Mark McHugh

Archive for the ‘stocks finance’ Category

Is The SLV Wired To Blow?

In Conspiracy, Government, Humor, Leveraged ETF, Mary Schapiro, Open Thread, SEC, Silver, stocks finance on Friday, April 29, 2011 at 8:13 pm

I’m not real big on suspense, so I’ll tell you upfront, I think so.  Once again, we may be about to find out what happens when regulators are asleep at the switch.

As of this writing there are 364 million shares of SLV outstanding.  In the past five trading days (April 25 – 29) more than 755 million shares have been traded, and get this, more than 10 million ounces of silver were taken from the trust between the 26th and the 28th, taking available shares with them.  From Stockhouse.com :

Note: Stockhouse.com is the only free website that I know of that accurately tracks the number of ETF shares outstanding and changes (wish I could say the same of my broker).  Enter the ETF ticker with the suffix “.SO”

At what point does trading volume relative to existing shares become unbelievable?

Information on institutional holdings of ETF shares is also hard to find. but according to nasdaq.com, 86 million shares of SLV are held by institutions, but that does not include any holdings reported since April 1, 2011.  And speaking of missing data, does anybody know where China Investment Corp’s 13F‘s  are?  The sovereign wealth giant filed its initial holdings with the SEC on February 5, 2010,   but no additional data has been released.  The SEC requires the form to be filed within 45 days of the quarter’s end. 

The point is that the SLV has become one of the most heavily traded instruments on our exchanges and there is an all too finite number of shares.  There’s at least some evidence that the SECs institutional holdings data is outdated and/or incomplete.   What happens when all the shares are spoken for?  If it hasn’t happened already (I suspect it has), it should soon…..

Then what?

Will the SEC suspend sales of the SLV?  Will the SLV start trading at huge premiums to NAV?  Will the SEC even notice?

I don’t know about you, but I’m going with “SEC will never notice,”  because they have no mechanism in place to ensure “shares owned” doesn’t exceed shares outstanding (remember Mary Schapiro’s only qualification to Chair the SEC is her inability to recognize a Ponzi).

Obviously if SLV starts trading at huge premiums, it isn’t tracking the price of silver anymore.  It will have a market dynamic unto itself.  Suspending sales until more silver is deposited with the trust  will immediately cause a run on physical silver the likes of which has never been seen before.  The silver exchange on the COMEX will blow up in a matter of minutes, followed shortly thereafter by JP Morgan and the class structure of western civilization.  If you don’t know how tight the silver supply is getting, take a peak at this chart from 24HOURGOLD:

Kudos to 24hourgold.com for doing a better job tracking the rapidly vanishing supply of registered silver than the COMEX!!!!  (Hope it’s OK I stole a screenshot).

To make matters even worse, SLV trades options.  Lots and lots and lots of options.  So when the shares outstanding are all sold, there will be people with call options, who have bought the right to buy shares of SLV at a given price.  Forcing cash settlement means the SLV no longer can claim to track the price of physical silver, because the purchase of silver by an authorized participant to create the shares to cover the options would have surely moved the price of the metal.

So once again America, ignoring the grim reality of the situation is the only logical course of action.  The SEC knows all too well that that’s what porn sites are for.  So unless somebody posts this on Pornhub……

I’m sure that Tyler Durden’s instincts will be proven correct again, when he stated that Blackrock’s Kevin Feldman’s defense of the SLV was a red flag in and of itself.  Blackrock is the sponsor of the SLV, and Kevin urged everyone to read the prospectus.  That was probably not such a good idea.  Be extra careful when you try to download the prospectus, I got the following warning:

Comedy ensued after using Firefox (safe mode) to view the prospectus:

“The sponsor does not exercise day-to-day oversight over the trustee or the custodian” 

Which seems to conflict with Kevin’s letter:

“At BlackRock, we take the responsibility of protecting shareholder interests very seriously and spend a lot of time constructing our iShares products to help ensure they meet investor expectations.”

So in reality Blackrock takes protecting shareholders about as seriously as the US Department of Justice takes perjury.  To his credit, Kevin did link to a list of bars the SLV holds in some vaults over in England.  The list was prepared by JP Morgan, because if you can’t trust them regarding silver, who can you trust?  Rather than spoil all the potential ways the SLV might not meet “investor expectations”, I thought it would be fun to make a contest of it (see comments).

The SLV pimps out the price action of the silver it holds to shareholders.  It can terminate the trust for a long list of reasons, not the least insignificant of which is if  the Authorized Participants (who actually own the silver) feel like it.

