange Commission (CFTC) for approval. This process will ordinarily consume considerably more than 45 days. Apparently, such correct and careful practices apply only to banks and independent storage facilities that are not J.P. Morgan Chase.

Some vault operators are more equal than others. JPM appears immune from processes that everyone else must suffer through. On March 15, 2011, the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) advised the CFTC that they had approved J.P. Morgan's application to become a licensed vault facility, using a "self-certification" process. The newly licensed vault, located at 1 Chase Manhattan Plaza, NY, NY, is ready to roll as both “weighmaster” and depository, for delivery of gold, silver, platinum and palladium contracts, as of March 17, 2011, two days later.

As a smaller player, the NYSE-Liffe exchange uses COMEX licensed depositories for delivery and storage of its metals. The new JPM vault, therefore, will also qualify to accept delivery of metal coming from the maturity of NYSE-Liffe gold and silver futures contracts, including the smaller 1,000 ounce silver contract.

Departures from usual practices, and special treatment in favor of some over others are events that lawyers describe as having "the appearance of impropriety", if nothing more. J.P. Morgan is a huge player in the London precious metals market, especially in derivatives. It has always been a very important player at NYMEX/COMEX, especially if you include its Bear Stearns division. The bank is heavily involved in infamous "unallocated storage" schemes in London. A more complete description of London-style storage can be found in my previous article.

JPM is one of six big bank owners of the London Precious Metals Clearing Limited (LPMCL) which clears, “delivers” and sets standards for “storing” precious metals allegedly “sold” at the London Bullion Market Association (LBMA) and the London Platinum and Palladium Market (LPPM). Unallocated storage is the norm at LPMCL member banks, including J.P. Morgan Chase.

Allocated storage, however, is the norm for precious metals vaults licensed by NYMEX and COMEX. The two futures exchanges have approved a small group of vault operators, who provide allocated storage to clearing members and their customers. This has given greater legitimacy to the NY exchange traded precious metals venue than the LBMA now has. It is true that NYMEX/COMEX warehouse supplies are wholly insufficient to cover the number of short contracts the exchange allows its clearing members to write. However, at least the numbers are transparent and published. That is more than can be said for the storage facilities that participate in the secretive LPMCL in London.

Allocated storage, under the common law, is known as a "bailment." When precious metal is allocated, the vault is the "bailee" and the owner is the "bailor". The bailee is keeping the property safe for the bailor and, in return, it charges a fee for its services, but the property belongs to the bailor at all times. The property cannot be legally leased, loaned, borrowed or used in any way without overt consent by the bailor. Whereas unallocated metal is an asset that is seized by a vault's creditors in bankruptcy, allocated metal is immune from this.

A bailment cannot be legally seized or encumbered by the bailee's creditors. Some of the NYMEX/COMEX vaults require a written bailment contract, setting out all rights and responsibilities of the customer and vault. Others operate in the old fashioned way (though the handshake is now often electronic) and, in such cases, the agreement between bailor and bailee is governed by traditional common law standards with no need to sign anything.

There are two storage categories in the NYMEX/COMEX scheme, known as “registered” and “eligible”. Regardless of the category, all bars are allocated by title, and are always of a size, weight and composition that would satisfy "good delivery" if the owner decided to deliver it. An exception to the idea of "global" allocation may occur if "registered" metal is kept in the name of a clearing member, but the bars actually belong to a customer.

This might happen when and if the clearing broker uses the bars as a form of "collateral" to back up performance bonds in a customer account. In such a case, the "bailment" (and allocated storage) would exist between the vault and the clearing member. I use the word "collateral" loosely because true collateral would remain titled to the debtor. In the NYMEX/COMEX scheme, registered bars are always titled in the name of a clearing member of the exchange, whereas eligible bars can be titled in the name of a customer or a clearing member.

