Great interactive map of historic and current G20 nations inflation.

http://www.ft.com/cms/s/0/c40c439e-66aa-11e0-ac4d-00144feab49a.html#axzz1L8iTzOAT

When Alpha becomes Beta, what do you do? We wish all the quote stuffing HFT Algos good luck in trying to outsmart each others similar strategies.

(chart; population from 10 000 BC to today)

http://www.businessinsider.com/andrew-lo-alpha-beta-chart-why-john-paulson-performance-down-year-2011-4?utm_source=Triggermail&utm_medium=email&utm_term=Business%20Insider%20Select&utm_campaign=BI_Select_042911

April 28, 2011

Mr. Laurence D. Fink
Chairman and CEO
BlackRock
55 East 52nd Street
New York, NY 10055

Dear Mr. Fink,

I am writing to alert you to a possible circumstance of fraud and manipulation in your popular ETF, SLV, due to the excessive short-selling of its shares. Current reports indicate the most recent level of total short sales now exceed 36 million shares. This is an increase of more than 14 million shares from the previous reported amount.  ShortSqueeze.com

Each share of SLV requires that one ounce of silver be held at the Trust’s custodian (minus accumulated ed management fees), according to the prospectus. Since short sellers of SLV shares do not deposit metal with the Trust’s custodian, this means that the buyers of the more than 36 million shorted shares of SLV do not have metal backing, as required by the prospectus. It is my belief that many of the shares shorted have been shorted precisely because no physical silver was available to deposit. If I am correct, this may constitute fraud and manipulation, possibly on the part of Authorized Participants (APAs) who make deposits and redemptions of metal in the Trust.

I am a silver analyst and a fan of SLV. I had raised this issue with the previous owner and sponsor of the trust, Barclays Global Investors (BGI). I never did receive a satisfactory answer from BGI about the shorted shares issue, although they did agree to list and publish the bar serial number and weights held in the Trust after I publicly urged them to do so. I am hopeful that BlackRock might be more responsive to this issue.

Publicly-traded ETFs that have specific metal backing are highly unique securities. Perhaps a small short position may be overlooked on a temporary basis until the metal is deposited in the Trust due to logistical considerations. But a short position that represents more than 10% of the outstanding shares issued means that many buyers of the shares have no metal backing. This is clearly not in keeping with the spirit of the prospectus that each share issued be backed by one ounce of silver on deposit with the custodian.

I trust you will look into and rectify this circumstance.

Sincerely,

Ted Butler

Butler Research, LLC
www.butlerresearch.com

Courtesy Jessie

DXY index has been trading in tandem with the Vix index. Although the relationship was slightly broken some weeks ago, both the indexes are following each other. Usd index has just broken critical support, and is trading very poorly. The Vix index is yet to break down, but if it is to follow Usd index, we might even see Vix moving close to 10 level. That would indicate people have lost all fear factor, and could be signaling a compleacancy about the market, and a great buy vol opportunity.

Buffet vs Sokol part 2 started this weekend. Buffet has now shown a new more aggressive stance in Sokol’s Lubrizol shares dealing. The initial comment of” I won’t comment more…” is now escalated to lawyers accusing the opposite parts. Sokol will be sacrificed before the saga ends.

“I don’t think there’s any question about the inexcusable part,” Mr. Buffett said. “He violated the code of ethics. He violated our insider trading rules. He violated the principles I lay out every two years.” (NYT)

In the below article we see a far more happier Buffet with the cheerleaders than when facing Mr Sokol’s lawyers.

http://dealbook.nytimes.com/2011/04/30/buffett-takes-sharper-tone-in-sokol-affair/?ref=business

With the Usd collapsing further into the abyss, and the Chinese Put on gold, the price of gold seems to be heading for new higher  levels after it broke out of the consolidation formation this week.

“Gold Note — China has reserves of $3 trillion, of which almost half is in dollar denominated items. China is now the world’s biggest producer of gold. And the Chinese government is going all out to increase its production of gold. China also is encouraging its people to buy and accumulate gold.