Suddenly everybody has an opinion of what the price of silver should be, but as JPM is now finding out, if you don’t have silver to sell your opinion doesn’t count.

I don’t wish any ill on SLV shareholders, but make no mistake, you don’t own silver.  History has not been kind to people who made similar mistakes,  and recent history should tell you no one is looking out for you. 

 Miscellaneous Fun Facts:

  • In February, 2007 the author contacted the SEC via email regarding Countrywide Financial CEO Angelo Mozilo’s insider trading.
  • In March 2007 the author applied for an SEC bounty regarding Angelo Mozilo’s insider trading (up to 10% of recovered amount) .  Countrywide’s stock was trading at about $37 at the time.  It would trade over $40 in May and implode to less than $5 by late 2007.
  • On June 4, 2009 (27 months later) the SEC charged Mozilo with insider trading and securities fraud.
  • In October 2010 Mozilo agreed to pay $67.5 million in fines to the SEC to settle the charges against him.
  • At its peak, Countrywide had a Market Cap of more than $26B.  Angelo Mozilo has an estimated net worth of $600 million.
  • The SLV currently has a Market Cap of approximately $17B.
  • The author never received a bounty from the SEC, because the Dodd-Frank “Financial Reform” legislation repealed the previous SEC bounty program.  Bounties can no longer be paid based on an outsider’s analysis of publicly available information.
  • In 2010, the author applied for a job as an “abusive trading practices specialist” with the SEC.  He received no reply.
  • In February 2011, the US dropped its criminal investigation against Mozilo.
  • Paybacks are a bitch.

Common sense (and a little math) tells me that the SLV is already a fraud.  When that becomes obvious to all is anyone’s guess, but based on my past experience, neither the SEC nor the CFTC will recognize it until about two years after it implodes.

***

Update:  Thanks a million to Steve Quayle!!!  He is the only major blogger who has linked to this story thusfar (kind of makes you wonder how much some of these other guys value truth).  This story needs to be discussed.  If you’ve got a blog, take this story and run with it!

****Max Keiser has now added the story too, Thanks Max!

****Jesse’s Crossroads cafe brought it big time!! Thank You, Jesse!

***

 I have to recognize all the people who helped this post see the light of day.  It had been getting easier for me to get things I’ve written promoted….then BAM!  The doors really got slammed in my face with “…Wired to Blow.”  I was confused and angry.  Then I realized something….

One way or another, most of the financial blogoshere is still pretty tight with Wall Street, and every financial pro who has recommended the SLV to clients dropped the proverbial due diligence ball.  I believe that’s why so many didn’t want this story told.  They’re probably going to have some explaining to do soon.   Luckily, a couple of big bloggers (Steve Quayle, Max Keiser and Jesse ) came to help, and I’m very grateful.  But they weren’t the only ones.

I get way more than my fair share of support from relatively small bloggers, just like me, and I have been remiss in recognizing their support.  I spend too much time feeling threatened and jealous of their talent.  But I must say, they really came through for me.  Just look at all the places I got hits from here.  All kidding aside, I am touched.  If you’re new here, feel free to take any of my original content (pictures and/or words).  If it is not credited to anyone else, it’s mine and therefore yours to share.  I’ll be adding a bunch of you guys to the blogroll very soon.

Thanks again,

Mark

Why Silver Is Still The Best Revenge

In Government, Open Thread, Silver, stocks finance on Thursday, April 14, 2011 at 10:21 pm

Author’s note:  Some of the info contained in this piece was published rather hastily earlier this week.  Please excuse the redundancies. 

Face it, former Goldman Sachs CEO Hank Paulson, who served as US Treasury Secretary just long enough to loot taxpayers is never going to jail. Neither are Alan Greenspan, Ben Bernanke, Angelo Mozilo, Phil Graham, Franklin Raines, Barney Frank…(I could do this all day).  Justice (much like truth) is a luxury Americans can no longer afford.

Silver is something most Americans can still afford, but aren’t smart enough to buy.  Maybe it’s because the concept that the supply of anything could be less-than-infinite is rejected here.  Or maybe they’re afraid someone might laugh and call them a conspiracy theorist.   Too bad, because they’ve already missed out on some really good laughs, with more to come.   The latest round of  jokes came from the CME group’s year to date metals delivery notices report.   Since December 2010, only 11 firms have been foolish enough to be net sellers of physical silver at the COMEX.   Here they are:

Net, JP Morgan delivered 12.2 million ounces of the shiny metal from December 2010 until last week; more than four times as much physical silver as all other market participants combined.  So the idea that JPM is the entity holding down the price of silver is an incontrovertible fact, not a conspiracy theory. It’s not even worth discussing. 

What is worth discussing is how much longer JPM can continue delivering silver at this blistering pace.  JPMs 4-month total would be more than 90% of US mining production for the period.  So how JPM acquires its silver should be of interest, and that requires some speculation.   The largest silver stockpile in World history is a good place to start.  On June 1, 1955 The Wall Street Journal reported that the US government had a “useless” stockpile of about 3 billion ounces of silver, and blasted the Treasury for paying the outrageous price of 90.41 cents for an ounce of silver (click here for excerpt, or here  if you are inclined to pay $4.95 for proof the WSJ was a worthless rag 56 years ago too).

***

 Fun with Math: If you had 3 billion ounces of something on June 1, 1955 and began selling 1 million ounces per week, you’d run out 57.49 years later, on Tuesday November 27, 2012.

 ***

The point is that in 1955, the US government was in possession of more than 10 percent of all silver ever discovered up to that point in human history. Fifty years later, it was all gone according to the 2005 US Geological Survey.   The price of silver has now risen more than 4,000% despite the complete liquidation of the largest stockpile of the stuff ever known.   That’s better than stocks, houses, oil and just about everything else you can imagine, with the exception of gold, which was illegal for US citizens to own in 1955.  One can only wonder what the price might be without that liquidation.  Well, that and who the US government sold all that silver to, and under what terms exactly.  That’s probably a good question to ask your congressman the next time he tells you Social Security is broke.  Anyway, the US government says it doesn’t have any silver left and apparently JPM and the customer(s) they represent have lots and lots. Nothing odd about that, right?

I say “apparently” JPM has lots and lots of silver because they delivered more than 12 million ounces in four months.   I have to wonder how many more times they can pull a rabbit that big out of their hat. In March 2011 folks at the COMEX decided to make JPM’S vault a certified COMEX vault.   As of April 11, that vault contained 30,844 ounces of silver. JPM has averaged about 150,000 ounces in physical settlement per trading day during the past four months. Which means that stash should last about two hours….

Maybe JPM still has lots and lots of silver elsewhere, right?  Certainly they should.  In November 2010, Jason Hommel estimated that JPM has silver obligations totaling 3.3 Billion ounces.   So if Jamie Dimon is in fact the man on the silver mountain (and maybe that explains the picture), why is he sending customers to the COMEX floor?  From the CME group’s YTD metals report:

JPMs customer(s) were by far the biggest net sellers of silver in March 2011, selling 374 contracts (5,000 t oz each), while buying none. So far in April, 119 silver contracts have been issued and JPMs customer have taken 94 of them (79%). Sentiment shifts don’t get any less subtle, even if you ignore the fact that they sold low and bought higher. So either they’re:  

  • suddenly expecting much higher prices 
  •  the most misguided investors on planet Earth, or
  • desperately in need of silver (after all, the stuff is very useful).

(This is the part where you need to think for yourself)

I’ll tell you right now, JPMs apologists are going to scream, “Obviously they’re not the same people!”  and you are free to accept that explanation.  The question remains however that if this party wanted physical silver why wouldn’t they just purchase it directly from JPM?   Wouldn’t JPM be happy to sell some of its hoard, now at 30-year highs directly to a customer?   They should have lots and lots, remember?   And who (besides the US government) would sell everything they have, only to buy it back for more in a month? 
 

Fun Fact:  JP Morgan’s London Branch is the custodian of the iShares Silver Trust (SLV) and neither the SEC nor the CFTC seem the slightest bit concerned. 

The SLV is the largest silver ETF, holding more than 360 million ounces of the element with the best electrical conductivity. As the prospectus says, “The custodian is responsible for safekeeping the silver owned by the trust….and is responsible for any loss of silver to the trustee only…Because the holders of ishares are not party to the custodian agreement, their claims against the custodian may be limited.”

I expect we will be seeing more silver showing up at JPMs COMEX vault shortly, if only for appearance’s sake.  Remember this:  The supply of a natural resources is finite, the ability to make promises you can’t keep is not.  Few questioned AIGs ability to honor its obligations until it was far too late.  The same kind of ignorance is in play in the silver market today. 

Silver has now embarrassed every pie-charting, asset allocating, Fibonacci retracing, Elliot waving, reversion-to-the-meaning dimwit trying to pass himself off as a “financial professional.”  Most have never recommended silver, and they know tough questions will be coming shortly from their future ex-clients.  So right now they’re praying, to whatever deity people who have based their World view on ignoring the difference constants and variables pray to, that silver is a bubble.  Fat chance.

