Mint reveals how it lost a fortune in gold

Inadvertent slag sales and miscounts lost 17,500 troy ounces? I suppose that's easier than saying we found tungsten/lead filled bars.

More than $3 million in government gold was unwittingly sold off at a fraction of its value as refinery slag, while $8 million more was miscounted and never left the Royal Canadian Mint, the Crown corporation revealed Monday in a full accounting of how it lost track of a fortune in gold for a year.

A series of miscalculations and blunders in the mint's gold refinery dating back to 2005 were responsible for 17,500 troy ounces — a system of weights for precious metals — of gold going missing from the mint's Ottawa inventory count last October, the mint announced in a 12-page report.

Source: http://www.windsorstar.com/Mint+reveals+lost+fortune+gold/2367398/story.html

State and Local Governments Face Crisis

State and local governments from California to New York face significant cash crunches.

California -

"Without additional legislative measures to address the state's financial difficulties or unprecedented amounts of borrowing from the short-term credit markets," the report said, "the state will not be able to pay many of its bills on time for much of its 2009-10 fiscal year."

New York -

Without a budget-cutting plan, state officials said New York may have to delay payments to schools and local governments or borrow to pay its bills, which would hurt the state’s credit rating and its ability to borrow money.

Source: http://statepolitics.lohudblogs.com/2009/11/20/dinapoli-state-cash-crunch-getting-worse/

Source: http://www.sacbee.com/capitolandcalifornia/story/1842247.html

TA: Long Bonds

TLT price and volume continues to confirm a breakdown of the small head and shoulders formation. The neckline of the large head and shoulders formation and the 1982 trendline as illustrated by the Shearson Bond Index (SLBI) are now pulling hard. This implies upward pressure on yields into 2010. IMO, the bond market remains the canary in the coal mine for the U.S. dollar and other key markets.

TLT:

SLBI:

Failed Bank List Expanding...

While the Fed speaks of removing emergency supports as the economy improves, it quietly ignores the steady stream of bank failures buried in the back sections of the news. One had to search hard to find that the Fed's had to shutter seven more banks on Friday.

Regulators on Friday shut down two big California banks, as well as banks in Alabama, Florida, Georgia, Michigan and Illinois, bringing to 140 the number of U.S. banks brought down this year by the weak economy and mounting loan defaults.

The 140 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the government-backed deposit insurance fund — which has fallen into the red — more than $30 billion so far this year. The failures compare with 25 last year and three in 2007.

Source: http://www.usatoday.com/money/industries/banking/2009-12-18-bank-failures_N.htm?csp=34
Source: http://www.fdic.gov/bank/individual/failed/banklist.html

A Consolidation & Breakout Study of Gold

GLD:


Observations:

• Force of the breakout is a function of time and range (or volatility) within the consolidation. The longer the time of consolidation and greater the volitility within the consolidation, the greater the force of the breakout.
• The lastest gold breakout occurred after an extremely volatile and long consolidation. To suggest that it has topped out after 3-months and 9% rally from the breakout ignores the massive energy stored within the previous consolidation.
• Has gold peaked as so many have suggested on F-TV?

COT F&O U.S. Dollar & COT F&O Money Flow Table

U.S. Dollar Index and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

U.S. Dollar Index and the NonreportableTraders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Gold and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

Gold London P.M Fixed and the Commercial Traders COT Futures and Options Net Long As A % of Open Interest:

COT F&O Money Flows Table:

Observations -

• Commercial traders and nonreportables weighted stochastic reveals the continuation of aggressive outflows and inflows during the dollar rally, respectively. In other words, the strong hands have been the sellers and the weak hands have been the buyers. This is a classic bearish setup that awaits a technical sell signal to complete.
• An overweight COT short position by the commercial traders at the onset rally failed to predict an intermediate top from 2005 to 2006 and 2007 to 2008. Note that the 2007-2008 overweight short position was not as extreme prior to the breakout. The overweight short position from 2009 (October) to 2010 should also fail to predict an intermediate top.

Inflation Expectations are rising

Inflation expectations, as measured by the spread between TIP and nominal bonds, have been rising steadily since March 2009. The government reported CPI is so statistically skewed to understate to be of much historical use.


TIPS to Nominal Bond Ratio: