Oldtent Archives 2007 - 2008

i do business with apmex in person, in cash.

rno

Denninger ….

WASF!

It’s old news but will have big ramifications on the ‘investing’ or should we trust a ‘Financial Mis-Adviser’ scene. $50B here, and there…..quite a lot have lost a Ton of money.

December 13, 2008
$50 billion at stake after Wall St broker Bernard Madoff is arrested over ‘world’s biggest swindle’
Bernard Madoff: ’stunning fraud’

Bernard Madoff: ’stunning fraud’
Tim Reid in Washington

Some of America’s wealthiest socialites were facing ruin last night after the arrest of a Wall Street big hitter accused of the largest investor swindle perpetrated by one man.

Shock and panic spread through the country clubs of Palm Beach and Long Island after Bernard Madoff, a trading powerbroker for more than four decades, allegedly confessed to a fraud that will cost his wealthy investors at least $50 billion – perhaps the largest swindle in Wall Street history.

Mr Madoff, 70, a former Nasdaq stock chairman, was apparently turned in by his two sons and arrested on Thursday morning at his Manhattan apartment by the FBI. Andrew Calamari, a senior enforcement official at the US Securities and Exchange Commission, described the scheme as “a stunning fraud that appears to be of epic proportions”.

The FBI’s criminal complaint states that when two federal agents arrived at Mr Madoff’s apartment, he told them: “There is no innocent explanation.” The agents say that he told them “he paid investors with money that wasn’t there”, that he was “broke” and that he expected to go to jail.
Related Links

* Madoff’s high-profile ‘victims’

Many of his investors came from the enormously wealthy enclaves of Palm Beach, Florida and Long Island, New York, where people had invested billions in Mr Madoff’s firm for decades. He was a fixture on the Palm Beach social scene, and was a member of some of its most exclusive clubs, including the Palm Beach Country Club and Boca Rio Golf Club, where he drummed up much of his business.

The FBI claims that three senior employees of Mr Madoff’s investment firm turned up at his apartment on Wednesday to ask questions about the company’s solvency. Two of them are believed to be his sons, Andrew and Mark, who have worked for their father for two decades.

Mr Madoff told them that he was “finished”, that he had “absolutely nothing”, and that “it’s all just one big lie”. He said the investment arm of his firm was “basically a giant Ponzi scheme”, and that it had been insolvent for years.

A Ponzi scheme, named after the swindler Charles Ponzi, is a fraudulent investment operation that pays abnormally high returns to investors out of money put into the scheme by subsequent investors, rather than from real profits generated by share trading.

The FBI complaint states that Mr Madoff told his sons that he believed the losses from his scheme could exceed $50 billion. If that is the case, his fraud would be far greater than past Ponzi schemes and easily the greatest swindle blamed on a single individual.

There has been scepticism for years on Wall Street over how Mr Madoff managed to pay such consistently high returns. Ponzi schemes inevitably collapse, and Mr Madoff found himself to be no exception. This month, clients asked for $7 billion to be returned, the FBI says.

Mr Madoff ran the scheme separately from his main business and his sons had no involvement in it.

Mr Madoff has been charged with a single count of securities fraud. He declined to enter a plea in Manhattan’s US District Court and was released on $10 million bail. He faces up to 20 years in jail and a $5 million fine if convicted. His lawyer, Dan Horwitz, said that his client was “a person of integrity. He intends to fight to get through this unfortunate event.”

One investor told The Wall Street Journal: “This is going to kill so many people. It’s absolutely awful.” Ira Roth, from New Jersey, said that his family had $1 million invested, and that he was in a state of panic.

* Have your say

Will all of Mr. Madoff´s duped investors now go to Washington and ask/expect to get bailed out? Nothing would surprise me these days.

Jeff Mason, La Paz, Bolivia

perfect man to head the social security administration

charles bonow, new lenox, u.s.