In order to be delivered, eligible bars must be transferred into the registered category. This involves nothing more than an electronic entry, "wrapping" the correct number of units into what is called a warehouse "warrant." Each warrant constitutes a "good delivery" unit of metal sufficient to satisfy one short contract obligation. "Good delivery" means that each bar must be of a standard weight sufficient to meet the rules of the exchange and must be numbered and weighed. Each storage facility must always keep a "chain of title" history record for each bar.

Delivery at NYMEX/COMEX is first made to any licensed vault facility. Once the unit of metal arrives, title is transferred to the new owner. The new owner can do whatever he wants with his property. He can remove it from the bailment and take it into his own personal possession. He can transfer to a different vault. Or, he can keep the metal at the initial point of delivery. In many cases, the last option is chosen, so, often the bar never leaves the delivery vault until it is eventually resold and, usually, not even then. Bars can be delivered, and title transferred, without ever having left the vault.

Until now, JP Morgan did not have a NYMEX/COMEX vault license. They had to send silver, for example, to HSBC, Brinks, Scotia Mocatta and/or the Delaware Depository in order to "deliver" it on COMEX. Those vaults have been NYMEX/COMEX licensed for a very long time. But now J.P. Morgan has its own vault license, and the manner in which it seems to have obtained it, is troubling. The bank can now, potentially, deliver short obligations to itself. Yes, you read that correctly. The bank itself, if it still holds short silver positions, and/or the hedge funds/related financial institutions who may have taken over the positions, can now deliver the alleged metal to J.P. Morgan's own vault.

The American legal standard requires us to maintain a presumption of innocence until guilt is proven. That doesn't mean Americans are stupid. Only a fool would ignore the testimony given at the CFTC hearing held on March 25, 2010, or the fact that J.P. Morgan Chase is being sued, in two different class actions, accused of being a racketeering and corrupt influenced organization (RICO). Both lawsuits claim that the bank is using allegedly immense silver short positions in various venues, including COMEX, to manipulate prices.

If a short seller must deliver a commodity, and the commodity is not readily available, there is no better way to buy extra time than to be able to deliver into its own vault. Most of the metal will never leave the vault, and most delivered metal that will leave the vault won't leave right away. Indeed, paperwork tasks of transferring title can consume a few days. Thus, a late delivery may not be noticed if it is to the short seller's own vault if the vault operation staff chooses to remain silent.

Why was JPM awarded a vault license almost overnight, avoiding the lengthy vetting process others must undergo? Why did it happen in the middle of a major COMEX silver delivery month, during a massive worldwide silver short squeeze, at a time when physical silver is in severe shortage? We do not know the answers to these questions. The exchange rules should prohibit proprietary trading divisions, hedge funds and other closely associated or controlled financial institutions, from delivering to vaults owned or controlled by their own family of companies. Yet, no such rules exist.

Does the licensing of a NYMEX/COMEX JPM vault reflect short-seller panic? Paper money can be printed, of course, ad infinitum and endless reams of it can be borrowed from the Fed. The issue is how much paper money is needed to pry sufficient physical silver loose from the hands of its owners. We believe that an equilibrium level of about $52 per troy ounce would be sufficient. Assuming that the holdings of the various ETFs are not the scam that some have claimed, there is a huge potential supply right there.

Large delivery requirements can be met by cashing in on "baskets" of ETF shares for silver. There is also a huge supply of hoarded bars outside of ETFs, waiting for the right price to set them free. If supply problems continue, the price must rise further until sufficient selling occurs. Most owners of ETF shares, as well as holders of real physical silver, are not momentum chasers. They buy low and sell high in a traditional manner. Momentum chasers are irrelevant because they generally have only paper, and no real metal to deliver.

Remember, your bars can be transferred from one licensed facility to another very quickly. If any storage facility imposes a significant delay, that should be publicized, and met with resolute opposition. Neither silver nor other metals must be stored at licensed vault. They certainly need not be left at the first point of delivery. If you intend to use silver, for example, in commerce (such as a jeweler or industrial user might) or if you expect to keep it off the market for 20 years or so as a retirement fund, it is economically more efficient to physically remove the metal.

