Gold and silver lower as dollar picks up steam

In the Lead: “Ridi, Pagliaccio!”

Another government that threatens to collapse – the one in Italy – also remains in focus today as the G-20 leaders gather in Cannes to tackle some of the pressing issues at hand. Mr. Berlusconi may have shown up with empty hands to this summit, but he is leaving with his hands full; full of new, unpleasant tasks. Italy’s EU teammates, apparently fed up with Mr. Berlusconi’s stretching out the timetable for reforms in the country to the same extent he stretches his singing “talents” have given him “marching” orders.

Mr. B and his government will now have to march to a new tune: that of being monitored by the IMF as the implementation of restructuring is carried out. Italy’s revamping of its pension plans, labour markets and privatization processes will be now scrutinized by the IMF and European Commission, complete with monthly progress reports. The lack of Berlusconi’s (and Italy’s) credibility that the imposition of such disciplinary measure implies is obvious and quite sizeable. The only promises made by Mr. B that might now be believable any longer will be limited to the ones he routinely makes to nubile females at his so-called bunga bunga parties. Ms. Merkel clearly believes no such Berlusconi claptrap. She might just ask him to powder his face, put on his costume and “Laugh, Clown (Ridi Pagliaccio).” Who’s laughing now?

This is looking like a day for collapses, near-collapses, resignations and near-resignations. Thus, unsurprisingly, we note the now formal announcement of the departure from MF Global of its recently taciturn leader, Mr. Corzine. The recently collapsed securities firm will lose its Chairman and CEO and he will not take with him a severance package worth $12 million – certainly not while Michael Moore and the OWS crowd are both not very far away from the firm’s offices and are out there protesting the very behaviour that has brought about such spectacular implosions.

MF is still under FBI investigation, and it is being targeted by numerous lawsuits, some of them involving monies from people who ran Ponzi schemes. Mr. Corzine expressed great “sadness” for what took place at his firm. While this was no Lehman Bros., Mr. Geithner must be squirming in the wake of his Sept. 15 declaration that there will be “no more Lehmans.” This is, at the end of this day, a $40 billion (give or take, but mostly “take”) bankruptcy; the 8th largest one in US business history – bigger than the Chrysler fiasco of 2009. Heckuva job, Jon, heckuva job. Still to be determined is what/how many positions in commodities MF holds and what might have to come to be liquidated. This story is far from being over.

Finally this morning, jobs figures. USA job additions amounted to 80,000 positions in the latest reporting week. Albeit hiring was occurring at a more robust pace than in late summer, the addition of less than 100K jobs leaves markets on the cold side. However, overall unemployment did tick 0.10% lower, to an even 9%. On the home front however, we did not do so well in Canada last month. More than 54,000 full-time jobs were lost (the most since 2009) and overall unemployment climbed two notches to 7.3 percent.

Enjoy your weekend. It is certain to be more fun than the one in Cannes for some – caviar and blinis, champagne and truffles notwithstanding. Don’t forget to set your clocks back an hour; this will give you “more” time to parse the wacky news of a wacky world on Sunday. Not much to laugh about (see the 1:48 mark)...

Jon Nadler is a Senior Metals Analyst at Kitco Metals Inc. North America

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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