Labor Market Troubles; Morgan Stanley’s Positive Gold Outlook; America’s Debt in Pictures
This may sound a bit crass, but there’s nothing like smell of B.S. in the morning. 7.7% unemployment in November should be viewed as better news regarding the labor market, but that headline figure is clouded by another 540,000 people having left the labor force in last month. The labor force participation rate, at 63.6, remains at multi decade lows (think at the level when Ronald Reagan was President. With the increase of 540 thousand more people out of the labor force, the total number of people no longer being counted is 88.8 million. Is that a good thing? No.
I will never be able to spin this data positively so long as hundreds of thousands of people each month are statistically reported as leaving the workforce.
Flying Under the Radar – CFTC Charges Against 12 Commodities Firms
Here’s a little piece of news that has gone virtually unnoticed. The system is corrupt to the core which is one of the reasons it shall fall apart. Anyone think this will result in crippling fines, or jail time for the people and firms allegedly involved? Haha.. think wet noodle punishment should there be convictions.
From the Commodities Futures Trading Commission:
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on December 5, 2012, it filed a civil injunctive enforcement action in the U.S. District Court for the Southern District of Florida against Hunter Wise Commodities, LLC; Hunter Wise Services, LLC; Hunter Wise Credit, LLC; Hunter Wise Trading, LLC; Lloyds Commodities, LLC; Lloyds Commodities Credit Company, LLC; Lloyds Services, LLC; C.D. Hopkins Financial, LLC; Hard Asset Lending Group, LLC; Blackstone Metals Group, LLC; Newbridge Alliance, Inc.; United States Capital Trust, LLC; Harold Edward Martin, Jr.; Fred Jager; James Burbage; Frank Gaudino; Baris Keser; Chadewick Hopkins; John King; and David A. Moore. The complaint charges these entities and individuals with fraudulently marketing illegal, off-exchange retail commodity contracts. The complaint alleges that Hunter Wise Commodities, the orchestrator of the fraud, has taken in at least $46 million in customer funds since July 2011.
According to the CFTC complaint, the defendants claim to sell physical metals, including gold, silver, platinum, palladium, and copper, to retail customers in retail commodity transactions. Under the defendants’ retail commodity transactions investment contract, customers allegedly make a down payment on certain quantities of physical metals, usually 25 percent of the total purchase price. Defendants allegedly claim to arrange loans for the balance of the purchase price, and advise customers that their physical metals will be stored in a secure depository.
The complaint further alleges that these statements were false, and that the defendants do not purchase any physical metals, arrange loans for their customers to purchase physical metals, or arrange for storage of physical metals for any customers participating in their retail commodity transactions. Instead, all the transactions are just paper transactions, according to the complaint. Defendants allegedly do not own or sell metals to customers; customers are charged storage and insurance fees on metals that do not exist; and are charged interest on loans, which are never made by the defendants.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 expanded the CFTC’s jurisdiction over transactions like these, and requires that such transactions be executed on or subject to the rules of a board of trade, exchange or commodity market, according to the complaint. This new requirement took effect on July 16, 2011. The complaint alleges that all of the defendants’ financed commodity transactions after July 16, 2011, were illegal. The complaint also alleges that the defendants defrauded customers in all of these financed commodity transactions.
David Meister, the CFTC’s Director of Enforcement stated: “Here is a prime example of how the Dodd-Frank Act provided the Commission with additional strong authority to go after wrong-doers, such as, as alleged in the complaint, individuals who prey on people looking to make retail investments in commodities like gold and silver. We will use this new authority to the fullest extent possible.”
In January 2012 the CFTC issued a Consumer Fraud Advisory (see Advisory under Related Links) regarding precious metals fraud, saying that it had seen an increase in the number of companies offering customers the opportunity to buy or invest in precious metals. The CFTC’s Consumer Fraud Advisory specifically warned that frequently companies do not purchase any physical metals for the customer, instead simply keeping the customer’s funds. The Consumer Fraud Advisory further cautioned consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.
In its continuing litigation against the defendants, the CFTC is seeking preliminary and permanent civil injunctions in addition to other remedial relief, including restitution to customers.
Jim again: Folks, metals manipulation is real. While that may sound like conspiracy theory talk, it’s not.
Gold and Morgan Stanley
Following up on yesterday’s call on Goldman Sachs proclaiming the coming end to the gold bull market – not everyone agrees: MORGAN STANLEY: Here Are 4 Reasons Why Gold Is Our Favorite Commodity For 2013 http://www.businessinsider.com/morgan-stanley-gold-2012-12?0=moneygame … via @themoneygame
I am inclined to agree with Morgan Stanley. It’s not just because I am a long term fan of gold. I agree with MS due to future fundamentals ranging from ever increasing sovereign debt to changes to banking regulations that will make gold a Tier One asset. It’s a no brainer to have strong exposure to gold and it’s true nature as a hedge against unthinkable catastrophic financial developments.
Guns and Gold
Smith & Wesson announces a 48% Surge in revenue. The firearms maker boasts $21.2 million quarter… http://bit.ly/YIOco4 . As Washington and specifically the present Administration appear to be on a course to gut the 2nd amendment more people are buying guns.
The surge in gun sales coincides with the recent report that U.S. gold coins had their strongest November sales in 14 years http://reut.rs/WzuPa5 . There are people paying attention to what’s going around them.
Will gold rise next week? Quoting from ZeroHedge.com…
UBS and Nomura have suggested that gold could rise next week as the Federal Reserve may announce further easing at the FOMC meeting – on Tuesday (11/12/12) and Wednesday (12/12/12). Nomura said it is worth considering whether the FOMC will announce further easing to replace so called ‘Operation Twist’. The research house noted that gold remains at the same level as during the October meeting, which suggests gold has not yet priced in any move by the FOMC – creating an opportunity for gold bullion buyers. Regardless of whether the FOMC actually eases at this point – Nomura thinks there is a non-negligible probability – gold is likely to rise. Therefore, Nomura expects gold to rise and prices in this probability as the December meeting approaches, just as gold rose when the September meeting was approaching
Read more here: http://www.zerohedge.com/news/2012-12-07/gold-%E2%80%98storm%E2%80%99-could-rise-sharply-next-week-fed-say-ubs-and-nomura
An interesting little video clip
America’s debt load visualized in $100 bills. In my opinion there is no way out unless a economic game changer comes along.
Perhaps the U.S. should mint a few trillion dollar platinum coins! CNBC: The Trillion-Dollar Coin Is Back http://soc.li/63pL2zN
Have a day!
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.
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