***

More Fun Facts (and a bizzare comparison):  As of this writing, the US Treasury has sold 13,803,000 ounces of silver YTD.  At $40 each, that’s about $552mm, or  0.012% of GDP.  Meanwhile, Treasury’s net issuance of new paper has totaled $239B or5.13% of GDP.  If you charted that difference in height, it would be like comparing Dubai’s Burj Khalifa  to a Port-a-Potty (I’m not going to do that).  The Port-a-Potty may not get much respect (and I’ve seen a few woefully disrespected) but is absolutely necessary.  I’m not sure how necessary a giant needle (requiring the cooling equivalent of melting 22 million pounds of ice per day)  in a barren wasteland is. 

***

Draw your own conclusions regarding  bubbliciousness.  Still I can’t help but getting a little misty when I see the paperbug’s concern for the silverbugs.  Thanks guys, but your sentiments are about as insane as people on the Titanic  screaming to those already in life boats, “Come back!!! This ship is unsinkable and we’ve got technical analysis to PROVE it!”  Sure you do, but methinks you’re just after our lifeboat.

In case you haven’t noticed, the same people who call record numbers of Americans on food stamps a “recovery”, while piling up unpayable debts on others to stay large and in charge, call silverbugs crazy.  They act like trading infinitely printable paper for an irreplaceable vanishing resource, that has also served quite nicely as money throughout human history, is a silly idea.  Last time I checked, scientists haven’t yet found a way to turn bullshit into silver.

In April 2010, Jason Hommel filed an antitrust complaint against JP Morgan with the US Department of Justice, who still haven’t managed to send a single bankster to prison (Madoff turned himself in), so don’t hold your breath.  Taking silver at the artificially low prices still being offered is as close to revenge as the common man is ever going to get.

I leave you with lists of the top five contributors to the campaigns of financial reform “champions”  Chris Dodd and Barney Frank from Opensecrets.org.
 

 

 

Previously:
If you don’t know why you should own silver, please read:
https://acrossthestreetnet.wordpress.com/2010/12/15/what-the-silver-vigilantes-understand-that-you-probably-dont-arithmetic-human-nature-and/
 

CME group metals data links:
Daily
Month to Date
Year to Date
Silver Stocks (XLS)
 

Disclosure: Author is an unapologetic conspiracy theorist.

UpdateThis has now been the busiest day ever on the blog (and there’s three more hours to go) .  Thanks to everyone who made it possible, especially Coinflation.com, Max Keiser , and Steve Quayle

Another Update: If you are a silverbug (in case you haven’t noticed, I’m proud to be called that), I highly recommend About.Ag.  The site is 100% dedicated to providing accurate information on silver (chemical symbol Ag).  The page explaining the COMEX futures market is a must read.

What The Silver Vigilantes Understand That You Probably Don’t (Arithmetic, Human Nature and other Stuff)

In Open Thread, Silver, stocks finance, Treasuries on Wednesday, December 15, 2010 at 6:03 pm

Sorry about the insulting headline, but every last shred of evidence I can find suggests that the most people remain utterly clueless about silver, despite the efforts of the silver vigilantes, led by Max Keiser and Mike Kreiger.  Their brilliantly simple plan (go get some physical silver) promises to topple the criminally insane fraud that has become US economy.  It doesn’t require politicians or regulators to lift a finger either, you simply take advantage of what is undoubtedly an artificially low price.  I can completely understand anyone who is skeptical of that last statement; I’m sure you’ve been burned before, but that doesn’t mean you should stop seeking truth.  

Part 1. A little math.

I’m not sure when performing basic arithmetic made you a conspiracy theorist, but here we are.  

The 2009 World’s population was about 6.8 Billion.  According to the Silver Institute, total silver supply in 2009 was 889 million ounces.  That means there was .13 ounces of silver produced for every human being on the planet.  That looks like this:

Yep, your fair share of Worldwide silver production is a little less than the silver content of two pre-1965 dimes.  That’s all.  A bargain at about four bucks when you consider the amazing properties of this element.  FYI: World oil production per capita is 190 gallons. 

This….

 …represents more than ten years of  worldwide silver mining production divided by 2009 population.  Less than $35, and hell of lot easier to transport than 7,600 quarts of Quaker State.  Please note that so-called “World production” includes government sales and scrap.  Government sales and “scrap” have accounted for more than 25% of  “World Silver Production” from 2000 to 2009.  I’m not sure I believe that one out of every four ounces of silver gets recycled, but understand that without that bonus production, demand exceeds supply by 37%. 

Part 2. Who needs silver?

Just about everybody, it turns out.  Sadly, another way to get yourself labeled a conspiracy theorist is by reading government documents like the Constitution, or the Department of the Interior’s 2009 U.S. Geological Survey which states:

The physical properties of silver include ductility, electrical conductivity, malleability, and reflectivity. The demand for silver in industrial applications continues to increase and includes use of silver in bandages for wound care, batteries, brazing and soldering, in catalytic converters in automobiles, in cell phone covers to reduce the spread of bacteria, in clothing to minimize odor, electronics and circuit boards, electroplating, hardening bearings, inks, mirrors, solar cells, water purification, and wood treatment to resist mold. Silver was used for miniature antennas in Radio Frequency Identification Devices (RFIDs) that were used in casino chips, freeway toll transponders, gasoline speed purchase devices, passports, and on packages to keep track of inventory shipments. Mercury and silver, the main components of dental amalgam, are biocides and their use in amalgam inhibits recurrent decay.

 Yet you can actually find dunces out there claiming that digital cameras have made silver obsolete.  You should live so long…

Fun Fact:  Silver (not gold, copper or anything else) is the element with the highest electrical conductivity.

Part 3. People lie…..

“…I want to make it equally clear that this nation will maintain the dollar as good as gold, freely interchangeable with gold at $35 an ounce, the foundation-stone of the free world’s trade and payments system.”

John F. Kennedy, July 18, 1963 

“That we stand ready to use our gold to meet our international obligations–down to the last bar of gold, if that be necessary–should be crystal clear to all.”

William McChesney Martin, Jr. (Federal Reserve Chairman) December 9, 1963

And…..

Lesson:  When someone says you can exchange paper for precious metals – make the swap before they change the rules.

Since the invention of paper, people have been writing bogus notes, and if there are two time-tested methods to become wealthy beyond your wildest dreams, they are:  1)Selling stuff that doesn’t exist and 2) Selling stuff you don’t actually own.  Unless you believe there has been a sudden outbreak of integrity in the banking industry, there’s no reason to believe these dynamics are not still in play, is there?  As recently as 2007, Morgan Stanley settled a class-action lawsuit with 22,000 clients who bought and paid storage on “phantom” silver (check out the Ted Butler article Money for Nothing).

At today’s prices, a million dollars in gold weighs less than fifty pounds, but a million dollars in silver weighs more than 2,300 pounds!  So ask yourself, how many rich people are storing their own silver?  How many hedge funds hold physical silver in their own storage facility?  Or have they entrusted the storage to the big banks?

JP Morgan is the custodian of the ishares Silver Trust (SLV), which now holds over 350 million ounces of silver, provides  sovereign and corporate investors with precious metals solutions (JP’s website), and is the largest short seller of silver in the history of the world.  Berkshire Asset Management’s  Eric Fry writes:

Based on some of the latest conjecture, Morgan’s short position totals a whopping 3.3 billion ounces. If, therefore, the buzz about J.P. Morgan and silver is even half true, the prestigious investment bank could be cruisin’ for bruisin’.

For perspective, 3.3 billion ounces is roughly equal to:

1) One third of all the world’s known silver deposits;

2) Two times the world’s approximate stockpiles of silver bullion;

3) Four times the annual mined supply of silver;

4) 30 times the inventory of silver at the COMEX.

If you can, forget about the conflict of interest, and ponder the enormity of the explosion.

 

Part 4. A little more math. 

 Estimates of total silver production since the dawn of man range from 46 to 53 billion ounces (roughly 11x gold production), but unlike gold, we’ve used pretty much all of it (although squandered might be a better word).  It’s in our cemeteries (fillings) and scattered throughout our landfills.  There hasn’t been a significant surplus since 1990.  Ted Butler and others estimate that there is far less silver bullion in the world than gold bullion and they back up their case with numbers  that the paperbugs have never even bothered to refute.  So why does gold trade at more than 45 times the price of silver?  Because JP Morgan, the US government, and every other psuedo-capitalist parasite wants it that way.  But that’s a truth for another day.

Part 5. Other things you should know.

 The Treasury has sold 34 million one ounce American Eagles so far in 2010.  Those sales total less than one Billion dollars. Apple (AAPL) trades about that much every hour the market is open.  Meanwhile the Treasury has issued more than 1.5 Trillion in new debt (1,500 times more) in 2010.  Just for fun, let’s multiply 1500 by 34 million.  A transaction of that size would have equaled every last bit of silver ever discovered at $30 an ounce.    Yet you can actually find people who believe silver is the bubble.