Ira Roth from NJ????. Is that name someones idea of a joke. He would be listed in the phone book as Roth IRA.

Steve, Riverhead, NY, USA

THE GOLD RUSH IS ON!

By Adrian Douglas

The article that appeared in the Financial Times today and circulated by GATA is very significant. What is especially significant is the necessity to supply disinformation

www.ft.com/cms/s/0/077b765c-c77c-11dd-b611-000077b07658.html?nclick_check=1

QUOTE

Traders have been hearing talk that the gold market could face a potential squeeze at the end of this year if market participants with futures position on New York’s Comex exchange decide not to roll over their positions, because of concerns about counterparty risk and opt for physical delivery instead. But dealers dismissed the threat of a squeeze, pointing out that Comex gold stocks stand at 8.5 million ounces, well above the five-year average of almost 6 million ounces. …

END

The 8.5 million ozs which is referred to here is the total COMEX inventory. This includes gold that belongs to customers who are storing it on the exchange. The amount that is registered to dealers, and therefore available for delivery, is only 2.846 Million ozs. The delivery notices that have been issued so far in December total 1.26 Million ozs which is 44% of the available deliverable gold. This assumes that the gold registered to dealers is totally unencumbered which is not necessarily a good assumption in the fuzzy accounting world that is now a Wall St. reality.

What is very telling is that the reason for investors taking delivery is given as “counterparty risk”. They could have said that it was due to investors “wanting the safe haven of gold in times of financial crisis” etc etc. Stating unequivocally “counterparty risk” as the reason high delivery demands are occurring is the first reference to the possibility of COMEX going into default that has appeared in the mainstream press. It is also of note that it appeared in the FT which is traditionally anti-gold.

The pieces of the puzzle are falling into place.

* The CB’s are selling only a fraction of their WAG allowance
* Coin melt bars are showing up on the wholesale market indicative of the bottom of the barrel
* The US mint is rationing coins
* The Perth Mint has suspended taking orders for any bullion products
* Retail dealers are sold out and only small quantities of PM’s are available
* The traditional major shorts on TOCOM have covered their massive short positions
* Prices in the retail market are very much higher than COMEX spot
* Significant reduction in Contango has been observed and even some backwardation
* A disconnect has formed between COMEX paper gold trading and physical gold markets

Ever since July when one or possibly two US banks sold short 10% of the annual global gold supply and 20% of annual global silver supply (as confirmed by reporting issued by the CFTC) the COMEX price has been disconnected from the physical market and has become the last bastion of the multi-year gold price suppression scheme. Without a doubt the hammering down of the paper gold price made many leveraged speculators head for the exits, as demonstrated by the fact that the Open Interest has reduced by 50%. However, the investors who remain are not leveraged and unfortunately for the Gold Cartel are taking delivery from the COMEX. Talk of a squeeze due to “counterparty risk” will no doubt encourage more investors to take delivery. We will probably see Contango in the further out months reduce and gold be purchased in the cash market as investors switch from future IOU’s to real metal. This may even provoke a much more pronounced Backwardation than we have already seen in recent days.

Make no mistake about this. We are seeing the early signs of a gold rush like the world has never seen before. Investors do not take physical delivery of gold to sell it back for a 10% profit. The inflation adjusted high of gold in 1980 is today $2500. However, today we are in the midst of a global financial crisis the likes of which we have never witnessed in the whole of recorded history. Simultaneously every country in the world is hell bent on currency destruction as an anti-dote to too much debt creation. What is gold worth in such a scenario? Who knows but it is multiples of where it is now. The precious metals that are being taken off the market will not see the light of day again for a long time. The Central Banks have almost stopped selling gold and mine supply is dropping year after year.

My unique analysis methods at www.mareketforceanalysis.com indicate that gold and silver are at very good buy points. Gold and silver are selling for almost their cost of production so the downside is severely limited because no commodity can trade below its cost of production for very long because producers go out of business thereby reducing supply which increases the price.

An ex-FED Governor appeared on Canadian TV yesterday saying that the FED could rebalance it’s balance sheet by allowing gold to be re-valued to $5000 to $10,000 per oz. This suggests that it is in the hands of the FED. If the shorts on COMEX get squeezed and COMEX defaults on physical delivery, the market not the FED, will decide the true value of gold.

How many times do you get advance warning of what will likely be the trade of the century? There is no such thing as a risk free trade but I think this is as good as it ever gets!

Investors should take physical delivery and not be leveraged. This way you will make sure you are around for payday and you will put more pressure on the shorts who have fraudulently sold gold and silver that they are unable to deliver.

Whether there is a massive squeeze on the COMEX in December or February is irrelevant. The Gold Rush is on!

When gold and silver become unavailable prices will have to go up by multiples. The beaten up mining sector will reach new highs. When the precious metals are not available in bullion form the next best alternative for investors will be companies who dig them out the ground.

Adrian Douglas

December 13, 2008

info@marketforceanalysis.com

www.marketforceanalysis.com

From Mrs Winedoc to our GoldTent friends

www.youtube.com/watch?v=dr01qTQ1_FI

Sure glad to see ya back! Hope you’ll show up a little more often. Maybe we can plan another pirate raid on the good ship Voronsky. I wonder if he still sends exiles into the depths of hell like he used to? Don’t go over there much……as there ain’t a helluva lot to offer anymore…..but we might be able to steal a few new converts. I still notice however……he still brags about millions and kazillions of hits over there……What a crock. Anyways sure good to see ya around!……Just in time for the next big leg up in the ongoing gold bull. A good lesson for those who are new to this market on……how quickly the worm can turn. I’ve completely lost count of the number of times gold has been pronounced down for the count…..only to see it come back even stronger.

All the best.——–aggie.

OK, AuGirl, I admit it… I cannot do a YouTube embed here either.   The Dilbert one was a snap… but the YouTubes do not work.   What I have discovered thru trial and error is that the ‘code’ will not ’save’.  I come back to edit the post, and the code has disappeared.  I tried ‘Save and Continue Editing’ and the code also disappears.  Perhaps it has something to do with a limit on the length of the code to save??  The Dilbert strip was small code, compared to the multiple lines of the YouTube stuff.

Actually, I did spell it correctly…  ‘Vronsky’… just like he uses at GEF.

Just think… without him, we all wouldn’t be here.   Good to see ya here, reefer.  We’ve been having a “Kona Low” storms and floods here the past few days, and again my hair hurts!

your mistake was in the spelling…’YKSNOROV’ wj

ahh now after a fine evening meal i can say without a doubt…wj

…saved at TQ Compendium..

….we got a few Compendiums going…

…..cheers

I believe that the YEN hit a 13 year high against the USD on Friday.

With what appears to be another .50 and some calling for a .75 cut in rates for the US this week, one would think that would be positive for the good guys (us) and negative for the SM.  Also have Goldman Sucks earnings on Tuesday I believe, so we will see whether GS has put out enough bad numbers the last two weeks to get a pop if they don’t lay a total egg but still have a sizeable loss.

“i can always excersize the back room ‘keys’ and change my handle to ‘voronsky’!”

I did that once.  Some admin got so freaked I immediately got whacked!  

Good to see your smilin mug at GT, home of the Gold Christmas elves. 

Storm’s ill-advice sends innocents to the bottom

Michael West

December 13, 2008

THIS one is worse than Westpoint, Fincorp or ACR. Forget Allco. Even MFS, ABC or City Pacific pale in comparison. Storm Financial Group’s demise is the greatest tragedy to embroil retail investors this year.

The other corporate collapses encompass mortgage funds, one-product wonders, or random sharemarket companies. Investors are unlikely to have lumped their entire savings into these. Not so Storm.

The splintering Townsville-based Storm is a financial planner. That is, it recommends what its clients should do with their entire savings. And the recommendation was to put it into the sharemarket, and not just the savings. They were advised to go into debt, often using their family home as collateral.

Now these families, many among them retirees who will never get the chance to make the money back, face ruin — their debt greater than their savings thanks to the advice of Storm to use leverage and punt the stockmarket.

Yet Storm has the gall to blame Commonwealth Bank for its client losses via a calculated public relations strategy that no doubt hinges on the reasoning that public opinion can comfortably be swung against a big bad bank.

Along with another financial services player Challenger, Commonwealth Bank offshoot Colonial ran indexed funds for Storm. That is, they are clients of Storm and created share funds in which Storm clients invested — after Storm had advised the clients to take on leverage to enhance their returns.

Leverage works well to magnify returns in a rising market but is poison, especially for unsophisticated investors, in a falling market.

The whole “Stormification” strategy as they dubbed it was to “optimise the client’s personal balance sheet” — use debt, in other words. Did the founders, Emmanuel and Julie Cassimatis, really believe the sharemarket would go up forever?

And the fees, at roughly 7 per cent, were extortionate, especially in light of the dangerous strategy of leveraging retail clients at the zenith of the biggest bull market in history.

Colonial began contacting Storm clients this week to advise them they needed to pay margin calls on their positions. Many were unaware of their plight, many report not receiving a statement of position from their adviser. And now Storm has the hide to try to shift the blame onto CBA. CBA could be accused of being greedy, but not reckless.

While Storm has made empty noises about legal action against the bank, CBA is firing off a legal letter to Storm today warning it about making any further slurs.

It is squarely the role of the financial adviser to “know thy client”, to do the research and risk profiling. It is squarely Storm’s fault.

Shirking responsibility to the most shameless degree, Storm hired aggressive crisis management PR mob Third Person to spin the entire collapse as CBA’s fault.

In a tripartite Orwellian assault, ABC radio was told:

1. As the margin-lending facility was run by CBA and it was the one making the margin calls it was the bank’s fault.

2. “The founders of Storm, Julie and Emmanuel Cassimatis, their staff and advisers, are all investors in these types of facilities. They are also hurting and feeling the financial pain that clients are at the moment.”

3. Storm gave to charities such as the Salvation Army.

Rather than responding to questions from BusinessDay, the Cassimatis have shot off a letter demanding an apology.

So, let’s put it in print. How much money has been given to charity? And how much money, as a proportion of their many tens if not hundreds of millions of dollars in personal wealth, have the Cassimatis actually got tied up and leveraged in these Storm index funds?

But for their failure to float the company on the sharemarket late last year for $500 million — after a spending spree to mop up a plethora of financial planning shops before the float — they would have made a lot more money. According to the draft prospectus, they planned to cash out a good deal of their wealth into the float.

Instead, they persevered this year, advising clients to hold their debt-laden portfolios until a couple of months ago, during the 40 per cent sharemarket downturn.

It proved disastrous. As reported earlier, Colonial is terminating its four Storm-branded funds and selling out Storm client stock. We are talking 13,500 clients and $4.7 billion in funds under management.

Take this email for instance, which arrived yesterday morning from Peter and his wife (names provided but we are withholding them) as evidence of merely one personal wrecking:

“Hi Michael: We are Storm Financial customers and after reading your articles are very worried. Without much correspondence from our Brisbane office we have been kept in the dark and are concerned about losing our house. If you were in our shoes what would be the best course of action? We would appreciate some advice.

“We have been margin called by Colonial and hence have a $57,000 shortfall. We now have a $300,000 mortgage against our house with ANZ, which we had previously owned. Any sort of guidance would be helpful as we are lost to know what to do.

Regards,

Peter”

Meanwhile, with the regulators yet to show up at the scene of the accident and the Financial Planners Association wringing its hands helplessly, the lawyers are circling like hungry sharks. Plaintiff firm Slater & Gordon is but one signing up clients for a class action.