If anyone has any positive or negative experiences with the newly licensed J.P. Morgan vault, we would be very interested in learning about them.

 
Does this make sense in any other way then a corrupt one?  I just don't see it.  Why the rush to approve them?  I believe that the silver is running out and this will enable them to prolong the scam a little while longer.  Notice I said "little while" because this will have no effect on the long term uptrend in silver.  This is just another finger in the dike but six more holes are about to show up.  Continue to buy gold and silver as we have a long way to go until the real "bubble" appears.  Here's a nice little video from Mike Maloney with further evidence that up is a much more likely direction for the price of gold than down.
 
 
 
 
Lastly, an article from Zero Hedge:
 

A Golden Tipping Point: University of Texas Takes Delivery Of $1 Billion In Physical Gold

Submitted by Tyler Durden on 04/16/2011 19:59 -0400
Tipping points are funny: for years, decades, even centuries, the conditions for an event to occur may be ripe yet nothing happens. Then, in an instant, a shift occurs, whether its is due a change in conventional wisdom, due to an exogenous event or due to something completely inexplicable. That event, colloquially called a black swan in recent years, changes the prevalent perception of reality in a moment. This past week, we were seeing the effect of a tipping point in process, with gold prices rising to new all time highs day after day, and the price of silver literally moving in a parabolic fashion. What was missing was the cause. We now know what it is: per Bloomberg: "The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board." And so, the game theory of a nearly 100 year old system of monetary exchange has seen its first defector, but most certainly not last. With an entity as large as the University of Texas calling the bluff of the Comex, the Chairman, and fiat in general in roughly that order, virtually every other asset manager is now sure to follow, considering there is not nearly enough physical gold to satisfy all paper gold in existence by a factor of about 100x. The proverbial Nash equilibrium has just been broken.
 

In summary - the fiat tide is now going out. And among those who will first be observed swimming naked are the very same people whose fate has been so very intrinsically linked to the perpetuation of a flawed regime (and who coined this very saying). In the meantime, hold on to your hats: should a scramble for delivery ensue, the recent parabolic move in various precious metals will seem like a dress rehearsal for what is about to transpire.

The only open question is who was the broker with enough gold to deliver to the UofT. We hope to find out soon enough. We also hope that the UofT is smart enough, and that Kyle Bass advised it, that if they are getting "delivery" in a Comex vault in New York, the gold has likely already been leased out at least several times to various entities demanding paper allocations...

 
Will this be a tipping point?  Hard to say, but one day it will come.  That day, if you have indeed listened to mine and others advice, and purchased physical gold and silver, will be a day you will have peace of mind while the financial world is in turmoil.
 
Positions
 
GORO  (closed $28.85, down $.15, average price paid $6)
 
Goro presented at a gold conference in Zurich is past Friday and seems to have brought in some new investors.
 
 
 Mexus Gold  (closed $.21, down $0.04, average price paid, $.22)
 
I see a concerted effort to lower the price on this stock.  Typically, on these smaller issues this happens before great news.  The market makers try and create a panic.  As an example, the price of Mexus was $.23 and the bid dropped to $.17.  Soon after, the price dropped to $.17.  After looking up the sale, I found that it was a 100 share trade!  100 shares, which is $17 took the market cap of the company from $34 million to $25 million.  Luckily they have been unable to shake a lot of shares out of holders.   I would not hesitate to add more at these levels.  Of course this is a risky stock and only money you can afford to lose should be invested here, but I like the odds especially when I see these types of games being played which usually presage a large move upward. 
 
 
Stocks    (Current status, out, sold on March 18)
 
Physical Gold  (Closed $1,486,  up $11,  average price paid $395)
 
 
Physical Silver  (Closed $43.05,  up $2.12,  average price paid $5.31)
 
I'll close this week with a video of a complete crazy man, have a great week!
 
 
In case you thought that was real, here's a video of the German Microsoft team who made it.  This was also on Mythbusters and they could only fly 70 feet instead of the 115 in the video.  Still looks fun to me!