Treasury doesn’t make it easy to buy silver.  They’ll sell you bills, bonds and notes directly online, but not precious metals at anything close to market price.   The mint only does business with  11 Authorized Purchasers (a list can be found here),  Why the lack of savvy?

China can blow up the COMEXs silver market in the blink of an eye, at any moment.  They can do it with their pocket change, as a goof.  And if we piss them off enough, they will.

Part 6. So what’s silver worth.

The short answer is: more.  If silver were priced based on its occurrence relative to gold, it would be over $125/oz.  If it were priced on its availability – somewhere around $2,000.  But if you are content to let the likes of Blythe Masters dictate the value based on truckloads of worthless paper promises, you can expect ultra-low prices until the whole thing blows up.  Of course at that point, we’ll be so busy killing each other for food no one will have time to say, “I told you so.”

The silver vigilantes just want you to re-learn what the phrases like, “cold, hard cash,”  and “payment in full” are supposed to mean.  There not asking you to sink everything you have into physical silver,  just a little.  Silver can’t be printed into oblivion, or stolen by a cyber attack.  Why wouldn’t you want to own some of your very own? 

A paper dollar from 1960 is worth exactly the same as a paper dollar in 2010, but  four quarters from 1960 are worth more than $21.  Given the fiscal insanity of the US government, I can’t imagine the US dollar surviving another 50 years, but I’m quite sure that silver will still be useful.  Please consider getting some.

***

 

 

 

 

Update: All indications say this piece is the most widely read thing I’ve ever written.  I would like to thank everyone who helped make that possible especially Max Keiser, Steve Quayle and my friends at Zerohedge.  For the record: ANYONE (except seekingalpha.com – long story) is welcome to my original content here (which is like 99.9% of what’s here).  It would be nice if you mentioned me, but I won’t hunt you down if you don’t.

Some Personal Favorites:

M. C. Escher – Economist   (This graphic in particular)

Giant Leaps  – My best (and most ignored) work.

Tin Foil Hat America (the Eskimo Test) – provides insight into my madness

I can’t believe it’s no Capitalism! – graphic

Candy from Strangers – Who’s buying our debt? (I still don’t know)

“Shut-up And Eat Your Paint Chips, Kid” – Miseducating America (the ZH discussion  was great, and I love the Daily Bail’s graphic (not mine))

Understanding the National Debt (Sesame Street Edition) 

Hopefully there’s other wortwhile stuff here, but I think that’s all the shameless self-promotion any of us can stand.

Thanks for stopping by!

Are Leveraged ETFs a Dumping Ground for Government Debt?

In Leveraged ETF, SEC, stocks finance, Treasuries on Monday, March 1, 2010 at 9:40 pm

**note: all data used was captured as of the February 26 close.

I’m not big on suspense, so I’ll answer right up front – YES!  Yes they are. In fact when you boil off the bullshit, there’s not much else to them. The actual (net) holdings of one leveraged ETF pair (FAS/FAZ) is currently 84% Goldman Sachs Financial Square Government Fund ($1.44B). But that’s really only slightly more outrageous than Direxion’s total ETF family (here), which is comprised of $4.77B (79%) government debt vs. $1.29B actual investment.  

If you want to understand how I know this, you will have to indulge me a little.   

For a moment, think about the concept of leveraged ETFs; promising returns of up to 300% of a particular index, or its’ inverse (-300%)!  But beyond the ability to make (or in my case, lose) money astonishingly fast; I am astounded that such devices can even be designed, by NASA, or anyone else native to this planet.  Where would you start?  And who are these guys?   

Just another day at Direxion Funds, I guess. 

more…. Read the rest of this entry »

Saint Hankenstein?

In stocks finance on Thursday, June 11, 2009 at 10:40 pm

saint hankensteinI know that TV appearances by uber-boob Steve Moore have proven to most of us  that the only thing the Wall Street Journal represents is the senseless slaughter of trees.  But from time to time, the shit gets so deep, real journalists take exception (no, not me stupid).

Comedy ensued when Matt Taibbi, author of the brilliant, must-read, Rolling Stone article, The Big Takeover took offense to a key-slappin’ douche-bag by the name of  Evan Newmark, who actually entitled a column, It’s Time to Enshrine Hank Paulson as National Hero. Rumor has is that Evan’s body of work also includes pieces entitled, Why don’t we name Streets after Hitler ? and Missing Michael Vick. But I digress.

