Golden Minerals Company

As anyone who has ever traded CDS (or any other OTC, non-exchange traded product) knows, when you have a short risk position, unless compliance tells you to...and they rarely do as they have no idea what CDS is most of the time...you always mark the EOD [end of day] price at the offer, and vice versa...on long risk positions, you always use the bid. That way the P&L always looks better.

And for portfolios in which the DV01 is in the hundreds of thousands of dollars (or much, much more if your name was Bruno Iksil), marking at either side of an illiquid market can result in tens if not hundreds of millions of unrealistic profits booked in advance, simply to make one's book look better, mostly for year end bonus purposes.

This is certainly the second shoe to drop in the JPMorgan fiasco...and without doubt this 'problem' infects every TBTF financial entity on Planet Earth. It's a long read...and I thank reader 'David in California' for being the first one through the door with it. The link is here.

Small businesses hired fewer workers in May and cut hours for those on their payrolls, an independent survey showed on Wednesday, raising prospects of another disappointing employment report.

Businesses added 40,000 new jobs, after increasing payrolls by an upwardly revised 60,000 jobs in April, according to Intuit, a payrolls processing firm. April's job count was previously reported as 40,000.

The survey's findings contradict expectations of a pick-up in job gains in the broader economy this month as the weather-related distortions that held back employment growth in March and April dissipate.

This cnbc.com story from yesterday was sent to me by West Virginia reader Elliot Simon...and the link is here.

Even though our recent Recovery Reality Check Summit participants generally agreed that interesting economic times will continue for some time, the details of why they think that are quite varied. Casey Research's Senior Metals Investment Strategist Louis James' interview of Greg Weldon is an excellent example of this; he provides another sobering perspective on the US dollar debasement in explaining why he thinks turbulence is ahead for many nations' economies.

This video interview was posted in yesterday's edition of Casey's Daily Dispatch...and it runs a hair under 20 minutes. The link is here.

Last week, when we reported on the then brand new record number of EUR non-commercial short contracts as reported by the CFTC, we said: "with such a massive surge in shorts in a short period of time, this means that the likelihood of major short squeezes is substantial on even the most innocuous of news.

Our advice to FX trading readers: be very careful with EUR/USD stops: it is very likely that in their pursuit of short covering squeezes, (BIS) algos will take the pair substantially into the offer-side stop limit buffer just to force short hands out, which in turn may initiate short-term covering ramps."

More extreme positions! This zerohedge.com piece was posted on their website on Monday...and the imbedded graph makes the entire article worth the read. I thank Nitin Agrawal for bringing it to our attention...and the link is here.

Today's ECB data shows that Euroland's money supply is contracting again.

M3 fell by €51bn in April.

M1 fell by €55bn.

Private credit fell €55bn.

I don't yet have the country breakdown. My guess is that the Club Med implosion is grim.

This excellent AE-S blog from yesterday's edition of The Telegraph is an absolute must read...and I thank Roy Stephens for his first offering of the day. The link is here.

Ms Lagarde was forced to publish an embarrassing climb-down on her Facebook page over the weekend after being bombarded by hundreds of Greek people who felt insulted by her suggestion that the country’s crisis was partly due to “all these people in Greece who are trying to escape tax”.

However, on Tuesday she had to admit that her $467,940 (£300,000) annual salary and $83,760 of additional allowances are entirely tax-free as the IMF is an international organisation.

Ms Lagarde earns more than President Barack Obama and British Prime Minister David Cameron, both of whom pay taxes.

I feel for her, but I can't quite reach her. This story was posted on The Telegraph's website early yesterday evening BST...and is Roy's second offering in today's column. The link is here.

Spain is facing the gravest danger since the end of the Franco dictatorship as the country is frozen out of global capital markets and slides towards an epic showdown with Europe.

“We’re in a situation of total emergency, the worst crisis we have ever lived through” said ex-premier Felipe Gonzalez, the country’s elder statesman.

The warning came as the yields on Spanish 10-year bonds spiked to 6.7pc, pushing the “risk premium” over German Bunds to a post-euro high of 540 basis points. The IBEX index of stocks in Madrid fell 2.6pc, the lowest since the dotcom bust in 2003.

Chaos over the €23.5bn rescue of crippled lender Bankia has led to the abrupt resignation of central bank governor Miguel Ángel Fernández Ordóñez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.

Here's another Ambrose Evans-Pritchard story that's a must read for sure. It was posted on The Telegraph's website early yesterday evening as well. It's another Roy Stephens offering, for which I thank him...and the link is here.

Market observers should fret more over a "Spexit," one analyst says, as a Spanish withdrawal from the eurozone is more likely as the country is too big to bail out.

"The Spanish are a lot more likely to pull out of the euro than the Greeks, or indeed any of the peripheral countries," says Matthew Lynn of Strategy Economics on Wednesday, according to CNBC.

"They are too big to rescue, they have no political hang-ups about rupturing their relations with the European Union, they are already fed up with austerity, and there is a bigger Spanish-speaking world for them to grow into."