Against it’s huge ($3 trillion) reserves, only 1.7% of China’s reserves are in gold. China is on a diversification program to increase its tiny reserves of gold. It is thought that China wants at least 10% of its reserves in gold. This means that China is on a massive gold accumulation program.

My thought is that there is a “Chinese put” under gold. When ever gold corrects a bit, China is there loading up on what ever is available. Other central banks are doing the same thing.” (kingworldnews)

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/30_Richard_Russell_-_China_on_Massive_Gold_Accumulation_Program.html

“This repeated lunge for the sour spot — the place where costs are high and benefits are low — now seems to be a trademark of the President’s decision-making style. On the left it is earning him Carter comparisons from people like Eric Alterman; on the right it means that despite his compromises and yielding of significant ground he continues to feed the incandescent hostility of his bitterest foes. Worst of all, it suggests to people abroad and at home that the way to manipulate this “split the difference”, consensus-seeking President is to raise your demands. If you are going to get something like 50 percent of what you ask for, ask for twice as much as you really want. And with this Presidential style, the squeaking wheel gets the grease. Not surprisingly, all the wheels have begun to squeak.

Here is the paradox we face: The President is a consensus-seeker whose decision making style rewards polarization and a conciliator who loses friends without winning over enemies.” (theatlantic.som)

http://www.theatlantic.com/politics/archive/2011/04/the-great-mystery-of-the-obama-presidency/238043/

It seems that Geithner is getting rather tired of PIMCO’S Ponzi talk about the prosperous US Economy. After PIMCO posted the “Doghnut” article ( Aggressive Must read report from PIMCO-Us a Ponzi?) comparing the Us Economy to the real Mr Ponzi, it seems that Geithner & Co have now totally lost it. This is getting rather personal.

“The fail charge is too high and will be counter- productive,” Scott Simon, Newport Beach, California-based Pimco’s mortgage-bond head, said in an e-mail. “While it will reduce intentional fails, we believe it will sharply reduce liquidity and incent accounts to attempt short squeezes.”

A 1 percent fee “would be a much better level,” said Simon, whose firm manages the world’s largest bond fund.” (Bloomberg)

http://www.bloomberg.com/news/2011-04-29/failed-trade-charges-proposed-for-mortgage-bonds-agencies-1-.html

In the more than 36 years between 1971 – the year that the fiat currency era began – and late 2007, the USDX had never gone below the 80.00 level for more than a week at a time. Since late 2007, the USDX has only climbed back above the 80.00 level in times of extreme crisis to the global financial system. The one best remembered is the nine-month period between mid 2008 and March 2009 when the USDX soared from 72 to 89. That was the “deleveraging” rally where debtors everywhere desperately piled back into the US Dollar to meet margin calls and pay down (at least some) debts. The other US Dollar rally was in the first half of 2010 when the European “sovereign debt crisis” hit global headlines.

The last USDX close above 80.00 was on January 12, 2011. The last USDX close above 75.00 was less than two weeks ago on April 19, 2011. Now, the USDX is uncomfortably close to its all time lows. This has happened while the Dow Transports, the “leading indicator” for the US stock market, has reached new all time highs. The Fed’s “free money” is still doing what it was designed to do on the US stock and Treasury debt markets. But it is doing so by undermining the US Dollar at an increasing speed and focussing very unwanted attention on the major alternatives to paper – Gold and Silver. There is a very old saying that states that anything you get for “free” is a very expensive purchase.

How expensive the Fed’s “free money” will become will not be known until the speed with which it is being pumped out has its inevitable effect on US interest rates. When that happens, the Fed can continue to pursue as many “dastardly deeds” as they can concoct. None of them will be “dirt cheap” anymore.  (theprivateer.com)

“Contrary to the silly subtitle his publisher no doubt foisted on him, William D. Cohan does not argue that Goldman Sachs rules the world. A judicious author, Cohan avoids hyperbole in “Money and Power,” a definitive account of the most profitable and influential investment bank of the modern era.” (NYT)

http://www.nytimes.com/2011/05/01/books/review/book-review-money-and-power-by-william-d-cohan.html?_r=1&ref=business