Turns out Mr. Taibbi is also gifted with the hatchet (please note: I have corrupted the definition of “hatchet job” in my warped little mind.  I does not necessarily involve misrepresenting facts, but rather highlights absurdity and foolishness through the use of colorful explicatives), case in point:

Dear WSJ,

Just out of curiosity — did Evan Newmark ever work for Goldman, Sachs? And if the answer to the question is yes, don’t you think that might have been a good fact to disclose before he fellated Hank Paulson in his “Mean Street” column?

Sincerely,
Matt Taibbi

Turns out Matt’s suspicions were right, so he wrote (among other things):

Can you imagine what a craven, bumlicking ass-goblin you’d have to be to get a job working for the Wall Street Journal, not mention up front that you used to be a Goldman Sachs managing director, and then write a lengthy article calling your former boss a “national hero”.

It’s mean, but it’s art.  Matt’s entire takedown can be found here: http://trueslant.com/matttaibbi/2009/06/08/mean-street-it%E2%80%99s-time-to-enshrine-hank-paulson-as-national-hero-deal-journal-wsj/

But wait, there’s more to this story……..

Read the rest of this entry »

What’s Wrong with This Picture?

In SEC, stocks finance on Wednesday, June 10, 2009 at 3:30 pm

My four year old got this one:610SPYCaptureSadly, our regulators won’t.

From the final minutes of trading today.  Now keep in mind, this is the SPY, not some penny stock.  If the SPY is having liquidity issues, we’re in for some very interesting days.

And I was trying to be nice….

I’ve got 14 million reasons to be kind to the SEC.  In March of 2007, I applied for a bounty on Angelo Mozilo’s insider trading. So when the SEC finally charged Mozilo with $140M in fraudulent insider trading, my heart skipped a few beats  (a bounty award is up to 10% of the amount recovered).   And while that kind of money is beyond my wildest dreams, it’s not enough to make me turn a blind eye to the incestuous horror show that passes for regulation in our markets.  I only hope that they have to cough up that reward money to someone who despises them as much as I do.

If I were a rich man….

For kicks, I decided what I would do if my archenemies had to cut that check to me.  I would run an open source development project on biochar.  It is my opinion that this is the most promising “green” technolgy, and would provide more jobs for more people than anything currently being discussed.  If I could ask one thing of you, it would be that you read the wikipedia article on biochar.

From Wikipedia:

biochar is a tool used to simultaneously slow down deforestation, increase the food security of rural communities, provide renewable energy to them and sequester carbon.

I’m using Biochar to describe a variety of technologies (including wood gasification) that can be enacted locally and customized to community or individual needs, addressing energy, environmental, and agricultural needs simultaneously.  These technologies require intelligent humans to build, operate, maintain and sustain them on a very local level.

Or we could go space-mining…..

If you’re thinking about buying Gold now – Think again (please)

In Gold, stocks finance on Thursday, May 21, 2009 at 11:03 pm

The answers to life’s problems aren’t at the bottom of a bottle, they’re on TV!”

~Homer Simpson

I guess it was morbid curiosity that made me put on CNBC  for the first time in a couple months (and that’s all I got to say about that).

All day, between Wonder Hange commercials, the forbidden word was uttered repeatedly.  Gold. If I were more ambitious, I’d create a montage of people saying the word gold on CNBC Today.  But it could never compare to MJK’s four minute plus montage of Homer Simpson saying, “D’oh”, so whats really the point?  Well, the point is the bobbleheads were so busy saying the forbidden word that I’m surprised no one collapsed from lack of oxygen. Gold gold gold GOLD gold………get the picture.

Gold was up about 17 bucks, while the dollar, stocks and bonds retreated. Of course normally, when gold’s up 17 bucks my favorite morons forget to mention it.  They treat gold like some sideshow curiosity that was once considered money….go figure…. But from time to time, they actually suggest that you should buy gold.  And if you’re paying attention, you know that is the time you should sell gold.

Of course when I say “gold”, I mean make-believe paper and pixel gold, not shiny yellow metal.  There’s really no connection between the two.  The “prices” that you trade on are figments of  imagination; no more real than the $35 “price” claimed by the Bretton Woods system.