The European Union...and its currency...are toast. This story was posted over at the moneynews.com website early yesterday morning...and I thank West Virginia reader Elliot Simon for his second contribution in today's column. The link is here.

More than two decades after the fall of communism, angry residents in Eastern European democracies are rebelling against a culture of corruption that is making their economic hardships even worse.

Demonstrators recently brought down a corrupt government in Romania and nearly toppled one in the Czech Republic. In Slovenia, the prime minister is under indictment, while Croats are watching a massive corruption trial. Hungarians have taken to the streets to protest a new constitution that centralizes power in the national government.

“We grew up in a culture where petty corruption was almost like a civic virtue - a way to get around the stupid [communist] system we had,” said Miklos Marschall, deputy director of Transparency International, who is from Hungary. Now graft is reaching beyond the penny-ante levels of the old Iron Curtain, he said.

This Washington Post story was posted on their website on Tuesday. It's worth reading...and I thank Roy Stephens for bringing it to my attention...and now to yours. The link is here.

China on Tuesday announced that direct trading of its currency against the Japanese yen will begin later this week, bringing the yuan one step closer to becoming a truly global currency.

Authorized by the country's central bank, the trading marks the first time for China to allow a major currency other than the US dollar to be traded directly against the Chinese currency RMB, or the yuan.

As part of the efforts between China and Japan to strengthen cooperation in developing the financial market, the move serves as an important means of promoting direct yuan-yen trading, the People's Bank of China said in a statement on its website.

Yuan-yen trading will start on China's interbank foreign exchange market on Friday, according to the China Foreign Exchange Trade System, the market operator.

This story was posted on the chinadaily.com.cn website on Tuesday...and I thank Hong Kong reader Graham C. for bringing it to my attention. The link is here.

Its role in global commodity trading is a key piece of market infrastructure for buyers and sellers and consequently one of the reasons for London's pre-eminence as a trading hub.

But, almost unnoticed, this key institution is about to be sold for more than £1bn (on profits of just £10m).

While many City institutions have ended up in the hands of foreign investors, the fate of the LME is a cause for particular concern.The lead bidder is China, which also happens to be the world's biggest consumer of industrial metals, including 40pc of world copper.

Placing the entity that sets prices for industrial metals globally in the hands of the biggest consumer of industrial metals globally may not be a sensible move for the rest of the world. There are clear conflicts of interest, regardless of the fact that it would be China in control.

This story was posted on the telegraph.co.uk website on Tuesday evening...and I thank reader Brad Robertson for sending it along. The link is here.

Alberta Premier Alison Redford is travelling to Virginia this week to take part in the Bilderberg conference.

The invitation-only, closed-door meetings brings politicians together with leaders from areas including economics, finance, academia and industry.

According to a government news release, Redford will meet with a number of individuals to discuss topics like monetary policy, ecological challenges and responsible development of natural resources.

This story showed up on the Canadian Broadcasting Corporation website on Tuesday...and I thank Edmonton reader Ray Hay for sending it. The link is here.

The first blog is with Dan Norcini...and it's headlined "This May Accelerate Into a Full-Blown Panic & Collapse". The second is with Rob Arnott...and it bears the title "Lost Confidence: Stocks to Plunge 20% to 30%". And lastly is this audio interview with Newmont CEO Richard O'Brien. I posted his KWN blog in yesterday's column.

Interviewed by Geoff Candy at MineWeb, Sprott Asset Management's John Embry says that only market interference has gotten in the way of gold's fundamentals, foremost among which is the growing realization that government currencies soon will be worth a lot less.

I found this mineweb.com story, which they headlined "One of the finest opportunities to buy gold in the whole bull market - Embry" posted in a GATA release...and the above headline and the introductory paragraph are courtesy of Chris Powell. The link is here.

John Embry of Sprott Asset Management is really getting around today, elaborating for King World News on the "massive manipulation and interference" in the gold market. "They knock gold down when it obviously should be going higher," Embry says, echoing GATA's long-running complaint about the counterintuitive moves in the gold price.

This GATA release from yesterday contains an extensive must read preamble from Chris Powell...and I would think that John's comments over at KWN are worth reading as well. The link is here.

Gold and silver have had a bumpy ride since both metals got smacked down on February 29th.

On that day, Europe announced a massive long-term refinancing for its beleaguered banks, a move that represented quantitative easing at its finest.

February 29th was also the day that Ben Bernanke, chairman of the U.S. Federal Reserve, made headlines. He made some remarks about the improving U.S. economy that were meant to indicate the Fed would do no further quantitative easing...at least for the time being.

His comments, as well as the European refinancing, sparked a rout in the gold market, tumbling the metal nearly US$100 an ounce in just one day, while pulling down silver more than US$3 an ounce.

This commentary was posted on May 4th in the Investor's Digest of Canada...and I dug it up at the sprott.com Internet yesterday...and the link is here.