Gold & Silver, a Rigged Market?
Research for Online Investors

by John Dalt

6/9/09

We all know governments loan their gold to market makers. This allows them to make a 1% premium on the loan. Otherwise, gold and silver make no return. What if they are loaning their gold and silver to banks that are in turn selling it on the open market to manipulate prices?

There is a great article in the “Hard Asset Investor” about manipulation of the gold and silver market.  This story makes you feel like you are gambling in Casablanca, “I am shocked there is gambling going on here.”  This is a great article with a lot of credibility. If this author is correct, you have a great chance to extract a little blood from GS, JPM and HSBC.  Too bad, we cannot get a little action against some others.  If you own gold or silver, you should read about manipulating gold.  You will want to buy more tomorrow!

If you own GS, JPM or HSBC, you should read this article and let your best judgment govern your actions.  SLV is moving more than GLD; it may be the best vehicle to use.  As I reported Friday, in May GLD was up 8.38%, and SLV was up 25.67%  SLV also goes down faster!

Airlines are forecast to lose over $9 billion worldwide in 2009, according to the International Air Transport Association. This is nearly double the previous forecast. Economic recession, swine flu, and higher fuel costs are creating headwinds for the industry. I am reminded of Warren Buffet’s comments about airlines destroying money.  It would have been cheaper for the Wright Brothers to have crashed at Kitty Hawk!

George Kengott with First National Bullion sent a note that China announced they had increased their gold reserve to 1054 million tonnes at the end of April.  China has become the largest miner of gold, but they do not export ANY.  Look to GLD and SLV for tradable ownership.  Many experts suggest that at least 10% of your portfolio should be in precious metals to hedge against inflation.

Ten banks will be allowed to return the TARP funds that beefed up their balance sheets. They are J.P. Morgan, Goldman Sachs, American Express, New York Mellon, BB&T Corp., Capital One, State Street, U.S. Bancorp, Morgan Stanley, and Northern Trust. Together they will repay $68.3 billion, one-fourth of TARP distributed to banks. They will still owe the government the warrants that were issued. The government has ten years to exercise their rights on the warrants. The immediate question will be how much control Oh! Bama will try to exert over these banks.  The New York Times has a good article on the banks returning TARP funds.

At our press time, the Supreme Court has not issued any statements.  This would suggest the Chrysler case is headed for a hearing before the Supremes.  One justice can issue a stay for 24 hours without concurrence from other justices.  It has now been over 24 hours since yesterday’s stay announcement.

The dollar was down, oil was up. TLT, the 20-treasury ETF held steady. The news will be made tomorrow and Thursday when the treasury sells 10 and 30 year bonds.

Do you want to see a scary chart? Look at this. Subprime mortgages resets are going to increase in 2010.  Look at the real explosion in Option ARM and Unsecuritized ARM's.  It looks like the last half of '09 and 2010 could be a repeat of last year.  Looks like we need to short the financials by the end of this month, then again in May of 2010.  Get ready for the headlines, it looks to get worse.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future

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