The losses that you can suffer listening to the quacks on TV, however, are quite real……

more…………. Read the rest of this entry »

Goldman Sachs – Public Enemy #1

In Open Thread, stocks finance on Monday, April 13, 2009 at 11:33 pm

Author’s warning: What follows is a sprawling, bloody, semi-coherent mess (at best).  I wrote it when I learned that Goldman Sachs was trying to stifle someone’s right to freedom of expression and because I believe that our recent history is being morphed into an alternate reality, where many important details are being lost or erased.  I don’t trust McGraw-Hill (parent company of Standard and Poor’s) to write the history books.  So, I decided to sharpen the hatchet and take some whacks……

The megalomaniacs of Manhattan are at it again…….

First, it was Glass-Steagall, then leverage limits, then the uptick rule (I’ll pin that on them later)….now the first amendment is proving irritating to Goldman Sachs.  Yup, they’ve decided that an obscure blog called goldmansachs666.com needs to be silenced.  Blogger Mike Morgan is the author  and has been warned he may face legal action if he does not “cease and desist”…..

Here’s the story by James Quinn (which incidentally, was reported by a British publication, because US propagandists journalists have already accepted the repeal of the first amendment) :

According to Chadbourne & Parke’s letter, dated April 8, the bank is rattled because the site “violates several of Goldman Sachs’ intellectual property rights” and also “implies a relationship” with the bank itself.

I guess running a “pump and dump” like Goldman did with oil last summer could be considered intellectual property, but mostly it proves  once again that the “smartest guys on the street” are pretty fucking dumb.  You see, if there’s one thing bloggers hate more than being ignored (and trust me, I know about being ignored), it’s being censored by scumbags like Goldman.  And when you get away with the greatest heist in history,  it’s probably a bad idea to shine the spotlight on those with a mountain of evidence against you.    In fact, if I were Goldman Sachs, I wouldn’t want my name and “conviction” uttered in the same breath (but that’s just me).  What kind of things would Goldman want suppressed?  Maybe things like:

more…… Read the rest of this entry »

Can You say ‘Fiduciary’?

In Open Thread, stocks finance, Uncategorized on Sunday, March 8, 2009 at 3:59 pm

immeltcapture

It seems that corporate America is in need of a vocabulary lesson:

From West’s Encyclopedia of American Law via Answers.com

Fiduciary (fidōō′shē-erē) n.

An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another’s benefit……

…..A fiduciary relationship extends to every possible case in which one side places confidence in the other and such confidence is accepted; this causes dependence by the one individual and influence by the other……

I can’t link to an SEC or Finra or NYSE web page that clearly defines the CEO’s fiduciary obligations to shareholders (because I can’t find them, or they don’t exist), but I’m pretty sure that when you say your dividend is good to go, then cut it a month later you’ve breached the trust the shareholders have placed in you.

more……. Read the rest of this entry »

It’s all About Redemption Now

In Open Thread, stocks finance, Uncategorized on Monday, March 2, 2009 at 2:45 pm

No, not your immortal soul, goofy.

My prayers for a snowstorm that would paralyze the Northeast and close the markets were only partially answered (sometimes God says, “sort of…”), so I’m home today, watching the train wreck.  This is looking to me like the kind of washout that we need, and I’m not seeing any price action for the X-files today.  Could it be that the powers have finally decided to let the chips fall where they may?  Who knows.  I believe that facing reality is usually the best course of action, no matter how painful.  I must concede however, that these are not usual times.

The key to successful short-term trading is figuring out what the other guy is going to do, before he figures it out.  The economic news, especially on Friday of last week, was grim.  Changing bailout terms, GDP much worse than initially thought, more Ponzis, initial unemployment claims thundering along, GE cuts dividend,  Santelli’s a Ho?  etc, etc, etc.  I  found too myself overwhelmed to write anything coherent (at least 5 pieces hit the trash can).

more…………………………………………………………………….

Read the rest of this entry »

GE will change ticker to HFS

In stocks finance on Wednesday, February 4, 2009 at 2:26 pm

That would be the headline if I were king, anyway.  Inspired by the cranial diarrhea spewed  this week on CNBC (see Erin Burnett – Shithead of the week), I started wondering how poorly run a company must be to employ the likes of Dennis Kneale and Erin.  Well, I’m finding out.  Upon further investigation, I’ve realized that a more appropriate name for the organization would be Holy Fucking Shit!

Fun fact: General Electric Co. has $523.8 Billion in debt and only $12.3B in cash.  That works out to $1.6 million in debt per employee!

How can a company with 1.6 million dollars in debt per employee be anti-protectionist?

Super-Duper fucked-up fact: GE chairman and CEO Jeffrey Immelt is a Class B Director of the New York Federal Reserve.  Class B Directors are elected by member banks to represent the public (you can’t make this stuff up).

Oh yeah, Once again the common stock hit fresh 13 year lows.